Categories: Wire Stories

Gilat Reports First Quarter 2023 Results

Demonstrates Strong Revenue Growth of 15% Year-over-Year and Increased Profitability with GAAP Operating Income of $7 Million and Adjusted EBITDA of $8.4 Million
Company Raises its GAAP Operating Income and Adjusted EBITDA Guidance for 2023

PETAH TIKVA, Israel, May 09, 2023 (GLOBE NEWSWIRE) — Gilat Satellite Networks Ltd. (NASDAQ: GILT, TASE: GILT), a worldwide leader in satellite networking technology, solutions and services, reported today its results for the first quarter, ended March 31, 2023.

First Quarter 2023 Financial Highlights

  • Revenue of $59.0 million, up 15% compared with $51.4 million in Q1 2022;
  • GAAP operating income of $7.0 million, compared with GAAP operating loss of $1.0 million in Q1 2022;
  • Non-GAAP operating income of $5.3 million, compared with a non-GAAP operating loss of $0.3 million in Q1 2022;
  • GAAP net income of $5.6 million, or $0.10 earnings per diluted share, compared with GAAP net loss of $2.5 million, or loss of $0.04 per share, in Q1 2022;
  • Non-GAAP net income of $3.8 million, or $0.07 earnings per diluted share, compared with non-GAAP net loss of $1.8 million, or loss of $0.03 per share, in Q1 2022;
  • Adjusted EBITDA of $8.4 million compared with $2.5 million in Q1 2022;

Forward-Looking Expectations

The Company today raised its GAAP operating income guidance to between $16 to $20 million, representing year-over-year growth of 81% at the mid-point and its adjusted EBITDA guidance to between $31 to $35 million, representing year-over-year growth of 31% at the mid-point. The company reiterated its 2023 revenue guidance.

Adi Sfadia, Gilat’s CEO, commented:

“The first quarter of 2023 was a very strong opening for the year and is another quarter in which we showed strong year-over-year growth in revenues and profitability. Our growth was broad, across multiple business areas, demonstrating the increased interest in satellite communications and in Gilat’s leading position in the industry. Adding to that is the significant improvement in our profitability metrics, with gross margins reaching a multi-year high of 42% and Adjusted EBITDA of 14% of revenues or $8.4 million, more than tripled that of the same quarter last year.”

“I am pleased we continued to make great inroads with our strategy to be the partner of choice for satellite operators with multimillion-dollar orders during the first quarter.

In addition, on the defense front, we made significant progress in executing on our growth strategy. We signed a definitive agreement to acquire DataPath Inc. a US Defense integrator, to boost our defense offering with a focus on the US Department of Defense.”

Mr. Sfadia concluded, “I believe that Gilat today is in the best position it has been in a long time – revenue is growing strongly, with bookings, backlog, and the pipeline all at a very healthy level. This, coupled with our strong performance in Q1, has led us to increase our profitability guidance for 2023.”

Key Recent Announcements

  • Financial Institution in Latin America Deploying Millions of Dollars of Gilat Technology for Satellite Connectivity
  • Gilat Receives Multimillion-Dollar Order for Expansion of Advanced Disaster Response Network in Asia
  • Intelsat Strengthens Strategic Partnership and Expands Service Capabilities with Significant Multimillion-Dollar Orders for Gilat’s Multi-service Platforms and Terminals
  • SES Certifies Gilat’s SkyEdge IV Platform for O3b mPOWER, O3b and SES-17
  • ST Engineering iDirect and Gilat Satellite Networks Successfully Showcase Proof of Concept Utilizing DIFI Standard at Satellite 2023
  • Gilat Signs Definitive Agreement to Acquire DataPath, Market Leader in Trusted Communications for US DoD, Military & Gov’t Sectors
  • Gilat Announces Launch of Endurance, a New Line of “Always-On” SSPA Products
  • Hispasat and Gilat Expand Strategic Partnership with the Selection of Gilat’s SkyEdge IV Platform for Amazonas Nexus
  • Gilat Announces Availability of SkyEdge IV Taurus-M, New Satellite Modem for Military and Government Markets
  • Gilat Enables TIM Brasil to Be First Network Operator with Coverage to 100% of Brazilian Cities

Conference Call Details
Gilat’s management will discuss its first quarter 2023 results and business achievements and participate in a question-and-answer session:

Date: Tuesday, May 9, 2023
Start: 09:30 AM EDT / 16:30 IDT
Dial-in: US: 1-888-407-2553
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/gilatq1-2023

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 gross profit, operating expenses, operating income, income before taxes on income, net 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 with a more complete understanding of the Company’s underlying operational results, trends, and performance. Non-GAAP financial measures mainly exclude, if and when applicable, the effect of stock-based compensation, amortization of purchased intangibles, amortization of intangible assets related to acquisition transactions, lease incentive amortization, impairment of held for sale asset, income tax effect on adjustments, one-time changes of deferred tax assets, and other operating income, net.

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 net income (loss) and adjusted EBITDA is presented in the attached summary financial statements.

Non-GAAP presentations of gross profit, operating expenses, operating income, income before taxes on income, net 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 over 35 years of experience, we create and deliver deep technology solutions for satellite, ground and new space connectivity and provide comprehensive end-to-end solutions and services, powered by our innovative technology. We believe in the right of all people to be connected and are united in our resolution to provide communication solutions to all reaches of the world.

Delivering high value solutions, our portfolio is comprised of a cloud-based platform and high performance satellite terminals designed to work in harmony with satellite constellations, including Very High Throughput Satellites (VHTS) and Software-Defined Satellites (SDS) in multiple orbits; high performance Satellite On-the-Move (SOTM) antennas; and highly efficient, high-power Solid State Power 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, mobility, cellular backhaul, military, government, and enterprise, 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

Gilat Satellite Networks
Mayrav Sher, Head of Finance and Investor Relations
MayravS@gilat.com

EK Global IR
Ehud Helft, Managing Partner
ehud@ekgir.com

GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
U.S. dollars in thousands (except share and per share data)
        Three months ended
        March 31,
        2023   2022
        Unaudited
             
Revenues     $ 58,962     $ 51,409  
Cost of revenues       34,277       35,021  
             
Gross profit       24,685       16,388  
             
Research and development expenses, net     9,619       7,668  
Selling and marketing expenses     6,009       5,350  
General and administrative expenses     4,431       4,184  
Impairment of held for sale asset           210  
Other operating income, net       (2,387 )      
             
Total operating expenses       17,672       17,412  
             
Operating income (loss)       7,013       (1,024 )
             
Financial expenses, net       149       1,195  
             
Income (loss) before taxes on income     6,864       (2,219 )
             
Taxes on income       1,284       315  
             
Net income (loss)     $ 5,580     $ (2,534 )
             
Earnings (losses) per share (basic and diluted)   $ 0.10     $ (0.04 )
             
Weighted average number of shares used in        
  computing earnings (losses) per share        
  Basic       56,613,485       56,551,070  
  Diluted       56,623,432       56,551,070  
             
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  
      March 31, 2023   March 31, 2022  
      GAAP   Adjustments (*)   Non-GAAP   GAAP   Adjustments (*)   Non-GAAP  
      Unaudited   Unaudited  
                             
Gross profit   $ 24,685     75     $ 24,760   $ 16,388       75     $ 16,463    
Operating expenses     17,672     1,809       19,481     17,412       (683 )     16,729    
Operating income (loss)     7,013     (1,734 )     5,279     (1,024 )     758       (266 )  
Income (loss) before taxes on income     6,864     (1,734 )     5,130     (2,219 )     758       (1,461 )  
Net income (loss)   $ 5,580     (1,734 )   $ 3,846   $ (2,534 )     758     $ (1,776 )  
                             
Earnings (losses) per share (basic and diluted) $ 0.10   $ (0.03 )   $ 0.07   $ (0.04 )   $ 0.01     $ (0.03 )  
                             
                             
Weighted average number of shares used in computing earnings (losses) per share                         
  Basic     56,613,485         56,613,485     56,551,070           56,551,070    
  Diluted     56,623,432         56,623,432     56,551,070           56,551,070    
                             
  (*) Adjustments reflect the effect of non-cash stock-based compensation as per ASC 718, amortization of intangible assets related to acquisition transactions, impairment of held for sale asset and other operating income, net   
                     
                             
      Three months ended   Three months ended  
      March 31, 2023   March 31, 2022  
          Unaudited           Unaudited      
                             
GAAP net income (loss)       $ 5,580             $ (2,534 )      
                             
Gross profit                          
Non-cash stock-based compensation expenses       75               70        
Amortization of intangible assets related to acquisition transactions                   5        
            75               75        
Operating expenses                          
Non-cash stock-based compensation expenses       527               422        
Amortization of intangible assets related to acquisition transactions     51               51        
Impairment of held for sale asset                       210        
Other operating income, net         (2,387 )                    
            (1,809 )             683        
                             
Non-GAAP net income (loss)       $ 3,846             $ (1,776 )      
                             
GILAT SATELLITE NETWORKS LTD.  
SUPPLEMENTAL INFORMATION  
U.S. dollars in thousands  
           
ADJUSTED EBITDA:          
    Three months ended
 
    March 31,  
    2023   2022  
    Unaudited  
           
GAAP net income (loss)   $ 5,580     $ (2,534 )  
Adjustments:          
Financial expenses, net     149       1,195    
Taxes on income     1,284       315    
Non-cash stock-based compensation expenses     602       492    
Impairment of held for sale asset           210    
Other operating income, net     (2,387 )        
Depreciation and amortization (*)     3,163       2,851    
           
Adjusted EBITDA   $ 8,391     $ 2,529    
           
(*) Including amortization of lease incentive          
           
SEGMENT REVENUES:          
    Three months ended  
    March 31,  
    2023   2022  
    Unaudited  
           
Satellite Networks   $ 33,546     $ 24,770    
Integrated Solutions     12,919       13,706    
Network Infrastructure and Services     12,497       12,933    
           
Total revenues   $ 58,962     $ 51,409    
           
  GILAT SATELLITE NETWORKS LTD.        
  CONSOLIDATED BALANCE SHEETS        
  U.S. dollars in thousands        
      March 31,   December 31,
      2023   2022
      Unaudited   Audited
           
  ASSETS        
           
  CURRENT ASSETS:        
  Cash and cash equivalents   $ 89,119     $ 86,591  
  Restricted cash     608       541  
  Trade receivables, net     44,440       50,644  
  Contract assets     20,546       24,971  
  Inventories     40,019       33,024  
  Other current assets     22,136       19,283  
           
     Total current assets     216,868       215,054  
           
  LONG-TERM ASSETS:        
  Restricted cash     12       13  
  Long-term contract assets     10,452       11,149  
  Severance pay funds     5,836       5,947  
  Deferred taxes     17,139       18,265  
  Operating lease right-of-use assets     3,623       3,891  
  Other long-term assets     11,607       10,737  
           
  Total long-term assets     48,669       50,002  
           
  PROPERTY AND EQUIPMENT, NET     75,256       76,578  
           
  INTANGIBLE ASSETS, NET     254       309  
           
  GOODWILL     43,468       43,468  
           
  TOTAL ASSETS   $ 384,515     $ 385,411  
           
  GILAT SATELLITE NETWORKS LTD.        
  CONSOLIDATED BALANCE SHEETS (Cont.)        
  U.S. dollars in thousands        
      March 31,   December 31,
      2023   2022
      Unaudited   Audited
           
  LIABILITIES AND SHAREHOLDERS’ EQUITY        
           
  CURRENT LIABILITIES:        
  Trade payables   $ 22,726     $ 20,668  
  Accrued expenses     46,171       50,356  
  Advances from customers and deferred revenues     26,774       30,531  
  Operating lease liabilities     1,954       1,941  
  Other current liabilities     28,028       22,291  
           
     Total current liabilities     125,653       125,787  
           
  LONG-TERM LIABILITIES:        
  Accrued severance pay     6,765       6,580  
  Long-term advances from customers and deferred revenues     337       1,041  
  Operating lease liabilities     1,620       1,890  
  Other long-term liabilities     179       5,988  
           
     Total long-term liabilities     8,901       15,499  
           
  SHAREHOLDERS’ EQUITY:        
  Share capital – ordinary shares of NIS 0.2 par value     2,711       2,711  
  Additional paid-in capital     932,688       932,086  
  Accumulated other comprehensive loss     (7,193 )     (6,847 )
  Accumulated deficit     (678,245 )     (683,825 )
           
  Total shareholders’ equity     249,961       244,125  
           
  TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 384,515     $ 385,411  
           
GILAT SATELLITE NETWORKS LTD.        
CONSOLIDATED STATEMENTS OF CASH FLOWS        
U.S. dollars in thousands        
         
    Three months ended
    March 31,
    2023   2022
    Unaudited
Cash flows from operating activities:        
Net income (loss)   $ 5,580     $ (2,534 )
         
Adjustments required to reconcile net income (loss) to net cash provided by (used in) operating activities:        
Depreciation and amortization     3,107       2,796  
Stock-based compensation of options     602       492  
Accrued severance pay, net     297       (63 )
Deferred taxes, net     1,126       306  
Decrease (increase) in trade receivables, net     6,491       (6,412 )
Decrease (increase) in contract assets     4,917       (2,009 )
Increase in other assets and other adjustments (including short-term, long-term and effect of exchange rate changes on cash and cash equivalents)     (2,767 )     (3,716 )
Increase in inventories     (7,623 )     (2,344 )
Increase in trade payables     1,989       1,672  
Increase (decrease) in accrued expenses     (2,199 )     752  
Increase (decrease) in advance from customers and deferred revenue     (4,469 )     2,310  
Increase (decrease) in other liabilities     (848 )     1,375  
Net cash provided by (used in) operating activities     6,203       (7,375 )
         
Cash flows from investing activities:        
Purchase of property and equipment     (3,032 )     (2,201 )
Net cash used in investing activities     (3,032 )     (2,201 )
         
Effect of exchange rate changes on cash, cash equivalents and restricted cash     (577 )     253  
         
Increase (decrease) in cash, cash equivalents and restricted cash     2,594       (9,323 )
         
Cash, cash equivalents and restricted cash at the beginning of the period     87,145       84,463  
         
Cash, cash equivalents and restricted cash at the end of the period   $ 89,739     $ 75,140  
         

Alex

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