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Gilat Reports First Quarter 2021 Results

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PETAH TIKVA, Israel, May 04, 2021 (GLOBE NEWSWIRE) -- Gilat Satellite Networks Ltd. (NASDAQ:GILT, TASE: GILT)), a worldwide leader in satellite networking technology, solutions and services, today reported its results for the first quarter of 2021.

First Quarter Financial Highlights

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

Management Commentary

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

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

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

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

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

Key Recent Announcements

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

Conference Call Details

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

Date: Tuesday, May 4, 2021
Start: 9:30 AM ET / 4:30 PM IT
Dial-in: US: 1-866-744-5399
  International: +972-3-918-0610

 

A simultaneous webcast of the conference call will be available on the Gilat website at www.gilat.com and through this link: www.veidan-stream.com/gilatq1-2021.html

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

Non-GAAP Measures
The attached summary unaudited financial statements were prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). To supplement the consolidated financial statements presented in accordance with GAAP, the Company presents Non-GAAP presentations of net income, operating income, Adjusted EBITDA and earnings per share. The adjustments to the Company's GAAP results are made with the intent of providing both management and investors a more complete understanding of the Company's underlying operational results, trends and performance. Non-GAAP financial measures mainly exclude the effect of stock based compensation, amortization of purchased intangibles, lease incentive amortization, litigation expenses, income related to trade secrets claims, restructuring and reorganization costs, merger, acquisition and related litigation expense (income), net and initial recognition of deferred tax asset with respect to carry-forward losses.

Adjusted EBITDA is presented to compare the Company's performance to that of prior periods and evaluate the Company's financial and operating results on a consistent basis from period to period. The Company also believes this measure, when viewed in combination with the Company's financial results prepared in accordance with GAAP, provides useful information to investors to evaluate ongoing operating results and trends. Adjusted EBITDA, however, should not be considered as an alternative to operating income or net income for the period and may not be indicative of the historic operating results of the Company; nor is it meant to be predictive of potential future results. Adjusted EBITDA is not a measure of financial performance under GAAP and may not be comparable to other similarly titled measures for other companies. Reconciliation between the Company's Operating income and Adjusted EBITDA is presented in the attached summary financial statements.

Non-GAAP presentations of net income, operating income, Adjusted EBITDA and earnings per share should not be considered in isolation or as a substitute for any of the consolidated statements of operations prepared in accordance with GAAP, or as an indication of Gilat's operating performance or liquidity.

About Gilat
Gilat Satellite Networks Ltd. (NASDAQ:GILT, TASE: GILT)) is a leading global provider of satellite-based broadband communications. With 30 years of experience, we design and manufacture cutting-edge ground segment equipment, and provide comprehensive solutions and end-to-end services, powered by our innovative technology. Delivering high value competitive solutions, our portfolio comprises of a cloud based VSAT network platform, high-speed modems, high performance on-the-move antennas and high efficiency, high power Solid-State Amplifiers (SSPA) and Block Upconverters (BUC).

Gilat's comprehensive solutions support multiple applications with a full portfolio of products to address key applications including broadband access, Cellular Backhaul, enterprise, in-flight connectivity, maritime, trains, defense and public safety, all while meeting the most stringent service level requirements. Gilat controlling shareholders are the FIMI Private Equity Funds. For more information, please visit: www.gilat.com

Certain statements made herein that are not historical are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. The words "estimate", "project", "intend", "expect", "believe" and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties. Many factors could cause the actual results, performance or achievements of Gilat to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, risks associated with the outbreak and global spread of the coronavirus (COVID-19) pandemic; changes in general economic and business conditions, inability to maintain market acceptance to 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. We undertake no obligation to update or revise any forward-looking statements for any reason.

Contact:
Gilat Satellite Networks
Doreet Oren, Director Corporate Communications
DoreetO@gilat.com

Ehud Helft
GK Investor & Public Relations
gilat@gkir.com
+1 646 688 3559


       
GILAT SATELLITE NETWORKS LTD.      
CONSOLIDATED STATEMENTS OF OPERATIONS      
U.S. dollars in thousands (except share and per share data)      
  Three months ended 
   March 31, 
    2021       2020  
   
  Unaudited
       
Revenues $ 44,713     $ 47,673  
Cost of revenues   32,356       38,787  
       
Gross profit   12,357       8,886  
       
Research and development expenses   8,111       7,634  
Less - grants   184       272  
Research and development expenses, net   7,927       7,362  
Selling and marketing expenses   5,004       5,066  
General and administrative expenses   3,083       4,818  
Merger, acquisition and related litigation expenses   -       2,405  
       
Total operating expenses   16,014       19,651  
       
Operating loss   (3,657 )     (10,765 )
       
Financial expenses, net   (1,192 )     (972 )
       
Loss before taxes on income   (4,849 )     (11,737 )
       
Taxes on income   247       18  
       
Net loss $ (5,096 )   $ (11,755 )
       
Basic loss per share $ (0.09 )   $ (0.21 )
       
Diluted loss per share $ (0.09 )   $ (0.21 )
       
Weighted average number of shares used in computing loss per share      
Basic   56,031,343       55,493,258  
Diluted   56,031,343       55,493,258  
       


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


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


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


GILAT SATELLITE NETWORKS LTD.      
CONSOLIDATED STATEMENTS OF CASH FLOWS      
U.S. dollars in thousands      
       
   Three months ended 
   March 31, 
    2021       2020  
   
  Unaudited
Cash flows from operating activities:      
Net loss $ (5,096 )   $ (11,755 )
Adjustments required to reconcile net income      
 to net cash provided by (used in) operating activities:      
Depreciation and amortization   2,330       2,604  
Capital loss from disposal of property and equipment   -       (33 )
Stock-based compensation of options   (159 )     423  
Accrued severance pay, net   (10 )     43  
Deferred income taxes, net   518       634  
Decrease (increase) in trade receivables, net   (1,933 )     13,607  
Increase in contract assets   (4,487 )     (4,851 )
Decrease (increase) in other assets (including short-term, long-term      
 and deferred charges)   (220 )     1,673  
Increase in inventories   (2,212 )     (6,635 )
Increase in trade payables   950       2,375  
Increase (decrease) in accrued expenses   969       (1,652 )
Increase (decrease) in advance from customer and deferred revenues   7,688       (2,827 )
Increase in current and non current liabilities   2,003       2,811  
Net cash provided by (used in) operating activities   341       (3,583 )
       
Cash flows from investing activities:      
Purchase of property and equipment   (1,483 )     (951 )
Net cash used in investing activities   (1,483 )     (951 )
       
Cash flows from financing activities:      
Dividend payment   (35,003 )     -  
Repayment of long-term loans   (4,000 )     (4,096 )
Net cash used in financing activities   (39,003 )     (4,096 )
       
Effect of exchange rate changes on cash, cash equivalents and restricted cash   (254 )     (695 )
       
Decrease in cash, cash equivalents and restricted cash   (40,399 )     (9,325 )
       
Cash, cash equivalents and restricted cash at the beginning of the period   115,958       101,969  
       
Cash, cash equivalents and restricted cash at the end of the period $ 75,559     $ 92,644  
       


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