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Gilat Reports Full Year 2015 Results With a Good Fourth Quarter and Forecasted Profitable Growth for 2016

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PETAH TIKVA, Israel, Feb. 17, 2016 (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 fourth quarter and year ended December 31, 2015.

Key Financial Updates:

  • Revenues for the fourth quarter of 2015 were $67.7 million compared to $40.3 million in the third quarter of 2015 and $73.1 million in the comparable period of 2014.

  • Revenue for 2015 was $197.5 million compared to $235.1 million in 2014.

  • EBITDA for the fourth quarter of 2015 was of $11.1 million compared to a loss of $3.4 million in the third quarter of 2015 and EBITDA of $10.4 million in the comparable period of 2014.

  • EBITDA for 2015 was $5.3 million compared to EBITDA of $23.4 million in 2014.

  • Cash balances, including restricted cash, net of short-term bank credits, increased by $32.5 million compared to September 30, 2015, resulting in a cash balance of $120.9 million as of December 31, 2015.

  • Company recorded $10.1 million impairment of long-lived assets related to the Kioscos project in Colombia.

  • Management objectives for 2016 of revenues between $290 and $310 million and EBITDA between $18 and $24 million.

"I am pleased with the results of Q4 2015, in which we demonstrated strong revenue, profit and wins, providing a positive ending to a challenging year," said Dov Baharav, Gilat's Interim CEO and Chairman of the Board. "We made very encouraging progress in the In-Flight Connectivity (IFC) market, further penetration to the Chinese market, with sales to Synertone, and an additional win of a $108 million project in Peru, together with high acceptance of Gilat's HTS X-Architecture for mobility and fixed applications including cellular backhaul.

"A prime example is SoftBank, which selected Gilat's satellite-based cellular backhaul technology for the provision of LTE services to remote sites in Japan.  Gilat's SkyEdge II-c Capricorn platform is the first satellite solution to deliver a 4G handset user experience on par with terrestrial networks.

"The positive developments of Q4 vindicate our strategy and give us confidence in our projected growth for 2016 and beyond," Mr. Baharav added.

Revenues for the fourth quarter of 2015 were $67.7 million, compared to $73.1 million for the same period in 2014. Revenues for the year ended December 31, 2015 were $197.5 million, compared to $235.1 million in the year ended December 31, 2014. Revenues in the fourth quarter were below the updated management objectives, mainly due to temporary delays resulting from some regulatory issues relating to the Fitel projects in Peru.

On a non-GAAP basis, the operating income was $8.9 million in the fourth quarter of 2015 as compared to the operating income of $7.5 million in the comparable quarter of 2014. The operating loss for 2015 on a non-GAAP basis was $4.2 million compared to the operating income of $13.1 million in 2014.

On a GAAP basis, the operating loss was $3.4 million in the fourth quarter of 2015 as compared to the operating income of $5.5 million in the comparable quarter of 2014. The operating loss for 2015 on a GAAP basis was $43.7 million compared to the operating income of $5 million in 2014.

On a non-GAAP basis, the net income for the quarter was $7 million or $0.16 per diluted share compared to the net income of $4.4 million or $0.1 per diluted share in the same quarter of 2014. The net loss for 2015 on a non-GAAP basis was $12.6 million or $0.29 per diluted share compared to the net income of $7.4 million or $0.17 per diluted share in 2014.

On a GAAP basis, the net loss for the quarter was $5.2 million or $0.12 per diluted share compared to the net income from continuing operations of $2.4 million or $0.06 per diluted share in the same quarter of 2014. The net loss from continuing operations for 2015 on a GAAP basis was $52.1 million or $1.19 per diluted share compared to the net loss from continuing operations of $0.7 million or $0.02 per diluted share in 2014.

EBITDA for the fourth quarter of 2015 reached $11.1 million compared with $10.4 million in the comparable period in 2014. EBITDA for the twelve months of 2015 was $5.3 million compared with $23.4 million in the comparable period in 2014.

Key Recent Announcements:

  • Avanti Deploys HTS VSAT Networks from Gilat for Broadband Connectivity Across the UK
  • Gilat Wins Bid of $108 Million for a New Project in Peru
  • Gilat Announces Phased-Array Antenna (PAA) Program Following the Signing of a Development Agreement with an Aerospace Systems Integrator
  • Synertone, a leading Chinese satellite solutions provider, selects Gilat to enable its fixed and mobile offerings throughout China in a $12 million deal
  • CRRC, the World's Largest Railway Transportation Supplier, Selects Gilat to Bring Satellite Connectivity to all its Trains, Worldwide
  • Gilat Launches its Revolutionary Distributed X-Architecture to Address the Growing Demands of High-Throughput Satellites (HTS) in a Single Platform

Conference Call and Webcast Details:
Gilat management will host a conference call today at 14:30 GMT / 09:30 EST / 16:30 IST (Israel Standard Time) to discuss the results. International participants are invited to access the call on (972) 3-918-0644, and US-based participants are invited to access the call by dialing (888) 281-1167. 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 February 20, 2016.  International participants are invited to access the replay on (972) 3-925-5900, and US-based participants are invited to access the replay by dialing (888) 326-9310. 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 and other costs related to acquisition transactions. 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)) and other costs related to acquisition transactions ('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 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. 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.


GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share and per share data)
 
 Year endedThree months ended
 December 31,December 31,
  2015  2014  2015  2014 
 UnauditedAuditedUnauditedUnaudited
     
Revenues   197,543    235,133    67,682    73,097 
Cost of revenues   143,318    151,498    47,181    47,325 
Impairment of long lived assets   10,137    -     10,137    -  
Gross profit   44,088     83,635     10,364     25,772  
     
Research and development expenses:    
Expenses incurred   24,952    27,635    5,709    6,804 
Less - grants   2,540    2,477    1,977    675 
    22,412    25,158    3,732    6,129 
Selling and marketing expenses   24,823    32,537    6,098    7,257 
General and administrative expenses   18,644    20,903    3,418    6,892 
Restructuring costs   1,508    -     522    -  
Goodwill impairment   20,402    -     -     -  
Total operating expenses   87,789     78,598     13,770     20,278  
Operating income (loss)   (43,701)   5,037     (3,406)   5,494  
Financial expenses, net    (7,243)   (3,837)   (1,393)   (1,939)
Income (loss) before taxes on income   (50,944)   1,200     (4,799)   3,555  
Taxes on income   1,190    1,901    450    1,118 
Income (loss) from continuing operations   (52,134)   (701)   (5,249)   2,437  
Loss from discontinued operations   (200)   (795)   -      -   
Net income (loss)   (52,334)   (1,496)   (5,249)   2,437  
     
Net income (loss) per share from continuing operations (basic and diluted)   (1.19)   (0.02)   (0.12)   0.06 
Loss per share from discontinued operations (basic and diluted)   (0.00)   (0.02)   -     -  
Net Income (loss) per share (basic and diluted)   (1.19)   (0.04)   (0.12)   0.06 
     
Weighted average number of shares used in computing net income (loss) per share    
Basic 43,655,309   42,444,482   44,311,825   42,664,812  
Diluted 43,655,309   42,444,482   44,311,825   43,165,834  
 


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    
   31 December 2015     31 December 2014   
 GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP 
 Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited 
             
Gross profit   10,364     11,387     21,751     25,772     1,251    27,023 
Operating expenses   13,770     (896)    12,874     20,278     (741)   19,537 
Operating income (loss)   (3,406)    12,283     8,877     5,494     1,992    7,486 
Income (loss) before taxes on income   (4,799)    12,283     7,484     3,555     1,992    5,547 
Net income (loss)   (5,249)    12,283     7,034     2,437     1,992    4,429 
             
Basic net income (loss) per share   (0.12)    0.28     0.16     0.06     0.04    0.10 
             
Diluted net income (loss) per share   (0.12)    0.28     0.16     0.06     0.04    0.10 
             
Weighted average number of shares used in computing net income (loss) per share            
Basic 44,311,825     44,311,825   42,664,812    42,664,812 
Diluted 44,311,825     44,567,776   43,165,834    43,640,235 
             
             
(1) Adjustments reflect the effect of non-cash stock based compensation as per ASC 718, amortization of intangible assets related to Shares acquisition transactions, impairments, restructuring costs and net income (loss) from discontinued operations. 
  
    Three months ended       Three months ended    
   31 December 2015     31 December 2014   
   Unaudited     Unaudited   
             
GAAP net income (loss)     (5,249)        2,437    
Gross profit:            
Non-cash stock-based compensation expenses:     52         53    
Amortization of intangible assets related to acquisition transactions    1,198         1,198    
Impairment of long lived assets     10,137         -     
      11,387         1,251    
Operating expenses:            
Non-cash stock-based compensation expenses     184         529    
Amortization of intangible assets related to acquisition transactions    190         212    
Restructuring costs     522         -     
      896         741    
             
Non GAAP net income (loss)     7,034         4,429    
             
             
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)
 
    Year ended       Year ended    
   31 December 2015     31 December 2014   
 GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP 
 Unaudited Unaudited Unaudited Audited Unaudited Unaudited 
             
Gross profit   44,088     15,146     59,234     83,635     5,024    88,659 
Operating expenses   87,789     (24,399)    63,390     78,598     (3,043)   75,555 
Operating income (loss)   (43,701)    39,545     (4,156)    5,037     8,067    13,104 
Income (loss) before taxes on income   (50,944)    39,545     (11,399)    1,200     8,067    9,267 
Income (loss) from continuing operations   (52,134)    39,545     (12,589)    (701)    8,067    7,366 
Loss from discontinued operations   (200)    200     -      (795)    795    -  
Net income (loss)   (52,334)    39,745     (12,589)    (1,496)    8,862    7,366 
             
Basic loss per share from continuing operations   (1.19)        (0.02)     
Basic loss per share from discontinued operations   (0.00)        (0.02)     
Basic net income (loss) per share   (1.19)    0.90     (0.29)    (0.04)    0.21    0.17 
             
Diluted loss per share from continuing operations   (1.19)        (0.02)     
Diluted loss per share from discontinued operations   (0.00)        (0.02)     
Diluted net income (loss) per share   (1.19)    0.90     (0.29)    (0.04)    0.21    0.17 
             
Weighted average number of shares used in computing net income (loss) per share            
Basic 43,655,309     43,655,309   42,444,482    42,444,482 
Diluted 43,655,309     43,655,309   42,444,482    43,621,979 
             
             
(1) Adjustments reflect the effect of non-cash stock based compensation as per ASC 718, amortization of intangible assets related to Shares acquisition transactions, impairments, restructuring costs and net income (loss) from discontinued operations. 
  
    Year ended       Year ended    
   31 December 2015     31 December 2014   
    Unaudited       Unaudited    
             
GAAP net income (loss)     (52,334)        (1,496)   
Gross profit:            
Non-cash stock-based compensation expenses:     217         232    
Amortization of intangible assets related to acquisition transactions    4,792         4,792    
Impairment of long lived assets     10,137         -     
      15,146         5,024    
Operating expenses:            
Non-cash stock-based compensation expenses     1,684         2,193    
Amortization of intangible assets related to acquisition transactions    805         850    
Goodwill impairment     20,402         -     
Restructuring costs     1,508         -     
      24,399         3,043    
             
Loss from discontinued operations     200         795    
             
Non GAAP net income (loss)     (12,589)        7,366    
  


GILAT SATELLITE NETWORKS LTD.
 
CONDENSED EBITDA
 
US dollars in thousands
 
  Year ended Three months ended 
  December 31,
 December 31,
 
   2015 2014  2015 2014 
  UnauditedUnaudited UnauditedUnaudited 
        
Operating income (loss)    (43,701)  5,037    (3,406)  5,494 
Add:       
Non-cash stock-based compensation expenses    1,901   2,425    236   582 
Restructuring costs    1,508   -     522   -  
Impairment of goodwill and long lived assets    30,539   -     10,137   -  
Depreciation and amortization    15,072   15,951    3,613   4,325 
EBITDA    5,319    23,413     11,102    10,401  
  


GILAT SATELLITE NETWORKS LTD. 
CONDENSED CONSOLIDATED BALANCE SHEET 
US dollars in thousands 
  
  December 31, December 31, 
   2015   2014  
  Unaudited Audited 
      
ASSETS     
      
CURRENT ASSETS:     
Cash and cash equivalents    18,435     27,726  
Restricted cash    100,779     25,983  
Restricted cash held by trustees    8,524     15,441  
Trade receivables, net    50,984     57,728  
Inventories    25,358     25,112  
Other current assets    16,223     14,760  
Total current assets    220,303     166,750  
      
LONG-TERM INVESTMENTS AND RECEIVABLES:     
Long-term restricted cash    179     216  
Severance pay funds    7,545     8,085  
Other long term receivables and deferred charges    221     12,124  
Total long-term investments and receivables    7,945     20,425  
      
PROPERTY AND EQUIPMENT, NET    81,963     90,893  
      
INTANGIBLE ASSETS, NET    17,154     22,970  
      
GOODWILL    43,468     63,870  
      
TOTAL ASSETS    370,833     364,908  
  
  
  December 31, December 31, 
   2015   2014  
  Unaudited Audited 
      
LIABILITIES AND EQUITY     
      
CURRENT LIABILITIES:     
Short-term bank credit and loans    7,000     15,857  
Current maturities of long-term loans    4,542     4,595  
Trade payables     17,210     22,850  
Accrued expenses     23,481     22,475  
Advances from customers    82,813     2,940  
Advances from customers, held by trustees    8,515     12,858  
Other current liabilities    16,213     18,587  
      
Total current liabilities    159,774     100,162  
      
LONG-TERM LIABILITIES:     
Accrued severance pay    7,506     8,157  
Long-term loans, net of current maturities    21,493     26,271  
Other long-term liabilities    3,978     5,179  
      
Total long-term liabilities    32,977     39,607  
      
EQUITY:     
Share capital - ordinary shares of NIS 0.2 par value     2,048     1,966  
Additional paid-in capital    884,126     876,624  
Accumulated other comprehensive loss    (3,727)    (1,420) 
Accumulated deficit    (704,365)    (652,031) 
      
Total equity    178,082     225,139  
      
TOTAL LIABILITIES AND EQUITY    370,833     364,908  
  


GILAT SATELLITE NETWORKS LTD.  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
US dollars in thousands 
  
  Year ended Three months ended 
  December 31,
  December 31,
 
   2015  2014   2015  2014  
  UnauditedAudited UnauditedUnaudited 
Cash flows from operating activities:       
Net income (loss)    (52,334)   (1,496)    (5,249)   2,437  
Loss from discontinued operations    200    795     -     -   
Net income (loss) from continuing operations    (52,134)   (701)    (5,249)   2,437  
Adjustments required to reconcile net income (loss) to net cash generated provided by (used in) operating activities:      
Depreciation and amortization    15,072    15,951     3,613    4,325  
Goodwill impairment     20,402    -      -     -   
Impairment of long lived assets    10,137    -      10,137    -   
Stock-based compensation    1,901    2,425     236    582  
Accrued severance pay, net    (111)   301     163    259  
Accrued interest and exchange rate differences on short and long-term restricted cash, net    842    858     635    394  
Exchange rate differences on long-term loans    (288)   (416)    (67)   (105) 
Capital loss (gain) from disposal of property and equipment    82    430     (39)   189  
Deferred income taxes, net    1    7     (10)   63  
Decrease (increase) in trade receivables, net    4,553    (2,457)    (12,177)   (3,995) 
Decrease (increase) in other assets (including short-term, long-term and deferred charges)    998    (20,251)    136    (8,520) 
Decrease (increase) in inventories    (2,821)   (445)    2,090    781  
Increase in restricted cash directly related to operating activities, net   (87,004)   -      (34,268)   -   
Increase (decrease) in trade payables    (5,133)   2,226     2,514    6,930  
Increase in accrued expenses    2,935    5,401     3,444    3,910  
Increase (decrease) in advance from customers    79,884    (25,935)    24,268    (13,511) 
Increase (decrease) in advances from customers, held by trustees    (2,243)   14,068     6,168    14,133  
Decrease in other current liabilities and other long term liabilities    (1,860)   (7,624)    (1,454)   (447) 
Net cash provided by (used in) operating activities    (14,787)   (16,162)    140     7,425   
  
GILAT SATELLITE NETWORKS LTD. 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
US dollars in thousands 
  
   Year ended  Three months ended 
  December 31,
 December 31,
 
   2015  2014   2015  2014  
  UnauditedAudited UnauditedUnaudited 
Cash flows from investing activities:       
Purchase of property and equipment    (3,930)   (12,630)    (821)   (435) 
Investment in restricted cash held by trustees    (16,634)   (24,869)    (10,525)   (18,955) 
Proceeds from restricted cash held by trustees    21,501    12,306     2,852    3,681  
Investment in restricted cash (including long-term)    (22,717)   (12,788)    (306)   (2,207) 
Proceeds from restricted cash (including long-term)    34,120    11,228     1,561    10,996  
Net cash provided by (used in) investing activities    12,340     (26,753)    (7,239)   (6,920) 
        
Cash flows from financing activities:       
Capital lease payments    (609)   (234)    (201)   (148) 
Issuance of restricted stock units and exercise of stock options    5,683    1,185     88    437  
Payment of obligation related to the purchase of intangible assets    (500)   (500)    -     -   
Short term bank credit, net    (5,897)   16,571     (2,086)   2,394  
Repayment of long-term loans    (4,544)   (4,633)    (135)   (149) 
Net cash provided by (used in) financing activities    (5,867)   12,389      (2,334)   2,534   
        
Effect of exchange rate changes on cash and cash equivalents   (977)   (172)    145     49   
        
Increase (decrease) in cash and cash equivalents    (9,291)   (30,698)    (9,288)   3,088   
        
Cash and cash equivalents at the beginning of the period    27,726     58,424      27,723     24,638   
        
Cash and cash equivalents at the end of the period    18,435     27,726      18,435     27,726   
  


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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