EchoStar Announces Financial Results for Three and Twelve Months Ended December 31, 2019


February 20, 2020


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Englewood, CO, February 20, 2020—EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three and twelve months ended December 31, 2019.

Three Months Ended December 31, 2019 Financial Highlights:

  • Consolidated revenues of $499.0 million.
  • Net loss from continuing operations of $56.3 million, consolidated net loss attributable to EchoStar common stock of $53.1 million, and diluted loss per share of $(0.55).
  • Consolidated Adjusted EBITDA of $155.9 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

Twelve Months Ended December 31, 2019 Financial Highlights:

  • Consolidated revenues of $1.9 billion.
  • Net loss from continuing operations of $113.7 million, consolidated net loss attributable to EchoStar common stock of $62.9 million, and diluted loss per share of $(0.65).
  • Consolidated Adjusted EBITDA of $582.8 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

“I am pleased with our performance in the fourth quarter and full year of 2019” commented Michael Dugan, CEO and President of EchoStar.  “We grew our revenue and Adjusted EBITDA from 2018.  We completed a transformative spin-off of our BSS business to DISH Network Corporation as well as additional strategic transactions that allow us to focus on the growing broadband and connectivity markets.  We concluded our joint venture with Yahsat in Brazil in November, and as part of that transaction, acquired approximately 20,000 additional consumer subscribers.  Operationally, we grew our consumer subscriber base by another 20,000 in the fourth quarter driven by our international markets which brings our broadband subscriber total to approximately 1.477 million as of year-end 2019. Until our EchoStar 24/J3 satellite is launched, we are focused on increasing the yield on our existing assets and are continuing to explore opportunities in pursuit of our strategy of being a global connectivity provider.”

Three Months Ended December 31, 2019 - Additional Information:

  • Consolidated revenue increased 10% or $45.0 million year over year.
  • Adjusted EBITDA increased 19% or $25.1 million year over year.
    • Hughes segment Adjusted EBITDA increased by $25.9 million primarily driven by higher revenue and associated margin from our consumer business and enterprise equipment sales.  Adjusted EBITDA excludes all activity related to the India license fee dispute discussed below.
    • ESS segment Adjusted EBITDA was flat.
    • Corporate and Other segment Adjusted EBITDA decreased by $0.5 million.  The segment was impacted by the loss of the revenue and EBITDA associated with the transfer of certain real estate assets to DISH Network Corporation as part of the BSS transaction that were not treated as discontinued operations as well as continued investment in corporate development activities.  This was partially offset by smaller equity losses of unconsolidated affiliates.  During the fourth quarter, we changed our accounting policy to record our share of net earnings or losses of unconsolidated affiliates on a three month-lag.  Based on this change, our results exclude Q4-19 activity from these equity investments.
  • License fee dispute with the Government of India:
    • In October 2019, the Supreme Court of India issued an order affirming certain license fee assessments, interest, penalties, and interest on the penalties imposed by the Indian Department of Telecommunications (“DOT”) related to a license fee dispute with the Government of India that dates back over a decade and has affected the entire Indian Telecom industry.  On February 14, 2020, the Supreme Court of India denied the petitions filed by us and other telecommunication service providers asking the court to modify the order to permit the DOT to calculate the final amount due and extend the payment deadline.  To date, the DOT has issued us written assessments of $28.4 million for the license fees, penalties and interest.  It is possible the DOT’s assessment may be modified depending on the methodology it uses to calculate interest over the period in question.
    • As a result of the Supreme Court’s decisions and based on the DOT’s current methodology for assessing penalties and interest, we booked an additional accrual of $60.8 million during the quarter which also impacted Net income (loss) attributable to non-controlling interest.  This is summarized as follows (amounts in millions):

SG&A expense

$

2.3

 

Interest expense, net of amounts capitalized

$

58.5

 

Total

$

60.8

 

 

 

Net income (loss) attributable to non-controlling interest

$

9.4

 

We now have $80.2 million accrued for this matter as of December 31, 2019.  Any eventual payments made with respect to the ultimate outcome may be different from our accrual and such differences could be significant.

  • Net loss from continuing operations was $56.3 million, a decrease of loss by $72.5 million from last year.  The decreased loss was primarily due to an impairment of long-lived asset of $65.2 million in Q4-18, higher net gains on investments of $45.0 million, and higher operating income (excluding impairments) of $9.2 million.  This was partially offset by higher net interest expense of $45.5 million which includes $58.5 of interest related to the license fee dispute with the Government of India discussed above.  Excluding the impact of the license fee dispute (tax effected), Net earnings from continuing operations would have been $4.3 million.
  • Hughes broadband subscribers are approximately 1,477,000 as of December 31, 2019 including approximately 237,000 subscribers in Central and South America.
  • Cash, cash equivalents and current marketable investment securities were $2.5 billion as of December 31, 2019.

Set forth below is a table highlighting certain of EchoStar’s segment results for the three and twelve months ended December 31, 2019 and 2018 (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,

 

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

Hughes

 

$

491,823

 

 

$

444,642

 

 

$

1,852,742

 

 

$

1,716,528

 

EchoStar Satellite Services

 

4,384

 

 

4,669

 

 

16,257

 

 

27,231

 

Corporate and Other

 

2,799

 

 

4,672

 

 

17,082

 

 

18,879

 

Total revenue

 

$

499,006

 

 

$

453,983

 

 

$

1,886,081

 

 

$

1,762,638

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

 

 

Hughes

 

$

176,738

 

 

$

150,809

 

 

$

666,890

 

 

$

616,532

 

EchoStar Satellite Services

 

1,988

 

 

2,286

 

 

6,994

 

 

17,764

 

Corporate & Other:

 

 

 

 

 

 

 

 

Corporate overhead, operating and other

 

(23,090)

 

 

(18,988)

 

 

(81,859)

 

 

(73,237)

 

Equity in earnings (losses) of unconsolidated affiliates, net

 

250

 

 

(3,303)

 

 

(9,257)

 

 

(5,954)

 

Total Corporate & Other

 

(22,840)

 

 

(22,291)

 

 

(91,116)

 

 

(79,191)

 

Total Adjusted EBITDA

 

$

155,886

 

 

$

130,804

 

 

$

582,768

 

 

$

555,105

 

 

 

 

 

 

 

 

 

 

Net income (loss) from continuing operations

 

$

(56,273)

 

 

$

(128,774)

 

 

$