EchoStar Announces Financial Results for Three and Twelve Months Ended December 31, 2020

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Englewood, CO, February 23, 2021—EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three and twelve months ended December 31, 2020.

Three Months Ended December 31, 2020 Financial Highlights:

  • Consolidated revenues of $489.3 million.
  • Net loss from continuing operations of $2.6 million, consolidated net income attributable to EchoStar common stock of $0.1 million, and diluted earnings per share of $0.01.
  • Consolidated Adjusted EBITDA of $166.7 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

Twelve Months Ended December 31, 2020 Financial Highlights:

  • Consolidated revenues of $1,887.9 million.
  • Net loss from continuing operations of $51.9 million, consolidated net loss attributable to EchoStar common stock of $40.2 million, and diluted loss per share of $(0.41).
  • Consolidated Adjusted EBITDA of $642.9 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

“2020 will go down in the history books as one of the most challenging on record, but it demonstrated the value of our service to businesses and families and brought out the very best of the EchoStar team,” commented Michael Dugan, CEO and President of EchoStar.  “Thanks to their efforts and accomplishments in every market sector, we delivered solid financial results and grew revenue, net income, and Adjusted EBITDA over 2019. We remain excited about our position in the industry and our ability to grow as the demand for connectivity continues to increase.”

Three Months Ended December 31, 2020 – Additional Information:

  • Consolidated revenue was down $9.7 million year over year primarily driven by lower equipment sales as well as an estimated negative foreign exchange impact of $10.3 million.
  • Adjusted EBITDA increased 7.0% or $10.8 million year over year.
  • Hughes segment Adjusted EBITDA increased $11.7 million year over year.The increase was driven primarily by the higher margin associated with the growth in our consumer broadband service and lower sales and marketing spend.
  • ESS segment Adjusted EBITDA was flat year over year.
  • Corporate and Other segment Adjusted EBITDA decreased by $0.9 million year over year.The decrease was primarily due to higher spend on corporate development projects.
  • Net loss from continuing operations was $2.6 million, an improvement of $53.7 million from last year.The change was primarily due to higher operating income of $6.5 million, lower net interest expense of $47.5 million driven primarily by $58.5 million of interest expense accrued in the fourth quarter of 2019 related to our license fee dispute with the government of India, improvement in foreign currency transactions, net, of $5.7 million, and higher gains on investments, net, of $5.6 million.This was partially offset by higher income tax provision, net, of $9.9 million.
  • Total Hughes broadband subscribers are approximately 1,564,000 as of December 31, 2020. Subscribers in the US decreased by 27,000 to approximately 1,189,000.In Latin America, subscribers increased by 11,000 to approximately 375,000.
  • Based on an updated schedule from Maxar, the Jupiter 3 satellite is expected to launch in the second half of 2022.In December 2020, we contracted for the launch of the satellite.
  • For the three months ended December 31, 2020, approximately 69% of Hughes segment revenue was attributable to our consumer customers with approximately 31% attributable to our enterprise customers.
  • Cash, cash equivalents and current marketable investment securities were $2.5 billion as of December 31, 2020.
  • In December 2020, we purchased 1,708,907 shares of our Class A common stock in the open market. From January 1, 2021 through February 11, 2021, we purchased 2,851,841 shares of our Class A common stock in the open market.

Set forth below is a table highlighting certain of EchoStar’s segment results for the three and twelve months ended December 31, 2020 and 2019 (amounts in thousands) from continuing operations (all US GAAP amounts reference results from continuing operations):

  For the three months ended December 31, For the twelve months ended December 31,
  2020 2019 2020 2019
         
Revenue        
Hughes $482,418  $491,823  $1,860,834  $1,852,742 
EchoStar Satellite Services 4,165  4,384  17,398  16,257 
Corporate and Other 2,690  2,799  9,675  17,082 
Total revenue $489,273  $499,006  $1,887,907  $1,886,081 
         
Adjusted EBITDA        
Hughes $188,389  $176,738  $723,343  $666,890 
EchoStar Satellite Services 2,026  1,988  7,873  6,994 
Corporate & Other:        
Corporate overhead, operating and other (23,920)  (23,090)  (87,867)  (81,859) 
Equity in earnings (losses) of unconsolidated affiliates, net 226  250  (434)  (9,257) 
Total Corporate & Other (23,694)  (22,840)  (88,301)  (91,116) 
Total Adjusted EBITDA $166,721  $155,886  $642,915  $582,768 
         
Expenditures for property and equipment $113,757  $103,723  $408,798  $418,074 

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

  For the three months ended December 31, For the twelve months ended December 31,
  2020 2019 2020 2019
         
Net income (loss) $(2,597)  $(63,094)  $(51,904)  $(74,252) 
Interest income, net (6,275)  (17,535)  (39,982)  (82,352) 
Interest expense, net of amounts capitalized 35,469  94,203  147,927  251,016 
Income tax provision (benefit), net 17,760  7,882  24,069  20,488 
Depreciation and amortization 132,934  129,146  525,011  490,765 
Net (income) loss from discontinued operations   6,821    (39,401) 
Net (income) loss attributable to non-controlling interests 2,714  9,976  11,754  11,335 
EBITDA 180,005  167,399  616,875  577,599 
(Gains) losses on investments, net (6,458)  (825)  31,306  (28,912) 
Impairment of long-lived assets 1,685    1,685   
Litigation expense   (627)    25,701 
License fee dispute – India, net of non-controlling interests 107  (7,150)  (936)  (3,210) 
Foreign currency transaction (gains) losses, net (8,618)  (2,911)  (6,015)  11,590 
Adjusted EBITDA $166,721  $155,886  $642,915  $582,768 

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 December 31, 2020 and 2019 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, 2020 filed today with the Securities and Exchange Commission.

EchoStar will host a conference call and webcast to discuss its earnings on Tuesday, February 23, 2021 at 11:00 a.m. Eastern Time. The call-in numbers are (877) 815-1625 (toll-free) and (716) 247-5178 (international), Conference ID 9174397.  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, 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.

Contact Information

EchoStar Investor RelationsEchoStar Media Relations
Terry BrownPhone: +1 303-728-5179Email: terry.brown@echostar.comSharyn NerenbergPhone: +1 301-428-7124Email: sharyn.nerenberg@echostar.com

ECHOSTAR CORPORATION

Condensed Consolidated Balance Sheets

(Amounts in thousands, except per share amounts)

  As of December 31,
  2020 2019
Assets    
Current assets:    
Cash and cash equivalents $896,005  $1,519,431 
Marketable investment securities 1,638,271  940,623 
Trade accounts receivable and contract assets, net 183,989  196,629 
Other current assets, net 189,821  179,531 
Total current assets 2,908,086  2,836,214 
Non-current assets:    
Property and equipment, net 2,390,313  2,528,738 
Operating lease right-of-use assets 128,303  114,042 
Goodwill 511,597  506,953 
Regulatory authorizations, net 478,762  478,598 
Other intangible assets, net 18,433  29,507 
Other investments, net 284,937  325,405 
Other non-current assets, net 352,921  334,841 
Total non-current assets 4,165,266  4,318,084 
Total assets $7,073,352  $7,154,298 
     
Liabilities and Stockholders’ Equity    
Current liabilities:    
Trade accounts payable $122,366  $124,080 
Current portion of long-term debt, net 898,237   
Contract liabilities 104,569  101,060 
Accrued expenses and other current liabilities 299,999  270,879 
Total current liabilities 1,425,171  496,019 
Non-current liabilities:    
Long-term debt, net 1,495,256  2,389,168 
Deferred tax liabilities, net 359,896  351,692 
Operating lease liabilities 114,886  96,941 
Other non-current liabilities 70,893  74,925 
Total non-current liabilities 2,040,931  2,912,726 
Total liabilities 3,466,102  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 December31, 2020 and 2019    
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, 57,254,201 shares issued and 48,863,374 shares outstanding at December31, 2020 and 56,592,251 shares issued and 50,107,330 shares outstanding at December31, 2019 57  57 
ClassB convertible common stock, $0.001 par value, 800,000,000 shares authorized, 47,687,039 shares issued and outstanding at both December31, 2020 and 2019 48  48 
ClassC convertible common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at both December31, 2020 and 2019    
ClassD common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at both December31, 2020 and 2019    
Additional paid-in capital 3,321,426  3,290,483 
Accumulated other comprehensive income (loss) (187,876)  (122,138) 
Accumulated earnings (losses) 583,591  632,809 
Treasury stock, at cost (174,912)  (131,454) 
Total EchoStar Corporation stockholders’ equity 3,542,334  3,669,805 
Non-controlling interests 64,916  75,748 
Total stockholders’ equity 3,607,250  3,745,553 
Total liabilities and stockholders’ equity $7,073,352  $7,154,298 

ECHOSTAR CORPORATION

Condensed Consolidated Statements of Operations

(Amounts in thousands, except per share amounts)

  FortheyearsendedDecember31,
  2020 2019 2018
       
Revenue:      
Services and other revenue $1,682,304  $1,619,271  $1,557,228 
Equipment revenue 205,603  266,810  205,410 
Total revenue 1,887,907  1,886,081  1,762,638 
Costs and expenses:      
Cost of sales – services and other (exclusive of depreciation and amortization) 577,943  561,353  563,907 
Cost of sales – equipment (exclusive of depreciation and amortization) 166,435  226,002  176,600 
Selling, general and administrative expenses 474,912  509,145  436,088 
Research and development expenses 29,448  25,739  27,570 
Depreciation and amortization 525,011  490,765  457,116 
Impairment of long-lived assets 1,685    65,220 
Total costs and expenses 1,775,434  1,813,004  1,726,501 
Operating income (loss) 112,473  73,077  36,137 
Other income (expense):      
Interest income, net 39,982  82,352  80,275 
Interest expense, net of amounts capitalized (147,927)  (251,016)  (219,288) 
Gains (losses) on investments, net (31,306)  28,912  (12,622) 
Equity in earnings (losses) of unconsolidated affiliates, net (7,267)  (14,734)  (5,954) 
Foreign currency transaction gains (losses), net 6,015  (11,590)  (15,583) 
Other, net 195  (166)  11,249 
Total other income (expense), net (140,308)  (166,242)  (161,923) 
Income (loss) from continuing operations before income taxes (27,835)  (93,165)  (125,786) 
Income tax benefit (provision), net (24,069)  (20,488)  (6,576) 
Net income (loss) from continuing operations (51,904)  (113,653)  (132,362) 
Net income (loss) from discontinued operations   39,401  93,729 
Net income (loss) (51,904)  (74,252)  (38,633) 
Less: Net loss (income) attributable to non-controlling interests 11,754  11,335  (1,842) 
Net income (loss) attributable to EchoStar Corporation common stock $(40,150)  $(62,917)  $(40,475) 
       
Earnings (losses) per share – ClassA and B common stock:      
Basic and diluted earnings (losses) from continuing operations per share $(0.41)  $(1.06)  $(1.39) 
Total basic and diluted earnings (losses) per share $(0.41)  $(0.65)  $(0.42) 

ECHOSTAR CORPORATION

Condensed Consolidated Statements of Cash Flows

(Amounts in thousands, except per share amounts)

  FortheyearsendedDecember31,
  2020 2019 2018
       
Cash flows from operating activities:      
Net income (loss) $(51,904)  $(74,252)  $(38,633) 
Adjustments to reconcile net income (loss) to net cash flows from operating activities:      
Depreciation and amortization 525,011  588,200  598,178 
Impairment of long-lived assets 1,685    65,220 
Losses (gains) on investments, net 31,306  (28,912)  12,109 
Equity in losses (earnings) of unconsolidated affiliates, net 7,267  14,734  6,037 
Foreign currency transaction losses (gains), net (6,015)  11,590  15,583 
Deferred tax provision (benefit), net 18,147  32,542  26,327 
Stock-based compensation 8,887  9,353  9,990 
Amortization of debt issuance costs 4,324  5,912  7,923 
Dividends received from unconsolidated affiliates   2,716  10,000 
Other, net (12,501)  6,297  (3,489) 
Changes in assets and current liabilities, net:      
Trade accounts receivable and contract assets, net 2,237  8,289  (17,842) 
Other current assets, net (12,984)  (39,190)  18,577 
Trade accounts payable (12,339)  13,149  9,562 
Contract liabilities 3,509  26,376  7,867 
Accrued expenses and other current liabilities 42,822  66,352  12,183 
Non-current assets and non-current liabilities, net (15,064)  13,166  (5,070) 
Net cash flows from operating activities 534,388  656,322  734,522 
Cash flows from investing activities:      
Purchases of marketable investment securities (2,799,838)  (993,369)  (2,973,254) 
Sales and maturities of marketable investment securities 2,110,336  2,391,220  1,498,463 
Expenditures for property and equipment (408,798)  (418,584)  (555,141) 
Expenditures for externally marketed software (38,655)  (29,310)  (31,639) 
Purchase of other investments (5,500)  (93,687)   
Investments in unconsolidated affiliates   (2,149)  (115,991) 
Purchases of regulatory authorizations   (34,447)   
Refunds and other receipts related to property and equipment     77,524 
Dividend received from unconsolidated affiliate   2,284   
Sale of investment in unconsolidated affiliates     1,558 
Net cash flows from investing activities (1,142,455)  821,958  (2,098,480) 
Cash flows from financing activities:      
Repurchase and maturity of the 2019 Senior Secured Notes   (920,923)  (70,173) 
Repayment of other long-term debt and finance lease obligations (811)  (29,347)  (41,019) 
Payment of in-orbit incentive obligations (1,554)  (5,447)  (5,350) 
Net proceeds from ClassA common stock options exercised 855  67,337  4,424 
Net proceeds from Class A common stock issued under the Employee Stock Purchase Plan 10,109  9,779  9,368 
Treasury share purchase (43,458)    (33,292) 
Contribution by non-controlling interest holder 18,241     
Purchase of non-controlling interest   (7,313)   
Other, net 998  603  (521) 
Net cash flows from financing activities (15,620)  (885,311)  (136,563) 
Effect of exchange rates on cash and cash equivalents (1,390)  (575)  (2,233) 
Net increase (decrease) in cash and cash equivalents (625,077)  592,394  (1,502,754) 
Cash and cash equivalents, including restricted amounts, beginning of period 1,521,889  929,495  2,432,249 
Cash and cash equivalents, including restricted amounts, end of period $896,812  $1,521,889  $929,495