Gilat Reports Strong Second Quarter 2022 Results

Gilat Satellite Networks Ltd.

Revenue of $55.5 million, operating profit $1.5 million and Adjusted EBITDA of $5.3 million; Reiterates 2022 guidance

PETAH TIKVA, Israel, Aug. 09, 2022 (GLOBE NEWSWIRE) -- Gilat Satellite Networks Ltd. (NASDAQ: GILT, TASE: GILT), a worldwide leader in satellite networking technology, solutions and services, today reported its results for the second quarter ended June 30, 2022.

Second Quarter 2022 Financial Highlights

• Revenues of $55.5 million,up 1.2% compared with Q2 of last year;
  
  

• GAAP operating income of $1.5 million versus operating loss of $0.4 million in Q2 last year;
  
  

• Non-GAAP operating income of $2.4 million versus Non-GAAP operating income of $0.1 million in Q2 last year;
  
  

• GAAP net income of $0.5 million versus loss of $0.2 million in Q2 last year;
  
  

• Non-GAAP net income of $1.4 million versus Non-GAAP income of $0.3 million in Q2 last year;
  
  

• Adjusted EBITDA of $5.3 million versus Adjusted EBITDA of $2.4 million in Q2 last year;
  
  

• Reiterates and on-track with 2022 financial guidance;
  
  

Forward-Looking Expectations

The Company reiterates its 2022 guidance issued in 2022, of revenues between $245 to $265 million, representing year-over-year growth of between 14% and 23%, GAAP operating income of between $5 to $9 million and Adjusted EBITDA of between $20 to $24 million, representing year-over-year growth of Adjusted EBITDA between 30% to 56%.

Management Commentary

Adi Sfadia, Gilat's CEO, commented: "We are pleased with our strong results, especially with the solid improvement in our profitability. We continue to successfully capitalize on the opportunities in our pipeline, and we see increasing growth potential in our end-markets for the coming years. Looking out to the rest of the year, we feel increasingly comfortable and remain on target to meet our goals.

This was an exceptional quarter with significant multimillion dollar orders for Gilat's next generation platform, SkyEdge IV. We expanded the global strategic relationships with our partners, the satellite operators, SES and Intelsat, and are competing on important GEO VHTS opportunities in our pipeline with additional major satellite operators. Furthermore, our SSPA business for this new and exciting market is progressing as planned, and as such, we believe we are well positioned to seize opportunities in the multibillion market of the next era of satellite communication.

We received more than $10 million in new Cellular Backhaul orders this quarter as we continue to expand our global leadership. We are encouraged with the progress in our strategic markets of Inflight Connectivity and Maritime as well as with our growing business in Defense and Enterprise, and we see a growing set of additional opportunities."

Mr. Sfadia concluded, “Given our ongoing strong performance, we reiterate our 2022 guidance and expect a year of solid growth in revenue and improved profitability."

Key Recent Announcements

• Internet Para Todos Expands Services Contract with Gilat

• Gilat Signs Agreement to Enable a Central Asian Government to Provide Digital Services over Satellite

• Gilat and Intelsat Expand Their Strategic In-Flight Connectivity Partnership in Japan

• Tier-1 MNO Awards Multimillion-Dollar Order to Gilat for 4G Cellular Backhaul Network Expansion in Latin America

• Gilat Awarded Order of Over $7M from Tier-1 Mobile Network Carrier in APAC for 4G Cellular Backhaul Network Expansion

• Gilat Awarded Follow-On Orders to Expand Defense Force SATCOM Network in an Asian Nation

• Gilat Receives Over $8 Million Follow-On Order for Support of Low Earth Orbit Constellation
  
  

Conference Call Details

Gilat’s management will discuss its second quarter 2022 results and business achievements and participate in a question and answer session:

Date:              Tuesday, August 9, 2022
Start:              09:30 AM EDT / 16:30 IDT
Dial-in:            US: 1-866-744-5399
                       International: +972-3-918-0609

A simultaneous webcast of the conference call will be available on the Gilat website at www.gilat.com and through this link: https://Veidan.activetrail.biz/gilatq2-2022

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

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, acquisition and related litigation expense (income), impairment of held for sale asset, and one-time changes of deferred tax assets.

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. 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, risks associated with the outbreak and global spread of the coronavirus (COVID-19) pandemic; 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. 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. We undertake no obligation to update or revise any forward-looking statements for any reason.

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

Ehud Helft
EK Global Investor Relations
gilat@ekgir.com
+1 212 378 8040

GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
U.S. dollars in thousands (except share and per share data)
									Six months ended								Three months ended
									June 30,								June 30,
										2022				2021				2022				2021
													As Restated (1)								As Restated (1)
									Unaudited								Unaudited
Revenues									$	106,863			$	98,169			$	55,454			$	54,798
Cost of revenues										70,706				69,070				35,685				38,179
Gross profit										36,157				29,099				19,769				16,619
Research and development expenses, net										16,386				15,660				8,718				7,733
Selling and marketing expenses										10,310				10,468				4,960				5,464
General and administrative expenses										8,555				6,938				4,371				3,855
Impairment of held for sale asset										439				-				229				-
Total operating expenses										35,690				33,066				18,278				17,052
Operating income (loss)										467				(3,967	)			1,491				(433	)
Financial income (expenses), net										(1,663	)			(757	)			(468	)			435
Income (loss) before taxes on income										(1,196	)			(4,724	)			1,023				2
Taxes on income										832				474				517				227
Net income (loss)									$	(2,028	)		$	(5,198	)		$	506			$	(225	)
Earnings (loss) per share (basic and diluted)									$	(0.04	)		$	(0.09	)		$	0.01			$	(0.00	)
Weighted average number of shares used in
computing earning (loss) per share
Basic										56,574,296				56,269,941				56,597,523				56,508,539
Diluted										56,574,296				56,269,941				56,637,208				56,508,539
(1)  The Company restated its previously issued condensed interim consolidated financial statements for the three and six months ended June 30, 2021.
For additional information, see Item 5 of our 2021 Form 20-F and Notes 2 and 13 of our Condensed Interim Consolidated Financial Statements filed
with the U.S. Securities and Exchange Commission on May 16, 2022 and August 9, 2022, respectively.

GILAT SATELLITE NETWORKS LTD.
RECONCILIATION BETWEEN GAAP AND NON-GAAP CONSOLIDATED STATEMENTS OF INCOME (LOSS)
FOR COMPARATIVE PURPOSES
U.S. dollars in thousands (except share and per share data)
								Three months ended										Three months ended
								June 30, 2022										June 30, 2021
								GAAP			Adjustments (*)				Non-GAAP			GAAP					Adjustments (*)				Non-GAAP
																		As Restated (1)									As Restated (1)
								Unaudited										Unaudited
Gross profit								$	19,769			81			$	19,850		$	16,619					64			$	16,683
Operating expenses									18,278			(832	)			17,446			17,052					(456	)			16,596
Operating income (loss)									1,491			913				2,404			(433	)				520				87
Income before taxes on income									1,023			913				1,936			2					520				522
Net income (loss)								$	506			913			$	1,419		$	(225	)				520			$	295
Earnings (loss) per share (basic and diluted)								$	0.01		$	0.02			$	0.03		$	(0.00	)			$	0.01			$	0.01
Weighted average number of shares used in
computing earning (loss) per share
Basic									56,597,523							56,597,523			56,508,539									56,508,539
Diluted									56,637,208							56,773,970			56,508,539									57,328,088
(*) Adjustments reflect the effect of non-cash stock-based compensation as per ASC 718, amortization of intangible assets related to shares acquisition transactions and
impairment of held for sale asset.
											Three months ended												Three months ended
											June 30, 2022												June 30, 2021
																							As Restated (1)
											Unaudited												Unaudited
GAAP net income (loss)											$	506											$	(225	)
Gross profit
Non-cash stock-based compensation expenses												75												59
Amortization of intangible assets related to acquisition transactions												55												5
												130												64
Operating expenses
Non-cash stock-based compensation expenses												494												406
Amortization of intangible assets related to acquisition transactions												60												50
Impairment of held for sale asset												229												-
												783												456
Non-GAAP net income											$	1,419											$	295
(1)  The Company restated its previously issued condensed interim consolidated financial statements for the three and six months ended June 30, 2021.
For additional information, see Item 5 of our 2021 Form 20-F and Notes 2 and 13 of our Condensed Interim Consolidated Financial Statements filed
with the U.S. Securities and Exchange Commission on May 16, 2022 and August 9, 2022, respectively.

GILAT SATELLITE NETWORKS LTD.
RECONCILIATION BETWEEN GAAP AND NON-GAAP CONSOLIDATED STATEMENTS OF INCOME (LOSS)
FOR COMPARATIVE PURPOSES
U.S. dollars in thousands (except share and per share data)
								Six months ended												Six months ended
								June 30, 2022												June 30, 2021
								GAAP				Adjustments (*)				Non-GAAP				GAAP				Adjustments (*)				Non-GAAP
																				As Restated (1)								As Restated (1)
								Unaudited												Unaudited
Gross profit								$	36,157				156			$	36,313			$	29,099				130			$	29,229
Operating expenses									35,690				(1,515	)			34,175				33,066				(287	)			32,779
Operating income (loss)									467				1,671				2,138				(3,967	)			417				(3,550	)
Income (loss) before taxes on income									(1,196	)			1,671				475				(4,724	)			417				(4,307	)
Net loss									(2,028	)			1,671				(357	)			(5,198	)			417				(4,781	)
Loss per share (basic and diluted)								$	(0.04	)		$	0.03			$	(0.01	)		$	(0.09	)		$	0.01			$	(0.08	)
Weighted average number of shares used in
computing loss per share
		Basic							56,574,296								56,574,296				56,269,941								56,269,941
		Diluted							56,574,296								56,574,296				56,269,941								56,269,941
(*) Adjustments reflect the effect of non-cash stock-based compensation as per ASC 718, amortization of intangible assets related to shares acquisition transactions and
impairment of held for sale asset.
												Six months ended												Six months ended
												June 30, 2022												June 30, 2021
																								As Restated (1)
												Unaudited												Unaudited
GAAP net loss												$	(2,028	)										$	(5,198	)
Gross profit
Non-cash stock-based compensation expenses													145												120
Amortization of intangible assets related to acquisition transactions													60												10
													205												130
Operating expenses
Non-cash stock-based compensation expenses													916												186
Amortization of intangible assets related to acquisition transactions													111												101
Impairment of held for sale asset													439												-
													1466												287
Non-GAAP net loss												$	(357	)										$	(4,781	)
(1)  The Company restated its previously issued condensed interim consolidated financial statements for the three and six months ended June 30, 2021.
For additional information, see Item 5 of our 2021 Form 20-F and Notes 2 and 13 of our Condensed Interim Consolidated Financial Statements filed
with the U.S. Securities and Exchange Commission on May 16, 2022 and August 9, 2022, respectively.

GILAT SATELLITE NETWORKS LTD.
SUPPLEMENTAL INFORMATION
U.S. dollars in thousands
ADJUSTED EBITDA:
						Six months ended								Three months ended
						June 30,								June 30,
							2022				2021				2022			2021
										As Restated (1)							As Restated (1)
						Unaudited								Unaudited
GAAP net income (loss)						$	(2,028	)		$	(5,198	)		$	506		$	(225	)
Adjustments:
Financial expenses (income), net							1,663				757				468			(435	)
Taxes on income							832				474				517			227
Non-cash stock-based compensation expenses							1,061				306				569			465
Impairment of held for sale asset							439				-				229			-
Other							60				-				60			-
Depreciation and amortization (*)							5,792				4,758				2,941			2,373
Adjusted EBITDA						$	7,819			$	1,097			$	5,290		$	2,405
(*) Including amortization of lease incentive
SEGMENT REVENUE:
						Six months ended								Three months ended
						June 30,								June 30,
							2022				2021				2022			2021
										As Restated (1)							As Restated (1)
						Unaudited								Unaudited
Satellite Networks						$	51,627			$	59,975			$	26,857		$	34,351
Integrated Solutions							29,397				18,836				15,691			12,127
Network Infrastructure and Services							25,839				19,358				12,906			8,320
Total revenues						$	106,863			$	98,169			$	55,454		$	54,798
(1) The Company restated its previously issued condensed interim consolidated financial statements for the three and six months ended June 30, 2021.
For additional information, see Item 5 of our 2021 Form 20-F and Notes 2 and 13 of our Condensed Interim Consolidated Financial Statements filed
with the U.S. Securities and Exchange Commission on May 16, 2022 and August 9, 2022, respectively.

GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
		June 30,				December 31,
			2022				2021
		Unaudited				Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	70,133			$	81,859
Short-term deposits			-				2,159
Restricted cash			1,313				2,592
Trade receivables, net			51,303				39,161
Contract assets			29,310				26,008
Inventories			32,156				28,432
Other current assets			22,458				14,607
Held for sale asset			4,276				4,587
Total current assets			210,949				199,405
LONG-TERM ASSETS:
Restricted cash			12				12
Long- term contract assets			11,845				12,539
Severance pay funds			5,937				6,795
Deferred taxes			15,885				17,551
Operating lease right-of-use assets			3,845				4,478
Other long term assets			11,225				10,456
Total long-term assets			48,749				51,831
PROPERTY AND EQUIPMENT, NET			72,410				72,391
INTANGIBLE ASSETS, NET			419				640
GOODWILL			43,468				43,468
TOTAL ASSETS		$	375,995			$	367,735
GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED BALANCE SHEETS (Cont.)
U.S. dollars in thousands
		June 30,				December 31,
			2022				2021
		Unaudited				Audited
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables		$	24,010			$	19,776
Accrued expenses			47,654				49,202
Advances from customers and deferred revenues			31,932				24,373
Operating lease liabilities			1,747				1,818
Other current liabilities			15,458				13,339
Total current liabilities			120,801				108,508
LONG-TERM LIABILITIES:
Accrued severance pay			6,548				7,292
Long-term advances from customers			722				1,209
Operating lease liabilities			2,056				2,283
Other long-term liabilities			132				120
Total long-term liabilities			9,458				10,904
SHAREHOLDERS' EQUITY:
Share capital - ordinary shares of NIS 0.2 par value			2,711				2,706
Additional paid-in capital			930,927				929,871
Accumulated other comprehensive loss			(7,977	)			(6,357	)
Accumulated deficit			(679,925	)			(677,897	)
Total shareholders' equity			245,736				248,323
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	375,995			$	367,735

GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
			Six months ended								Three months ended
			June 30,								June 30,
				2022				2021				2022				2021
							As Restated (1)								As Restated (1)
			Unaudited								Unaudited
Cash flows from operating activities:
Net income (loss)			$	(2,028	)		$	(5,198	)		$	506			$	(225	)
Adjustments required to reconcile net loss
to net cash provided by (used in) operating activities:
Depreciation and amortization				5,683				4,646				2,887				2,316
Impairment of held for sale asset				439				-				229				-
Stock-based compensation of options				1,061				306				569				465
Accrued severance pay, net				114				(128	)			177				(118	)
Deferred taxes, net				1,664				185				1,358				(333	)
Increase in trade receivables, net				(11,883	)			(7,357	)			(5,471	)			(5,424	)
Decrease (increase) in contract assets				(2,608	)			21,647				(599	)			24,826
Increase in other assets (including short-term, long-term
and deferred charges)				(7,763	)			(4,009	)			(4,047	)			(3,789	)
Decrease (increase) in inventories				(4,075	)			1,774				(1,731	)			3,986
Increase (decrease) in trade payables				4,205				(790	)			2,533				(1,740	)
Decrease in accrued expenses				(1,690	)			(1,802	)			(2,442	)			(1,304	)
Increase (decrease) in advance from customers and deferred revenue				7,010				(338	)			4,700				(8,062	)
Decrease in other liabilities				(810	)			(194	)			(1,975	)			(2,197	)
Net cash provided by (used in) operating activities				(10,681	)			8,742				(3,306	)			8,401
Cash flows from investing activities:
Purchase of property and equipment				(4,515	)			(3,572	)			(2,314	)			(2,089	)
Repayment of (investment in) short term deposits				2,159				(2,159	)			2,159				(2,159	)
Net cash used in investing activities				(2,356	)			(5,731	)			(155	)			(4,248	)
Cash flows from financing activities:
Dividend payment				-				(35,003	)			-				-
Repayment of long-term loan				-				(4,000	)			-				-
Net cash used in financing activities				-				(39,003	)			-				-
Effect of exchange rate changes on cash, cash equivalents and restricted cash				32				(161	)			(221	)			93
Increase (decrease) in cash, cash equivalents and restricted cash				(13,005	)			(36,153	)			(3,682	)			4,246
Cash, cash equivalents and restricted cash at the beginning of the period				84,463				115,958				75,140				75,559
Cash, cash equivalents and restricted cash at the end of the period			$	71,458			$	79,805			$	71,458			$	79,805
(1)     The Company restated its previously issued condensed interim consolidated financial statements for the three and six months ended June 30, 2021.
For additional information, see Item 5 of our 2021 Form 20-F and Notes 2 and 13 of our Condensed Interim Consolidated Financial Statements filed
with the U.S. Securities and Exchange Commission on May 16, 2022 and August 9, 2022, respectively.