Gilat Reports Continued Profitability Growth in Q2 2019 - WBCB: The Valley's CW |

Gilat Reports Continued Profitability Growth in Q2 2019

SOURCE Gilat Satellite Networks

GAAP Operating Income increases 17.9% Year-over-Year; GAAP Net Income Increased 58%; Adjusted EBITDA totals $8.9 million

PETAH TIKVA, Israel, Aug. 6, 2019 /PRNewswire/ -- 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, 2019.

Gilat_Logo

Key Financial Highlights: 

  • Revenues for Q2 2019 totaled $59.7 million compared with $66.5 million for Q2 2018.
  • Continued strong profitability:
    • Q2 2019 GAAP operating income increased 17.9% to $4.9 million from $4.1 million in Q2 2018. Q2 2019 Non-GAAP operating income rose to $6.3 million, or by 10.8% from Q2 2018.
    • Q2 2019 GAAP net income increased 58.3% to $3.4 million, or $0.06 per diluted share, compared with $2.2 million, or $0.04 per diluted share in Q2 2018. Q2 2019 non-GAAP net income increased 30.7% to $4.8 million, or $0.09 per diluted share, compared with $3.7 million, or $0.07 per diluted share, in Q2 2018. 
    • Q2 2019 Adjusted EBITDA increased 10% year over year to $8.9 million, or 14.9% of revenues.
  • Reiterated management objectives for 2019: revenue range between $275 million to $295 million, GAAP operating income of between $23 million and $27 million, and Adjusted EBITDA between $38 million and $42 million.

Yona Ovadia, CEO of Gilat, commented: 

"I am pleased to report that aside from Gilat's continued positive results and solid profitability in the second quarter, this has been a strong quarter as we executed our strategy to build high quality revenues through our growth engines of Broadband, Mobile Cellular Backhaul and Mobility IFC.

"We achieved two major milestones in the quarter that will be important drivers of our future growth. 

"The first is in the area of Inflight Connectivity. We have now entered into the Business Aviation market with a multi-million-dollar award from an Aviation Service Provider for our tail-mount antenna.  This milestone not only complements our leading IFC position in Commercial Aviation, it also expands our IFC product portfolio with an airborne tail-mount antenna in addition to our leading airborne modem.

"Second, we have reached a critical milestone in Peru with approval to enter the operational phase of the three-region telecom project awarded in 2015 by Fitel. Entering this phase enables Gilat to unlock access to revenue of approximately $12 million per annum of operations fees, for a period of ten years, as well as to start selling services over the network which yield higher margins. In fact, we already have efforts underway to sell network services over the infrastructure we have built and recently started to operate. We expect to report progress with these efforts in the coming weeks and months.

"In addition, we were awarded a three-year multi-million-dollar broadband expansion project further to our managed services cellular backhaul project with Globe Telecom, the leading telco in the Philippines. This expansion demonstrates once again our conviction that the declining price of satellite capacity along with strong ground segment equipment, provides Telcos worldwide an additional legitimate cost-effective tool for quality broadband to their customers."

Mr. Ovadia concluded: "Overall, Gilat achieved important milestones in the second quarter, particularly in our Peru projects and our IFC business, while attaining solid profitability. We plan to press forward with these and our other growth engines for the remainder of 2019, and to focus on further improving profitability."

Key Recent Announcements:

  • Gilat will Provide Aero Antennas with Initial Agreement for Tens of Millions of Dollars to a Tier-1 Business Aviation Service Provider
  • Gilat Awarded Over $7 Million Dollar Contract for US Army's WIN-T (Warfighter Information Network-Tactical) Program
  • Gilat Achieves Critical Milestone in Peru with Approval to Enter Operational Phase, Unlocking Access to Revenue of ~$12M per Annum from Telecom Project Awarded in 2015
  • Globe Awards Gilat a Three-Year Multi-Million US Dollar Contract for Delivering Satellite Based WiFi in Addition to Cellular Backhaul Services

Conference Call and Webcast Details:

Following the issuance of this release, Yona Ovadia, Chief Executive Officer, and Adi Sfadia, Chief Financial Officer, will discuss Gilat's second quarter 2019 results and participate in a question and answer session: 

Date:  Tuesday, August 6

Start:  09:30 AM EDT / 16:30 IDT

Dial-in:  US: 1-888-668-9141 

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: http://veidan-stream.com/gilatq2-2019.html

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

Conference Call Replay

Start:  August 6, 2019 at 12:00 PM EDT / 19:00 IDT

End:  August 9, 2019 at 12:00 PM EDT / 19:00 IDT

Dial-in:  US: 1-888-326-9310

International: (972) 3-925-5900 

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, re-organization costs, expenses for tax contingencies to be paid under an amnesty program 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.

This news release also contains a forward-looking estimate of Adjusted EBITDA projected to be generated by Gilat in 2019. A forward-looking estimate of net income and reconciliations of the forward-looking estimates of Adjusted EBITDA to net income are not provided because the items necessary to estimate net income are not estimable at this time. 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, 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. We undertake no obligation to update or revise any forward-looking statements for any reason. 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.

Contact:

Gilat Satellite Networks
Doreet Oren, Director Corporate Communications
DoreetO@gilat.com 
Comm-Partners LLC

June Filingeri, President
+1-203-972-0186
junefil@optonline.net

 

GILAT SATELLITE NETWORKS LTD.









CONSOLIDATED STATEMENTS OF OPERATIONS








U.S. dollars in thousands (except share and per share data)











Six months ended


Three months ended






June 30,


June 30,






2019


2018


2019


2018






Unaudited


Unaudited














Revenues



$              121,794


$              133,882


$                59,685


$                66,508


Cost of revenues



76,239


90,053


37,700


44,066














Gross profit



45,555


43,829


21,985


22,442














Research and development expenses


16,492


16,730


7,635


8,284


Less - grants



1,094


810


539


343


Research and development expenses, net


15,398


15,920


7,096


7,941


Selling and marketing expenses


11,288


11,716


5,417


6,303


General and administrative expenses


9,527


8,389


4,585


4,054














Total operating expenses



36,213


36,025


17,098


18,298














Operating income



9,342


7,804


4,887


4,144














Financial expenses, net 



(1,400)


(2,188)


(579)


(1,605)














Income before taxes on income


7,942


5,616


4,308


2,539














Taxes on income 



1,713


1,154


903


388














Net income



$             6,229


$             4,462


$              3,405


$             2,151














Basic and Diluted earnings per share


$               0.11


$               0.08


$                0.06


$               0.04














Weighted average number of shares used in computing earnings per share



















Basic



55,321,858


54,811,893


55,446,127


54,858,330


Diluted



56,074,361


55,614,782


56,189,217


55,639,202


 

GILAT SATELLITE NETWORKS LTD.








RECONCILIATION BETWEEN GAAP AND NON-GAAP STATEMENTS OF OPERATIONS




FOR COMPARATIVE PURPOSES 












U.S. dollars in thousands (except share and per share data)










 Three months ended 


 Three months ended 




June 30, 2019


June 30, 2018




GAAP


Adjustments(1)


Non-GAAP


GAAP


Adjustments (1)


Non-GAAP




Unaudited


Unaudited
















Gross profit

$            21,985


312



$            22,297


$           22,442


1,230


$           23,672

Operating expenses

17,098


(1,077)



16,021


18,298


(288)


18,010

Operating income

4,887


1,389



6,276


4,144


1,518


5,662

Income before taxes on income

4,308


1,389



5,697


2,539


1,518


4,057

Net income

3,405


1,389



4,794


2,151


1,518


3,669
















Earnings per share (basic and diluted)

$                0.06


$                 0.03



$               0.09


$               0.04


$                    0.03


$               0.07































Weighted average number of shares used in 

computing earnings per share
















 Basic

55,446,127





55,446,127


54,858,330




54,858,330


Diluted

56,189,217





56,337,558


55,639,202




55,854,231
















(1) Adjustments reflect the effect of non-cash stock-based compensation as per ASC 718, amortization of intangible assets related to




     shares acquisition transactions, trade secrets litigation expenses and re-organization costs.

























Three months ended 




Three months ended










June 30, 2019




June 30, 2018











Unaudited




Unaudited


















GAAP net income







$            3,405




$               2,151


















Gross profit











Non-cash stock-based compensation expenses


49




36



Amortization of intangible assets related to acquisition transactions

Re-organization costs




234




1,194






29




-











312




1,230



Operating expenses











Non-cash stock-based compensation expenses




373




238



Amortization of intangible assets related to acquisition transactions




49




50



Trade secrets litigation expenses




100




-



Re-organization costs




555




-











1,077




288


















Non-GAAP net income




$             4,794




$               3,669


















 

 

GILAT SATELLITE NETWORKS LTD.











RECONCILIATION BETWEEN GAAP AND NON-GAAP STATEMENTS OF OPERATIONS









FOR COMPARATIVE PURPOSES 











U.S. dollars in thousands (except share and per share data)


















 Six months ended 


 Six months ended 






June 30, 2019


June 30, 2018






GAAP


Adjustments (1)


Non-GAAP


GAAP


Adjustments (1)


Non-GAAP






Unaudited


Unaudited

















Gross profit


$              45,555


638


$               46,193


$              43,829


2,430


$         46,259

Operating expenses


36,213


(1,906)


34,307


36,025


(551)


35,474

Operating income


9,342


2,544


11,886


7,804


2,981


10,785

Income before taxes on income

7,942


2,544


10,486


5,616


2,981


8,597

Net income

6,229


2,544


8,773


4,462


2,981


7,443

















Basic earnings per share

$                  0.11


$                      0.05


$                   0.16


$                0.08


$                 0.06


$            0.14

















Diluted earnings per share

$                   0.11


$                      0.05


$                   0.16


$                0.08


$                  0.05


$            0.13

































Weighted average number of shares used in computing earnings per share













    Basic




55,321,858




55,321,858


54,811,893




54,811,893


    Diluted




56,074,361




56,240,141


55,614,782




55,835,134


































(1) Adjustments reflect the effect of non-cash stock-based compensation as per ASC 718, amortization of intangible assets related to shares acquisition transactions trade secrets litigation expenses or income and re-organization costs.


















 Six months ended 



 Six months ended 




June 30, 2019



June 30, 2018




 Unaudited 



 Unaudited 








GAAP net income



$                   6,229



$                   4,462








Gross profit







Non-cash stock-based compensation expenses



143



42

Amortization of intangible assets related to acquisition transactions



466



2,388

Re-organization costs



29



-




638



2,430

Operating expenses







Non-cash stock-based compensation expenses



1,150



450

Amortization of intangible assets related to acquisition transactions



101



101

Trade secrets litigation expenses



100



-

Re-organization costs



555



-




1,906



551








Finance and taxes on income under amnesty program



-



183

Tax benefit adjustment



(4,111)



-








Non-GAAP net income



$                   8,773



$                   7,443

 

GILAT SATELLITE NETWORKS LTD.









SUPPLEMENTAL INFORMATION









U.S. dollars in thousands








ADJUSTED EBITDA:












Six months ended


Three months ended






June 30,


June 30,






2019


2018


2019


2018






Unaudited


Unaudited


GAAP operating income

$         9,342


$                  7,804


$                  4,887


$                  4,144


Add:










Non-cash stock-based compensation expenses

1,293


492


422


274



Re-organization costs

584


-


584


-


Trade secrets litigation expenses

100


-


100


-


Depreciation and amortization (*)

5,786


7,322


2,909


3,672














Adjusted EBITDA


$          17,105


$               15,618


$                 8,902


$                 8,090














(*) includng amortization of lease incentive


















SEGMENT REVENUE:












Six months ended


Three months ended






June 30,


June 30,






2019


2018


2019


2018






Unaudited


Unaudited


Fixed Networks

$           66,836


$                73,843


$                30,408


$                36,228


Mobility Solutions

43,499


45,778


22,587


25,021


Terrestrial Infrastructure Projects

11,459


14,261


6,690


5,259














Total revenue

$         121,794


$              133,882


$               59,685


$               66,508


 

GILAT SATELLITE NETWORKS LTD.





CONSOLIDATED BALANCE SHEET





U.S. dollars in thousands







June 30,


December 31,



2019


2018



Unaudited


Audited






ASSETS










CURRENT ASSETS:





Cash and cash equivalents


$                39,904


$                67,381

Restricted cash


27,094


32,305

Restricted cash held by trustees


2,353


4,372

Trade receivables, net


45,553


47,164

Contract assets


47,119


47,760

Inventories


26,224


21,109

Other current assets


25,777


26,022






   Total current assets


214,024


246,113






LONG-TERM INVESTMENTS AND RECEIVABLES:





Long-term restricted cash


147


146

Severance pay funds


6,770


6,780

Long term deferred tax assets


2,809


4,127

Operating lease right-of-use assets


4,721


-

Other long term receivables


9,371


7,276






Total long-term investments and receivables


23,818


18,329






PROPERTY AND EQUIPMENT, NET


82,466


84,403






INTANGIBLE ASSETS, NET


1,757


2,434






GOODWILL


43,468


43,468






TOTAL ASSETS


$              365,533


$              394,747

GILAT SATELLITE NETWORKS LTD.





CONSOLIDATED BALANCE SHEET (Cont.)





U.S. dollars in thousands












June 30,


December 31,



2019


2018



Unaudited


Audited






LIABILITIES AND SHAREHOLDERS' EQUITY










CURRENT LIABILITIES:





Current maturities of long-term loans


$                  4,325


$                  4,458

Trade payables 


28,569


24,636

Accrued expenses 


59,012


67,533

Advances from customers and deferred revenues


20,403


29,133

Operating lease right-of-use liabilities


1,659


-

Other current liabilities


13,650


14,588






   Total current liabilities


127,618


140,348






LONG-TERM LIABILITIES:





Accrued severance pay


7,020


6,649

Long-term loans, net of current maturities


4,000


8,098

Operating lease right-of-use liabilities


3,093


-

Other long-term liabilities


646


580






   Total long-term liabilities


14,759


15,327






SHAREHOLDERS' EQUITY:





Share capital - ordinary shares of NIS 0.2 par value 


2,640


2,625

Additional paid-in capital


926,509


924,856

Accumulated other comprehensive loss


(4,329)


(5,380)

Accumulated deficit


(701,664)


(683,029)






Total shareholders' equity


223,156


239,072






TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY


$              365,533


$              394,747






GILAT SATELLITE NETWORKS LTD.








CONSOLIDATED STATEMENTS OF CASH FLOWS








U.S. dollars in thousands





















Six months ended


Three months ended




June 30,

June 30,




2019


2018


2019


2018




Unaudited


Unaudited

Cash flows from operating activities:









Net income


$                  6,229


$                  4,462


$                  3,405


$                  2,151

Adjustments required to reconcile net income 









 to net cash provided by operating activities:









Depreciation and amortization


5,681


7,322


2,859


3,672

Stock-based compensation of options 


1,293


492


422


274

Accrued severance pay, net


382


47


97


(41)

Exchange rate differences on long-term loans


-


(13)


-


(43)

Deferred income taxes, net


1,385


(29)


702


(41)

Decrease (increase) in trade receivables, net


2,506


15,089


(5,325)


(3,221)

Decrease (increase) in contract assets


(232)


14,380


198


(2,819)

Decrease (increase) in other assets (including short-term, long-term









   and deferred charges)


(29)


(9,151)


50


(9,865)

Decrease (increase) in inventories


(6,137)


332


(2,478)


1,777

Increase (decrease) in trade payables


3,933


(11,634)


4,855


(3,362)

Increase (decrease) in accrued expenses


(7,076)


(1,980)


(4,907)


27

Decrease in advance from customers


(8,405)


(4,980)


(5,318)


(78)

Decrease in advances from customers, held 









   by trustees


-


(1,478)


-


-

Increase (decrease) in other current liabilities and other long term liabilities


(1,950)


5,575


(2,813)


4,011

Net cash provided by (used in) operating activities


(2,420)


18,434


(8,253)


(7,558)











Cash flows from investing activities:









Purchase of property and equipment


(3,587)


(5,014)


(1,573)


(2,153)

Net cash used in investing activities


(3,587)


(5,014)


(1,573)


(2,153)











Cash flows from financing activities:









Exercise of stock options


375


573


37


267

Repayment of long-term loans


(4,231)


(4,249)


(108)


(249)

Dividend payment


(24,864)


-


(24,864)


-

Net cash provided by (used in) financing activities


(28,720)


(3,676)


(24,935)


18











Effect of exchange rate changes on cash, cash equivalents and restricted cash


21


(709)


(76)


(1,005)











Increase (decrease) in cash, cash equivalents and restricted cash


(34,706)


9,035


(34,837)


(10,698)











Cash, cash equivalents and restricted cash at the beginning of the period


104,204


86,757


104,335


106,490











Cash, cash equivalents and restricted cash at the end of the period


$               69,498


$               95,792


$               69,498


$               95,792











 

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