EchoStar Announces Financial Results for Three and Nine Months Ended September 30, 2020

November 5, 2020
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ENGLEWOOD, Colo., Nov. 5, 2020 /PRNewswire/ -- EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three and nine months ended September 30, 2020.

Three Months Ended September 30, 2020 Financial Highlights:

  • Consolidated revenues of $473.5 million.
  • Net income from continuing operations of $23.3 million, consolidated net income attributable to EchoStar common stock of $25.4 million, and diluted earnings per share of $0.26.
  • Consolidated Adjusted EBITDA of $166.7 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

Nine Months Ended September 30, 2020 Financial Highlights:

  • Consolidated revenues of $1,398.6 million.
  • Net loss from continuing operations of $49.3 million, consolidated net loss attributable to EchoStar common stock of $40.3 million, and diluted loss per share of $(0.41).
  • Consolidated Adjusted EBITDA of $476.2 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

"We had another outstanding quarter," commented Michael Dugan, CEO and President of EchoStar.  "We increased our consumer subscriber base by approximately 38,000, driven by our international markets, and grew our Net income and Adjusted EBITDA from the same period last year.  The continued growth in demand for our service demonstrates the importance of our networks and services for businesses and families everywhere.  We will continue to focus on the needs of our customers as connectivity becomes a more vital part of business, entertainment, and communications."

Three Months Ended September 30, 2020 - Additional Information:

  • Consolidated revenue was up $1.2 million year over year including an estimated negative foreign exchange impact of $10.9 million.
  • Adjusted EBITDA increased 9% or $14.3 million year over year.
    • Hughes segment Adjusted EBITDA increased $13.2 million year over year. The increase was driven primarily by the higher margin associated with the growth in our consumer broadband service.
    • ESS segment Adjusted EBITDA increased by $0.5 million year over year.
    • Corporate and Other segment Adjusted EBITDA increased by $0.7 million. The increase was primarily driven by lower equity losses in unconsolidated affiliates of $1.3 million compared to the same period last year.
  • Net income from continuing operations was $23.3 million, an increase of $46.4 million from last year. The change was primarily due to higher operating income of $10.9 million, improvement in foreign currency transactions, net, of $21.8 million, higher gains on investments, net, of $6.7 million, and lower income tax provision of $2.1 million.
  • Hughes broadband subscribers are approximately 1,580,000 as of September 30, 2020 including approximately 364,000 subscribers in Latin America.
  • For the three months ended September 30, 2020, approximately 71% of Hughes segment revenue was attributable to our consumer customers with approximately 29% attributable to our enterprise customers.
  • Cash, cash equivalents and marketable investment securities were $2.5 billion as of September 30, 2020.

Set forth below is a table highlighting certain of EchoStar's segment results three and nine months ended September 30, 2020 and 2019 (amounts in thousands) from continuing operations (all US GAAP amounts reference results from continuing operations):

For the three months
ended September 30,

For the nine months
ended September 30,


2020

2019

2020

2019

Revenue







Hughes

$

466,762

$

463,735

$

1,378,416

$

1,360,919

EchoStar Satellite Services

4,402

4,098

13,233

11,873

Corporate and Other

2,338

4,429

6,985

14,283

Total revenue

$

473,502

$

472,262

$

1,398,634

$

1,387,075









Adjusted EBITDA







Hughes

$

186,458

$

173,298

$

534,955

$

490,152

EchoStar Satellite Services

2,274

1,791

5,847

5,006

Corporate & Other:







Corporate overhead, operating and other

(21,572)

(20,981)

(63,948)

(58,769)

Equity in earnings (losses) of unconsolidated affiliates, net

(504)

(1,782)

(660)

(9,507)

Total Corporate & Other

(22,076)

(22,763)

(64,608)

(68,276)

Total Adjusted EBITDA

$

166,656

$

152,326

$

476,194

$

426,882









Expenditures for property and equipment

$

98,137

$

95,155

$

295,041

$

314,351

 

Reconciliation of GAAP to Non-GAAP Measurement (amounts in thousands):



For the three months
ended September 30,

For the nine months
ended September 30,


2020

2019

2020

2019

Net income (loss)

$

23,273

$

(21,106)

(49,307)

(11,158)

Interest income, net

(7,364)

(17,175)

(33,707)

(64,817)

Interest expense, net of amounts capitalized

37,967

49,865

112,458

156,813

Income tax provision (benefit), net

2,950

5,016

6,309

12,607

Depreciation and amortization

129,822

122,374

392,077

361,619

Net loss (income) from discontinued operations

—

(2,008)

—

(46,223)

Net loss (income) attributable to non-controlling interests

2,167

2,797

9,040

1,359

EBITDA

188,815

139,763

436,870

410,200

(Gains) losses on investments, net

(14,998)

(8,295)

37,764

(28,087)

Litigation Expense

—

1,824

—

26,328

License fee dispute - India, net of non-controlling interests

(480)

3,940

(1,043)

3,940

Foreign currency transaction (gains) losses, net

(6,681)

15,094

2,603

14,501

Adjusted EBITDA

$

166,656

$

152,326

$

476,194

$

426,882

















Note on Use of Non-GAAP Financial Measures

EBITDA is defined as "Net income (loss)" excluding "Interest income, net," Interest expense, net of amounts capitalized," "Income tax benefit (provision), net," "Depreciation and amortization," "Net income (loss) from discontinued operations," and "Net income (loss) attributable to non-controlling interests." 

Adjusted EBITDA is defined as EBITDA excluding "Gains and losses on investments, net," "Foreign currency transaction gains (losses), net," and other non-recurring or non-operational items.  EBITDA and Adjusted EBITDA are not measures determined in accordance with US GAAP. EBITDA and Adjusted EBITDA are 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 US GAAP. Our management uses EBITDA and Adjusted EBITDA as measures of our operating efficiency and overall financial performance for benchmarking against our peers and competitors. Management believes that these non-GAAP measures provide meaningful supplemental information regarding the underlying operating performance of our business and are appropriate to enhance an overall understanding of our financial performance. Management also believes that EBITDA and Adjusted EBITDA are useful to investors because they are 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 September 30, 2020 and 2019 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 September 30, 2020 filed today with the Securities and Exchange Commission.

EchoStar will host a conference call and webcast to discuss its earnings on Thursday, November 5, 2020 at 11:00 a.m. Eastern Time. The call-in numbers are (877) 815-1625 (US) and (716) 247-5178 (International), Conference ID 8263356.  The webcast will be available on EchoStar's investor relations website at www.echostar.com.

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, 2019 and Quarterly Report on Form 10-Q for the period ended September 30, 2020 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

Condensed Consolidated Balance Sheets

(Amounts in thousands, except per share amounts)



As of


September 30, 2020

December 31, 2019

Assets



Current assets:



Cash and cash equivalents

$

555,550

$

1,519,431

Marketable investment securities

1,950,804

940,623

Trade accounts receivable and contract assets, net

190,950

196,629

Other current assets, net

192,724

179,531

Total current assets

2,890,028

2,836,214

Non-current assets:



Property and equipment, net

2,372,594

2,528,738

Operating lease right-of-use assets

129,073

114,042

Goodwill

508,660

506,953

Regulatory authorizations, net

475,824

478,598

Other intangible assets, net

20,550

29,507

Other investments, net

284,238

325,405

Other non-current assets, net

344,569

334,841

Total non-current assets

4,135,508

4,318,084

Total assets

$

7,025,536

$

7,154,298





Liabilities and Stockholders' Equity



Current liabilities:



Trade accounts payable

$

111,099

$

124,080

Current portion of long-term debt, net

897,303

—

Contract liabilities

89,622

101,060

Accrued expenses and other current liabilities

276,703

270,879

Total current liabilities

1,374,727

496,019

Non-current liabilities:



Long-term debt, net

1,495,078

2,389,168

Deferred tax liabilities, net

352,948

351,692

Operating lease liabilities

115,376

96,941

Other non-current liabilities

74,271

74,925

Total non-current liabilities

2,037,673

2,912,726

Total liabilities

3,412,400

3,408,745





Commitments and contingencies










Stockholders' equity:



Preferred stock, $0.001 par value, 20,000,000 shares authorized, none issued and outstanding at both September 30, 2020 and December 31, 2019

—

—

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, 57,140,432 shares issued and 50,458,512 shares outstanding at September 30, 2020 and 56,592,251 shares issued and 50,107,330 shares outstanding at December 31, 2019

57

57

Class B convertible common stock, $0.001 par value, 800,000,000 shares authorized, 47,687,039 shares issued and outstanding at both September 30, 2020 and December 31, 2019

48

48

Class C convertible common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at both September 30, 2020 and December 31, 2019

—

—

Class D common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at both September 30, 2020 and December 31, 2019

—

—

Additional paid-in capital

3,317,868

3,290,483

Accumulated other comprehensive income (loss)

(209,538)

(122,138)

Accumulated earnings (losses)

583,474

632,809

Treasury stock, at cost

(137,347)

(131,454)

Total EchoStar Corporation stockholders' equity

3,554,562

3,669,805

Non-controlling interests

58,574

75,748

Total stockholders' equity

3,613,136

3,745,553

Total liabilities and stockholders' equity

$

7,025,536

$

7,154,298









 

ECHOSTAR CORPORATION

Condensed Consolidated Statements of Operations

(Amounts in thousands, except per share amounts)



For the three months ended September 30,

For the nine months ended September 30,


2020

2019

2020

2019

Revenue:







Services and other revenue

$

426,532

$

406,537

$

1,251,932

$

1,211,991

Equipment revenue

46,970

65,725

146,702

175,084

Total revenue

473,502

472,262

1,398,634

1,387,075

Costs and expenses:







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

146,577

143,842

432,848

429,869

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

37,079

51,188

115,529

142,744

Selling, general and administrative expenses

115,358

122,629

354,437

383,952

Research and development expenses

7,676

6,136

21,378

19,411

Depreciation and amortization

129,822

122,374

392,077

361,619

Total costs and expenses

436,512

446,169

1,316,269

1,337,595

Operating income (loss)

36,990

26,093

82,365

49,480

Other income (expense):







Interest income, net

7,364

17,175

33,707

64,817

Interest expense, net of amounts capitalized

(37,967)

(49,865)

(112,458)

(156,813)

Gains (losses) on investments, net

14,998

8,295

(37,764)

28,087

Equity in earnings (losses) of unconsolidated affiliates, net

(2,134)

(3,209)

(5,866)

(14,317)

Foreign currency transaction gains (losses), net

6,681

(15,094)

(2,603)

(14,501)

Other, net

291

(1,493)

(379)

(1,527)

Total other income (expense), net

(10,767)

(44,191)

(125,363)

(94,254)

Income (loss) from continuing operations before income taxes

26,223

(18,098)

(42,998)

(44,774)

Income tax benefit (provision), net

(2,950)

(5,016)

(6,309)

(12,607)

Net income (loss) from continuing operations

23,273

(23,114)

(49,307)

(57,381)

Net income (loss) from discontinued operations

—

2,008

—

46,223

Net income (loss)

23,273

(21,106)

(49,307)

(11,158)

Less: Net loss (income) attributable to non-controlling interests

2,167

2,797

9,040

1,359

Net income (loss) attributable to EchoStar Corporation common stock

$

25,440

$

(18,309)

$

(40,267)

(9,799)









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







Basic and diluted earnings (losses) from continuing operations per share

$

0.26

$

(0.21)

$

(0.41)

$

(0.58)

Total basic and diluted earnings (losses) per share

$

0.26

$

(0.19)

$

(0.41)

$

(0.10)

 

ECHOSTAR CORPORATION

Condensed Consolidated Statements of Cash Flows

(Amounts in thousands, except per share amounts)



For the nine months ended
September 30,


2020

2019

Cash flows from operating activities:



Net income (loss)

$

(49,307)

$

(11,158)

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



Depreciation and amortization

392,077

459,054

Losses (gains) on investments, net

37,764

(28,087)

Equity in losses (earnings) of unconsolidated affiliates, net

5,866

14,317

Foreign currency transaction losses (gains), net

2,603

14,501

Deferred tax provision (benefit), net

4,474

22,949

Stock-based compensation

6,887

7,120

Amortization of debt issuance costs

3,212

4,882

Dividends received from unconsolidated affiliates

—

2,716

Other, net

(9,145)

9,617

Changes in assets and liabilities, net:



Trade accounts receivable and contract assets, net

(9,157)

(5,439)

Other current assets, net

(21,090)

(42,140)

Trade accounts payable

(17,824)

18,180

Contract liabilities

(11,438)

37,273

Accrued expenses and other current liabilities

29,155

27,972

Non-current assets and non-current liabilities, net

1,325

1,303

Net cash flows from operating activities

365,402

533,060





Cash flows from investing activities:



Purchases of marketable investment securities

(2,234,671)

(655,265)

Sales and maturities of marketable investment securities

1,231,790

1,988,078

Expenditures for property and equipment

(295,041)

(314,861)

Expenditures for externally marketed software

(27,824)

(21,364)

Purchase of other investments

(5,500)

—

Investments in unconsolidated affiliates

—

(7,503)

Dividend received from unconsolidated affiliate

—

2,284

Net cash flows from investing activities

(1,331,246)

991,369





Cash flows from financing activities:



Repurchase and maturity of the 2019 Senior Secured Notes

—

(920,923)

Payment of finance lease obligations

(606)

(29,135)

Payment of in-orbit incentive obligations

(1,268)

(5,269)

Net proceeds from Class A common stock options exercised

983

64,143

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

8,066

7,724

Treasury share purchase

(5,893)

—

Contribution by non-controlling interest holder

14,268

—

Purchase of non-controlling interest

—

(7,313)

Other, net

998

758

Net cash flows from financing activities

16,548

(890,015)





Effect of exchange rates on cash and cash equivalents

(8,348)

(411)

Net increase (decrease) in cash and cash equivalents

(957,644)

634,003

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

1,521,889

929,495

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

$

564,245

$

1,563,498

 

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SOURCE EchoStar Corporation

EchoStar Investor Relations, Terry Brown, Phone: +1 303-728-5179, Email: terry.brown@echostar.com, or EchoStar Media Relations, Sharyn Nerenberg, Phone: +1 301-428-7124, Email: sharyn.nerenberg@echostar.com