EchoStar Announces Fourth Quarter and Full Year 2017 Results
ENGLEWOOD, Colo., Feb. 22, 2018 /PRNewswire/ -- EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the fourth quarter and full year ended December 31, 2017.
Fourth Quarter 2017 Financial Highlights:
-- Consolidated revenues of $506 million.
-- Consolidated net income from continuing operations of $311.8 million,
consolidated net income attributable to EchoStar common stock of $313.2
million and diluted earnings per share of $3.23.
-- Consolidated EBITDA of $207 million (see reconciliation of this non-GAAP
measure below).
Full Year Ended December 31, 2017 Financial Highlights:
-- Consolidated revenue of $1.89 billion.
-- Consolidated net income from continuing operations of $385.0 million,
consolidated net income attributable to EchoStar common stock of $393.8
million and diluted earnings per share of $4.07.
-- Consolidated EBITDA of $795 million (see reconciliation of this non-GAAP
measure below).
Additional Highlights:
-- Approximately 1,208,000 Hughes broadband subscribers as of December 31,
2017.
-- Cash, cash equivalents and current marketable investment securities of
$3.25 billion as of December 31, 2017
The Tax Cuts and Jobs Act enacted in December 2017 includes a reduction of the federal corporate tax rate to 21%. As a result, we provisionally recorded a one-time tax benefit of $303.5 million from the re- measurement of our deferred tax assets and liabilities. The net income and earnings per share noted above include the impact of this benefit.
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 twelve months ended December 31, 2017 and 2016:
For the Three Months For the Years
Ended December 31, Ended December 31,
2017 2016 2017 2016
---- ---- ---- ----
(Dollars in thousands)
Revenue
Hughes $405,775 $370,910 $1,477,918 $1,392,361
EchoStar Satellite Services 96,459 101,741 392,244 407,660
Corporate & Other 3,814 3,137 15,346 10,445
------ ------
Total $506,048 $475,788 $1,885,508 $1,810,466
======== ======== ========== ==========
EBITDA
Hughes $132,529 $123,660 $475,222 $477,165
EchoStar Satellite Services 73,412 84,335 315,285 341,516
Corporate & Other 598 (22,170) 4,070 (67,676)
----- -------
Total $206,539 $185,825 $794,577 $751,005
======== ======== ======== ========
Net income (loss) attributable to EchoStar common stock $313,237 $38,222 $393,770 $181,673
======== ======= ======== ========
Diluted earnings per share (in dollars) $3.23 $0.40 $4.07 $1.92
===== ===== ===== =====
Net income from continuing operations $311,759 $23,823 $384,980 $136,372
======== ======= ======== ========
Capital expenditures from continuing operations $156,239 $150,692 $566,384 $628,510
======== ======== ======== ========
The following table reconciles total consolidated Net income to EBITDA.
For the Three Months For the Years
Ended December 31, Ended December 31,
2017 2016 2017 2016
---- ---- ---- ----
(In thousands)
Net income $313,814 $38,930 $393,489 $180,692
Interest income and expense, net 46,465 35,587 172,621 102,237
Income tax (benefit) provision, net (293,359) 18,996 (284,286) 80,254
Depreciation and amortization 142,251 108,161 522,190 432,904
Net income from discontinued operations (2,055) (15,107) (8,509) (44,320)
Net income attributable to noncontrolling interests (577) (742) (928) (762)
---- ---- ---- ----
EBITDA $206,539 $185,825 $794,577 $751,005
======== ======== ======== ========
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 benefit (provision), net" 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, 2017 and 2016 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, 2017 filed today with the Securities and Exchange Commission.
EchoStar will host its earnings conference call on Thursday, February 22, 2018 at 11:00 a.m. Eastern Time. The call-in numbers are (877) 815-1625 (toll-free) and (716) 247-5178 (international), Conference ID # 2186058.
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, 2017, 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.
ECHOSTAR CORPORATION
Consolidated Balance Sheets
As of December 31,
2017 2016
---- ----
Assets
Current Assets:
Cash and cash equivalents $2,431,456 $2,570,365
Marketable investment securities, at fair value 814,161 522,516
Trade accounts receivable, net of allowance for doubtful accounts of $12,027 and $12,956, respectively 196,840 182,527
Trade accounts receivable - DISH Network, net of allowance for doubtful accounts of zero 43,295 19,417
Inventory 83,595 62,620
Prepaids and deposits 54,533 43,456
Other current assets 91,574 10,862
Current assets of discontinued operations 97 311,524
--- -------
Total current assets 3,715,551 3,723,287
--------- ---------
Noncurrent Assets:
Property and equipment, net of accumulated depreciation of $2,661,129 and $2,598,492, respectively 3,465,471 3,398,195
Regulatory authorizations, net 536,936 544,633
Goodwill 504,173 504,173
Other intangible assets, net 58,955 80,734
Investments in unconsolidated entities 161,427 171,016
Other receivable - DISH Network 92,687 90,586
Other noncurrent assets, net 214,814 179,311
Noncurrent assets of discontinued operations - 316,924
--- -------
Total noncurrent assets 5,034,463 5,285,572
--------- ---------
Total assets $8,750,014 $9,008,859
========== ==========
Liabilities and Stockholders' Equity
Current Liabilities:
Trade accounts payable $108,406 $170,297
Trade accounts payable - DISH Network 4,753 1,072
Current portion of long-term debt and capital lease obligations 40,631 32,984
Deferred revenue and prepayments 65,959 59,989
Accrued interest 47,616 46,487
Accrued compensation 47,756 53,454
Accrued expenses and other 98,227 95,726
Current liabilities of discontinued operations 542 71,429
--- ------
Total current liabilities 413,890 531,438
------- -------
Noncurrent Liabilities:
Long-term debt and capital lease obligations, net of unamortized debt issuance costs 3,594,213 3,622,463
Deferred tax liabilities, net 436,023 746,667
Other noncurrent liabilities 128,503 90,785
Noncurrent liabilities of discontinued operations - 10,701
--- ------
Total noncurrent liabilities 4,158,739 4,470,616
--------- ---------
Total liabilities 4,572,629 5,002,054
--------- ---------
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, zero authorized, issued and outstanding at December 31, 2017 and - 6
13,000,000 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, 53,663,859 shares issued and 48,131,541 shares 54 52
outstanding at December 31, 2017 and 52,243,465 shares issued and 46,711,147 shares outstanding at December 31, 2016
Class B convertible common stock, $.001 par value, 800,000,000 shares authorized, 47,687,039 shares issued and outstanding 48 48
at each of December 31, 2017 and 2016
Class C convertible common stock, $.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of - -
December 31, 2017 and 2016
Class D common stock, $.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of December 31, - -
2017 and 2016
Additional paid-in capital 3,669,461 3,828,677
Accumulated other comprehensive loss (130,154) (124,803)
Accumulated earnings 721,316 314,247
Treasury stock, at cost (98,162) (98,162)
------- -------
Total EchoStar stockholders' equity 4,162,563 3,920,065
Noncontrolling interest in HSS Tracking Stock - 73,910
Other noncontrolling interests 14,822 12,830
------ ------
Total stockholders' equity 4,177,385 4,006,805
--------- ---------
Total liabilities and stockholders' equity $8,750,014 $9,008,859
========== ==========
ECHOSTAR CORPORATION
Consolidated Statements of Operations
(In thousands)
For the Years Ended December 31,
2017 2016 2015
---- ---- ----
Revenue:
Services and other revenue - other $1,200,321 $1,100,828 $1,093,674
Services and other revenue - DISH Network 445,698 463,442 532,162
Equipment revenue - other 239,199 237,356 212,269
Equipment revenue - DISH Network 290 8,840 10,752
Total revenue 1,885,508 1,810,466 1,848,857
--------- --------- ---------
Costs and Expenses:
Cost of sales - services and other (exclusive of depreciation and amortization) 546,327 521,220 574,400
Cost of sales - equipment (exclusive of depreciation and amortization) 212,170 203,965 195,360
Selling, general and administrative expenses 366,007 325,044 318,136
Research and development expenses 31,745 31,170 26,377
Depreciation and amortization 522,190 432,904 460,819
Impairment of long-lived assets 10,762 - -
------ --- ---
Total costs and expenses 1,689,201 1,514,303 1,575,092
--------- --------- ---------
Operating income 196,307 296,163 273,765
------- ------- -------
Other Income (Expense):
Interest income 44,619 21,244 10,388
Interest expense, net of amounts capitalized (217,240) (123,481) (121,995)
Gains (losses) on investments, net 56,751 9,767 (6,443)
Other-than-temporary impairment loss on available-for-sale securities (3,298) - (11,226)
Equity in earnings (losses) of unconsolidated affiliates, net 16,973 10,802 (2,477)
Other, net 6,582 2,131 (2,685)
----- ----- ------
Total other expense, net (95,613) (79,537) (134,438)
------- ------- --------
Income from continuing operations before income taxes 100,694 216,626 139,327
Income tax benefit (provision), net 284,286 (80,254) (51,235)
------- ------- -------
Net income from continuing operations 384,980 136,372 88,092
Net income from discontinued operations 8,509 44,320 61,279
Net income 393,489 180,692 149,371
Less: Net loss attributable to noncontrolling interest in HSS Tracking Stock (655) (944) (5,603)
Less: Net income attributable to other noncontrolling interests 1,583 1,706 1,617
----- ----- -----
Net income attributable to EchoStar 392,561 179,930 153,357
Less: Net loss attributable to Hughes Retail Preferred Tracking Stock (1,209) (1,743) (10,343)
------ ------ -------
Net income attributable to EchoStar common stock $393,770 $181,673 $163,700
======== ======== ========
Amounts attributable to EchoStar common stock:
Net income from continuing operations $385,261 $137,353 $102,421
Net income from discontinued operations 8,509 44,320 61,279
Net income attributable to EchoStar common stock $393,770 $181,673 $163,700
======== ======== ========
Weighted-average common shares outstanding - Class A and B common stock:
Basic 95,425 93,795 92,397
====== ====== ======
Diluted 96,741 94,410 93,466
====== ====== ======
Earnings per share - Class A and B common stock:
Basic:
Continuing operations $4.04 $1.46 $1.11
Discontinued operations 0.09 0.48 0.66
Total basic earnings per share $4.13 $1.94 $1.77
===== ===== =====
Diluted:
Continuing operations $3.98 $1.45 $1.10
Discontinued operations 0.09 0.47 0.65
Total diluted earnings per share $4.07 $1.92 $1.75
===== ===== =====
ECHOSTAR CORPORATION
Consolidated Statements of Cash Flows
(In thousands)
For the Years Ended December 31,
2017 2016 2015
---- ---- ----
Cash Flows from Operating Activities:
Net income $393,489 $180,692 $149,371
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization 533,849 495,068 528,158
Impairment of long-lived assets 10,762 - 2,400
Equity in earnings of unconsolidated affiliates, net (15,814) (13,310) (1,895)
Losses (gains) and impairment on marketable investment securities, net (53,453) (9,767) 17,669
Loss from partial redemption of debt - - 5,044
Stock-based compensation 10,103 15,234 21,839
Deferred tax provision (benefit) (288,577) 98,148 56,132
Dividends received from unconsolidated entities 19,000 15,000 5,000
Proceeds from sale of trading securities 8,922 7,140 380
Changes in current assets and current liabilities, net:
Trade accounts receivable, net 421 (26,942) (38,452)
Trade accounts receivable - DISH Network 235,227 (1,456) (25,490)
Inventory (19,291) (4,814) (4,906)
Other current assets (15,352) 2,263 6,499
Trade accounts payable (78,419) (24,571) 37,228
Trade accounts payable - DISH Network 731 (19,650) (7,792)
Accrued expenses and other 11,993 55,998 1,477
Changes in noncurrent assets and noncurrent liabilities, net (36,975) 9,459 1,616
Other, net 10,276 24,851 22,173
------ ------ ------
Net cash flows from operating activities 726,892 803,343 776,451
------- ------- -------
Cash Flows from Investing Activities:
Purchases of marketable investment securities (855,717) (921,247) (536,430)
Sales and maturities of marketable investment securities 578,051 1,001,166 1,057,034
Expenditures for property and equipment (583,211) (722,341) (809,270)
Refunds and other receipts related to capital expenditures 4,311 24,087 105,750
Sale of investment in unconsolidated entity 17,781 - -
Investments in unconsolidated entities - (1,636) (64,655)
Expenditures for externally marketed software (31,331) (23,252) (22,327)
Other, net 2,114 10,956 (5,413)
----- ------ ------
Net cash flows from investing activities (868,002) (632,267) (275,311)
-------- -------- --------
Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt - 1,500,000 -
Payments of debt issuance costs (414) (7,097) -
Repayment of 6 1/2% Senior Secured Notes Due 2019 and related premium - - (113,300)
Repayment of debt and capital lease obligations (37,670) (40,364) (44,804)
Net proceeds from Class A common stock options exercised 35,536 13,065 24,841
Net proceeds from Class A common stock issued under the Employee Stock Purchase Plan 8,758 14,367 13,888
Cash exchanged for Tracking Stock (651) - -
Other, net (5,487) (4,282) (882)
------ ------ ----
Net cash flows from financing activities 72 1,475,689 (120,257)
--- --------- --------
Effect of exchange rates on cash and cash equivalents 1,351 138 (5,696)
----- --- ------
Net increase (decrease) in cash and cash equivalents (139,687) 1,646,903 375,187
Cash and cash equivalents, beginning of period 2,571,143 924,240 549,053
--------- ------- -------
Cash and cash equivalents, end of period $2,431,456 $2,571,143 $924,240
========== ========== ========
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest (including capitalized interest) $259,632 $172,707 $179,114
======== ======== ========
Capitalized interest $52,015 $94,395 $63,808
======= ======= =======
Cash paid for income taxes $11,033 $11,700 $6,394
======= ======= ======
Employee benefits paid in Class A common stock $11,200 $11,126 $10,711
======= ======= =======
Property and equipment financed under capital lease obligations $8,484 $7,652 $8,604
====== ====== ======
Increase (decrease) in capital expenditures included in accounts payable, net $(3,831) $3,054 $(7,123)
======= ====== =======
Transfer of EchoStar 105/SES-11 payloads to SES in exchange for receivable $77,524 $ - $ -
======= === === === ===
Capitalized in-orbit incentive obligations $43,890 $ - $ -
======= === === === ===
Noncash net assets exchanged for Tracking Stock $299,888 $ - $ -
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SOURCE EchoStar Corporation
