U.S. Markets closed
  • S&P 500

    3,638.35
    +8.70 (+0.24%)
     
  • Dow 30

    29,910.37
    +37.90 (+0.13%)
     
  • Nasdaq

    12,205.85
    +111.44 (+0.92%)
     
  • Russell 2000

    1,855.27
    +10.25 (+0.56%)
     
  • Crude Oil

    45.53
    -0.18 (-0.39%)
     
  • Gold

    1,788.10
    -23.10 (-1.28%)
     
  • Silver

    22.64
    -0.81 (-3.44%)
     
  • EUR/USD

    1.1970
    +0.0057 (+0.4788%)
     
  • 10-Yr Bond

    0.8420
    -0.0360 (-4.10%)
     
  • Vix

    20.84
    -0.41 (-1.93%)
     
  • GBP/USD

    1.3314
    -0.0042 (-0.3169%)
     
  • USD/JPY

    104.0500
    -0.2000 (-0.1918%)
     
  • BTC-USD

    16,915.66
    -269.69 (-1.57%)
     
  • CMC Crypto 200

    333.27
    -4.23 (-1.25%)
     
  • FTSE 100

    6,367.58
    +4.65 (+0.07%)
     
  • Nikkei 225

    26,644.71
    +107.40 (+0.40%)
     

Gilat Reports Q2 2020 Results

Gilat Satellite Networks Ltd.
·19 min read

PETAH TIKVA, Israel, Aug. 31, 2020 (GLOBE NEWSWIRE) -- Gilat Satellite Networks Ltd. (NASDAQ, TASE: GILT), a worldwide leader in satellite networking technology, solutions and services, today reported its results for the second quarter ended June 30, 2020.

Key Financial Highlights:

  • Revenues for Q2 2020 totaled $38.3 million compared with $59.7 million for Q2 2019.

  • Q2 2020 - GAAP operating loss was $3.5 million compared to operating income of $4.9 million in Q2 2019. Q2 2020 Non-GAAP operating loss was $2.6 million compared to Non-GAAP operating income of $6.3 in Q2 2019.

  • Q2 2020 GAAP net loss was $4.2 million, or loss of $0.08 per diluted share, compared with net income of $3.4 million, or income of $0.06 per diluted share in Q2 2019. Q2 2020 non-GAAP net loss was $3.3 million, or $0.06 per diluted share, compared with net income of $4.8 million, or $0.09 per diluted share, in Q2 2019.

  • Q2 2020 Adjusted EBITDA was $0.1 million compared with Adjusted EBITDA of $8.9 million in Q2 2019.

Adi Sfadia, Gilat's interim CEO, commented:

"The COVID-19 pandemic continued to affect Gilat's second quarter 2020 results, as we continued to see postponements and delays in orders. However, during the second quarter we began to see and are continuing to see a recovery in most of our areas of operations which is demonstrated by a significant increase in pipeline opportunities. We believe that as a result of these trends, coupled with the cost reduction initiatives we have executed and are continuing to execute, the second half of 2020 will be meaningfully better than the first half, for Gilat.

"I am pleased to report that Bosmat Halpern, Gilat's AVP Finance has been appointed as Gilat's interim CFO, and I am confident in her ability to wisely navigate Gilat's finances through these unprecedented times."

Comtech Transaction and Litigation

The acquisition of Gilat by Comtech Telecommunications Corp ("Comtech") remains subject to certain conditions to closing, including regulatory approvals in Russia. As previously reported, Comtech filed a complaint against Gilat in the Delaware Court of Chancery seeking declaratory judgments that certain actions, if taken by Gilat in connection with Russia regulatory approval would breach Gilat’s obligations under the Merger Agreement and that Gilat has suffered a Material Adverse Effect, as defined in the Merger Agreement, as a result of the COVID-19 pandemic. As a consequence, Comtech contends that it is not required to consummate the merger.

Gilat strongly rejects all such allegations, and on July 21, 2020, Gilat filed a complaint against Comtech in the Delaware Court of Chancery, seeking a Court order requiring Comtech to specifically perform its obligations under the merger agreement, including using its reasonable best efforts to obtain regulatory approval as soon as practicable (as well as seeking all other relief deemed proper, including damages). The Complaint also seeks a declaratory judgment that, if Russian regulatory approval is not obtained by the termination date of the merger agreement, satisfaction of the Russian regulatory condition be excused, and a declaratory judgment that Gilat has not suffered a “Material Adverse Effect”. Trial is scheduled for early October 2020.

Key Recent Announcements

  • Gilat Awarded Over $10 Million for a Five-Year Service Project for 4G Backhaul Services in Latin America

  • US Tier-1 Mobile Operator Awards Gilat a Multi-Million Dollar Service Contract for Cellular Backhaul

  • Africa Mobile Networks (AMN) Extends Gilat’s Contract of Powering Africa’s Largest Satellite Cellular Backhaul Network

  • Gilat Awarded Cellular Backhaul Project for Kcell, Kazakhstan’s Largest Mobile Network Operator

  • Gilat Selected to Extend and Expand Managed Service Cellular Backhaul Project by a Leading Mobile Operator in Mexico

  • Telefonica International Wholesale Services (TIWS) Selects Gilat for Broadband and Cellular Backhaul Project in Argentina

  • Gilat’s Airborne Technology Enables Opening-up of the Chinese Ka-Band IFEC Market and Driving a Multi-Million Dollar Market Opportunity

  • Gilat Announces Availability of its Flagship VSAT, Achieving Half a Gigabit of Concurrent Speeds

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. Non-GAAP financial measures mainly exclude the effect of stock based compensation, amortization of purchased intangibles, lease incentive amortization, litigation expenses, income related to trade secrets claims, restructuring and reorganization costs, merger and acquisition costs and initial recognition of deferred tax asset with respect to carry-forward losses.

Adjusted EBITDA 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.

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

Safe Harbor Statement
Certain statements made herein that are not historical are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks and uncertainties that could cause the actual results, performance or achievements of Gilat, or the expected results of the proposed transaction with Comtech to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. Due to such uncertainties and risks, no assurances can be given that such expectations will prove to have been correct, and readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. The forward-looking statements contained herein include, but are not limited to, statements about the results, performance or achievements of Gilat, Gilat’s plans, objectives and expectations for future operations, the expected completion of the proposed transaction with Comtech, the satisfaction or waiver of any conditions to the proposed transaction, and other events relating to the proposed transaction. Forward-looking statements are often characterized by the use of forward-looking terminology such as “may,” “will,” “expect,” “anticipate,” “estimate,” “continue,” “believe,” “should,” “intend,” “plan,” “project” or other similar words, but are not the only way these statements are identified. These forward-looking statements are based upon Gilat’s management’s current estimates and projections of future results or trends. In addition to the risks and uncertainties described in the Annual Report on Form 20-F for the year ended December 31, 2019 and in the proxy statement/prospectus dated April 3, 2020 and those described in any other documents filed with the Securities and Exchange Commission, such risks and uncertainties include, among others, (i) changes in general economic and business conditions, (ii) the inability to maintain market acceptance of Gilat's products, (iii) the inability to timely develop and introduce new technologies, products and applications, (iv) rapid changes in the market for Gilat's products, (v) loss of market share and pressure on prices resulting from competition, (vi) introduction of competing products by other companies, (vii) the inability to manage growth and expansion, (viii) loss of key OEM partners, (ix) the inability to attract and retain qualified personnel, (x) the inability to protect the Company's proprietary technology, (xi) risks associated with Gilat's international operations and its location in Israel and (xii) risks relating to the Merger of wholly owned subsidiary of Comtech with and into Gilat (the “Merger”), including, among others: (1) the risk that the conditions to the closing of the are not satisfied, including the risk that required approvals for the Merger from governmental authorities are not received; (2) changes or circumstances that could give rise to the termination of the Merger Agreement; (3) the risk that the value of the stock merger consideration will fluctuate over time; (4) litigation relating to the Merger; (5) uncertainties as to the timing of the consummation of the Merger and the ability of each party to consummate the Merger; (6) risks that the proposed Merger disrupts the current plans and operations of Gilat or Comtech, or both; (7) the ability of Gilat and Comtech to retain and hire key personnel; (8) competitive responses to the proposed Merger and the impact of competitive products; (9) unexpected costs, charges or expenses resulting from the Merger; (10) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the Merger; (11) the combined company’s ability to achieve the financial and operating results, growth prospects and synergies expected from the Merger, as well as delays, challenges and expenses associated with integrating the existing businesses of Comtech and Gilat; (12) the combined company’s ability to maintain and improve relationships with customers, suppliers and other third parties following the Merger; (13) the terms and availability of the indebtedness that may be incurred in connection with the Merger; (14) the timing and funding of government contracts; (15) risks associated with international sales; (16) risks associated with legal proceedings, customer claims for indemnification and other similar matters; (17) risks associated with Comtech’s obligations under its credit facility; (18) risks associated with the outbreak and global spread of the coronavirus (COVID-19) pandemic; and (19) legislative, regulatory, technological, political and economic developments, including changing business conditions in the industries in which Comtech and Gilat operate and the overall economy. as well as the financial performance and expectations of Comtech’s and Gilat’s existing and prospective customers.

The foregoing list of factors is not exclusive and you should not place undue reliance on any forward-looking statement. All forward-looking statements contained herein are made only as of the date of the date hereof and, except as required by law, Gilat does not undertake any obligation to update publicly any of these forward-looking statements to reflect events or circumstances that may arise after the date hereof.

For additional information regarding these and other risks and uncertainties associated with Gilat's business and the pending acquisition of Gilat by Comtech, reference is made to Gilat's reports filed from time to time with the Securities and Exchange Commission.

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


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

2020

2019

2020

2019

Unaudited

Unaudited

Revenues

$

85,988

$

121,794

$

38,315

$

59,685

Cost of revenues

67,514

76,239

28,727

37,700

Gross profit

18,474

45,555

9,588

21,985

Research and development expenses

13,773

16,492

6,139

7,635

Less - grants

472

1,094

200

539

Research and development expenses, net

13,301

15,398

5,939

7,096

Selling and marketing expenses

8,650

11,288

3,584

5,417

General and administrative expenses (*)

7,791

9,527

2,973

4,585

Merger and acquisition costs

2,951

-

546

-

Total operating expenses

32,693

36,213

13,042

17,098

Operating income (loss)

(14,219

)

9,342

(3,454

)

4,887

Financial expenses, net

(1,429

)

(1,400

)

(457

)

(579

)

Income (loss) before taxes on income

(15,648

)

7,942

(3,911

)

4,308

Taxes on income

332

1,713

314

903

Net income (loss)

$

(15,980

)

$

6,229

$

(4,225

)

$

3,405

Basic and Diluted earnings (loss) per share

$

(0.29

)

$

0.11

$

(0.08

)

$

0.06

Weighted average number of shares used in

computing earnings (loss) per share

Basic

55,499,300

55,262,453

55,505,342

55,327,318

Diluted

55,499,300

56,014,927

55,505,342

56,070,351

(*) Including restructuring cost


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, 2020

June 30, 2019

GAAP

Adjustments (1)

Non-GAAP

GAAP

Adjustments (1)

Non-GAAP

Unaudited

Unaudited

Gross profit

$

9,588

54

$

9,642

$

21,985

312

$

22,297

Operating expenses

13,042

(831

)

12,211

17,098

(1,077

)

16,021

Operating income (loss)

(3,454

)

885

(2,569

)

4,887

1,389

6,276

Income (loss) before taxes on income

(3,911

)

885

(3,026

)

4,308

1,389

5,697

Net income (loss)

(4,225

)

885

(3,340

)

3,405

1,389

4,794

Earnings (loss) per share (basic and diluted)

$

(0.08

)

$

0.02

$

(0.06

)

$

0.06

$

0.03

$

0.09

Weighted average number of shares used in

computing earnings per share

Basic

55,505,342

55,505,342

55,327,318

55,327,318

Diluted

55,505,342

55,505,342

56,070,351

56,218,672

(1) Adjustments reflect the effect of non-cash stock-based compensation as per ASC 718, amortization of intangible assets related to shares acquisition transactions, merger and acquisition costs, trade secrets and other litigation expenses and restructuring and re-organization costs.

Three months ended

Three months ended

June 30, 2020

June 30, 2019

Unaudited

Unaudited

GAAP net income (loss)

$

(4,225

)

$

3,405

Gross profit

Non-cash stock-based compensation expenses

49

49

Amortization of intangible assets related to acquisition transactions

5

234

Restructuring and re-organization costs

-

29

54

312

Operating expenses

Non-cash stock-based compensation expenses

235

373

Amortization of intangible assets related to acquisition transactions

50

49

Trade secrets and other litigation expenses

-

100

Merger and acquisition costs

546

-

Restructuring and re-organization costs

-

555

831

1,077

Non-GAAP net income (loss)

$

(3,340

)

$

4,794


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, 2020

June 30, 2019

GAAP

Adjustments (1)

Non-GAAP

GAAP

Adjustments (1)

Non-GAAP

Unaudited

Unaudited

Gross profit

$

18,474

116

$

18,590

$

45,555

638

$

46,193

Operating expenses

32,693

(3,937

)

28,756

36,213

(1,906

)

34,307

Operating income (loss)

(14,219

)

4,053

(10,166

)

9,342

2,544

11,886

Income (loss) before taxes on income

(15,648

)

4,053

(11,595

)

7,942

2,544

10,486

Net income (loss)

(15,980

)

4,053

(11,927

)

6,229

2,544

8,773

Earnings (loss) per share (basic and diluted)

$

(0.29

)

$

0.08

$

(0.21

)

$

0.11

$

0.05

$

0.16

Weighted average number of shares used in

computing earnings per share

Basic

55,499,300

55,499,300

55,262,453

55,262,453

Diluted

55,499,300

55,499,300

56,014,927

56,180,698

(1) Adjustments reflect the effect of non-cash stock-based compensation as per ASC 718, amortization of intangible assets related to shares acquisition transactions, merger and acquisition costs, trade secrets and other litigation expenses and restructuring and re-organization costs.

Six months ended

Six months ended

June 30, 2020

June 30, 2019

Unaudited

Unaudited

GAAP net income (loss)

$

(15,980

)

$

6,229

Gross profit

Non-cash stock-based compensation expenses

106

143

Amortization of intangible assets related to acquisition transactions

10

466

Restructuring and re-organization costs

-

29

116

638

Operating expenses

Non-cash stock-based compensation expenses

601

1,150

Amortization of intangible assets related to acquisition transactions

101

101

Trade secrets and other litigation expenses

11

100

Merger and acquisition costs

2,951

-

Restructuring and re-organization costs

273

555

3,937

1,906

Non-GAAP net income (loss)

$

(11,927

)

$

8,773


GILAT SATELLITE NETWORKS LTD.

SUPPLEMENTAL INFORMATION

U.S. dollars in thousands

ADJUSTED EBITDA:

Six months ended

Three months ended

June 30,

June 30,

2020

2019

2020

2019

Unaudited

Unaudited

GAAP operating income (loss)

$

(14,219

)

$

9,342

$

(3,454

)

$

4,887

Add:

Non-cash stock-based compensation expenses

707

1,293

284

422

Trade secrets and other litigation expenses

11

100

-

100

Restructuring and re-organization costs

273

584

-

584

Merger and acquisition costs

2,951

-

546

-

Depreciation and amortization (*)

5,382

5,786

2,718

2,909

Adjusted EBITDA

$

(4,895

)

$

17,105

$

94

$

8,902

(*) Including amortization of lease incentive

SEGMENT REVENUE:

Six months ended

Three months ended

June 30,

June 30,

2020

2019

2020

2019

Unaudited

Unaudited

Fixed Networks

$

44,790

$

66,836

$

21,779

$

30,408

Mobility Solutions

33,207

43,499

14,006

22,587

Terrestrial Infrastructure Projects

7,991

11,459

2,530

6,690

Total revenue

$

85,988

$

121,794

$

38,315

$

59,685


GILAT SATELLITE NETWORKS LTD.

CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

June 30,

December 31,

2020

2019

Unaudited

Audited

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

59,601

$

74,778

Restricted cash

25,579

27,067

Trade receivables, net

28,560

47,731

Contract assets

32,060

23,698

Inventories

32,489

27,203

Other current assets

15,581

23,007

Total current assets

193,870

223,484

LONG-TERM ASSETS:

Long-term restricted cash

117

124

Severance pay funds

6,425

6,831

Deferred taxes

18,291

18,455

Operating lease right-of-use assets

6,353

5,211

Other long term receivables

9,699

10,156

Total long-term assets

40,885

40,777

PROPERTY AND EQUIPMENT, NET

78,781

82,584

INTANGIBLE ASSETS, NET

1,302

1,523

GOODWILL

43,468

43,468

TOTAL ASSETS

$

358,306

$

391,836

GILAT SATELLITE NETWORKS LTD.

CONSOLIDATED BALANCE SHEETS (Cont.)

U.S. dollars in thousands

June 30,

December 31,

2020

2019

Unaudited

Audited

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Current maturities of long-term loans

$

4,000

$

4,096

Trade payables

20,129

20,725

Accrued expenses

48,194

54,676

Advances from customers and deferred revenues

23,124

27,220

Operating lease liabilities

2,145

1,977

Other current liabilities

10,552

12,261

Total current liabilities

108,144

120,955

LONG-TERM LIABILITIES:

Long-term loans, net of current maturities

-

4,000

Accrued severance pay

6,681

7,061

Long-term advances from customers

1,180

2,866

Operating lease liabilities

4,153

3,258

Other long-term liabilities

1,218

108

Total long-term liabilities

13,232

17,293

SHAREHOLDERS' EQUITY:

Share capital - ordinary shares of NIS 0.2 par value

2,644

2,643

Additional paid-in capital

928,054

927,348

Accumulated other comprehensive loss

(6,433

)

(5,048

)

Accumulated deficit

(687,335

)

(671,355

)

Total shareholders' equity

236,930

253,588

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

358,306

$

391,836


GILAT SATELLITE NETWORKS LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

Six months ended

Three months ended

June 30,

June 30,

2020

2019

2020

2019

Unaudited

Unaudited

Cash flows from operating activities:

Net income (loss)

$

(15,980

)

$

6,229

$

(4,225

)

$

3,405

Adjustments required to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

5,271

5,681

2,667

2,859

Capital loss from disposal of property and equipment

23

-

56

-

Stock-based compensation of options

707

1,293

284

422

Accrued severance pay, net

26

382

(17

)

97

Deferred income taxes, net

140

1,385

(494

)

702

Decrease (increase) in trade receivables, net

18,364

2,506

4,757

(5,325

)

Decrease (increase) in contract assets

(8,362

)

(232

)

(3,511

)

198

Decrease (increase) in other assets (including short-term, long-term and deferred charges)

6,710

(29

)

5,037

50

Decrease (increase) in inventories

(5,698

)

(6,137

)

937

(2,478

)

Increase (decrease) in trade payables

(510

)

3,933

(2,885

)

4,855

Decrease in accrued expenses

(5,809

)

(7,076

)

(4,157

)

(4,907

)

Decrease in advance from customers

(5,725

)

(8,405

)

(2,898

)

(5,318

)

Increase (decrease) in current and non current liabilities

685

(1,950

)

(2,126

)

(2,813

)

Net cash used in operating activities

(10,158

)

(2,420

)

(6,575

)

(8,253

)

Cash flows from investing activities:

Purchase of property and equipment

(1,879

)

(3,587

)

(928

)

(1,573

)

Net cash used in investing activities

(1,879

)

(3,587

)

(928

)

(1,573

)

Cash flows from financing activities:

Exercise of stock options

-

375

-

37

Dividend payment

-

(24,864

)

-

(24,864

)

Repayment of long-term loans

(4,096

)

(4,231

)

-

(108

)

Net cash used in financing activities

(4,096

)

(28,720

)

-

(24,935

)

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

(539

)

21

156

(76

)

Decrease in cash, cash equivalents and restricted cash

(16,672

)

(34,706

)

(7,347

)

(34,837

)

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

101,969

104,204

92,644

104,335

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

$

85,297

$

69,498

$

85,297

$

69,498