ENGLEWOOD, Colo., Aug. 9, 2017 /PRNewswire/ — EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three and six months ending June 30, 2017.

EchoStar Corporation Logo. (PRNewsfoto/EchoStar Corporation)

Three Months Ending June 30, 2017 Financial Highlights:

  • Consolidated revenues of $465 million.
  • Consolidated net income from continuing operations of $6.6 million, consolidated net income attributable to EchoStar common stock of $6.9 million and diluted earnings per share of 0.07.
    • Consolidated net income from continuing operations declined compared to the three months ended June 30, 2016 primarily due to:
      • An increase of $22.3 million in interest expense from the issuance of bonds in July 2016;
      • A decrease of $13.1 million in capitalized interest relating to satellites placed into service in 2017; and
      • An increase of $24.0 million in depreciation expense primarily on those satellites;
      • Partially offset by a decrease in income tax expense of $20.7 million.
    • Consolidated EBITDA of $185 million (see reconciliation of this non-GAAP measure below).

Six Months Ended June 30, 2017 Financial Highlights:

  • Consolidated revenue of $898 million.
  • Consolidated net income from continuing operations of $37.4 million, consolidated net income attributable to EchoStar common stock of $45.9 million and diluted earnings per share of $0.48.
  • Consolidated EBITDA of $368 million (see reconciliation of this non-GAAP measure below).

Additional Highlights:

  • Approximately 1,085,000 Hughes broadband subscribers as of June 30, 2017.
  • Cash, cash equivalents and  current marketable investment securities of $3.27 billion as of June 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 six months ended June 30, 2017 and 2016:

For the Three Months
Ended June 30,

For the Six Months
Ended June 30,

2017

2016

2017

2016

(Dollars in thousands)

Revenue

Hughes

$

362,762

$

339,337

$

692,082

$

665,575

EchoStar Satellite Services

98,366

101,450

198,692

204,439

Corporate & Other

3,948

1,871

7,453

4,618

Total

$

465,076

$

442,658

$

898,227

$

874,632

EBITDA

Hughes

$

110,024

$

117,627

$

210,876

$

227,983

EchoStar Satellite Services

80,465

84,284

163,528

172,924

Corporate & Other

(5,626)

(11,585)

(6,227)

(25,029)

Total

$

184,863

$

190,326

$

368,177

$

375,878

Net income (loss) attributable to EchoStar
common stock

$

6,940

$

56,133

$

45,864

$

106,807

Diluted earnings per share (in dollars)

$

0.07

$

0.60

$

0.48

$

1.14

Net income from continuing operations

$

6,591

$

44,253

$

37,366

$

79,638

Expenditures for property and equipment from continuing operations

$

128,064

$

132,449

$

218,014

$

338,244

The following table reconciles total consolidated Net income to EBITDA.

For the Three Months
Ended June 30,

For the Six Months
Ended June 30,

2017

2016

2017

2016

(Dollars in thousands)

Net income

$

7,122

$

55,909

$

44,474

$

104,352

Interest income and expense, net

45,417

16,387

82,522

35,593

Income tax provision

3,003

23,692

2,991

43,864

Depreciation and amortization

130,034

106,117

245,117

216,194

Net income from discontinued operations

(531)

(11,656)

(7,108)

(24,714)

Net (income) loss attributable to noncontrolling 
     interests

(182)

(123)

181

589

EBITDA

$

184,863

$

190,326

$

368,177

$

375,878

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 June 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 June 30, 2017 filed today with the Securities and Exchange Commission.

EchoStar will host its earnings conference call on Wednesday, August 9, 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 # 63515337.

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 June 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

June 30, 2017

December 31, 2016

Assets

Current Assets:

Cash and cash equivalents

$

2,985,062

$

2,570,365

Marketable investment securities, at fair value

280,402

522,516

Trade accounts receivable, net of allowance for doubtful accounts of $12,541 and $12,956, respectively

192,246

182,527

Trade accounts receivable – DISH Network, net of allowance for doubtful accounts of zero

56,825

19,417

Inventory

91,265

62,620

Prepaids and deposits

52,857

43,456

Other current assets

12,035

10,862

Current assets of discontinued operations

37,814

311,524

Total current assets

3,708,506

3,723,287

Noncurrent Assets:

Restricted cash and marketable investment securities

13,847

12,926

Property and equipment, net of accumulated depreciation of $2,661,897 and $2,598,492, respectively

3,451,362

3,398,195

Regulatory authorizations, net

544,310

544,633

Goodwill

504,173

504,173

Other intangible assets, net

66,316

80,734

Investments in unconsolidated entities

174,067

171,016

Other receivable – DISH Network

91,579

90,586

Other noncurrent assets, net

189,511

166,385

Noncurrent assets of discontinued operations

316,924

Total noncurrent assets

5,035,165

5,285,572

Total assets

$

8,743,671

$

9,008,859

Liabilities and Stockholders’ Equity

Current Liabilities:

Trade accounts payable

$

118,563

$

170,297

Trade accounts payable – DISH Network

961

1,072

Current portion of long-term debt and capital lease obligations

39,229

32,984

Deferred revenue and prepayments

54,722

59,989

Accrued interest

46,280

46,487

Accrued compensation

37,978

53,454

Accrued expenses and other

106,366

95,726

Current liabilities of discontinued operations

3,071

71,429

Total current liabilities

407,170

531,438

Noncurrent Liabilities:

Long-term debt and capital lease obligations, net of unamortized debt issuance costs

3,611,746

3,622,463

Deferred tax liabilities, net

736,100

746,667

Other noncurrent liabilities

131,931

90,785

Noncurrent liabilities of discontinued operations

10,701

Total noncurrent liabilities

4,479,777

4,470,616

Total liabilities

4,886,947

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 June 30, 2017 and 13,000,000 
     shares authorized and 6,290,499 issued and outstanding at December 31, 2016

6

Common stock, $.001 par value, 4,000,000,000 shares authorized:

Class A common stock, $.001 par value, 1,600,000,000 shares authorized, 53,486,261 shares issued and 47,953,943 shares 
     outstanding at June 30, 2017 and 52,243,465 shares issued and 46,711,147 shares outstanding at December 31, 2016

53

52

Class B common stock, $.001 par value, 800,000,000 shares authorized, 47,687,039 shares issued and outstanding at each of June 30, 
     2017 and December 31, 2016

48

48

Class C common stock, $.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of June 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 June 30, 2017 and 
     December 31, 2016

Additional paid-in capital

3,654,139

3,828,677

Accumulated other comprehensive loss

(86,068)

(124,803)

Accumulated earnings

373,410

314,247

Treasury stock, at cost

(98,162)

(98,162)

Total EchoStar stockholders’ equity

3,843,420

3,920,065

Noncontrolling interest in HSS Tracking Stock

73,910

Other noncontrolling interests

13,304

12,830

Total stockholders’ equity

3,856,724

4,006,805

Total liabilities and stockholders’ equity

$

8,743,671

$

9,008,859

 

ECHOSTAR CORPORATION

Condensed Consolidated Statements of Operations

(In thousands)

For the Three Months
Ended June 30,

For the Six Months
Ended June 30,

2017

2016

2017

2016

Revenue:

Services and other revenue – DISH Network

$

113,734

$

115,864

$

228,689

$

232,313

Services and other revenue – other

285,053

273,972

554,844

543,869

Equipment revenue – DISH Network

18

2,101

49

4,870

Equipment revenue – other

66,271

50,721

114,645

93,580

Total revenue

465,076

442,658

898,227

874,632

Costs and Expenses:

Cost of sales – services and other (exclusive of depreciation and amortization)

134,024

127,766

265,807

253,348

Cost of sales – equipment (exclusive of depreciation and amortization)

57,865

46,545

101,803

89,653

Selling, general and administrative expenses

89,826

79,237

172,817

159,782

Research and development expenses

7,437

7,562

15,142

14,494

Depreciation and amortization

130,034

106,117

245,117

216,194

Total costs and expenses

419,186

367,227

800,686

733,471

Operating income

45,890

75,431

97,541

141,161

Other Income (Expense):

Interest income

10,039

3,502

18,330

7,467

Interest expense, net of amounts capitalized

(55,456)

(19,889)

(100,852)

(43,060)

Gains on investments, net

1,837

5,487

13,872

7,949

Other-than-temporary impairment loss on available-for-sale securities

(3,298)

Equity in earnings of unconsolidated affiliates, net

4,831

5,626

11,239

4,818

Other, net

2,453

(2,212)

3,525

5,167

Total other expense, net

(36,296)

(7,486)

(57,184)

(17,659)

Income from continuing operations before income taxes

9,594

67,945

40,357

123,502

Income tax provision

(3,003)

(23,692)

(2,991)

(43,864)

Net income from continuing operations

6,591

44,253

37,366

79,638

Net income from discontinued operations

531

11,656

7,108

24,714

Net income

7,122

55,909

44,474

104,352

Less: Net loss attributable to noncontrolling interest in HSS Tracking Stock

(188)

(655)

(1,011)

Less: Net income attributable to other noncontrolling interests

182

311

474

422

Net income attributable to EchoStar

6,940

55,786

44,655

104,941

Less: Net loss attributable to Hughes Retail Preferred Tracking Stock

(347)

(1,209)

(1,866)

Net income attributable to EchoStar common stock

$

6,940

$

56,133

$

45,864

$

106,807

Amounts attributable to EchoStar common stock:

Net income from continuing operations

$

6,409

$

44,477

$

38,756

$

82,093

Net income from discontinued operations

531

11,656

7,108

24,714

Net income attributable to EchoStar common stock

$

6,940

$

56,133

$

45,864

$

106,807

Weighted-average common shares outstanding – Class A and B common stock:

Basic

95,537

93,751

95,143

93,541

Diluted

96,785

94,330

96,451

94,090

Earnings per share – Class A and B common stock:

Basic:

Continuing operations

$

0.07

$

0.47

$

0.41

$

0.88

Discontinued operations

0.13

0.07

0.26

Total basic earnings per share

$

0.07

$

0.60

$

0.48

$

1.14

Diluted:

Continuing operations

$

0.07

$

0.47

$

0.40

$

0.87

Discontinued operations

0.13

0.08

0.27

Total diluted earnings per share

$

0.07

$

0.60

$

0.48

$

1.14

 

ECHOSTAR CORPORATION

Condensed Consolidated Statements of Cash Flows

(In thousands)

For the Six Months Ended June 30,

2017

2016

Cash Flows from Operating Activities:

Net income

$

44,474

$

104,352

Adjustments to reconcile net income to net cash flows from operating activities:

Depreciation and amortization

256,776

247,239

Equity in earnings of unconsolidated affiliates, net

(10,080)

(6,017)

Gain and impairment on investments, net

(10,574)

(7,949)

Stock-based compensation

3,908

8,328

Deferred tax provision

673

53,091

Dividends received from unconsolidated entity

7,500

10,000

Proceeds from sale of trading securities

8,922

7,140

Changes in current assets and current liabilities, net

87,305

(73,916)

Changes in noncurrent assets and noncurrent liabilities, net

(11,763)

2,859

Other, net

5,738

10,507

Net cash flows from operating activities

382,879

355,634

Cash Flows from Investing Activities:

Purchases of marketable investment securities

(46,533)

(641,358)

Sales and maturities of marketable investment securities

291,944

500,775

Expenditures for property and equipment

(230,530)

(376,856)

Refunds and other receipts related to capital expenditures

24,087

Changes in restricted cash and marketable investment securities

(921)

(1,689)

Investments in unconsolidated entities

(1,636)

Sale of investment in unconsolidated entity

17,781

Expenditures for externally marketed software

(17,119)

(12,299)

Other, net

1,462

Net cash flows from investing activities

14,622

(507,514)

Cash Flows from Financing Activities:

Repayment of debt and capital lease obligations

(17,718)

(20,433)

Net proceeds from Class A common stock options exercised

31,992

2,975

Net proceeds from Class A common stock issued under the Employee Stock Purchase Plan

4,540

7,530

Cash exchanged for Tracking Stock

(651)

Other, net

(2,712)

(1,320)

Net cash flows from financing activities

15,451

(11,248)

Effect of exchange rates on cash and cash equivalents

967

728

Net increase (decrease) in cash and cash equivalents

413,919

(162,400)

Cash and cash equivalents, beginning of period

2,571,143

924,240

Cash and cash equivalents, end of period

$

2,985,062

$

761,840

Supplemental Disclosure of Cash Flow Information:

Cash paid for interest (including capitalized interest)

$

130,231

$

87,213

Capitalized interest

$

33,768

$

47,093

Cash paid for income taxes

$

9,369

$

6,199

Employee benefits paid in Class A common stock

$

11,200

$

11,126

Property and equipment financed under capital lease obligations

$

8,189

$

6,857

Increase (decrease) in capital expenditures included in accounts payable, net

$

(3,404)

$

8,238

Capitalized in-orbit incentive obligations

$

43,890

$

Noncash net assets exchanged for Tracking Stock

$

299,425

$

 

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SOURCE EchoStar Corporation