PETAH TIKVA, Israel, Aug. 08, 2017 (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, 2017.

Key Financial Highlights:

• Revenues for Q2 2017 were $66.2 million compared with $63.9 million in Q1 2017 and $67.9 million in Q2 2016.

• Profitability showed significant improvement, both quarter-over-quarter and year-over-year:

  • GAAP operating profit improved substantially to $1.9 million in Q2 2017 from $18 thousand in Q1 2017, and compared with an operating loss of $2.5 million in Q2 2016.

  • Non-GAAP operating income grew to $4.1 million from $2.5 million in Q1 2017 and $0.5 million in Q2 2016.   

  • The Company achieved GAAP net income of $2.1 million, or $0.04 per diluted share in Q2 2017, compared with a loss of $0.8 million, or $0.01 per diluted share, in Q1 2017, and a loss of $3.7 million, or $0.07 per diluted share, in Q2 2016.

  • Non-GAAP net income reached $4.6 million, or $0.08 per diluted share, compared with $1.7 million, or $0.03 per diluted share in Q1 2017, and a non-GAAP loss of $0.6 million, or $0.01 per diluted share, in Q2 2016. 

  • Adjusted EBITDA increased to $5.9 million, or 8.9% of revenues, compared with $4.2 million, or 6.6% of revenues, in Q1 2017, and $2.4 million, or 3.5% of revenues, in Q2 2016.

• Updated management objectives for 2017: revenue range narrowed to between $280 to $290 million, GAAP operating income raised to between $7 and $11 million, and Adjusted EBITDA raised to between $22 and $26 million.

Yona Ovadia, CEO of Gilat, commented: “I am very pleased to report another quarter of strong progress for Gilat. The Gilat management team has maintained an ongoing focus on improving profitability and optimizing our growth engines. That has resulted in significant improvement in our profitability in the second quarter with a substantial step-up in our operating income as well as the achievement of GAAP net income, along with a major increase in our Adjusted EBITDA, which increased 39% from the first quarter of 2017 and 149% from the second quarter last year.

“With our increased profitability and the growing traction of our new strategy, I am pleased to say that we have raised our profitability objectives for 2017, including moving up the range for Adjusted EBITDA to $22 to $26 million from the previous range of $20 to $24 million.”

“The principal drivers of this profitability improvement in the second quarter were a substantial increase in revenues from our mobility growth engine, mainly our solutions for In-Flight Connectivity (IFC). This demonstrates the earnings power and potential of our strategic growth engines, which also include our cellular backhaul over satellite solutions for the mobile market.

“In the second quarter, we continued to see progress with our growth engines. In Mobility, we are pleased that Gogo is now installing our modems in an accelerated fashion on commercial flights with a plan to reach over 1,800 aircrafts across more than 13 airlines. In addition, we continue to mature other opportunities in this market.

“We are also pleased to see a growing market for consumer broadband in Russia/CIS that is enabled by our innovative technology, the Scorpio VSAT, which was selected by the leading Russian DTH providers, now NTV-Plus in addition to Tricolor. 

“Furthermore, in the Mobile growth engine, we continue to develop our telco strategy of providing leading LTE over satellite cellular backhaul solutions to the industry. We are optimistic that opportunities in our pipeline will soon mature.

“Lastly, the win of a significant deal with Telebras in Brazil points to the start of a potential turnaround in our business in LATAM, and we are focused on accelerating this trend.

Mr. Ovadia concluded: “We are pleased to report the continued strong progress of Gilat in the second quarter as we continue to focus on improving profitability while developing our Mobile and Mobility growth engines. As our management objectives for full year 2017 indicate, we are optimistic about the rest of the year.”

Key Recent Announcements:

  • Gilat Propels the Russian DTH Market into Broadband Services
  • Telebras, Brazil Awards Gilat Contract of Over USD 11 Million
  • Intelsat and Gilat Unveil Mobile Reach Solar 3G Solution for Mobile Network Operators that Need to Expand in Remote Areas

Conference Call and Webcast Details:

Gilat management will host a conference call today, Tuesday, August 8, to discuss the second quarter results.  The details are as follows:

Conference Call and Webcast

Date:Tuesday, August 8, 2017
Start: 09:30 AM EDT / 16:30 IDT 
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: http://veidan-stream.com/gilatq2-2017.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 8, 2017 at 12:00 PM EDT / 19:00 IDT
End:August 11, 2017 at 12:00 PM EDT / 19:00 IDT
Dial-in: US: 1-888-782-4291
 International: (972) 3-925-5918

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 tax 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 2017. 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.  
CONDENSED 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, 
 
     2017   2016   2017   2016  
    Unaudited Unaudited 
            
Revenues  $130,168  $120,563  $66,237  $67,898  
Cost of revenues   93,258   92,984   46,668   52,717  
            
Gross profit     36,910      27,579      19,569      15,181   
            
Research and development expenses  13,467   12,593   6,712   6,705  
Less - grants   523   638   476   552  
Research and development, net   12,944   11,955   6,236   6,153  
Selling and marketing expenses   11,350   10,976   5,555   5,853  
General and administrative expenses  10,723   10,152   5,903   5,714  
            
Total operating expenses     35,017      33,083      17,694      17,720   
            
Operating income (loss)     1,893      (5,504)    1,875      (2,539) 
            
Financial expenses, net   (2,046)  (1,603)  (1,242)  (860) 
            
Income (loss) before taxes on income    (153)    (7,107)    633      (3,399) 
            
Taxes on income (tax benefit)   (1,501)  569   (1,499)  251  
            
Net income (loss)  $   1,348   $   (7,676) $   2,132   $   (3,650) 
            
Earnings (loss) per share (basic and diluted) $   0.02   $   (0.16) $   0.04   $   (0.07) 
            
Weighted average number of shares used in          
 computing earnings (loss) per share         
 Basic   54,649,863    49,383,450    54,676,042    54,384,521   
 Diluted   54,690,930    49,383,450    54,701,316    54,384,521   
            

 

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, 2017 June 30, 2016 
       GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP 
       Unaudited Unaudited 
                   
Gross profit     $19,569  1,205  $20,774 $15,181   1,225  $16,406  
Operating expenses     17,694  (1,049)  16,645  17,720   (1,839)  15,881  
Operating income (loss)     1,875  2,254   4,129  (2,539)  3,064   525  
Income (loss) before taxes on income    633  2,491   3,124  (3,399)  3,064   (335) 
Net income (loss)     $   2,132     2,491   $   4,623  $   (3,650)    3,064   $   (586) 
                   
Income (loss) per share (basic and diluted)   $   0.04   0.04  $   0.08  $   (0.07)  0.06  $   (0.01) 
                   
Weighted average number of shares used in               
computing income (loss) per share               
 Basic      54,676,042    54,676,042  54,384,521     54,384,521  
 Diluted      54,701,316    54,735,130  54,384,521     54,384,521  
                   
                   
 (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, 2017     June 30, 2016   
         Unaudited     Unaudited   
                   
GAAP net income (loss)      $2,132      $(3,650)   
Gross profit                 
Non-cash stock-based compensation expenses      11       32    
Amortization of intangible assets related to acquisition transactions    1,194       1,193    
          1,205       1,225    
Operating expenses                
Non-cash stock-based compensation expenses      203       270    
Amortization of intangible assets related to acquisition transactions    193       195    
Trade secrets litigation expenses       25       1,374    
Tax expenses under amnesty program      628       -    
          1,049       1,839    
                   
Finance and taxes on income                
Tax expenses under amnesty program      237       -    
                   
Non GAAP income (loss)      $4,623      $(586)   
                   

 

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  
       30 June 2017 
   30 June 2016
 
       GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP 
       Unaudited Unaudited 
                   
Gross profit     $36,910   2,410  $39,320 $27,579   2,409  $29,988  
Operating expenses     35,017   (2,285)  32,732  33,083   (2,470)  30,613  
Operating income (loss)  1,893   4,695   6,588  (5,504)  4,879   (625) 
Income (loss) before taxes on income  (153)  4,932   4,779  (7,107)  4,879   (2,228) 
Net income (loss) $   1,348      4,932   $   6,280  $   (7,676)    4,879   $   (2,797) 
              
Income (loss) per share (basic and diluted) $   0.02      0.09   $   0.11  $   (0.16)    0.10   $   (0.06) 
              
               
Weighted average number of shares used in             
computing net income (loss) per share             
 Basic    54,649,863        54,649,863     49,383,450        49,383,450   
 Diluted    54,690,930        54,785,783     49,383,450        49,383,450   
       
     
 (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    
         30 June 2017     30 June 2016   
          Unaudited       Unaudited    
                   
GAAP net income (loss)      $1,348      $(7,676)   
Gross profit                 
Non-cash stock-based compensation expenses      22       21    
Amortization of intangible assets related to acquisition transactions    2,388       2,388    
          2,410       2,409    
Operating expenses                
Non-cash stock-based compensation expenses      396       482    
Amortization of intangible assets related to acquisition transactions:    388       388    
Trade secrets litigation expenses      873       1,600    
Tax expenses under amnesty program      628       -    
          2,285       2,470    
                   
Finance and taxes on income               
Tax expenses under amnesty program      237       -    
                   
Non GAAP income (loss)      $6,280      $(2,797)   
                   

 

GILAT SATELLITE NETWORKS LTD. 
CONDENSED ADJUSTED EBITDA 
U.S. dollars in thousands 
    Six months ended Three months ended 
     June 30, 
 June 30, 
 
     2017  2016   2017  2016  
    Unaudited Unaudited 
            
GAAP operating income (loss) $1,893 $(5,504) $1,875 $(2,539) 
Add:          
Non-cash stock-based compensation expenses 418  503   214  302  
Trade secrets litigation expenses 873  1,600   25  1,374  
Tax expenses under amnesty program 628  -   628  -  
Depreciation and amortization  6,304  6,525   3,139  3,224  
            
Adjusted EBITDA  $  10,116  $  3,124   $   5,881  $   2,361   

 

 GILAT SATELLITE NETWORKS LTD. 
 CONDENSED CONSOLIDATED BALANCE SHEET 
 U.S. dollars in thousands 
       
   June 30, December 31, 
    2017   2016  
   Unaudited Audited 
       
 ASSETS     
       
 CURRENT ASSETS:     
 Cash and cash equivalents $78,831  $40,133  
 Restricted cash  24,379   62,229  
 Restricted cash held by trustees  6,110   9,058  
 Trade receivables, net  84,219   89,377  
 Inventories  24,471   21,469  
 Other current assets  24,371   17,017  
       
 Total current assets  242,381   239,283  
       
 LONG-TERM INVESTMENTS:     
 Severance pay funds  8,346   7,791  
 Other long term receivables  394   436  
       
 Total long-term investments and receivables  8,740   8,227  
       
 PROPERTY AND EQUIPMENT, NET  80,048   80,837  
       
 INTANGIBLE ASSETS, NET  8,497   11,383  
       
 GOODWILL  43,468   43,468  
       
 TOTAL ASSETS $383,134  $383,198  
       
   
 GILAT SATELLITE NETWORKS LTD.
 
 CONDENSED CONSOLIDATED BALANCE SHEET
 
 U.S. dollars in thousands
 
   June 30, December 31, 
    2017   2016  
   Unaudited Audited 
       
 LIABILITIES AND EQUITY     
       
 CURRENT LIABILITIES:     
 Current maturities of long-term loans  4,496   4,617  
 Trade payables  30,197   29,625  
 Accrued expenses  64,648   53,429  
 Advances from customers and deferred revenues  29,294   37,659  
 Advances from customers, held by trustees  4,188   7,498  
 Other current liabilities  16,228   13,846  
       
   Total current liabilities  149,051   146,674  
       
 LONG-TERM LIABILITIES:     
 Accrued severance pay  8,146   7,485  
 Long-term loans, net of current maturities  12,782   16,932  
 Other long-term liabilities  494   2,281  
       
   Total long-term liabilities  21,422   26,698  
       
 EQUITY:     
 Share capital - ordinary shares of NIS 0.2 par value  2,598   2,593  
 Additional paid-in capital  921,123   920,162  
 Accumulated other comprehensive loss  (2,648)  (3,224) 
 Accumulated deficit  (708,412)  (709,705) 
       
 Total equity  212,661   209,826  
       
 TOTAL LIABILITIES AND EQUITY $383,134  $383,198  
       

 

GILAT SATELLITE NETWORKS LTD. 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
U.S. dollars in thousands 
           
   Six months ended Three months ended 
    June 30, 
  June 30, 
 
    2017   2016   2017   2016  
   Unaudited Unaudited 
Cash flows from operating activities:         
Net income (loss) $1,348  $(7,676) $2,132  $(3,650) 
Adjustments required to reconcile net income (loss)         
 to net cash provided by (used in) operating activities:         
Depreciation and amortization  6,304   6,525   3,139   3,224  
Stock-based compensation of options and RSU's  418   503   214   302  
Accrued severance pay, net  106   (97)  167   26  
Accrued interest and exchange rate differences on short and long-term restricted cash, net  10   (1,560)  151   (1,151) 
Exchange rate differences on long-term loans  113   48   88   (42) 
Deferred income taxes, net  (159)  -   (143)  -  
Decrease in trade receivables, net  5,048   3,994   12,003   5,388  
Decrease (increase) in other assets (including short-term, long-term and deferred charges)  (6,519)  (1,072)  (3,265)  1,082  
Decrease (increase) in inventories  (3,558)  (2,459)  (246)  226  
Decrease in restricted cash directly related to operating activities, net  37,979   21,574   100   15,270  
Increase (decrease) in trade payables  537   3,192   929   (897) 
Increase in accrued expenses  11,418   14,483   3,925   7,075  
Decrease in advances from customers  (5,710)  (36,285)  (2,612)  (24,462) 
Increase (decrease) in advances from customers, held by trustees  (3,342)  (2,012)  1,070   2,051  
Increase (decrease) in other current liabilities and other long term liabilities  (1,904)  697   434   (524) 
Net cash provided by (used in) operating activities  42,089    (145)  18,086    3,918   
           
Cash flows from investing activities:         
Purchase of property and equipment  (2,173)  (2,032)  (961)  (928) 
Investment in restricted cash held by trustees  (5,309)  (5,428)  (5,309)  (5,428) 
Proceeds from restricted cash held by trustees  8,000   8,158   2,644   4,483  
Investment in restricted cash (including long-term)  (646)  (186)  (621)  (7) 
Proceeds from restricted cash (including long-term)  667   7,426   -   79  
Net cash provided by (used in) investing activities    539      7,938    (4,247)    (1,801) 
           
Cash flows from financing activities:         
Capital lease payments  -   (307)  -   (256) 
Issuance of shares in a rights offering  -   35,095   -   19,852  
Issuance of restricted stock units and exercise of stock options  493   346   227   10  
Short term bank credit, net  -   (7,000)  -   (4,250) 
Repayment of long-term loans  (4,383)  (4,277)  (142)  (138) 
Net cash provided by (used in) financing activities  (3,890)  23,857    85    15,218   
           
Effect of exchange rate changes on cash and cash equivalents    (40)    675      (169)    265   
           
Increase in cash and cash equivalents  38,698    32,325    13,755    17,600   
           
Cash and cash equivalents at the beginning of the period  40,133    18,435    65,076    33,160   
           
Cash and cash equivalents at the end of the period $ 78,831   $ 50,760   $ 78,831   $50,760   
           

  

Contact:
Gilat Satellite Networks
Doreet Oren
DoreetO@gilat.com

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

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