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Gilat Reports Continued Strong Growth in Profitability in Q2 2018

Company achieves GAAP operating income of $4.1 million (up 121.0% year over year) and Adjusted EBITDA of $8.1 million (up 37.6% year over year)

PETAH TIKVA, Israel, Aug. 7, 2018 /PRNewswire/ -- Gilat Satellite Networks Ltd. (GILT) (GILT), a worldwide leader in satellite networking technology, solutions and services, today reported its results for the second quarter ended June 30, 2018.

Gilat logo

 Key Financial Highlights:

  • Revenues for Q2 2018 were $66.5 million, compared with $66.2 million in Q2 2017.
  • Continued strong profitability:
  • Reiterated management objectives for 2018: revenue range between $285 million to $305 million, GAAP operating income between $17 million and $21 million, and Adjusted EBITDA between $30 million and $34 million.

Yona Ovadia, CEO of Gilat, commented:
"I am pleased to report that the second quarter of 2018 was another strong quarter for Gilat. We continued the trend of improvement in profitability as well as continued growth momentum in our business, as evidenced with the following achievements:

"In our strategic area of LTE cellular backhaul we have secured two additional wins, one with Telstra in Australia and the other with a major MNO in Latin America. In both these areas of the globe, Gilat was selected for its recognized global leadership in large, efficient and reliable LTE networks, which is what the businesses and residents in the remote locations of these countries expect and are willing to pay for.

"The win in LATAM is joined by the announcement on an expansion of our relationships with Hispasat for the delivery of affordable high quality broadband services to consumers and enterprises in the vast areas of Brazil that currently do not have this service, which marks our continued efforts and recovery of the business in this key part of the world.

"Finally, we also announced the win of two new regional telecommunications infrastructure projects for Fitel in Peru, bringing Gilat's awarded regions to six out of the 13 regions. Gilat's long term goal in Peru is for multi-year high margin recurring revenues from services, which is the motivation for these projects rather than the construction dollars."

Mr. Ovadia concluded: "We remain committed to our target of improving the bottom line, and are confident that as capacity prices continue to decrease and demand grows, new opportunities will continue to be generated. This, together with our ongoing significant investment in R&D will drive further momentum in our strategic growth engines."

Key Recent Announcements:

  • Hispasat and Gilat Partner to Commercialize High Throughput Satellite (HTS) Capacity of Amazonas 3 and 5 Satellites over Brazil
  • Tier-1 Mobile Network Operator in Latin America Selects Gilat for LTE Satellite Backhaul
  • Telstra Selects Gilat's Satellite-based Cellular Backhaul Solution for 4G Mobile Service Expansion to Remote Locations Across Australia
  • Telesat and Gilat Join Forces to Develop Broadband Communication Modem Technology for Low Earth Orbit (LEO) Satellites
  • Gilat Awarded $153.6 Million by Fitel Peru for Regional Telecommunications Projects

Conference Call and Webcast Details:
Gilat management will host a conference call today, Tuesday, August 7, to discuss the second quarter results.  The details are as follows:


Conference Call and Webcast

Following the release, Yona Ovadia, Chief Executive Officer, and Adi Sfadia, Chief Financial Officer, will discuss Gilat's second quarter 2018 results and participate in a question and answer session: 

Date: Tuesday, August 7, 2018
Start: 09:30 AM EST / 16:30 IST
Dial-in: US: 1-888-407-2553
International: (972) 3-918-0610

A simultaneous Webcast of the conference call will be available on the Gilat website at www.gilat.com and through this link: www.veidan-stream.com/gilatq2-2018.html

The webcast will also be archived for a period of 30 days on the Company's website and through the link above.

Conference Call Replay

Start: August 7, 2018 at 12:00 PM EST / 19:00 IST
End: August 10, 2018 at 12:00 PM EST / 19:00 IST
Dial-in: US: 1-888-295-2634
International: (972) 3-925-5904

Non-GAAP Measures
The attached summary unaudited financial statements were prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). To supplement the consolidated financial statements presented in accordance with GAAP, the Company presents Non-GAAP presentations of net income, operating income, Adjusted EBITDA and earnings per share. The adjustments to the Company's GAAP results are made with the intent of providing both management and investors a more complete understanding of the Company's underlying operational results, trends and performance.


Adjusted EBITDA (operating income before depreciation, amortization, non-cash stock option expenses, costs related to acquisition transactions, restructuring cost, goodwill impairment, impairment of long lived assets, trade secrets litigation expenses and expenses under amnesty program) is presented to compare the Company's performance to that of prior periods and evaluate the Company's financial and operating results on a consistent basis from period to period. The Company also believes this measure, when viewed in combination with the Company's financial results prepared in accordance with GAAP, provides useful information to investors to evaluate ongoing operating results and trends. Adjusted EBITDA, however, should not be considered as an alternative to operating income or net income for the period and may not be indicative of the historic operating results of the Company; nor is it meant to be predictive of potential future results. Adjusted EBITDA is not a measure of financial performance under GAAP and may not be comparable to other similarly titled measures for other companies. Reconciliation between the Company's Operating income and Adjusted EBITDA is presented in the attached summary financial statements.

This news release also contains a forward-looking estimate of Adjusted EBITDA projected to be generated by Gilat in 2018. A forward-looking estimate of net income and reconciliations of the forward-looking estimates of Adjusted EBITDA to net income are not provided because the items necessary to estimate net income are not estimable at this time. Non-GAAP presentations of net income, operating income, Adjusted EBITDA and earnings per share should not be considered in isolation or as a substitute for any of the consolidated statements of operations prepared in accordance with GAAP, or as an indication of Gilat's operating performance or liquidity.

About Gilat

Gilat Satellite Networks Ltd. (NASDAQ: GILT, TASE: GILT) is a leading global provider of satellite-based broadband communications. With 30 years of experience, we design and manufacture cutting-edge ground segment equipment, and provide comprehensive solutions and end-to-end services, powered by our innovative technology. Delivering high value competitive solutions, our portfolio comprises of a cloud based VSAT network platform, high-speed modems, high performance on-the-move antennas and high efficiency, high power Solid State Amplifiers (SSPA) and Block Upconverters (BUC).

Gilat's comprehensive solutions support multiple applications with a full portfolio of products to address key applications including broadband access, cellular backhaul, enterprise, in-flight connectivity, maritime, trains, defense and public safety, all while meeting the most stringent service level requirements. Gilat controlling shareholders are the FIMI Private Equity Funds. For more information, please visit: www.gilat.com

Certain statements made herein that are not historical are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. The words "estimate", "project", "intend", "expect", "believe" and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties. Many factors could cause the actual results, performance or achievements of Gilat to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in general economic and business conditions, inability to maintain market acceptance to Gilat's products, inability to timely develop and introduce new technologies, products and applications, rapid changes in the market for Gilat's products, loss of market share and pressure on prices resulting from competition, introduction of competing products by other companies, inability to manage growth and expansion, loss of key OEM partners, inability to attract and retain qualified personnel, inability to protect the Company's proprietary technology and risks associated with Gilat's international operations and its location in Israel. We undertake no obligation to update or revise any forward-looking statements for any reason. For additional information regarding these and other risks and uncertainties associated with Gilat's business, reference is made to Gilat's reports filed from time to time with the Securities and Exchange Commission.

 

GILAT SATELLITE NETWORKS LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands (except share and per share data)






Six months ended



Three months ended





June 30,


June 30,





2018


2017


2018


2017





Unaudited


Unaudited












Revenues



$              133,882


$              130,168


$                66,508


$                66,237

Cost of revenues



90,053


93,258


44,066


46,668












Gross profit



43,829


36,910


22,442


19,569












Research and development expenses


16,730


13,467


8,284


6,712

Less - grants



810


523


343


476

Research and development expenses, net


15,920


12,944


7,941


6,236

Selling and marketing expenses


11,716


11,350


6,303


5,555

General and administrative expenses


8,389


10,723


4,054


5,903












Total operating expenses



36,025


35,017


18,298


17,694












Operating income



7,804


1,893


4,144


1,875












Financial expenses, net 



(2,188)


(2,046)


(1,605)


(1,242)












Income (loss) before taxes on income


5,616


(153)


2,539


633












Taxes on income (tax benefit)


1,154


(1,501)


388


(1,499)












Net income



$                 4,462


$                 1,348


$                 2,151


$                 2,132












Earnings per share (basic and diluted)


$                   0.08


$                   0.02


$                   0.04


$                   0.04












Weighted average number of shares used in 










computing earnings per share










Basic



54,811,893


54,649,863


54,858,330


54,676,042


Diluted



55,614,782


54,690,930


55,639,202


54,701,316

 

 

GILAT SATELLITE NETWORKS LTD.











RECONCILIATION BETWEEN GAAP AND NON-GAAP STATEMENTS OF OPERATIONS







FOR COMPARATIVE PURPOSES 







U.S. dollars in thousands (except share and per share data)












 Three months ended 


 Three months ended 



June 30, 2018


June 30, 2017



GAAP


Adjustments (1)


Non-GAAP


GAAP


Adjustments (1)


Non-GAAP



Unaudited


Unaudited














Gross profit

$        22,442


1,230


$          23,672


$          19,569


1,205


$         20,774

Operating expenses

18,298


(288)


18,010


17,694


(1,049)


16,645

Operating income

4,144


1,518


5,662


1,875


2,254


4,129

Income before taxes on income

2,539


1,518


4,057


633


2,491


3,124

Net income

$          2,151


1,518


$           3,669


$           2,132


2,491


$          4,623














Earnings per share (basic and diluted)

$            0.04


$           0.03


$             0.07


$             0.04


$           0.04


$            0.08



























Weighted average number of shares used in 











   computing earnings per share












    Basic

54,858,330




54,858,330


54,676,042




54,676,042


    Diluted

55,639,202




55,854,231


54,701,316




54,735,130




























(1) Adjustments reflect the effect of non-cash stock-based compensation as per ASC 718, amortization of intangible assets related to





      shares acquisition transactions, trade secrets litigation expenses and tax expenses under amnesty program.







 

 



 Three months ended 


Three months ended




June 30, 2018


June 30, 2017




 

Unaudited


Unaudited








GAAP net income


$                           2,151


$                      2,132








Gross profit





Non-cash stock-based compensation expenses

36


11


Amortization of intangible assets related to acquisition transactions

1,194


1,194





1,230


1,205


Operating expenses





Non-cash stock-based compensation expenses

238


203


Amortization of intangible assets related to acquisition transactions

50


193


Trade secrets litigation expenses


-


25


Tax expenses under amnesty program


-


628





288


1,049








Finance and taxes on income under amnesty program

-


237








Non-GAAP net income


$                          3,669


$                       4,623



 

 

GILAT SATELLITE NETWORKS LTD.








RECONCILIATION BETWEEN GAAP AND NON-GAAP STATEMENTS OF OPERATIONS







FOR COMPARATIVE PURPOSES 







U.S. dollars in thousands (except share and per share data)













 Six months ended 


 Six months ended 



June 30, 2018


June 30, 2017



GAAP


Adjustments (1)


Non-GAAP


GAAP


Adjustments (1)


Non-GAAP



Unaudited


Unaudited














Gross profit

$       43,829


2,430


$            46,259


$          36,910


2,410


$           39,320

Operating expenses

36,025


(551)


35,474


35,017


(2,285)


32,732

Operating income

7,804


2,981


10,785


1,893


4,695


6,588

Income (loss) before taxes on income

5,616


2,981


8,597


(153)


4,932


4,779

Net income

$          4,462


2,981


$             7,443


$           1,348


4,932


$            6,280














Basic income per share

$            0.08


$               0.06


$               0.14


$             0.02


$               0.09


$             0.11














Diluted income per share

$           0.08


$               0.05


$               0.13


$              0.02


$               0.09


$              0.11



























Weighted average number of shares used in 









   computing earnings per share










    Basic

54,811,893




54,811,893


54,649,863




54,649,863


    Diluted

55,614,782




55,835,134


54,690,930




54,785,783




























(1) Adjustments reflect the effect of non-cash stock-based compensation as per ASC 718, amortization of intangible assets related to






      shares acquisition transactions, trade secrets litigation expenses and tax expenses under amnesty program.








 

 


Six months ended


Six months ended



June 30, 2018


June 30, 2017



Unaudited


Unaudited







GAAP net income

$                  4,462


$                 1,348







Gross profit

42


22


Non-cash stock-based compensation expenses

2,388


2,388


Amortization of intangible assets related to acquisition transactions

2,430


2,410







Operating expenses

450


396


Non-cash stock-based compensation expenses

101


388


Amortization of intangible assets related to acquisition transactions

-


873


Trade secrets litigation expenses

-


628


Tax expenses under amnesty program

551


2,285












Finance and taxes on income under amnesty program

-


237







Non-GAAP net income

$                  7,443


$                  6,280



 

 

GILAT SATELLITE NETWORKS LTD.








SUPPLEMENTAL INFORMATION








U.S. dollars in thousands































ADJUSTED EBITDA:

























Six months ended



Three months ended





June 30,


June 30,





2018


2017


2018


2017





Unaudited


Unaudited












GAAP operating income


$                  7,804


$                  1,893


$                  4,144


$                  1,875

Add:










Non-cash stock-based compensation expenses

492


418


274


214

Trade secrets litigation expenses


-


873


-


25

Tax expenses under amnesty program

-


628


-


628

Depreciation and amortization


7,322


6,304


3,672


3,139












Adjusted EBITDA


$               15,618


$               10,116


$                 8,090


$                 5,881

 

 


SEGMENT REVENUE:

























Six months ended



Three months ended





June 30,


June 30,





2018


2017


2018


2017





Unaudited


Unaudited












Fixed Networks



$                73,843


$                51,801


$                36,228


$                24,928

Mobility Solutions



45,778


36,909


25,021


22,005

Terrestrial Infrastructure Projects


14,261


41,458


5,259


19,304












Total revenue



$             133,882


$             130,168


$               66,508


$               66,237

 

 


GILAT SATELLITE NETWORKS LTD.


CONSOLIDATED BALANCE SHEET


U.S. dollars in thousands










June 30,


December 31,



2018


2017



Unaudited


Audited






ASSETS










CURRENT ASSETS:





Cash and cash equivalents


$                57,010


$                52,957

Restricted cash


32,295


29,288

Restricted cash held by trustees


6,334


4,325

Trade receivables, net


78,995


108,842

Inventories


27,380


28,853

Other current assets


31,856


21,686






   Total current assets


233,870


245,951






LONG-TERM INVESTMENTS:





Long-term restricted cash


153


187

Severance pay funds


7,264


8,188

Other long term receivables


1,447


1,071






Total long-term investments


8,864


9,446






PROPERTY AND EQUIPMENT, NET


82,498


82,246






INTANGIBLE ASSETS, NET


3,110


5,709






GOODWILL


43,468


43,468






TOTAL ASSETS


$              371,810


$              386,820

 

 


GILAT SATELLITE NETWORKS LTD.

CONSOLIDATED BALANCE SHEET

U.S. dollars in thousands



June 30,


December 31,



2018


2017



Unaudited


Audited






LIABILITIES AND EQUITY










CURRENT LIABILITIES:





Current maturities of long-term loans


$                  4,466


$                  4,479

Trade payables 


22,013


33,715

Accrued expenses 


67,606


70,534

Advances from customers and deferred revenues


15,210


16,721

Advances from customers, held by trustees


-


1,416

Other current liabilities


22,955


20,044






   Total current liabilities


132,250


146,909






LONG-TERM LIABILITIES:





Accrued severance pay


7,122


7,999

Long-term loans, net of current maturities


8,333


12,582

Other long-term liabilities


962


1,008






   Total long-term liabilities


16,417


21,589






EQUITY:





Share capital - ordinary shares of NIS 0.2 par value 

2,610


2,601

Additional paid-in capital


922,778


921,726

Accumulated other comprehensive loss


(5,269)


(3,046)

Accumulated deficit


(696,976)


(702,959)






Total equity


223,143


218,322






TOTAL LIABILITIES AND EQUITY


$              371,810


$              386,820


 

 

GILAT SATELLITE NETWORKS LTD.









CONSOLIDATED STATEMENTS OF CASH FLOWS (*)









U.S. dollars in thousands























Six months ended



Three months ended




June 30,


June 30,




2018


2017


2018


2017




Unaudited


Unaudited

Cash flows from operating activities:









Net income


$                  4,462


$                  1,348


$                  2,151


$                  2,132

Adjustments required to reconcile net income 









 to net cash provided by (used in) operating activities:









Depreciation and amortization


7,322


6,304


3,672


3,139

Stock-based compensation of options and RSU's


492


418


274


214

Accrued severance pay, net


47


106


(41)


167

Exchange rate differences on long-term loans


(13)


113


(43)


88

Deferred income taxes, net


(29)


(159)


(41)


(143)

Decrease (increase) in trade receivables, net


29,469


5,048


(6,040)


12,003

Increase in other assets (including short-term, long-term









   and deferred charges)


(9,151)


(6,590)


(9,865)


(3,340)

Decrease (increase) in inventories


332


(3,558)


1,777


(246)

Increase (decrease) in trade payables


(11,634)


537


(3,362)


929

Increase (decrease) in accrued expenses


(1,980)


11,418


27


3,925

Decrease in advances from customers


(4,980)


(5,710)


(78)


(2,612)

Increase (decrease) in advances from customers, held 









   by trustees


(1,478)


(3,342)


-


1,070

Increase (decrease) in other current liabilities and other long term liabilities


5,575


(1,905)


4,011


433

Net cash provided by (used in) operating activities


18,434


4,028


(7,558)


17,759











Cash flows from investing activities:









Purchase of property and equipment


(5,014)


(2,172)


(2,153)


(960)

Net cash used in investing activities


(5,014)


(2,172)


(2,153)


(960)











Cash flows from financing activities:









Issuance of restricted stock units and exercise of stock options


573


493


267


227

Repayment of long-term loans


(4,249)


(4,383)


(249)


(142)

Net cash provided by (used in) financing activities


(3,676)


(3,890)


18


85











Effect of exchange rate changes on cash, cash equivalents and restricted cash


(709)


(109)


(1,005)


(537)











Increase (decrease) in cash, cash equivalents and restricted cash


9,035


(2,143)


(10,698)


16,347











Cash, cash equivalents and restricted cash at the beginning of the period


86,757


111,633


106,490


93,143











Cash, cash equivalents and restricted cash at the end of the period


$               95,792


$             109,490


$               95,792


$             109,490









































(*) In November 2016, the Financial Accounting Standards Board (the "FASB") issued ASU 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash", 



which requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when 



reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for annual and interim periods 

beginning after December 15, 2017. The Company adopted this standard during the first quarter of 2018 using the retrospective transition method, 


as required by the new standard.



















The following table provides a reconciliation of cash and cash equivalents, restricted cash, restricted cash held by trustees and long term restricted cash reported within

the consolidated balance sheets that sum to the total of such amounts in the consolidated statements of cash flows:




 

 











June 30,





2018


2017




Unaudited







Cash and cash equivalents


$               57,010


$               78,831

Restricted cash


32,295


24,379

Restricted cash held by trustees


6,334


6,110

Long term restricted cash included in other assets


153


170

Cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows

$               95,792


$             109,490



 

Contact:
Gilat Satellite Networks
Doreet Oren, Director Corporate Communications 
DoreetO@gilat.com

Comm-Partners LLC 
June Filingeri, President 
junefil@optonline.net 
203-972-0186 


 

 

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