Categories: Wire Stories

Gilat Reports Strong Second Quarter 2022 Results

Revenue of $55.5 million, operating profit $1.5 million and Adjusted EBITDA of $5.3 million; Reiterates 2022 guidance

PETAH TIKVA, Israel, Aug. 09, 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 second quarter ended June 30, 2022.

Second Quarter 2022 Financial Highlights

  • Revenues of $55.5 million,up 1.2% compared with Q2 of last year;
  • GAAP operating income of $1.5 million versus operating loss of $0.4 million in Q2 last year;
  • Non-GAAP operating income of $2.4 million versus Non-GAAP operating income of $0.1 million in Q2 last year;
  • GAAP net income of $0.5 million versus loss of $0.2 million in Q2 last year;
  • Non-GAAP net income of $1.4 million versus Non-GAAP income of $0.3 million in Q2 last year;
  • Adjusted EBITDA of $5.3 million versus Adjusted EBITDA of $2.4 million in Q2 last year;
  • Reiterates and ontrack with 2022 financial guidance;

Forward-Looking Expectations

The Company reiterates its 2022 guidance issued in 2022, of revenues between $245 to $265 million, representing year-over-year growth of between 14% and 23%, GAAP operating income of between $5 to $9 million and Adjusted EBITDA of between $20 to $24 million, representing year-over-year growth of Adjusted EBITDA between 30% to 56%.

Management Commentary

Adi Sfadia, Gilat’s CEO, commented: “We are pleased with our strong results, especially with the solid improvement in our profitability. We continue to successfully capitalize on the opportunities in our pipeline, and we see increasing growth potential in our end-markets for the coming years. Looking out to the rest of the year, we feel increasingly comfortable and remain on target to meet our goals.

This was an exceptional quarter with significant multimillion dollar orders for Gilat’s next generation platform, SkyEdge IV. We expanded the global strategic relationships with our partners, the satellite operators, SES and Intelsat, and are competing on important GEO VHTS opportunities in our pipeline with additional major satellite operators. Furthermore, our SSPA business for this new and exciting market is progressing as planned, and as such, we believe we are well positioned to seize opportunities in the multibillion market of the next era of satellite communication.

We received more than $10 million in new Cellular Backhaul orders this quarter as we continue to expand our global leadership. We are encouraged with the progress in our strategic markets of Inflight Connectivity and Maritime as well as with our growing business in Defense and Enterprise, and we see a growing set of additional opportunities.”

Mr. Sfadia concluded, �Given our ongoing strong performance, we reiterate our 2022 guidance and expect a year of solid growth in revenue and improved profitability.”

Key Recent Announcements

  • Internet Para Todos Expands Services Contract with Gilat
  • Gilat Signs Agreement to Enable a Central Asian Government to Provide Digital Services over Satellite
  • Gilat and Intelsat Expand Their Strategic In-Flight Connectivity Partnership in Japan
  • Tier-1 MNO Awards Multimillion-Dollar Order to Gilat for 4G Cellular Backhaul Network Expansion in Latin America
  • Gilat Awarded Order of Over $7M from Tier-1 Mobile Network Carrier in APAC for 4G Cellular Backhaul Network Expansion
  • Gilat Awarded Follow-On Orders to Expand Defense Force SATCOM Network in an Asian Nation
  • Gilat Receives Over $8 Million Follow-On Order for Support of Low Earth Orbit Constellation

Conference Call Details

Gilat’s management will discuss its second quarter 2022 results and business achievements and participate in a question and answer session:

Date:              Tuesday, August 9, 2022
Start:              09:30 AM EDT / 16:30 IDT
Dial-in:            US: 1-866-744-5399
                       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/gilatq2-2022

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), impairment of held for sale asset, 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. 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
EK Global Investor Relations
gilat@ekgir.com
+1 212 378 8040

GILAT SATELLITE NETWORKS LTD.              
CONSOLIDATED STATEMENTS OF INCOME (LOSS)          
U.S. dollars in thousands (except share and per share data)          
        Six months ended
   Three months ended
         June 30,
  June 30,
 
          2022       2021       2022       2021    
            As Restated (1)
        As Restated (1)
   
        Unaudited   Unaudited  
                       
Revenues     $ 106,863     $ 98,169     $ 55,454     $ 54,798    
Cost of revenues     70,706       69,070       35,685       38,179    
                       
Gross profit       36,157       29,099       19,769       16,619    
                       
Research and development expenses, net         16,386       15,660       8,718       7,733    
Selling and marketing expenses         10,310       10,468       4,960       5,464    
General and administrative expenses         8,555       6,938       4,371       3,855    
Impairment of held for sale asset         439             229          
                       
Total operating expenses   35,690       33,066       18,278       17,052    
                       
Operating income (loss)   467       (3,967 )     1,491       (433 )  
                       
Financial income (expenses), net         (1,663 )     (757 )     (468 )     435    
                       
Income (loss) before taxes on income         (1,196 )     (4,724 )     1,023       2    
                       
Taxes on income     832       474       517       227    
                       
Net income (loss)   $ (2,028 )   $ (5,198 )   $ 506     $ (225 )  
                       
Earnings (loss) per share (basic and diluted)       $ (0.04 )   $ (0.09 )   $ 0.01     $ (0.00 )    
                       
Weighted average number of shares used in              
computing earning (loss) per share

             
Basic       56,574,296       56,269,941       56,597,523       56,508,539    
Diluted     56,574,296       56,269,941       56,637,208       56,508,539    
                       
(1)  The Company restated its previously issued condensed interim consolidated financial statements for the three and six months ended June 30, 2021.
 For additional information, see Item 5 of our 2021 Form 20-F and Notes 2 and 13 of our Condensed Interim Consolidated Financial Statements filed
 with the U.S. Securities and Exchange Commission on May 16, 2022 and August 9, 2022, respectively.  
                       

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  
              June 30, 2022   June 30, 2021  
              GAAP
  Adjustments (*)   Non-GAAP
  GAAP
    Adjustments (*)   Non-GAAP
                          As Restated (1)
            As Restated (1)
              Unaudited   Unaudited  
                                     
Gross profit           $ 19,769     81     $ 19,850   $ 16,619         64     $ 16,683  
Operating expenses           18,278     (832 )     17,446     17,052         (456 )     16,596  
Operating income (loss)         1,491     913       2,404     (433 )     520       87  
Income before taxes on income       1,023     913       1,936     2       520       522  
Net income (loss)         $ 506     913     $ 1,419   $ (225 )       520     $ 295  
                                     
Earnings (loss) per share (basic and diluted) $ 0.01   $ 0.02     $ 0.03   $ (0.00 )     $ 0.01     $ 0.01  
                                     
                                     
Weighted average number of shares used in                        
computing earning (loss) per share                          
 Basic             56,597,523         56,597,523     56,508,539             56,508,539  
 Diluted           56,637,208         56,773,970     56,508,539             57,328,088  
                                     
                                     
 (*) Adjustments reflect the effect of non-cash stock-based compensation as per ASC 718, amortization of intangible assets related to shares acquisition transactions and
 impairment of held for sale asset.            
                                     
                                     
                    Three months ended
          Three months ended
     
                    June 30, 2022
          June 30, 2021    
                              As Restated (1)
     
                  Unaudited         Unaudited    
                                     
GAAP net income (loss)           $ 506             $ (225 )      
                                     
Gross profit                                  
Non-cash stock-based compensation expenses       75               59        
Amortization of intangible assets related to acquisition transactions                   55               5        
                    130               64        
Operating expenses                                
Non-cash stock-based compensation expenses       494               406        
Amortization of intangible assets related to acquisition transactions                   60               50        
Impairment of held for sale asset           229                      
                    783               456        
                                     
                                     
Non-GAAP net income           $ 1,419             $ 295        
                                     
(1)  The Company restated its previously issued condensed interim consolidated financial statements for the three and six months ended June 30, 2021.
 For additional information, see Item 5 of our 2021 Form 20-F and Notes 2 and 13 of our Condensed Interim Consolidated Financial Statements filed
 with the U.S. Securities and Exchange Commission on May 16, 2022 and August 9, 2022, respectively.      
                                     

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)                      
              Six months ended   Six months ended  
              June 30, 2022   June 30, 2021  
              GAAP   Adjustments (*)   Non-GAAP   GAAP   Adjustments (*)   Non-GAAP  
                          As Restated (1)
      As Restated (1)
              Unaudited   Unaudited  
                                     
Gross profit           $ 36,157       156     $ 36,313     $ 29,099       130     $ 29,229    
Operating expenses           35,690       (1,515 )     34,175       33,066       (287 )     32,779    
Operating income (loss)         467       1,671       2,138       (3,967 )     417       (3,550 )  
Income (loss) before taxes on income     (1,196 )     1,671       475       (4,724 )     417       (4,307 )  
Net loss             (2,028 )     1,671       (357 )     (5,198 )     417       (4,781 )  
                                     
Loss per share (basic and diluted)     $ (0.04 )   $ 0.03     $ (0.01 )   $ (0.09 )   $ 0.01     $ (0.08 )  
                                     
                                     
Weighted average number of shares used in                        
computing loss per share                              
  Basic           56,574,296           56,574,296       56,269,941           56,269,941    
  Diluted           56,574,296           56,574,296       56,269,941           56,269,941    
                                     
                                     
 (*) Adjustments reflect the effect of non-cash stock-based compensation as per ASC 718, amortization of intangible assets related to shares acquisition transactions and  
 impairment of held for sale asset.             
                                     
                                     
                      Six months ended
                  Six months ended
       
                      June 30, 2022
                  June 30, 2021
       
                              As Restated (1)    
                  Unaudited           Unaudited      
                                     
GAAP net loss             $ (2,028 )           $ (5,198 )      
                                     
Gross profit                                  
Non-cash stock-based compensation expenses       145               120        
Amortization of intangible assets related to acquisition transactions   60               10        
                    205               130        
Operating expenses                                
Non-cash stock-based compensation expenses       916               186        
Amortization of intangible assets related to acquisition transactions   111               101        
Impairment of held for sale asset           439                      
                    1466               287        
                                     
                                     
Non-GAAP net loss             $ (357 )           $ (4,781 )      
                                     
(1)  The Company restated its previously issued condensed interim consolidated financial statements for the three and six months ended June 30, 2021.      
 For additional information, see Item 5 of our 2021 Form 20-F and Notes 2 and 13 of our Condensed Interim Consolidated Financial Statements filed    
 with the U.S. Securities and Exchange Commission on May 16, 2022 and August 9, 2022, respectively.              
                                     

                   
GILAT SATELLITE NETWORKS LTD.                  
SUPPLEMENTAL INFORMATION                  
U.S. dollars in thousands                    
                       
                       
ADJUSTED EBITDA:                    
                       
         Six months ended
   Three months ended
         June 30,
   June 30,
 
          2022       2021       2022     2021    
            As Restated (1)       As Restated (1)  
        Unaudited   Unaudited  
                       
GAAP net income (loss)     $ (2,028 )   $ (5,198 )   $ 506   $ (225 )  
Adjustments:                      
Financial expenses (income), net       1,663       757       468     (435 )  
Taxes on income         832       474       517     227    
Non-cash stock-based compensation expenses         1,061       306       569     465    
Impairment of held for sale asset       439             229        
Other         60             60        
Depreciation and amortization (*)     5,792       4,758       2,941     2,373    
                       
Adjusted EBITDA       $ 7,819     $ 1,097     $ 5,290   $ 2,405    
                       
(*) Including amortization of lease incentive                  
                       
SEGMENT REVENUE:                    
                       
         Six months ended     Three months ended   
         June 30,     June 30,   
          2022       2021       2022     2021    
            As Restated (1)       As Restated (1)  
        Unaudited   Unaudited  
                       
Satellite Networks       $ 51,627     $ 59,975     $ 26,857   $ 34,351    
Integrated Solutions         29,397       18,836       15,691     12,127    
Network Infrastructure and Services     25,839       19,358       12,906     8,320    
                       
Total revenues       $ 106,863     $ 98,169     $ 55,454   $ 54,798    
                       
                       
                       
(1) The Company restated its previously issued condensed interim consolidated financial statements for the three and six months ended June 30, 2021.  
      For additional information, see Item 5 of our 2021 Form 20-F and Notes 2 and 13 of our Condensed Interim Consolidated Financial Statements filed  
      with the U.S. Securities and Exchange Commission on May 16, 2022 and August 9, 2022, respectively.          
                       

           
GILAT SATELLITE NETWORKS LTD.      
CONSOLIDATED BALANCE SHEETS      
U.S. dollars in thousands        
           
    June 30,   December 31,  
      2022       2021    
    Unaudited   Audited  
           
ASSETS        
           
CURRENT ASSETS:        
Cash and cash equivalents $ 70,133     $ 81,859    
Short-term deposits         2,159    
Restricted cash   1,313       2,592    
Trade receivables, net   51,303       39,161    
Contract assets   29,310       26,008    
Inventories   32,156       28,432    
Other current assets   22,458       14,607    
Held for sale asset   4,276       4,587    
           
Total current assets   210,949       199,405    
           
LONG-TERM ASSETS:        
Restricted cash   12       12    
Long- term contract assets   11,845       12,539    
Severance pay funds   5,937       6,795    
Deferred taxes   15,885       17,551    
Operating lease right-of-use assets     3,845       4,478    
Other long term assets   11,225       10,456    
           
Total long-term assets   48,749       51,831    
           
PROPERTY AND EQUIPMENT, NET     72,410       72,391    
           
INTANGIBLE ASSETS, NET     419       640    
           
GOODWILL   43,468       43,468    
           
TOTAL ASSETS $ 375,995     $ 367,735    
           
GILAT SATELLITE NETWORKS LTD.      
CONSOLIDATED BALANCE SHEETS (Cont.)    
U.S. dollars in thousands        
           
    June 30,   December 31,  
      2022       2021    
    Unaudited   Audited  
           
LIABILITIES AND SHAREHOLDERS’ EQUITY    
           
CURRENT LIABILITIES:      
Trade payables $ 24,010     $ 19,776    
Accrued expenses   47,654       49,202    
Advances from customers and deferred revenues     31,932       24,373    
Operating lease liabilities   1,747       1,818    
Other current liabilities   15,458       13,339    
           
Total current liabilities   120,801       108,508    
           
LONG-TERM LIABILITIES:      
Accrued severance pay   6,548       7,292    
Long-term advances from customers     722       1,209    
Operating lease liabilities   2,056       2,283    
Other long-term liabilities   132       120    
           
Total long-term liabilities     9,458       10,904    
           
SHAREHOLDERS’ EQUITY:      
Share capital – ordinary shares of NIS 0.2 par value     2,711       2,706    
Additional paid-in capital   930,927       929,871    
Accumulated other comprehensive loss     (7,977 )     (6,357 )  
Accumulated deficit   (679,925 )     (677,897 )  
           
Total shareholders’ equity     245,736       248,323    
           
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY   $ 375,995     $ 367,735    
           

GILAT SATELLITE NETWORKS LTD.                
CONSOLIDATED STATEMENTS OF CASH FLOWS                
U.S. dollars in thousands                
                   
     Six months ended
   Three months ended
     June 30,
   June 30,
 
      2022       2021       2022       2021    
        As Restated (1)       As Restated (1)  
    Unaudited   Unaudited  
Cash flows from operating activities:                
Net income (loss) $ (2,028 )   $ (5,198 )   $ 506     $ (225 )  
Adjustments required to reconcile net loss                
 to net cash provided by (used in) operating activities:                
Depreciation and amortization   5,683       4,646       2,887       2,316    
Impairment of held for sale asset   439             229          
Stock-based compensation of options   1,061       306       569       465    
Accrued severance pay, net   114       (128 )     177       (118 )  
Deferred taxes, net   1,664       185       1,358       (333 )  
Increase in trade receivables, net   (11,883 )     (7,357 )     (5,471 )     (5,424 )  
Decrease (increase) in contract assets   (2,608 )     21,647       (599 )     24,826    
Increase in other assets (including short-term, long-term                
   and deferred charges)   (7,763 )     (4,009 )     (4,047 )     (3,789 )  
Decrease (increase) in inventories   (4,075 )     1,774       (1,731 )     3,986    
Increase (decrease) in trade payables   4,205       (790 )     2,533       (1,740 )  
Decrease in accrued expenses   (1,690 )     (1,802 )     (2,442 )     (1,304 )  
Increase (decrease) in advance from customers and deferred revenue   7,010       (338 )     4,700       (8,062 )  
Decrease in other liabilities   (810 )     (194 )     (1,975 )     (2,197 )  
Net cash provided by (used in) operating activities   (10,681 )     8,742       (3,306 )     8,401    
                   
Cash flows from investing activities:                
Purchase of property and equipment   (4,515 )     (3,572 )     (2,314 )     (2,089 )  
Repayment of (investment in) short term deposits   2,159       (2,159 )     2,159       (2,159 )  
Net cash used in investing activities   (2,356 )     (5,731 )     (155 )     (4,248 )  
                   
Cash flows from financing activities:                
Dividend payment         (35,003 )              
Repayment of long-term loan         (4,000 )              
Net cash used in financing activities         (39,003 )              
                   
Effect of exchange rate changes on cash, cash equivalents and restricted cash   32       (161 )     (221 )     93    
                   
Increase (decrease) in cash, cash equivalents and restricted cash   (13,005 )     (36,153 )     (3,682 )     4,246    
                   
Cash, cash equivalents and restricted cash at the beginning of the period   84,463       115,958       75,140       75,559    
                   
Cash, cash equivalents and restricted cash at the end of the period $ 71,458     $ 79,805     $ 71,458     $ 79,805    
                   
(1)     The Company restated its previously issued condensed interim consolidated financial statements for the three and six months ended June 30, 2021.      
 For additional information, see Item 5 of our 2021 Form 20-F and Notes 2 and 13 of our Condensed Interim Consolidated Financial Statements filed      
 with the U.S. Securities and Exchange Commission on May 16, 2022 and August 9, 2022, respectively.              
                   

Alex

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