Gilat Reports Strong Fourth Quarter and Full Year 2021 Results; Resumes Yearly Guidance with Continued Strong Growth in 2022

Fourth quarter revenue of $67.3 million, up 58% YoY; GAAP operating income of $5.6 million; Adjusted EBITDA of $10.6 million;

PETAH TIKVA, Israel, Feb. 15, 2022 (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, 2021.

Fourth Quarter Financial Highlights

• Revenues of $67.3 million, up 58% compared with $42.6 million in Q4 2020 and up 35% compared with $49.9 million in the previous quarter;
• GAAP operating income of $5.6 million compared with $62.7 million in Q4 2020 which included a one-time net income of $64.8 million related to the settlement with Comtech. Excluding this item, Q4 2020 operating loss would have been $2.1 million. GAAP operating income in the previous quarter was $0.9 million;
• Non-GAAP operating income of $6.8 million, compared with Non-GAAP operating loss of $1.6 million in Q4 2020, and Non-GAAP operating income of $1.5 million in the previous quarter;
• GAAP net income of $2.4 million, or $0.04 per diluted share, compared with net income of $62.4 million, or $1.12 per diluted share in Q4 2020. �GAAP net income for Q4 2020 included the above-mentioned net income from the Comtech settlement; GAAP net income in the previous quarter was $0.2 million, or $0.00 per diluted share;
• Non-GAAP net income of $5.9 million, or $0.10 per diluted share, compared with Non-GAAP net loss of $1.9 million, or loss of $0.03 per share in Q4 2020 and Non-GAAP net income of $0.7 million, or $0.01 per diluted share, in the previous quarter; 
• Adjusted EBITDA of $10.6 million, compared with $1.1 million in Q4 2020 and $4.0 million in the previous quarter;

Full year 2021 Financial Highlights 

• Revenue of $218.9 million, up by 32% compared with $165.9 million in 2020;
• GAAP operating income of $2.5 million compared to $37.6 million in 2020; GAAP operating income in 2020 includes net income of $53.6 million related to the settlement with Comtech;
• Non-GAAP operating income of $4.7 million compared with Non-GAAP operating loss of $13.7 million in 2020;
• GAAP net loss of $2.7 million, or $0.05 per share, compared with GAAP net income of $34.9 million in 2020, or $0.63 per diluted share; GAAP net income in 2020 includes the above-mentioned Comtech settlement net income;
• Non-GAAP net income of $1.8 million, or $0.03 per diluted share, compared to Non-GAAP net loss of $16.4 million, or $0.30 per share, in 2020;
• Adjusted EBITDA was $15.7 million compared with adjusted EBITDA loss of $3.3 million in 2020;

Forward-Looking Expectations

Guidance for 2022 is for revenues of between $245 to $265 million, representing year-over-year growth of between 12% and 21%, GAAP operating income of between $5 to $9 million and adjusted EBITDA of between $20 to $24 million, representing year-over-year growth of between 27% to 53%.

Management Commentary

Adi Sfadia, Gilat’s CEO, commented: “Our results in the quarter showed significant revenue growth of 58% year-over-year which translated into adjusted EBITDA of over $10 million, 10 times our levels in Q4 last year, an impressive achievement in a challenging year. These results, among others, reflect the opportunities and trends we are witnessing and have mentioned several times over the past year.”

“We recently launched SkyEdge IV, Gilat’s next-generation multi-orbit, software-centric platform, that will improve operational efficiencies. I am proud to report that we recently closed major deals on this new platform with both Intelsat and SES, of which a significant portion were software licenses. We expect that with SkyEdge IV we will further increase our market share and strengthen our leadership position in our major focus areas of Mobility, 4G/5G Cellular Backhaul, Enterprise and Defense.

“Looking back at 2021, it was a remarkable year due to four major accomplishments. First, in the NGSO and VHTS segments we had two outstanding achievements: we were awarded a sizeable deal for a multi-year contract with the potential of hundreds of millions of dollars, to customize and provide our leading technology for NGSO constellations. Upon signing this contract, we received the first multi-million-dollar purchase order for initial units. We also received more than $40 million dollars in orders from a leading satellite operator to support a Low Earth Orbit Constellation.

“The second major accomplishment in 2021 was in fortifying our Mobility leadership in a multimillion dollar deal for SkyEdge IV, which provides Gilat access to top cruise lines and maritime service providers that will use SES’s O3b mPOWER as well as their geostationary fleet. 

“The third major accomplishment during the year was in Peru, where we reached, ahead of our stated objectives, our goal of a $50 million run rate in annual recurring revenue. We expect that in 2022 we will turn the corner in Peru and our business there will become significantly profitable.

“And finally, we expanded our strategic relationship with Intelsat for commercial aviation in North America and Asia, demonstrating continued IFC market recovery.”

Mr. Sfadia concluded, “As we enter 2022, I am very encouraged by our strong backlog, solid visibility and the pipeline we see ahead of us. We therefore feel confident in resuming our annual objectives which show strong growth in revenues and significant improvement in profitability for 2022.”

Key Recent Announcements

• Intelsat Makes Strategic Selection with a Significant Initial Order of Gilat’s New SkyEdge IV Platform for Its Newest High Throughput Satellite
• SES and Gilat Expand Strategic Partnership with the Selection of Gilat’s SkyEdge IV Platform for SES-17
• Gilat Announces Launch of SkyEdge IV, Next Generation SATCOM Ground System, Aiming to Capture a Leading Position of the Multibillion-Dollar Emerging VHTS Market Opportunity
• Gilat and Intelsat Expand Their Strategic Partnership in Commercial Aviation
• Gilat Captures Greater Maritime Market Share in New Deal with Eurasian Satellite Service Provider
• Leading Mobile Operator in Mexico Extends 4G Cellular Backhaul Recurring Revenue Managed Services Project with Gilat
• Tier-1 Mobile Network Carrier in Japan Expanding Their 4G Cellular Network with Gilat’s Backhaul over Satellite
• One of World’s Largest MNOs to Deploy Gilat’s 4G Cellular Backhaul over Satellite Technology
• Gilat Signs Multi-Million Dollar Deal to Modernize and Expand Satellite Communications in Eurasia for Multiple Applications
• Tier-1 US Global Military Terminal Provider Places Order of Over $5M with Gilat for Solid State Amplifiers
• Africa’s Largest Satellite Cellular Backhaul Network Extends Coverage with Gilat’s Technology to a Dozen Countries in Africa

Conference Call Details

Gilat’s management will discuss its fourth quarter and full year 2021 results and business achievements and participate in a question and answer session:

Date:	Tuesday, February 15, 2022
Start:	09:30 AM EST / 16:30 IST
Dial-in:	US: 1-866-744-5399
	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: https://veidan.activetrail.biz/gilatq4-2021

The webcast will also be archived for a period of 30 days on the Company’s website and through the link above.

Unaudited Results
The attached summary unaudited financial statements represent the most current information available to management. Audited results will be reported in our annual report on Form 20-F.

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 expense (income), impairment of held for sale assets, and one-time changes of deferred tax assets.

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, Senior Director Corporate Communications
DoreetO@gilat.com

Ehud Helft
GK Investor & Public Relations
gilat@gkir.com
+1 212 378 8040

GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share and per share data)
			Three months ended							Twelve months ended
			December 31,							December 31,
			2021			2020				2021				2020
			Unaudited							Unaudited				Audited
Revenues			$	67,271		$	42,627			$	218,818			$	165,885
Cost of revenues				42,328			29,329				147,198				124,670
Gross profit				24,943			13,298				71,620				41,215
Research and development expenses				9,357			7,474				33,031				27,689
Less – grants				905			454				1,695				1,386
Research and development expenses, net				8,452			7,020				31,336				26,303
Selling and marketing expenses				5,685			4,534				21,512				16,871
General and administrative expenses				4,545			3,794				15,587				14,063
Merger, acquisition and related litigation expenses (income), net				–			(64,782	)			–				(53,633	)
Impairment of held for sale asset				651			–				651				–
Total operating expenses (income)				19,333			(49,434	)			69,086				3,604
Operating income				5,610			62,732				2,534				37,611
Financial expenses, net				264			192				1,722				1,907
Income before taxes on income				5,346			62,540				812				35,704
Taxes on income				2,969			98				3,492				793
Net income (loss)			$	2,377		$	62,442			$	(2,680	)		$	34,911
Basic and Diluted earnings (loss) per share			$	0.04		$	1.12			$	(0.05	)		$	0.63
Weighted average number of shares used in
	computing earnings (loss) per share
	Basic			56,539,237			55,545,654				56,401,074				55,516,113
	Diluted			56,627,907			55,815,099				56,401,074				55,583,474

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, 2021										December 31, 2020
		GAAP			Adjustments (1)				Non-GAAP			GAAP				Adjustments (1)				Non-GAAP
		Unaudited										Unaudited
Gross profit		$	24,943			71			$	25,014		$	13,298				42			$	13,340
Operating expenses (income)			19,333			(1,147	)			18,186			(49,434	)			64,389				14,955
Operating income (loss)			5,610			1,218				6,828			62,732				(64,347	)			(1,615	)
Income (loss) before taxes on income			5,346			1,218				6,564			62,540				(64,347	)			(1,807	)
Net income (loss)		$	2,377			3,517			$	5,894		$	62,442				(64,347	)		$	(1,905	)
Earnings (loss) per share (basic and diluted)		$	0.04		$	0.06			$	0.10		$	1.12			$	(1.15	)		$	(0.03	)
Weighted average number of shares used in
computing earnings per share
	Basic		56,539,237							56,539,237			55,545,654								55,545,654
	Diluted		56,627,907							56,928,169			55,815,099								55,545,654
	(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 and other litigation expenses, merger, acquisition and related litigation expenses (income), net , impairment of held for sale asset and one-time   changes to deferred tax assets.
		Three months ended										Three months ended
		December 31, 2021										December 31, 2020
					Unaudited											Unaudited
GAAP net income					$	2,377										$	62,442
Gross profit
Non-cash stock-based compensation expenses						66											39
Amortization of intangible assets related to acquisition transactions						5											3
						71											42
Operating expenses
Non-cash stock-based compensation expenses						445											254
Amortization of intangible assets related to acquisition transactions						51											54
Merger, acquisition and related litigation expenses (income), net						–											(64,782	)
Impairment of held for sale asset						651											–
Trade secrets and other litigation expenses						–											85
						1,147											(64,389	)
One-time changes to deferred tax assets						2,299											–
Non-GAAP net income (loss)					$	5,894										$	(1,905	)

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, 2021											December 31, 2020
			GAAP				Adjustments (1)				Non-GAAP			GAAP			Adjustments (1)				Non-GAAP
			Unaudited											Audited			Unaudited
Gross profit			$	71,620				297			$	71,917		$	41,215			186			$	41,401
Operating expenses				69,086				(1,882	)			67,204			3,604			51,502				55,106
Operating income (loss)				2,534				2,179				4,713			37,611			(51,316	)			(13,705	)
Income (loss) before taxes on income				812				2,179				2,991			35,704			(51,316	)			(15,612	)
Net income (loss)				(2,680	)			4,478				1,798			34,911			(51,316	)			(16,405	)
Earnings (loss) per share (basic and diluted)			$	(0.05	)		$	0.08			$	0.03		$	0.63		$	(0.93	)		$	(0.30	)
Weighted average number of shares used in
computing earnings per share
	Basic			56,401,074								56,401,074			55,516,113							55,516,113
	Diluted			56,401,074								56,878,852			55,583,474							55,516,113
	(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 and other litigation expenses, merger, acquisition and related litigation expenses (income), net, impairment of held for sale asset, restructuring and re-organization costs and one-time changes to deferred tax assets.
			Twelve months ended											Twelve months ended
			December 31, 2021											December 31, 2020
							Unaudited										Unaudited
GAAP net income (loss)							$	(2,680	)								$	34,911
Gross profit
Non-cash stock-based compensation expenses								277										166
Amortization of intangible assets related to acquisition transactions								20										20
								297										186
Operating expenses
Non-cash stock-based compensation expenses								1,029										1,114
Amortization of intangible assets related to acquisition transactions								202										204
Merger, acquisition and related litigation expenses (income), net								–										(53,633	)
Impairment of held for sale asset								651										–
Trade secrets and other litigation expenses								–										96
Restructuring and re-organization costs								–										717
								1,882										(51,502	)
One-time changes to deferred tax assets								2,299										–
Non-GAAP net income (loss)							$	1,798									$	(16,405	)

GILAT SATELLITE NETWORKS LTD.
SUPPLEMENTAL INFORMATION
U.S. dollars in thousands
ADJUSTED EBITDA:
		Three months ended							Twelve months ended
		December 31,							December 31,
		2021			2020				2021			2020
		Unaudited							Unaudited
GAAP operating profit		$	5,610		$	62,732			$	2,534		$	37,611
Add:
Non-cash stock-based compensation expenses			511			293				1,306			1,280
Trade secrets and other litigation expenses			–			85				–			96
Restructuring and re-organization costs			–			–				–			717
Merger, acquisition and related litigation expenses (income), net			–			(64,782	)			–			(53,633	)
Impairment of held for sale asset			651			–				651			–
Depreciation and amortization (*)			3,848			2,729				11,214			10,653
Adjusted EBITDA		$	10,620		$	1,057			$	15,705		$	(3,276	)
(*) Including amortization of lease incentive
SEGMENT REVENUE:
		Three months ended							Twelve months ended
		December 31,							December 31,
		2021			2020				2021			2020
		Unaudited							Unaudited			Audited
Fixed Networks		$	36,994		$	25,085			$	115,449		$	92,671
Mobility Solutions			24,988			11,751				77,614			54,169
Terrestrial Infrastructure Projects			5,289			5,791				25,755			19,045
Total revenue		$	67,271		$	42,627			$	218,818		$	165,885

GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
		December 31,				December 31,
		2021				2020
		Unaudited				Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	81,859			$	88,754
Short-term deposits			2,159				–
Restricted cash			2,592				27,162
Trade receivables, net			38,744				27,976
Contract assets			24,220				41,573
Inventories			28,432				31,304
Other current assets			14,607				16,637
Held for sale asset			4,587				–
Total current assets			197,200				233,406
LONG-TERM ASSETS:
Restricted cash			12				42
Severance pay funds			6,795				6,665
Deferred taxes			17,551				19,295
Operating lease right-of-use assets			4,478				4,879
Other long term receivables			10,456				7,797
Total long-term assets			39,292				38,678
PROPERTY AND EQUIPMENT, NET			72,391				77,172
INTANGIBLE ASSETS, NET			640				1,082
GOODWILL			43,468				43,468
TOTAL ASSETS		$	352,991			$	393,806
GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED BALANCE SHEETS (Cont.)
U.S. dollars in thousands
		December 31,				December 31,
		2021				2020
		Unaudited				Audited
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current maturities of long-term loans		$	–			$	4,000
Trade payables			19,776				20,487
Accrued expenses			49,202				46,387
Advances from customers and deferred revenues			25,472				26,244
Operating lease liabilities			1,818				1,911
Dividend payable			–				35,003
Other current liabilities			13,339				13,322
Total current liabilities			109,607				147,354
LONG-TERM LIABILITIES:
Accrued severance pay			7,292				7,136
Long-term advances from customers			1,595				1,890
Operating lease liabilities			2,283				2,985
Other long-term liabilities			120				631
Total long-term liabilities			11,290				12,642
SHAREHOLDERS’ EQUITY:
Share capital – ordinary shares of NIS 0.2 par value			2,706				2,647
Additional paid-in capital			929,871				928,626
Accumulated other comprehensive loss			(6,357	)			(6,017	)
Accumulated deficit			(694,126	)			(691,446	)
Total shareholders’ equity			232,094				233,810
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	352,991			$	393,806

GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
		Three months ended								Twelve months ended
		December 31,								December 31,
		2021				2020				2021				2020
		Unaudited								Unaudited				Audited
Cash flows from operating activities:
Net income (loss)		$	2,377			$	62,442			$	(2,680	)		$	34,911
Adjustments required to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization			3,789				2,534				10,991				10,291
Capital loss from disposal of property and equipment and impairment of held for sale asset			651				147				651				181
Stock-based compensation of options			511				293				1,306				1,282
Accrued severance pay, net			203				205				26				242
Deferred taxes, net			1,694				(966	)			1,647				(867	)
Decrease (increase) in trade receivables, net			(9,032	)			(1,520	)			(10,789	)			19,332
Decrease (increase) in contract assets			249				(3,471	)			17,353				(17,875	)
Decrease (increase) in other assets (including short-term, long-term
and deferred charges)			5,238				1,021				(247	)			8,941
Decrease (increase) in inventories			2,796				100				2,449				(5,050	)
Increase (decrease) in trade payables			2,007				3,178				(712	)			(157	)
Increase (decrease) in accrued expenses			861				(7,356	)			2,012				(7,549	)
Increase (decrease) in advance from customers and deferred revenue			(5,491	)			2,218				(1,122	)			(1,898	)
Increase (decrease) in current and non current liabilities			(681	)			1,596				(1,982	)			1,376
Net cash provided by operating activities			5,172				60,421				18,903				43,160
Cash flows from investing activities:
Purchase of property and equipment			(3,909	)			(1,976	)			(8,933	)			(4,716	)
Investment in short term deposits			(2,159	)			–				(2,159	)			–
Net cash used in investing activities			(6,068	)			(1,976	)			(11,092	)			(4,716	)
Cash flows from financing activities:
Dividend payment			–				(19,999	)			(35,003	)			(19,999	)
Repayment of long-term loans			–				–				(4,000	)			(4,096	)
Net cash used in financing activities			–				(19,999	)			(39,003	)			(24,095	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash			(51	)			270				(303	)			(360	)
Increase (decrease) in cash, cash equivalents and restricted cash			(947	)			38,716				(31,495	)			13,989
Cash, cash equivalents and restricted cash at the beginning of the period			85,410				77,242				115,958				101,969
Cash, cash equivalents and restricted cash at the end of the period		$	84,463			$	115,958			$	84,463			$	115,958