PR Newswire | Nov 5, 2020 06:01AM EST

30, 2020

11/05 05:00 CST

EchoStar Announces Financial Results for Three and Nine Months Ended September 30, 2020 ENGLEWOOD, Colo., Nov. 5, 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.

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 For the nine months ended September 30, ended September 30,

2020 2019 2020 2019

Revenue

Hughes $466,762$463,735$1,378,416$1,360,919

EchoStar Satellite 4,402 4,098 13,233 11,873 Services

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 2,274 1,791 5,847 5,006 Services

Corporate & Other:

Corporate overhead, (21,572) (20,981) (63,948) (58,769) operating and other

Equity in earnings (losses) of (504) (1,782) (660) (9,507) unconsolidated affiliates, net

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$98,137 $95,155 $295,041 $314,351 and equipment

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



For the three months For the nine months ended September 30, 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 37,967 49,865 112,458 156,813 amounts capitalized

Income tax provision 2,950 5,016 6,309 12,607 (benefit), net

Depreciation and 129,822 122,374 392,077 361,619 amortization

Net loss (income) from - (2,008) - (46,223) discontinued operations

Net loss (income) attributable to 2,167 2,797 9,040 1,359 non-controlling interests

EBITDA 188,815 139,763 436,870 410,200

(Gains) losses on (14,998) (8,295) 37,764 (28,087) investments, net

Litigation Expense - 1,824 - 26,328

License fee dispute - India, net of non-controlling (480) 3,940 (1,043) 3,940 interests

Foreign currency transaction(6,681) 15,094 2,603 14,501 (gains) losses, net

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 December 31, 30, 2020 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, 190,950 196,629 net

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 57 57 at September 30, 2020 and 56,592,251 shares issued and 50,107,330 shares outstanding at December 31, 2019

Class B convertible common stock, $0.001 par value, 800,000,000 shares authorized, 47,687,039 48 48 shares issued and outstanding at both September 30, 2020 and December 31, 2019

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 $ 426,532 $ 406,537 $1,251,932 $1,211,991 other revenue

Equipment 46,970 65,725 146,702 175,084 revenue

Total revenue 473,502 472,262 1,398,634 1,387,075

Costs and expenses:

Cost of sales - services and other (exclusive of 146,577 143,842 432,848 429,869 depreciation and amortization)

Cost of sales - equipment (exclusive of 37,079 51,188 115,529 142,744 depreciation and amortization)

Selling, general and 115,358 122,629 354,437 383,952 administrative expenses

Research and development 7,676 6,136 21,378 19,411 expenses

Depreciation and 129,822 122,374 392,077 361,619 amortization

Total costs and436,512 446,169 1,316,269 1,337,595 expenses

Operating 36,990 26,093 82,365 49,480 income (loss)

Other income (expense):

Interest 7,364 17,175 33,707 64,817 income, net

Interest expense, net of(37,967) (49,865) (112,458) (156,813) amounts capitalized

Gains (losses) on investments,14,998 8,295 (37,764) 28,087 net

Equity in earnings (losses) of (2,134) (3,209) (5,866) (14,317) unconsolidated affiliates, net

Foreign currency transaction 6,681 (15,094) (2,603) (14,501) gains (losses), net

Other, net 291 (1,493) (379) (1,527)

Total other income (10,767) (44,191) (125,363) (94,254) (expense), net

Income (loss) from continuing operations 26,223 (18,098) (42,998) (44,774) before income taxes

Income tax benefit (2,950) (5,016) (6,309) (12,607) (provision), net

Net income (loss) from 23,273 (23,114) (49,307) (57,381) continuing operations

Net income (loss) from - 2,008 - 46,223 discontinued operations

Net income 23,273 (21,106) (49,307) (11,158) (loss)

Less: Net loss (income) attributable to2,167 2,797 9,040 1,359 non-controlling interests

Net income (loss) attributable to$ 25,440 $ (18,309) $(40,267) (9,799) EchoStar Corporation common stock



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

Basic and diluted earnings (losses) from $ 0.26 $ (0.21) $(0.41) $(0.58) continuing operations per share

Total basic and diluted earnings $ 0.26 $ (0.19) $(0.41) $(0.10) (losses) per share

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 5,866 14,317 affiliates, net

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, (9,157) (5,439) net

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, 1,325 1,303 net

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 1,231,790 1,988,078 securities

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 - (920,923) Secured Notes

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 983 64,143 exercised

Net proceeds from Class A common stock issued 8,066 7,724 under the Employee Stock Purchase Plan

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 (8,348) (411) equivalents

Net increase (decrease) in cash and cash (957,644) 634,003 equivalents

Cash and cash equivalents, including restricted 1,521,889 929,495 amounts, beginning of period

Cash and cash equivalents, including restricted $564,245 $1,563,498amounts, end of period

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SOURCE EchoStar Corporation