EchoStar Announces Financial Results for Three and Six Months Ending June 30, 2017
ENGLEWOOD, Colo., Aug. 9, 2017 /PRNewswire/ -- EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three and six months ending June 30, 2017.
Three Months Ending June 30, 2017 Financial Highlights:
-- Consolidated revenues of $465 million.
-- Consolidated net income from continuing operations of $6.6 million,
consolidated net income attributable to EchoStar common stock of $6.9
million and diluted earnings per share of 0.07.
-- Consolidated net income from continuing operations declined compared
to the three months ended June 30, 2016 primarily due to:
-- An increase of $22.3 million in interest expense from the
issuance of bonds in July 2016;
-- A decrease of $13.1 million in capitalized interest relating to
satellites placed into service in 2017; and
-- An increase of $24.0 million in depreciation expense primarily
on those satellites;
-- Partially offset by a decrease in income tax expense of $20.7
million.
-- Consolidated EBITDA of $185 million (see reconciliation of this
non-GAAP measure below).
Six Months Ended June 30, 2017 Financial Highlights:
-- Consolidated revenue of $898 million.
-- Consolidated net income from continuing operations of $37.4 million,
consolidated net income attributable to EchoStar common stock of $45.9
million and diluted earnings per share of $0.48.
-- Consolidated EBITDA of $368 million (see reconciliation of this non-GAAP
measure below).
Additional Highlights:
-- Approximately 1,085,000 Hughes broadband subscribers as of June 30,
2017.
-- Cash, cash equivalents and current marketable investment securities of
$3.27 billion as of June 30, 2017
Starting with the quarter that ended March 31, 2017, we changed the way we present our segments. Previously, our business segments reflected an allocation of the costs of our corporate functions. Under our new presentation, these costs are no longer allocated to the operating segments and are now reported as part of the Corporate and Other segment (previously "All Other and Eliminations").
In addition, results of our EchoStar Technology segment, which was transferred to DISH Network Corporation in the Share Exchange transaction, are included in Discontinued Operations.
Set forth below is a table highlighting certain of EchoStar's segment results for the three and six months ended June 30, 2017 and 2016:
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2017 2016 2017 2016
---- ---- ---- ----
(Dollars in thousands)
Revenue
Hughes $362,762 $339,337 $692,082 $665,575
EchoStar Satellite Services 98,366 101,450 198,692 204,439
Corporate & Other 3,948 1,871 7,453 4,618
Total $465,076 $442,658 $898,227 $874,632
======== ======== ======== ========
EBITDA
Hughes $110,024 $117,627 $210,876 $227,983
EchoStar Satellite Services 80,465 84,284 163,528 172,924
Corporate & Other (5,626) (11,585) (6,227) (25,029)
Total $184,863 $190,326 $368,177 $375,878
======== ======== ======== ========
Net income (loss) attributable to EchoStar $6,940 $56,133 $45,864 $106,807
common stock
Diluted earnings per share (in dollars) $0.07 $0.60 $0.48 $1.14
===== ===== ===== =====
Net income from continuing operations $6,591 $44,253 $37,366 $79,638
====== ======= ======= =======
Expenditures for property and equipment from continuing operations $128,064 $132,449 $218,014 $338,244
======== ======== ======== ========
The following table reconciles total consolidated Net income to EBITDA.
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2017 2016 2017 2016
---- ---- ---- ----
(Dollars in thousands)
Net income $7,122 $55,909 $44,474 $104,352
Interest income and expense, net 45,417 16,387 82,522 35,593
Income tax provision 3,003 23,692 2,991 43,864
Depreciation and amortization 130,034 106,117 245,117 216,194
Net income from discontinued operations (531) (11,656) (7,108) (24,714)
Net (income) loss attributable to noncontrolling (182) (123) 181 589
interests
EBITDA $184,863 $190,326 $368,177 $375,878
======== ======== ======== ========
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 June 30, 2017 and 2016 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 June 30, 2017 filed today with the Securities and Exchange Commission.
EchoStar will host its earnings conference call on Wednesday, August 9, 2017 at 11:00 a.m. Eastern Time. The call-in numbers are (877) 815-1625 (toll-free) and (716) 247-5178 (international), Conference ID # 63515337.
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, 2016 and Quarterly Report on Form 10-Q for the period ended June 30, 2017, each 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
Condensed Consolidated Balance Sheets
(Dollars in thousands, except per-share amounts)
As of
June 30, 2017 December 31, 2016
------------- -----------------
Assets
Current Assets:
Cash and cash equivalents $2,985,062 $2,570,365
Marketable investment securities, at fair value 280,402 522,516
Trade accounts receivable, net of allowance for doubtful accounts of $12,541 and $12,956, respectively 192,246 182,527
Trade accounts receivable - DISH Network, net of allowance for doubtful accounts of zero 56,825 19,417
Inventory 91,265 62,620
Prepaids and deposits 52,857 43,456
Other current assets 12,035 10,862
Current assets of discontinued operations 37,814 311,524
------ -------
Total current assets 3,708,506 3,723,287
--------- ---------
Noncurrent Assets:
Restricted cash and marketable investment securities 13,847 12,926
Property and equipment, net of accumulated depreciation of $2,661,897 and $2,598,492, respectively 3,451,362 3,398,195
Regulatory authorizations, net 544,310 544,633
Goodwill 504,173 504,173
Other intangible assets, net 66,316 80,734
Investments in unconsolidated entities 174,067 171,016
Other receivable - DISH Network 91,579 90,586
Other noncurrent assets, net 189,511 166,385
Noncurrent assets of discontinued operations - 316,924
--- -------
Total noncurrent assets 5,035,165 5,285,572
--------- ---------
Total assets $8,743,671 $9,008,859
========== ==========
Liabilities and Stockholders' Equity
Current Liabilities:
Trade accounts payable $118,563 $170,297
Trade accounts payable - DISH Network 961 1,072
Current portion of long-term debt and capital lease obligations 39,229 32,984
Deferred revenue and prepayments 54,722 59,989
Accrued interest 46,280 46,487
Accrued compensation 37,978 53,454
Accrued expenses and other 106,366 95,726
Current liabilities of discontinued operations 3,071 71,429
----- ------
Total current liabilities 407,170 531,438
------- -------
Noncurrent Liabilities:
Long-term debt and capital lease obligations, net of unamortized debt issuance costs 3,611,746 3,622,463
Deferred tax liabilities, net 736,100 746,667
Other noncurrent liabilities 131,931 90,785
Noncurrent liabilities of discontinued operations - 10,701
--- ------
Total noncurrent liabilities 4,479,777 4,470,616
--------- ---------
Total liabilities 4,886,947 5,002,054
--------- ---------
Commitments and Contingencies (Note 14)
Stockholders' Equity:
Preferred Stock, $.001 par value, 20,000,000 shares authorized:
Hughes Retail Preferred Tracking Stock, $.001 par value, zero authorized, issued and outstanding at June 30, 2017 and 13,000,000 - 6
shares authorized and 6,290,499 issued and outstanding at December 31, 2016
Common stock, $.001 par value, 4,000,000,000 shares authorized:
Class A common stock, $.001 par value, 1,600,000,000 shares authorized, 53,486,261 shares issued and 47,953,943 shares 53 52
outstanding at June 30, 2017 and 52,243,465 shares issued and 46,711,147 shares outstanding at December 31, 2016
Class B common stock, $.001 par value, 800,000,000 shares authorized, 47,687,039 shares issued and outstanding at each of June 30, 48 48
2017 and December 31, 2016
Class C common stock, $.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of June 30, 2017 and - -
December 31, 2016
Class D common stock, $.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of June 30, 2017 and - -
December 31, 2016
Additional paid-in capital 3,654,139 3,828,677
Accumulated other comprehensive loss (86,068) (124,803)
Accumulated earnings 373,410 314,247
Treasury stock, at cost (98,162) (98,162)
------- -------
Total EchoStar stockholders' equity 3,843,420 3,920,065
Noncontrolling interest in HSS Tracking Stock - 73,910
Other noncontrolling interests 13,304 12,830
------ ------
Total stockholders' equity 3,856,724 4,006,805
--------- ---------
Total liabilities and stockholders' equity $8,743,671 $9,008,859
========== ==========
ECHOSTAR CORPORATION
Condensed Consolidated Statements of Operations
(In thousands)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2017 2016 2017 2016
---- ---- ---- ----
Revenue:
Services and other revenue - DISH Network $113,734 $115,864 $228,689 $232,313
Services and other revenue - other 285,053 273,972 554,844 543,869
Equipment revenue - DISH Network 18 2,101 49 4,870
Equipment revenue - other 66,271 50,721 114,645 93,580
Total revenue 465,076 442,658 898,227 874,632
------- ------- ------- -------
Costs and Expenses:
Cost of sales - services and other (exclusive of depreciation and amortization) 134,024 127,766 265,807 253,348
Cost of sales - equipment (exclusive of depreciation and amortization) 57,865 46,545 101,803 89,653
Selling, general and administrative expenses 89,826 79,237 172,817 159,782
Research and development expenses 7,437 7,562 15,142 14,494
Depreciation and amortization 130,034 106,117 245,117 216,194
------- -------
Total costs and expenses 419,186 367,227 800,686 733,471
------- ------- ------- -------
Operating income 45,890 75,431 97,541 141,161
------ ------ ------ -------
Other Income (Expense):
Interest income 10,039 3,502 18,330 7,467
Interest expense, net of amounts capitalized (55,456) (19,889) (100,852) (43,060)
Gains on investments, net 1,837 5,487 13,872 7,949
Other-than-temporary impairment loss on available-for-sale securities - - (3,298) -
Equity in earnings of unconsolidated affiliates, net 4,831 5,626 11,239 4,818
Other, net 2,453 (2,212) 3,525 5,167
----- ------ ----- -----
Total other expense, net (36,296) (7,486) (57,184) (17,659)
------- ------ ------- -------
Income from continuing operations before income taxes 9,594 67,945 40,357 123,502
Income tax provision (3,003) (23,692) (2,991) (43,864)
------ ------- ------ -------
Net income from continuing operations 6,591 44,253 37,366 79,638
Net income from discontinued operations 531 11,656 7,108 24,714
Net income 7,122 55,909 44,474 104,352
Less: Net loss attributable to noncontrolling interest in HSS Tracking Stock - (188) (655) (1,011)
Less: Net income attributable to other noncontrolling interests 182 311 474 422
--- --- --- ---
Net income attributable to EchoStar 6,940 55,786 44,655 104,941
Less: Net loss attributable to Hughes Retail Preferred Tracking Stock - (347) (1,209) (1,866)
--- ---- ------ ------
Net income attributable to EchoStar common stock $6,940 $56,133 $45,864 $106,807
====== ======= ======= ========
Amounts attributable to EchoStar common stock:
Net income from continuing operations $6,409 $44,477 $38,756 $82,093
Net income from discontinued operations 531 11,656 7,108 24,714
Net income attributable to EchoStar common stock $6,940 $56,133 $45,864 $106,807
====== ======= ======= ========
Weighted-average common shares outstanding - Class A and B common stock:
Basic 95,537 93,751 95,143 93,541
====== ====== ====== ======
Diluted 96,785 94,330 96,451 94,090
====== ====== ====== ======
Earnings per share - Class A and B common stock:
Basic:
Continuing operations $0.07 $0.47 $0.41 $0.88
Discontinued operations - 0.13 0.07 0.26
----
Total basic earnings per share $0.07 $0.60 $0.48 $1.14
===== ===== ===== =====
Diluted:
Continuing operations $0.07 $0.47 $0.40 $0.87
Discontinued operations - 0.13 0.08 0.27
Total diluted earnings per share $0.07 $0.60 $0.48 $1.14
===== ===== ===== =====
ECHOSTAR CORPORATION
Condensed Consolidated Statements of Cash Flows
(In thousands)
For the Six Months Ended June 30,
2017 2016
---- ----
Cash Flows from Operating Activities:
Net income $44,474 $104,352
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization 256,776 247,239
Equity in earnings of unconsolidated affiliates, net (10,080) (6,017)
Gain and impairment on investments, net (10,574) (7,949)
Stock-based compensation 3,908 8,328
Deferred tax provision 673 53,091
Dividends received from unconsolidated entity 7,500 10,000
Proceeds from sale of trading securities 8,922 7,140
Changes in current assets and current liabilities, net 87,305 (73,916)
Changes in noncurrent assets and noncurrent liabilities, net (11,763) 2,859
Other, net 5,738 10,507
----- ------
Net cash flows from operating activities 382,879 355,634
------- -------
Cash Flows from Investing Activities:
Purchases of marketable investment securities (46,533) (641,358)
Sales and maturities of marketable investment securities 291,944 500,775
Expenditures for property and equipment (230,530) (376,856)
Refunds and other receipts related to capital expenditures - 24,087
Changes in restricted cash and marketable investment securities (921) (1,689)
Investments in unconsolidated entities - (1,636)
Sale of investment in unconsolidated entity 17,781 -
Expenditures for externally marketed software (17,119) (12,299)
Other, net - 1,462
--- -----
Net cash flows from investing activities 14,622 (507,514)
------ --------
Cash Flows from Financing Activities:
Repayment of debt and capital lease obligations (17,718) (20,433)
Net proceeds from Class A common stock options exercised 31,992 2,975
Net proceeds from Class A common stock issued under the Employee Stock Purchase Plan 4,540 7,530
Cash exchanged for Tracking Stock (651) -
Other, net (2,712) (1,320)
------ ------
Net cash flows from financing activities 15,451 (11,248)
------ -------
Effect of exchange rates on cash and cash equivalents 967 728
--- ---
Net increase (decrease) in cash and cash equivalents 413,919 (162,400)
Cash and cash equivalents, beginning of period 2,571,143 924,240
--------- -------
Cash and cash equivalents, end of period $2,985,062 $761,840
========== ========
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest (including capitalized interest) $130,231 $87,213
======== =======
Capitalized interest $33,768 $47,093
======= =======
Cash paid for income taxes $9,369 $6,199
====== ======
Employee benefits paid in Class A common stock $11,200 $11,126
======= =======
Property and equipment financed under capital lease obligations $8,189 $6,857
====== ======
Increase (decrease) in capital expenditures included in accounts payable, net $(3,404) $8,238
======= ======
Capitalized in-orbit incentive obligations $43,890 $ -
======= === ===
Noncash net assets exchanged for Tracking Stock $299,425 $ -
======== === ===
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SOURCE EchoStar Corporation
