Gilat Reports Continued Profitability Growth in Q2 2019

PETAH TIKVA, Israel, Aug. 6, 2019 /PRNewswire/ -- Gilat Satellite Networks Ltd. GILT 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. GILT 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





















 

Cision View original content:http://www.prnewswire.com/news-releases/gilat-reports-continued-profitability-growth-in-q2-2019-300897083.html

SOURCE Gilat Satellite Networks

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