EchoStar Announces Financial Results for Three Months Ended March 31, 2019


May 8, 2019


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Englewood, CO, May 8, 2019—EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three months ended March 31, 2019.

Financial Highlights:

  • Consolidated revenues of $531 million.
  • Consolidated net income of $15 million, consolidated net income attributable to EchoStar common stock of $14 million, and diluted earnings per share of $0.15. 
  • Consolidated Adjusted EBITDA of $206 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

Additional Highlights:

  • Approximately 1,388,000 total Hughes broadband subscribers as of March 31, 2019 including approximately 150,000 subscribers in Latin America.
  • Cash, cash equivalents and current marketable investment securities of $3.3 billion as of March 31, 2019.

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

 

 

For the three months
ended March 31,

 

 

 

2019

 

2018

 

 

 

(Dollars in thousands)

Revenue

 

 

 

 

 

Hughes

 

$

445,337

 

 

$

400,818

 

 

EchoStar Satellite Services

 

 

81,259

 

 

 

96,753

 

 

Corporate & Other

 

 

4,486

 

 

 

4,221

 

 

Total

 

$

531,082

 

 

$

501,792

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

 

 

 

 

Hughes

 

$

161,864

 

 

$

137,108

 

 

EchoStar Satellite Services

 

 

68,717

 

 

 

84,150

 

 

Corporate & Other:

 

 

 

 

 

Corporate overhead, operating and other

 

(20,116)

 

 

(17,870)

 

 

Equity in earnings (losses) of unconsolidated affiliates, net

 

(4,827)

 

 

(1,009)

 

 

Sub-total

 

 

(24,943)

 

 

 

(18,879)

 

 

Total

 

$

205,638

 

 

$

202,379

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

15,008

 

 

$

(21,171)

 

 

Expenditures for property and equipment

 

$

111,962

 

 

$

50,982

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP to Non-GAAP Measurement:

 

 

For the three months
ended March 31,

 

 

 

2019

 

2018

 

 

 

(Dollarsinthousands)

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

15,008

 

 

$

(21,171)

 

 

Interest income and expense, net

 

35,453

 

 

47,116

 

 

Income tax provision (benefit), net

 

8,180

 

 

(5,403)

 

 

Depreciation and amortization

 

154,221

 

 

145,554

 

 

Net income attributable to noncontrolling interests

 

(806)

 

 

(380)

 

 

(Gains) loss on investment, net

 

(6,418)

 

 

36,663

 

 

Adjusted EBITDA

 

$

205,638

 

 

$

202,379

 

 

Note on Use of Non-GAAP Financial Measures

Adjusted EBITDA is defined as “Net income (loss)” excluding “Interest income and expense, net,” “Income tax provision (benefit), net,” “Depreciation and amortization,” “Net income (loss) attributable to noncontrolling interests,” and “Gains and losses on investments, net.” Adjusted EBITDA is not a measure determined in accordance with US GAAP. Adjusted 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 Adjusted 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, 2019 and 2018 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, 2019 filed today with the Securities and Exchange Commission.

EchoStar will host its earnings conference call on Wednesday, May 8, 2019 at 11:00 a.m. Eastern Time. The call-in numbers are (877) 815-1625 (toll-free) and (716) 247-5178 (international), Conference ID 8058859.

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, 2018 and Quarterly Report on Form 10-Q for the period ended March 31, 2019, 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.

ECHOSTAR CORPORATION

Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

 

 

Asof

 

 

March 31, 2019

 

December 31, 2018

Assets

 

(Unaudited)

 

(Audited)

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

1,349,724

 

 

$

928,306

 

Marketable investment securities, at fair value

 

1,925,108

 

 

2,282,152

 

Trade accounts receivable and contract assets, net (Note 3)

 

216,558

 

 

201,096

 

Trade accounts receivable - DISH Network

 

19,510

 

 

14,200

 

Inventory

 

76,114

 

 

75,379

 

Prepaids and deposits

 

66,119

 

 

61,177

 

Other current assets

 

24,508

 

 

18,539

 

Total current assets

 

3,677,641

 

 

3,580,849

 

Noncurrent assets:

 

 

 

 

Property and equipment, net

 

3,363,404

 

 

3,414,908

 

Operating lease right-of-use assets

 

115,647

 

 

 

Regulatory authorizations, net

 

494,253

 

 

495,654

 

Goodwill

 

504,173

 

 

504,173

 

Other intangible assets, net

 

40,550

 

 

44,231

 

Investments in unconsolidated entities

 

227,828

 

 

262,473

 

Other receivables - DISH Network

 

95,889

 

 

95,114

 

Other noncurrent assets, net

 

259,506

 

 

263,892

 

Total noncurrent assets

 

5,101,250

 

 

5,080,445

 

Total assets

 

$

8,778,891

 

 

$

8,661,294

 

Liabilities and Stockholders’ Equity

 

 

 

 

Current liabilities:

 

 

 

 

Trade accounts payable

 

$

115,752

 

 

$

121,437

 

Trade accounts payable - DISH Network

 

2,826

 

 

1,698

 

Current portion of long-term debt and finance lease obligations

 

953,636

 

 

959,577

 

Contract liabilities

 

90,180

 

 

72,284

 

Accrued interest

 

55,552

 

 

47,416

 

Accrued compensation

 

35,161

 

 

54,242

 

Accrued taxes

 

17,455

 

 

16,013

 

Accrued expenses and other

 

75,443

 

 

72,470

 

Total current liabilities

 

1,346,005

 

 

1,345,137

 

Noncurrent liabilities:

 

 

 

 

Long-term debt and finance lease obligations, net

 

2,563,429

 

 

2,573,204

 

Deferred tax liabilities, net

 

475,464

 

 

465,933

 

Operating lease liabilities

 

95,215

 

 

 

Other noncurrent liabilities

 

119,242

 

 

121,546

 

Total noncurrent liabilities

 

3,253,350

 

 

3,160,683

 

Total liabilities

 

4,599,355

 

 

4,505,820

 

Commitments and contingencies

 

 

 

 

Stockholders’ equity:

 

 

 

 

Preferred stock, $0.001 par value, 20,000,000 shares authorized, none issued and outstanding at each of March 31, 2019 and December 31, 2018

 

 

 

 

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, 54,514,833 shares issued and 48,029,912 shares outstanding at March 31, 2019 and 54,142,566 shares issued and 47,657,645 shares outstanding at December31, 2018

 

54

 

 

54

 

ClassB convertible common stock, $0.001 par value, 800,000,000 shares authorized, 47,687,039 shares issued and outstanding at each of March 31, 2019 and December31, 2018

 

48

 

 

48

 

ClassC convertible common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of March 31, 2019 and December31, 2018

 

 

 

 

ClassD common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of March 31, 2019 and December31, 2018

 

 

 

 

Additional paid-in capital

 

3,713,777

 

 

3,702,522

 

Accumulated other comprehensive loss

 

(124,251)

 

 

(125,100)

 

Accumulated earnings

 

709,928

 

 

694,129

 

Treasury stock, at cost

 

(131,454)

 

 

(131,454)

 

Total EchoStar Corporation stockholders’ equity

 

4,168,102

 

 

4,140,199

 

Other noncontrolling interests

 

11,434

 

 

15,275

 

Total stockholders’ equity

 

4,179,536

 

 

4,155,474

 

Total liabilities and stockholders’ equity

 

$

8,778,891

 

 

$

8,661,294

 

 

ECHOSTAR CORPORATION

Consolidated Statements of Operations

(Dollars in thousands, except per share amounts)

 

 

 

For the three months
ended March 31,

 

 

2019

 

2018

Revenue:

 

 

 

 

Services and other revenue - DISH Network

 

$

85,888

 

 

$

103,805

 

Services and other revenue - other

 

393,480

 

 

355,040

 

Equipment revenue

 

51,714

 

 

42,947

 

Total revenue

 

531,082

 

 

501,792

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

Cost of sales - services and other (exclusive of depreciation and amortization)

 

153,571

 

 

148,745

 

Cost of sales - equipment (exclusive of depreciation and amortization)

 

45,007

 

 

39,071

 

Selling, general and administrative expenses

 

112,134

 

 

103,275

 

Research and development expenses

 

6,888

 

 

7,137

 

Depreciation and amortization

 

154,221

 

 

145,554

 

Total costs and expenses

 

471,821

 

 

443,782

 

Operating income

 

59,261

 

 

58,010

 

 

 

 

 

 

Other income (expense):

 

 

 

 

Interest income

 

24,429

 

 

15,635

 

Interest expense, net of amounts capitalized

 

(59,882)

 

 

(62,751)

 

Gains (losses) on investments, net

 

6,418

 

 

(36,663)

 

Equity in losses of unconsolidated affiliates, net

 

(6,353)

 

 

(1,009)

 

Other, net

 

(685)

 

 

204

 

Total other expense, net

 

(36,073)

 

 

(84,584)

 

Income (loss) before income taxes

 

23,188

 

 

(26,574)

 

Income tax benefit (provision), net

 

(8,180)

 

 

5,403

 

Net income (loss)

 

15,008

 

 

(21,171)

 

Less: Net income attributable to noncontrolling interests

 

806

 

 

380

 

Net income (loss) attributable to EchoStar Corporation common stock

 

$

14,202

 

 

$

(21,551)

 

 

 

 

 

 

Earnings per share - ClassA and B common stock:

 

 

 

 

Basic earnings (loss) per share

 

$

0.15

 

 

$

(0.22)

 

Diluted earnings (loss) per share

 

$

0.15

 

 

$

(0.22)

 

 

ECHOSTAR CORPORATION

Consolidated Statements of Cash Flows

(Dollars in thousands, except per share amounts)

 

 

For the three months ended March 31,

 

 

2019

 

2018

Cash flows from operating activities:

 

 

 

 

Net income (loss)

 

$

15,008

 

 

$

(21,171)

 

Adjustments to reconcile net income to net cash flows from operating activities:

 

 

 

 

Depreciation and amortization

 

154,221

 

 

145,554

 

Equity in losses of unconsolidated affiliates, net

 

6,353

 

 

1,009

 

Amortization of debt issuance costs

 

2,010

 

 

1,936

 

(Gains) losses on investments, net

 

(6,418)

 

 

36,673

 

Stock-based compensation

 

2,628

 

 

2,765

 

Deferred tax (benefit) provision

 

6,455

 

 

(7,036)

 

Changes in current assets and current liabilities, net:

 

 

 

 

Trade accounts receivable, net

 

(19,231)

 

 

23,153

 

Trade accounts receivable - DISH Network

 

(5,310)

 

 

(13,473)

 

Inventory

 

(1,036)

 

 

(2,297)

 

Other current assets

 

(4,024)

 

 

(10,926)

 

Trade accounts payable

 

8,831

 

 

(6,471)

 

Trade accounts payable - DISH Network

 

1,128

 

 

(1,011)

 

Accrued expenses and other

 

6,854

 

 

(2,288)

 

Changes in noncurrent assets and noncurrent liabilities, net

 

5,563

 

 

(13,982)

 

Other, net

 

2,914

 

 

2,840

 

Net cash flows from operating activities

 

175,946

 

 

135,275

 

Cash flows from investing activities:

 

 

 

 

Purchases of marketable investment securities

 

(325,557)

 

 

(562,611)

 

Sales and maturities of marketable investment securities

 

712,666

 

 

298,596

 

Expenditures for property and equipment

 

(111,962)

 

 

(128,506)

 

Refunds and other receipts related to property and equipment

 

 

 

77,524

 

Expenditures for externally marketed software

 

(7,600)

 

 

(7,148)

 

Net cash flows from investing activities

 

267,547

 

 

(322,145)

 

Cash flows from financing activities:

 

 

 

 

Repayment of debt and finance lease obligations

 

(9,882)

 

 

(9,368)

 

Repurchase of debt

 

(8,046)

 

 

 

Net proceeds from ClassA common stock options exercised

 

2,047

 

 

3,481

 

Net proceeds from Class A common stock issued under the Employee Stock Purchase Plan

 

2,749

 

 

2,636

 

Noncontrolling interest purchase

 

(7,313)

 

 

 

Repayment of in-orbit incentive obligations

 

(1,573)

 

 

(1,265)

 

Other, net

 

(131)

 

 

(243)

 

Net cash flows from financing activities

 

(22,149)

 

 

(4,759)

 

Effect of exchange rates on cash and cash equivalents

 

(133)

 

 

(242)

 

Net increase (decrease) in cash and cash equivalents, including restricted amounts

 

421,211

 

 

(191,871)

 

Cash and cash equivalents, including restricted amounts, beginning of period

 

929,495

 

 

2,432,249

 

Cash and cash equivalents, including restricted amounts, end of period

 

$

1,350,706

 

 

$

2,240,378

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

Cash paid for interest, net of amounts capitalized

 

$

54,572

 

 

$

51,073

 

Cash paid for income taxes

 

$

772

 

 

$

839