Categories: Wire Stories

Gilat Reports Strong Results in Second Quarter 2021

Revenue is up 49% year-over-year and 27% sequentially with a return to Non-GAAP profitability

PETAH TIKVA, Israel, Aug. 10, 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 second quarter of 2021.

Second Quarter Financial Highlights

  • Revenues of $56.9 million, a 49% increase from $38.3 million in Q2 2020 and up 27% from $44.7 million in the previous quarter.
  • GAAP operating loss of $0.3 million, an improvement compared with an operating loss of $3.5 million in Q2 2020 and an operating loss of $3.7 million in Q1 2021.
  • Non-GAAP operating income of $0.2 million, compared with an operating loss of $2.6 million in Q2 2020 and an operating loss of $3.8 million in the previous quarter.
  • GAAP net loss of $0.1 million, or zero per share, compared with a net loss of $4.2 million, or a loss of $0.08 per share in Q2 2020 and a net loss of $5.1 million, or a loss of $0.09 per share in the previous quarter.
  • Non-GAAP net income of $0.4 million, which is $0.01 per share, compared with a net loss of $3.3 million, or a loss of $0.06 per share in Q2 2020, and compared with a net loss of $5.2 million, or a loss of $0.09 per share, in the previous quarter.
  • Adjusted EBITDA of $2.5 million compared with adjusted EBITDA of $0.1 million in Q2 2020; and an adjusted EBITDA loss of $1.4 million in the previous quarter.

Management Commentary

Adi Sfadia, Gilat’s CEO, commented: �I am very pleased with the improvement in our second quarter results which showed very strong revenue growth and a return to Non-GAAP profitability.

“We are experiencing strong business momentum in nearly all our end markets and have secured several significant awards. In our Mobility segment we solidified our leadership position in maritime with a multi-million-dollar award from SES, and our leading position in NGSO with orders for more than $15 million from a leading satellite operator for support of a Low Earth Orbit Constellation. Very importantly, we are most pleased with the rapid growth in our Defense segment in which we secured deals for over $10 million in Asia, Latin America and the US.

“Further to the many opportunities we see ahead of us, we continue investing heavily in our R&D efforts in order to capture these opportunities and accelerate our future growth. Given the improving momentum and strong backlog, we expect to continue with our high revenue and profitability growth through the second half of 2021. We expect this growth to increase even further in 2022, as the inflight connectivity sector recovers, in addition to continued growth expected from the Maritime, Cellular Backhaul, NGSO and Defense market segments, as well as our operations in Peru.”

Key Recent Announcements

  • Tier-1 US Terminal Provider Awards Gilat over $5M for Solid State Amplifiers Powering Militaries Worldwide
  • Gilat’s Global Mobility Platform Selected by SES in Multi-Million Dollar Order
  • Gilat Receives Multi-Million Dollar Award from US Army to Supply High Performance BUCs for Tactical Communications
  • Gilat Signed a Strategic Agreement Estimated at Over $5 Million with Pacific Dataport for Delivery of Ubiquitous Broadband Coverage in Alaska
  • Gilat Received $2 Million in Orders for Support of Low Earth Orbit Constellation
  • Gilat Awarded Multi-Million Dollar Contract to Provide Satellite Communication Equipment for Defense Forces in Asia
  • Gilat Awarded $9 Million in Orders for Support of Low Earth Orbit Constellation
  • Gilat Awarded Multiple Projects for Armed Forces in Latin America
  • Gilat Awarded Contract to Supply Satellite Communication Equipment for Military Usage
  • Gilat Awarded $13M Contract by Pronatel for Delivery of Internet Services to Hundreds of Sites in Peru
  • Gilat Extends Multi-Million Dollar IoT Project in Latin America
  • Gilat Awarded Over $4 Million in Orders for Support of Low Earth Orbit Constellation
  • Telefonica Global Solutions (TGS) Selects Gilat to Equip Strategic Teleport in Arica, Chile

Conference Call Details

Gilat’s management will discuss its second quarter 2021 results and business achievements and participate in a questions and answers session:

Date: Tuesday, August 10, 2021
Start: 9:30 AM ET / 4:30 PM IT
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/gilatq2-2021

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 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), 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, Senior 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)              
     Six months ended
   Three months ended
     June, 30
   June, 30
      2021       2020       2021       2020  
    Unaudited   Unaudited
                 
Revenues $ 101,636     $ 85,988     $ 56,923     $ 38,315  
Cost of revenues   72,564       67,514       40,208       28,727  
                 
Gross profit   29,072       18,474       16,715       9,588  
                 
Research and development expenses   16,034       13,773       7,923       6,139  
Less – grants   374       472       190       200  
Research and development expenses, net   15,660       13,301       7,733       5,939  
Selling and marketing expenses   10,468       8,650       5,464       3,584  
General and administrative expenses   6,938       7,518       3,855       2,973  
Restructuring costs         273              
Merger, acquisition and related litigation expense, net         2,951             546  
                 
Total operating expenses   33,066       32,693       17,052       13,042  
                 
Operating loss   (3,994 )     (14,219 )     (337 )     (3,454 )
                 
Financial income (expenses), net   (757 )     (1,429 )     435       (457 )
                 
Income (loss) before taxes on income   (4,751 )     (15,648 )     98       (3,911 )
                 
Taxes on income   474       332       227       314  
                 
Net loss $ (5,225 )   $ (15,980 )   $ (129 )   $ (4,225 )
                 
Basic and Diluted loss per share $ (0.09 )   $ (0.29 )   $ (0.00 )   $ (0.08 )
                 
Weighted average number of shares used in              
  computing earnings (loss) per share              
  Basic and Diluted   56,269,941       55,499,300       56,508,539       55,505,342  
                 

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
    June 30, 2021   June 30, 2020
    GAAP   Adjustments (1)   Non-GAAP   GAAP   Adjustments (1)   Non-GAAP
    Unaudited   Unaudited
                         
Gross profit $ 16,715       64     $ 16,779   $ 9,588       54     $ 9,642  
Operating expenses (income)   17,052       (456 )     16,596     13,042       (831 )     12,211  
Operating income (loss)   (337 )     520       183     (3,454 )     885       (2,569 )
Income (loss) before taxes on income   98       520       618     (3,911 )     885       (3,026 )
Net income (loss)   (129 )     520       391     (4,225 )     885       (3,340 )
                         
Earnings (loss) per share (basic and diluted) $ (0.00 )   $ 0.01     $ 0.01   $ (0.08 )   $ 0.02     $ (0.06 )
                         
                         
Weighted average number of shares used in                      
   computing earnings per share                      
      Basic   56,508,539           56,508,539     55,505,342           55,505,342  
      Diluted   56,508,539           57,328,088     55,505,342           55,505,342  
                         
                         
 (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 merger and acquisition and related litigation, net.
                             
                         
    Three months ended   Three months ended
    June 30, 2021   June 30, 2020
        Unaudited           Unaudited    
                         
GAAP net loss     $ (129 )           $ (4,225 )    
                         
Gross profit                      
Non-cash stock-based compensation expenses       59               49      
Amortization of intangible assets related to acquisition transactions       5               5      
          64               54      
Operating expenses                      
Non-cash stock-based compensation expenses       406               235      
Amortization of intangible assets related to acquisition transactions       50               50      
Merger and acquisition and related litigation, net                     546      
          456               831      
                         
Non-GAAP net income (loss)     $ 391             $ (3,340 )    
                         

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)                      
    Six months ended   Six months ended
    June 30, 2021   June 30, 2020
    GAAP   Adjustments (1)   Non-GAAP   GAAP   Adjustments (1)   Non-GAAP
    Unaudited   Unaudited
                         
Gross profit $ 29,072       130     $ 29,202     $ 18,474       116     $ 18,590  
Operating expenses (income)   33,066       (287 )     32,779       32,693       (3,937 )     28,756  
Operating income (loss)   (3,994 )     417       (3,577 )     (14,219 )     4,053       (10,166 )
Income (loss) before taxes on income   (4,751 )     417       (4,334 )     (15,648 )     4,053       (11,595 )
Net income (loss)   (5,225 )     417       (4,808 )     (15,980 )     4,053       (11,927 )
                         
Earnings (loss) per share (basic and diluted) $ (0.09 )   $ 0.01     $ (0.08 )   $ (0.29 )   $ 0.08     $ (0.21 )
                         
                         
Weighted average number of shares used in                      
   computing earnings per share                      
      Basic and Diluted   56,269,941           56,269,941       55,499,300           55,499,300  
                         
                         
(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 and acquisition and related litigation, net, trade secrets and other litigation expenses and restructuring costs.    
                       
                         
    Six months ended   Six months ended
    June 30, 2021   June 30, 2020
        Unaudited           Unaudited    
                         
GAAP net loss     $ (5,225 )           $ (15,980 )    
                         
Gross profit                      
Non-cash stock-based compensation expenses       120               106      
Amortization of intangible assets related to acquisition transactions       10               10      
          130               116      
Operating expenses                      
Non-cash stock-based compensation expenses       186               601      
Amortization of intangible assets related to acquisition transactions       101               101      
Trade secrets and other litigation expenses                     11      
Merger, acquisition and related litigation expense, net                     2,951      
Restructuring costs                     273      
          287               3,937      
                         
Non-GAAP net loss     $ (4,808 )           $ (11,927 )    
                         

GILAT SATELLITE NETWORKS LTD.              
SUPPLEMENTAL INFORMATION              
U.S. dollars in thousands              
               
               
ADJUSTED EBITDA:              
               
   Six months ended
   Three months ended
   June 30,
   June 30,
    2021       2020       2021       2020  
       
  Unaudited   Unaudited
               
GAAP operating loss $ (3,994 )   $ (14,219 )   $ (337 )   $ (3,454 )
Add:              
Non-cash stock-based compensation expenses   306       707       465       284  
Trade secrets and other litigation expenses         11              
Restructuring and re-organization costs         273              
Merger, acquisition and related litigation expense, net         2,951             546  
Depreciation and amortization (*)   4,758       5,382       2,373       2,718  
               
Adjusted EBITDA $ 1,070     $ (4,895 )   $ 2,501     $ 94  
               
(*) Including amortization of lease incentive              
               
SEGMENT REVENUE:              
               
   Six months ended     Three months ended 
   June 30,     June 30, 
    2021       2020       2021       2020  
       
  Unaudited   Unaudited
               
Fixed Networks $ 56,127     $ 44,790     $ 30,825     $ 21,779  
Mobility Solutions   31,002       33,207       19,923       14,006  
Terrestrial Infrastructure Projects   14,507       7,991       6,175       2,530  
               
Total revenue $ 101,636     $ 85,988     $ 56,923     $ 38,315  
               

         
  GILAT SATELLITE NETWORKS LTD.      
  CONSOLIDATED BALANCE SHEETS      
  U.S. dollars in thousands      
         
    June 30,   December 31,
     2021     2020 
    Unaudited   Audited
         
  ASSETS      
         
  CURRENT ASSETS:      
  Cash and cash equivalents $ 57,882     $ 88,754  
  Short-term deposits   2,159        
  Restricted cash   21,910       27,162  
  Trade receivables, net   33,009       27,976  
  Contract assets   23,830       41,573  
  Inventories   29,644       31,304  
  Other current assets   22,508       16,637  
         
     Total current assets   190,942       233,406  
         
  LONG-TERM ASSETS:      
  Restricted cash   13       42  
  Severance pay funds   6,616       6,665  
  Tax assets   2,489       2,482  
  Deferred taxes   16,621       16,813  
  Operating lease right-of-use assets   4,338       4,879  
  Other long term receivables   8,691       7,797  
         
  Total long-term assets   38,768       38,678  
         
  PROPERTY AND EQUIPMENT, NET   76,584       77,172  
         
  INTANGIBLE ASSETS, NET   861       1,082  
         
  GOODWILL   43,468       43,468  
         
  TOTAL ASSETS $ 350,623     $ 393,806  
         
         
         
  GILAT SATELLITE NETWORKS LTD.      
  CONSOLIDATED BALANCE SHEETS (Cont.)      
  U.S. dollars in thousands      
         
    June 30,   December 31,
      2021       2020  
    Unaudited   Audited
         
  LIABILITIES AND SHAREHOLDERS’ EQUITY      
         
  CURRENT LIABILITIES:      
  Current maturities of long-term loans $     $ 4,000  
  Trade payables   19,705       20,487  
  Accrued expenses   48,359       46,387  
  Advances from customers and deferred revenues   23,881       26,244  
  Operating lease liabilities   1,800       1,911  
  Dividend payable         35,003  
  Other current liabilities   14,319       13,322  
         
     Total current liabilities   108,064       147,354  
         
  LONG-TERM LIABILITIES:      
  Accrued severance pay   6,959       7,136  
  Long-term advances from customers   4,184       1,890  
  Operating lease liabilities   2,584       2,985  
  Other long-term liabilities   118       631  
         
     Total long-term liabilities   13,845       12,642  
         
  SHAREHOLDERS’ EQUITY:      
  Share capital – ordinary shares of NIS 0.2 par value   2,705       2,647  
  Additional paid-in capital   928,874       928,626  
  Accumulated other comprehensive loss   (6,194 )     (6,017 )
  Accumulated deficit   (696,671 )     (691,446 )
         
  Total shareholders’ equity   228,714       233,810  
         
  TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 350,623     $ 393,806  
         

GILAT SATELLITE NETWORKS LTD.              
CONSOLIDATED STATEMENTS OF CASH FLOWS              
U.S. dollars in thousands              
               
   Six months ended
   Three months ended
   June 30,
   June 30,
    2021       2020       2021       2020  
       
  Unaudited   Unaudited
Cash flows from operating activities:              
Net loss $ (5,225 )   $ (15,980 )   $ (129 )   $ (4,225 )
Adjustments required to reconcile net income              
 to net cash provided by operating activities:              
Depreciation and amortization   4,646       5,271       2,316       2,667  
Capital loss from disposal of property and equipment         23             56  
Stock-based compensation of options   306       707       465       284  
Accrued severance pay, net   (128 )     26       (118 )     (17 )
Deferred taxes, net   185       140       (333 )     (494 )
Decrease (increase) in trade receivables, net   (7,068 )     18,364       (5,135 )     4,757  
Decrease (increase) in contract assets   17,743       (8,362 )     22,230       (3,511 )
Decrease (increase) in other assets (including short-term, long-term and deferred charges)   (4,009 )     6,710       (3,789 )     5,037  
Decrease (increase) in inventories   1,774       (5,698 )     3,986       937  
Decrease in trade payables   (790 )     (510 )     (1,740 )     (2,885 )
Increase (decrease) in accrued expenses   1,693       (5,809 )     724       (4,157 )
Decrease in advance from customers and deferred revenue   (191 )     (5,725 )     (7,879 )     (2,898 )
Increase (decrease) in current and non current liabilities   (194 )     685       (2,197 )     (2,126 )
Net cash provided by (used in) operating activities   8,742       (10,158 )     8,401       (6,575 )
               
Cash flows from investing activities:              
Purchase of property and equipment   (3,572 )     (1,879 )     (2,089 )     (928 )
Investment in short term deposits   (2,159 )           (2,159 )      
Net cash used in investing activities   (5,731 )     (1,879 )     (4,248 )     (928 )
               
Cash flows from financing activities:              
Dividend payment   (35,003 )                  
Repayment of long-term loans   (4,000 )     (4,096 )            
Net cash used in financing activities   (39,003 )     (4,096 )            
               
Effect of exchange rate changes on cash, cash equivalents and restricted cash   (161 )     (539 )     93       156  
               
Increase (decrease) in cash, cash equivalents and restricted cash   (36,153 )     (16,672 )     4,246       (7,347 )
               
Cash, cash equivalents and restricted cash at the beginning of the period   115,958       101,969       75,559       92,644  
               
Cash, cash equivalents and restricted cash at the end of the period $ 79,805     $ 85,297     $ 79,805     $ 85,297  
               

Alex

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