EchoStar Announces Financial Results for Three and Nine Months Ended September 30, 2019
ENGLEWOOD, Colo., Nov. 7, 2019 /PRNewswire/ -- EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three and nine months ended September 30, 2019.
Three Months Ended September 30, 2019 Financial Highlights:
-- Consolidated revenues of $472.3 million.
-- Consolidated net loss of $21.1 million, consolidated net loss
attributable to EchoStar common stock of $18.3 million, and diluted loss
per share of $0.19.
-- Consolidated Adjusted EBITDA of $148.3 million (see discussion and the
reconciliation of GAAP to this non-GAAP measure below).
Nine Months Ended September 30, 2019 Financial Highlights:
-- Consolidated revenues of $1.4 billion.
-- Consolidated net loss of $11.2 million, consolidated net loss
attributable to EchoStar common stock of $9.8 million, and diluted loss
per share of $0.10.
-- Consolidated Adjusted EBITDA of $422.7 million (see discussion and the
reconciliation of GAAP to this non-GAAP measure below).
"I am pleased with our performance in the third quarter of 2019," commented Michael Dugan, CEO and President of EchoStar. "On September 10th, we completed the spin-off to DISH of the BSS business and ancillary assets and liabilities in exchange for DISH shares that were distributed to EchoStar shareholders. As a result, the BSS business has been presented as discontinued operations in our current financial results. We can now focus on the growing broadband market, additional satellite opportunities, and strategic investments. We grew our consumer subscriber base by approximately 22,000 driven by our international markets and launched a consumer service in Mexico on October 1st. Our North American capacity is relatively full with the EchoStar 24/J3 satellite scheduled for launch in 2021. We continue to work to complete our previously announced JVs with Yahsat in Brazil and Bharti Airtel in India and also announced the acquisition of Helios Wire Corporation on October 25th. The Helios acquisition lays the foundation for the creation of worldwide S-band capabilities."
Three Months Ended September 30, 2019 - Additional Information:
-- Consolidated revenue increased 4% or $16.0 million year over year.
-- An accrual of $20.7 million was booked during the quarter related to a
license fee dispute with the Government of India. This impacted SG&A
expenses by $7.1 million and Interest expense, net of amounts
capitalized, by $13.6 million. Net income (loss) attributable to
noncontrolling interests had a corresponding offset of $3.2 million.
This fee dispute dates back over a decade and has affected the entire
Indian Telecom industry.
-- Adjusted EBITDA decreased 4% or $6.0 million year over year.
-- Hughes segment Adjusted EBITDA increased by $1.9 million which
includes the impact of the industry wide fee dispute with the
Government of India.
-- ESS segment Adjusted EBITDA decreased by $2.9 million primarily due
to lower revenue.
-- Corporate and Other segment Adjusted EBITDA decreased by $5.0
million driven primarily by transaction related legal costs and
increased losses on equity in earnings of unconsolidated affiliates.
-- Net loss from continuing operations was $23.2 million, the loss
increasing by $20.0 million from last year. The decline was primarily
due to higher unrealized losses on foreign currency of $11.0 million,
higher depreciation and amortization expense of $7.0 million, increased
equity losses of unconsolidated affiliates of $3.6 million, partially
offset by higher gains of investments of $5.4 million.
-- Hughes broadband subscribers are approximately 1,437,000 as of September
30, 2019 including approximately 192,000 subscribers in Central and
South America.
-- Cash, cash equivalents and current marketable investment securities of
$2.5 billion as of September 30, 2019.
Set forth below is a table highlighting certain of EchoStar's segment results for the three and nine months ended September 30, 2019 and 2018 (amounts in thousands):
For the three months
For the nine months
ended September 30, ended September 30,
2019 2018 2019 2018
Revenue
Hughes $
463,735 $
444,762 $
1,360,919 $
1,271,886
EchoStar Satellite Services 4,098 6,802 11,873 22,562
Corporate and Other 4,429 4,710 14,283 14,207
Total revenue $
472,262 $
456,274 $
1,387,075 $
1,308,655
Adjusted EBITDA
Hughes $
169,358 $
167,492 $
486,212 $
465,724
EchoStar Satellite Services 1,791 4,687 5,006 15,478
Corporate & Other:
Corporate overhead, operating and (21,028) (18,231) (58,968) (54,489)
other
Equity in earnings (losses) of (1,782) 416 (9,507) (2,651)
unconsolidated affiliates, net
Total Corporate & Other (22,810) (17,815) (68,476) (57,141)
Total Adjusted EBITDA $
148,339 $
154,364 $
422,742 $
424,061
Net income (loss) from continuing $
(23,161) $
(3,195) $
(57,581) $
(3,828)
operations
Expenditures for property and $
95,155 $
167,144 $
314,351 $
337,625
equipment
Reconciliation of GAAP to Non-GAAP Measurement (amounts in thousands):
For the three months For the nine months
ended September 30, ended September 30,
2019 2018 2019 2018
Net income (loss) $
(21,106) $
16,502 $
(11,158) $
73,015
Interest income and expense, net 32,690 33,529 91,996 107,801
Income tax provision, net 5,016 7,963 12,607 8,275
Depreciation and amortization 122,374 115,325 361,619 338,737
Net (income) loss from discontinued (2,055) (19,697) (46,423) (76,843)
operations
Net (income) loss attributable to 2,797 (450) 1,359 (1,292)
noncontrolling interests
EBITDA 139,716 153,172 410,000 449,693
(Gains) losses on investments, net (8,295) (2,873) (28,087) (31,606)
Litigation expense (1) 1,824 26,328
Vendor settlement (9,571)
Unrealized (gains) losses on foreign 15,094 4,065 14,501 15,545
currency
Adjusted EBITDA $
148,339 $
154,364 $
422,742 $
424,061
(1) Does not include license fee dispute with the Government of India.
Note on Use of Non-GAAP Financial Measures
EBITDA is defined as "Net income (loss)" excluding "Interest income and expense, net," "Income tax provision (benefit), net," "Depreciation and amortization," "Net income (loss) from discontinued operations," and "Net income (loss) attributable to noncontrolling interests."
Adjusted EBITDA is defined as EBITDA excluding "Gains and losses on investments, net," unrealized gains (losses) on foreign currency, and other non-recurring or non-operational items. EBITDA and Adjusted EBITDA are not measures determined in accordance with US GAAP. EBITDA and Adjusted EBITDA are 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 EBITDA and Adjusted EBITDA as measures of our operating efficiency and overall financial performance for benchmarking against our peers and competitors. Management believes that these non-GAAP measures provide meaningful supplemental information regarding the underlying operating performance of our business and are appropriate to enhance an overall understanding of our financial performance. Management also believes that EBITDA and Adjusted EBITDA are useful to investors because they are 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, 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 September 30, 2019 filed today with the Securities and Exchange Commission.
EchoStar will host its earnings conference call on Thursday, November 7, 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 3877704.
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 September 30, 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
Condensed Consolidated Balance Sheets
(Amounts in thousands, except per share amounts)
As of
September 30, 2019 December 31, 2018
Assets
Current assets:
Cash and cash equivalents $
1,547,162 $
928,306
Marketable investment securities, at fair value 1,000,165 2,282,152
Trade accounts receivable and contract assets, net (Note 3) 200,779 201,096
Trade accounts receivable - DISH Network 16,125 14,200
Inventory 83,397 75,379
Prepaids and deposits 63,210 57,691
Other current assets 17,382 18,539
Current assets of discontinued operations 5,866 3,486
Total current assets 2,934,086 3,580,849
Noncurrent assets:
Property and equipment, net 2,444,157 2,534,666
Operating lease right-of-use assets 112,263
Goodwill 504,173 504,173
Regulatory authorizations, net 426,189 430,039
Other intangible assets, net 33,188 44,231
Investments in unconsolidated entities 225,908 262,473
Other receivables - DISH Network 93,321 95,114
Other noncurrent assets, net 264,465 247,316
Noncurrent assets of discontinued operations 962,433
Total noncurrent assets 4,103,664 5,080,445
Total assets $
7,037,750 $
8,661,294
Liabilities and Stockholders' Equity
Current liabilities:
Trade accounts payable $
122,319 $
121,437
Trade accounts payable - DISH Network 714 1,698
Current portion of long-term debt and finance lease obligations 407 919,582
Contract liabilities 109,557 72,284
Accrued interest 37,039 45,350
Accrued compensation 42,810 54,242
Accrued taxes 17,465 16,013
Accrued expenses and other 126,865 64,395
Current liabilities of discontinued operations 4,565 50,136
Total current liabilities 461,741 1,345,137
Noncurrent liabilities:
Long-term debt and finance lease obligations, net 2,388,931 2,386,202
Deferred tax liabilities, net 331,498 287,420
Operating lease liabilities 94,332
Other noncurrent liabilities 77,333 80,304
Noncurrent liabilities of discontinued operations 406,757
Total noncurrent liabilities 2,892,094 3,160,683
Total liabilities 3,353,835 4,505,820
Commitments and contingencies (Note 16)
Stockholders' equity:
Preferred stock, $0.001 par value, 20,000,000 shares authorized, none issued and outstanding at both September 30, 2019 and
December 31, 2018
Common stock, $0.001 par value, 4,000,000,000 shares authorized:
Class A common stock, $0.001 par value, 1,600,000,000 shares authorized, 56,383,893 shares issued and 56 54
49,898,972 shares outstanding at September 30, 2019 and 54,142,566 shares issued and 47,657,645 shares
outstanding at December 31, 2018
Class B convertible common stock, $0.001 par value, 800,000,000 shares authorized, 47,687,039 shares issued and outstanding at
both September 30, 2019 and December 31, 2018 48 48
Class C convertible common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at both of
September 30, 2019 and December 31, 2018
Class D common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at both
September 30, 2019 and December 31, 2018
Additional paid-in capital 3,251,808 3,702,522
Accumulated other comprehensive loss (131,664) (125,100)
Accumulated earnings 685,927 694,129
Treasury stock, at cost (131,454) (131,454)
Total EchoStar Corporation stockholders' equity 3,674,721 4,140,199
Noncontrolling interests 9,194 15,275
Total stockholders' equity 3,683,915 4,155,474
Total liabilities and stockholders' equity $
7,037,750 $
8,661,294
ECHOSTAR CORPORATION
Condensed Consolidated Statements of Operations
(Amounts in thousands, except per share amounts)
For the three months For the nine months
ended September 30, ended September 30,
2019 2018 2019 2018
Revenue:
Services and other revenue - DISH Network $
13,232 $
17,054 $
42,532 $
57,410
Services and other revenue - other 393,305 382,374 1,169,459 1,101,111
Equipment revenue 65,725 56,846 175,084 150,134
Total revenue 472,262 456,274 1,387,075 1,308,655
Costs and expenses:
Cost of sales - services and other (exclusive of 143,842 142,290 429,869 421,622
depreciation and amortization)
Cost of sales - equipment (exclusive of depreciation and 51,188 46,318 142,744 127,254
amortization)
Selling, general and administrative expenses 122,676 107,540 384,152 314,040
Research and development expenses 6,136 6,544 19,411 20,328
Depreciation and amortization 122,374 115,325 361,619 338,737
Total costs and expenses 446,216 418,017 1,337,795 1,221,981
Operating income 26,046 38,257 49,280 86,674
Other income (expense):
Interest income 17,175 21,349 64,817 56,237
Interest expense, net of amounts capitalized (49,865) (54,878) (156,813) (164,038)
Gains (losses) on investments, net 8,295 2,873 28,087 31,606
Equity in earnings (losses) of unconsolidated affiliates, net (3,209) 416 (14,317) (2,651)
Other, net (16,587) (3,249) (16,028) (3,381)
Total other income (expense), net (44,191) (33,489) (94,254) (82,227)
Income (loss) from continuing operations before (18,145) 4,768 (44,974) 4,447
income taxes
Income tax benefit (provision), net (5,016) (7,963) (12,607) (8,275)
Net loss from continuing operations (23,161) (3,195) (57,581) (3,828)
Net income from discontinued operations 2,055 19,697 46,423 76,843
Net income (loss) (21,106) 16,502 (11,158) 73,015
Less: Net income (loss) attributable to (2,797) 450 (1,359) 1,292
noncontrolling interests
Net income (loss) attributable to $
(18,309) $
16,052 $
(9,799) $
71,723
EchoStar Corporation common stock
Earnings per share - Class A and B common stock:
Basic loss from continuing operations per share $
(0.21) $
(0.04) $
(0.58) $
(0.05)
Total basic earnings (loss) per share $
(0.19) $
0.17 $
(0.10) $
0.75
Diluted loss from continuing operations per share $
(0.21) $
(0.04) $
(0.58) $
(0.05)
Total diluted earnings (loss) per share $
(0.19) $
0.17 $
(0.10) $
0.75
ECHOSTAR CORPORATION
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands, except per share amounts)
For the nine months ended September 30,
2019 2018
Cash flows from operating activities:
Net income (loss) $
(11,158) $
73,015
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Depreciation and amortization 459,054 444,558
Equity in losses of unconsolidated affiliates, net 14,317 2,651
Amortization of debt issuance costs 4,882 5,910
(Gains) losses on investments, net (28,087) (33,524)
Stock-based compensation 7,120 7,771
Deferred tax provision 22,949 22,357
Dividend received from unconsolidated entity 2,716 5,000
Changes in current assets and current liabilities, net:
Trade accounts receivable, net (5,439) (35,811)
Trade accounts receivable - DISH Network (28,779) 32,323
Inventory (8,661) 10,667
Other current assets (3,716) (5,569)
Trade accounts payable 18,180 2,536
Trade accounts payable - DISH Network (984) (3,342)
Accrued expenses and other 65,245 19,450
Changes in noncurrent assets and noncurrent liabilities, net 1,303 (16,123)
Other, net 24,118 12,043
Net cash flows from operating activities 533,060 543,912
Cash flows from investing activities:
Purchases of marketable investment securities (655,265) (2,323,090)
Sales and maturities of marketable investment securities 1,988,078 1,331,225
Expenditures for property and equipment (314,861) (415,253)
Refunds and other receipts related to property and equipment 77,524
Expenditures for externally marketed software (21,364) (24,568)
Investment in unconsolidated entities (7,503) (991)
Dividend received from unconsolidated entity 2,284
Sale of investment in unconsolidated entity 1,558
Net cash flows from investing activities 991,369 (1,353,595)
Cash flows from financing activities:
Repayment of debt and finance lease obligations (29,135) (27,764)
Repurchase and maturity of debt (920,923)
Purchase of noncontrolling interest (7,313)
Repayment of in-orbit incentive obligations (5,269) (4,601)
Net proceeds from Class A common stock options exercised 64,143 4,424
Net proceeds from Class A common stock issued under the Employee Stock Purchase Plan 7,724 7,428
Other, net 758 (530)
Net cash flows from financing activities (890,015) (21,043)
Effect of exchange rates on cash and cash equivalents (411) (3,449)
Net increase (decrease) in cash and cash equivalents, including restricted amounts 634,003 (834,175)
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 $
1,563,498 $
1,598,074
Supplemental disclosure of cash flow information:
Cash paid for interest, net of amounts capitalized $
161,766 $
170,303
Cash paid for income taxes $
2,119 $
3,369
View original content to download multimedia:http://www.prnewswire.com/news-releases/echostar-announces-financial-results-for-three-and-nine-months-ended-september-30-2019-300953541.html
SOURCE Hughes Network Systems, LLC
