PR Newswire | Feb 23, 2021 06:01AM EST

31, 2020

02/23 05:00 CST

EchoStar Announces Financial Results for Three and Twelve Months Ended December 31, 2020 ENGLEWOOD, Colo., Feb. 23, 2021

ENGLEWOOD, Colo., Feb. 23, 2021 /PRNewswire/ -- EchoStar Corporation (NASDAQ: SATS) today announced its financial results for the three and twelve months ended December 31, 2020.

Three Months Ended December 31, 2020 Financial Highlights:

* Consolidated revenues of $489.3 million. * Net loss from continuing operations of $2.6 million, consolidated net income attributable to EchoStar common stock of $0.1 million, and diluted earnings per share of $0.01. * Consolidated Adjusted EBITDA of $166.7 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

Twelve Months Ended December 31, 2020 Financial Highlights:

* Consolidated revenues of $1,887.9 million. * Net loss from continuing operations of $51.9 million, consolidated net loss attributable to EchoStar common stock of $40.2 million, and diluted loss per share of $(0.41). * Consolidated Adjusted EBITDA of $642.9 million (see discussion and the reconciliation of GAAP to this non-GAAP measure below).

"2020 will go down in the history books as one of the most challenging on record, but it demonstrated the value of our service to businesses and families and brought out the very best of the EchoStar team," commented Michael Dugan, CEO and President of EchoStar. "Thanks to their efforts and accomplishments in every market sector, we delivered solid financial results and grew revenue, net income, and Adjusted EBITDA over 2019. We remain excited about our position in the industry and our ability to grow as the demand for connectivity continues to increase."

Three Months Ended December 31, 2020 - Additional Information:

* Consolidated revenue was down $9.7 million year over year primarily driven by lower equipment sales as well as an estimated negative foreign exchange impact of $10.3 million. * Adjusted EBITDA increased 7.0% or $10.8 million year over year. * Hughes segment Adjusted EBITDA increased $11.7 million year over year. The increase was driven primarily by the higher margin associated with the growth in our consumer broadband service and lower sales and marketing spend. * ESS segment Adjusted EBITDA was flat year over year. * Corporate and Other segment Adjusted EBITDA decreased by $0.9 million year over year. The decrease was primarily due to higher spend on corporate development projects.

* Net loss from continuing operations was $2.6 million, an improvement of $53.7 million from last year. The change was primarily due to higher operating income of $6.5 million, lower net interest expense of $47.5 million driven primarily by $58.5 million of interest expense accrued in the fourth quarter of 2019 related to our license fee dispute with the government of India, improvement in foreign currency transactions, net, of $5.7 million, and higher gains on investments, net, of $5.6 million. This was partially offset by higher income tax provision, net, of $9.9 million. * Total Hughes broadband subscribers are approximately 1,564,000 as of December 31, 2020. Subscribers in the US decreased by 27,000 to approximately 1,189,000. In Latin America, subscribers increased by 11,000 to approximately 375,000. * Based on an updated schedule from Maxar, the Jupiter 3 satellite is expected to launch in the second half of 2022. In December 2020, we contracted for the launch of the satellite. * For the three months ended December 31, 2020, approximately 69% of Hughes segment revenue was attributable to our consumer customers with approximately 31% attributable to our enterprise customers. * Cash, cash equivalents and current marketable investment securities were $2.5 billion as of December 31, 2020. * In December 2020, we purchased 1,708,907 shares of our Class A common stock in the open market. From January 1, 2021 through February 11, 2021, we purchased 2,851,841 shares of our Class A common stock in the open market.

Set forth below is a table highlighting certain of EchoStar's segment results for the three and twelve months ended December 31, 2020 and 2019 (amounts in thousands) from continuing operations (all US GAAP amounts reference results from continuing operations):

For the three months For the twelve months ended December 31, ended December 31,

2020 2019 2020 2019



Revenue

Hughes $482,418$491,823$1,860,834$1,852,742

EchoStar Satellite Services 4,165 4,384 17,398 16,257

Corporate and Other 2,690 2,799 9,675 17,082

Total revenue $489,273$499,006$1,887,907$1,886,081



Adjusted EBITDA

Hughes $188,389$176,738$723,343 $666,890

EchoStar Satellite Services 2,026 1,988 7,873 6,994

Corporate & Other:

Corporate overhead, operating and other (23,920) (23,090) (87,867) (81,859)

Equity in earnings (losses) of unconsolidated affiliates, net226 250 (434) (9,257)

Total Corporate & Other (23,694) (22,840) (88,301) (91,116)

Total Adjusted EBITDA $166,721$155,886$642,915 $582,768



Expenditures for property and equipment $113,757$103,723$408,798 $418,074

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

For the three months For the twelve months ended December 31, ended December 31,

2020 2019 2020 2019



Net income (loss) $(2,597)$(63,094)$(51,904)$(74,252)

Interest income, net (6,275) (17,535) (39,982) (82,352)

Interest expense, net of amounts capitalized 35,469 94,203 147,927 251,016

Income tax provision (benefit), net 17,760 7,882 24,069 20,488

Depreciation and amortization 132,934 129,146 525,011 490,765

Net (income) loss from discontinued operations - 6,821 - (39,401)

Net (income) loss attributable to non-controlling interests 2,714 9,976 11,754 11,335

EBITDA 180,005 167,399 616,875 577,599

(Gains) losses on investments, net (6,458) (825) 31,306 (28,912)

Impairment of long-lived assets 1,685 - 1,685 -

Litigation expense - (627) - 25,701

License fee dispute - India, net of non-controlling interests107 (7,150) (936) (3,210)

Foreign currency transaction (gains) losses, net (8,618) (2,911) (6,015) 11,590

Adjusted EBITDA $166,721$155,886 $642,915 $582,768

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 December 31, 2020 and 2019 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, 2020 filed today with the Securities and Exchange Commission.

EchoStar will host a conference call and webcast to discuss its earnings on Tuesday, February 23, 2021 at 11:00 a.m. Eastern Time. The call-in numbers are (877) 815-1625 (toll-free) and (716) 247-5178 (international), Conference ID 9174397. 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, 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 December 31,

2020 2019

Assets

Current assets:

Cash and cash equivalents $896,005 $1,519,431

Marketable investment securities 1,638,271 940,623

Trade accounts receivable and contract assets, 183,989 196,629 net

Other current assets, net 189,821 179,531

Total current assets 2,908,086 2,836,214

Non-current assets:

Property and equipment, net 2,390,313 2,528,738

Operating lease right-of-use assets 128,303 114,042

Goodwill 511,597 506,953

Regulatory authorizations, net 478,762 478,598

Other intangible assets, net 18,433 29,507

Other investments, net 284,937 325,405

Other non-current assets, net 352,921 334,841

Total non-current assets 4,165,266 4,318,084

Total assets $7,073,352$7,154,298



Liabilities and Stockholders' Equity

Current liabilities:

Trade accounts payable $122,366 $124,080

Current portion of long-term debt, net 898,237 -

Contract liabilities 104,569 101,060

Accrued expenses and other current liabilities 299,999 270,879

Total current liabilities 1,425,171 496,019

Non-current liabilities:

Long-term debt, net 1,495,256 2,389,168

Deferred tax liabilities, net 359,896 351,692

Operating lease liabilities 114,886 96,941

Other non-current liabilities 70,893 74,925

Total non-current liabilities 2,040,931 2,912,726

Total liabilities 3,466,102 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 December 31, 2020 and 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, 57,254,201 shares issued and 48,863,374 shares outstanding 57 57 at December 31, 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 December 31, 2020 and 2019

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

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

Additional paid-in capital 3,321,426 3,290,483

Accumulated other comprehensive income (loss) (187,876) (122,138)

Accumulated earnings (losses) 583,591 632,809

Treasury stock, at cost (174,912) (131,454)

Total EchoStar Corporation stockholders' equity 3,542,334 3,669,805

Non-controlling interests 64,916 75,748

Total stockholders' equity 3,607,250 3,745,553

Total liabilities and stockholders' equity $7,073,352$7,154,298



ECHOSTAR CORPORATION

Condensed Consolidated Statements of Operations

(Amounts in thousands, except per share amounts)



For the years ended December 31,

2020 2019 2018



Revenue:

Services and other revenue $1,682,304$1,619,271$1,557,228

Equipment revenue 205,603 266,810 205,410

Total revenue 1,887,907 1,886,081 1,762,638

Costs and expenses:

Cost of sales - services and other (exclusive of depreciation and 577,943 561,353 563,907 amortization)

Cost of sales - equipment (exclusive of depreciation and 166,435 226,002 176,600 amortization)

Selling, general and administrative474,912 509,145 436,088 expenses

Research and development expenses 29,448 25,739 27,570

Depreciation and amortization 525,011 490,765 457,116

Impairment of long-lived assets 1,685 - 65,220

Total costs and expenses 1,775,434 1,813,004 1,726,501

Operating income (loss) 112,473 73,077 36,137

Other income (expense):

Interest income, net 39,982 82,352 80,275

Interest expense, net of amounts (147,927) (251,016) (219,288) capitalized

Gains (losses) on investments, net (31,306) 28,912 (12,622)

Equity in earnings (losses) of (7,267) (14,734) (5,954) unconsolidated affiliates, net

Foreign currency transaction gains 6,015 (11,590) (15,583) (losses), net

Other, net 195 (166) 11,249

Total other income (expense), net (140,308) (166,242) (161,923)

Income (loss) from continuing (27,835) (93,165) (125,786) operations before income taxes

Income tax benefit (provision), net(24,069) (20,488) (6,576)

Net income (loss) from continuing (51,904) (113,653) (132,362) operations

Net income (loss) from discontinued- 39,401 93,729 operations

Net income (loss) (51,904) (74,252) (38,633)

Less: Net loss (income) attributable to non-controlling 11,754 11,335 (1,842) interests

Net income (loss) attributable to $(40,150) $(62,917) $(40,475) EchoStar Corporation common stock



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

Basic and diluted earnings (losses) from continuing operations per $(0.41) $(1.06) $(1.39) share

Total basic and diluted earnings $(0.41) $(0.65) $(0.42) (losses) per share

ECHOSTAR CORPORATION

Condensed Consolidated Statements of Cash Flows

(Amounts in thousands, except per share amounts)



For the years ended December 31,

2020 2019 2018



Cash flows from operating activities:

Net income (loss) $(51,904) $(74,252) $(38,633)

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

Depreciation and amortization 525,011 588,200 598,178

Impairment of long-lived assets 1,685 - 65,220

Losses (gains) on investments, net 31,306 (28,912) 12,109

Equity in losses (earnings) of 7,267 14,734 6,037 unconsolidated affiliates, net

Foreign currency transaction losses (6,015) 11,590 15,583 (gains), net

Deferred tax provision (benefit), 18,147 32,542 26,327 net

Stock-based compensation 8,887 9,353 9,990

Amortization of debt issuance costs 4,324 5,912 7,923

Dividends received from - 2,716 10,000 unconsolidated affiliates

Other, net (12,501) 6,297 (3,489)

Changes in assets and current liabilities, net:

Trade accounts receivable and 2,237 8,289 (17,842) contract assets, net

Other current assets, net (12,984) (39,190) 18,577

Trade accounts payable (12,339) 13,149 9,562

Contract liabilities 3,509 26,376 7,867

Accrued expenses and other current 42,822 66,352 12,183 liabilities

Non-current assets and non-current (15,064) 13,166 (5,070) liabilities, net

Net cash flows from operating 534,388 656,322 734,522 activities

Cash flows from investing activities:

Purchases of marketable investment (2,799,838)(993,369) (2,973,254)securities

Sales and maturities of marketable 2,110,336 2,391,220 1,498,463 investment securities

Expenditures for property and (408,798) (418,584) (555,141) equipment

Expenditures for externally marketed(38,655) (29,310) (31,639) software

Purchase of other investments (5,500) (93,687) -

Investments in unconsolidated - (2,149) (115,991) affiliates

Purchases of regulatory - (34,447) - authorizations

Refunds and other receipts related - - 77,524 to property and equipment

Dividend received from - 2,284 - unconsolidated affiliate

Sale of investment in unconsolidated- - 1,558 affiliates

Net cash flows from investing (1,142,455)821,958 (2,098,480)activities

Cash flows from financing activities:

Repurchase and maturity of the 2019 - (920,923) (70,173) Senior Secured Notes

Repayment of other long-term debt (811) (29,347) (41,019) and finance lease obligations

Payment of in-orbit incentive (1,554) (5,447) (5,350) obligations

Net proceeds from Class A common 855 67,337 4,424 stock options exercised

Net proceeds from Class A common stock issued under the Employee 10,109 9,779 9,368 Stock Purchase Plan

Treasury share purchase (43,458) - (33,292)

Contribution by non-controlling 18,241 - - interest holder

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

Other, net 998 603 (521)

Net cash flows from financing (15,620) (885,311) (136,563) activities

Effect of exchange rates on cash and(1,390) (575) (2,233) cash equivalents

Net increase (decrease) in cash and (625,077) 592,394 (1,502,754)cash equivalents

Cash and cash equivalents, including restricted amounts, beginning of 1,521,889 929,495 2,432,249 period

Cash and cash equivalents, including$896,812 $1,521,889$929,495 restricted amounts, end of period



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SOURCE EchoStar Corporation