EchoStar Announces Financial Results for Three and Nine Months Ended September 30, 2020

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ENGLEWOOD, CO, November 5, 2020 – EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three and nine months ended September 30, 2020.

 

Three Months Ended September 30, 2020 Financial Highlights:

  1. Consolidated revenues of $473.5 million.
  2. Net income from continuing operations of $23.3 million, consolidated net income attributable to EchoStar common stock of $25.4 million, and diluted earnings per share of $0.26.
  3. Consolidated Adjusted EBITDA of $166.7 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below). 

 

Nine Months Ended September 30, 2020 Financial Highlights: 

  1. Consolidated revenues of $1,398.6 million.
  2. Net loss from continuing operations of $49.3 million, consolidated net loss attributable to EchoStar common stock of $40.3 million, and diluted loss per share of $(0.41).
  3. Consolidated Adjusted EBITDA of $476.2 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below). “We had another outstanding quarter,” commented Michael Dugan, CEO and President of EchoStar.  “We increased our consumer subscriber base by approximately 38,000, driven by our international markets, and grew our Net income and Adjusted EBITDA from the same period last year.  The continued growth in demand for our service demonstrates the importance of our networks and services for businesses and families everywhere.  We will continue to focus on the needs of our customers as connectivity becomes a more vital part of business, entertainment, and communications.” Three Months Ended September 30, 2020 – Additional Information: 
  1. Consolidated revenue was up $1.2 million year over year including an estimated negative foreign exchange impact of $10.9 million.
  2. Adjusted EBITDA increased 9% or $14.3 million year over year.
  1. Hughes segment Adjusted EBITDA increased $13.2 million year over year.  The increase was driven primarily by the higher margin associated with the growth in our consumer broadband service.
  2. ESS segment Adjusted EBITDA increased by $0.5 million year over year.
  3. Corporate and Other segment Adjusted EBITDA increased by $0.7 million.  The increase was primarily driven by lower equity losses in unconsolidated affiliates of $1.3 million compared to the same period last year.
  1. Net income from continuing operations was $23.3 million, an increase of $46.4 million from last year.  The change was primarily due to higher operating income of $10.9 million, improvement in foreign currency transactions, net, of $21.8 million, higher gains on investments, net, of $6.7 million, and lower income tax provision of $2.1 million.
  2. Hughes broadband subscribers are approximately 1,580,000 as of September 30, 2020 including approximately 364,000 subscribers in Latin America. 
  1. For the three months ended September 30, 2020, approximately 71% of Hughes segment revenue was attributable to our consumer customers with approximately 29% attributable to our enterprise customers. 
  2. Cash, cash equivalents and marketable investment securities were $2.5 billion as of September 30, 2020.  Set forth below is a table highlighting certain of EchoStar’s segment results three and nine months ended September 30, 2020 and 2019 (amounts in thousands) from continuing operations (all US GAAP amounts reference results from continuing operations):

 

    For the three months ended September 30,   For the nine months ended September 30,
    2020   2019   2020   2019
Revenue                
Hughes   $ 466,762     $ 463,735     $ 1,378,416     $ 1,360,919  
EchoStar Satellite Services   4,402     4,098     13,233     11,873  
Corporate and Other   2,338     4,429     6,985     14,283  
Total revenue   $ 473,502     $ 472,262     $ 1,398,634     $ 1,387,075  
                 
Adjusted EBITDA                
Hughes   $ 186,458     $ 173,298     $ 534,955     $ 490,152  
EchoStar Satellite Services   2,274     1,791     5,847     5,006  
Corporate & Other:                
Corporate overhead, operating and other   (21,572)     (20,981)     (63,948)     (58,769)  
Equity in earnings (losses) of unconsolidated affiliates, net   (504)     (1,782)     (660)     (9,507)  
Total Corporate & Other   (22,076)     (22,763)     (64,608)     (68,276)  
Total Adjusted EBITDA   $ 166,656     $ 152,326     $ 476,194     $ 426,882  
                 
Expenditures for property and equipment   $ 98,137     $ 95,155     $ 295,041     $ 314,351  

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

    For the three months ended September 30,   For the nine months ended September 30,
    2020   2019   2020   2019
Net income (loss)   $ 23,273     $ (21,106)     (49,307)     (11,158)  
Interest income, net   (7,364)     (17,175)     (33,707)     (64,817)  
Interest expense, net of amounts capitalized   37,967     49,865     112,458     156,813  
Income tax provision (benefit), net   2,950     5,016     6,309     12,607  
Depreciation and amortization   129,822     122,374     392,077     361,619  
Net loss (income) from discontinued operations       (2,008)         (46,223)  
Net loss (income) attributable to non-controlling interests   2,167     2,797     9,040     1,359  
EBITDA   188,815     139,763     436,870     410,200  
(Gains) losses on investments, net   (14,998)     (8,295)     37,764     (28,087)  
Litigation Expense       1,824         26,328  
License fee dispute – India, net of non-controlling interests   (480)     3,940     (1,043)     3,940  
Foreign currency transaction (gains) losses, net   (6,681)     15,094     2,603     14,501  
Adjusted EBITDA   $ 166,656     $ 152,326     $ 476,194     $ 426,882  
                                 

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 September 30, 2020 and 2019 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, 2020 filed today with the Securities and Exchange Commission.

EchoStar will host a conference call and webcast to discuss its earnings on Thursday, November 5, 2020 at 11:00 a.m. Eastern Time. The call-in numbers are (877) 815-1625 (US) and (716) 247-5178 (International), Conference ID 8263356.  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, 2019 and Quarterly Report on Form 10-Q for the period ended September 30, 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.

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Contact Information

EchoStar Investor Relations EchoStar Media Relations
Terry Brown
Phone: +1 303-728-5179
Email: terry.brown@echostar.com
Sharyn Nerenberg
Phone: +1 301-428-7124
Email: sharyn.nerenberg@echostar.com

ECHOSTAR CORPORATION

Condensed Consolidated Balance Sheets

(Amounts in thousands, except per share amounts)

    Asof
    September 30, 2020   December 31, 2019
Assets        
Current assets:        
Cash and cash equivalents   $ 555,550     $ 1,519,431  
Marketable investment securities   1,950,804     940,623  
Trade accounts receivable and contract assets, net   190,950     196,629  
Other current assets, net   192,724     179,531  
Total current assets   2,890,028     2,836,214  
Non-current assets:        
Property and equipment, net   2,372,594     2,528,738  
Operating lease right-of-use assets   129,073     114,042  
Goodwill   508,660     506,953  
Regulatory authorizations, net   475,824     478,598  
Other intangible assets, net   20,550     29,507  
Other investments, net   284,238     325,405  
Other non-current assets, net   344,569     334,841  
Total non-current assets   4,135,508     4,318,084  
Total assets   $ 7,025,536     $ 7,154,298  
         
Liabilities and Stockholders’ Equity        
Current liabilities:        
Trade accounts payable   $ 111,099     $ 124,080  
Current portion of long-term debt, net   897,303      
Contract liabilities   89,622     101,060  
Accrued expenses and other current liabilities   276,703     270,879  
Total current liabilities   1,374,727     496,019  
Non-current liabilities:        
Long-term debt, net   1,495,078     2,389,168  
Deferred tax liabilities, net   352,948     351,692  
Operating lease liabilities   115,376     96,941  
Other non-current liabilities   74,271     74,925  
Total non-current liabilities   2,037,673     2,912,726  
Total liabilities   3,412,400     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 September 30, 2020 and December 31, 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, 57,140,432 shares issued and 50,458,512 shares outstanding at September30, 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 September30, 2020 and December31, 2019   48     48  
ClassC convertible common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at both September30, 2020 and December31, 2019        
ClassD common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at both September30, 2020 and December31, 2019        
Additional paid-in capital   3,317,868     3,290,483  
Accumulated other comprehensive income (loss)   (209,538)     (122,138)  
Accumulated earnings (losses)   583,474     632,809  
Treasury stock, at cost   (137,347)     (131,454)  
Total EchoStar Corporation stockholders’ equity   3,554,562     3,669,805  
Non-controlling interests   58,574     75,748  
Total stockholders’ equity   3,613,136     3,745,553  
Total liabilities and stockholders’ equity   $ 7,025,536     $ 7,154,298  
                 

ECHOSTAR CORPORATION

Condensed Consolidated Statements of Operations

(Amounts in thousands, except per share amounts)

    For the three months ended September 30,   For the nine months ended September 30,
    2020   2019   2020   2019
Revenue:                
Services and other revenue   $ 426,532     $ 406,537     $ 1,251,932     $ 1,211,991  
Equipment revenue   46,970     65,725     146,702     175,084  
Total revenue   473,502     472,262     1,398,634     1,387,075  
Costs and expenses:                
Cost of sales – services and other (exclusive of depreciation and amortization)   146,577     143,842     432,848     429,869  
Cost of sales – equipment (exclusive of depreciation and amortization)   37,079     51,188     115,529     142,744  
Selling, general and administrative expenses   115,358     122,629     354,437     383,952  
Research and development expenses   7,676     6,136     21,378     19,411  
Depreciation and amortization   129,822     122,374     392,077     361,619  
Total costs and expenses   436,512     446,169     1,316,269     1,337,595  
Operating income (loss)   36,990     26,093     82,365     49,480  
Other income (expense):                
Interest income, net   7,364     17,175     33,707     64,817  
Interest expense, net of amounts capitalized   (37,967)     (49,865)     (112,458)     (156,813)  
Gains (losses) on investments, net   14,998     8,295     (37,764)     28,087  
Equity in earnings (losses) of unconsolidated affiliates, net   (2,134)     (3,209)     (5,866)     (14,317)  
Foreign currency transaction gains (losses), net   6,681     (15,094)     (2,603)     (14,501)  
Other, net   291     (1,493)     (379)     (1,527)  
Total other income (expense), net   (10,767)     (44,191)     (125,363)     (94,254)  
Income (loss) from continuing operations before income taxes   26,223     (18,098)     (42,998)     (44,774)  
Income tax benefit (provision), net   (2,950)     (5,016)     (6,309)     (12,607)  
Net income (loss) from continuing operations   23,273     (23,114)     (49,307)     (57,381)  
Net income (loss) from discontinued operations       2,008         46,223  
Net income (loss)   23,273     (21,106)     (49,307)     (11,158)  
Less: Net loss (income) attributable to non-controlling interests   2,167     2,797     9,040     1,359  
Net income (loss) attributable to EchoStar Corporation common stock   $ 25,440     $ (18,309)     $ (40,267)     (9,799)  
                 
Earnings (losses) per share – ClassA and B common stock:                
Basic and diluted earnings (losses) from continuing operations per share   $ 0.26     $ (0.21)     $ (0.41)     $ (0.58)  
Total basic and diluted earnings (losses) per share   $ 0.26     $ (0.19)     $ (0.41)     $ (0.10)  

ECHOSTAR CORPORATION

Condensed Consolidated Statements of Cash Flows

(Amounts in thousands, except per share amounts)

    For the nine months ended
September 30,
    2020   2019
Cash flows from operating activities:        
Net income (loss)   $ (49,307)     $ (11,158)  
Adjustments to reconcile net income (loss) to net cash flows from operating activities:        
Depreciation and amortization   392,077     459,054  
Losses (gains) on investments, net   37,764     (28,087)  
Equity in losses (earnings) of unconsolidated affiliates, net   5,866     14,317  
Foreign currency transaction losses (gains), net   2,603     14,501  
Deferred tax provision (benefit), net   4,474     22,949  
Stock-based compensation   6,887     7,120  
Amortization of debt issuance costs   3,212     4,882  
Dividends received from unconsolidated affiliates       2,716  
Other, net   (9,145)     9,617  
Changes in assets and liabilities, net:        
Trade accounts receivable and contract assets, net   (9,157)     (5,439)  
Other current assets, net   (21,090)     (42,140)  
Trade accounts payable   (17,824)     18,180  
Contract liabilities   (11,438)     37,273  
Accrued expenses and other current liabilities   29,155     27,972  
Non-current assets and non-current liabilities, net   1,325     1,303  
Net cash flows from operating activities   365,402     533,060  
         
Cash flows from investing activities:        
Purchases of marketable investment securities   (2,234,671)     (655,265)  
Sales and maturities of marketable investment securities   1,231,790     1,988,078  
Expenditures for property and equipment   (295,041)     (314,861)  
Expenditures for externally marketed software   (27,824)     (21,364)  
Purchase of other investments   (5,500)      
Investments in unconsolidated affiliates       (7,503)  
Dividend received from unconsolidated affiliate       2,284  
Net cash flows from investing activities   (1,331,246)     991,369  
         
Cash flows from financing activities:        
Repurchase and maturity of the 2019 Senior Secured Notes       (920,923)  
Payment of finance lease obligations   (606)     (29,135)  
Payment of in-orbit incentive obligations   (1,268)     (5,269)  
Net proceeds from ClassA common stock options exercised   983     64,143  
Net proceeds from Class A common stock issued under the Employee Stock Purchase Plan   8,066     7,724  
Treasury share purchase   (5,893)      
Contribution by non-controlling interest holder   14,268      
Purchase of non-controlling interest       (7,313)  
Other, net   998     758  
Net cash flows from financing activities   16,548     (890,015)  
         
Effect of exchange rates on cash and cash equivalents   (8,348)     (411)  
Net increase (decrease) in cash and cash equivalents   (957,644)     634,003  
Cash and cash equivalents, including restricted amounts, beginning of period   1,521,889     929,495  
Cash and cash equivalents, including restricted amounts, end of period   $ 564,245     $ 1,563,498