Categories: Wire Stories

Gilat Reports Strong Revenue & Profitability Growth in Third Quarter 2021

Revenue up 34% year-over-year to $49.9M, GAAP operating income of $0.9 million and Adjusted EBITDA reached $4.0 million

PETAH TIKVA, Israel, Nov. 09, 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 third quarter of 2021.

Third Quarter Financial Highlights

  • Revenues of $49.9 million, a 34% increase from $37.3 million in Q3 2020 and 12% lower than $56.9 million in the previous quarter;
  • GAAP operating income of $0.9 million, a significant improvement compared with an operating loss of $10.9 million in Q3 2020 (which included $8.2 million of Comtech merger and acquisition expenses) and an operating loss of $0.3 million in the previous quarter;
  • Non-GAAP operating income of $1.5 million, compared with operating loss of $1.9 million in Q3 2020, and an operating income of $0.2 million in the previous quarter;
  • GAAP net income of $0.2 million, or $0.00 per diluted share, compared with a net loss of $11.6 million, or loss of $0.21 per share in Q3 2020 and net loss of $0.1 million in the previous quarter, or $0.00 per share;
  • Non-GAAP net income of $0.7 million, or $0.01 per diluted share, compared with a net loss of $2.6 million, or loss of $0.05 per share in Q3 2020, and compared with a net income of $0.4 million, or $0.01 per diluted share, in the previous quarter;
  • Adjusted EBITDA of $4.0 million compared with adjusted EBITDA of $0.6 million in Q3 2020; and adjusted EBITDA of $2.5 million in the previous quarter;

Management Commentary

Adi Sfadia, Gilat’s CEO, commented: �Our revenue this quarter showed significant year over year growth as we continue to increase profitability reaching an Adjusted EBITDA of $4 million. We are especially pleased with our success in signing new deals, some of which are potentially transformable in nature and strategic.

“I am most excited about major progress this quarter in the NGSO and VHTS market segments. Furthermore, we experienced improved performance and significant bookings in our strategic market segments including Cellular Backhaul and IFC where we received several orders from key market players to be delivered over the next few quarters.

“In our Peru operation we have made significant progress with awards of $28 million in multi-year service agreements, and achieved our target goal of approximately $50 million in annual recurring revenue from Peru, well before the stated target date.”

Continued Mr. Sfadia, “Although the global supply chain presents challenges, so far we have been able to mitigate these issues and we hope that this will continue to be the case. Looking ahead, given the recent wins and awards as well as the strong and improving momentum we are seeing across our business, we are increasingly confident that we will show significant growth in the top line and in the Adjusted EBITDA, both in Q4 of this year and in 2022.”

Key Recent Announcements

  • Tier-1 Mobile Operator in Asia Expands 4G Network with Gilat’s Cellular Backhaul Solution
  • Gilat Expands 4G Network with Tier-1 Mobile Operator in North America
  • Gilat Signs Service Agreements of Over $16 Million for Operating Transport-Networks to Support Broadband Services in Peru
  • Gilat Receives $12 Million Service Agreement for Operation of Transport Network in Cusco, Peru
  • Gilat Received $17 Million in Orders for Support of Low Earth Orbit Constellation
  • SES Awards Gilat Multi-Million Dollar Contract for Multiple Broadband Applications in Latin America

Conference Call Details

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

Date: Tuesday, November 9, 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/gilatq3-2021

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
+1 212 378 8040

 

GILAT SATELLITE NETWORKS LTD.    
CONSOLIDATED STATEMENTS OF OPERATIONS          
U.S. dollars in thousands (except share and per share data)              
               
         Three months ended
 Nine months ended
         September, 30
   September, 30
          2021       2020       2021       2020  
        Unaudited   Unaudited
                     
Revenues     $ 49,911     $ 37,270     $ 151,547     $ 123,258  
Cost of revenues       32,306       27,827       104,870       95,341  
                     
Gross profit       17,605       9,443       46,677       27,917  
                     
Research and development expenses     7,640       6,442       23,674       20,215  
Less – grants       416       460       790       932  
Research and development expenses, net     7,224       5,982       22,884       19,283  
Selling and marketing expenses     5,359       3,687       15,827       12,337  
General and administrative expenses     4,104       2,478       11,042       10,269  
Merger, acquisition and related litigation expense, net         8,198             11,149  
                     
Total operating expenses     16,687       20,345       49,753       53,038  
                     
Operating income (loss)       918       (10,902 )     (3,076 )     (25,121 )
                     
Financial expenses, net       (701 )     (286 )     (1,458 )     (1,715 )
                     
Income (loss) before taxes on income     217       (11,188 )     (4,534 )     (26,836 )
                     
Taxes on income       49       363       523       695  
                     
Net income (loss)     $ 168     $ (11,551 )   $ (5,057 )   $ (27,531 )
                     
Basic and Diluted earnings (loss) per share   $ 0.00     $ (0.21 )   $ (0.09 )   $ (0.50 )
                     
Weighted average number of shares used in              
  computing earnings (loss) per share                
  Basic       56,525,177       55,520,197       56,355,020       55,506,266  
  Diluted       56,958,250       55,520,197       56,355,020       55,506,266  
                     

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        
            September 30, 2021                 September 30, 2020
       
    GAAP   Adjustments (1)   Non-GAAP   GAAP   Adjustments (1)   Non-GAAP
            Unaudited                  Unaudited         
                         
Gross profit   $ 17,605     96     $ 17,701   $ 9,443       28     $ 9,471  
Operating expenses (income)     16,687     (448 )     16,239     20,345       (8,950 )     11,395  
Operating income (loss)     918     544       1,462     (10,902 )     8,978       (1,924 )
Income (loss) before taxes on income     217     544       761     (11,188 )     8,978       (2,210 )
Net income (loss)     168     544       712     (11,551 )     8,978       (2,573 )
                         
Earnings (loss) per share (basic and diluted)   $ 0.00   $ 0.01     $ 0.01   $ (0.21 )   $ 0.16     $ (0.05 )
                         
Weighted average number of shares used in computing earnings per share                      
     Basic          56,525,177      56,525,177           55,520,197      55,520,197  
     Diluted         56,958,250      57,227,810           55,520,197      55,520,197  
                         
 
(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. and restructuring and re-organization costs               

    Three months ended   Three months ended
    September 30, 2021   September 30, 2020
    Unaudited   Unaudited
         
GAAP net income (loss)   $ 168   $ (11,551 )
         
Gross profit        
Non-cash stock-based compensation expenses     91     21  
Amortization of intangible assets related to acquisition transactions     5     7  
      96     28  
Operating expenses        
Non-cash stock-based compensation expenses     398     259  
Amortization of intangible assets related to acquisition transactions     50     49  
Merger and acquisition and related litigation, net         8,198  
Restructuring and re-organization costs         444  
      448     8,950  
         
Non-GAAP net income (loss)   $ 712   $ (2,573 )
         

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)
 
            Nine months ended
                  Nine months ended
       
            September 30, 2021
                  September 30, 2020
       
    GAAP   Adjustments (1)   Non-GAAP   GAAP   Adjustments (1)   Non-GAAP
             Unaudited                     Unaudited         
                         
Gross profit $ 46,677       226     $ 46,903     $ 27,917       144     $ 28,061  
Operating expenses (income)   49,753       (735 )     49,018       53,038       (12,887 )     40,151  
Operating income (loss)   (3,076 )     961       (2,115 )     (25,121 )     13,031       (12,090 )
Income (loss) before taxes on income   (4,534 )     961       (3,573 )     (26,836 )     13,031       (13,805 )
Net income (loss)   (5,057 )     961       (4,096 )     (27,531 )     13,031       (14,500 )
                         
Earnings (loss) per share (basic and diluted) $ (0.09 )   $ 0.02     $ (0.07 )   $ (0.50 )   $ 0.24     $ (0.26 )
                         
                         
Weighted average number of shares used in                      
   computing earnings per share                      
      Basic and Diluted         56,355,020      56,355,020             55,506,266      55,506,266  
                         
                         
(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 and re-organization costs .        

    Nine months ended     Nine months ended
    September 30, 2021     September 30, 2020
    Unaudited     Unaudited
           
GAAP net loss   $ (5,057 )     $ (27,531 )
           
Gross profit          
Non-cash stock-based compensation expenses     211         127  
Amortization of intangible assets related to acquisition transactions     15         17  
      226         144  
Operating expenses          
Non-cash stock-based compensation expenses     584         860  
Amortization of intangible assets related to acquisition transactions     151         150  
Trade secrets and other litigation expenses             11  
Merger, acquisition and related litigation expense, net             11,149  
Restructuring and re-organization costs             717  
      735         12,887  
           
Non-GAAP net loss   $ (4,096 )     $ (14,500 )
           

GILAT SATELLITE NETWORKS LTD.                
SUPPLEMENTAL INFORMATION                
U.S. dollars in thousands                
ADJUSTED EBITDA:                
                 
     Three months ended     Nine months ended
     September 30,     September 30,
     2021    2020     2021     2020 
    Unaudited   Unaudited
                 
GAAP operating profit (loss)   $ 918   $ (10,902 )   $ (3,076 )   $ (25,121 )
Add:                
Non-cash stock-based compensation expenses     489     280       795       987  
Trade secrets and other litigation expenses                     11  
Restructuring and re-organization costs         444             717  
Merger, acquisition and related litigation expense, net         8,198             11,149  
Depreciation and amortization (*)     2,608     2,542       7,365       7,924  
                 
Adjusted EBITDA   $ 4,015   $ 562     $ 5,084     $ (4,333 )
                 
(*) Including amortization of lease incentive                
                 
SEGMENT REVENUE:                
                 
     Three months ended      Nine months ended 
     September 30,     September 30, 
     2021    2020     2021     2020 
    Unaudited   Unaudited
                 
Fixed Networks   $ 22,328   $ 22,797     $ 78,455     $ 67,587  
Mobility Solutions     21,624     9,210       52,626       42,417  
Terrestrial Infrastructure Projects     5,959     5,263       20,466       13,254  
                 
Total revenue   $ 49,911   $ 37,270     $ 151,547     $ 123,258  
                 

 

  GILAT SATELLITE NETWORKS LTD.      
  CONSOLIDATED BALANCE SHEETS      
  U.S. dollars in thousands      
           
      September 30,   December 31,
       2021     2020 
      Unaudited   Audited
           
  ASSETS        
           
  CURRENT ASSETS:        
  Cash and cash equivalents   $ 63,774     $ 88,754  
  Restricted cash     21,624       27,162  
  Trade receivables, net     29,705       27,976  
  Contract assets     24,469       41,573  
  Inventories     31,577       31,304  
  Other current assets     24,189       16,637  
           
     Total current assets     195,338       233,406  
           
  LONG-TERM ASSETS:        
  Restricted cash     12       42  
  Severance pay funds     6,524       6,665  
  Deferred taxes     19,343       19,295  
  Operating lease right-of-use assets     4,129       4,879  
  Other long term receivables     6,474       7,797  
           
  Total long-term assets     36,482       38,678  
           
  PROPERTY AND EQUIPMENT, NET     75,631       77,172  
           
  INTANGIBLE ASSETS, NET     750       1,082  
           
  GOODWILL     43,468       43,468  
           
  TOTAL ASSETS   $ 351,669     $ 393,806  
           
           
  GILAT SATELLITE NETWORKS LTD.        
  CONSOLIDATED BALANCE SHEETS (Cont.)        
  U.S. dollars in thousands        
           
      September 30,   December 31,
       2021     2020 
      Unaudited   Audited
           
  LIABILITIES AND SHAREHOLDERS’ EQUITY        
           
  CURRENT LIABILITIES:        
  Current maturities of long-term loans   $     $ 4,000  
  Trade payables     17,767       20,487  
  Accrued expenses     47,722       46,387  
  Advances from customers and deferred revenues     29,550       26,244  
  Operating lease liabilities     1,804       1,911  
  Dividend payable           35,003  
  Other current liabilities     13,342       13,322  
           
     Total current liabilities     110,185       147,354  
           
  LONG-TERM LIABILITIES:        
  Accrued severance pay     6,819       7,136  
  Long-term advances from customers     3,022       1,890  
  Operating lease liabilities     2,325       2,985  
  Other long-term liabilities     120       631  
           
     Total long-term liabilities     12,286       12,642  
           
  SHAREHOLDERS’ EQUITY:        
  Share capital – ordinary shares of NIS 0.2 par value     2,706       2,647  
  Additional paid-in capital     929,359       928,626  
  Accumulated other comprehensive loss     (6,364 )     (6,017 )
  Accumulated deficit     (696,503 )     (691,446 )
           
  Total shareholders’ equity     229,198       233,810  
           
  TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 351,669     $ 393,806  
           

GILAT SATELLITE NETWORKS LTD.                
CONSOLIDATED STATEMENTS OF CASH FLOWS                
U.S. dollars in thousands                
                   
      Three months ended    Nine months ended
       September 30,     September 30,
       2021     2020     2021     2020 
      Unaudited     Unaudited
Cash flows from operating activities:                
Net income (loss)   $ 168     $ (11,551 )   $ (5,057 )   $ (27,531 )
Adjustments required to reconcile net income                
 to net cash provided by operating activities:                
Depreciation and amortization     2,556       2,486       7,202       7,757  
Capital loss from disposal of property and equipment           11             34  
Stock-based compensation of options     489       280       795       987  
Accrued severance pay, net     (49 )     11       (177 )     37  
Deferred taxes, net     (232 )     (39 )     (47 )     101  
Decrease (increase) in trade receivables, net     5,311       2,488       (1,757 )     20,852  
Decrease (increase) in contract assets     (639 )     (6,042 )     17,104       (14,404 )
Decrease (increase) in other assets (including short-term, long-term                
   and deferred charges)     (1,476 )     1,209       (5,485 )     7,919  
Decrease (increase) in inventories     (2,121 )     548       (347 )     (5,150 )
Decrease in trade payables     (1,929 )     (2,825 )     (2,719 )     (3,335 )
Increase (decrease) in accrued expenses     (542 )     5,616       1,151       (193 )
Increase (decrease) in advance from customers and deferred revenue     4,560       1,609       4,369       (4,116 )
Decrease in current and non current liabilities     (1,107 )     (904 )     (1,301 )     (219 )
Net cash provided by (used in) operating activities     4,989       (7,103 )     13,731       (17,261 )
                     
Cash flows from investing activities:                
Purchase of property and equipment     (1,452 )     (861 )     (5,024 )     (2,740 )
Proceeds from short term deposits     2,159                    
Net cash used in investing activities     707       (861 )     (5,024 )     (2,740 )
                   
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     (91 )     (91 )     (252 )     (630 )
                   
Increase (decrease) in cash, cash equivalents and restricted cash     5,605       (8,055 )     (30,548 )     (24,727 )
                   
Cash, cash equivalents and restricted cash at the beginning of the period     79,805       85,297       115,958       101,969  
                   
Cash, cash equivalents and restricted cash at the end of the period   $ 85,410     $ 77,242     $ 85,410     $ 77,242  
                   

 

Alex

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