EchoStar Announces First Quarter of 2018 Results
May 10, 2018
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Englewood, CO, May 10, 2018—EchoStar Corporation
(NASDAQ: SATS) today announced its financial results for the quarter ended March
31, 2018.
First Quarter 2018 Financial Highlights:
-
Consolidated revenues of $501.8 million.
-
Consolidated net loss from continuing operations of
$21.2 million, consolidated net loss attributable to EchoStar
common stock of $21.6 million, and diluted losses per share of
$0.22. Included in these amounts are net losses on investments
of $36.7 million. Excluding these net losses, diluted earnings
per share would have been $0.16.
-
Consolidated EBITDA of $165.7 million, including
net losses on investments of $36.7 million. Excluding these net
losses, EBITDA would have been $202.4 million (see discussion
and the reconciliation of GAAP to this non-GAAP measure below).
Additional Highlights:
-
Approximately 1,267,000 Hughes broadband
subscribers as of March 31, 2018.
-
Cash, cash equivalents and current marketable
investment securities of $3.3 billion as of March 31, 2018
On January 1, 2018, we adopted two new accounting pronouncements:
-
Topic 606 relating to revenue recognition and the
related costs from contracts with customers. The adoption
decreased our revenue by $1.2 million and increased our net
income by $1.1 million for the three months ended March 31,
2018.
-
Topic 321 relating to accounting for investments.
The adoption decreased our net losses on investments by $19.1
million and correspondingly increased our net income by $19.1
million.
Set forth below is a table highlighting certain of EchoStar’s
segment results for the three months ended March 31, 2018 and 2017:
|
For the three months ended
March
31,
|
|
2018
|
|
2017
|
|
(Dollars in Thousands)
|
Revenue
|
|
|
|
|
|
Hughes
|
$
|
400,818
|
|
$
|
329,320
|
EchoStar Satellite Services
|
|
96,753
|
|
|
100,326
|
Corporate & Other
|
|
4,221
|
|
|
3,505
|
Total
|
$
|
501,792
|
|
$
|
433,151
|
|
|
|
|
|
|
EBITDA
|
|
|
|
|
|
Hughes
|
$
|
136,713
|
|
$
|
100,852
|
EchoStar Satellite Services
|
|
84,150
|
|
|
83,063
|
Corporate & Other:
|
|
|
|
|
|
Corporate overhead, operating and
other
|
|
(17,870)
|
|
|
(18,952)
|
Equity in earnings (losses) of
unconsolidated affiliates, net
|
|
(1,009)
|
|
|
6,408
|
Gains (losses) on investments,
net
|
|
(36,268)
|
|
|
11,943
|
Sub-total
|
|
(55,147)
|
|
|
(601)
|
Total
|
$
|
165,716
|
|
$
|
183,314
|
|
|
|
|
|
|
Net income (loss) from continuing
operations
|
$
|
(21,171)
|
|
$
|
30,775
|
Net income from discontinued
operations
|
$
|
—
|
|
$
|
6,577
|
Net income (loss)
|
$
|
(21,171)
|
|
$
|
37,352
|
|
|
|
|
|
|
Expenditures for property and
equipment from continuing operations
|
$
|
50,982
|
|
$
|
89,950
|
The following table reconciles GAAP to non-GAAP measurements.
|
For the three months ended March
31,
|
|
2018
|
|
2017
|
|
(Dollars in Thousands)
|
Net income (loss)
|
$
|
(21,171)
|
|
$
|
37,352
|
|
|
|
|
|
|
Interest income and expense, net
|
|
47,116
|
|
|
37,105
|
Income tax benefit, net
|
|
(5,403)
|
|
|
(12)
|
Depreciation and amortization
|
|
145,554
|
|
|
115,083
|
Net income from discontinued
operations
|
|
—
|
|
|
(6,577)
|
Net (income) loss attributable to
noncontrolling interests
|
|
(380)
|
|
|
363
|
EBITDA
|
$
|
165,716
|
|
$
|
183,314
|
|
|
|
|
|
|
|
|
|
|
|
|
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.” This measure is not
determined in accordance with US GAAP. 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 GAAP. Our management uses this non-GAAP measure as a measure of
our operating efficiency and overall operating 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 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, 2018 and 2017 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, 2018 filed today with the
Securities and Exchange Commission.
EchoStar will host its earnings conference call on Thursday, May
10, 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 # 8292996.
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 forwardlooking statements. Although management
believes that the expectations reflected in these forwardlooking 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 and
Quarterly Report on Form 10-Q for the period ended March 31, 2018, 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.
###
Contact Information
ECHOSTAR CORPORATION
Consolidated Balance Sheets
|
|
As of
|
|
|
March 31, 2018
|
|
December 31, 2017
|
Assets
|
|
(unaudited)
|
|
(audited)
|
Current Assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
2,239,591
|
|
|
$
|
2,431,456
|
|
Marketable investment securities,
at fair value
|
|
1,060,733
|
|
|
814,161
|
|
Trade accounts receivable and
contract assets, net (Note 3)
|
|
166,182
|
|
|
196,840
|
|
Trade accounts receivable - DISH
Network, net
|
|
56,861
|
|
|
43,295
|
|
Inventory
|
|
85,995
|
|
|
83,595
|
|
Prepaids and deposits
|
|
59,751
|
|
|
54,533
|
|
Other current assets
|
|
13,163
|
|
|
91,671
|
|
Total current assets
|
|
3,682,276
|
|
|
3,715,551
|
|
Noncurrent Assets:
|
|
|
|
|
Property and equipment, net
|
|
3,461,004
|
|
|
3,465,471
|
|
Regulatory authorizations, net
|
|
536,548
|
|
|
536,936
|
|
Goodwill
|
|
504,173
|
|
|
504,173
|
|
Other intangible assets, net
|
|
55,273
|
|
|
58,955
|
|
Investments in unconsolidated
entities
|
|
173,601
|
|
|
161,427
|
|
Other receivables - DISH Network
|
|
93,287
|
|
|
92,687
|
|
Other noncurrent assets, net
|
|
255,582
|
|
|
214,814
|
|
Total noncurrent assets
|
|
5,079,468
|
|
|
5,034,463
|
|
Total assets
|
|
$
|
8,761,744
|
|
|
$
|
8,750,014
|
|
Liabilities and Stockholders’
Equity
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
Trade accounts payable
|
|
$
|
103,785
|
|
|
$
|
108,406
|
|
Trade accounts payable - DISH
Network
|
|
3,742
|
|
|
4,753
|
|
Current portion of long-term debt
and capital lease obligations
|
|
41,424
|
|
|
40,631
|
|
Contract liabilities
|
|
65,333
|
|
|
65,959
|
|
Accrued interest
|
|
57,297
|
|
|
47,616
|
|
Accrued compensation
|
|
32,905
|
|
|
47,756
|
|
Accrued expenses and other
|
|
105,291
|
|
|
98,769
|
|
Total current liabilities
|
|
409,777
|
|
|
413,890
|
|
Noncurrent Liabilities:
|
|
|
|
|
Long-term debt and capital lease
obligations, net
|
|
3,585,972
|
|
|
3,594,213
|
|
Deferred tax liabilities, net
|
|
433,174
|
|
|
436,023
|
|
Other noncurrent liabilities
|
|
127,306
|
|
|
128,503
|
|
Total noncurrent liabilities
|
|
4,146,452
|
|
|
4,158,739
|
|
Total liabilities
|
|
4,556,229
|
|
|
4,572,629
|
|
Commitments and contingencies (Note
15)
|
|
|
|
|
Stockholders’ Equity:
|
|
|
|
|
Preferred stock, $.001 par value,
20,000,000 shares authorized, none issued and
outstanding at each of March 31, 2018 and
December 31, 2017
|
|
—
|
|
|
—
|
|
Common stock, $.001 par value,
4,000,000,000 shares authorized:
|
|
|
|
|
Class A common stock, $.001 par
value, 1,600,000,000 shares authorized,
53,932,336 shares issued and 48,400,018 shares
outstanding at March 31, 2018 and 53,663,859
shares issued and 48,131,541 shares outstanding
at December 31, 2017
|
|
54
|
|
|
54
|
|
Class B convertible common stock,
$.001 par value, 800,000,000 shares authorized,
47,687,039 shares issued and outstanding at each
of March 31, 2018 and December 31, 2017
|
|
48
|
|
|
48
|
|
Class C convertible common stock,
$.001 par value, 800,000,000 shares authorized,
none issued and outstanding at each of March 31,
2018 and December 31, 2017
|
|
—
|
|
|
—
|
|
Class D common stock, $.001 par
value, 800,000,000 shares authorized, none
issued and outstanding at each of March 31, 2018
and December 31, 2017
|
|
—
|
|
|
—
|
|
Additional paid-in capital
|
|
3,685,577
|
|
|
3,669,461
|
|
Accumulated other comprehensive
loss
|
|
(111,413)
|
|
|
(130,154)
|
|
Accumulated earnings
|
|
714,423
|
|
|
721,316
|
|
Treasury stock, at cost
|
|
(98,162)
|
|
|
(98,162)
|
|
Total EchoStar Corporation
stockholders’ equity
|
|
4,190,527
|
|
|
4,162,563
|
|
Other noncontrolling interests
|
|
14,988
|
|
|
14,822
|
|
Total stockholders’ equity
|
|
4,205,515
|
|
|
4,177,385
|
|
Total liabilities and stockholders’
equity
|
|
$
|
8,761,744
|
|
|
$
|
8,750,014
|
|
ECHOSTAR CORPORATION
Consolidated Statements of Operations
(In thousands)
|
|
For the three months ended March
31,
|
|
|
2018
|
|
2017
|
Revenue:
|
|
|
|
|
Services and other revenue - DISH
Network
|
|
$
|
103,805
|
|
|
$
|
114,955
|
|
Services and other revenue - other
|
|
355,040
|
|
|
269,791
|
|
Equipment revenue
|
|
42,947
|
|
|
48,405
|
|
Total revenue
|
|
501,792
|
|
|
433,151
|
|
Costs and expenses:
|
|
|
|
|
Cost of sales - services and other
(exclusive of depreciation and amortization)
|
|
143,793
|
|
|
131,783
|
|
Cost of sales - equipment
(exclusive of depreciation and amortization)
|
|
44,023
|
|
|
43,938
|
|
Selling, general and administrative
expenses
|
|
103,275
|
|
|
82,991
|
|
Research and development expenses
|
|
7,137
|
|
|
7,705
|
|
Depreciation and amortization
|
|
145,554
|
|
|
115,083
|
|
Total costs and expenses
|
|
443,782
|
|
|
381,500
|
|
Operating income
|
|
58,010
|
|
|
51,651
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
Interest income
|
|
15,635
|
|
|
8,291
|
|
Interest expense, net of amounts
capitalized
|
|
(62,751)
|
|
|
(45,396)
|
|
Gains (losses) on investments, net
|
|
(36,663)
|
|
|
12,035
|
|
Other-than-temporary impairment
loss on available-for-sale securities
|
|
—
|
|
|
(3,298)
|
|
Equity in earnings (losses) of
unconsolidated affiliates, net
|
|
(1,009)
|
|
|
6,408
|
|
Other, net
|
|
204
|
|
|
1,072
|
|
Total other expense, net
|
|
(84,584)
|
|
|
(20,888)
|
|
Income (loss) from continuing
operations before income taxes
|
|
(26,574)
|
|
|
30,763
|
|
Income tax benefit, net
|
|
5,403
|
|
|
12
|
|
Net income (loss) from continuing
operations
|
|
(21,171)
|
|
|
30,775
|
|
Net income from discontinued
operations
|
|
—
|
|
|
6,577
|
|
Net income (loss)
|
|
(21,171)
|
|
|
37,352
|
|
Less: Net loss attributable to
noncontrolling interest in HSS Tracking Stock
(Note 1)
|
|
—
|
|
|
(655)
|
|
Less: Net income attributable to
other noncontrolling interests
|
|
380
|
|
|
292
|
|
Net income (loss) attributable to
EchoStar Corporation
|
|
(21,551)
|
|
|
37,715
|
|
Less: Net loss attributable to
Hughes Retail Preferred Tracking Stock (Note 1)
|
|
—
|
|
|
(1,209)
|
|
Net income (loss) attributable to
EchoStar Corporation common stock
|
|
$
|
(21,551)
|
|
|
$
|
38,924
|
|
|
|
|
|
|
Amounts attributable to EchoStar
Corporation common stock:
|
|
|
|
|
Net income (loss) from continuing
operations
|
|
$
|
(21,551)
|
|
|
$
|
32,347
|
|
Net income from discontinued
operations
|
|
—
|
|
|
6,577
|
|
Net income (loss) attributable to
EchoStar Corporation common stock
|
|
$
|
(21,551)
|
|
|
$
|
38,924
|
|
|
|
|
|
|
Weighted-average common shares
outstanding - Class A and B common stock:
|
|
|
|
|
Basic
|
|
95,888
|
|
|
94,745
|
|
Diluted
|
|
95,888
|
|
|
95,893
|
|
|
|
|
|
|
Earnings (losses) per share -
Class A and B common stock:
|
|
|
|
|
Basic:
|
|
|
|
|
Continuing operations
|
|
$
|
(0.22)
|
|
|
$
|
0.34
|
|
Discontinued operations
|
|
—
|
|
|
0.07
|
|
Total basic earnings (losses) per
share
|
|
$
|
(0.22)
|
|
|
$
|
0.41
|
|
Diluted:
|
|
|
|
|
Continuing operations
|
|
$
|
(0.22)
|
|
|
$
|
0.34
|
|
Discontinued operations
|
|
—
|
|
|
0.07
|
|
Total diluted earnings (losses) per
share
|
|
$
|
(0.22)
|
|
|
$
|
0.41
|
|
ECHOSTAR CORPORATION
Consolidated Statements of Cash Flows
(In thousands)
|
|
For the three months ended March
31,
|
|
|
2018
|
|
2017
|
Cash flows from operating
activities:
|
|
|
|
|
Net income (loss)
|
|
$
|
(21,171)
|
|
|
$
|
37,352
|
|
Adjustments to reconcile net income
(loss) to net cash flows from operating
activities:
|
|
|
|
|
Depreciation and amortization
|
|
145,554
|
|
|
126,742
|
|
Amortization of debt issuance costs
|
|
1,936
|
|
|
1,790
|
|
Equity in (earnings) losses of
unconsolidated affiliates, net
|
|
1,009
|
|
|
(5,249)
|
|
Loss (gain) and impairment on
investments, net
|
|
36,673
|
|
|
(8,737)
|
|
Stock-based compensation
|
|
2,765
|
|
|
956
|
|
Deferred tax (benefit) provision
|
|
(7,036)
|
|
|
343
|
|
Dividend received from
unconsolidated entity
|
|
—
|
|
|
7,500
|
|
Changes in current assets and
current liabilities, net
|
|
(13,313)
|
|
|
(13,857)
|
|
Changes in noncurrent assets and
noncurrent liabilities, net
|
|
(13,982)
|
|
|
(6,003)
|
|
Other, net
|
|
2,840
|
|
|
518
|
|
Net cash flows from operating
activities
|
|
135,275
|
|
|
141,355
|
|
Cash flows from investing
activities:
|
|
|
|
|
Purchases of marketable investment
securities
|
|
(562,611)
|
|
|
(45,905)
|
|
Sales and maturities of marketable
investment securities
|
|
298,596
|
|
|
209,923
|
|
Expenditures for property and
equipment
|
|
(128,506)
|
|
|
(102,463)
|
|
Refunds and other receipts related
to capital expenditures
|
|
77,524
|
|
|
—
|
|
Sale of investment in
unconsolidated entity
|
|
—
|
|
|
17,781
|
|
Expenditures for externally
marketed software
|
|
(7,148)
|
|
|
(10,832)
|
|
Net cash flows from investing
activities
|
|
(322,145)
|
|
|
68,504
|
|
Cash flows from financing
activities:
|
|
|
|
|
Repayment of debt and capital lease
obligations
|
|
(9,368)
|
|
|
(8,736)
|
|
Net proceeds from Class A common
stock options exercised
|
|
3,481
|
|
|
26,325
|
|
Net proceeds from Class A common
stock issued under the Employee Stock Purchase
Plan
|
|
2,636
|
|
|
2,409
|
|
Cash exchanged for Tracking Stock
(Note 1)
|
|
—
|
|
|
(651)
|
|
Other, net
|
|
(1,508)
|
|
|
(1,475)
|
|
Net cash flows from financing
activities
|
|
(4,759)
|
|
|
17,872
|
|
Effect of exchange rates on cash
and cash equivalents
|
|
(242)
|
|
|
715
|
|
Net increase (decrease) in cash and
cash equivalents, including restricted amounts
|
|
(191,871)
|
|
|
228,446
|
|
Cash and cash equivalents,
including restricted amounts, beginning of
period
|
|
2,432,249
|
|
|
2,571,866
|
|
Cash and cash equivalents,
including restricted amounts, end of period
|
|
$
|
2,240,378
|
|
|
$
|
2,800,312
|
|
|
|
|
|
|
Supplemental disclosure of cash
flow information:
|
|
|
|
|
Cash paid for interest (including
capitalized interest)
|
|
$
|
55,172
|
|
|
$
|
54,053
|
|
Capitalized interest
|
|
$
|
4,099
|
|
|
$
|
21,824
|
|
Cash paid for income taxes
|
|
$
|
839
|
|
|
$
|
1,035
|
|
Employee benefits paid in Class A
common stock
|
|
$
|
7,605
|
|
|
$
|
11,199
|
|
Property and equipment financed
under capital lease obligations
|
|
$
|
38
|
|
|
$
|
7,485
|
|
Increase (decrease) in capital
expenditures included in accounts payable, net
|
|
$
|
585
|
|
|
$
|
(6,315)
|
|
Capitalized in-orbit incentive
obligations
|
|
$
|
—
|
|
|
$
|
31,000
|
|
Non-cash net assets exchanged for
Tracking Stock (Note 1)
|
|
$
|
—
|
|
|
$
|
299,425
|
|