Englewood, CO, November 8, 2018—EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three and nine months ended September 30, 2018.
Three Months Ended September 30, 2018 Financial Highlights:
- Consolidated revenues of $533.0 million.
- Consolidated net income from continuing operations of $16.5 million, consolidated net income attributable to EchoStar common stock of $16.1 million, and diluted earnings per share of $0.17. Included in these amounts are net gains on investments of $4.7 million. Excluding these net gains, diluted earnings per share would have been $0.12.
- Consolidated EBITDA of $220.2 million, including net gains on investments of $4.7 million. Excluding these net gains, EBITDA would have been $215.5 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).
Nine Months Ended September 30, 2018 Financial Highlights:
- Consolidated revenues of $1,560.7 million.
- Consolidated net income from continuing operations of $73.0 million, consolidated net income attributable to EchoStar common stock of $71.7 million, and diluted earnings per share of $0.74. Included in these amounts are net gains on investments of $33.4 million. Excluding these net gains, diluted earnings per share would have been $0.40.
- Consolidated EBITDA of $671.7 million, including net gains on investments of $33.4 million. Excluding these net gains, EBITDA would have been $638.2 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).
Additional Highlights:
- Approximately 1,332,000 Hughes broadband subscribers as of September 30, 2018.
- Cash, cash equivalents and current marketable investment securities of $3.4 billion as of September 30, 2018.
Set forth below is a table highlighting certain of EchoStar’s segment results for the three and nine months ended September 30, 2018 and 2017:
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| (Dollars in thousands) | ||||||||||||||||
| Revenue | ||||||||||||||||
| Hughes | $ | 444,762 | $ | 380,061 | $ | 1,271,886 | $ | 1,072,143 | ||||||||
| EchoStar Satellite Services | 84,007 | 97,093 | 276,185 | 295,785 | ||||||||||||
| Corporate & Other | 4,184 | 4,079 | 12,631 | 11,532 | ||||||||||||
| Total | $ | 532,953 | $ | 481,233 | $ | 1,560,702 | $ | 1,379,460 | ||||||||
| EBITDA | ||||||||||||||||
| Hughes | $ | 164,135 | $ | 131,817 | $ | 452,982 | $ | 342,693 | ||||||||
| EchoStar Satellite Services | 72,156 | 78,345 | 238,789 | 241,873 | ||||||||||||
| Corporate & Other: | ||||||||||||||||
| Corporate overhead, operating and other | (21,076 | ) | (14,772 | ) | (50,641 | ) | (44,386 | ) | ||||||||
| Equity in earnings (losses) of unconsolidated affiliates, net | 416 | 4,381 | (2,651 | ) | 15,620 | |||||||||||
| Gains and losses on investments, net | 4,549 | 20,090 | 33,171 | 32,238 | ||||||||||||
| Sub-total | (16,111 | ) | 9,699 | (20,121 | ) | 3,472 | ||||||||||
| Total | $ | 220,180 | $ | 219,861 | $ | 671,650 | $ | 588,038 | ||||||||
| Net income from continuing operations | $ | 16,502 | $ | 35,855 | $ | 73,015 | $ | 73,221 | ||||||||
| Net income (loss) from discontinued operations | — | (654 | ) | — | 6,454 | |||||||||||
| Net income | $ | 16,502 | $ | 35,201 | $ | 73,015 | $ | 79,675 | ||||||||
| Expenditures for property and equipment from continuing operations | $ | 167,155 | $ | 192,131 | $ | 337,729 | $ | 410,145 |
The following table reconciles GAAP to non-GAAP measurements.
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| (Dollarsinthousands) | ||||||||||||||||
| Net income | $ | 16,502 | $ | 35,201 | $ | 73,015 | $ | 79,675 | ||||||||
| Interest income and expense, net | 40,737 | 43,634 | 130,134 | 126,156 | ||||||||||||
| Income tax provision, net | 12,836 | 6,082 | 25,235 | 9,073 | ||||||||||||
| Depreciation and amortization | 150,555 | 134,822 | 444,558 | 379,939 | ||||||||||||
| Net (income) loss from discontinued operations | — | 654 | — | (6,454 | ) | |||||||||||
| Net income attributable to noncontrolling interests | (450 | ) | (532 | ) | (1,292 | ) | (351 | ) | ||||||||
| EBITDA | $ | 220,180 | $ | 219,861 | $ | 671,650 | $ | 588,038 |
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 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 September 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 September 30, 2018 filed today with the Securities and Exchange Commission.
EchoStar will host its earnings conference call on Thursday, November 8, 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 # 1087737.
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 September 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
| Asof | ||||||||
| September 30, 2018 | December 31, 2017 | |||||||
| Assets | (Unaudited) | (Audited) | ||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 1,597,295 | $ | 2,431,456 | ||||
| Marketable investment securities, at fair value | 1,842,875 | 814,161 | ||||||
| Trade accounts receivable and contract assets, net | 217,524 | 196,840 | ||||||
| Trade accounts receivable – DISH Network | 11,065 | 43,295 | ||||||
| Inventory | 70,061 | 83,595 | ||||||
| Prepaids and deposits | 56,149 | 54,533 | ||||||
| Other current assets | 17,222 | 91,671 | ||||||
| Total current assets | 3,812,191 | 3,715,551 | ||||||
| Noncurrent assets: | ||||||||
| Property and equipment, net | 3,442,537 | 3,465,471 | ||||||
| Regulatory authorizations, net | 525,595 | 536,936 | ||||||
| Goodwill | 504,173 | 504,173 | ||||||
| Other intangible assets, net | 47,912 | 58,955 | ||||||
| Investments in unconsolidated entities | 160,669 | 161,427 | ||||||
| Other receivables – DISH Network | 94,503 | 92,687 | ||||||
| Other noncurrent assets, net | 262,866 | 214,814 | ||||||
| Total noncurrent assets | 5,038,255 | 5,034,463 | ||||||
| Total assets | $ | 8,850,446 | $ | 8,750,014 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Trade accounts payable | $ | 119,235 | $ | 108,406 | ||||
| Trade accounts payable – DISH Network | 1,411 | 4,753 | ||||||
| Current portion of long-term debt and capital lease obligations | 1,030,088 | 40,631 | ||||||
| Contract liabilities | 74,135 | 65,959 | ||||||
| Accrued interest | 57,589 | 47,616 | ||||||
| Accrued compensation | 41,341 | 47,756 | ||||||
| Accrued taxes | 16,681 | 16,122 | ||||||
| Accrued expenses and other | 72,464 | 82,647 | ||||||
| Total current liabilities | 1,412,944 | 413,890 | ||||||
| Noncurrent liabilities: | ||||||||
| Long-term debt and capital lease obligations, net | 2,582,819 | 3,594,213 | ||||||
| Deferred tax liabilities, net | 471,259 | 436,023 | ||||||
| Other noncurrent liabilities | 124,694 | 128,503 | ||||||
| Total noncurrent liabilities | 3,178,772 | 4,158,739 | ||||||
| Total liabilities | 4,591,716 | 4,572,629 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $.001 par value, 20,000,000 shares authorized, none issued and outstanding at each of September 30, 2018 and December 31, 2017 | — | — | ||||||
| Common stock, $.001 par value, 4,000,000,000 shares authorized: | ||||||||
| ClassA common stock, $.001 par value, 1,600,000,000 shares authorized, 54,080,228 shares issued and 48,547,910 shares outstanding at September 30, 2018 and 53,663,859 shares issued and 48,131,541 shares outstanding at December31, 2017 | 54 | 54 | ||||||
| ClassB convertible common stock, $.001 par value, 800,000,000 shares authorized, 47,687,039 shares issued and outstanding at each of September 30, 2018 and December31, 2017 | 48 | 48 | ||||||
| ClassC convertible common stock, $.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of September 30, 2018 and December31, 2017 | — | — | ||||||
| ClassD common stock, $.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of September 30, 2018 and December31, 2017 | — | — | ||||||
| Additional paid-in capital | 3,694,682 | 3,669,461 | ||||||
| Accumulated other comprehensive loss | (160,947 | ) | (130,154 | ) | ||||
| Accumulated earnings | 808,330 | 721,316 | ||||||
| Treasury stock, at cost | (98,162 | ) | (98,162 | ) | ||||
| Total EchoStar Corporation stockholders’ equity | 4,244,005 | 4,162,563 | ||||||
| Other noncontrolling interests | 14,725 | 14,822 | ||||||
| Total stockholders’ equity | 4,258,730 | 4,177,385 | ||||||
| Total liabilities and stockholders’ equity | $ | 8,850,446 | $ | 8,750,014 |
ECHOSTAR CORPORATION
Consolidated Statements of Operations
(In thousands)
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Revenue: | ||||||||||||||||
| Services and other revenue – DISH Network | $ | 87,859 | $ | 111,135 | $ | 291,835 | $ | 339,824 | ||||||||
| Services and other revenue – other | 388,248 | 310,973 | 1,118,733 | 865,817 | ||||||||||||
| Equipment revenue | 56,846 | 59,125 | 150,134 | 173,819 | ||||||||||||
| Total revenue | 532,953 | 481,233 | 1,560,702 | 1,379,460 | ||||||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of sales – services and other (exclusive of depreciation and amortization) | 152,011 | 143,048 | 451,913 | 416,463 | ||||||||||||
| Cost of sales – equipment (exclusive of depreciation and amortization) | 46,318 | 47,644 | 127,254 | 141,839 | ||||||||||||
| Selling, general and administrative expenses | 107,490 | 91,003 | 313,839 | 263,820 | ||||||||||||
| Research and development expenses | 6,544 | 8,302 | 20,328 | 23,444 | ||||||||||||
| Depreciation and amortization | 150,555 | 134,822 | 444,558 | 379,939 | ||||||||||||
| Total costs and expenses | 462,918 | 424,819 | 1,357,892 | 1,225,505 | ||||||||||||
| Operating income | 70,035 | 56,414 | 202,810 | 153,955 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 21,349 | 12,012 | 56,237 | 30,342 | ||||||||||||
| Interest expense, net of amounts capitalized | (62,086 | ) | (55,646 | ) | (186,371 | ) | (156,498 | ) | ||||||||
| Gains and losses on investments, net | 4,693 | 20,090 | 33,426 | 30,664 | ||||||||||||
| Equity in earnings (losses) of unconsolidated affiliates, net | 416 | 4,381 | (2,651 | ) | 15,620 | |||||||||||
| Other, net | (5,069 | ) | 4,686 | (5,201 | ) | 8,211 | ||||||||||
| Total other income (expense), net | (40,697 | ) | (14,477 | ) | (104,560 | ) | (71,661 | ) | ||||||||
| Income from continuing operations before income taxes | 29,338 | 41,937 | 98,250 | 82,294 | ||||||||||||
| Income tax provision, net | (12,836 | ) | (6,082 | ) | (25,235 | ) | (9,073 | ) | ||||||||
| Net income from continuing operations | 16,502 | 35,855 | 73,015 | 73,221 | ||||||||||||
| Net income (loss) from discontinued operations | — | (654 | ) | — | 6,454 | |||||||||||
| Net income | 16,502 | 35,201 | 73,015 | 79,675 | ||||||||||||
| Less: Net income attributable to noncontrolling interests | 450 | 532 | 1,292 | 351 | ||||||||||||
| Net income attributable to EchoStar Corporation | 16,052 | 34,669 | 71,723 | 79,324 | ||||||||||||
| Less: Net loss attributable to Hughes Retail Preferred Tracking Stock | — | — | — | (1,209 | ) | |||||||||||
| Net income attributable to EchoStar Corporation common stock | $ | 16,052 | $ | 34,669 | $ | 71,723 | $ | 80,533 | ||||||||
| Earnings per share – ClassA and B common stock: | ||||||||||||||||
| Basic earnings from continuing operations per share | $ | 0.17 | $ | 0.37 | $ | 0.75 | $ | 0.78 | ||||||||
| Total basic earnings per share | $ | 0.17 | $ | 0.36 | $ | 0.75 | $ | 0.84 | ||||||||
| Diluted earnings from continuing operations per share | $ | 0.17 | $ | 0.36 | $ | 0.74 | $ | 0.77 | ||||||||
| Total diluted earnings per share | $ | 0.17 | $ | 0.36 | $ | 0.74 | $ | 0.83 |
ECHOSTAR CORPORATION
Consolidated Statements of Cash Flows
(In thousands)
| For the nine months ended September 30, | ||||||||
| 2018 | 2017 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 73,015 | $ | 79,675 | ||||
| Adjustments to reconcile net income to net cash flows from operating activities: | ||||||||
| Depreciation and amortization | 444,558 | 391,598 | ||||||
| Equity in (earnings) losses of unconsolidated affiliates, net | 2,651 | (14,461 | ) | |||||
| Amortization of debt issuance costs | 5,910 | 5,479 | ||||||
| Gains and losses on investments, net | (33,524 | ) | (30,664 | ) | ||||
| Stock-based compensation | 7,771 | 7,169 | ||||||
| Deferred tax provision | 22,357 | 7,924 | ||||||
| Dividends received from unconsolidated entity | 5,000 | 15,000 | ||||||
| Proceeds from sale of trading securities | — | 8,922 | ||||||
| Changes in current assets and current liabilities, net: | ||||||||
| Trade accounts receivable, net | (35,811 | ) | 5,088 | |||||
| Trade accounts receivable – DISH Network | 32,323 | 225,963 | ||||||
| Inventory | 10,667 | (26,231 | ) | |||||
| Other current assets | (5,569 | ) | (11,392 | ) | ||||
| Trade accounts payable | 2,536 | (64,553 | ) | |||||
| Trade accounts payable – DISH Network | (3,342 | ) | 2,534 | |||||
| Accrued expenses and other | 19,450 | 13,268 | ||||||
| Changes in noncurrent assets and noncurrent liabilities, net | (16,123 | ) | (23,474 | ) | ||||
| Other, net | 12,043 | 91 | ||||||
| Net cash flows from operating activities | 543,912 | 591,936 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchases of marketable investment securities | (2,323,090 | ) | (319,912 | ) | ||||
| Sales and maturities of marketable investment securities | 1,331,225 | 375,890 | ||||||
| Expenditures for property and equipment | (415,253 | ) | (422,661 | ) | ||||
| Refunds and other receipts related to property and equipment | 77,524 | — | ||||||
| Sale of investment in unconsolidated entity | 1,558 | 17,781 | ||||||
| Expenditures for externally marketed software | (24,568 | ) | (25,447 | ) | ||||
| Other | (991 | ) | — | |||||
| Net cash flows from investing activities | (1,353,595 | ) | (374,349 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Repayment of debt and capital lease obligations | (27,764 | ) | (26,394 | ) | ||||
| Net proceeds from ClassA common stock options exercised | 4,424 | 33,156 | ||||||
| Net proceeds from Class A common stock issued under the Employee Stock Purchase Plan | 7,428 | 6,938 | ||||||
| Cash exchanged for Tracking Stock | — | (651 | ) | |||||
| Repayment of in-orbit incentive obligations | (4,601 | ) | (4,583 | ) | ||||
| Other, net | (530 | ) | 201 | |||||
| Net cash flows from financing activities | (21,043 | ) | 8,667 | |||||
| Effect of exchange rates on cash and cash equivalents | (3,449 | ) | 1,014 | |||||
| Net increase (decrease) in cash and cash equivalents, including restricted amounts | (834,175 | ) | 227,268 | |||||
| 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 | $ | 1,598,074 | $ | 2,799,134 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest, net of amounts capitalized | $ | 170,303 | $ | 137,955 | ||||
| Cash paid for income taxes | $ | 3,369 | $ | 10,071 |