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Gilat Reports Strong Year-over-Year Profitability Improvement in Q1 2017

PETAH TIKVA, Israel, May 16, 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 first quarter ended March 31, 2017.

/EIN News/ -- Key Financial Highlights:

  • Revenues for Q1 2017 increased 21% to $63.9 million from $52.7 million in Q1 2016.
  • Profitability continued to improve year-over-year:
    - GAAP operating profitability improved to $18 thousand in Q1 2017, compared with an operating loss of $3.0 million in Q1 2016.
    - Non-GAAP operating income improved to $2.5 million, compared with a non-GAAP operating loss of $1.2 million in Q1 2016.
    - GAAP loss was $0.8 million, or $0.01 per diluted share, compared with a GAAP loss of $4.0 million, or $0.09 per diluted share, in Q1 2016.
    - Non-GAAP net income was $1.7 million, or $0.03 per diluted share, compared with a non-GAAP loss of $2.2 million, or $0.05 per diluted share, in Q1 2016.
    - Adjusted EBITDA increased to $4.2 million, or 6.6% of revenues, compared with Adjusted EBITDA of $0.8 million, or 1.4% of revenues, in Q1 2016.
  • Reiterated management objectives for 2017: revenues between $280 to $300 million, GAAP operating income between $4 and $8 million, and Adjusted EBITDA of between $20 and $24 million.

Yona Ovadia, CEO of Gilat, commented: “I am pleased to report that Gilat achieved further positive results in the first quarter of 2017 as evidenced by continued year-over-year improvement in profitability, both on a GAAP and non-GAAP basis. It shows the fruit of focusing on our growth engines and on more profitable revenues, along with our continued drive to reduce costs.

"Our management objectives for 2017 indicate that profitability remains our priority, while we continue to develop our broadband and mobility growth engines based on product innovation and technology leadership.

“In the first quarter, we saw important substantiation of our strategic direction. I am pleased to report that in a high-profile live airborne event held last week by Gogo, the leading IFC player, our IFC modem demonstrated unprecedented performance and received high marks from the analyst and media community.

"In addition, we are seeing industry acknowledgement of cellular backhaul over satellite, now moving into the mainstream and competing with terrestrial solutions. A number of Tier 1 customers are already implementing their LTE networks with our de-facto leading cellular backhaul solution, and we see additional opportunity ahead.

Mr. Ovadia concluded: “We are pleased with the first quarter results that are due to focusing on our strategy. We will continue to execute upon this strategy, and are optimistic regarding the rest of the year.”

Key Recent Announcements:

  • Gilat's In-Flight Modem Exhibits Unprecedented Performance in Gogo's Live Airborne Media and Investor Event
  • Gilat Announces Availability of Mobility-Ready Solution for On-the-Move Applications on Land, Sea and Air
  • Gilat and Hughes to Unveil High Performance Dual-Band Aero Antenna for In-Flight Connectivity (IFC) at Satellite 2017
  • Gilat Announces Availability of Ultra-Compact, High Throughput SATCOM Terminal for Unmanned Aircraft Systems (UAS)
  • SES and Gilat Join Forces to Make Connectivity at Sea More Accessible

Conference Call and Webcast Details:

Gilat management will host a conference call today, Tuesday, May 16, to discuss the first quarter results.  The details are as follows:

Conference Call and Webcast

Date:  Tuesday, May 16, 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://www.veidan-stream.com/?con=Gilat_Satellite_Networks_Q1_2017_Results

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: May 16, 2017 at 12:00 PM EDT / 19:00 IDT
End:  May 19, 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. Gilat is presenting Adjusted EBITDA (operating income before depreciation, amortization, non-cash stock option expenses and other costs related to acquisition transactions, restructuring cost, goodwill impairment, impairment of long lived assets and trade secrets litigation expenses) due to significant litigation expenses relating to a trade secrets litigation that was recently resolved.

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 generally accepted accounting principles 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, 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)  
           
        Three months ended
 
        March 31, 
 
          2017       2016    
        Unaudited  
               
Revenues     $ 63,931     $ 52,665    
Cost of revenues       46,590       40,267    
               
Gross profit         17,341         12,398    
               
Research and development expenses     6,755       5,888    
Less - grants       47       86    
Research and development, net       6,708       5,802    
Selling and marketing expenses       5,795       5,123    
General and administrative expenses     4,820       4,438    
               
Total operating expenses         17,323         15,363    
               
Operating income (loss)         18         (2,965 )  
               
Financial expenses, net       (804 )     (743 )  
               
Loss before taxes on income         (786 )       (3,708 )  
               
Taxes on income (tax benefit)       (2 )     318    
               
Loss     $    (784 )   $    (4,026 )  
               
Loss per share (basic and diluted)   $    (0.01 )   $    (0.09 )  
               
Weighted average number of shares used in computing loss per share (basic and diluted)
    54,623,685       44,382,379    

 

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   
              March 31, 2017   March 31, 2016  
              GAAP   Adjustments (1)   Non-GAAP   GAAP   Adjustments (1)   Non-GAAP  
              Unaudited   Unaudited  
                                     
Gross profit           $ 17,341       1,205     $ 18,546   $ 12,398       1,184     $ 13,582    
Operating expenses           17,323       (1,236 )     16,087     15,363       (631 )     14,732    
Operating income (loss)           18       2,441       2,459     (2,965 )     1,815       (1,150 )  
Income (loss) before taxes on income         (786 )     2,441       1,655     (3,708 )     1,815       (1,893 )  
Income (loss)           $    (784 )       2,441     $    1,657   $    (4,026 )       1,815     $    (2,211 )  
                                     
Income (loss) per share (basic and diluted)       $    (0.01 )     0.04     $    0.03   $    (0.09 )     0.04     $    (0.05 )  
                                     
Weighted average number of shares used in computing income (loss) per share                              
  Basic             54,623,685           54,623,685     44,382,379           44,382,379    
  Diluted             54,623,685           54,836,436     44,382,379           44,382,379    
                                     
                                     
  (1) Adjustments reflect the effect of non-cash stock-based compensation as per ASC 718, amortization of intangible assets related to shares acquisition transactions and trade secrets litigation expenses.  
                         
                                     
                  Three months ended            Three months ended      
                  March 31, 2017           March 31, 2016      
                  Unaudited           Unaudited      
                                     
GAAP loss                   $ (784 )             $ (4,026 )      
Gross profit                                  
Non-cash stock-based compensation expenses (income)           10               (11 )      
Amortization of intangible assets related to acquisition transactions         1,195               1,195        
                    1,205               1,184        
Operating expenses                                
Non-cash stock-based compensation expenses             194               212        
Amortization of intangible assets related to acquisition transactions         194               193        
Trade secrets litigation expenses               848               226        
                    1,236               631        
                                     
Non GAAP income (loss)             $ 1,657             $ (2,211 )      

 

GILAT SATELLITE NETWORKS LTD.  
CONDENSED ADJUSTED EBITDA  
U.S. dollars in thousands  
               
        Three months ended  
         March 31, 
 
          2017     2016    
        Unaudited  
               
GAAP operating income (loss)   $ 18   $ (2,965 )  
Add:            
Non-cash stock-based compensation expenses   204     201    
Trade secrets litigation expenses   848     226    
Depreciation and amortization     3,165     3,301    
               
Adjusted EBITDA     $    4,235   $    763    

 

  GILAT SATELLITE NETWORKS LTD.  
  CONDENSED CONSOLIDATED BALANCE SHEET  
  U.S. dollars in thousands  
             
      March 31,   December 31,  
        2017       2016    
      Unaudited   Audited  
             
  ASSETS          
             
  CURRENT ASSETS:          
  Cash and cash equivalents   $ 65,076     $ 40,133    
  Restricted cash     23,817       62,229    
  Restricted cash held by trustees     4,081       9,058    
  Trade receivables, net     96,360       89,377    
  Inventories     24,634       21,469    
  Other current assets     20,996       17,017    
             
    Total current assets     234,964       239,283    
             
  LONG-TERM INVESTMENTS AND RECEIVABLES:          
  Severance pay funds     8,228       7,791    
  Other long term receivables     402       436    
             
  Total long-term investments and receivables     8,630       8,227    
             
  PROPERTY AND EQUIPMENT, NET     80,408       80,837    
             
  INTANGIBLE ASSETS, NET     9,940       11,383    
             
  GOODWILL     43,468       43,468    
             
  TOTAL ASSETS   $ 377,410     $ 383,198    
             
             
  GILAT SATELLITE NETWORKS LTD.
  CONDENSED CONSOLIDATED BALANCE SHEET
 
  U.S. dollars in thousands
 
      March 31,   December 31,  
        2017       2016    
      Unaudited   Audited  
             
  LIABILITIES AND EQUITY          
             
  CURRENT LIABILITIES:          
  Current maturities of long-term loans     4,493       4,617    
  Trade payables     29,317       29,625    
  Accrued expenses     61,025       53,429    
  Advances from customers and deferred revenues     32,147       37,659    
  Advances from customers, held by trustees     3,334       7,498    
  Other current liabilities     14,368       13,846    
             
    Total current liabilities     144,684       146,674    
             
  LONG-TERM LIABILITIES:          
  Accrued severance pay     7,860       7,485    
  Long-term loans, net of current maturities     12,840       16,932    
  Other long-term liabilities     1,768       2,281    
             
    Total long-term liabilities     22,468       26,698    
             
  EQUITY:          
  Share capital - ordinary shares of NIS 0.2 par value     2,596       2,593    
  Additional paid-in capital     920,687       920,162    
  Accumulated other comprehensive loss     (2,481 )     (3,224 )  
  Accumulated deficit     (710,544 )     (709,705 )  
             
  Total equity     210,258       209,826    
             
  TOTAL LIABILITIES AND EQUITY   $ 377,410     $ 383,198    

 

GILAT SATELLITE NETWORKS LTD.  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
U.S. dollars in thousands  
               
        Three months ended  
         March 31, 
 
          2017       2016    
        Unaudited  
Cash flows from operating activities:            
Loss     $ (784 )   $ (4,026 )  
Adjustments required to reconcile loss            
to net cash provided by (used in) operating activities:            
Depreciation and amortization       3,165       3,301    
Stock-based compensation of options and RSU's       204       201    
Accrued severance pay, net       (61 )     (123 )  
Accrued interest and exchange rate differences on            
short and long-term restricted cash, net       (141 )     (409 )  
Exchange rate differences on long-term loans       25       90    
Deferred income taxes, net       (16 )     -    
Increase in trade receivables, net       (6,955 )     (1,394 )  
Increase in other assets (including short-term, long-term            
and deferred charges)       (3,254 )     (2,154 )  
Increase in inventories       (3,312 )     (2,685 )  
Decrease in restricted cash directly related to operating activities, net   37,879       6,304    
Increase (decrease) in trade payables       (392 )     4,089    
Increase in accrued expenses       7,493       7,408    
Decrease in advances from customers       (3,098 )     (11,823 )  
Decrease in advances from customers, held            
by trustees       (4,412 )     (4,063 )  
Increase (decrease) in other current liabilities and other long term liabilities   (2,338 )     1,221    
Net cash provided by (used in) operating activities     $    24,003     $    (4,063 )  
   
 
GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
  Three months ended  
   March 31, 
 
    2017       2016    
  Unaudited  
Cash flows from investing activities:            
Purchase of property and equipment     $ (1,212 )   $ (1,104 )  
Proceeds from restricted cash held by trustees       5,356       3,675    
Investment in restricted cash (including long-term)       (28 )     (179 )  
Proceeds from restricted cash (including long-term)       670       7,347    
Net cash provided by investing activities         4,786         9,739    
               
Cash flows from financing activities:            
Capital lease payments       -       (51 )  
Issuance of shares in a rights offering       -       15,243    
Issuance of restricted stock units and exercise of stock options       266       336    
Short term bank credit, net       -       (2,750 )  
Repayment of long-term loans       (4,241 )     (4,139 )  
Net cash provided by (used in) financing activities         (3,975 )       8,639    
               
Effect of exchange rate changes on cash and cash equivalents       129         410    
               
Increase in cash and cash equivalents         24,943         14,725    
               
Cash and cash equivalents at the beginning of the period         40,133         18,435    
               
Cash and cash equivalents at the end of the period     $    65,076     $    33,160    
               

 

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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