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Gilat Reports Third Quarter 2023 Results

Revenues Grew 6% to $63.9 million;
GAAP Operating Income of $12.7 million and Adjusted EBITDA of $9.5 million, 30% Growth Year-over-Year;

PETAH TIKVA, Israel, Nov. 07, 2023 (GLOBE NEWSWIRE) -- Gilat Satellite Networks Ltd. (NASDAQ: GILT, TASE: GILT), a worldwide leader in satellite networking technology, solutions and services, reported today its results for the third quarter, ended September 30, 2023.

Third Quarter 2023 Financial Highlights

  • Revenueof $63.9 million, up 6% compared with $60.4 million in Q3 2022;
  • GAAP operating income of $12.7 million compared with $3.4 million in Q3 2022;
    GAAP operating income in this quarter includes a one-time other income, net, of $7.4 million, that was recorded with respect to a settlement of legal proceedings in the Philippines and a real estate sale in Bulgaria;
  • Non-GAAP operating income of $6.1 million, up 40% compared with $4.4 million in Q3 2022;
  • GAAP net income of $10.2 million, or $0.18 per diluted share, compared with $2.1 million, or $0.04 per diluted share in Q3 2022; GAAP net income in Q3 2023 excluding the one-time other income, net, mentioned above and its relevant tax effect, was $3.8 million, or $0.07 per diluted share;
  • Non-GAAP net income of $4.6 million, or $0.08 per diluted share, up 51% compared with $3 million, or $0.06 per diluted share in Q3 2022;
  • Adjusted EBITDA of $9.5 million, up 30% compared with $7.3 million in Q3 2022;

Forward-Looking Expectations

The Company narrowed the range of its 2023 revenue guidance, with expectations of between $265 million to $275 million, representing year-over-year growth of 13% at the mid-point. The Company increased the range of its GAAP operating income guidance range to between $29 million to $31 million representing significant year-over-year growth compared with $10 million in 2022. The Company also narrowed the range of its Adjusted EBITDA guidance to between $35 to $37 million, representing year-over-year growth of 43% at the mid-point.

Adi Sfadia, Gilat's CEO, commented:

“We are deeply saddened by the tragic events of October 7th in Israel. Our thoughts and prayers are with the victims and families of this horrific attack – the murdered, the hostages, the wounded and their families. We are very proud of our employees’ response to this crisis and their dedication to the company during these times. We also want to thank our customers and suppliers and the world community at large for their full hearted support. 

As a strong global company with operation and development centers worldwide, our operation remains unaffected by recent events in Israel. We continue to closely monitor the situation and have implemented relevant measures, and refreshed our business continuity plans to minimize any potential effect, if at all, to our business.”

Mr. Sfadia continued, ”We are pleased with our results, particularly the continued revenue growth combined with the solid improvement in our profitability. We reported significantly improved profitability including Adjusted EBITDA, demonstrating the operating leverage inherent in our business. The ongoing good performance was due to the continued growing interest in our solutions as well as advancements in the satellite communications space in general.”

Mr. Sfadia concluded, "Our strong performance in 2023 to date, has generated Adjusted EBITDA of $27 million in the nine months ended September 30, 2023 which already exceeds the Adjusted EBITDA from the whole of 2022. Given our leading position in the market and the opportunities we see ahead, we look forward to continuing our growth into 2024 and beyond.”

Key Recent Announcements

  • Gilat Awarded Approximately $20 Million in Contract Renewal and Extension from Tier-1 MNO in the USA
  • Gilat Awarded Contract for Satellite Network Modernization at Ethio Telecom

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

Date: Tuesday, November 7, 2023
Start: 09:30 AM EST / 16:30 IST
Dial-in: US: 1-888-407-2553
  International: +972-3-918-0609
   

A simultaneous webcast of the conference call will be available on the Gilat website at www.gilat.com and through this link: https://Veidan.activetrail.biz/gilatq3-2023

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

Non-GAAP Measures

The attached summary unaudited financial statements were prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). To supplement the consolidated financial statements presented in accordance with GAAP, the Company presents non-GAAP presentations of gross profit, operating expenses, operating income, income before taxes on income, net income, adjusted EBITDA, and earnings per share. The adjustments to the Company’s GAAP results are made with the intent of providing both management and investors with a more complete understanding of the Company’s underlying operational results, trends, and performance. Non-GAAP financial measures mainly exclude, if and when applicable, the effect of non-cash stock-based compensation expenses, amortization of purchased intangibles, amortization of intangible assets related to acquisition transactions, lease incentive amortization, impairment of held for sale asset, income tax effect on adjustments, one-time changes of deferred tax assets, and other operating expenses (income), net.

Adjusted EBITDA is presented to compare the Company’s performance to that of prior periods and evaluate the Company’s financial and operating results on a consistent basis from period to period. The Company also believes this measure, when viewed in combination with the Company’s financial results prepared in accordance with GAAP, provides useful information to investors to evaluate ongoing operating results and trends. Adjusted EBITDA, however, should not be considered as an alternative to operating income or net income for the period and may not be indicative of the historic operating results of the Company; nor is it meant to be predictive of potential future results. Adjusted EBITDA is not a measure of financial performance under GAAP and may not be comparable to other similarly titled measures for other companies. Reconciliation between the Company's net income and adjusted EBITDA is presented in the attached summary financial statements.

Non-GAAP presentations of gross profit, operating expenses, operating income, income before taxes on income, net income, adjusted EBITDA and earnings per share should not be considered in isolation or as a substitute for any of the consolidated statements of operations prepared in accordance with GAAP, or as an indication of Gilat’s operating performance or liquidity.

About Gilat

Gilat Satellite Networks Ltd. (NASDAQ: GILT, TASE: GILT) is a leading global provider of satellite-based broadband communications.

With over 35 years of experience, we create and deliver deep technology solutions for satellite, ground and new space connectivity and provide comprehensive end-to-end solutions and services, powered by our innovative technology. We believe in the right of all people to be connected and are united in our resolution to provide communication solutions to all reaches of the world.

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

Gilat’s comprehensive solutions support multiple applications with a full portfolio of products to address key applications including broadband access, mobility, cellular backhaul, military, government, and enterprise, all while meeting the most stringent service level requirements. For more information, please visit: www.gilat.com

Certain statements made herein that are not historical are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. The words “estimate”, “project”, “intend”, “expect”, “believe” and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties. Many factors could cause the actual results, performance or achievements of Gilat to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, risks associated with the outbreak and global spread of the coronavirus (COVID-19) pandemic; changes in general economic and business conditions, inability to maintain market acceptance to Gilat’s products, inability to timely develop and introduce new technologies, products and applications, rapid changes in the market for Gilat’s products, loss of market share and pressure on prices resulting from competition, introduction of competing products by other companies, inability to manage growth and expansion, loss of key OEM partners, inability to attract and retain qualified personnel, inability to protect the Company’s proprietary technology and risks associated with Gilat’s international operations and its location in Israel. For additional information regarding these and other risks and uncertainties associated with Gilat’s business, reference is made to Gilat’s reports filed from time to time with the Securities and Exchange Commission. We undertake no obligation to update or revise any forward-looking statements for any reason.

Contact:
Gilat Satellite Networks
Doreet Oren, Senior Director Corporate Communications
[email protected]

Gilat Satellite Networks
Mayrav Sher, Head of Finance and Investor Relations
[email protected]

EK Global IR
Ehud Helft, Managing Partner
[email protected]

 

GILAT SATELLITE NETWORKS LTD.                
CONSOLIDATED STATEMENTS OF INCOME                
U.S. dollars in thousands (except share and per share data)              
    Nine months ended
  Three months ended
    September 30,
  September 30,
      2023     2022     2023     2022
    Unaudited   Unaudited
                 
Revenues   $ 190,478     $ 167,213   $ 63,927     $ 60,350
Cost of revenues     114,453       108,021     38,123       37,315
                 
Gross profit     76,025       59,192     25,804       23,035
                 
Research and development expenses, net     29,549       25,542     10,546       9,156
Selling and marketing expenses     18,124       15,724     6,183       5,414
General and administrative expenses     12,903     *) 13,214     3,748     *) 4,719
Impairment of held for sale asset     -       718     -       279
Other operating expenses (income), net     (9,757 )   *) 111     (7,417 )   *) 51
                 
Total operating expenses     50,819       55,309     13,060       19,619
                 
Operating income     25,206       3,883     12,744       3,416
                 
Financial expenses, net     1,087       2,716     352       1,053
                 
Income before taxes on income     24,119       1,167     12,392       2,363
                 
Taxes on income     4,062       1,075     2,240       243
                 
Net income   $ 20,057     $ 92   $ 10,152     $ 2,120
                 
Earnings per share (basic and diluted)   $ 0.35     $ 0.00   $ 0.18     $ 0.04
                 
Weighted average number of shares used in computing earnings per share                
Basic     56,618,407       56,585,858     56,623,793       56,608,981
Diluted     56,623,125       56,604,854     56,624,966       56,626,283
                 
*) Reclassified                
                 

GILAT SATELLITE NETWORKS LTD.
RECONCILIATION BETWEEN GAAP AND NON-GAAP CONSOLIDATED STATEMENTS OF INCOME
FOR COMPARATIVE PURPOSES
U.S. dollars in thousands (except share and per share data)
    Three months ended   Three months ended
    September 30, 2023   September 30, 2022
    GAAP   Adjustments(*)   Non-GAAP   GAAP   Adjustments(*)   Non-GAAP
    Unaudited   Unaudited
                         
Gross profit $ 25,804   $ 108     $ 25,912   $ 23,035   $ 74     $ 23,109
Operating expenses   13,060     6,753       19,813     19,619     (879 )     18,740
Operating income   12,744     (6,645 )     6,099     3,416     953       4,369
Income before taxes on income   12,392     (6,645 )     5,747     2,363     953       3,316
Net income $ 10,152   $ (5,568 )   $ 4,584   $ 2,120   $ 911     $ 3,031
                         
Earnings per share (basic and diluted) $ 0.18   $ (0.10 )   $ 0.08   $ 0.04   $ 0.02     $ 0.06
                         
                         
Weighted average number of shares used in computing earnings per share                      
                         
  Basic   56,623,793         56,623,793     56,608,981         56,608,981
  Diluted   56,624,966         56,906,057     56,626,283         56,652,855
                         
                         
(*)  Adjustments reflect the effect of non-cash stock-based compensation expenses as per ASC 718, amortization of intangible assets related to acquisition transactions, impairment of held for sale asset, other operating expenses (income), net and income tax effect on adjustments which is calculated using the relevant effective tax rate.
                         
                         
    Three months ended   Three months ended
    September 30, 2023   September 30, 2022
        Unaudited           Unaudited    
                         
GAAP net income     $ 10,152             $ 2,120      
                         
Gross profit                      
Non-cash stock-based compensation expenses         108               74      
          108               74      
Operating expenses                      
Non-cash stock-based compensation expenses         614               498      
Amortization of intangible assets related to acquisition transactions       50               51      
Impairment of held for sale asset       -               279      
Other operating expenses (income), net       (7,417 )             51      
          (6,753 )             879      
                         
Income tax effect on adjustments       1,077               (42 )    
                         
Non-GAAP net income     $ 4,584             $ 3,031      
                         

GILAT SATELLITE NETWORKS LTD.
RECONCILIATION BETWEEN GAAP AND NON-GAAP CONSOLIDATED STATEMENTS OF INCOME
FOR COMPARATIVE PURPOSES
U.S. dollars in thousands (except share and per share data)
    Nine months ended   Nine months ended
    September 30, 2023   September 30, 2022
    GAAP   Adjustments(*)
  Non-GAAP   GAAP   Adjustments(*)
  Non-GAAP
    Unaudited   Unaudited
                         

Gross profit
$ 76,025   $ 278     $ 76,303   $ 59,192   $ 230     $ 59,422
Operating expenses   50,819     8,049       58,868     55,309     (2,394 )     52,915
Operating income   25,206     (7,771 )     17,435     3,883     2,624       6,507
Income before taxes on income   24,119     (7,771 )     16,348     1,167     2,624       3,791
Net income $ 20,057   $ (6,694 )   $ 13,363   $ 92   $ 2,582     $ 2,674
                         
Earnings per share (basic and diluted) $ 0.35   $ (0.11 )   $ 0.24   $ 0.00   $ 0.05     $ 0.05
                         
                         
Weighted average number of shares used in computing earnings per share                      
  Basic   56,618,407         56,618,407     56,585,858         56,585,858
  Diluted   56,623,125         56,716,822     56,604,854         56,659,298
                         
                         
(*)  Adjustments reflect the effect of non-cash stock-based compensation expenses as per ASC 718, amortization of intangible assets related to acquisition transactions, impairment of held for sale asset, other operating expenses (income), net and income tax effect on adjustments which is calculated using the relevant effective tax rate.
 
                         
                         
    Nine months ended   Nine months ended
    September 30, 2023   September 30, 2022
        Unaudited           Unaudited    
                         
GAAP net income     $ 20,057             $ 92      
                         

Gross profit
                     
Non-cash stock-based compensation expenses       278               220      

Amortization of intangible assets related to acquisition transactions 
        -               10      
          278               230      
Operating expenses                      
Non-cash stock-based compensation expenses       1,558               1,413      
Amortization of intangible assets related to acquisition transactions          150               152      
Impairment of held for sale asset       -               718      
Other operating expenses (income), net       (9,757 )             111      
          (8,049 )             2,394      
                         
Income tax effect on adjustments       1,077               (42 )    
                         
Non-GAAP net income     $ 13,363             $ 2,674      
                         

GILAT SATELLITE NETWORKS LTD.              
SUPPLEMENTAL INFORMATION              
U.S. dollars in thousands              
               
ADJUSTED EBITDA:              
               
  Nine months ended
  Three months ended
  September 30,
  September 30,
    2023     2022     2023     2022
  Unaudited   Unaudited
               
GAAP net income $ 20,057     $ 92   $ 10,152     $ 2,120
Adjustments:              
Financial expenses, net   1,087       2,716     352       1,053
Taxes on income   4,062       1,075     2,240       243
Non-cash stock-based compensation expenses   1,836       1,633     722       572
Impairment of held for sale asset   -       718     -       279
Other operating expenses (income), net   (9,757 )     111     (7,417 )     51
Depreciation and amortization (*)   9,765       8,770     3,430       2,978
               
Adjusted EBITDA $ 27,050     $ 15,115   $ 9,479     $ 7,296
               
(*) Including amortization of lease incentive              
               
SEGMENT REVENUES:              
           
  Nine months ended   Three months ended
  September 30,   September 30,
    2023     2022     2023     2022
  Unaudited   Unaudited
               
Satellite Networks $ 115,010     $ 83,993   $ 40,737     $ 32,366
Integrated Solutions   36,630       45,047     11,011       15,650
Network Infrastructure and Services   38,838       38,173     12,179       12,334
               
Total revenues $ 190,478     $ 167,213   $ 63,927     $ 60,350
               

GILAT SATELLITE NETWORKS LTD.        
CONSOLIDATED BALANCE SHEETS        
U.S. dollars in thousands        
         
    September 30,   December 31,
      2023       2022  
    Unaudited   Audited
         
ASSETS        
         
CURRENT ASSETS:        
Cash and cash equivalents   $ 99,530     $ 86,591  
Restricted cash     749       541  
Trade receivables, net     46,966       50,644  
Contract assets     20,522       24,971  
Inventories     37,673       33,024  
Other current assets     20,407       19,283  
         
Total current assets     225,847       215,054  
         
LONG-TERM ASSETS:        
Restricted cash     14       13  
Long-term contract assets     9,283       11,149  
Severance pay funds     5,407       5,947  
Deferred taxes     14,500       18,265  
Operating lease right-of-use assets     3,609       3,891  
Other long-term assets     8,920       10,737  
         
Total long-term assets     41,733       50,002  
         
PROPERTY AND EQUIPMENT, NET     73,697       76,578  
         
INTANGIBLE ASSETS, NET     165       309  
         
GOODWILL     43,468       43,468  
         
TOTAL ASSETS   $ 384,910     $ 385,411  
         
GILAT SATELLITE NETWORKS LTD.        
CONSOLIDATED BALANCE SHEETS (Cont.)        
U.S. dollars in thousands        
         
    September 30,   December 31,
      2023       2022  
    Unaudited   Audited
         
LIABILITIES AND SHAREHOLDERS’ EQUITY        
         
CURRENT LIABILITIES:        
Trade payables   $ 13,884     $ 20,668  
Accrued expenses     45,534       50,356  
Advances from customers and deferred revenues     33,108       30,531  
Operating lease liabilities     2,128       1,941  
Other current liabilities     15,745       22,291  
         
   Total current liabilities     110,399       125,787  
         
LONG-TERM LIABILITIES:        
Accrued severance pay     6,195       6,580  
Long-term advances from customers and deferred revenues     1,123       1,041  
Operating lease liabilities     1,403       1,890  
Other long-term liabilities     279       5,988  
         
Total long-term liabilities     9,000       15,499  
         
SHAREHOLDERS’ EQUITY:        
Share capital - ordinary shares of NIS 0.2 par value     2,712       2,711  
Additional paid-in capital     933,921       932,086  
Accumulated other comprehensive loss     (7,354 )     (6,847 )
Accumulated deficit     (663,768 )     (683,825 )
         
Total shareholders’ equity     265,511       244,125  
         
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 384,910     $ 385,411  
         

GILAT SATELLITE NETWORKS LTD.                
CONSOLIDATED STATEMENTS OF CASH FLOWS                
U.S. dollars in thousands                
                 
    Nine months ended
  Three months ended
    September 30,
  September 30,
      2023       2022       2023       2022  
    Unaudited   Unaudited
Cash flows from operating activities:                
Net income   $ 20,057     $ 92     $ 10,152     $ 2,120  
Adjustments required to reconcile net income to net cash provided by (used in) operating activities:                
Depreciation and amortization     9,597       8,604       3,375       2,921  
Capital gain from sale of property     (2,084 )     -       (2,084 )     -  
Impairment of held for sale asset     -       718       -       279  
Stock-based compensation     1,836       1,633       722       572  
Accrued severance pay, net     155       92       (41 )     (22 )
Deferred taxes, net     3,865       1,823       2,045       159  
Decrease (increase) in trade receivables, net     3,887       (12,270 )     (5,511 )     (387 )
Decrease (increase) in contract assets     6,110       (2,290 )     (2,268 )     318  
Decrease (increase) in other assets and other adjustments (including short-term, long-term and effect of exchange rate changes on cash and cash equivalents)     3,598       (8,652 )     3,355       (889 )
Decrease (increase) in inventories     (6,185 )     (6,030 )     1,710       (1,955 )
Increase (decrease) in trade payables     (5,321 )     4,315       (1,081 )     110  
Increase (decrease) in accrued expenses     (2,782 )     (1,767 )     2,257       (77 )
Increase (decrease) in advance from customers and deferred revenues     2,646       7,397       (478 )     387  
Increase (decrease) in other liabilities     (13,392 )     365       1,617       1,175  
Net cash provided by (used in) operating activities     21,987       (5,970 )     13,770       4,711  
                 
Cash flows from investing activities:                
Purchase of property and equipment     (8,656 )     (9,225 )     (2,100 )     (4,710 )
Proceeds from short term deposits     -       2,159       -       -  
Investment in financial instrument     -       (1,536 )     -       (1,536 )
Receipts from sale of property     2,168       -       2,168       -  
Net cash provided by (used in) investing activities     (6,488 )     (8,602 )     68       (6,246 )
                 
Effect of exchange rate changes on cash, cash equivalents and restricted cash     (2,351 )     (15 )     (1,341 )     (47 )
                 
Increase (decrease) in cash, cash equivalents and restricted cash     13,148       (14,587 )     12,497       (1,582 )
                 
Cash, cash equivalents and restricted cash at the beginning of the period     87,145       84,463       87,796       71,458  
                 
Cash, cash equivalents and restricted cash at the end of the period   $ 100,293     $ 69,876     $ 100,293     $ 69,876  
                 

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