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EchoStar Announces Fourth Quarter and Full Year 2017 Results

ENGLEWOOD, Colo., Feb. 22, 2018 /PRNewswire/ -- EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the fourth quarter and full year ended December 31, 2017.

EchoStar Corporation Logo. (PRNewsfoto/EchoStar Corporation)

Fourth Quarter 2017 Financial Highlights:

  • Consolidated revenues of $506 million.
  • Consolidated net income from continuing operations of $311.8 million, consolidated net income attributable to EchoStar common stock of $313.2 million and diluted earnings per share of $3.23.
  • Consolidated EBITDA of $207 million (see reconciliation of this non-GAAP measure below).

Full Year Ended December 31, 2017 Financial Highlights:

  • Consolidated revenue of $1.89 billion.
  • Consolidated net income from continuing operations of $385.0 million, consolidated net income attributable to EchoStar common stock of $393.8 million and diluted earnings per share of $4.07.
  • Consolidated EBITDA of $795 million (see reconciliation of this non-GAAP measure below).

Additional Highlights:

  • Approximately 1,208,000 Hughes broadband subscribers as of December 31, 2017.
  • Cash, cash equivalents and current marketable investment securities of $3.25 billion as of December 31, 2017

The Tax Cuts and Jobs Act enacted in December 2017 includes a reduction of the federal corporate tax rate to 21%. As a result, we provisionally recorded a one-time tax benefit of $303.5 million from the re- measurement of our deferred tax assets and liabilities. The net income and earnings per share noted above include the impact of this benefit.

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 twelve months ended December 31, 2017 and 2016:

 



For the Three Months
Ended December 31,


For the Years
Ended December 31,



2017


2016


2017


2016



(Dollars in thousands)

Revenue









Hughes


$

405,775



$

370,910



$

1,477,918



$

1,392,361


EchoStar Satellite Services


96,459



101,741



392,244



407,660


Corporate & Other


3,814



3,137



15,346



10,445


Total


$

506,048



$

475,788



$

1,885,508



$

1,810,466











EBITDA









Hughes


$

132,529



$

123,660



$

475,222



$

477,165


EchoStar Satellite Services


73,412



84,335



315,285



341,516


Corporate & Other


598



(22,170)



4,070



(67,676)


Total


$

206,539



$

185,825



$

794,577



$

751,005











Net income (loss) attributable to EchoStar common stock


$

313,237



$

38,222



$

393,770



$

181,673


Diluted earnings per share (in dollars)


$

3.23



$

0.40



$

4.07



$

1.92


Net income from continuing operations


$

311,759



$

23,823



$

384,980



$

136,372











Capital expenditures from continuing operations


$

156,239



$

150,692



$

566,384



$

628,510


 

The following table reconciles total consolidated Net income to EBITDA.

 



For the Three Months
Ended December 31,


For the Years
Ended December 31,



2017


2016


2017


2016



(In thousands)

Net income


$

313,814



$

38,930



$

393,489



$

180,692











Interest income and expense, net


46,465



35,587



172,621



102,237


Income tax (benefit) provision, net


(293,359)



18,996



(284,286)



80,254


Depreciation and amortization


142,251



108,161



522,190



432,904


Net income from discontinued operations


(2,055)



(15,107)



(8,509)



(44,320)


Net income attributable to noncontrolling interests


(577)



(742)



(928)



(762)


EBITDA


$

206,539



$

185,825



$

794,577



$

751,005


 

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), net" 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 December 31, 2017 and 2016 are attached to this press release. Detailed financial data and other information are available in EchoStar's Annual Report on Form 10-K for the period ended December 31, 2017 filed today with the Securities and Exchange Commission.

EchoStar will host its earnings conference call on Thursday, February 22, 2018 at 11:00 a.m. Eastern Time. The call-in numbers are (877) 815-1625 (toll-free) and (716) 247-5178 (international), Conference ID # 2186058.

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, 2017, 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




As of December 31,



2017


2016

Assets





Current Assets:





Cash and cash equivalents


$

2,431,456



$

2,570,365


Marketable investment securities, at fair value


814,161



522,516


Trade accounts receivable, net of allowance for doubtful accounts of $12,027 and $12,956, respectively


196,840



182,527


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


43,295



19,417


Inventory


83,595



62,620


Prepaids and deposits


54,533



43,456


Other current assets


91,574



10,862


Current assets of discontinued operations


97



311,524


Total current assets


3,715,551



3,723,287


Noncurrent Assets:





Property and equipment, net of accumulated depreciation of $2,661,129 and $2,598,492, respectively


3,465,471



3,398,195


Regulatory authorizations, net


536,936



544,633


Goodwill


504,173



504,173


Other intangible assets, net


58,955



80,734


Investments in unconsolidated entities


161,427



171,016


Other receivable - DISH Network


92,687



90,586


Other noncurrent assets, net


214,814



179,311


Noncurrent assets of discontinued operations




316,924


Total noncurrent assets


5,034,463



5,285,572


Total assets


$

8,750,014



$

9,008,859


Liabilities and Stockholders' Equity





Current Liabilities:





Trade accounts payable


$

108,406



$

170,297


Trade accounts payable - DISH Network


4,753



1,072


Current portion of long-term debt and capital lease obligations


40,631



32,984


Deferred revenue and prepayments


65,959



59,989


Accrued interest


47,616



46,487


Accrued compensation


47,756



53,454


Accrued expenses and other


98,227



95,726


Current liabilities of discontinued operations


542



71,429


Total current liabilities


413,890



531,438


Noncurrent Liabilities:





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


3,594,213



3,622,463


Deferred tax liabilities, net


436,023



746,667


Other noncurrent liabilities


128,503



90,785


Noncurrent liabilities of discontinued operations




10,701


Total noncurrent liabilities


4,158,739



4,470,616


Total liabilities


4,572,629



5,002,054


Commitments and Contingencies (Note 16)





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 December 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, 53,663,859 shares issued and 48,131,541 shares
  outstanding at December 31, 2017 and 52,243,465 shares issued and 46,711,147 shares outstanding at December 31, 2016


54



52


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


48



48


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





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





Additional paid-in capital


3,669,461



3,828,677


Accumulated other comprehensive loss


(130,154)



(124,803)


Accumulated earnings


721,316



314,247


Treasury stock, at cost


(98,162)



(98,162)


Total EchoStar stockholders' equity


4,162,563



3,920,065


Noncontrolling interest in HSS Tracking Stock




73,910


Other noncontrolling interests


14,822



12,830


Total stockholders' equity


4,177,385



4,006,805


Total liabilities and stockholders' equity


$

8,750,014



$

9,008,859


 

 

ECHOSTAR CORPORATION

Consolidated Statements of Operations

(In thousands)




For the Years Ended December 31,



2017


2016


2015

Revenue:







Services and other revenue - other


$

1,200,321



$

1,100,828



$

1,093,674


Services and other revenue - DISH Network


445,698



463,442



532,162


Equipment revenue - other


239,199



237,356



212,269


Equipment revenue - DISH Network


290



8,840



10,752


Total revenue


1,885,508



1,810,466



1,848,857


Costs and Expenses:







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


546,327



521,220



574,400


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


212,170



203,965



195,360


Selling, general and administrative expenses


366,007



325,044



318,136


Research and development expenses


31,745



31,170



26,377


Depreciation and amortization


522,190



432,904



460,819


Impairment of long-lived assets


10,762






Total costs and expenses


1,689,201



1,514,303



1,575,092


Operating income


196,307



296,163



273,765


Other Income (Expense):







Interest income


44,619



21,244



10,388


Interest expense, net of amounts capitalized


(217,240)



(123,481)



(121,995)


Gains (losses) on investments, net


56,751



9,767



(6,443)


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


(3,298)





(11,226)


Equity in earnings (losses) of unconsolidated affiliates, net


16,973



10,802



(2,477)


Other, net


6,582



2,131



(2,685)


Total other expense, net


(95,613)



(79,537)



(134,438)


Income from continuing operations before income taxes


100,694



216,626



139,327


Income tax benefit (provision), net


284,286



(80,254)



(51,235)


Net income from continuing operations


384,980



136,372



88,092


Net income from discontinued operations


8,509



44,320



61,279


Net income


393,489



180,692



149,371


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


(655)



(944)



(5,603)


Less: Net income attributable to other noncontrolling interests


1,583



1,706



1,617


Net income attributable to EchoStar


392,561



179,930



153,357


Less: Net loss attributable to Hughes Retail Preferred Tracking Stock


(1,209)



(1,743)



(10,343)


Net income attributable to EchoStar common stock


$

393,770



$

181,673



$

163,700









Amounts attributable to EchoStar common stock:







Net income from continuing operations


$

385,261



$

137,353



$

102,421


Net income from discontinued operations


8,509



44,320



61,279


Net income attributable to EchoStar common stock


$

393,770



$

181,673



$

163,700









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







Basic


95,425



93,795



92,397


Diluted


96,741



94,410



93,466









Earnings per share - Class A and B common stock:







Basic:







  Continuing operations


$

4.04



$

1.46



$

1.11


  Discontinued operations


0.09



0.48



0.66


Total basic earnings per share


$

4.13



$

1.94



$

1.77


Diluted:







  Continuing operations


$

3.98



$

1.45



$

1.10


  Discontinued operations


0.09



0.47



0.65


Total diluted earnings per share


$

4.07



$

1.92



$

1.75


 

 

ECHOSTAR CORPORATION

Consolidated Statements of Cash Flows

(In thousands)




For the Years Ended December 31,



2017


2016


2015

Cash Flows from Operating Activities:







Net income


$

393,489



$

180,692



$

149,371


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







Depreciation and amortization


533,849



495,068



528,158


Impairment of long-lived assets


10,762





2,400


Equity in earnings of unconsolidated affiliates, net


(15,814)



(13,310)



(1,895)


Losses (gains) and impairment on marketable investment securities, net


(53,453)



(9,767)



17,669


Loss from partial redemption of debt






5,044


Stock-based compensation


10,103



15,234



21,839


Deferred tax provision (benefit)


(288,577)



98,148



56,132


Dividends received from unconsolidated entities


19,000



15,000



5,000


Proceeds from sale of trading securities


8,922



7,140



380


Changes in current assets and current liabilities, net:







Trade accounts receivable, net


421



(26,942)



(38,452)


Trade accounts receivable - DISH Network


235,227



(1,456)



(25,490)


Inventory


(19,291)



(4,814)



(4,906)


Other current assets


(15,352)



2,263



6,499


Trade accounts payable


(78,419)



(24,571)



37,228


Trade accounts payable - DISH Network


731



(19,650)



(7,792)


Accrued expenses and other


11,993



55,998



1,477


Changes in noncurrent assets and noncurrent liabilities, net


(36,975)



9,459



1,616


Other, net


10,276



24,851



22,173


Net cash flows from operating activities


726,892



803,343



776,451


Cash Flows from Investing Activities:







Purchases of marketable investment securities


(855,717)



(921,247)



(536,430)


Sales and maturities of marketable investment securities


578,051



1,001,166



1,057,034


Expenditures for property and equipment


(583,211)



(722,341)



(809,270)


Refunds and other receipts related to capital expenditures


4,311



24,087



105,750


Sale of investment in unconsolidated entity


17,781






Investments in unconsolidated entities




(1,636)



(64,655)


Expenditures for externally marketed software


(31,331)



(23,252)



(22,327)


Other, net


2,114



10,956



(5,413)


Net cash flows from investing activities


(868,002)



(632,267)



(275,311)


Cash Flows from Financing Activities:







Proceeds from issuance of long-term debt




1,500,000




Payments of debt issuance costs


(414)



(7,097)




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






(113,300)


Repayment of debt and capital lease obligations


(37,670)



(40,364)



(44,804)


Net proceeds from Class A common stock options exercised


35,536



13,065



24,841


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


8,758



14,367



13,888


Cash exchanged for Tracking Stock


(651)






Other, net


(5,487)



(4,282)



(882)


Net cash flows from financing activities


72



1,475,689



(120,257)


Effect of exchange rates on cash and cash equivalents


1,351



138



(5,696)


Net increase (decrease) in cash and cash equivalents


(139,687)



1,646,903



375,187


Cash and cash equivalents, beginning of period


2,571,143



924,240



549,053


Cash and cash equivalents, end of period


$

2,431,456



$

2,571,143



$

924,240


Supplemental Disclosure of Cash Flow Information:







Cash paid for interest (including capitalized interest)


$

259,632



$

172,707



$

179,114


Capitalized interest


$

52,015



$

94,395



$

63,808


Cash paid for income taxes


$

11,033



$

11,700



$

6,394


Employee benefits paid in Class A common stock


$

11,200



$

11,126



$

10,711


Property and equipment financed under capital lease obligations


$

8,484



$

7,652



$

8,604


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


$

(3,831)



$

3,054



$

(7,123)


Transfer of EchoStar 105/SES-11 payloads to SES in exchange for receivable


$

77,524



$



$


Capitalized in-orbit incentive obligations


$

43,890



$



$


Noncash net assets exchanged for Tracking Stock


$

299,888



$



$


 

 

 

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