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Gilat Announces Third Quarter 2015 Results

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PETAH TIKVA, Israel, Nov. 18, 2015 (GLOBE NEWSWIRE) -- Gilat Satellite Networks Ltd. (NASDAQ: GILT) (TASE:GILT), a worldwide leader in satellite networking technology, solutions and services, today reported its results for the third quarter, ended September 30, 2015.

Key Financial Updates:

  • Revenues for the third quarter of 2015 were $40.3 million compared to $44.3 million in the second quarter of 2015 and $57.1 million in the comparable period of 2014.
  • EBITDA for the third quarter of 2015 was a loss of $3.4 million compared to a loss of $2.5 million in the second quarter of 2015 and EBITDA of $6.4 million in the comparable period of 2014.
  • Cash balances, including restricted cash, net of short-term bank credits, increased by $34.9 million compared to December 31, 2014, resulting in a cash balance of $88.4 million as of September 30, 2015.
  • Company recorded a non-cash impairment of goodwill in the amount of $20.4 million related to Wavestream.
  • Reiterated management objectives for 2015: Revenues of between $210 to $220 million and EBITDA of between $6 to $8 million.

On a non-GAAP basis, operating loss was $5.8 million in the third quarter of 2015, compared to an operating income of $3.6 million in the comparable quarter of 2014.

On a GAAP basis, operating loss, including impairment of goodwill and restructuring costs, was $29.1 million in the third quarter of 2015, compared to an operating income of $1.5 million in the comparable quarter of 2014.

On a non-GAAP basis, net loss for the quarter was $8.9 million or $0.20 per diluted share, compared to net income of $3.0 million or $0.07 per diluted share in the same quarter of 2014.

On a GAAP basis, net loss for the quarter was $32.4 million or a loss of $0.73 per diluted share compared to a net income of $0.2 million in the same quarter of 2014.

"As I mentioned in our previous release regarding our organizational change, the company is continuing its transition as it seeks to maximize the potential for growth in two key areas: High Throughput Satellite (HTS) and In-Flight Connectivity (IFC)," said Dov Baharav, Interim CEO and Chairman of the Board of Gilat.

"The industry shift to HTS, in some cases at the expense of the traditional enterprise equipment sales, represents an opportunity for large end-to-end deals and substantial growth for Gilat, given the significant technological advantage we have with our X-Architecture, coupled with our service offering. However, the HTS business is characterized by a longer decision-making process. This longer decision-making process has affected our results in the third quarter. At the same time, as previously mentioned, the defense-related business is still weak impacting our third quarter results. On the other hand, we see high-growth in IFC and during the third quarter we have ramped-up our IFC production capabilities, and expect it to translate into revenues starting in the fourth quarter. Furthermore, our results were adversely impacted by the rapid devaluation of the Brazilian Real and the Colombian Peso.

"Looking forward, given the growing demand we see for our IFC offering, the expected new HTS business, and the pickup of our Fitel projects in Peru, we anticipate continued growth in 2016, and a strong fourth quarter in 2015 with a substantial increase in revenues and EBITDA."

As previously announced, Adi Sfadia has joined Gilat and assumed the role of Gilat's Chief Financial Officer on November 16, 2015. He will be joining Dov Baharav on the earnings call later today.

Key Recent Announcements:

  • Gilat Launches its Revolutionary Distributed X-Architecture to Address the Growing Demands of High-Throughput Satellites (HTS) in a Single Platform
  • Gilat Announces Structural Organizational Changes to Support Key Strategic Opportunities
  • Gilat Signed Agreement with Major Satellite Broadband Provider to Deliver High-Performance Dual Ku/Ka-Band Terminal
  • Nordnet Orders Gilat SkyEdge II-c HTS Consumer Kits for High-Speed Internet Access in France

Conference Call and Webcast Details:
Gilat management will host a conference call today at 15:00 GMT / 10:00 EST / 17:00 IST to discuss the results. International participants are invited to access the call at (972) 3-918-0687, and US-based participants are invited to access the call by dialing (866)-744-5399 or (888)-642-5032. A replay of the conference call will be available beginning at approximately 17:00 GMT/ 12:00 EST/ 19:00 IST today, until 17:00 GMT/ 12:00 EST/ 19:00 IST November 21, 2015.  International participants are invited to access the call at (972)3-9255940, and US-based participants are invited to access the call by dialing (866)-276-1485. A replay of the call may also be accessed as a webcast via Gilat's website at www.gilat.com and will be archived for 30 days.

Notes:
(1) The attached summary financial statements were prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). The attached summary financial statements are unaudited. To supplement the consolidated financial statements presented in accordance with GAAP, the Company presents Gilat's EBITDA before the impact of non-cash share-based payment charges, depreciation and amortization, other income, goodwill impairment and restructuring costs. Non-GAAP presentations of net income, operating income, EBITDA and earnings per share are provided to enhance the understanding of the Company's historical financial performance and comparability between periods.

(2) Operating income before depreciation, amortization, non-cash stock option expenses as per ASC 718 (formerly SFAS 123(R)),goodwill impairment and restructuring costs ('EBITDA') is presented because it is a measure commonly used and is presented solely in order to improve the understanding of the Company's operating results and to provide further perspective on these results. EBITDA, however, should not be considered as an alternative to operating income or net income for the period as an indicator of the operating performance of the Company.

Similarly, EBITDA should not be considered as an alternative to cash flows from operating activities as a measure of liquidity. EBITDA is not a measure of financial performance under generally accepted accounting principles and may not be comparable to other similarly titled measures for other companies. EBITDA may not be indicative of the historic operating results of the Company; nor is it meant to be predictive of potential future results. Reconciliation between the Company's Operating income and EBITDA is presented in the attached summary financial statements.

About Gilat
Gilat Satellite Networks Ltd (NASDAQ: GILT) (TASE:GILT) is a leading provider of products and services for satellite-based broadband communications. Gilat develops and markets a wide range of high-performance satellite ground segment equipment and VSATs, with an increasing focus on the consumer and Ka-band market. In addition, Gilat enables mobile SOTM (Satellite-on-the-Move) solutions providing low-profile antennas, next generation solid-state power amplifiers and modems. Gilat also provides managed network and satellite-based services for rural telephony and Internet access via its subsidiaries in Peru and Colombia.

With over 25 years of experience, and over a million products shipped to more than 90 countries, Gilat has provided enterprises, service providers and operators with efficient and reliable satellite-based connectivity solutions, including cellular backhaul, banking, retail, e-government and rural communication networks. Gilat also enables leading defense, public security and news organizations to implement advanced, on-the-move tactical communications on board their land, air and sea fleets using Gilat's high-performance SOTM solutions. Gilat's controlling shareholders are the FIMI Private Equity Funds. For more information, please visit us at 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. 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.

    
GILAT SATELLITE NETWORKS LTD.   
CONDENSED CONSOLIDATED BALANCE SHEET   
US dollars in thousands   
    
 September 30,December 31, 
  2015  2014  
 Unaudited  
    
ASSETS   
    
CURRENT ASSETS:   
Cash and cash equivalents 27,723  27,726  
Restricted cash 68,405  25,983  
Restricted cash held by trustees 1,204  15,441  
Trade receivables, net 38,731  57,728  
Inventories 28,830  25,112  
Other current assets 16,036  14,760  
Total current assets 180,929  166,750  
    
LONG-TERM INVESTMENTS AND RECEIVABLES:   
Long-term restricted cash 177  216  
Severance pay funds 7,690  8,085  
Other long term receivables and deferred charges 7,081  12,124  
Total long-term investments and receivables 14,948  20,425  
    
PROPERTY AND EQUIPMENT, NET 85,972  90,893  
    
INTANGIBLE ASSETS, NET 18,597  22,970  
    
GOODWILL 43,468  63,870  
    
TOTAL ASSETS 343,914  364,908  
    
    
    
 September 30,December 31, 
  2015  2014  
 Unaudited  
    
LIABILITIES AND EQUITY   
    
CURRENT LIABILITIES:   
Short-term bank credit and loans 9,124  15,857  
Current maturities of long-term loans 4,557  4,595  
Trade payables 14,661  22,850  
Accrued expenses 20,284  22,475  
Advances from customers 58,545  2,940  
Short-term advances from customers, held by trustees 2,614  12,858  
Other current liabilities 17,349  18,587  
    
Total current liabilities 127,134  100,162  
    
LONG-TERM LIABILITIES:   
Accrued severance pay 7,489  8,157  
Long-term loans, net of current maturities 21,680  26,271  
Other long-term liabilities 4,380  5,179  
    
Total long-term liabilities 33,549  39,607  
    
EQUITY:   
Share capital - ordinary shares of NIS 0.2 par value 2,046  1,966  
Additional paid-in capital 883,803  876,624  
Accumulated other comprehensive loss (3,502) (1,420) 
Accumulated deficit (699,116) (652,031) 
    
Total equity 183,231  225,139  
    
TOTAL LIABILITIES AND EQUITY   343,914    364,908  
    

 

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   
  30 September 2015  30 September 2014  
 GAAPAdjustments (1)Non-GAAPGAAPAdjustments (1)Non-GAAP 
 UnauditedUnauditedUnauditedUnauditedUnauditedUnaudited 
        
Revenues   40,347    -     40,347    57,135    -     57,135  
Cost of revenues   30,865    (1,278)   29,587    38,567    (1,258)   37,309  
Gross profit   9,482     1,278     10,760     18,568     1,258     19,826   
  24%  27% 32%  35% 
Research and development expenses:       
Expenses incurred   6,115    (102)   6,013    6,714    (121)   6,593  
Less - grants   151    -     151    854    -     854  
    5,964    (102)   5,862    5,860    (121)   5,739  
Selling and marketing expenses   6,050    (317)   5,733    6,913    (350)   6,563  
General and administrative expenses   5,164    (214)   4,950    4,258    (305)   3,953  
Restructuring Costs   986    (986)   -     -     -     -   
Goodwill Impairment   20,402    (20,402)   -     -     -     -   
Operating income (loss)   (29,084)   23,299     (5,785)   1,537     2,034     3,571   
Financial expenses, net   (2,940)   -     (2,940)   (349)   -     (349) 
Income (loss) before taxes on income   (32,024)   23,299     (8,725)   1,188     2,034     3,222   
Taxes on income   173    -     173    259    -     259  
Net income (loss) from continuing operations   (32,197)   23,299     (8,898)   929     2,034     2,963   
Loss from discontinued operations   (200)   200     -     (752)   752     -   
Net income (loss)   (32,397)   23,499     (8,898)   177     2,786     2,963   
        
Basic net income (loss) per share from continuing operations (0.73)   0.02    
Basic loss per share from discontinued operations (0.00)   (0.02)   
Basic net income (loss) per share (0.73)  (0.20) 0.00   0.07  
        
Diluted net income (loss) per share from continuing operations (0.73)   0.02    
Diluted loss per share from discontinued operations (0.00)   (0.02)   
Diluted net income (loss) per share (0.73)  (0.20) 0.00   0.07  
        
Weighted average number of shares used in       
computing net income (loss) per share       
Basic44,030,805  44,030,805  42,579,396  42,579,396   
Diluted44,030,805  44,030,805  42,995,059  43,586,395   
        
        
(1) Adjustments reflect the effect of non-cash stock based compensation as per ASC 718, amortization of intangible assets related to Shares acquisition transactions, goodwill impairment, restructuring costs and net income (loss) from discontinued operations.    
        
   Three months ended    Three months ended   
  30 September 2015  30 September 2014  
  Unaudited  Unaudited  
Non-cash stock-based compensation expenses:       
Cost of revenues  59    61   
Research and development  102    121   
Selling and marketing  127    136   
General and administrative  214    305   
     502       623    
        
Amortization of intangible assets related to acquisition transactions:       
Cost of revenues  1,219    1,197   
Selling and marketing  190    214   
     1,409       1,411    
        
        
        
GILAT SATELLITE NETWORKS LTD.       
RECONCILIATION BETWEEN GAAP AND NON-GAAP STATEMENTS OF OPERATIONS     
FOR COMPARATIVE PURPOSES       
U.S. dollars in thousands (except share and per share data)       
   Nine months ended    Nine months ended   
  30 September 2015  30 September 2014  
 GAAPAdjustments (1)Non-GAAPGAAPAdjustments (1)Non-GAAP 
 UnauditedUnauditedUnauditedUnauditedUnauditedUnaudited 
        
Revenues 129,861  -  129,861  162,036  -  162,036  
Cost of revenues 96,137  (3,759) 92,378  104,173  (3,773) 100,400  
Gross profit   33,724     3,759     37,483     57,863     3,773     61,636   
  26%  29% 36%  38% 
Research and development expenses:       
Expenses incurred 19,243  (321) 18,922  20,831  (362) 20,469  
Less - grants 563  -  563  1,802  -  1,802  
  18,680  (321) 18,359  19,029  (362) 18,667  
Selling and marketing expenses 18,725  (1,000) 17,725  25,280  (1,042) 24,238  
General and administrative expenses 15,226  (794) 14,432  14,011  (898) 13,113  
Restructuring Costs 986  (986) -  -  -  -  
Goodwill Impairment 20,402  (20,402) -  -  -  -  
Operating income (loss)   (40,295)   27,262     (13,033)   (457)   6,075     5,618   
Financial expenses, net (5,850) -  (5,850) (1,898) -  (1,898) 
Income (loss) before taxes on income   (46,145)   27,262     (18,883)   (2,355)   6,075     3,720   
Taxes on income 740  -  740  783  -  783  
Net income (loss) from continuing operations   (46,885)   27,262     (19,623)   (3,138)   6,075     2,937   
Loss from discontinued operations   (200)   200     -      (795)   795     -    
Net income (loss)   (47,085)   27,462     (19,623)   (3,933)   6,870     2,937   
        
Basic loss per share from continuing operations (1.08)   (0.07)   
Basic loss per share from discontinued operations (0.00)   (0.02)   
Basic net income (loss) per share (1.08)  (0.45) (0.09)  0.07  
        
Diluted loss per share from continuing operations (1.08)   (0.07)   
Diluted loss per share from discontinued operations (0.00)   (0.02)   
Diluted net income (loss) per share (1.08)  (0.45) (0.09)  0.07  
        
Weighted average number of shares used in       
computing net income (loss) per share       
Basic43,436,470  43,436,470  42,371,039   42,371,039   
Diluted43,436,470  43,436,470  42,371,039   43,615,894   
        
        
(1) Adjustments reflect the effect of non-cash stock based compensation as per ASC 718, amortization of intangible assets related to Shares acquisition transactions, goodwill impairment, restructuring costs and net income (loss) from discontinued operations.    
     
        
   Nine months ended    Nine months ended   
  30 September 2015  30 September 2014  
   Unaudited    Unaudited   
Non-cash stock-based compensation expenses:       
Cost of revenues  165    179   
Research and development  321    362   
Selling and marketing  385    404   
General and administrative  794    898   
     1,665       1,843    
        
Amortization of intangible assets related to acquisition transactions:       
Cost of revenues  3,594    3,594   
Selling and marketing  615    638   
     4,209       4,232    
        

 

GILAT SATELLITE NETWORKS LTD.     
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS     
U.S. dollars in thousands (except share and per share data)     
 Nine months endedThree months ended 
 September 30,September 30, 
  2015  2014  2015  2014  
 UnauditedUnauditedUnauditedUnaudited 
      
Revenues   129,861    162,036    40,347    57,135  
Cost of revenues   96,137    104,173    30,865    38,567  
Gross profit   33,724     57,863     9,482     18,568   
      
Research and development expenses:     
Expenses incurred   19,243    20,831    6,115    6,714  
Less - grants   563    1,802    151    854  
    18,680    19,029    5,964    5,860  
Selling and marketing expenses   18,725    25,280    6,050    6,913  
General and administrative expenses 15,226  14,011  5,164  4,258  
Restructuring Costs 986  -  986  -  
Goodwill Impairment 20,402  -  20,402  -  
Operating income (loss)   (40,295)   (457)   (29,084)   1,537   
Financial expenses, net (5,850) (1,898) (2,940) (349) 
Income (loss) before taxes on income   (46,145)   (2,355)   (32,024)   1,188   
Taxes on income 740  783  173  259  
Income (loss) from continuing operations   (46,885)   (3,138)   (32,197)   929   
Loss from discontinued operations   (200)   (795)   (200)   (752) 
Net income (loss)   (47,085)   (3,933)   (32,397)   177   
      
Net income (loss) per share from continuing operations (basic and diluted) (1.08) (0.07) (0.73) 0.02  
Loss per share from discontinued operations (basic and diluted) (0.00) (0.02) (0.00) (0.02) 
Net Income (loss) per share (basic and diluted) (1.08) (0.09) (0.73) 0.00  
      
Weighted average number of shares used in     
computing net income (loss) per share     
Basic 43,436,470   42,371,039  44,030,80542,579,396 
Diluted 43,436,470   42,371,039  44,030,80542,995,059 
      

 

GILAT SATELLITE NETWORKS LTD.     
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS     
US dollars in thousands     
      
 Nine months endedThree months ended 
 September 30,September 30, 
  2015  2014  2015  2014  
 UnauditedUnauditedUnauditedUnaudited 
Cash flows from continuing operations     
Cash flows from operating activities:     
Net income (loss) (47,085) (3,933) (32,397) 177  
Loss from discontinued operations (200) (795) (200) (752) 
Net income (loss) from continuing operations (46,885) (3,138) (32,197) 929  
Adjustments required to reconcile net income (loss)     
to net cash generated provided by (used in) operating activities:     
Depreciation and amortization 11,459  11,626  3,760  4,198  
Goodwill impairment 20,402  -  20,402  -  
Stock-based compensation 1,665  1,843  502  623  
Accrued severance pay, net (274) 42  (4) 145  
Accrued interest and exchange rate differences on     
 short and long-term restricted cash, net 207  464  120  496  
Exchange rate differences on long-term loans (221) (311) 5  (277) 
Capital loss from disposal of property and equipment 121  241  73  181  
Deferred income taxes 11  (56) 49  (9) 
Decrease in trade receivables, net 16,730  1,538  10,395  9,572  
Decrease (increase) in other assets (including short-term, long-term     
 and deferred charges) 862  (11,731) 846  804  
Increase in inventories (4,911) (1,226) (2,094) (1,925) 
Decrease (increase) in restricted cash directly related to operating activities (52,736) -  1,582  -  
Decrease in trade payables (7,647) (4,704) (2,346) (4,652) 
Increase (decrease) in accrued expenses (509) 1,491  1,251  (2,685) 
Increase (decrease) in advance from customers 55,616  (12,424) (1,716) (7,503) 
Decrease in advances from customers, held     
 by trustees   (8,411)   (65)   (4,253)   (3,516) 
Decrease in other current liabilities and other long term liabilities   (406) (7,177) (2,148) (6,256) 
Net cash used in operating activities   (14,927)   (23,587)   (5,773)   (9,875) 
      
      
GILAT SATELLITE NETWORKS LTD.     
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS     
US dollars in thousands     
      
 Nine months endedThree months ended 
 September 30,September 30, 
  2015  2014  2015  2014  
 UnauditedUnauditedUnauditedUnaudited 
Cash flows from investing activities:     
Purchase of property and equipment (3,109) (12,195) (1,270) (1,876) 
Investment in restricted cash held by trustees (6,109) (5,914) -  (1,686) 
Proceeds from restricted cash held by trustees 18,649  8,625  3,997  2,037  
Investment in restricted cash (including long-term) (22,411) (10,581) (1,209) (3,065) 
Proceeds from restricted cash (including long-term) 32,559  232  4,283  56  
      
Net cash provided by (used in) investing activities   19,579     (19,833)   5,801     (4,534) 
      
      
Cash flows from financing activities:     
Capital lease payments (408) (86) (204) (86) 
Issuance of restricted stock units and exercise of stock options 5,595  748  1,890  2  
Payment of obligation related to the purchase of intangible assets (500) (500) (500) (500) 
Short term bank credit, net (3,811) 14,177  1,758  6,961  
Repayment of long-term loans (4,409) (4,484) (137) (154) 
      
Net cash provided by (used in) financing activities   (3,533)   9,855     2,807     6,223   
      
      
Effect of exchange rate changes on cash and cash equivalents   (1,122)   (221)   (708)   (576) 
      
Increase (decrease) in cash and cash equivalents   (3)   (33,786)   2,127     (8,762) 
      
Cash and cash equivalents at the beginning of the period   27,726     58,424     25,596     33,400   
      
Cash and cash equivalents at the end of the period   27,723     24,638     27,723     24,638   
      

 

GILAT SATELLITE NETWORKS LTD.     
CONDENSED EBITDA     
US dollars in thousands     
  Nine months endedThree months ended 
  September 30,September 30, 
   2015  2014  2015 2014 
  UnauditedUnauditedUnauditedUnaudited 
       
Operating income (loss) (40,295) (457) (29,084)1,537 
Add:     
Non-cash stock-based compensation expenses 1,665  1,843  502 623 
Restructuring costs 986  -  986 - 
Goodwill impairment 20,402  -  20,402 - 
Depreciation and amortization 11,459  11,626  3,760 4,198 
EBITDA   (5,783)   13,012     (3,434)  6,358  
       


Contact: Gilat Satellite Networks Joelle Inowlocki JoelleI@gilat.com KCSA Strategic Communications Phil Carlson, Vice President (212) 896-1233 pcarlson@kcsa.com

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