Englewood, CO, February 21, 2019—EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three and twelve months ended December 31, 2018.
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.
Contact Information
| EchoStar Investor Relations | EchoStar Media Relations |
| Deepak V. Dutt Phone: +1 301-428-1686 Email: deepak.dutt@echostar.com | Sharyn Nerenberg Phone: +1 301-428-7124 Email: sharyn.nerenberg@echostar.com |
ECHOSTAR CORPORATION
Consolidated Balance Sheets
(In thousands, except per share amounts)
| AsofDecember31, | ||||||||
| 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 December31, 2018 and 2017 | — | — | ||||||
| Common stock, $0.001 par value, 4,000,000,000 shares authorized: | ||||||||
| ClassA common stock, $0.001 par value, 1,600,000,000 shares authorized, 54,142,566 shares issued and 47,657,645 shares outstanding at December31, 2018 and 53,663,859 shares issued and 48,131,541 shares outstanding at December31, 2017 | 54 | 54 | ||||||
| ClassB convertible common stock, $0.001 par value, 800,000,000 shares authorized, 47,687,039 shares issued and outstanding at each of December31, 2018 and 2017 | 48 | 48 | ||||||
| ClassC convertible common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of December31, 2018 and 2017 | — | — | ||||||
| ClassD common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of December31, 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)
| FortheyearsendedDecember31, | ||||||||||||
| 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 – ClassA 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)
| FortheyearsendedDecember31, | ||||||||||||
| 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 ClassA common stock options exercised | 4,424 | 35,536 | 13,065 | |||||||||
| Net proceeds from ClassA 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 |