EchoStar Announces Financial Results for Three and Twelve Months Ended December 31, 2018

February 21, 2019

ENGLEWOOD, Colo., Feb. 21, 2019 /PRNewswire/ -- EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three and twelve months ended December 31, 2018.

EchoStar Corporation Logo. (PRNewsfoto/EchoStar Corporation)

Three Months Ended December 31, 2018 Financial Highlights:

  • Consolidated revenues of $531 million.
  • Consolidated net loss from continuing operations of $112 million, consolidated net loss attributable to EchoStar common stock of $112 million, and diluted loss per share of $1.17.  Included in these amounts are net losses on investments of $46 million and a non-recurring impairment charge of $65 million. Excluding these items, diluted loss per share would have been $0.01.
  • Consolidated EBITDA of $85 million, including net losses on investments of $46 million and a non-recurring impairment charge of $65 million.  Excluding these items, EBITDA would have been $196 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

Twelve Months Ended December 31, 2018 Financial Highlights:

  • Consolidated revenues of $2.1 billion.
  • Consolidated net loss from continuing operations of $39 million, consolidated net loss attributable to EchoStar common stock of $40 million, and diluted loss per share of $0.42. Included in these amounts are net losses on investments of $12 million and a non-recurring impairment charge of $65 million. Excluding these items, diluted earnings per share would have been $0.38.
  • Consolidated EBITDA of $757 million, including net losses on investments of $12 million and a non-recurring impairment charge of $65 million.  Excluding these items, EBITDA would have been $834 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

Additional Highlights:

  • Cash, cash equivalents and current marketable investment securities of $3.2 billion as of December 31, 2018.
  • Approximately 1,361,000 Hughes broadband subscribers as of December 31, 2018.

Set forth below is a table highlighting certain of EchoStar's segment results for the three and twelve months ended December 31, 2018 and 2017:

 



For the Three Months
Ended December 31,


For the Years
Ended December 31,



2018


2017


2018


2017



(In thousands)

Revenue









Hughes


$

444,642



$

405,775



$

1,716,528



$

1,477,918


EchoStar Satellite Services


81,873



96,459



358,058



392,244


Corporate and Other


4,146



3,814



16,777



15,346


Total


$

530,661



$

506,048



$

2,091,363



$

1,885,508











EBITDA









Hughes


$

148,337



$

132,529



$

601,319



$

475,222


EchoStar Satellite Services


69,269



73,412



308,058



315,285


Corporate and Other:









Corporate overhead, operating and other


(18,716)



(18,782)



(69,356)



(63,168)


Equity in earnings (losses) of unconsolidated
affiliates, net


(3,303)



1,353



(5,954)



16,973


Gains (losses) on investments, net


(45,349)



22,789



(12,178)



55,027


 Impairment of long lived assets


(65,220)



(4,762)



(65,220)



(4,762)


Sub-total


(132,588)



598



(152,708)



4,070


Total


$

85,018



$

206,539



$

756,669



$

794,577











Net income (loss) from continuing operations


$

(111,648)



$

311,759



$

(38,633)



$

384,980


Net income from discontinued operations




2,055





8,509


Net income (loss)


$

(111,648)



$

313,814



$

(38,633)



$

393,489











Expenditures for property and equipment
from continuing operations


$

139,888



$

156,239



$

477,617



$

566,384


 

The following table reconciles GAAP to non-GAAP measurements.

 



For the Three Months
Ended December 31,


For the Years
Ended December 31,



2018


2017


2018


2017



(In thousands)

Net income (loss)


$

(111,648)



$

313,814



$

(38,633)



$

393,489











Interest income and expense, net


38,158



46,465



168,293



172,621


Income tax (benefit) provision, net


5,438



(293,359)



30,673



(284,286)


Depreciation and amortization


153,620



142,251



598,178



522,190


Net income from discontinued operations




(2,055)





(8,509)


Net income attributable to noncontrolling
       interests


(550)



(577)



(1,842)



(928)


EBITDA


$

85,018



$

206,539



$

756,669



$

794,577


 

Note on Use of Non-GAAP Financial Measures

EBITDA is defined as "Net income (loss)" excluding "Interest income and expense, net," "Income tax provision (benefit), net," "Depreciation and amortization," "Net income (loss) from discontinued operations," and "Net income (loss) attributable to noncontrolling interests."  EBITDA is not a measure determined in accordance with U.S. GAAP.  EBITDA is reconciled to "Net income (loss)" in the table above and should not be considered in isolation or as a substitute for operating income, net income or any other measure determined in accordance with U.S. GAAP.  Our management uses this non-GAAP measure as a measure of operating efficiency and overall financial performance for benchmarking against our peers and competitors. Management believes that this non-GAAP measure provides meaningful supplemental information regarding the underlying operating performance of our business and is appropriate to enhance an overall understanding of our financial performance. Management also believes that EBITDA is useful to investors because it is frequently used by securities analysts, investors, and other interested parties to evaluate the performance of companies in our industry.

The consolidated financial statements of EchoStar for the periods ended December 31, 2018 and 2017 are attached to this press release. Detailed financial data and other information are available in EchoStar's Annual Report on Form 10-K for the period ended December 31, 2018 filed today with the Securities and Exchange Commission.

EchoStar will host its earnings conference call on Thursday, February 21, 2019 at 11:00 a.m. Eastern Time. The call-in numbers are (877) 815-1625 (toll-free) and (716) 247-5178 (international), Conference ID # 2185925.

About EchoStar Corporation

EchoStar Corporation (NASDAQ:  SATS) is a premier global provider of satellite communications solutions.  Headquartered in Englewood, Colo., and conducting business around the globe, EchoStar is a pioneer in secure communications technologies through its Hughes Network Systems and EchoStar Satellite Services business segments.

Safe Harbor Statement under the US Private Securities Litigation Reform Act of 1995

This press release may contain statements that are forward looking, as that term is defined by the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's beliefs, as well as assumptions made by, and information currently available to, management. When used in this release, the words "believe," "anticipate," "estimate," "expect," "intend," "project," "plans," and similar expressions and the use of future dates are intended to identify forward‑looking statements. Although management believes that the expectations reflected in these forward‑looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made. We assume no responsibility for the accuracy of forward-looking statements or information or for updating forward-looking information or statements. These statements are subject to certain risks, uncertainties, and assumptions. See "Risk Factors" in EchoStar's Annual Report on Form 10-K for the period ended December 31, 2018, as filed with the Securities and Exchange Commission and in the other documents EchoStar files with the Securities and Exchange Commission from time to time.

 

 

ECHOSTAR CORPORATION

Consolidated Balance Sheets

(In thousands, except per share amounts)




As of December 31,



2018


2017

Assets





Current assets:





Cash and cash equivalents


$

928,306



$

2,431,456


Marketable investment securities, at fair value


2,282,152



814,161


Trade accounts receivable and contract assets, net


201,096



196,840


Trade accounts receivable - DISH Network


14,200



43,295


Inventory


75,379



83,595


Prepaids and deposits


61,177



54,533


Other current assets


18,539



91,671


Total current assets


3,580,849



3,715,551


Noncurrent assets:





Property and equipment, net


3,414,908



3,465,471


Regulatory authorizations, net


495,654



536,936


Goodwill


504,173



504,173


Other intangible assets, net


44,231



58,955


Investments in unconsolidated entities


262,473



161,427


Other receivables - DISH Network


95,114



92,687


Other noncurrent assets, net


263,892



214,814


Total noncurrent assets


5,080,445



5,034,463


Total assets


$

8,661,294



$

8,750,014


Liabilities and Stockholders' Equity





Current liabilities:





Trade accounts payable


$

121,437



$

108,406


Trade accounts payable - DISH Network


1,698



4,753


Current portion of long-term debt and capital lease obligations


959,577



40,631


Contract liabilities


72,284



65,959


Accrued interest


47,416



47,616


Accrued compensation


54,242



47,756


Accrued taxes


16,013



16,122


Accrued expenses and other


72,470



82,647


Total current liabilities


1,345,137



413,890


Noncurrent liabilities:





Long-term debt and capital lease obligations, net


2,573,204



3,594,213


Deferred tax liabilities, net


465,933



436,023


Other noncurrent liabilities


121,546



128,503


Total noncurrent liabilities


3,160,683



4,158,739


Total liabilities


4,505,820



4,572,629


Commitments and contingencies





Stockholders' equity:





Preferred stock, $0.001 par value, 20,000,000 shares authorized, none issued and outstanding at each of 
     December 31, 2018 and 2017





Common stock, $0.001 par value, 4,000,000,000 shares authorized:





Class A common stock, $0.001 par value, 1,600,000,000 shares authorized, 54,142,566 shares issued 
     and 47,657,645 shares outstanding at December 31, 2018 and 53,663,859 shares issued and 
     48,131,541 shares outstanding at December 31, 2017


54



54


Class B convertible common stock, $0.001 par value, 800,000,000 shares authorized, 47,687,039 
     shares issued and outstanding at each of December 31, 2018 and 2017


48



48


Class C convertible common stock, $0.001 par value, 800,000,000 shares authorized, none issued 
     and outstanding at each of December 31, 2018 and 2017





Class D common stock, $0.001 par value, 800,000,000 shares authorized, none issued and 
     outstanding at each of December 31, 2018 and 2017





Additional paid-in capital


3,702,522



3,669,461


Accumulated other comprehensive loss


(125,100)



(130,154)


Accumulated earnings


694,129



721,316


Treasury stock, at cost


(131,454)



(98,162)


Total EchoStar Corporation stockholders' equity


4,140,199



4,162,563


Other noncontrolling interests


15,275



14,822


Total stockholders' equity


4,155,474



4,177,385


Total liabilities and stockholders' equity


$

8,661,294



$

8,750,014


 

 

ECHOSTAR CORPORATION

Consolidated Statements of Operations

(In thousands, except per share amounts)




For the years ended December 31,



2018


2017


2016

Revenue:







Services and other revenue - DISH Network


$

378,694



$

445,698



$

463,442


Services and other revenue - other


1,507,259



1,200,321



1,100,828


Equipment revenue


205,410



239,489



246,196


Total revenue


2,091,363



1,885,508



1,810,466


Costs and expenses:







Cost of sales - services and other (exclusive of depreciation
and amortization)


604,305



563,346



536,568


Cost of sales - equipment (exclusive of depreciation and
amortization)


176,600



195,151



188,617


Selling, general and administrative expenses


436,247



366,007



325,044


Research and development expenses


27,570



31,745



31,170


Depreciation and amortization


598,178



522,190



432,904


Impairment of long-lived assets


65,220



10,762




Total costs and expenses


1,908,120



1,689,201



1,514,303


Operating income


183,243



196,307



296,163


Other income (expense):







Interest income


80,275



44,619



21,244


Interest expense, net of amounts capitalized


(248,568)



(217,240)



(123,481)


Gains (losses) on investments, net


(12,207)



53,453



9,767


Equity in earnings (losses) of unconsolidated affiliates, net


(5,954)



16,973



10,802


Other, net


(4,749)



6,582



2,131


Total other income (expense), net


(191,203)



(95,613)



(79,537)


Income (loss) from continuing operations before income taxes


(7,960)



100,694



216,626


Income tax benefit (provision), net


(30,673)



284,286



(80,254)


Net income (loss) from continuing operations


(38,633)



384,980



136,372


Net income from discontinued operations




8,509



44,320


Net income (loss)


(38,633)



393,489



180,692


Less: Net income attributable to noncontrolling interests


1,842



928



762


Net income (loss) attributable to EchoStar Corporation


(40,475)



392,561



179,930


Less: Net loss attributable to Hughes Retail Preferred Tracking Stock




(1,209)



(1,743)


Net income (loss) attributable to EchoStar Corporation common stock


$

(40,475)



$

393,770



$

181,673









Earnings per share - Class A and B common stock:







Basic earnings (loss) from continuing operations per share


$

(0.42)



$

4.04



$

1.46


Total basic earnings (loss) per share


$

(0.42)



$

4.13



$

1.94


Diluted earnings (loss) from continuing operations per share


$

(0.42)



$

3.98



$

1.45


Total diluted earnings (loss) per share


$

(0.42)



$

4.07



$

1.92


 

 

ECHOSTAR CORPORATION

Consolidated Statements of Cash Flows

(In thousands)




For the years ended December 31,



2018


2017


2016

Cash flows from operating activities:







Net income (loss)


$

(38,633)



$

393,489



$

180,692


Adjustments to reconcile net income (loss) to net cash flows from operating activities:







Depreciation and amortization


598,178



533,849



495,068


Impairment of long-lived assets


65,220



10,762




Equity in earnings of unconsolidated affiliates, net


6,037



(15,814)



(13,310)


Amortization of debt issuance costs


7,923



7,378



6,551


Gains and losses on investments, net


12,109



(53,453)



(9,767)


Stock-based compensation


9,990



10,103



15,234


Deferred tax provision (benefit)


26,327



(288,577)



98,148


Dividends received from unconsolidated entities


10,000



19,000



15,000


Proceeds from sale of trading securities




8,922



7,140


Changes in current assets and current liabilities, net:







Trade accounts receivable, net


(17,842)



421



(26,942)


Trade accounts receivable - DISH Network


29,188



235,227



(1,456)


Inventory


5,650



(19,291)



(4,814)


Other current assets


(16,261)



(15,352)



2,263


Trade accounts payable


9,562



(78,419)



(24,571)


Trade accounts payable - DISH Network


(3,055)



731



(19,650)


Accrued expenses and other


23,105



11,993



55,998


Changes in noncurrent assets and noncurrent liabilities, net


(5,070)



(36,975)



9,459


Other, net


12,094



2,898



18,300


Net cash flows from operating activities


734,522



726,892



803,343


Cash flows from investing activities:







Purchases of marketable investment securities


(2,973,254)



(855,717)



(921,247)


Sales and maturities of marketable investment securities


1,498,463



580,235



1,009,310


Expenditures for property and equipment


(555,141)



(583,211)



(722,341)


Refunds and other receipts related to property and equipment


77,524



4,311



24,087


Sale of investment in unconsolidated entity


1,558



17,781




Expenditures for externally marketed software


(31,639)



(31,331)



(23,252)


Investments in unconsolidated entities


(115,991)





(1,636)


Other, net






2,880


Net cash flows from investing activities


(2,098,480)



(867,932)



(632,199)


Cash flows from financing activities:







Proceeds from issuance of long-term debt






1,500,000


Payments of debt issuance costs




(414)



(7,097)


Repurchase of the 2019 Senior Secured Notes (Note 12)


(70,173)






Purchase of treasury shares (Note 14)


(33,292)






Repayment of debt and capital lease obligations


(41,019)



(37,670)



(40,364)


Net proceeds from Class A common stock options exercised


4,424



35,536



13,065


Net proceeds from Class A common stock issued under the Employee Stock Purchase Plan


9,368



8,758



14,367


Repayment of in-orbit incentive obligations


(5,350)



(5,487)



(5,499)


Cash exchanged for Tracking Stock (Note 1)




(651)




Other, net


(521)





1,217


Net cash flows from financing activities


(136,563)



72



1,475,689


Effect of exchange rates on cash and cash equivalents


(2,233)



1,351



138


Net increase (decrease) in cash and cash equivalents


(1,502,754)



(139,617)



1,646,971


Cash and cash equivalents, including restricted amounts, beginning of period


2,432,249



2,571,866



924,895


Cash and cash equivalents, including restricted amounts, end of period


$

929,495



$

2,432,249



$

2,571,866









Supplemental disclosure of cash flow information:







Cash paid for interest, net of amounts capitalized


$

240,596



$

207,617



$

78,312


Cash paid for income taxes


$

5,209



$

11,033



$

11,700


 

 

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SOURCE EchoStar Corporation

EchoStar Investor Relations, Deepak V. Dutt, +1 301-428-1686, deepak.dutt@echostar.com; EchoStar Media Relations, Sharyn Nerenberg, +1 301-428-7124, sharyn.nerenberg@echostar.com