Englewood, CO, February 24, 2017—EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the fourth quarter and full year ended December 31, 2016.
Fourth Quarter 2016 Financial Highlights:
- Consolidated revenues of $740 million.
- Consolidated net income of $39 million.
- Consolidated net income attributable to EchoStar common stock of $38 million and diluted earnings per share of $0.40.
- Consolidated EBITDA of $229 million (see reconciliation of this non-GAAP measure below).
- Approximately 1,036,000 Hughes consumer broadband subscribers as of December 31, 2016.
Full Year Ended December 31, 2016 Financial Highlights:
- Consolidated revenue of $3.06 billion.
- Consolidated net income of $181 million.
- Consolidated net income attributable to EchoStar common stock of $182 million and diluted earnings per share of $1.92.
- Consolidated EBITDA of $884 million (see reconciliation of this non-GAAP measure below).
- Strong liquidity with cash, cash equivalents and current marketable investment securities of $3.09 billion as of December 31, 2016.
Set forth below is a table highlighting certain of EchoStar’s segment results for the three and twelve months ended December 31, 2016 and 2015:
| For the Three Months Ended December 31, | For the Years Ended December 31, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| (Dollars in thousands) | ||||||||||||||||
| Revenue | ||||||||||||||||
| Hughes | $ | 370,910 | $ | 347,146 | $ | 1,392,361 | $ | 1,347,340 | ||||||||
| EchoStar Technologies Corp. | 266,082 | 325,101 | 1,249,197 | 1,298,198 | ||||||||||||
| EchoStar Satellite Services | 101,741 | 116,304 | 407,660 | 490,591 | ||||||||||||
| All Other & Eliminations | 1,660 | 2,036 | 7,512 | 7,585 | ||||||||||||
| Total | $ | 740,393 | $ | 790,587 | $ | 3,056,730 | $ | 3,143,714 | ||||||||
| EBITDA | ||||||||||||||||
| Hughes | $ | 109,937 | $ | 100,415 | $ | 427,802 | $ | 396,684 | ||||||||
| EchoStar Technologies Corp. | 32,123 | 25,981 | 89,549 | 106,745 | ||||||||||||
| EchoStar Satellite Services | 83,784 | 98,430 | 339,496 | 412,607 | ||||||||||||
| All Other & Eliminations | 3,243 | (2,084 | ) | 26,684 | (50,683 | ) | ||||||||||
| Total | $ | 229,087 | $ | 222,742 | $ | 883,531 | $ | 865,353 | ||||||||
| Net income (loss) attributable to EchoStar common stock | $ | 38,222 | $ | 66,296 | $ | 181,673 | $ | 163,700 | ||||||||
| Diluted earnings per share (in dollars) | $ | 0.40 | $ | 0.71 | $ | 1.92 | $ | 1.75 | ||||||||
| Net income | $ | 38,930 | $ | 62,402 | $ | 180,692 | $ | 149,371 | ||||||||
| Capital expenditures | $ | 188,672 | $ | 223,368 | $ | 698,254 | $ | 703,520 |
The following table reconciles total consolidated net income to EBITDA.
| For the Three Months Ended December 31, | For the Years Ended December 31, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| (In thousands) | ||||||||||||||||
| Net income | $ | 38,930 | $ | 62,402 | $ | 180,692 | $ | 149,371 | ||||||||
| Interest income and expense, net | 35,615 | 23,397 | 102,381 | 111,637 | ||||||||||||
| Income tax provision, net | 31,088 | 6,360 | 106,152 | 72,201 | ||||||||||||
| Depreciation and amortization | 124,196 | 129,611 | 495,068 | 528,158 | ||||||||||||
| Net (income) loss attributable to noncontrolling interest in HSS Tracking Stock and other noncontrolling interests | (742 | ) | 972 | (762 | ) | 3,986 | ||||||||||
| EBITDA | $ | 229,087 | $ | 222,742 | $ | 883,531 | $ | 865,353 |
Note on Use of Non-GAAP Financial Measures
EBITDA is defined as “Net income” excluding “Interest expense, net of amounts capitalized,” “Interest income”, “Income tax provision” and “Depreciation and amortization.” EBITDA is not a measure determined in accordance with US GAAP. This non-GAAP measure is reconciled to net income in the table above. EBITDA should not be considered in isolation or as a substitute for operating income, net income or any other measure determined in accordance with GAAP. EBITDA is used by our management as a measure of operating efficiency and overall financial performance for benchmarking against our peers and competitors. Management believes EBITDA provides meaningful supplemental information regarding the underlying operating performance of our business. 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, 2016 and 2015 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, 2016 filed today with the Securities and Exchange Commission.EchoStar will host its earnings conference call on Friday, February 24, 2017 at 10:00 a.m. Eastern Time. The call-in numbers are (877) 815-1625 (toll-free) and (716) 247-5178 (international), Conference ID # 69523685.
About EchoStar Corporation
EchoStar Corporation (NASDAQ: SATS) is a premier global provider of satellite and video delivery solutions. Headquartered in Englewood, Colo., and conducting business around the globe, EchoStar is a pioneer in secure communications technologies through its EchoStar Satellite Services, EchoStar Technologies Corporation, and Hughes Network Systems 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, 2016, filed today 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 | Janet GipsonPhone: +1 303-706-5555Email: janet.gipson@echostar.com |
ECHOSTAR CORPORATIONCONSOLIDATED BALANCE SHEETS(In thousands, except share amounts)
| As of December 31, | ||||||||
| 2016 | 2015 | |||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 2,571,143 | $ | 924,240 | ||||
| Marketable investment securities, at fair value | 522,516 | 612,338 | ||||||
| Trade accounts receivable, net of allowance for doubtful accounts of $13,400 and $12,485, respectively | 209,788 | 179,240 | ||||||
| Trade accounts receivable – DISH Network, net of allowance for doubtful accounts of zero | 278,615 | 277,159 | ||||||
| Inventory | 72,444 | 67,010 | ||||||
| Prepaids and deposits | 57,919 | 56,949 | ||||||
| Other current assets | 10,862 | 16,723 | ||||||
| Total current assets | 3,723,287 | 2,133,659 | ||||||
| Noncurrent Assets: | ||||||||
| Restricted cash and marketable investment securities | 12,926 | 21,002 | ||||||
| Property and equipment, net of accumulated depreciation of $3,407,470 and $2,998,074, respectively | 3,669,303 | 3,412,990 | ||||||
| Regulatory authorizations, net | 544,633 | 543,812 | ||||||
| Goodwill | 510,630 | 510,630 | ||||||
| Other intangible assets, net | 88,454 | 132,653 | ||||||
| Investments in unconsolidated entities | 197,219 | 209,264 | ||||||
| Other receivable – DISH Network | 90,586 | 90,966 | ||||||
| Other noncurrent assets, net | 171,821 | 154,510 | ||||||
| Total noncurrent assets | 5,285,572 | 5,075,827 | ||||||
| Total assets | $ | 9,008,859 | $ | 7,209,486 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current Liabilities: | ||||||||
| Trade accounts payable | $ | 189,815 | $ | 213,671 | ||||
| Trade accounts payable – DISH Network | 5,032 | 24,682 | ||||||
| Current portion of long-term debt and capital lease obligations | 37,307 | 35,698 | ||||||
| Deferred revenue and prepayments | 62,956 | 61,881 | ||||||
| Accrued compensation | 58,106 | 42,767 | ||||||
| Accrued interest | 46,504 | 8,596 | ||||||
| Accrued royalties | 23,199 | 22,531 | ||||||
| Accrued expenses and other | 108,519 | 117,005 | ||||||
| Total current liabilities | 531,438 | 526,831 | ||||||
| Noncurrent Liabilities: | ||||||||
| Long-term debt and capital lease obligations, net of unamortized debt issuance costs | 3,622,879 | 2,156,667 | ||||||
| Deferred tax liabilities, net | 754,020 | 650,392 | ||||||
| Other noncurrent liabilities | 93,717 | 93,954 | ||||||
| Total noncurrent liabilities | 4,470,616 | 2,901,013 | ||||||
| Total liabilities | 5,002,054 | 3,427,844 | ||||||
| Commitments and Contingencies (Note 16) | ||||||||
| Stockholders’ Equity: | ||||||||
| Preferred Stock, $.001 par value, 20,000,000 shares authorized: | ||||||||
| Hughes Retail Preferred Tracking Stock, $.001 par value, 13,000,000 shares authorized, 6,290,499 issued and outstanding at each of December 31, 2016 and 2015 | 6 | 6 | ||||||
| Common stock, $.001 par value, 4,000,000,000 shares authorized: | ||||||||
| Class A common stock, $.001 par value, 1,600,000,000 shares authorized, 52,243,465 shares issued and 46,711,147 shares outstanding at December 31, 2016 and 51,087,839 shares issued and 45,555,521 shares outstanding at December 31, 2015 | 52 | 51 | ||||||
| Class B common stock, $.001 par value, 800,000,000 shares authorized, 47,687,039 shares issued and outstanding at each of December 31, 2016 and 2015 | 48 | 48 | ||||||
| Class C common stock, $.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of December 31, 2016 and 2015 | — | — | ||||||
| Class D common stock, $.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of December 31, 2016 and 2015 | — | — | ||||||
| Additional paid-in capital | 3,828,677 | 3,776,451 | ||||||
| Accumulated other comprehensive loss | (124,803 | ) | (117,233 | ) | ||||
| Accumulated earnings | 314,247 | 134,317 | ||||||
| Treasury stock, at cost | (98,162 | ) | (98,162 | ) | ||||
| Total EchoStar stockholders’ equity | 3,920,065 | 3,695,478 | ||||||
| Noncontrolling interest in HSS Tracking Stock | 73,910 | 74,854 | ||||||
| Other noncontrolling interests | 12,830 | 11,310 | ||||||
| Total stockholders’ equity | 4,006,805 | 3,781,642 | ||||||
| Total liabilities and stockholders’ equity | $ | 9,008,859 | $ | 7,209,486 |
ECHOSTAR CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)(In thousands, except per share amounts)
| For the Years Ended December 31, | ||||||||||||
| 2016 | 2015 | 2014 | ||||||||||
| Revenue: | ||||||||||||
| Services and other revenue – DISH Network | $ | 888,603 | $ | 918,301 | $ | 828,612 | ||||||
| Services and other revenue – other | 1,109,597 | 1,103,928 | 1,096,938 | |||||||||
| Equipment revenue – DISH Network | 711,289 | 763,184 | 1,145,979 | |||||||||
| Equipment revenue – other | 347,241 | 358,301 | 374,049 | |||||||||
| Total revenue | 3,056,730 | 3,143,714 | 3,445,578 | |||||||||
| Costs and Expenses: | ||||||||||||
| Cost of sales – services and other (exclusive of depreciation and amortization) | 844,498 | 856,065 | 838,918 | |||||||||
| Cost of sales – equipment (exclusive of depreciation and amortization) | 891,108 | 948,655 | 1,288,998 | |||||||||
| Selling, general and administrative expenses | 385,634 | 374,116 | 372,010 | |||||||||
| Research and development expenses | 76,024 | 78,287 | 60,886 | |||||||||
| Depreciation and amortization | 495,068 | 528,158 | 556,676 | |||||||||
| Impairment of long-lived assets | — | 2,400 | — | |||||||||
| Total costs and expenses | 2,692,332 | 2,787,681 | 3,117,488 | |||||||||
| Operating income | 364,398 | 356,033 | 328,090 | |||||||||
| Other Income (Expense): | ||||||||||||
| Interest income | 21,249 | 10,429 | 9,102 | |||||||||
| Interest expense, net of amounts capitalized | (123,630 | ) | (122,066 | ) | (171,349 | ) | ||||||
| Loss from partial redemption of debt | — | (5,044 | ) | — | ||||||||
| Gains (losses) on marketable investment securities, net | 9,767 | (6,443 | ) | 41 | ||||||||
| Other-than-temporary impairment loss on available-for-sale securities | — | (11,226 | ) | — | ||||||||
| Equity in earnings of unconsolidated affiliates, net | 13,310 | 1,895 | 8,198 | |||||||||
| Other, net | 1,750 | (2,006 | ) | 4,251 | ||||||||
| Total other expense, net | (77,554 | ) | (134,461 | ) | (149,757 | ) | ||||||
| Income before income taxes | 286,844 | 221,572 | 178,333 | |||||||||
| Income tax provision, net | (106,152 | ) | (72,201 | ) | (30,784 | ) | ||||||
| Net income | 180,692 | 149,371 | 147,549 | |||||||||
| Less: Net loss attributable to noncontrolling interest in HSS Tracking Stock | (944 | ) | (5,603 | ) | (6,714 | ) | ||||||
| Less: Net income attributable to other noncontrolling interests | 1,706 | 1,617 | 1,389 | |||||||||
| Net income attributable to EchoStar | 179,930 | 153,357 | 152,874 | |||||||||
| Less: Net loss attributable to Hughes Retail Preferred Tracking Stock (Note 4) | (1,743 | ) | (10,343 | ) | (12,394 | ) | ||||||
| Net income attributable to EchoStar common stock | $ | 181,673 | $ | 163,700 | $ | 165,268 | ||||||
| Weighted-average common shares outstanding – Class A and B common stock: | ||||||||||||
| Basic | 93,795 | 92,397 | 91,190 | |||||||||
| Diluted | 94,410 | 93,466 | 92,616 | |||||||||
| Earnings per share – Class A and B common stock: | ||||||||||||
| Basic | $ | 1.94 | $ | 1.77 | $ | 1.81 | ||||||
| Diluted | $ | 1.92 | $ | 1.75 | $ | 1.78 | ||||||
| Comprehensive Income (Loss) | ||||||||||||
| Net income | $ | 180,692 | $ | 149,371 | $ | 147,549 | ||||||
| Other comprehensive income (loss), net of tax: | ||||||||||||
| Foreign currency translation adjustments | (11,315 | ) | (62,731 | ) | (31,935 | ) | ||||||
| Recognition of foreign currency translation loss in net income | — | 1,889 | — | |||||||||
| Unrealized gains (losses) on available-for-sale securities and other | 9,149 | (12,046 | ) | (9,462 | ) | |||||||
| Recognition of other-than-temporary loss on available-for-sale securities in net income | — | 11,226 | — | |||||||||
| Recognition of realized gains on available-for-sale securities in net income | (5,590 | ) | (35 | ) | (41 | ) | ||||||
| Total other comprehensive loss, net of tax | (7,756 | ) | (61,697 | ) | (41,438 | ) | ||||||
| Comprehensive income | 172,936 | 87,674 | 106,111 | |||||||||
| Less: Comprehensive loss attributable to noncontrolling interest in HSS Tracking Stock | (944 | ) | (5,603 | ) | (6,714 | ) | ||||||
| Less: Comprehensive income attributable to other noncontrolling interests | 1,520 | 1,297 | 1,152 | |||||||||
| Comprehensive income attributable to EchoStar | $ | 172,360 | $ | 91,980 | $ | 111,673 |
ECHOSTAR CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)
| For the Years Ended December 31, | ||||||||||||
| 2016 | 2015 | 2014 | ||||||||||
| Cash Flows from Operating Activities: | ||||||||||||
| Net income | $ | 180,692 | $ | 149,371 | $ | 147,549 | ||||||
| Adjustments to reconcile net income to net cash flows from operating activities: | ||||||||||||
| Depreciation and amortization | 495,068 | 528,158 | 556,676 | |||||||||
| Impairment of long-lived assets | — | 2,400 | — | |||||||||
| Loss from partial redemption of debt | — | 5,044 | — | |||||||||
| Losses (gains) and impairment on marketable investment securities, net | (9,767 | ) | 17,669 | (41 | ) | |||||||
| Equity in earnings of unconsolidated affiliates, net | (13,310 | ) | (1,895 | ) | (8,198 | ) | ||||||
| Stock-based compensation | 15,234 | 21,839 | 14,683 | |||||||||
| Deferred tax provision | 98,148 | 56,132 | 31,742 | |||||||||
| Dividends received from unconsolidated entities | 15,000 | 5,000 | 7,400 | |||||||||
| Proceeds from sale of trading securities | 7,140 | 380 | 17,053 | |||||||||
| Changes in current assets and current liabilities, net: | ||||||||||||
| Trade accounts receivable, net | (26,942 | ) | (38,452 | ) | (17,073 | ) | ||||||
| Trade accounts receivable – DISH Network | (1,456 | ) | (25,490 | ) | 104,051 | |||||||
| Inventory | (4,814 | ) | (4,906 | ) | 2,608 | |||||||
| Other current assets | 2,263 | 6,499 | 9,930 | |||||||||
| Trade accounts payable | (24,571 | ) | 37,228 | (22,230 | ) | |||||||
| Trade accounts payable – DISH Network | (19,650 | ) | (7,792 | ) | (26,508 | ) | ||||||
| Accrued expenses and other | 55,998 | 1,477 | 26,469 | |||||||||
| Changes in noncurrent assets and noncurrent liabilities, net | 9,459 | 1,616 | (8,305 | ) | ||||||||
| Other, net | 24,851 | 22,173 | 4,325 | |||||||||
| Net cash flows from operating activities | 803,343 | 776,451 | 840,131 | |||||||||
| Cash Flows from Investing Activities: | ||||||||||||
| Purchases of marketable investment securities | (921,247 | ) | (536,430 | ) | (1,523,514 | ) | ||||||
| Sales and maturities of marketable investment securities | 1,001,166 | 1,057,034 | 1,353,157 | |||||||||
| Expenditures for property and equipment | (722,341 | ) | (809,270 | ) | (680,026 | ) | ||||||
| Refunds and other receipts related to capital expenditures | 24,087 | 105,750 | — | |||||||||
| Changes in restricted cash and marketable investment securities | 8,076 | (2,057 | ) | (2,808 | ) | |||||||
| Investments in unconsolidated entities | (1,636 | ) | (64,655 | ) | (18,569 | ) | ||||||
| Acquisition of regulatory authorization | — | (3,428 | ) | — | ||||||||
| Expenditures for externally marketed software | (23,252 | ) | (22,327 | ) | (22,955 | ) | ||||||
| Other, net | 2,880 | 72 | 7,125 | |||||||||
| Net cash flows from investing activities | (632,267 | ) | (275,311 | ) | (887,590 | ) | ||||||
| Cash Flows from Financing Activities: | ||||||||||||
| Proceeds from issuance of long-term debt | 1,500,000 | — | — | |||||||||
| Payments of debt issuance costs | (7,097 | ) | — | — | ||||||||
| Repayment of 6 1/2% Senior Secured Notes Due 2019 and related premium | — | (113,300 | ) | — | ||||||||
| Repayment of debt and capital lease obligations | (40,364 | ) | (44,804 | ) | (63,122 | ) | ||||||
| Net proceeds from Class A common stock options exercised and stock issued under the Employee Stock Purchase Plan | 27,432 | 38,729 | 28,857 | |||||||||
| Net proceeds from issuance of Tracking Stock (Note 4) | — | — | 7,526 | |||||||||
| Excess tax benefit from stock option exercises | 848 | 3,929 | (7,252 | ) | ||||||||
| Other, net | (5,130 | ) | (4,811 | ) | (1,105 | ) | ||||||
| Net cash flows from financing activities | 1,475,689 | (120,257 | ) | (35,096 | ) | |||||||
| Effect of exchange rates on cash and cash equivalents | 138 | (5,696 | ) | (2,511 | ) | |||||||
| Net increase (decrease) in cash and cash equivalents | 1,646,903 | 375,187 | (85,066 | ) | ||||||||
| Cash and cash equivalents, beginning of period | 924,240 | 549,053 | 634,119 | |||||||||
| Cash and cash equivalents, end of period | $ | 2,571,143 | $ | 924,240 | $ | 549,053 | ||||||
| Supplemental Disclosure of Cash Flow Information: | ||||||||||||
| Cash paid for interest (including capitalized interest) | $ | 172,707 | $ | 179,114 | $ | 188,087 | ||||||
| Capitalized interest | $ | 94,395 | $ | 63,808 | $ | 23,774 | ||||||
| Cash paid for income taxes | $ | 11,700 | $ | 6,394 | $ | 14,221 | ||||||
| Employee benefits paid in Class A common stock | $ | 11,126 | $ | 10,711 | $ | 10,316 | ||||||
| Property and equipment financed under capital lease obligations | $ | 7,652 | $ | 8,604 | $ | 3,312 | ||||||
| Increase (decrease) in capital expenditures included in accounts payable, net | $ | 3,054 | $ | (7,123 | ) | $ | 11,436 | |||||
| Noncash assets contributed to SmarDTV (Note 6) | $ | — | $ | 6,651 | $ | — | ||||||
| Net noncash assets transferred from DISH Network in exchange for Tracking Stock (Note 4) | $ | — | $ | — | $ | 386,691 | ||||||
| Noncash assets received from Sling TV Holding (Note 6) | $ | — | $ | — | $ | 34,075 | ||||||
| Reduction of capital lease obligation for AMC-15 and AMC-16 satellites | $ | — | $ | 4,500 | $ | — |