EchoStar Announces First Quarter of 2018 Results


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.



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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
 
 
 
 
 
 
 
 
 
 
 
 

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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 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 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 Investor Relations
EchoStar Media Relations
Deepak V. Dutt
Phone: +1 301-428-1686
Dan Brown
Phone: +1 301-601-7216

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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

    

4

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


5

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



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