Gilat Reports First Quarter 2021 Results

PETAH TIKVA, Israel, May 04, 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 first quarter of 2021.

First Quarter Financial Highlights

  • Revenues of $44.7 million versus $47.7 million in Q1 2020 and up from $42.6 million in the previous quarter;
  • GAAP operating loss of $3.7 million versus operating loss of $10.8 million in Q1 2020 and an operating income of $62.7 million in Q4 2020; GAAP operating income in Q4 2020 included income related to the legal settlement with Comtech, net of related expenses, of $64.8 million;
  • Non-GAAP operating loss of $3.8 million, compared with operating loss of $7.6 million in Q1 2020, and an operating loss of $1.6 million in the previous quarter;
  • GAAP net loss of $5.1 million, or loss of $0.09 per diluted share, compared with net loss of $11.8 million, or loss of $0.21 per diluted share in Q1 2020 and net income in the previous quarter of $62.4 million, or income of $1.12 per share; GAAP net income in the previous quarter included $64.8 million income related to the settlement with Comtech, net of related expenses;
  • Non-GAAP net loss of $5.2 million, or loss of $0.09 per diluted share, compared with net loss of $8.6 million, or loss of $0.15 per diluted share in Q1 2020, and compared with a net loss of $1.9 million, or loss of $0.03 per share, as reported in the previous quarter;  
  • Adjusted EBITDA loss of $1.4 million compared with adjusted EBITDA loss of $5.0 million in Q1 2020; and adjusted EBITDA of $1.1 million in the previous quarter;

Management Commentary

Adi Sfadia, Gilat's CEO, commented: “We continue to see strong momentum across all our business units, with the exception of the IFC market segment, which is yet to show a recovery. We believe that this growth trend will continue during 2021 and expect to show sequential quarterly growth throughout the year and increasing profitability. Looking further out, 2022 is expected to show significant improvement both in revenue and profitability with the pick-up in IFC, Cellular Backhaul and NGSO.

"As a testament to the strong momentum we are seeing, I am very pleased to report that we entered a mega strategic agreement valued at tens of millions of dollars, including a potential for significant project expansions, with a large government corporation in Asia Pacific. I believe that we will see additional large strategic transactions in the near future.

“In light of the many opportunities we see ahead of us, we are investing significant R&D efforts in order to capture these opportunities and accelerate our future growth. We expect that NGSO, IFC and Cellular Backhaul will be the main market segments that will drive this growth during 2021 and beyond, and we also see strong potential for the defense business to support our growth in a more meaningful way than it has done in the past.

"We made positive progress during the first quarter in our strategic growth areas of NGSO and Cellular Backhaul. We received additional orders for a LEO constellation, where our gateway Solid State Power Amplifiers (SSPAs) have been selected as the solution of choice. On the Cellular Backhaul front, we received a multi-million-dollar expansion and follow-on orders from Tier-1 mobile operators around the globe including in Japan, Australia, Europe and South America.

"In addition, we have made great progress in Peru with the government's acceptance for the operational phase in the Cusco region, bringing us significantly closer to our goal of recurring revenue of over $50M in Peru."

Key Recent Announcements

  • Gilat Enters Strategic Agreement Valued at Tens of Millions of Dollars with a Large Government Corporation in Asia Pacific
  • Gilat Achieves Critical Milestone in Peru with Approval to Enter Operational Phase, Unlocking Access to Recurring Revenue of Multi Million Dollars per Annum
  • Tier-1 Telco in Latin America Awards Gilat Over $3M to Provide Broadband Connectivity in Support of Bridging the Digital Divide
  • Gilat Receives Over $5M for Cellular Backhaul Expansion from Tier-1 Mobile Network Carrier in Japan
  • Gilat Awarded Over $20 Million in Orders for Support of Low Earth Orbit Constellation
  • SES Selected Gilat to Enable Tier-1 4G/LTE MNO in Brazil to Provide Broadband Connectivity for Education
  • Telespazio Selects Gilat to Supply Enterprise Connectivity in Brazil for a Multinational Leading Energy Company
  • Gilat Announces Appointment of Isaac Angel as Chairman of the Board
  • Gilat’s In-Flight Connectivity High-Power Transceiver Successfully Tested by Global Eagle Entertainment for DO-160G Certification
  • Gilat Launches Next Generation VSAT Family Supporting 5G Networks and LEO/MEO Constellations

Conference Call Details

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

Date:Tuesday, May 4, 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: www.veidan-stream.com/gilatq1-2021.html

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 Gilats products, inability to timely develop and introduce new technologies, products and applications, rapid changes in the market for Gilats 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 Companys proprietary technology and risks associated with Gilats international operations and its location in Israel. For additional information regarding these and other risks and uncertainties associated with Gilats business, reference is made to Gilats 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, 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)   
 Three months ended 
  March 31, 
  2021   2020 
  
 Unaudited
    
Revenues$44,713  $47,673 
Cost of revenues 32,356   38,787 
    
Gross profit  12,357     8,886  
    
Research and development expenses 8,111   7,634 
Less - grants 184   272 
Research and development expenses, net 7,927   7,362 
Selling and marketing expenses 5,004   5,066 
General and administrative expenses 3,083   4,818 
Merger, acquisition and related litigation expenses -   2,405 
    
Total operating expenses   16,014     19,651  
    
Operating loss   (3,657)   (10,765)
    
Financial expenses, net (1,192)  (972)
    
Loss before taxes on income  (4,849)   (11,737)
    
Taxes on income 247   18 
    
Net loss$ (5,096) $ (11,755)
    
Basic loss per share$ (0.09) $ (0.21)
    
Diluted loss per share$ (0.09) $ (0.21)
    
Weighted average number of shares used in computing loss per share   
Basic 56,031,343    55,493,258  
Diluted 56,031,343    55,493,258  
    


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
 March 31, 2021 March 31, 2020
 GAAP Adjustments  Non-GAAP GAAP Adjustments  Non-GAAP
    
 Unaudited Unaudited
            
Gross profit$12,357   66  $12,423  $8,886   62  $8,948 
Operating expenses 16,014   169   16,183   19,651   (3,106)  16,545 
Operating loss (3,657)  (103)  (3,760)  (10,765)  3,168   (7,597)
Loss before taxes on income (4,849)  (103)  (4,952)  (11,737)  3,168   (8,569)
Net loss  (5,096)  (103)   (5,199)   (11,755)  3,168    (8,587)
            
Basic loss per share$ (0.09) $-  $ (0.09) $ (0.21) $0.06  $ (0.15)
Diluted loss per share$ (0.09) $-  $ (0.09) $ (0.21) $0.06  $ (0.15)
            
            
Weighted average number of shares used in computing loss per share           
Basic 56,031,343     56,031,343   55,493,258     55,493,258 
Diluted 56,031,343     56,031,343   55,493,258     55,493,258 
            
            
            
  Three months ended   Three months ended
     March 31, 2021
          March 31, 2020
    
   Unaudited     Unaudited  
            
GAAP net loss  $(5,096)     $(11,755)  
            
Gross profit           
Non-cash stock-based compensation expenses     61            57   
Amortization of intangible assets related to acquisition transactions     5            5   
    66       62   
Operating expenses (income)             
Non-cash stock-based compensation expenses     (220)         366   
Amortization of intangible assets related to acquisition transactions     51          51   
Trade secrets and other litigation expenses   -       11   
Merger, acquisition and related litigation expenses     -            2,405   
Restructuring and re-organization costs   -       273   
    (169)      3,106   
            
Non-GAAP net loss  $(5,199)     $(8,587)  
            


GILAT SATELLITE NETWORKS LTD.   
SUPPLEMENTAL INFORMATION   
U.S. dollars in thousands   
    
    
ADJUSTED EBITDA:   
    
  Three months ended 
  March 31, 
  2021   2020 
  
 Unaudited
    
GAAP operating loss$(3,657) $(10,765)
Add (deduct):   
Non-cash stock-based compensation expenses (159)  423 
Trade secrets and other litigation expenses -   11 
Restructuring and re-organization costs -   273 
Merger, acquisition and related litigation expenses -   2,405 
Depreciation and amortization (*) 2,385   2,664 
        
Adjusted EBITDA$ (1,431) $ (4,989)
    
(*) Including amortization of lease incentive   
    
SEGMENT REVENUE:   
    
  Three months ended 
  March 31, 
  2021   2020 
  
 Unaudited
    
Fixed Networks$25,302  $23,011 
Mobility Solutions 11,079   19,201 
Terrestrial Infrastructure Projects 8,332   5,461 
    
Total revenue$ 44,713   $ 47,673  
    


GILAT SATELLITE NETWORKS LTD.   
CONSOLIDATED BALANCE SHEETS   
U.S. dollars in thousands   
    
 March 31, December 31,
  2021   2020 
 Unaudited Audited
    
ASSETS   
    
CURRENT ASSETS:   
Cash and cash equivalents$48,905  $88,754 
Restricted cash 26,642   27,162 
Trade receivables, net 27,820   27,976 
Contract assets 46,060   41,573 
Inventories 33,339   31,304 
Other current assets 18,832   16,637 
    
Total current assets 201,598   233,406 
    
LONG-TERM ASSETS:   
Long-term restricted cash 12   42 
Severance pay funds 6,414   6,665 
Deferred taxes 18,778   19,295 
Operating lease right-of-use assets 4,478   4,879 
Other long term receivables 8,339   7,797 
    
Total long-term assets 38,021   38,678 
    
PROPERTY AND EQUIPMENT, NET 76,612   77,172 
    
INTANGIBLE ASSETS, NET 971   1,082 
    
GOODWILL 43,468   43,468 
    
TOTAL ASSETS$360,670  $393,806 
    
GILAT SATELLITE NETWORKS LTD.   
CONSOLIDATED BALANCE SHEETS (Cont.)   
U.S. dollars in thousands   
    
 March 31, December 31,
  2021   2020 
 Unaudited Audited
    
LIABILITIES AND SHAREHOLDERS' EQUITY   
    
CURRENT LIABILITIES:   
Current maturities of long-term loans$-  $4,000 
Trade payables 21,428   20,487 
Accrued expenses 47,465   46,387 
Advances from customers and deferred revenues 35,404   26,244 
Operating lease liabilities 1,678   1,911 
Dividend payable -   35,003 
Other current liabilities 16,161   13,322 
    
Total current liabilities 122,136   147,354 
    
LONG-TERM LIABILITIES:   
Accrued severance pay 6,875   7,136 
Long-term advances from customers 307   1,890 
Operating lease liabilities 2,847   2,985 
Other long-term liabilities 396   631 
    
Total long-term liabilities 10,425   12,642 
    
SHAREHOLDERS' EQUITY:   
Share capital - ordinary shares of NIS 0.2 par value 2,704   2,647 
Additional paid-in capital 928,410   928,626 
Accumulated other comprehensive loss (6,463)  (6,017)
Accumulated deficit (696,542)  (691,446)
    
Total shareholders' equity 228,109   233,810 
    
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$360,670  $393,806 
    


GILAT SATELLITE NETWORKS LTD.   
CONSOLIDATED STATEMENTS OF CASH FLOWS   
U.S. dollars in thousands   
    
  Three months ended 
  March 31, 
  2021   2020 
  
 Unaudited
Cash flows from operating activities:   
Net loss$(5,096) $(11,755)
Adjustments required to reconcile net income    
 to net cash provided by (used in) operating activities:   
Depreciation and amortization 2,330   2,604 
Capital loss from disposal of property and equipment -   (33)
Stock-based compensation of options (159)  423 
Accrued severance pay, net (10)  43 
Deferred income taxes, net 518   634 
Decrease (increase) in trade receivables, net (1,933)  13,607 
Increase in contract assets (4,487)  (4,851)
Decrease (increase) in other assets (including short-term, long-term   
 and deferred charges) (220)  1,673 
Increase in inventories (2,212)  (6,635)
Increase in trade payables 950   2,375 
Increase (decrease) in accrued expenses 969   (1,652)
Increase (decrease) in advance from customer and deferred revenues 7,688   (2,827)
Increase in current and non current liabilities 2,003   2,811 
Net cash provided by (used in) operating activities  341     (3,583)
    
Cash flows from investing activities:   
Purchase of property and equipment (1,483)  (951)
Net cash used in investing activities  (1,483)   (951)
    
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  (254)   (695)
    
Decrease in cash, cash equivalents and restricted cash  (40,399)   (9,325)
    
Cash, cash equivalents and restricted cash at the beginning of the period  115,958     101,969  
    
Cash, cash equivalents and restricted cash at the end of the period$ 75,559   $ 92,644  
    

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