EchoStar Announces Financial Results for Three and Nine Months Ended September 30, 2020

ENGLEWOOD, Colo., Nov. 5, 2020 /PRNewswire/ -- EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three and nine months ended September 30, 2020.

EchoStar Corporation Logo. (PRNewsfoto/EchoStar Corporation)

Three Months Ended September 30, 2020 Financial Highlights:

  • Consolidated revenues of $473.5 million.
  • Net income from continuing operations of $23.3 million, consolidated net income attributable to EchoStar common stock of $25.4 million, and diluted earnings per share of $0.26.
  • Consolidated Adjusted EBITDA of $166.7 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

Nine Months Ended September 30, 2020 Financial Highlights:

  • Consolidated revenues of $1,398.6 million.
  • Net loss from continuing operations of $49.3 million, consolidated net loss attributable to EchoStar common stock of $40.3 million, and diluted loss per share of $(0.41).
  • Consolidated Adjusted EBITDA of $476.2 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

"We had another outstanding quarter," commented Michael Dugan, CEO and President of EchoStar.  "We increased our consumer subscriber base by approximately 38,000, driven by our international markets, and grew our Net income and Adjusted EBITDA from the same period last year.  The continued growth in demand for our service demonstrates the importance of our networks and services for businesses and families everywhere.  We will continue to focus on the needs of our customers as connectivity becomes a more vital part of business, entertainment, and communications."

Three Months Ended September 30, 2020 - Additional Information:

  • Consolidated revenue was up $1.2 million year over year including an estimated negative foreign exchange impact of $10.9 million.
  • Adjusted EBITDA increased 9% or $14.3 million year over year.
    • Hughes segment Adjusted EBITDA increased $13.2 million year over year. The increase was driven primarily by the higher margin associated with the growth in our consumer broadband service.
    • ESS segment Adjusted EBITDA increased by $0.5 million year over year.
    • Corporate and Other segment Adjusted EBITDA increased by $0.7 million. The increase was primarily driven by lower equity losses in unconsolidated affiliates of $1.3 million compared to the same period last year.
  • Net income from continuing operations was $23.3 million, an increase of $46.4 million from last year. The change was primarily due to higher operating income of $10.9 million, improvement in foreign currency transactions, net, of $21.8 million, higher gains on investments, net, of $6.7 million, and lower income tax provision of $2.1 million.
  • Hughes broadband subscribers are approximately 1,580,000 as of September 30, 2020 including approximately 364,000 subscribers in Latin America.
  • For the three months ended September 30, 2020, approximately 71% of Hughes segment revenue was attributable to our consumer customers with approximately 29% attributable to our enterprise customers.
  • Cash, cash equivalents and marketable investment securities were $2.5 billion as of September 30, 2020.

Set forth below is a table highlighting certain of EchoStar's segment results three and nine months ended September 30, 2020 and 2019 (amounts in thousands) from continuing operations (all US GAAP amounts reference results from continuing operations):



For the three months
ended September 30,


For the nine months
ended September 30,



2020


2019


2020


2019

Revenue









Hughes


$

466,762



$

463,735



$

1,378,416



$

1,360,919


EchoStar Satellite Services


4,402



4,098



13,233



11,873


Corporate and Other


2,338



4,429



6,985



14,283


Total revenue


$

473,502



$

472,262



$

1,398,634



$

1,387,075











Adjusted EBITDA









Hughes


$

186,458



$

173,298



$

534,955



$

490,152


EchoStar Satellite Services


2,274



1,791



5,847



5,006


Corporate & Other:









Corporate overhead, operating and other


(21,572)



(20,981)



(63,948)



(58,769)


Equity in earnings (losses) of unconsolidated affiliates, net


(504)



(1,782)



(660)



(9,507)


Total Corporate & Other


(22,076)



(22,763)



(64,608)



(68,276)


Total Adjusted EBITDA


$

166,656



$

152,326



$

476,194



$

426,882











Expenditures for property and equipment


$

98,137



$

95,155



$

295,041



$

314,351


 

Reconciliation of GAAP to Non-GAAP Measurement (amounts in thousands):




For the three months
ended September 30,


For the nine months
ended September 30,



2020


2019


2020


2019

Net income (loss)


$

23,273



$

(21,106)



(49,307)



(11,158)


Interest income, net


(7,364)



(17,175)



(33,707)



(64,817)


Interest expense, net of amounts capitalized


37,967



49,865



112,458



156,813


Income tax provision (benefit), net


2,950



5,016



6,309



12,607


Depreciation and amortization


129,822



122,374



392,077



361,619


Net loss (income) from discontinued operations




(2,008)





(46,223)


Net loss (income) attributable to non-controlling interests


2,167



2,797



9,040



1,359


EBITDA


188,815



139,763



436,870



410,200


(Gains) losses on investments, net


(14,998)



(8,295)



37,764



(28,087)


Litigation Expense




1,824





26,328


License fee dispute - India, net of non-controlling interests


(480)



3,940



(1,043)



3,940


Foreign currency transaction (gains) losses, net


(6,681)



15,094



2,603



14,501


Adjusted EBITDA


$

166,656



$

152,326



$

476,194



$

426,882



















Note on Use of Non-GAAP Financial Measures

EBITDA is defined as "Net income (loss)" excluding "Interest income, net," Interest expense, net of amounts capitalized," "Income tax benefit (provision), net," "Depreciation and amortization," "Net income (loss) from discontinued operations," and "Net income (loss) attributable to non-controlling interests." 

Adjusted EBITDA is defined as EBITDA excluding "Gains and losses on investments, net," "Foreign currency transaction gains (losses), net," and other non-recurring or non-operational items.  EBITDA and Adjusted EBITDA are not measures determined in accordance with US GAAP. EBITDA and Adjusted EBITDA are 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 US GAAP. Our management uses EBITDA and Adjusted EBITDA as measures of our operating efficiency and overall financial performance for benchmarking against our peers and competitors. Management believes that these non-GAAP measures provide meaningful supplemental information regarding the underlying operating performance of our business and are appropriate to enhance an overall understanding of our financial performance. Management also believes that EBITDA and Adjusted EBITDA are useful to investors because they are 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, 2020 and 2019 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, 2020 filed today with the Securities and Exchange Commission.

EchoStar will host a conference call and webcast to discuss its earnings on Thursday, November 5, 2020 at 11:00 a.m. Eastern Time. The call-in numbers are (877) 815-1625 (US) and (716) 247-5178 (International), Conference ID 8263356.  The webcast will be available on EchoStar's investor relations website at www.echostar.com.

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, 2019 and Quarterly Report on Form 10-Q for the period ended September 30, 2020 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

(Amounts in thousands, except per share amounts)




As of



September 30, 2020


December 31, 2019

Assets





Current assets:





Cash and cash equivalents


$

555,550



$

1,519,431


Marketable investment securities


1,950,804



940,623


Trade accounts receivable and contract assets, net


190,950



196,629


Other current assets, net


192,724



179,531


Total current assets


2,890,028



2,836,214


Non-current assets:





Property and equipment, net


2,372,594



2,528,738


Operating lease right-of-use assets


129,073



114,042


Goodwill


508,660



506,953


Regulatory authorizations, net


475,824



478,598


Other intangible assets, net


20,550



29,507


Other investments, net


284,238



325,405


Other non-current assets, net


344,569



334,841


Total non-current assets


4,135,508



4,318,084


Total assets


$

7,025,536



$

7,154,298







Liabilities and Stockholders' Equity





Current liabilities:





Trade accounts payable


$

111,099



$

124,080


Current portion of long-term debt, net


897,303




Contract liabilities


89,622



101,060


Accrued expenses and other current liabilities


276,703



270,879


Total current liabilities


1,374,727



496,019


Non-current liabilities:





Long-term debt, net


1,495,078



2,389,168


Deferred tax liabilities, net


352,948



351,692


Operating lease liabilities


115,376



96,941


Other non-current liabilities


74,271



74,925


Total non-current liabilities


2,037,673



2,912,726


Total liabilities


3,412,400



3,408,745







Commitments and contingencies










Stockholders' equity:





Preferred stock, $0.001 par value, 20,000,000 shares authorized, none issued and outstanding at both September 30, 2020 and December 31, 2019





Common stock, $0.001 par value, 4,000,000,000 shares authorized:





Class A common stock, $0.001 par value, 1,600,000,000 shares authorized, 57,140,432 shares issued and 50,458,512 shares outstanding at September 30, 2020 and 56,592,251 shares issued and 50,107,330 shares outstanding at December 31, 2019


57



57


Class B convertible common stock, $0.001 par value, 800,000,000 shares authorized, 47,687,039 shares issued and outstanding at both September 30, 2020 and December 31, 2019


48



48


Class C convertible common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at both September 30, 2020 and December 31, 2019





Class D common stock, $0.001 par value, 800,000,000 shares authorized, none issued and outstanding at both September 30, 2020 and December 31, 2019





Additional paid-in capital


3,317,868



3,290,483


Accumulated other comprehensive income (loss)


(209,538)



(122,138)


Accumulated earnings (losses)


583,474



632,809


Treasury stock, at cost


(137,347)



(131,454)


Total EchoStar Corporation stockholders' equity


3,554,562



3,669,805


Non-controlling interests


58,574



75,748


Total stockholders' equity


3,613,136



3,745,553


Total liabilities and stockholders' equity


$

7,025,536



$

7,154,298











 

ECHOSTAR CORPORATION

Condensed Consolidated Statements of Operations

(Amounts in thousands, except per share amounts)




For the three months ended September 30,


For the nine months ended September 30,



2020


2019


2020


2019

Revenue:









Services and other revenue


$

426,532



$

406,537



$

1,251,932



$

1,211,991


Equipment revenue


46,970



65,725



146,702



175,084


Total revenue


473,502



472,262



1,398,634



1,387,075


Costs and expenses:









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


146,577



143,842



432,848



429,869


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


37,079



51,188



115,529



142,744


Selling, general and administrative expenses


115,358



122,629



354,437



383,952


Research and development expenses


7,676



6,136



21,378



19,411


Depreciation and amortization


129,822



122,374



392,077



361,619


Total costs and expenses


436,512



446,169



1,316,269



1,337,595


Operating income (loss)


36,990



26,093



82,365



49,480


Other income (expense):









Interest income, net


7,364



17,175



33,707



64,817


Interest expense, net of amounts capitalized


(37,967)



(49,865)



(112,458)



(156,813)


Gains (losses) on investments, net


14,998



8,295



(37,764)



28,087


Equity in earnings (losses) of unconsolidated affiliates, net


(2,134)



(3,209)



(5,866)



(14,317)


Foreign currency transaction gains (losses), net


6,681



(15,094)



(2,603)



(14,501)


Other, net


291



(1,493)



(379)



(1,527)


Total other income (expense), net


(10,767)



(44,191)



(125,363)



(94,254)


Income (loss) from continuing operations before income taxes


26,223



(18,098)



(42,998)



(44,774)


Income tax benefit (provision), net


(2,950)



(5,016)



(6,309)



(12,607)


Net income (loss) from continuing operations


23,273



(23,114)



(49,307)



(57,381)


Net income (loss) from discontinued operations




2,008





46,223


Net income (loss)


23,273



(21,106)



(49,307)



(11,158)


Less: Net loss (income) attributable to non-controlling interests


2,167



2,797



9,040



1,359


Net income (loss) attributable to EchoStar Corporation common stock


$

25,440



$

(18,309)



$

(40,267)



(9,799)











Earnings (losses) per share - Class A and B common stock:









Basic and diluted earnings (losses) from continuing operations per share


$

0.26



$

(0.21)



$

(0.41)



$

(0.58)


Total basic and diluted earnings (losses) per share


$

0.26



$

(0.19)



$

(0.41)



$

(0.10)


 

ECHOSTAR CORPORATION

Condensed Consolidated Statements of Cash Flows

(Amounts in thousands, except per share amounts)




For the nine months ended
September 30,



2020


2019

Cash flows from operating activities:





Net income (loss)


$

(49,307)



$

(11,158)


Adjustments to reconcile net income (loss) to net cash flows from operating activities:





Depreciation and amortization


392,077



459,054


Losses (gains) on investments, net


37,764



(28,087)


Equity in losses (earnings) of unconsolidated affiliates, net


5,866



14,317


Foreign currency transaction losses (gains), net


2,603



14,501


Deferred tax provision (benefit), net


4,474



22,949


Stock-based compensation


6,887



7,120


Amortization of debt issuance costs


3,212



4,882


Dividends received from unconsolidated affiliates




2,716


Other, net


(9,145)



9,617


Changes in assets and liabilities, net:





Trade accounts receivable and contract assets, net


(9,157)



(5,439)


Other current assets, net


(21,090)



(42,140)


Trade accounts payable


(17,824)



18,180


Contract liabilities


(11,438)



37,273


Accrued expenses and other current liabilities


29,155



27,972


Non-current assets and non-current liabilities, net


1,325



1,303


Net cash flows from operating activities


365,402



533,060







Cash flows from investing activities:





Purchases of marketable investment securities


(2,234,671)



(655,265)


Sales and maturities of marketable investment securities


1,231,790



1,988,078


Expenditures for property and equipment


(295,041)



(314,861)


Expenditures for externally marketed software


(27,824)



(21,364)


Purchase of other investments


(5,500)




Investments in unconsolidated affiliates




(7,503)


Dividend received from unconsolidated affiliate




2,284


Net cash flows from investing activities


(1,331,246)



991,369







Cash flows from financing activities:





Repurchase and maturity of the 2019 Senior Secured Notes




(920,923)


Payment of finance lease obligations


(606)



(29,135)


Payment of in-orbit incentive obligations


(1,268)



(5,269)


Net proceeds from Class A common stock options exercised


983



64,143


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


8,066



7,724


Treasury share purchase


(5,893)




Contribution by non-controlling interest holder


14,268




Purchase of non-controlling interest




(7,313)


Other, net


998



758


Net cash flows from financing activities


16,548



(890,015)







Effect of exchange rates on cash and cash equivalents


(8,348)



(411)


Net increase (decrease) in cash and cash equivalents


(957,644)



634,003


Cash and cash equivalents, including restricted amounts, beginning of period


1,521,889



929,495


Cash and cash equivalents, including restricted amounts, end of period


$

564,245



$

1,563,498


 

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SOURCE EchoStar Corporation

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