May 10, 2017

EchoStar Announces First Quarter 2017 Results

ENGLEWOOD, Colo., May 10, 2017 /PRNewswire/ -- EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the quarter ended March 31, 2017.

EchoStar Corporation Logo. (PRNewsFoto/EchoStar Corporation) (PRNewsFoto/EchoStar Corporation)

First Quarter 2017 Financial Highlights:

  • Consolidated revenues of $433 million.
  • Consolidated net income from continuing operations of $31 million
  • Consolidated net income attributable to EchoStar common stock of $39 million and diluted earnings per share of $0.41.
  • Consolidated EBITDA of $183 million (see reconciliation of this non-GAAP measure below).
  • Approximately 1,043,000 Hughes consumer broadband subscribers as of March 31, 2017.
  • Cash, cash equivalents and current marketable investment securities of $3.18 billion as of March 31, 2017

In the current quarter we changed the way we present our segments. Historically 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 EchoStar's segment results for the three months ended March 31, 2017 and 2016:



For the Three Months Ended
March 31,



2017


2016



(Dollars in thousands)

Revenue





Hughes


$

329,320



$

326,238


EchoStar Satellite Services


100,326



102,989


Corporate & Other


3,505



2,747


Total


$

433,151



$

431,974







EBITDA





Hughes


$

100,852



$

110,356


EchoStar Satellite Services


83,063



88,640


Corporate & Other


(601)



(13,444)


Total


$

183,314



$

185,552







Net income attributable to EchoStar common stock


$

38,924



$

50,674


Diluted earnings per share (in dollars)


$

0.41



$

0.54


Net income from continuing operations


$

30,775



$

35,385







Capital expenditures for property and equipment from continuing operations


$

89,950



$

205,795


The following table reconciles total consolidated Net income to EBITDA. 



For the Three Months
Ended March 31,



2017


2016



(In thousands)

Net income


$

37,352



$

48,443







Interest income and expense, net


37,105



19,206


Income tax (benefit) provision


(12)



20,172


Depreciation and amortization


115,083



110,077


Net income from discontinued operations


(6,577)



(13,058)


Net loss attributable to noncontrolling interest in HSS Tracking Stock and other noncontrolling interests


363



712


EBITDA


$

183,314



$

185,552


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)" 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 March 31, 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 March 31, 2017 filed today with the Securities and Exchange Commission.

EchoStar will host its earnings conference call on Wednesday, May 10, 2017 at 12:00 noon Eastern Time. The call-in numbers are (877) 815-1625 (toll-free) and (716) 247-5178 (international), Conference ID # 18953417.

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 March 31, 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

(In thousands, except share amounts)

(Unaudited)




As of



March 31, 2017


December 31, 2016

Assets





Current Assets:





Cash and cash equivalents


$

2,799,545



$

2,570,365


Marketable investment securities, at fair value


383,015



522,516


Trade accounts receivable, net of allowance for doubtful accounts of $11,371 and $12,956, respectively


167,860



182,527


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


50,284



19,417


Inventory


79,422



62,620


Prepaids and deposits


45,604



43,456


Other current assets


12,495



10,862


Current assets of discontinued operations


213,191



311,524


Total current assets


3,751,416



3,723,287


Noncurrent Assets:





Restricted cash and marketable investment securities


8,343



12,926


Property and equipment, net of accumulated depreciation of $2,724,049 and $2,598,492, respectively


3,425,548



3,398,195


Regulatory authorizations, net


545,620



544,633


Goodwill


504,173



504,173


Other intangible assets, net


73,006



80,734


Investments in unconsolidated entities


165,992



171,016


Other receivable - DISH Network


91,029



90,586


Other noncurrent assets, net


181,899



166,385


Noncurrent assets of discontinued operations




316,924


Total noncurrent assets


4,995,610



5,285,572


Total assets


$

8,747,026



$

9,008,859


Liabilities and Stockholders' Equity





Current Liabilities:





Trade accounts payable


$

134,461



$

170,297


Trade accounts payable - DISH Network


3,691



1,072


Current portion of long-term debt and capital lease obligations


37,270



32,984


Deferred revenue and prepayments


54,596



59,989


Accrued interest


57,012



46,487


Accrued compensation


30,013



53,454


Accrued expenses and other


106,391



95,726


Current liabilities of discontinued operations


311



71,429


Total current liabilities


423,745



531,438


Noncurrent Liabilities:





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


3,620,044



3,622,463


Deferred tax liabilities, net


736,186



746,667


Other noncurrent liabilities


121,341



90,785


Noncurrent liabilities of discontinued operations




10,701


Total noncurrent liabilities


4,477,571



4,470,616


Total liabilities


4,901,316



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 March 31, 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, 53,320,812 shares issued and 47,788,494 shares outstanding at March 31, 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 March 31, 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 March 31, 2017 and December 31, 2016





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





Additional paid-in capital


3,644,370



3,828,677


Accumulated other comprehensive loss


(80,191)



(124,803)


Accumulated earnings


366,470



314,247


Treasury stock, at cost


(98,162)



(98,162)


Total EchoStar stockholders' equity


3,832,588



3,920,065


Noncontrolling interest in HSS Tracking Stock




73,910


Other noncontrolling interests


13,122



12,830


Total stockholders' equity


3,845,710



4,006,805


Total liabilities and stockholders' equity


$

8,747,026



$

9,008,859


 

ECHOSTAR CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)





For the Three Months Ended March 31,



2017


2016

Revenue:





Services and other revenue - DISH Network


$

114,955



$

116,449


Services and other revenue - other


269,791



269,897


Equipment revenue - DISH Network


31



2,769


Equipment revenue - other


48,374



42,859


Total revenue


433,151



431,974


Costs and Expenses:





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


131,783



125,582


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


43,938



43,108


Selling, general and administrative expenses


82,991



80,545


Research and development expenses


7,705



6,932


Depreciation and amortization


115,083



110,077


Total costs and expenses


381,500



366,244


Operating income


51,651



65,730







Other Income (Expense):





Interest income


8,291



3,965


Interest expense, net of amounts capitalized


(45,396)



(23,171)


Gains on investments, net


12,035



2,462


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


(3,298)




Equity in earnings (losses) of unconsolidated affiliates, net


6,408



(808)


Other, net


1,072



7,379


Total other expense, net


(20,888)



(10,173)


Income from continuing operations before income taxes


30,763



55,557


Income tax benefit (provision)


12



(20,172)


Net income from continuing operations


30,775



35,385


Net income from discontinued operations


6,577



13,058


Net income


37,352



48,443


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


(655)



(823)


Less: Net income attributable to other noncontrolling interests


292



111


Net income attributable to EchoStar


37,715



49,155


Less: Net loss attributable to Hughes Retail Preferred Tracking Stock


(1,209)



(1,519)


Net income attributable to EchoStar common stock


$

38,924



$

50,674







Amounts attributable to EchoStar common stock:





Net income from continuing operations


$

32,347



$

37,616


Net income from discontinued operations


6,577



13,058


Net income attributable to EchoStar common stock


$

38,924



$

50,674







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





Basic


94,745



93,331


Diluted


95,893



93,852







Earnings per share - Class A and B common stock:





Basic:





   Continuing operations


$

0.34



$

0.40


   Discontinued operations


0.07



0.14


Total basic earnings per share


$

0.41



$

0.54







Diluted:





   Continuing operations


$

0.34



$

0.40


   Discontinued operations


0.07



0.14


Total diluted earnings per share


$

0.41



$

0.54


 

ECHOSTAR CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)






For the Three Months Ended March 31,



2017


2016

Cash Flows from Operating Activities:





Net income


$

37,352



$

48,443


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





Depreciation and amortization


126,742



126,734


Equity in losses (earnings) of unconsolidated affiliates, net


(5,249)



963


Gain and impairment on investments, net


(8,737)



(2,462)


Stock-based compensation


956



4,384


Deferred tax provision


343



25,684


Dividends received from unconsolidated entity


7,500




Changes in current assets and current liabilities, net


(13,857)



(18,184)


Changes in noncurrent assets and noncurrent liabilities, net


(6,003)



3,388


Other, net


2,308



3,899


Net cash flows from operating activities


141,355



192,849


Cash Flows from Investing Activities:





Purchases of marketable investment securities


(45,905)



(321,892)


Sales and maturities of marketable investment securities


205,296



323,889


Expenditures for property and equipment


(102,463)



(235,223)


Refunds and other receipts related to capital expenditures




24,087


Changes in restricted cash and marketable investment securities


4,583



(662)


Sale of investment in unconsolidated entity


17,781




Expenditures for externally marketed software


(10,832)



(5,959)


Other, net




1,460


Net cash flows from investing activities


68,460



(214,300)


Cash Flows from Financing Activities:





Repayment of debt and capital lease obligations


(8,736)



(10,542)


Net proceeds from Class A common stock options exercised


26,325



2,315


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


2,409



4,020


Cash exchanged for Tracking Stock


(651)




Other, net


(1,475)



(302)


Net cash flows from financing activities


17,872



(4,509)


Effect of exchange rates on cash and cash equivalents


715



536


Net increase (decrease) in cash and cash equivalents


228,402



(25,424)


Cash and cash equivalents, beginning of period


2,571,143



924,240


Cash and cash equivalents, end of period


$

2,799,545



$

898,816







Supplemental Disclosure of Cash Flow Information:





Cash paid for interest (including capitalized interest)


$

54,053



$

10,476


Capitalized interest


$

21,824



$

22,021


Cash paid for income taxes


$

1,035



$

2,586


Employee benefits paid in Class A common stock


$

11,199



$

11,126


Property and equipment financed under capital lease obligations


$

7,485



$

2,351


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


$

(6,315)



$

3,670


Capitalized in-orbit incentive obligations


$

31,000



$


Noncash net assets exchanged for Tracking Stock


$

299,425



$


 

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SOURCE EchoStar Corporation

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