Gilat Reports Third Quarter 2020 Results

PETAH TIKVA, Israel, Nov. 10, 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 third quarter ended September 30, 2020.

Third Quarter Key Financial Highlights

  • Revenues were $37.3 million; compared to $63.4 million in Q3 2019 and similar to that of the previous quarter.  
  • GAAP operating loss was $10.9 million compared to operating income of $7.0 million in Q3 2019 and an operating loss of $3.5 million in the previous quarter. The GAAP operating loss in the quarter includes $8.2 million in expenses related to the Comtech merger and litigation and their effects.
  • Non-GAAP operating loss in the quarter was $1.9 million compared with operating income of $7.5 million in Q3 2019 and compared to an operating loss of $2.6 million in the previous quarter.
  • GAAP net loss was $11.6 million, or loss of $0.21 per share, compared with net income of $6.3 million, or income of $0.11 per diluted share in Q3 2019; GAAP net loss in the previous quarter was $4.2 million, or loss of $0.08 per share.
  • Non-GAAP net loss was $2.6 million, or $0.05 per diluted share, compared with net income of $6.8 million, or $0.12 per diluted share, in Q3 2019, and compared with net loss of $3.3 million, or $0.06 per share, as reported in the prior quarter.
  • Adjusted EBITDA was $0.6 million compared with adjusted EBITDA of $10.1 million in Q3 2019, and adjusted EBITDA of $0.1 million in the previous quarter.
  • Gilat plans to distribute $55 million as a cash dividend, out of which $20 million was declared and will be paid on December 2nd, 2020 and an additional $35 million to be declared subject to court approval.
  • Income from the merger termination and litigation settlement paid by Comtech will be recorded in Q4 2020.

Adi Sfadia, Gilat's Interim CEO, commented, “Albeit our third quarter results were still negatively impacted by the ongoing pandemic’s effect and even more so by the litigation with Comtech, I am very optimistic as we continue to see a recovery in most of our areas of operations. During this quarter we made several significant achievements in our strategic growth engines of Cellular Backhaul, NGSO, and in our business in Peru which have resulted in significant increase in our backlog.

"Gilat continues to lead the market of Cellular Backhaul and we continue to reap the benefits of our cellular backhaul managed service strategy that allows us to enjoy larger contracts with recurring revenue. As an example, in North America we had two such major achievements this quarter. Gilat was awarded $20 Million for a three-year managed-service contract-renewal and expansion from a Tier-1 MNO in the United States and a three-year managed service contract by Southern Linc, for coverage to remote areas as well as emergency response.

"In NGSO and VHTS, we are progressing according to schedule with our partner SES to provide our next generation innovative baseband platform for O3B mPOWER. Throughout the last year, we have been working closely with SES with the joint goal of bringing to market unparalleled customer experience in all target verticals.

"Further, we just announced that SES and Gilat expanded the O3b mPower partnership with a multi-million-dollar follow-on order for high-speed modems. The modems will deliver multi Gbps throughput, targeting high-end services over the O3b mPOWER MEO constellation.

"Lastly, in Peru, we were awarded this quarter a large contract by IPT, a consortium consisting of Telefonica and Facebook among others."

Mr. Sfadia concluded:

"I am pleased with our business accomplishments and with the healthy pipeline of significant and large opportunities and believe that these accomplishments will enable us to demonstrate a sequentially improved fourth quarter, both in terms of revenues and profitability."

Key Recent Announcements

  • SES and Gilat Expand Partnership with Multi-Million-Dollar Follow-on Order for High-Speed Modems
  • Gilat Hires BG (Res.) Eyal Zelinger as Global Defense Vice President and General Manager
  • Gilat Plans to Distribute $55 Million in Dividends to Shareholders
  • Gilat Successfully Demonstrates Carrying 5G Traffic with Outstanding Performance over Thaicom's GEO HTS Satellite
  • US Department of Defense Awards Gilat Multi-Million-Dollar Orders for Military Communications Program
  • Gilat Awarded $20 Million Cellular Backhaul Managed Service Contract Renewal and Expansion from Tier-1 MNO in the United States
  • Gilat Satellite Networks Chosen by Southern Linc for 4G Cellular Backhaul Services
  • Comtech Telecommunications Corp. and Gilat Satellite Networks Ltd. Terminate Merger Agreement and Settle Litigation

Conference call details
Gilat’s management will discuss its third quarter 2020 results and business achievements and participate in a question and answer session:

Date:Tuesday, November 10, 2020
Start:09:30 AM EST / 16:30 IST
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: www.veidan-stream.com/gilatq3-2020.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:November 10, 2020 at 12:00 PM EST / 19:00 IST
End:November 13, 2020 at 12:00 PM EST / 19:00 IST
Dial-in: US: 1-888-326-9310
 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. 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 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

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 Gilats products, inability to timely develop and introduce new technologies, products and applications, rapid changes in the market for Gilats 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 Companys proprietary technology and risks associated with Gilats international operations and its location in Israel. For additional information regarding these and other risks and uncertainties associated with Gilats business, reference is made to Gilats 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, Director Corporate Communications
DoreetO@gilat.com

Ehud Helft
GK Investor & Public Relations
gilat@gkir.com
+1 646 688 3559

 
GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share and per share data)
 
   Nine months ended
 Three months ended
   September, 30
 September, 30
    2020   2019   2020   2019 
      
   Unaudited Unaudited
          
Revenues $123,258  $185,178  $37,270  $63,384 
Cost of revenues  95,341   116,369   27,827   40,130 
          
Gross profit  27,917    68,809    9,443    23,254  
          
Research and development expenses  20,215   24,088   6,442   7,596 
Less - grants  932   1,610   460   516 
Research and development expenses, net  19,283   22,478   5,982   7,080 
Selling and marketing expenses  12,337   16,332   3,687   5,044 
General and administrative expenses   10,269   13,666   2,478   4,139 
Merger, acquisition and related litigation  11,149    -    8,198    -  
          
Total operating expenses  53,038    52,476    20,345    16,263  
          
Operating income (loss)  (25,121)  16,333    (10,902)  6,991  
          
Financial expenses, net   (1,715)  (1,940)  (286)  (540)
          
Income (loss) before taxes on income  (26,836)  14,393    (11,188)  6,451  
          
Taxes on income   695   1,876   363   163 
          
Net income (loss) $(27,531) $12,517   $(11,551) $6,288  
          
Basic earnings (loss) per share $(0.50) $0.23   $(0.21) $0.11  
          
Diluted earnings (loss) per share $(0.50) $0.22   $(0.21) $0.11  
          
Weighted average number of shares used in         
 computing earnings (loss) per share        
 Basic  55,506,266    55,329,617    55,520,197    55,463,945  
 Diluted  55,506,266    56,029,698    55,520,197    56,059,239  
          

 

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 
  September 30, 2020 September 30, 2019
  GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP
     
  Unaudited Unaudited
             
Gross profit$9,443   28  $9,471  $23,254  68  $23,322
Operating expenses 20,345   (8,950)  11,395   16,263  (433)  15,830
Operating income (loss) (10,902)  8,978   (1,924)  6,991  501   7,492
Net income (loss) (11,551)  8,978   (2,573)   6,288   501   6,789
             
Earnings (loss) per share (basic and diluted)$(0.21) $0.16  $(0.05) $0.11  $0.01  $0.12
             
             
Weighted average number of shares used in           
computing earnings per share           
 Basic 55,520,197     55,520,197   55,463,945    55,463,945
 Diluted 55,520,197     55,520,197   56,059,239    56,179,331
             
             
(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, acquisition and relatedlitigation and restructuring and re-organization costs.
             
   Three months ended   Three months ended 
  September 30, 2020 September 30, 2019
    Unaudited     Unaudited  
             
GAAP net income (loss)  $(11,551)     $6,288   
             
Gross profit           
Non-cash stock-based compensation expenses  21       55   
Amortization of intangible assets related to acquisition transactions  7       13   
     28       68   
Operating expenses           
Non-cash stock-based compensation expenses  259       382   
Amortization of intangible assets related to acquisition transactions  49       51   
Merger, acquisition and related litigation   8,198       -   
Restructuring and re-organization costs   444       -   
     8,950       433   
             
Non-GAAP net income (loss)  $(2,573)     $6,789   
             

 

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)  
   
   Nine months ended   Nine months ended 
  September 30, 2020 September 30, 2019
  GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP
     
  Unaudited Unaudited
             
Gross profit$27,917   144  $28,061  $68,809  706  $69,515
Operating expenses 53,038   (12,887)  40,151   52,476  (2,339)  50,137
Operating income (loss) (25,121)  13,031   (12,090)  16,333  3,045   19,378
Net income (loss) (27,531)  13,031   (14,500)  12,517   3,045   15,562
             
Basic earnings (loss) per share$(0.50) $0.24  $(0.26) $0.23  $0.05  $0.28
Diluted earnings (loss) per share$(0.50) $0.24  $(0.26) $0.22  $0.06  $0.28
             
             
Weighted average number of shares used in          
computing earnings per share           
 Basic 55,506,266     55,506,266   55,329,617    55,329,617
 Diluted 55,506,266     55,506,266   56,029,698    56,180,242
             
             
(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, acquisition and related litigation, trade secrets and other litigation expenses and restructuring and re-organization costs.
             
   Nine months ended   Nine months ended 
  September 30, 2020 September 30, 2019
    Unaudited     Unaudited  
             
GAAP net income (loss)  $(27,531)     $12,517   
             
Gross profit           
Non-cash stock-based compensation expenses  127       198   
Amortization of intangible assets related to acquisition transactions 17       479   
Restructuring and re-organization costs   -       29   
     144       706   
Operating expenses           
Non-cash stock-based compensation expenses  860       1,532   
Amortization of intangible assets related to acquisition transactions 150       152   
Trade secrets and other litigation expenses   11       100   
Merger, acquisition and related litigation   11,149       -   
Restructuring and re-organization costs   717       555   
     12,887       2,339   
             
Non-GAAP net income (loss)  $(14,500)     $15,562   
             

 

GILAT SATELLITE NETWORKS LTD.
SUPPLEMENTAL INFORMATION
U.S. dollars in thousands
          
ADJUSTED EBITDA:         
          
   Nine months ended   Three months ended  
  September 30, 
 September 30, 
 
   2020   2019  2020   2019 
      
  Unaudited Unaudited 
          
GAAP operating income (loss) $(25,121) $16,333 $(10,902) $6,991 
Add:         
Non-cash stock-based compensation expenses 987   1,730  280   437 
Trade secrets and other litigation expenses 11   100  -   - 
Restructuring and re-organization costs 717   585  444   - 
Merger, acquisition and related litigation 11,149   -  8,198   - 
Depreciation and amortization (*)  7,924   8,413  2,542   2,627 
          
Adjusted EBITDA $(4,333) $27,161  $562   $10,055  
          
(*) Including amortization of lease incentive        
          
SEGMENT REVENUE:         
          
   Nine months ended   Three months ended  
  September 30,
 September 30, 
 
   2020   2019  2020   2019 
      
  Unaudited Unaudited 
          
Fixed Networks $67,587  $94,104 $22,797  $27,268 
Mobility Solutions  42,417   70,615  9,210   27,116 
Terrestrial Infrastructure Projects  13,254   20,459  5,263   9,000 
          
Total revenue $123,258   $185,178  $37,270   $63,384  
          

 

     
GILAT SATELLITE NETWORKS LTD.    
CONSOLIDATED BALANCE SHEETS    
U.S. dollars in thousands    
     
  September 30, December 31,
   2020   2019 
  Unaudited Audited
     
ASSETS    
     
CURRENT ASSETS:    
Cash and cash equivalents $51,574  $74,778 
Restricted cash  25,628   27,067 
Trade receivables, net  26,199   47,731 
Contract assets  38,102   23,698 
Inventories  31,816   27,203 
Other current assets  16,558   23,007 
     
   Total current assets  189,877   223,484 
     
LONG-TERM ASSETS:    
Long-term restricted cash  40   124 
Severance pay funds  6,227   6,831 
Deferred taxes  18,329   18,455 
Operating lease right-of-use assets  5,665   5,211 
Other long term receivables  7,796   10,156 
     
Total long-term assets  38,057   40,777 
     
PROPERTY AND EQUIPMENT, NET  77,618   82,584 
     
INTANGIBLE ASSETS, NET  1,192   1,523 
     
GOODWILL  43,468   43,468 
     
TOTAL ASSETS $350,212  $391,836 
     
GILAT SATELLITE NETWORKS LTD.    
CONSOLIDATED BALANCE SHEETS (Cont.)    
U.S. dollars in thousands    
     
  September 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  17,302   20,725 
Accrued expenses  54,075   54,676 
Advances from customers and deferred revenues  25,908   27,220 
Operating lease liabilities  1,940   1,977 
Other current liabilities  10,406   12,261 
     
   Total current liabilities  113,631   120,955 
     
LONG-TERM LIABILITIES:    
Long-term loans, net of current maturities  -   4,000 
Accrued severance pay  6,493   7,061 
Long-term advances from customers  -   2,866 
Operating lease liabilities  3,754   3,258 
Other long-term liabilities  1,069   108 
     
   Total long-term liabilities  11,316   17,293 
     
SHAREHOLDERS' EQUITY:    
Share capital - ordinary shares of NIS 0.2 par value  2,644   2,643 
Additional paid-in capital  928,337   927,348 
Accumulated other comprehensive loss  (6,830)  (5,048)
Accumulated deficit  (698,886)  (671,355)
     
Total shareholders' equity  225,265   253,588 
     
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $350,212  $391,836 
         

 

GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
          
   Nine months ended
 Three months ended
   September 30,
 September 30,
    2020   2019   2020   2019 
      
   Unaudited Unaudited
Cash flows from operating activities:        
Net income (loss) $(27,531) $12,517  $(11,551) $6,288 
Adjustments required to reconcile net income         
 to net cash provided by operating activities:        
Depreciation and amortization  7,757   8,247   2,486   2,565 
Capital loss from disposal of property and equipment  34   -   11   - 
Stock-based compensation of options  987   1,730   280   437 
Accrued severance pay, net  37   345   11   (37)
Deferred income taxes, net  101   1,081   (39)  (304)
Decrease (increase) in trade receivables, net  20,852   141   2,488   (2,365)
Decrease (increase) in contract assets  (14,404)  25,408   (6,042)  25,640 
Decrease (increase) in other assets (including short-term, long-term        
and deferred charges)  7,919   (1,419)  1,209   (1,390)
Decrease (increase) in inventories  (5,150)  (7,685)  548   (1,548)
Decrease in trade payables  (3,335)  (4,515)  (2,825)  (8,448)
Increase (decrease) in accrued expenses  (193)  (8,904)  5,616   (1,828)
Increase (decrease) in advance from customers  (4,116)  (9,540)  1,609   (1,135)
Decrease in current and non current liabilities  (219)  (2,659)  (904)  (708)
Net cash provided by (used in) operating activities  (17,261)  14,747    (7,103)  17,167  
          
Cash flows from investing activities:        
Purchase of property and equipment  (2,740)  (5,649)  (861)  (2,062)
Net cash used in investing activities        (2,740)       (5,649)        (861)       (2,062)
          
Cash flows from financing activities:        
Exercise of stock options  -   375   -   - 
Dividend payment  -   (24,864)  -   - 
Repayment of long-term loans  (4,096)  (4,353)  -   (122)
Net cash used in financing activities      (4,096)   (28,842)   -        (122)
          
Effect of exchange rate changes on cash, cash equivalents and restricted cash       (630)  (235)  (91)          (256)
          
Increase (decrease) in cash, cash equivalents and restricted cash   (24,727)    (19,979)      (8,055)   14,727  
          
Cash, cash equivalents and restricted cash at the beginning of the period  101,969    104,204    85,297      69,498  
          
Cash, cash equivalents and restricted cash at the end of the period $77,242   $        84,225   $   77,242   $84,225  
          

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