EchoStar Announces First Quarter of 2018 Results

May 10, 2018

ENGLEWOOD, Co., May 10, 2018 /PRNewswire/ -- EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the quarter ended March 31, 2018.

EchoStar Corporation Logo. (PRNewsfoto/EchoStar Corporation)

First Quarter 2018 Financial Highlights:

  • Consolidated revenues of $501.8 million.
  • Consolidated net loss from continuing operations of $21.2 million, consolidated net loss attributable to EchoStar common stock of $21.6 million, and diluted losses per share of $0.22. Included in these amounts are net losses on investments of $36.7 million. Excluding these net losses, diluted earnings per share would have been $0.16.
  • Consolidated EBITDA of $165.7 million, including net losses on investments of $36.7 million.  Excluding these net losses, EBITDA would have been $202.4 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

Additional Highlights:

  • Approximately 1,267,000 Hughes broadband subscribers as of March 31, 2018.
  • Cash, cash equivalents and current marketable investment securities of $3.3 billion as of March 31, 2018

On January 1, 2018, we adopted two new accounting pronouncements:

  • Topic 606 relating to revenue recognition and the related costs from contracts with customers. The adoption decreased our revenue by $1.2 million and increased our net income by $1.1 million for the three months ended March 31, 2018.
  • Topic 321 relating to accounting for investments. The adoption decreased our net losses on investments by $19.1 million and correspondingly increased our net income by $19.1 million.

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

 


For the three months ended March 31,


2018


2017


(Dollars in Thousands)

Revenue






Hughes

$

400,818


$

329,320

EchoStar Satellite Services


96,753



100,326

Corporate & Other


4,221



3,505

Total

$

501,792


$

433,151







EBITDA






Hughes

$

136,713


$

100,852

EchoStar Satellite Services


84,150



83,063

Corporate & Other:






   Corporate overhead, operating and other


(17,870)



(18,952)

   Equity in earnings (losses) of unconsolidated affiliates, net


(1,009)



6,408

   Gains (losses) on investments, net


(36,268)



11,943

       Sub-total


(55,147)



(601)

Total

$

165,716


$

183,314







Net income (loss) from continuing operations

$

(21,171)


$

30,775

Net income from discontinued operations

$


$

6,577

Net income (loss)

$

(21,171)


$

37,352







Expenditures for property and equipment from continuing operations

$

50,982


$

89,950

 

The following table reconciles GAAP to non-GAAP measurements.

 


For the three months ended March 31,


2018


2017


(Dollars in Thousands)

Net income (loss)

$

(21,171)


$

37,352







Interest income and expense, net


47,116



37,105

Income tax benefit, net


(5,403)



(12)

Depreciation and amortization


145,554



115,083

Net income from discontinued operations




(6,577)

Net (income) loss attributable to noncontrolling interests


(380)



363

EBITDA

$

165,716


$

183,314













 

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."  This measure is not determined in accordance with US 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 GAAP.  Our management uses this non-GAAP measure as a measure of our operating efficiency and overall operating 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 March 31, 2018 and 2017 are attached to this press release. Detailed financial data and other information are available in EchoStar's Quarterly Report on Form 10-Q for the period ended March 31, 2018 filed today with the Securities and Exchange Commission.

EchoStar will host its earnings conference call on Thursday, May 10, 2018 at 11:00 a.m. Eastern Time. The call-in numbers are (877) 815-1625 (toll-free) and (716) 247-5178 (international), Conference ID # 8292996.

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, 2017 and Quarterly Report on Form 10-Q for the period ended March 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






As of



March 31, 2018


December 31, 2017

Assets


(unaudited)


(audited)

Current Assets:





Cash and cash equivalents


$

2,239,591



$

2,431,456


Marketable investment securities, at fair value


1,060,733



814,161


Trade accounts receivable and contract assets, net (Note 3)


166,182



196,840


Trade accounts receivable - DISH Network, net


56,861



43,295


Inventory


85,995



83,595


Prepaids and deposits


59,751



54,533


Other current assets


13,163



91,671


Total current assets


3,682,276



3,715,551


Noncurrent Assets:





Property and equipment, net


3,461,004



3,465,471


Regulatory authorizations, net


536,548



536,936


Goodwill


504,173



504,173


Other intangible assets, net


55,273



58,955


Investments in unconsolidated entities


173,601



161,427


Other receivables - DISH Network


93,287



92,687


Other noncurrent assets, net


255,582



214,814


Total noncurrent assets


5,079,468



5,034,463


Total assets


$

8,761,744



$

8,750,014


Liabilities and Stockholders' Equity



Current Liabilities:





Trade accounts payable


$

103,785



$

108,406


Trade accounts payable - DISH Network


3,742



4,753


Current portion of long-term debt and capital lease obligations


41,424



40,631


Contract liabilities


65,333



65,959


Accrued interest


57,297



47,616


Accrued compensation


32,905



47,756


Accrued expenses and other


105,291



98,769


Total current liabilities


409,777



413,890


Noncurrent Liabilities:





Long-term debt and capital lease obligations, net


3,585,972



3,594,213


Deferred tax liabilities, net


433,174



436,023


Other noncurrent liabilities


127,306



128,503


Total noncurrent liabilities


4,146,452



4,158,739


Total liabilities


4,556,229



4,572,629


Commitments and contingencies (Note 15)





Stockholders' Equity:





Preferred stock, $.001 par value, 20,000,000 shares authorized, none issued and outstanding at each of March 31, 2018 and
December 31, 2017





Common stock, $.001 par value, 4,000,000,000 shares authorized:





Class A common stock, $.001 par value, 1,600,000,000 shares authorized, 53,932,336 shares issued and 48,400,018 shares
     outstanding at March 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, $.001 par value, 800,000,000 shares authorized, 47,687,039 shares issued and
     outstanding at each of March 31, 2018 and December 31, 2017


48



48


Class C convertible common stock, $.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of
     March 31, 2018 and December 31, 2017





Class D common stock, $.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of March 31,
     2018 and December 31, 2017





Additional paid-in capital


3,685,577



3,669,461


Accumulated other comprehensive loss


(111,413)



(130,154)


Accumulated earnings


714,423



721,316


Treasury stock, at cost


(98,162)



(98,162)


Total EchoStar Corporation stockholders' equity


4,190,527



4,162,563


Other noncontrolling interests


14,988



14,822


Total stockholders' equity


4,205,515



4,177,385


Total liabilities and stockholders' equity


$

8,761,744



$

8,750,014


 

         

ECHOSTAR CORPORATION

Consolidated Statements of Operations

(In thousands)






For the three months ended March 31,



2018


2017

Revenue:





Services and other revenue - DISH Network


$

103,805



$

114,955


Services and other revenue - other


355,040



269,791


Equipment revenue


42,947



48,405


Total revenue


501,792



433,151


Costs and expenses:





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


143,793



131,783


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


44,023



43,938


Selling, general and administrative expenses


103,275



82,991


Research and development expenses


7,137



7,705


Depreciation and amortization


145,554



115,083


Total costs and expenses


443,782



381,500


Operating income


58,010



51,651







Other income (expense):





Interest income


15,635



8,291


Interest expense, net of amounts capitalized


(62,751)



(45,396)


Gains (losses) on investments, net


(36,663)



12,035


Other-than-temporary impairment loss on available-for-sale securities




(3,298)


Equity in earnings (losses) of unconsolidated affiliates, net


(1,009)



6,408


Other, net


204



1,072


Total other expense, net


(84,584)



(20,888)


Income (loss) from continuing operations before income taxes


(26,574)



30,763


Income tax benefit, net


5,403



12


Net income (loss) from continuing operations


(21,171)



30,775


Net income from discontinued operations




6,577


Net income (loss)


(21,171)



37,352


Less: Net loss attributable to noncontrolling interest in HSS Tracking Stock (Note 1)




(655)


Less: Net income attributable to other noncontrolling interests


380



292


Net income (loss) attributable to EchoStar Corporation


(21,551)



37,715


Less: Net loss attributable to Hughes Retail Preferred Tracking Stock (Note 1)




(1,209)


Net income (loss) attributable to EchoStar Corporation common stock


$

(21,551)



$

38,924







Amounts attributable to EchoStar Corporation common stock:





Net income (loss) from continuing operations


$

(21,551)



$

32,347


Net income from discontinued operations




6,577


Net income (loss) attributable to EchoStar Corporation common stock


$

(21,551)



$

38,924







Weighted-average common shares outstanding - Class A and B common stock:





Basic


95,888



94,745


Diluted


95,888



95,893







Earnings (losses) per share - Class A and B common stock:





Basic:





   Continuing operations


$

(0.22)



$

0.34


   Discontinued operations




0.07


Total basic earnings (losses) per share


$

(0.22)



$

0.41


Diluted:





   Continuing operations


$

(0.22)



$

0.34


   Discontinued operations




0.07


Total diluted earnings (losses) per share


$

(0.22)



$

0.41


 

 

ECHOSTAR CORPORATION

Consolidated Statements of Cash Flows

(In thousands)






For the three months ended March 31,



2018


2017

Cash flows from operating activities:





Net income (loss)


$

(21,171)



$

37,352


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





Depreciation and amortization


145,554



126,742


Amortization of debt issuance costs


1,936



1,790


Equity in (earnings) losses of unconsolidated affiliates, net


1,009



(5,249)


Loss (gain) and impairment on investments, net


36,673



(8,737)


Stock-based compensation


2,765



956


Deferred tax (benefit) provision


(7,036)



343


Dividend received from unconsolidated entity




7,500


Changes in current assets and current liabilities, net


(13,313)



(13,857)


Changes in noncurrent assets and noncurrent liabilities, net


(13,982)



(6,003)


Other, net


2,840



518


Net cash flows from operating activities


135,275



141,355


Cash flows from investing activities:





Purchases of marketable investment securities


(562,611)



(45,905)


Sales and maturities of marketable investment securities


298,596



209,923


Expenditures for property and equipment


(128,506)



(102,463)


Refunds and other receipts related to capital expenditures


77,524




Sale of investment in unconsolidated entity




17,781


Expenditures for externally marketed software


(7,148)



(10,832)


Net cash flows from investing activities


(322,145)



68,504


Cash flows from financing activities:





Repayment of debt and capital lease obligations


(9,368)



(8,736)


Net proceeds from Class A common stock options exercised


3,481



26,325


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


2,636



2,409


Cash exchanged for Tracking Stock (Note 1)




(651)


Other, net


(1,508)



(1,475)


Net cash flows from financing activities


(4,759)



17,872


Effect of exchange rates on cash and cash equivalents


(242)



715


Net increase (decrease) in cash and cash equivalents, including restricted amounts


(191,871)



228,446


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


2,432,249



2,571,866


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


$

2,240,378



$

2,800,312







Supplemental disclosure of cash flow information:





Cash paid for interest (including capitalized interest)


$

55,172



$

54,053


Capitalized interest


$

4,099



$

21,824


Cash paid for income taxes


$

839



$

1,035


Employee benefits paid in Class A common stock


$

7,605



$

11,199


Property and equipment financed under capital lease obligations


$

38



$

7,485


Increase (decrease) in capital expenditures included in accounts payable, net


$

585



$

(6,315)


Capitalized in-orbit incentive obligations


$



$

31,000


Non-cash net assets exchanged for Tracking Stock (Note 1)


$



$

299,425


 

 

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SOURCE EchoStar Corporation

EchoStar Investor Relations, Deepak V. Dutt, Phone: +1 301-428-1686, Email: deepak.dutt@echostar.com; EchoStar Media Relations, Dan Brown, Phone: +1 301-601-7216, Email: dan.brown@echostar.com