EchoStar Announces Financial Results for Three and Nine Months Ending September 30, 2017
ENGLEWOOD, Colo., Nov. 8, 2017 /PRNewswire/ -- EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three and nine months ending September 30, 2017.
Three Months Ending September 30, 2017 Financial Highlights:
-- Consolidated revenues of $481 million.
-- Consolidated net income from continuing operations of $35.9 million,
consolidated net income attributable to EchoStar common stock of $34.7
million and diluted earnings per share of $0.36.
-- Consolidated EBITDA of $220 million (see reconciliation of this non-GAAP
measure below).
Nine Months Ended September 30, 2017 Financial Highlights:
-- Consolidated revenue of $1.38 billion.
-- Consolidated net income from continuing operations of $73.2 million,
consolidated net income attributable to EchoStar common stock of $80.5
million and diluted earnings per share of $0.83.
-- Consolidated EBITDA of $588 million (see reconciliation of this non-GAAP
measure below).
Additional Highlights:
-- Approximately 1,140,000 Hughes broadband subscribers as of September 30,
2017.
-- Cash, cash equivalents and current marketable investment securities of
$3.28 billion as of September 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 nine months ended September 30, 2017 and 2016:
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2017 2016 2017 2016
---- ---- ---- ----
(Dollars in thousands)
Revenue
Hughes $380,061 $355,876 $1,072,143 $1,021,451
EchoStar Satellite Services 97,093 101,480 295,785 305,919
Corporate & Other 4,079 2,690 11,532 7,308
Total $481,233 $460,046 $1,379,460 $1,334,678
======== ======== ========== ==========
EBITDA
Hughes $131,817 $125,522 $342,693 $353,505
EchoStar Satellite Services 78,345 84,257 241,873 257,181
Corporate & Other 9,699 (20,477) 3,472 (45,506)
Total $219,861 $189,302 $588,038 $565,180
======== ======== ======== ========
Net income (loss) attributable to EchoStar $34,669 $36,644 $80,533 $143,451
common stock
Diluted earnings per share (in dollars) $0.36 $0.39 $0.83 $1.52
===== ===== ===== =====
Net income from continuing operations $35,855 $32,911 $73,221 $112,549
======= ======= ======= ========
Capital expenditures from continuing operations $192,131 $139,574 $410,145 $477,818
======== ======== ======== ========
The following table reconciles total consolidated Net income to EBITDA.
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2017 2016 2017 2016
---- ---- ---- ----
(Dollars in thousands)
Net income $35,201 $37,410 $79,675 $141,762
Interest income and expense, net 43,634 31,057 126,156 66,650
Income tax provision 6,082 17,394 9,073 61,258
Depreciation and amortization 134,822 108,549 379,939 324,743
Net (income) loss from discontinued operations 654 (4,499) (6,454) (29,213)
Net income attributable to noncontrolling (532) (609) (351) (20)
interests
EBITDA $219,861 $189,302 $588,038 $565,180
======== ======== ======== ========
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 September 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 September 30, 2017 filed today with the Securities and Exchange Commission.
EchoStar will host its earnings conference call on Wednesday, November 8, 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 # 5279369.
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 September 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
September 30, December 31,
2017 2016
-------------- -------------
Assets
Current Assets:
Cash and cash equivalents $2,798,359 $2,570,365
Marketable investment securities, at fair value 485,035 522,516
Trade accounts receivable, net of allowance for doubtful accounts of $13,211 and $12,956, respectively 192,387 182,527
Trade accounts receivable - DISH Network, net of allowance for doubtful accounts of zero 52,512 19,417
Inventory 91,232 62,620
Prepaids and deposits 53,536 43,456
Other current assets 12,746 10,862
Current assets of discontinued operations 145 311,524
--- -------
Total current assets 3,685,952 3,723,287
--------- ---------
Noncurrent Assets:
Restricted cash and marketable investment securities 13,736 12,926
Property and equipment, net of accumulated depreciation of $2,551,678 and $2,598,492, respectively 3,530,459 3,398,195
Regulatory authorizations, net 545,557 544,633
Goodwill 504,173 504,173
Other intangible assets, net 62,635 80,734
Investments in unconsolidated entities 165,290 171,016
Other receivable - DISH Network 92,133 90,586
Other noncurrent assets, net 207,221 166,385
Noncurrent assets of discontinued operations - 316,924
--- -------
Total noncurrent assets 5,121,204 5,285,572
--------- ---------
Total assets $8,807,156 $9,008,859
========== ==========
Liabilities and Stockholders' Equity
Current Liabilities:
Trade accounts payable $120,436 $170,297
Trade accounts payable - DISH Network 6,556 1,072
Current portion of long-term debt and capital lease obligations 38,407 32,984
Deferred revenue and prepayments 56,285 59,989
Accrued interest 57,837 46,487
Accrued compensation 37,096 53,454
Accrued expenses and other 110,872 95,726
Current liabilities of discontinued operations 542 71,429
--- ------
Total current liabilities 428,031 531,438
------- -------
Noncurrent Liabilities:
Long-term debt and capital lease obligations, net of unamortized debt issuance costs 3,605,715 3,622,463
Deferred tax liabilities, net 745,965 746,667
Other noncurrent liabilities 131,626 90,785
Noncurrent liabilities of discontinued operations - 10,701
--- ------
Total noncurrent liabilities 4,483,306 4,470,616
--------- ---------
Total liabilities 4,911,337 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 September 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, 53,564,095 shares issued and 48,031,777 shares outstanding at 54 52
September 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 September 48 48
30, 2017 and December 31, 2016
Class C common stock, $.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of September 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 September 30, 2017 and - -
December 31, 2016
Additional paid-in capital 3,660,696 3,828,677
Accumulated other comprehensive loss (88,732) (124,803)
Accumulated earnings 408,079 314,247
Treasury stock, at cost (98,162) (98,162)
------- -------
Total EchoStar stockholders' equity 3,881,983 3,920,065
Noncontrolling interest in HSS Tracking Stock - 73,910
Other noncontrolling interests 13,836 12,830
------ ------
Total stockholders' equity 3,895,819 4,006,805
--------- ---------
Total liabilities and stockholders' equity $8,807,156 $9,008,859
========== ==========
ECHOSTAR CORPORATION
Condensed Consolidated Statements of Operations
(In thousands)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2017 2016 2017 2016
---- ---- ---- ----
Revenue:
Services and other revenue - DISH Network $111,135 $115,127 $339,824 $347,440
Services and other revenue - other 310,973 276,280 865,817 820,149
Equipment revenue - DISH Network 126 2,138 175 7,008
Equipment revenue - other 58,999 66,501 173,644 160,081
Total revenue 481,233 460,046 1,379,460 1,334,678
------- ------- --------- ---------
Costs and Expenses:
Cost of sales - services and other (exclusive of depreciation and amortization) 138,641 131,594 404,448 384,942
Cost of sales - equipment (exclusive of depreciation and amortization) 52,051 53,599 153,854 143,252
Selling, general and administrative expenses 91,003 80,672 263,820 240,454
Research and development expenses 8,302 9,030 23,444 23,524
Depreciation and amortization 134,822 108,549 379,939 324,743
------- -------
Total costs and expenses 424,819 383,444 1,225,505 1,116,915
------- ------- --------- ---------
Operating income 56,414 76,602 153,955 217,763
------ ------ ------- -------
Other Income (Expense):
Interest income 12,012 6,259 30,342 13,726
Interest expense, net of amounts capitalized (55,646) (37,316) (156,498) (80,376)
Gains on investments, net 20,090 230 33,962 8,179
Other-than-temporary impairment loss on available-for-sale securities - - (3,298) -
Equity in earnings of unconsolidated affiliates, net 4,381 4,166 15,620 8,984
Other, net 4,686 364 8,211 5,531
----- --- ----- -----
Total other expense, net (14,477) (26,297) (71,661) (43,956)
------- ------- ------- -------
Income from continuing operations before income taxes 41,937 50,305 82,294 173,807
Income tax provision (6,082) (17,394) (9,073) (61,258)
------ ------- ------ -------
Net income from continuing operations 35,855 32,911 73,221 112,549
Net income (loss) from discontinued operations (654) 4,499 6,454 29,213
Net income 35,201 37,410 79,675 141,762
Less: Net income (loss) attributable to noncontrolling interest in HSS Tracking Stock - 85 (655) (926)
Less: Net income attributable to other noncontrolling interests 532 524 1,006 946
--- --- ----- ---
Net income attributable to EchoStar 34,669 36,801 79,324 141,742
Less: Net income (loss) attributable to Hughes Retail Preferred Tracking Stock - 157 (1,209) (1,709)
--- --- ------ ------
Net income attributable to EchoStar common stock $34,669 $36,644 $80,533 $143,451
======= ======= ======= ========
Amounts attributable to EchoStar common stock:
Net income from continuing operations $35,323 $32,145 $74,079 $114,238
Net income (loss) from discontinued operations (654) 4,499 6,454 29,213
Net income attributable to EchoStar common stock $34,669 $36,644 $80,533 $143,451
======= ======= ======= ========
Weighted-average common shares outstanding - Class A and B common stock:
Basic 95,656 93,898 95,316 93,661
====== ====== ====== ======
Diluted 96,890 94,401 96,626 94,189
====== ====== ====== ======
Earnings (loss) per share - Class A and B common stock:
Basic:
Continuing operations $0.37 $0.34 $0.78 $1.22
Discontinued operations (0.01) 0.05 0.06 0.31
----
Total basic earnings per share $0.36 $0.39 $0.84 $1.53
===== ===== ===== =====
Diluted:
Continuing operations $0.36 $0.34 $0.77 $1.21
Discontinued operations - 0.05 0.06 0.31
Total diluted earnings per share $0.36 $0.39 $0.83 $1.52
===== ===== ===== =====
ECHOSTAR CORPORATION
Condensed Consolidated Statements of Cash Flows
(In thousands)
For the Nine Months Ended September 30,
2017 2016
---- ----
Cash Flows from Operating Activities:
Net income $79,675 $141,762
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization 391,598 370,872
Equity in earnings of unconsolidated affiliates, net (14,461) (11,181)
Gain and impairment on investments, net (30,664) (8,179)
Stock-based compensation 7,169 11,953
Deferred tax provision 7,924 71,422
Dividends received from unconsolidated entities 15,000 15,000
Proceeds from sale of trading securities 8,922 7,140
Changes in current assets and current liabilities, net 144,677 (47,013)
Changes in noncurrent assets and noncurrent liabilities, net (23,474) 8,097
Other, net 5,570 14,836
----- ------
Net cash flows from operating activities 591,936 574,709
------- -------
Cash Flows from Investing Activities:
Purchases of marketable investment securities (319,912) (883,288)
Sales and maturities of marketable investment securities 376,648 643,865
Expenditures for property and equipment (422,661) (533,669)
Refunds and other receipts related to capital expenditures - 24,087
Changes in restricted cash and marketable investment securities (810) 7,351
Investments in unconsolidated entities - (1,636)
Sale of investment in unconsolidated entity 17,781 -
Expenditures for externally marketed software (25,447) (17,991)
Other, net - 1,462
--- -----
Net cash flows from investing activities (374,401) (759,819)
-------- --------
Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt - 1,500,000
Payments of debt issuance costs (414) (6,275)
Repayment of debt and capital lease obligations (26,394) (30,615)
Net proceeds from Class A common stock options exercised 33,156 4,679
Net proceeds from Class A common stock issued under the Employee Stock Purchase Plan 6,938 11,478
Cash exchanged for Tracking Stock (651) -
Other, net (3,968) (3,373)
------ ------
Net cash flows from financing activities 8,667 1,475,894
----- ---------
Effect of exchange rates on cash and cash equivalents 1,014 684
----- ---
Net increase in cash and cash equivalents 227,216 1,291,468
Cash and cash equivalents, beginning of period 2,571,143 924,240
--------- -------
Cash and cash equivalents, end of period $2,798,359 $2,215,708
========== ==========
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest (including capitalized interest) $183,451 $97,044
======== =======
Capitalized interest $45,496 $70,386
======= =======
Cash paid for income taxes $10,071 $9,187
======= ======
Employee benefits paid in Class A common stock $11,200 $11,126
======= =======
Property and equipment financed under capital lease obligations $8,423 $7,172
====== ======
Increase (decrease) in capital expenditures included in accounts payable, net $(3,494) $21,951
======= =======
Capitalized in-orbit incentive obligations $43,890 $ -
======= === ===
Noncash net assets exchanged for Tracking Stock $299,425 $ -
======== === ===
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SOURCE EchoStar Corporation
