August 9, 2016

EchoStar Announces Financial Results for Three and Six Months Ending June 30, 2016

ENGLEWOOD, Colo., Aug. 9, 2016 /PRNewswire/ -- EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three and six months ending June 30, 2016.

EchoStar Corporation Logo.

Three Months Ending June 30, 2016 Financial Highlights:

  • Consolidated revenues of $758 million.
  • Consolidated net income of $56 million.
  • Consolidated net income attributable to EchoStar common stock of $56 million and diluted earnings per share of $0.60.
  • Consolidated EBITDA of $221 million (see reconciliation of this non-GAAP measure below).
  • Approximately 1,030,000 Hughes consumer broadband subscribers as of June 30, 2016.

Six Months Ended June 30, 2016 Financial Highlights:

  • Consolidated revenue of $1.57 billion.
  • Consolidated net income of $104 million.
  • Consolidated net income attributable to EchoStar common stock of $107 million and diluted earnings per share of $1.14.
  • Consolidated EBITDA of $443 million (see reconciliation of this non-GAAP measure below).
  • Strong liquidity with cash, cash equivalents and current marketable investment securities of $1.51 billion as of June 30, 2016.

Set forth below is a table highlighting certain of EchoStar's segment results for the three and six months ended June 30, 2016 and 2015:



For the Three Months
Ended June 30,


For the Six Months
Ended June 30,



2016


2015


2016


2015



(Dollars in thousands)

Revenue









Hughes


$

339,337



$

335,185



$

665,575



$

660,465


EchoStar Technologies Corp.


314,937



331,952



700,063



678,172


EchoStar Satellite Services


101,450



124,589



204,439



249,987


All Other & Eliminations


1,905



1,869



3,911



3,624


Total


$

757,629



$

793,595



$

1,573,988



$

1,592,248











EBITDA









Hughes


$

106,379



$

103,414



$

205,847



$

194,687


EchoStar Technologies Corp.


19,912



29,257



48,080



54,818


EchoStar Satellite Services


83,826



103,558



172,012



209,977


All Other & Eliminations


10,487



(23,911)



17,461



(33,483)


Total


$

220,604



$

212,318



$

443,400



$

425,999











Net income (loss) attributable to EchoStar common stock


$

56,133



$

33,900



$

106,807



$

67,302


Diluted earnings per share (in dollars)


$

0.60



$

0.36



$

1.14



$

0.72


Net income


$

55,909



$

31,013



$

104,352



$

58,611











Capital expenditures


$

141,633



$

179,108



$

352,769



$

356,910


 

The following table reconciles total consolidated EBITDA to net income.



For the Three Months
Ended June 30,


For the Six Months
Ended June 30,



2016


2015


2016


2015



(In thousands)

Net income


$

55,909



$

31,013



$

104,352



$

58,611











Less: Interest income and expense, net


(16,424)



(29,235)



(35,668)



(61,932)


Less: Income tax provision


(27,889)



(18,863)



(55,552)



(37,264)


Less: Depreciation and amortization


(120,505)



(132,470)



(247,239)



(265,655)


Less: Net income (loss) attributable to noncontrolling interest in HSS Tracking Stock and other noncontrolling interests


123



(737)



(589)



(2,537)


EBITDA


$

220,604



$

212,318



$

443,400



$

425,999


 

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, 2016 and 2015 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 three months ended June 30, 2016 filed today with the Securities and Exchange Commission.

EchoStar will host its earnings conference call on Tuesday, August 9, 2016 at 11:00 a.m. Eastern Time. The call-in numbers are (877) 815-1625 (toll-free) and (716) 247-5178 (international), Conference ID # 56393075.

About EchoStar Corporation

EchoStar Corporation (NASDAQ: SATS) is a premier global provider of satellite and video delivery solutions.  Headquartered in Englewood, Colo., and conducting business around the globe, EchoStar is a pioneer in secure communications technologies through its EchoStar Satellite Services, EchoStar Technologies and Hughes Network Systems business segments. For more information, visit echostar.com. Follow @EchoStar on Twitter.

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 Quarterly Report on Form 10-Q for the three months ended June 30, 2016, filed today 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
Consolidated Balance Sheets
(Dollars in thousands, except per-share amounts)






As of



June 30,


December 31,



2016


2015

Assets





Current Assets:





Cash and cash equivalents


$

761,840



$

924,240


Marketable investment securities, at fair value


745,844



612,338


Trade accounts receivable, net of allowance for doubtful accounts of $13,030 and $12,485, respectively


156,064



179,240


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


340,955



277,159


Inventory


72,392



67,010


Prepaids and deposits


58,334



56,949


Other current assets


10,429



16,723


Total current assets


2,145,858



2,133,659


Noncurrent Assets:





Restricted cash and marketable investment securities


22,691



21,002


Property and equipment, net of accumulated depreciation of $3,202,386 and $2,998,074, respectively


3,569,168



3,412,990


Regulatory authorizations, net


548,272



543,812


Goodwill


510,630



510,630


Other intangible assets, net


108,521



132,653


Investments in unconsolidated entities


202,023



209,264


Other receivable - DISH Network


91,376



90,966


Other noncurrent assets, net


162,854



154,510


Total noncurrent assets


5,215,535



5,075,827


Total assets


$

7,361,393



$

7,209,486


Liabilities and Stockholders' Equity





Current Liabilities:





Trade accounts payable


$

206,132



$

213,671


Trade accounts payable - DISH Network


18,829



24,682


Current portion of long-term debt and capital lease obligations


38,494



35,698


Deferred revenue and prepayments


67,516



61,881


Accrued compensation


39,945



29,767


Accrued royalties


23,634



22,531


Accrued expenses and other


104,880



138,601


Total current liabilities


499,430



526,831


Noncurrent Liabilities:





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


2,144,479



2,156,667


Deferred tax liabilities, net


705,376



650,392


Other noncurrent liabilities


92,757



93,954


Total noncurrent liabilities


2,942,612



2,901,013


Total liabilities


3,442,042



3,427,844


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, 13,000,000 shares authorized, 6,290,499 issued and outstanding at each of June 30, 2016 and December 31, 2015


6



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, 51,716,369 shares issued and 46,184,051 shares outstanding at June 30, 2016 and 51,087,839 shares issued and 45,555,521 shares outstanding at December 31, 2015


52



51


Class B common stock, $.001 par value, 800,000,000 shares authorized, 47,687,039 shares issued and outstanding at each of June 30, 2016 and December 31, 2015


48



48


Class C common stock, $.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of June 30, 2016 and December 31, 2015





Class D common stock, $.001 par value, 800,000,000 shares authorized, none issued and outstanding at each of June 30, 2016 and December 31, 2015





Additional paid-in capital


3,804,580



3,776,451


Accumulated other comprehensive loss


(111,820)



(117,233)


Accumulated earnings


239,258



134,317


Treasury stock, at cost


(98,162)



(98,162)


Total EchoStar stockholders' equity


3,833,962



3,695,478


Noncontrolling interest in HSS Tracking Stock


73,843



74,854


Other noncontrolling interests


11,546



11,310


Total stockholders' equity


3,919,351



3,781,642


Total liabilities and stockholders' equity


$

7,361,393



$

7,209,486


 

ECHOSTAR CORPORATION
Consolidated Statements of Operations
(Dollars in thousands, except per-share amounts)








For the Three Months
Ended June 30,


For the Six Months
Ended June 30,



2016


2015


2016


2015

Revenue:









Equipment revenue - DISH Network


$

185,148



$

196,134



$

434,761



$

420,093


Equipment revenue - other


76,403



87,772



156,880



166,908


Services and other revenue - DISH Network


220,199



235,953



433,926



458,757


Services and other revenue - other


275,879



273,736



548,421



546,490


Total revenue


757,629



793,595



1,573,988



1,592,248


Costs and Expenses:









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


222,875



238,623



509,738



498,846


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


207,488



217,765



404,650



426,005


Selling, general and administrative expenses


96,143



90,704



194,836



188,632


Research and development expenses


20,732



19,685



41,174



37,557


Depreciation and amortization


120,505



132,470



247,239



265,655


Total costs and expenses


667,743



699,247



1,397,637



1,416,695


Operating income


89,886



94,348



176,351



175,553











Other Income (Expense):









Interest income


3,503



2,723



7,469



5,334


Interest expense, net of amounts capitalized


(19,927)



(31,958)



(43,137)



(67,266)


Loss from partial redemption of debt




(5,044)





(5,044)


Gains (losses) on marketable investment securities, net


5,487



(1,613)



7,949



(1,604)


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




(4,649)





(4,649)


Equity in earnings (losses) of unconsolidated affiliates, net


6,980



(203)



6,017



(256)


Other, net


(2,131)



(3,728)



5,255



(6,193)


Total other expense, net


(6,088)



(44,472)



(16,447)



(79,678)


Income before income taxes


83,798



49,876



159,904



95,875


Income tax provision


(27,889)



(18,863)



(55,552)



(37,264)


Net income


55,909



31,013



104,352



58,611


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


(188)



(1,165)



(1,011)



(3,334)


Less: Net income attributable to other noncontrolling interests


311



428



422



797


Net income attributable to EchoStar


55,786



31,750



104,941



61,148


Less: Net loss attributable to Hughes Retail Preferred Tracking Stock (Note 4)


(347)



(2,150)



(1,866)



(6,154)


Net income attributable to EchoStar common stock


$

56,133



$

33,900



$

106,807



$

67,302











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









Basic


93,751



92,283



93,541



92,127


Diluted


94,330



93,514



94,090



93,437











Earnings per share - Class A and B common stock:









Basic


$

0.60



$

0.37



$

1.14



$

0.73


Diluted


$

0.60



$

0.36



$

1.14



$

0.72











Comprehensive Income:









Net income


$

55,909



$

31,013



$

104,352



$

58,611


Other comprehensive income (loss), net of tax:









Foreign currency translation adjustments


(338)



2,994



11,286



(23,406)


Recognition of foreign currency translation loss in net income




1,889





1,889


Unrealized gains (losses) on available-for-sale securities and other


(1,988)



(2,053)



(485)



(835)


Recognition of other-than-temporary loss on available-for-sale securities in net income




4,649





4,649


Recognition of realized gains on available-for-sale securities in net income


(3,327)



(11)



(5,574)



(20)


Total other comprehensive income (loss), net of tax


(5,653)



7,468



5,227



(17,723)


Comprehensive income


50,256



38,481



109,579



40,888


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


(188)



(1,165)



(1,011)



(3,334)


Less: Comprehensive income attributable to other noncontrolling interests


125



428



236



797


Comprehensive income attributable to EchoStar


$

50,319



$

39,218



$

110,354



$

43,425


 

ECHOSTAR CORPORATION
Consolidated Statements of Cash Flows
(In thousands)






For the Six Months Ended June 30,



2016


2015

Cash Flows from Operating Activities:





Net income


$

104,352



$

58,611


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





Depreciation and amortization


247,239



265,655


Equity in losses (earnings) of unconsolidated affiliates, net


(6,017)



256


Loss from partial redemption of debt




5,044


Loss (gain) and impairment on marketable investment securities, net


(7,949)



6,253


Stock-based compensation


8,328



10,288


Deferred tax provision


53,091



36,255


Dividends received from unconsolidated entity


10,000




Proceeds from sale of trading securities


7,140




Changes in current assets and current liabilities, net


(73,916)



(14,429)


Changes in noncurrent assets and noncurrent liabilities, net


2,859



3,294


Other, net


10,507



11,517


Net cash flows from operating activities


355,634



382,744


Cash Flows from Investing Activities:





Purchases of marketable investment securities


(641,358)



(285,130)


Sales and maturities of marketable investment securities


500,775



419,038


Purchases of property and equipment


(376,856)



(356,910)


Refunds and other receipts related to capital expenditures


24,087




Changes in restricted cash and marketable investment securities


(1,689)



(1,507)


Investments in unconsolidated entities


(1,636)



(64,655)


Acquisition of regulatory authorization




(3,428)


Expenditures for externally marketed software


(12,299)



(11,660)


Other, net


1,462



8


Net cash flows from investing activities


(507,514)



(304,244)


Cash Flows from Financing Activities:





Repayment of 6 1/2% Senior Notes Due 2019 and related premium




(113,300)


Repayment of other debt and capital lease obligations


(20,433)



(26,235)


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


10,505



14,104


Other, net


(1,320)



3,186


Net cash flows from financing activities


(11,248)



(122,245)


Effect of exchange rates on cash and cash equivalents


728



(3,298)


Net increase (decrease) in cash and cash equivalents


(162,400)



(47,043)


Cash and cash equivalents, beginning of period


924,240



549,053


Cash and cash equivalents, end of period


$

761,840



$

502,010







Supplemental Disclosure of Cash Flow Information:





Cash paid for interest (including capitalized interest)


$

87,213



$

91,817


Capitalized interest


$

47,093



$

27,569


Cash paid for income taxes


$

6,199



$

3,010


Employee benefits paid in Class A common stock


$

11,126



$

10,711


Property and equipment financed under capital lease obligations


$

6,857



$

3,367


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


$

8,238



$

(8,931)


Reduction of capital lease obligation for AMC-15 and AMC-16 satellites


$



$

4,500


 

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