Englewood, CO, May 10, 2018—EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the quarter ended March 31, 2018.
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 forwardlooking statements. Although management believes that the expectations reflected in these forwardlooking 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.
Contact Information
| EchoStar Investor Relations | EchoStar Media Relations |
| Deepak V. DuttPhone: +1 301-428-1686Email: deepak.dutt@echostar.com | Dan BrownPhone: +1 301-601-7216Email: dan.brown@echostar.com |
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 |