November 8, 2016

EchoStar Announces Financial Results for Three and Nine Months Ending September 30, 2016

ENGLEWOOD, Colo., Nov. 8, 2016 /PRNewswire/ -- EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three and nine months ending September 30, 2016.

EchoStar Corporation Logo. (PRNewsFoto/EchoStar Corporation)

Three Months Ending September 30, 2016 Financial Highlights:

  • Consolidated revenues of $742 million.
  • Consolidated net income of $37 million.
  • Consolidated net income attributable to EchoStar common stock of $37 million and diluted earnings per share of $0.39.
  • Consolidated EBITDA of $211 million (see reconciliation of this non-GAAP measure below).
  • Approximately 1,018,000 Hughes consumer broadband subscribers as of September 30, 2016.

Nine Months Ended September 30, 2016 Financial Highlights:

  • Consolidated revenue of $2.32 billion.
  • Consolidated net income of $142 million.
  • Consolidated net income attributable to EchoStar common stock of $143 million and diluted earnings per share of $1.52.
  • Consolidated EBITDA of $654 million (see reconciliation of this non-GAAP measure below).
  • Strong liquidity with cash, cash equivalents and  current marketable investment securities of $3.02 billion as of September 30, 2016

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



For the Three Months
Ended September 30,


 For the Nine Months
Ended September 30,



2016


2015


2016


2015



(Dollars in thousands)

Revenue









Hughes


$

355,876



$

339,729



$

1,021,451



$

1,000,194


EchoStar Technologies Corp.


283,052



294,925



983,115



973,097


EchoStar Satellite Services


101,480



124,300



305,919



374,287


All Other & Eliminations


1,941



1,925



5,852



5,549


Total


$

742,349



$

760,879



$

2,316,337



$

2,353,127











EBITDA









Hughes


$

112,018



$

101,582



$

317,865



$

296,269


EchoStar Technologies Corp.


9,346



25,946



57,426



80,764


EchoStar Satellite Services


83,700



104,200



255,712



314,177


All Other & Eliminations


5,980



(15,116)



23,441



(48,599)


Total


$

211,044



$

216,612



$

654,444



$

642,611











Net income (loss) attributable to EchoStar common stock


$

36,644



$

30,102



$

143,451



$

97,404


Diluted earnings per share (in dollars)


$

0.39



$

0.32



$

1.52



$

1.04


Net income


$

37,410



$

28,358



$

141,762



$

86,969











Capital expenditures


$

156,813



$

123,242



$

509,582



$

480,152


 

The following table reconciles total consolidated net income to EBITDA.



For the Three Months
Ended September 30,


For the Nine Months
Ended September 30,



2016


2015


2016


2015



(Dollars in thousands)

Net income


$

37,410



$

28,358



$

141,762



$

86,969











Interest income and expense, net


31,098



26,308



66,766



88,240


Income tax provision


19,512



28,577



75,064



65,841


Depreciation and amortization


123,633



132,892



370,872



398,547


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


(609)



477



(20)



3,014


EBITDA


$

211,044



$

216,612



$

654,444



$

642,611


 

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 September 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 period ended September 30, 2016 filed today with the Securities and Exchange Commission.

EchoStar will host its earnings conference call on Tuesday, November 8, 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 # 8808210.

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 Corporation, and Hughes Network Systems 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 Quarterly Report on Form 10-Q for the period ended September 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



September 30,


December 31,



2016


2015

Assets





Current Assets:





Cash and cash equivalents


$

2,215,708



$

924,240


Marketable investment securities, at fair value


803,309



612,338


Trade accounts receivable, net of allowance for doubtful accounts of $13,817 and $12,485, respectively


177,901



179,240


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


330,300



277,159


Inventory


73,789



67,010


Prepaids and deposits


61,489



56,949


Other current assets


54,993



16,723


Total current assets


3,717,489



2,133,659


Noncurrent Assets:





Restricted cash and marketable investment securities


13,651



21,002


Property and equipment, net of accumulated depreciation of $3,303,714 and $2,998,074, respectively


3,628,379



3,412,990


Regulatory authorizations, net


548,211



543,812


Goodwill


510,630



510,630


Other intangible assets, net


98,366



132,653


Investments in unconsolidated entities


202,272



209,264


Other receivable - DISH Network


90,359



90,966


Other noncurrent assets, net


167,980



154,510


Total noncurrent assets


5,259,848



5,075,827


Total assets


$

8,977,337



$

7,209,486


Liabilities and Stockholders' Equity





Current Liabilities:





Trade accounts payable


$

225,234



$

213,671


Trade accounts payable - DISH Network


1,520



24,682


Current portion of long-term debt and capital lease obligations


37,717



35,698


Deferred revenue and prepayments


62,197



61,881


Accrued compensation


37,083



29,767


Accrued royalties


22,687



22,531


Accrued interest


57,159



8,596


Accrued expenses and other


104,638



130,005


Total current liabilities


548,235



526,831


Noncurrent Liabilities:





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


3,629,973



2,156,667


Deferred tax liabilities, net


724,839



650,392


Other noncurrent liabilities


95,615



93,954


Total noncurrent liabilities


4,450,427



2,901,013


Total liabilities


4,998,662



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 September 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, 51,890,524 shares issued and 46,358,206 shares outstanding at September 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 September 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 September 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 September 30, 2016 and December 31, 2015





Additional paid-in capital


3,813,841



3,776,451


Accumulated other comprehensive loss


(99,167)



(117,233)


Accumulated earnings


276,059



134,317


Treasury stock, at cost


(98,162)



(98,162)


Total EchoStar stockholders' equity


3,892,677



3,695,478


Noncontrolling interest in HSS Tracking Stock


73,928



74,854


Other noncontrolling interests


12,070



11,310


Total stockholders' equity


3,978,675



3,781,642


Total liabilities and stockholders' equity


$

8,977,337



$

7,209,486


 

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




For the Three Months
Ended September 30,


For the Nine Months
Ended September 30,



2016


2015


2016


2015

Revenue:









Services and other revenue - DISH Network


$

221,867



$

236,601



$

655,793



$

695,358


Services and other revenue - other


278,009



277,640



826,430



824,130


Equipment revenue - DISH Network


156,227



157,184



590,988



577,277


Equipment revenue - other


86,246



89,454



243,126



256,362


Total revenue


742,349



760,879



2,316,337



2,353,127


Costs and Expenses:









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


213,621



219,686



618,271



645,691


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


200,986



207,989



710,724



706,835


Selling, general and administrative expenses


101,541



91,830



296,377



280,462


Research and development expenses


20,587



19,875



61,761



57,432


Depreciation and amortization


123,633



132,892



370,872



398,547


Total costs and expenses


660,368



672,272



2,058,005



2,088,967


Operating income


81,981



88,607



258,332



264,160











Other Income (Expense):









Interest income


6,260



2,562



13,729



7,896


Interest expense, net of amounts capitalized


(37,358)



(28,870)



(80,495)



(96,136)


Loss from partial redemption of debt








(5,044)


Gains (losses) on marketable investment securities, net


230



(3,912)



8,179



(5,516)


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




(1,243)





(5,892)


Equity in earnings (losses) of unconsolidated affiliates, net


5,164



(2,324)



11,181



(2,580)


Other, net


645



2,115



5,900



(4,078)


Total other expense, net


(25,059)



(31,672)



(41,506)



(111,350)


Income before income taxes


56,922



56,935



216,826



152,810


Income tax provision


(19,512)



(28,577)



(75,064)



(65,841)


Net income


37,410



28,358



141,762



86,969


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


85



(686)



(926)



(4,020)


Less: Net income attributable to other noncontrolling interests


524



209



946



1,006


Net income attributable to EchoStar


36,801



28,835



141,742



89,983


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


157



(1,267)



(1,709)



(7,421)


Net income attributable to EchoStar common stock


$

36,644



$

30,102



$

143,451



$

97,404











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









Basic


93,898



92,500



93,661



92,253


Diluted


94,401



93,493



94,189



93,480











Earnings per share - Class A and B common stock:









Basic


$

0.39



$

0.33



$

1.53



$

1.06


Diluted


$

0.39



$

0.32



$

1.52



$

1.04











Comprehensive Income:









Net income


$

37,410



$

28,358



$

141,762



$

86,969


Other comprehensive income (loss), net of tax:









Foreign currency translation adjustments


2,483



(32,603)



13,769



(56,009)


Recognition of foreign currency translation loss in net income








1,889


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


10,180



(7,373)



9,695



(8,208)


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




1,243





5,892


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


(10)



(9)



(5,584)



(29)


Total other comprehensive income (loss), net of tax


12,653



(38,742)



17,880



(56,465)


Comprehensive income (loss)


50,063



(10,384)



159,642



30,504


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


85



(686)



(926)



(4,020)


Less: Comprehensive income attributable to other noncontrolling interests


524



(111)



760



686


Comprehensive income attributable to EchoStar


$

49,454



$

(9,587)



$

159,808



$

33,838


 

ECHOSTAR CORPORATION
Consolidated Statements of Cash Flows
(In thousands)




For the Nine Months
Ended September 30,



2016


2015

Cash Flows from Operating Activities:





Net income


$

141,762



$

86,969


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





Depreciation and amortization


370,872



398,547


Equity in losses (earnings) of unconsolidated affiliates, net


(11,181)



2,580


Loss from partial redemption of debt




5,044


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


(8,179)



11,408


Stock-based compensation


11,953



16,204


Deferred tax provision


71,422



63,421


Dividends received from unconsolidated entities


15,000



5,000


Proceeds from sale of trading securities


7,140



380


Changes in current assets and current liabilities, net


(47,013)



(274)


Changes in noncurrent assets and noncurrent liabilities, net


8,097



3,457


Other, net


14,836



15,187


Net cash flows from operating activities


574,709



607,923


Cash Flows from Investing Activities:





Purchases of marketable investment securities


(883,288)



(345,391)


Sales and maturities of marketable investment securities


643,865



669,393


Purchases of property and equipment


(533,669)



(585,902)


Refunds and other receipts related to capital expenditures


24,087



105,750


Changes in restricted cash and marketable investment securities


7,351



(313)


Investments in unconsolidated entities


(1,636)



(64,655)


Acquisition of regulatory authorization




(3,428)


Expenditures for externally marketed software


(17,991)



(16,905)


Other, net


1,462



(50)


Net cash flows from investing activities


(759,819)



(241,501)


Cash Flows from Financing Activities:





Proceeds from issuance of long-term debt


1,500,000




Payments of debt issuance costs


(6,275)




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




(113,300)


Repayment of other debt and capital lease obligations


(30,615)



(35,303)


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


16,157



19,893


Other, net


(3,373)



1,525


Net cash flows from financing activities


1,475,894



(127,185)


Effect of exchange rates on cash and cash equivalents


684



(9,185)


Net increase in cash and cash equivalents


1,291,468



230,052


Cash and cash equivalents, beginning of period


924,240



549,053


Cash and cash equivalents, end of period


$

2,215,708



$

779,105







Supplemental Disclosure of Cash Flow Information:





Cash paid for interest (including capitalized interest)


$

97,044



$

102,335


Capitalized interest


$

70,386



$

44,335


Cash paid for income taxes


$

9,187



$

5,185


Employee benefits paid in Class A common stock


$

11,126



$

10,711


Property and equipment financed under capital lease obligations


$

7,172



$

5,551


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


$

21,951



$

10,297


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


$



$

4,500


 

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