Gilat Reports Fourth Quarter and Full Year 2020 Results

Fourth Quarter GAAP Net Profit of $62.4 million and Adjusted EBITDA of $1.1 million
Net Profit includes termination fees, net of costs

Dov Baharav, Chairman of the Board, Announced His Plans to Step Down During 2021

PETAH TIKVA, Israel, Feb. 16, 2021 (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 fourth quarter and full year ended December 31, 2020.

Fourth Quarter Financial Highlights

  • Revenues of $42.6 million versus $78.3 million in Q4 2019 and improved from $37.3 million in the previous quarter;
  • GAAP operating income of $62.7 million versus $9.2 million in Q4 2019 and an operating loss of $10.9 million in Q3 2020; GAAP operating income includes income related to the settlement with Comtech, net of related expenses, of $64.8 million;
  • Non-GAAP operating loss of $1.6 million, compared with operating income of $9.9 million in Q4 2019, improved compared with an operating loss of $1.9 million in the previous quarter;
  • GAAP net income of $62.4 million, or income of $1.12 per diluted share, compared with net income of $24.0 million, or income of $0.43 per diluted share in Q4 2019 and net loss in the previous quarter of $11.6 million, or loss of $0.21 per share; GAAP net income includes $64.8 million income related to the settlement with Comtech, net of related expenses, while GAAP net income in Q4 2019 includes a $15.5 million tax benefit;
  • Non-GAAP net loss of $1.9 million, or loss of $0.03 per diluted share, compared with net income of $9.1 million, or income of $0.16 per diluted share in Q4 2019, and an improvement compared with a net loss of $2.6 million, or loss of $0.05 per share, as reported in the previous quarter;
  • Adjusted EBITDA of $1.1 million compared with adjusted EBITDA of $13.1 million in Q4 2019; and improved compared with adjusted EBITDA of $0.6 million in the previous quarter;
  • Received $70 million in merger cancellation fees from Comtech;
  • Cash dividend of $20 million paid to shareholders during the quarter; additional cash dividend of $35 million declared in the quarter and paid in January 2021;

Full year 2020 Financial Highlights

  • Revenue of $165.9 million, compared with $263.5 million in 2019;
  • GAAP operating income of $37.6 million compared to $25.6 million in 2019; GAAP operating income includes income of $53.6 million related to the settlement with Comtech, net of related expenses;
  • Non-GAAP operating loss of $13.7 million compared with non-GAAP operating income of $29.2 million in 2019;
  • GAAP net income of $34.9 million or $0.63 per diluted share compared with $36.5 million in 2019 or $0.65 per diluted share; GAAP net income includes income of $53.6 million related to the settlement with Comtech, net of related expenses, while GAAP net income in 2019 includes a $15.5 million tax benefit;
  • Non-GAAP net loss of $16.4 million or loss of $0.30 per diluted share compared to non-GAAP net income of $24.7 million or income of $0.44 per diluted share in 2019;
  • Adjusted EBITDA was $3.3 million loss compared with adjusted EBITDA of $40.2 million in 2019;

Management Commentary

Adi Sfadia, Gilat's CEO, commented: “During 2020, and specifically during the second half of the year, we made major technological achievements and closed some very significant deals, all of which position us very well for 2021 and onward. In particular, we saw wins in most of our growth areas, mainly Cellular Backhaul and NGSO.

"We won multiple managed service deals providing us with significant recurring revenue. In 5G backhaul - another growth engine for us, we are making solid headway and during the year, we successfully demonstrated the transport of 5G traffic with outstanding performance over Thaicom's GEO HTS satellite. We also solidified our position, as a front-runner in providing the ground-segment for NGSO constellations, with an award in the fourth quarter with a potential of over $50M in support of a LEO constellation.

“In addition, given that IFC is and will continue to play a major role in attracting air travelling customers, I am confident that as air travel resumes its recovery, we will see a significant rise in demand for our IFC products and solutions.”

Mr. Sfadia concluded, “I am very encouraged by our strong bookings in the second half of 2020 which have continued into 2021, as well as the enormous investments targeting our industry. Despite my belief that the pandemic may still effect our 2021 operation to some extent, I am confident that our 2021 operating results will be materially better than those of 2020.”

Dov Baharav stated: “Today I announced my plan to step down from my position as chairman of Gilat's Board of Directors during 2021 and retire, following a seven year tenure. I will retain my position until a new Chariman is appointed. I conclude my period with great pride and with a feeling of satisfaction. In the last seven years the company reached extraordinary technological and business achievements, and is extremely well positioned to take advantage of the robust opportunities we are currently seeing in the market." 

Key Recent Announcements

  • Gilat Shipped Initial Aero Modems Out of a Multi-Million-Dollar Potential in China
  • CORPAC Awards Gilat Multi-Million-Dollar Contract to Provide Mission Critical Telecom Systems for Peru's Airports
  • Gilat Awarded Contract with a Potential of Over $50 Million to Supply Wavestream’s Gateway Solid State Power Amplifiers for Low Earth Orbit Constellation
  • Gilat’s Proven ESA Technology Successfully Demonstrated over Inmarsat's Global Xpress
  • AXESS Awards Gilat Multi-Million Dollars to Expand Cellular Coverage for Two Key Mobile Operators in Mexico
  • Globe Awards Gilat Multi-Million US Dollar Managed Service Contract for Significant Expansion of Cellular Backhaul Project
  • Gilat Declares $35 Million Cash Dividend to Shareholders
  • Hispasat Awards Gilat a Multi-Million Dollar Order for Cellular Backhaul over Satellite to Extend Altan La Red Compartida Service to Rural Mexico
  • Gilat Equips Hundreds of Boats, Vessels and Cruise Ships with Satellite Communication
  • Gilat Receives Multi-Million-Dollar Order for a US Department of Defense Tactical Communications Program
  • United States Government Awards Gilat Additional Multi-Million-Dollar Contract for Military Communications Program

Conference Call Details

Gilat’s management will discuss its fourth quarter and full year 2020 results and business achievements and participate in a question and answer session:

Date:Tuesday, February 16, 2021
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/gilatq4-2020.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:February 16, 2021 at 12:00 PM EST / 19:00 IST
End:February 19, 2021 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, trade secrets and other litigation expenses, restructuring and reorganization costs, merger, acquisition and related litigation expense (income), net 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 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, 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)       
    Twelve months ended
 Three months ended
    December 31,
  December 31,
 
    2020   2019   2020   2019 
                  
   Unaudited Audited Unaudited
          
Revenues $165,885  $263,492  $42,627  $78,314 
Cost of revenues  124,670   167,615   29,329   51,246 
          
Gross profit  41,215   95,877   13,298   27,068 
          
Research and development expenses  27,689   32,208   7,474   8,120 
Less - grants  1,386   2,024   454   414 
Research and development expenses, net  26,303   30,184   7,020   7,706 
Selling and marketing expenses  16,871   21,488   4,534   5,156 
General and administrative expenses  14,063   18,515   3,794   4,849 
Merger, acquisition and related litigation expenses (income), net (53,633)  118   (64,782)  118 
          
Total operating expenses (income)  3,604   70,305   (49,434)  17,829 
          
Operating income   37,611   25,572   62,732   9,239 
          
Financial expenses, net  1,907   2,617   192   677 
          
Income before taxes on income  35,704   22,955   62,540   8,562 
          
Taxes on income (tax benefit)  793   (13,583)  98   (15,459)
          
Net income $ 34,911  $ 36,538  $ 62,442  $ 24,021 
          
Basic earnings per share $ 0.63  $ 0.66  $ 1.12  $ 0.43 
          
Diluted earnings per share $ 0.63  $ 0.65  $ 1.12  $ 0.43 
          
Weighted average number of shares used in        
 computing earnings per share        
 Basic  55,516,113   55,368,703   55,545,654   55,485,961 
 Diluted  55,583,474   56,030,976   55,815,099   56,034,744 
          


            
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
 December 31, 2020 December 31, 2019
 GAAP Adjustments  Non-GAAP GAAP Adjustments  Non-GAAP
            
            
 Unaudited Unaudited
            
            
Gross profit$13,298   42  $13,340  $27,068  70  $27,138 
Operating expenses (income) (49,434)  64,389   14,955   17,829  (550)  17,279 
Operating income (loss) 62,732   (64,347)  (1,615)  9,239  620   9,859 
Income (loss) before taxes on income 62,540   (64,347)  (1,807)  8,562  620   9,182 
Net income (loss) 62,442   (64,347)  (1,905)  24,021  (14,908)  9,113 
            
Basic earnings (loss) per share$ 1.12  $(1.15) $ (0.03) $ 0.43 $(0.27) $ 0.16 
Diluted earnings (loss) per share$ 1.12  $(1.15) $ (0.03) $ 0.43 $(0.27) $ 0.16 
            
            
Weighted average number of shares used in           
  computing earnings per share           
Basic 55,545,654     55,545,654   55,485,961    55,485,961 
Diluted 55,815,099     55,545,654   56,034,744    56,122,960 
            
            
            
 Three months ended Three months ended
 December 31, 2020 December 31, 2019
   Unaudited     Unaudited  
            
GAAP net income  $62,442      $24,021   
            
Gross profit           
Non-cash stock-based compensation expenses   39       58   
Amortization of intangible assets related to acquisition transactions   3       12   
    42       70   
Operating expenses (income)           
Non-cash stock-based compensation expenses   254       347   
Amortization of intangible assets related to acquisition transactions   54       49   
Trade secrets and other litigation expenses   85       36   
Merger, acquisition and related litigation expenses (income), net   (64,782)      118   
    (64,389)      550   
            
Tax benefit   -           (15,528)  
            
Non-GAAP net income (loss)  $(1,905)     $9,113   
            



             
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)
         
  Twelve months ended Twelve months ended 
  December 31, 2020 December 31, 2019 
  GAAP Adjustments  Non-GAAP GAAP Adjustments  Non-GAAP 
              
  Unaudited Audited Unaudited 
              
Gross profit$41,215   186  $41,401  $95,877   776  $96,653 
Operating expenses 3,604   51,502   55,106   70,305   (2,890)  67,415 
Operating income (loss) 37,611   (51,316)  (13,705)  25,572   3,666   29,238 
Income (loss) before taxes on income 35,704   (51,316)  (15,612)  22,955   3,666   26,621 
Net income (loss) 34,911   (51,316)  (16,405)  36,538   (11,862)  24,676 
              
Basic earnings (loss) per share$ 0.63  $(0.93) $ (0.30) $ 0.66  $(0.21) $ 0.45 
Diluted earnings (loss) per share$ 0.63  $(0.93) $ (0.30) $ 0.65  $(0.21) $ 0.44 
              
              
Weighted average number of shares used in            
computing earnings per share            
 Basic 55,516,113     55,516,113   55,368,703     55,368,703 
 Diluted 55,583,474     55,516,113   56,030,976     56,165,945 
              
              
              
  Twelve months ended Twelve months ended 
  December 31, 2020 December 31, 2019 
    Unaudited     Unaudited   
              
GAAP net income  $34,911      $36,538    
              
Gross profit            
Non-cash stock-based compensation expenses   166       257    
Amortization of intangible assets related to acquisition transactions   20       490    
Restructuring and re-organization costs   -           29    
     186       776    
Operating expenses (income)            
Non-cash stock-based compensation expenses   1,114       1,878    
Amortization of intangible assets related to acquisition transactions   204       203    
Trade secrets and other litigation expenses   96       136    
Merger, acquisition and related litigation expenses (income), net   (53,633)      118    
Restructuring and re-organization costs   717       555    
     (51,502)      2,890    
              
Tax benefit   -           (15,528)   
              
Non-GAAP net income (loss)  $(16,405)     $24,676    
              



GILAT SATELLITE NETWORKS LTD.        
SUPPLEMENTAL INFORMATION        
U.S. dollars in thousands        
          
          
ADJUSTED EBITDA:        
          
   Twelve months ended
  Three months ended
   December 31,
  December 31,
 
   2020   2019  2020   2019 
                
  Unaudited Unaudited 
          
GAAP operating income$37,611  $25,572 $62,732  $9,239 
Add (deduct):        
Non-cash stock-based compensation expenses  1,280   2,135  293   405 
Trade secrets and other litigation expenses 96   136  85   36 
Restructuring and re-organization costs 717   584  -       -     
Merger, acquisition and related litigation expenses (income), net (53,633)  118  (64,782)  118 
Depreciation and amortization (*) 10,653   11,676  2,729   3,263 
          
Adjusted EBITDA$ (3,276) $ 40,221 $ 1,057  $ 13,061 
          
(*) Including amortization of lease incentive        
          
SEGMENT REVENUE:        
          
   Twelve months ended   Three months ended
   December 31,   December 31,
   2020   2019  2020   2019 
                
  Unaudited Audited Unaudited 
          
Fixed Networks$92,671  $127,265 $25,085  $33,161 
Mobility Solutions 54,169   104,665  11,751   34,050 
Terrestrial Infrastructure Projects 19,045   31,562  5,791   11,103 
          
Total revenue$ 165,885  $ 263,492 $ 42,627  $ 78,314 
          



     
GILAT SATELLITE NETWORKS LTD.    
CONSOLIDATED BALANCE SHEETS    
U.S. dollars in thousands    
     
  December 31, December 31,
   2020   2019 
  Unaudited Audited
     
ASSETS    
     
CURRENT ASSETS:    
Cash and cash equivalents $88,754  $74,778 
Restricted cash  27,162   27,067 
Trade receivables, net  27,976   47,731 
Contract assets  41,573   23,698 
Inventories  31,304   27,203 
Other current assets  16,637   23,007 
     
Total current assets  233,406   223,484 
     
LONG-TERM ASSETS:    
Long-term restricted cash  42   124 
Severance pay funds  6,665   6,831 
Deferred taxes  19,295   18,455 
Operating lease right-of-use assets  4,879   5,211 
Other long term receivables  7,797   10,156 
     
Total long-term assets  38,678   40,777 
     
PROPERTY AND EQUIPMENT, NET  77,172   82,584 
     
INTANGIBLE ASSETS, NET  1,082   1,523 
     
GOODWILL  43,468   43,468 
     
TOTAL ASSETS $393,806  $391,836 
     
GILAT SATELLITE NETWORKS LTD.    
CONSOLIDATED BALANCE SHEETS (Cont.)    
U.S. dollars in thousands    
     
  December 31, December 31,
   2020   2019 
  Unaudited Audited
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
     
CURRENT LIABILITIES:    
Current maturities of long-term loans $4,000  $4,096 
Trade payables  20,487   20,725 
Accrued expenses  46,387   54,676 
Advances from customers and deferred revenues  26,244   27,220 
Operating lease liabilities  1,911   1,977 
Dividend payable  35,003   -     
Other current liabilities  13,322   12,261 
     
Total current liabilities  147,354   120,955 
     
LONG-TERM LIABILITIES:    
Long-term loans, net of current maturities  -       4,000 
Accrued severance pay  7,136   7,061 
Long-term advances from customers  1,890   2,866 
Operating lease liabilities  2,985   3,258 
Other long-term liabilities  631   108 
     
Total long-term liabilities  12,642   17,293 
     
SHAREHOLDERS' EQUITY:    
Share capital - ordinary shares of NIS 0.2 par value  2,647   2,643 
Additional paid-in capital  928,627   927,348 
Accumulated other comprehensive loss  (6,017)  (5,048)
Accumulated deficit  (691,447)  (671,355)
     
Total shareholders' equity  233,810   253,588 
     
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$393,806  $391,836 
     



GILAT SATELLITE NETWORKS LTD.        
CONSOLIDATED STATEMENTS OF CASH FLOWS        
U.S. dollars in thousands        
         
   Twelve months ended
  Three months ended
   December 31,
  December 31,
   2020   2019   2020   2019 
                 
  Unaudited Unaudited
Cash flows from operating activities:        
Net income  $34,911  $36,538  $62,442  $24,021 
Adjustments required to reconcile net income         
 to net cash provided by operating activities:        
Depreciation and amortization  10,291   10,978   2,534   2,730 
Capital loss from disposal of property and equipment  181   461   147   461 
Stock-based compensation of options  1,280   2,135   293   405 
Accrued severance pay, net  242   361   205   16 
Exchange rate differences on long-term loans  -       (12)  -       (12)
Deferred income taxes, net  (865)  (12,555)  (966)  (13,636)
Decrease (increase) in trade receivables, net  19,332   (1,323)  (1,520)  (1,464)
Decrease (increase) in contract assets  (17,875)  24,062   (3,471)  (1,346)
Decrease (increase) in other assets (including short-term, long-term        
   and deferred charges)  8,940   (817)  1,021   603 
Decrease (increase) in inventories  (5,050)  (8,076)  100   (391)
Decrease (increase) in trade payables  (157)  (3,884)  3,178   631 
Decrease in accrued expenses  (7,549)  (11,671)  (7,356)  (2,767)
Increase (decrease) in advance from customers  (1,898)  1,112   2,218   10,019 
Increase (decrease) in current and non current liabilities  1,377   (2,527)  1,596   765 
Net cash provided by operating activities  43,160   34,782   60,421   20,035 
         
Cash flows from investing activities:        
Purchase of property and equipment  (4,716)  (7,982)  (1,976)  (2,333)
Net cash used in investing activities  (4,716)  (7,982)  (1,976)  (2,333)
         
Cash flows from financing activities:        
Exercise of stock options  -       375   -       -     
Dividend payment  (19,999)  (24,864)  (19,999)  -     
Repayment of long-term loans  (4,096)  (4,447)  -       (94)
Net cash used in financing activities  (24,095)  (28,936)  (19,999)  (94)
         
Effect of exchange rate changes on cash, cash equivalents and restricted cash  (360)  (99)  270   136 
         
Increase (decrease) in cash, cash equivalents and restricted cash  13,989   (2,235)  38,716   17,744 
         
Cash, cash equivalents and restricted cash at the beginning of the period  101,969   104,204   77,242   84,225 
         
Cash, cash equivalents and restricted cash at the end of the period $ 115,958  $ 101,969  $ 115,958  $ 101,969 
         

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