PR Newswire | Aug 6, 2020 06:01AM EDT

2020

08/06 05:00 CDT

EchoStar Announces Financial Results for Three and Six Months Ended June 30, 2020 ENGLEWOOD, Colo., Aug. 6, 2020

ENGLEWOOD, Colo., Aug. 6, 2020 /PRNewswire/ -- EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three and six months ended June 30, 2020.

Three Months Ended June 30, 2020 Financial Highlights:

* Consolidated revenues of $459.5 million. * Net loss from continuing operations of $14.8 million, consolidated net loss attributable to EchoStar common stock of $11.4 million, and diluted loss per share of $(0.12). * Consolidated Adjusted EBITDA of $160.9 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

Six Months Ended June 30, 2020 Financial Highlights:

* Consolidated revenues of $925.1 million. * Net loss from continuing operations of $72.6 million, consolidated net loss attributable to EchoStar common stock of $65.7 million, and diluted loss per share of $(0.67). * Consolidated Adjusted EBITDA of $309.5 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

"The second quarter of 2020 continued to demonstrate that we are in extraordinary times, and despite the ongoing challenges of COVID-19, I am proud of our second quarter performance," commented Michael Dugan, CEO and President of EchoStar. "Whether our current environment is a 'new normal' or a temporary state, EchoStar remains focused on delivering the connectivity our customers need today and into the future. Operationally, we increased our consumer subscriber base by approximately 26,000, driven by our international markets, bringing our broadband subscriber total to approximately 1.542 million. We continue to monitor economic conditions and are prudently managing the business. We are also excited to be joining the consortium selected to acquire OneWeb out of bankruptcy and to continue as a trusted technology and distribution partner for OneWeb as it emerges from bankruptcy"

Three Months Ended June 30, 2020 - Additional Information:

* Consolidated revenue was down $0.9 million year over year including an estimated negative foreign exchange impact of $12 million. * Adjusted EBITDA increased 19% or $26.2 million year over year. * Hughes segment Adjusted EBITDA increased $31.1 million year over year. The increase was driven by higher margin primarily associated with our consumer service as well as lower sales, marketing, and other operating expenses. * ESS segment Adjusted EBITDA increased by $0.1 million year over year. * Corporate and Other segment Adjusted EBITDA decreased by $5.0 million. The decrease was primarily driven by the loss of the revenue and EBITDA associated with the transfer of certain real estate assets to DISH Network Corporation as part of the BSS transaction, which closed in September of 2019, that were not treated as discontinued operations. The segment also had equity losses in unconsolidated affiliates during the quarter of $4.7 million compared to equity losses of $2.9 million in the same period a year ago.

* Net loss from continuing operations was $14.8 million, a decrease of loss by $15.2 million from last year. The lower loss was primarily due to higher operating income of $39.4 million and lower net interest expense of $3 million. This was partially offset by lower gains on investments, net, of $18.9 million, higher income tax provision, net, of $6.2 million, and higher equity losses of unconsolidated affiliates, net, of $1.6 million. * Hughes broadband subscribers are approximately 1,542,000 as of June 30, 2020 including approximately 321,000 subscribers in Latin America. In response to the continued challenges associated with the COVID-19 pandemic, we extended the FCC's Keep America Connected Pledge through June 30, 2020, and our subscriber numbers and revenue exclude those whose service would have ordinarily been terminated in the absence of the Pledge. * For the three months ended June 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 June 30, 2020.

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

2020 2019 2020 2019



Revenue

Hughes $453,172$451,847$911,654$897,184

EchoStar Satellite Services 4,179 3,742 8,831 7,775

Corporate and Other 2,115 4,842 4,647 9,854

Total revenue $459,466$460,431$925,132$914,813



Adjusted EBITDA

Hughes $186,277$155,212$348,496$316,853

EchoStar Satellite Services 1,543 1,486 3,573 3,215

Corporate & Other:

Corporate overhead, operating(22,252) (19,070) (42,375) (37,788) and other

Equity in earnings (losses) of unconsolidated affiliates,(4,668) (2,898) (156) (7,725) net

Total Corporate & Other (26,920) (21,968) (42,531) (45,513)

Total Adjusted EBITDA $160,900$134,730$309,538$274,555



Expenditures for property and$92,300 $107,342$196,904$219,196equipment

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

For the three months For the six months ended June 30, ended June 30,

2020 2019 2020 2019



Net income (loss) $(14,843)$(5,060)(72,580) 9,948

Interest income, net (10,760) (23,213) (26,343) (47,642)

Interest expense, net of 38,258 53,749 74,491 106,948 amounts capitalized

Income tax provision 10,851 4,692 3,359 7,590 (benefit), net

Depreciation and 129,887 120,266 262,255 239,244 amortization

Net loss (income) from - (24,968) - (44,215) discontinued operations

Net loss (income) attributable to 3,431 (632) 6,873 (1,438) non-controlling interests

EBITDA 156,824 124,834 248,055 270,435

(Gains) losses on 6,090 (12,855) 52,762 (19,791) investments, net

Litigation Expense - 24,504 - 24,504

License fee dispute - India, net of non-controlling (454) - (563) - interests

Foreign currency transaction(1,560) (1,753) 9,284 (593) (gains) losses, net

Adjusted EBITDA $160,900 $134,730$309,538$274,555



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 June 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 June 30, 2020 filed today with the Securities and Exchange Commission.

EchoStar will host a conference call to discuss its earnings on Thursday, August 6, 2020 at 11:00 a.m. Eastern Time. The call-in numbers are (877) 815-1625 (toll-free) and (716) 247-5178 (international), Conference ID 3563538.

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 June 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

June 30, 2020 December 31, 2019

Assets

Current assets:

Cash and cash equivalents $1,948,464 $1,519,431

Marketable investment securities 509,980 940,623

Trade accounts receivable and contract assets, net 183,379 196,629

Other current assets, net 185,699 179,531

Total current assets 2,827,522 2,836,214

Non-current assets:

Property and equipment, net 2,399,711 2,528,738

Operating lease right-of-use assets 125,996 114,042

Goodwill 509,054 506,953

Regulatory authorizations, net 474,463 478,598

Other intangible assets, net 22,667 29,507

Other investments, net 275,873 325,405

Other non-current assets, net 340,904 334,841

Total non-current assets 4,148,668 4,318,084

Total assets $6,976,190 $7,154,298



Liabilities and Stockholders' Equity

Current liabilities:

Trade accounts payable $112,748 $124,080

Current portion of long-term debt, net 896,386 -

Contract liabilities 89,831 101,060

Accrued expenses and other current liabilities 262,944 270,879

Total current liabilities 1,361,909 496,019

Non-current liabilities:

Long-term debt, net 1,494,902 2,389,168

Deferred tax liabilities, net 349,973 351,692

Operating lease liabilities 110,899 96,941

Other non-current liabilities 74,239 74,925

Total non-current liabilities 2,030,013 2,912,726

Total liabilities 3,391,922 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 June - - 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, 56,988,365 shares issued and 50,306,445 shares outstanding at June 30, 2020 and 57 57 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 shares issued48 48 and outstanding at both June 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 June 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 - - June 30, 2020 and December 31, 2019

Additional paid-in capital 3,311,861 3,290,483

Accumulated other comprehensive income (loss) (206,810) (122,138)

Accumulated earnings (losses) 558,034 632,809

Treasury stock, at cost (137,347) (131,454)

Total EchoStar Corporation stockholders' equity 3,525,843 3,669,805

Non-controlling interests 58,425 75,748

Total stockholders' equity 3,584,268 3,745,553

Total liabilities and stockholders' equity $6,976,190 $ 7,154,298



ECHOSTAR CORPORATION Condensed Consolidated Statements of Operations (Amounts in thousands, except per share amounts)



For the three months For the six months ended June 30, ended June 30,

2020 2019 2020 2019

Revenue:

Services and other revenue $417,043 $402,786$825,400 $805,454

Equipment revenue 42,423 57,645 99,732 109,359

Total revenue 459,466 460,431 925,132 914,813

Costs and expenses:

Cost of sales - services and other (exclusive of 141,019 142,680 286,271 286,027 depreciation and amortization)

Cost of sales - equipment (exclusive of depreciation 32,542 46,549 78,450 91,556 and amortization)

Selling, general and 113,798 149,209 239,079 261,323 administrative expenses

Research and development 7,448 6,388 13,702 13,276 expenses

Depreciation and 129,887 120,266 262,255 239,244 amortization

Total costs and expenses 424,694 465,092 879,757 891,426

Operating income (loss) 34,772 (4,661) 45,375 23,387

Other income (expense):

Interest income, net 10,760 23,213 26,343 47,642

Interest expense, net of (38,258) (53,749) (74,491) (106,948)amounts capitalized

Gains (losses) on (6,090) 12,855 (52,762) 19,791 investments, net

Equity in earnings (losses) of unconsolidated (6,345) (4,754) (3,732) (11,107) affiliates, net

Foreign currency transaction gains (losses),1,560 1,753 (9,284) 593 net

Other, net (391) 7 (670) (35)

Total other income (38,764) (20,675) (114,596) (50,064) (expense), net

Income (loss) from continuing operations (3,992) (25,336) (69,221) (26,677) before income taxes

Income tax benefit (10,851) (4,692) (3,359) (7,590) (provision), net

Net income (loss) from (14,843) (30,028) (72,580) (34,267) continuing operations

Net income (loss) from - 24,968 - 44,215 discontinued operations

Net income (loss) (14,843) (5,060) (72,580) 9,948

Less: Net loss (income) attributable to 3,431 (632) 6,873 (1,438) non-controlling interests

Net income (loss) attributable to EchoStar $(11,412)$(5,692)$(65,707)8,510 Corporation common stock



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

Basic and diluted earnings (losses) from continuing $(0.12) $(0.32) $(0.67) $(0.37) operations per share

Total basic and diluted $(0.12) $(0.06) $(0.67) $0.09 earnings (losses) per share

ECHOSTAR CORPORATION Condensed Consolidated Statements of Cash Flows (Amounts in thousands, except per share amounts)



For the six months ended June 30,

2020 2019

Cash flows from operating activities:

Net income (loss) $(72,580) $9,948

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

Depreciation and amortization 262,255 309,631

Losses (gains) on investments, net 52,762 (19,791)

Equity in losses (earnings) of unconsolidated affiliates, net 3,732 11,107

Foreign currency transaction losses (gains), net 9,284 (593)

Deferred tax provision (benefit), net (2,452) 7,014

Stock-based compensation 4,509 4,833

Amortization of debt issuance costs 2,120 3,872

Other, net (7,295) 2,742

Changes in assets and liabilities, net:

Trade accounts receivable and contract assets, net (5,262) 167

Other current assets, net (11,642) (129)

Trade accounts payable (11,701) (225)

Contract liabilities (11,229) 34,024

Accrued expenses and other current liabilities 27,050 16,800

Non-current assets and non-current liabilities, net 5,729 1,374

Net cash flows from operating activities 245,280 380,774



Cash flows from investing activities:

Purchases of marketable investment securities (555,367) (504,264)

Sales and maturities of marketable investment securities 977,532 1,621,481

Expenditures for property and equipment (196,904) (219,440)

Expenditures for externally marketed software (19,237) (15,329)

Net cash flows from investing activities 200,524 882,448



Cash flows from financing activities:

Repurchase and maturity of the 2019 Senior Secured Notes - (920,923)

Payment of finance lease obligations (421) (20,008)

Payment of in-orbit incentive obligations (1,021) (3,778)

Net proceeds from Class A common stock options exercised 436 61,503

Net proceeds from Class A common stock issued under the Employee Stock Purchase 5,300 5,074 Plan

Treasury share purchase (5,893) -

Contribution by non-controlling interest holder 10,000 -

Purchase of non-controlling interest - (7,313)

Other, net 674 (267)

Net cash flows from financing activities 9,075 (885,712)



Effect of exchange rates on cash and cash equivalents (19,232) 121

Net increase (decrease) in cash and cash equivalents 435,647 377,631

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 $1,957,536 $1,307,126

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SOURCE EchoStar Corporation