Englewood, CO, August 7, 2018 — EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three and six months ended June 30, 2018.
Three Months Ended June 30, 2018 Financial Highlights:
- Consolidated revenues of $526.0 million.
- Consolidated net income from continuing operations of $77.7 million, consolidated net income attributable to EchoStar common stock of $77.2 million, and diluted earnings per share of $0.80. Included in these amounts are net gains on investments of $65.4 million. Excluding these net gains, diluted earnings per share would have been $0.12.
- Consolidated EBITDA of $285.8 million, including net gains on investments of $65.4 million. Excluding these net gains, EBITDA would have been $220.4 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).
Six Months Ended June 30, 2018 Financial Highlights:
- Consolidated revenues of $1,027.7 million.
- Consolidated net income from continuing operations of $56.5 million, consolidated net income attributable to EchoStar common stock of $55.7 million, and diluted earnings per share of $0.57. Included in these amounts are net gains on investments of $28.7 million. Excluding these net gains, diluted earnings per share would have been $0.28.
- Consolidated EBITDA of $451.5 million, including net gains on investments of $28.7 million. Excluding these net gains, EBITDA would have been $422.7 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).
Additional Highlights:
- Approximately 1,298,000 Hughes broadband subscribers as of June 30, 2018.
- Cash, cash equivalents and current marketable investment securities of $3.4 billion as of June 30, 2018.
Set forth below is a table highlighting certain of EchoStar’s segment results for the three and six months ended June 30, 2018 and 2017:
| For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| (Dollars in thousands) | ||||||||||||||||
| Revenue | ||||||||||||||||
| Hughes | $ | 426,306 | $ | 362,762 | $ | 827,124 | $ | 692,082 | ||||||||
| EchoStar Satellite Services | 95,425 | 98,366 | 192,178 | 198,692 | ||||||||||||
| Corporate & Other | 4,226 | 3,948 | 8,447 | 7,453 | ||||||||||||
| Total | $ | 525,957 | $ | 465,076 | $ | 1,027,749 | $ | 898,227 | ||||||||
| EBITDA | ||||||||||||||||
| Hughes | $ | 152,134 | $ | 110,024 | $ | 288,847 | $ | 210,876 | ||||||||
| EchoStar Satellite Services | 82,483 | 80,465 | 166,633 | 163,528 | ||||||||||||
| Corporate & Other: | ||||||||||||||||
| Corporate overhead, operating and other | (11,695 | ) | (10,662 | ) | (29,565 | ) | (29,614 | ) | ||||||||
| Equity in earnings (losses) of unconsolidated affiliates, net | (2,058 | ) | 4,831 | (3,067 | ) | 11,239 | ||||||||||
| Gains (losses) on investments, net | 64,891 | 205 | 28,622 | 12,148 | ||||||||||||
| Sub-total | 51,137 | (5,626 | ) | (4,010 | ) | (6,227 | ) | |||||||||
| Total | $ | 285,754 | $ | 184,863 | $ | 451,470 | $ | 368,177 | ||||||||
| Net income from continuing operations | $ | 77,684 | $ | 6,591 | $ | 56,513 | $ | 37,366 | ||||||||
| Net income from discontinued operations | — | 531 | — | 7,108 | ||||||||||||
| Net income | $ | 77,684 | $ | 7,122 | $ | 56,513 | $ | 44,474 | ||||||||
| Expenditures for property and equipment from continuing operations | $ | 119,592 | $ | 128,064 | $ | 170,574 | $ | 218,014 |
The following table reconciles GAAP to non-GAAP measurements.
| For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| (Dollars in thousands) | ||||||||||||||||
| Net income (loss) | $ | 77,684 | $ | 7,122 | $ | 56,513 | $ | 44,474 | ||||||||
| Interest income and expense, net | 42,281 | 45,417 | 89,397 | 82,522 | ||||||||||||
| Income tax provision, net | 17,802 | 3,003 | 12,399 | 2,991 | ||||||||||||
| Depreciation and amortization | 148,449 | 130,034 | 294,003 | 245,117 | ||||||||||||
| Net income from discontinued operations | — | (531 | ) | — | (7,108 | ) | ||||||||||
| Net (income) loss attributable to noncontrolling interests | (462 | ) | (182 | ) | (842 | ) | 181 | |||||||||
| EBITDA | 285,754 | 184,863 | 451,470 | 368,177 |
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 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 US 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 June 30, 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 June 30, 2018 filed today with the Securities and Exchange Commission.
EchoStar will host its earnings conference call on Tuesday, August 7, 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 # 8252368.
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 June 30, 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.
###
Contact Information
| EchoStar Investor Relations | EchoStar Media Relations |
| Deepak V. DuttPhone: +1 301-428-1686Email: deepak.dutt@echostar.com | Sharyn NerenbergPhone: +1 301-428-7124Email: sharyn.nerenberg@echostar.com |
ECHOSTAR CORPORATION
| As of | |
| June 30, 2018 December 31, 2017Assets (Unaudited) (Audited)Current assets: Cash and cash equivalents $1,793,053 $2,431,456 Marketable investment securities, at fair value 1,640,776 814,161 Trade accounts receivable and contract assets, net (Note 3) 186,962 196,840 Trade accounts receivable – DISH Network, net 26,126 43,295 Inventory 81,388 83,595 Prepaids and deposits 58,911 54,533 Other current assets 15,889 91,671 Total current assets 3,803,105 3,715,551 Noncurrent assets: Property and equipment, net 3,396,616 3,465,471 Regulatory authorizations, net 528,346 536,936 Goodwill 504,173 504,173 Other intangible assets, net of accumulated amortization of $309,690 and $302,345, respectively 51,593 58,955 Investments in unconsolidated entities 156,022 161,427 Other receivables – DISH Network 93,893 92,687 Other noncurrent assets, net 258,237 214,814 Total noncurrent assets 4,988,880 5,034,463 Total assets $8,791,985 $8,750,014 Liabilities and Stockholders’ Equity Current liabilities: Trade accounts payable $100,235 $108,406 Trade accounts payable – DISH Network 1,393 4,753 Current portion of long-term debt and capital lease obligations 1,028,119 40,631 Contract liabilities 72,776 65,959 Accrued interest 45,857 47,616 Accrued compensation 42,612 47,756 Accrued taxes 15,719 16,122 Accrued expenses and other 68,195 82,647 Total current liabilities 1,374,906 413,890 Noncurrent liabilities: Long-term debt and capital lease obligations, net 2,592,174 3,594,213 Deferred tax liabilities, net 456,401 436,023 Other noncurrent liabilities 124,252 128,503 Total noncurrent liabilities 3,172,827 4,158,739 Total liabilities 4,547,733 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 June 30, 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, 54,006,419 shares issued and 48,474,101 shares outstanding at June 30, 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 June 30, 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 June 30, 2018 and December 31, 2017 — — Class D common stock, $.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of June 30, 2018 and December 31, 2017 — — Additional paid-in capital 3,689,180 3,669,461 Accumulated other comprehensive loss (154,011) (130,154)Accumulated earnings 792,278 721,316 Treasury stock, at cost (98,162) (98,162)Total EchoStar Corporation stockholders’ equity 4,229,387 4,162,563 Other noncontrolling interests 14,865 14,822 Total stockholders’ equity 4,244,252 4,177,385 Total liabilities and stockholders’ equity $8,791,985 $8,750,014 |
ECHOSTAR CORPORATION
Consolidated Statements of Operations
(In thousands)
| For the three months ended June 30, For the six months ended June 30, 2018 2017 2018 2017Revenue: Services and other revenue – DISH Network $100,171 $113,734 $203,976 $228,689 Services and other revenue – other 375,445 285,053 730,485 554,844 Equipment revenue 50,341 66,289 93,288 114,694 Total revenue 525,957 465,076 1,027,749 898,227 Costs and expenses: Cost of sales – services and other (exclusive of depreciation and amortization) 151,157 138,227 299,902 273,415 Cost of sales – equipment (exclusive of depreciation and amortization) 41,865 53,662 80,936 94,195 Selling, general and administrative expenses 103,074 89,826 206,349 172,817 Research and development expenses 6,647 7,437 13,784 15,142 Depreciation and amortization 148,449 130,034 294,003 245,117 Total costs and expenses 451,192 419,186 894,974 800,686 Operating income 74,765 45,890 132,775 97,541 Other income (expense): Interest income 19,253 10,039 34,888 18,330 Interest expense, net of amounts capitalized (61,534) (55,456) (124,285) (100,852)Gains (losses) on investments, net 65,396 1,837 28,733 10,574 Equity in earnings (losses) of unconsolidated affiliates, net (2,058) 4,831 (3,067) 11,239 Other, net (336) 2,453 (132) 3,525 Total other income (expense), net 20,721 (36,296) (63,863) (57,184)Income from continuing operations before income taxes 95,486 9,594 68,912 40,357 Income tax provision, net (17,802) (3,003) (12,399) (2,991)Net income from continuing operations 77,684 6,591 56,513 37,366 Net income from discontinued operations — 531 — 7,108 Net income 77,684 7,122 56,513 44,474 Less: Net loss attributable to noncontrolling interest in HSS Tracking Stock (Note 1) — — — (655)Less: Net income attributable to other noncontrolling interests 462 182 842 474 Net income attributable to EchoStar Corporation 77,222 6,940 55,671 44,655 Less: Net loss attributable to Hughes Retail Preferred Tracking Stock (Note 1) — — — (1,209)Net income attributable to EchoStar Corporation common stock $77,222 $6,940 $55,671 $45,864 Earnings per share – Class A and B common stock: Basic earnings from continuing operations per share $0.80 $0.07 $0.58 $0.41 Total basic earnings per share $0.80 $0.07 $0.58 $0.48 Diluted earnings from continuing operations per share $0.80 $0.07 $0.57 $0.40 Total diluted earnings per share $0.80 $0.07 $0.57 $0.48 |
ECHOSTAR CORPORATION
Consolidated Statements of Cash Flows
(In thousands)
| For the six months ended June 30, | ||||||||
| 2018 | 2017 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 56,513 | $ | 44,474 | ||||
| Adjustments to reconcile net income to net cash flows from operating activities: | ||||||||
| Depreciation and amortization | 294,003 | 256,776 | ||||||
| Equity in (earnings) losses of unconsolidated affiliates, net | 3,067 | (10,080 | ) | |||||
| Amortization of debt issuance costs | 3,905 | 3,617 | ||||||
| (Gains) losses and impairments on investments, net | (28,674 | ) | (10,574 | ) | ||||
| Stock-based compensation | 5,110 | 3,908 | ||||||
| Deferred tax provision | 10,231 | 673 | ||||||
| Dividend received from unconsolidated entity | 5,000 | 7,500 | ||||||
| Proceeds from sale of trading securities | — | 8,922 | ||||||
| Changes in current assets and current liabilities, net: | ||||||||
| Trade accounts receivable, net | (3,061 | ) | 4,496 | |||||
| Trade accounts receivable – DISH Network | 17,262 | 184,077 | ||||||
| Inventory | 238 | (24,330 | ) | |||||
| Other current assets | (5,430 | ) | (6,193 | ) | ||||
| Trade accounts payable | 2,364 | (65,179 | ) | |||||
| Trade accounts payable – DISH Network | (3,360 | ) | (3,061 | ) | ||||
| Accrued expenses and other | 7,749 | (2,505 | ) | |||||
| Changes in noncurrent assets and noncurrent liabilities, net | (17,200 | ) | (11,763 | ) | ||||
| Other, net | 5,822 | 2,121 | ||||||
| Net cash flows from operating activities | 353,539 | 382,879 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchases of marketable investment securities | (1,632,930 | ) | (46,533 | ) | ||||
| Sales and maturities of marketable investment securities | 841,638 | 291,082 | ||||||
| Expenditures for property and equipment | (248,098 | ) | (230,530 | ) | ||||
| Refunds and other receipts related to property and equipment | 77,524 | — | ||||||
| Sale of investment in unconsolidated entity | — | 17,781 | ||||||
| Expenditures for externally marketed software | (15,000 | ) | (17,119 | ) | ||||
| Net cash flows from investing activities | (976,866 | ) | 14,681 | |||||
| Cash flows from financing activities: | ||||||||
| Repayment of debt and capital lease obligations | (18,417 | ) | (17,718 | ) | ||||
| Net proceeds from Class A common stock options exercised | 4,064 | 31,992 | ||||||
| Net proceeds from Class A common stock issued under the Employee Stock Purchase Plan | 4,886 | 4,540 | ||||||
| Cash exchanged for Tracking Stock (Note 1) | — | (651 | ) | |||||
| Repayment of in-orbit incentive obligations | (3,272 | ) | (3,194 | ) | ||||
| Other, net | (401 | ) | 482 | |||||
| Net cash flows from financing activities | (13,140 | ) | 15,451 | |||||
| Effect of exchange rates on cash and cash equivalents | (1,941 | ) | 967 | |||||
| Net increase (decrease) in cash and cash equivalents, including restricted amounts | (638,408 | ) | 413,978 | |||||
| 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 | $ | 1,793,841 | $ | 2,985,844 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest, net of amounts capitalized | $ | 122,017 | $ | 96,463 | ||||
| Cash paid for income taxes | $ | 2,574 | $ | 9,369 |