Gilat Announces Fourth Quarter and Full Year 2013 Results

Improved Profitability Objective for 2014 Based on Strong Backlog and Strong Cash Position

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| Source: Gilat Satellite Networks Ltd.

PETAH TIKVA, Israel, Feb. 18, 2014 (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, 2013.

Key Financial Updates:

  • Revenue for 2013 was $234.9 million with EBITDA of $16.3 million
  • Cash increased to $86.8 million as compared to $67.4 million at the end of 2012
  • Net cash increased to $50.9 million as compared to $18.7 million at the end of 2012
  • Strong backlog of $228 million at the end of 2013 more than doubled as compared to $98.9 million at the end of 2012
  • Management objectives for 2014 are in the range of $240 to $245 million in revenue with EBITDA of approximately 9%
  • Spacenet operational results are classified as discontinued operations and not included in results presented

Revenues for the fourth quarter of 2013 were $55.7 million, compared to $76.5 million for the same period in 2012. Revenues for the year ended December 31, 2013 were $234.9 million, compared to $271.6 million in the year ended December 31, 2012.

On a non-GAAP basis, operating loss was $0.1 million in the fourth quarter of 2013 as compared to an operating income of $5.6 million in the comparable quarter of 2012. Operating income for 2013 on a non-GAAP basis was $4.4 million compared to operating income of $19.1 million in 2012.

On a non-GAAP basis, net loss for the quarter was $1.0 million or $.02 per diluted share compared to net income of $6.6 million or $.15 per diluted share in the same quarter of 2012. Net loss for 2013 on a non-GAAP basis was $1.1 million compared to net income of $17.6 million in 2012.

EBITDA for the fourth quarter of 2013 reached $2.5 million compared with $8.9 million in the comparable period in 2012. EBITDA for the twelve months of 2013 reached $16.3 million compared with $30.7 million in the comparable period in 2012.

"2013 was a challenging year for Gilat," said Erez Antebi, CEO of Gilat. "Looking forward, we have worked to streamline the Company and its cost structure. We begin 2014 with a healthy balance sheet, strong cash position and a backlog which has more than doubled from 2013. And, we have successfully positioned ourselves in growing markets with many opportunities."

Resources:

Fourth Quarter 2013 Financial Statements

Key Recent Announcements:

- Gilat Introduces CellEdge, a Breakthrough Small Cell over Satellite Solution Specifically Designed for Unserved Rural Areas;

- THAICOM Launches Fast Internet Connectivity Service, Powered by Gilat Satellite Equipment;

- Gilat and Gilat Satcom to Supply Fixed and On-the-Move Satellite Services to Israeli Government;

- Gilat Awarded $30 Million Project by Peru's Fitel in Support of the Integracion Amazonica Loreto Initiative;

- Gilat Awarded $99-Million Project from Colombia's MINTIC;

- Gilat Announces the Closing of the Sale of Spacenet Subsidiary.

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 at (972) 3-918-0609, and US-based participants are invited to access the call by dialing (888) 668-9141. 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, 2014. International participants are invited to access the replay at (972) 3-925-5904, 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, 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 Satellite Networks Ltd.

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 85 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. 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    
     
  December 31, December 31,
  2013 2012
  Unaudited  
     
ASSETS    
     
CURRENT ASSETS:    
Cash and cash equivalents  58,424  66,968
Restricted cash  18,891  1,880
Restricted cash held by trustees  3,221  1,664
Trade receivables, net  56,466  52,737
Inventories  27,141  23,128
Other current assets  10,143  23,058
Current assets of discontinued operations  --   49,057
Total current assets  174,286  218,492
     
LONG-TERM INVESTMENTS AND RECEIVABLES:    
Long-term restricted cash  6,279  401
Severance pay fund  9,856  9,703
Long-term trade and other receivables  278  213
Total long-term investments and receivables  16,413  10,317
     
PROPERTY AND EQUIPMENT, NET  85,369  87,191
     
INTANGIBLE ASSETS, NET  28,830  34,773
     
GOODWILL  63,870  63,870
     
TOTAL ASSETS  368,768  414,643
     
     
GILAT SATELLITE NETWORKS LTD.    
CONDENSED CONSOLIDATED BALANCE SHEET    
US dollars in thousands    
  December 31, December 31,
  2013 2012
  Unaudited  
     
LIABILITIES AND EQUITY    
     
CURRENT LIABILITIES:    
Short-term bank credit  --   3,517
Current maturities of long-term loans  4,665  7,963
Trade payables   20,900  22,160
Accrued expenses   16,748  21,451
Short-term advances from customer, held by trustees  --   4,448
Other current liabilities  54,666  32,340
Liabilities of discontinued operations  --   19,369
     
Total current liabilities  96,979  111,248
     
LONG-TERM LIABILITIES:    
Accrued severance pay  9,628  9,513
Long-term loans, net of current maturities  31,251  40,747
Other long-term liabilities  4,877  11,178
     
Total long-term liabilities  45,756  61,438
     
COMMITMENTS AND CONTINGENCIES    
     
EQUITY:    
Share capital - ordinary shares of NIS 0.2 par value   1,932  1,909
Additional paid in capital  873,045  869,822
Accumulated other comprehensive income  1,591  2,864
Accumulated deficit  (650,535)  (632,638)
     
Total equity  226,033  241,957
     
TOTAL LIABILITIES AND EQUITY  368,768  414,643
 
GILAT SATELLITE NETWORKS LTD.
RECONCILIATION BETWEEN GAAP AND NON-GAAP STATEMENTS OF OPERATIONS
FOR COMPARATIVE PURPOSES 
U.S. dollars in thousands (except per share data)
     Three months ended       Three months ended   
    31 December 2013     31 December 2012  
  GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP
  Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
             
Revenues  55,728  --   55,728  76,463  --   76,463
Cost of revenues  35,519  (1,256)  34,263  48,703  (1,614)  47,089
Gross profit  20,209  1,256  21,465  27,760  1,614  29,374
  36%   39% 36%   38%
Research and development expenses:            
Expenses incurred  7,627  (129)  7,498  8,022  (111)  7,911
Less - grants  142  --   142  710  --   710
   7,485  (129)  7,356  7,312  (111)  7,201
Selling and marketing expenses  8,535  (344)  8,191  10,523  (339)  10,184
General and administrative expenses  6,341  (312)  6,029  6,628  (263)  6,365
Restructuring Costs  564  (564)  --   315  (315)  -- 
Impairment of goodwill and Intangible assets  --   --   --   31,879  (31,879)  -- 
Operating income (loss)  (2,716)  2,605  (111)  (28,897)  34,521  5,624
Financial expenses, net   (1,602)  --   (1,602)  (378)  --   (378)
Other income  --   --   --   2,729  (2,729)  -- 
Income (loss) before taxes on income  (4,318)  2,605  (1,713)  (26,546)  31,792  5,246
Tax benefit  (708)  --   (708)  (1,312)  --   (1,312)
Net income (loss) from continuing operations  (3,610)  2,605  (1,005)  (25,234)  31,792  6,558
Net income (loss) from discontinued operations  (3,911)  3,911  --   932  (932)  -- 
Net income (loss)  (7,521)  6,516  (1,005)  (24,302)  30,860  6,558
             
Basic net loss per share from continuing operations  (0.09)      (0.61)    
Basic net earnings (loss) per share from discontinued operations  (0.09)      0.02    
Basic net earnings (loss) per share  (0.18)    (0.02)  (0.59)    0.16
             
Diluted net loss per share from continuing operations  (0.09)      (0.61)    
Diluted net earnings (loss) per share from discontinued operations  (0.09)      0.02    
Diluted net earnings (loss) per share  (0.18)    (0.02)  (0.59)    0.15
             
Weighted average number of shares used in computing net earnings (loss) per share          
Basic 42,098   42,098 41,603   41,603
Diluted 42,098   42,098 41,603   43,556
             
(1) Adjustments reflect the effect of non-cash stock based compensation as per ASC 718, amortization of intangible assets related to acquisition transactions, impairments of goodwill and intangible assets, restructuring costs and net income (loss) from discontinued operations.
             
             
    Three months ended      Three months ended   
    31 December 2013     31 December 2012  
    Unaudited     Unaudited  
Non-cash stock-based compensation expenses:            
Cost of revenues    58      55  
Research and development    129      111  
Selling and marketing    131      127  
General and administrative    312      263  
     630      556  
             
Amortization of intangible assets related to acquisition transactions:            
Cost of revenues    1,198      1,559  
Selling and marketing    213      212  
     1,411      1,771  
             
GILAT SATELLITE NETWORKS LTD.
RECONCILIATION BETWEEN GAAP AND NON-GAAP STATEMENTS OF OPERATIONS
FOR COMPARATIVE PURPOSES 
U.S. dollars in thousands (except per share data)
     Year ended       Year ended   
    31 December 2013     31 December 2012  
  GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP
  Unaudited Unaudited Unaudited   Unaudited Unaudited
             
Revenues  234,866  --   234,866  271,566  --   271,566
Cost of revenues  155,210  (4,993)  150,217  173,637  (6,443)  167,194
Gross profit  79,656  4,993  84,649  97,929  6,443  104,372
  34%   36% 36%   38%
Research and development expenses:            
Expenses incurred  29,491  (468)  29,023  32,296  (354)  31,942
Less - grants  1,591  --   1,591  3,055  --   3,055
   27,900  (468)  27,432  29,241  (354)  28,887
Selling and marketing expenses  32,214  (1,297)  30,917  34,988  (1,247)  33,741
General and administrative expenses  23,071  (1,151)  21,920  23,618  (972)  22,646
Restructuring Costs  564  (564)  --   315  (315)  -- 
Impairment of goodwill and Intangible assets  --   --   --   31,879  (31,879)  -- 
Operating income (loss)  (4,093)  8,473  4,380  (22,112)  41,210  19,098
Financial expenses, net   (6,239)  --   (6,239)  (3,432)  --   (3,432)
Other income  --   --   --   2,729  (2,729)  -- 
Income (loss) before taxes on income  (10,332)  8,473  (1,859)  (22,815)  38,481  15,666
Tax benefit  (755)  --   (755)  (1,893)  --   (1,893)
Net income (loss) from continuing operations  (9,577)  8,473  (1,104)  (20,922)  38,481  17,559
Net loss from discontinued operations  (8,320)  8,320  --   (2,270)  2,270  -- 
Net income (loss)  (17,897)  16,793  (1,104)  (23,192)  40,751  17,559
             
Basic net loss per share from continuing operations  (0.23)      (0.51)    
Basic net loss per share from discontinued operations  (0.20)      (0.05)    
Basic net earnings (loss) per share  (0.43)    (0.03)  (0.56)    0.42
             
Diluted net loss per share from continuing operations  (0.23)      (0.51)    
Diluted net loss per share from discontinued operations  (0.20)      (0.05)    
Diluted net earnings (loss) per share  (0.43)    (0.03)  (0.56)    0.40
             
Weighted average number of shares used in computing net earnings (loss) per share            
Basic 41,961   41,961 41,410   41,410
Diluted 41,961   41,961 41,410   43,406
             
             
(1) Adjustments reflect the effect of non-cash stock based compensation as per ASC 718, amortization of intangible assets related to acquisition transactions, impairments of goodwill and intangible assets, restructuring costs and net income (loss) from discontinued operations.
             
             
    Year ended      Year ended   
    31 December 2013     31 December 2012  
    Unaudited     Unaudited  
Non-cash stock-based compensation expenses:            
Cost of revenues    201      207  
Research and development    468      354  
Selling and marketing    448      401  
General and administrative    1,151      972  
     2,268      1,934  
             
Amortization of intangible assets related to acquisition transactions:            
Cost of revenues    4,792      6,236  
Selling and marketing    849      846  
     5,641      7,082  
 
GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except per share data)
  Year ended Three months ended
  December 31, December 31,
  2013 2012 2013 2012
  Unaudited   Unaudited Unaudited
         
Revenues  234,866  271,566  55,728  76,463
Cost of revenues  155,210  173,637  35,519  48,703
Gross profit  79,656  97,929  20,209  27,760
Research and development expenses:        
Expenses incurred  29,491  32,296  7,627  8,022
Less - grants  1,591  3,055  142  710
   27,900  29,241  7,485  7,312
Selling and marketing expenses  32,214  34,988  8,535  10,523
General and administrative expenses  23,071  23,618  6,341  6,628
Restructuring Costs  564  315  564  315
Impairment of goodwill and Intangible assets  --   31,879  --   31,879
Operating loss  (4,093)  (22,112)  (2,716)  (28,897)
Financial expenses, net   (6,239)  (3,432)  (1,602)  (378)
Other income  --   2,729  --   2,729
Loss before taxes on income  (10,332)  (22,815)  (4,318)  (26,546)
Tax benefit  (755)  (1,893)  (708)  (1,312)
Net loss from continuing operations  (9,577)  (20,922)  (3,610)  (25,234)
Net income (loss) from discontinued operations  (8,320)  (2,270)  (3,911)  932
Net loss  (17,897)  (23,192)  (7,521)  (24,302)
         
Basic net loss per share from continuing operations  (0.23)  (0.51)  (0.09)  (0.61)
Basic net earnings (loss) per share from discontinued operations  (0.20)  (0.05)  (0.09)  0.02
Basic net loss per share  (0.43)  (0.56)  (0.18)  (0.59)
         
Diluted net loss per share from continuing operations  (0.23)  (0.51)  (0.09)  (0.61)
Diluted net earnings (loss) per share from discontinued operations  (0.20)  (0.05)  (0.09)  0.02
Diluted net loss per share  (0.43)  (0.56)  (0.18)  (0.59)
         
Weighted average number of shares used in computing net loss per share        
Basic 41,961 41,410 42,098 41,603
Diluted 41,961 41,410 42,098 41,603
 
GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
US dollars in thousands
 
  Year ended Three months ended
  December 31, December 31,
  2013 2012 2013 2012
  Unaudited Unaudited Unaudited Unaudited
Cash flows from continuing operations        
Cash flows from operating activities:        
Net loss from continuing operations  (9,577)  (20,922)  (3,610)  (25,234)
Adjustments required to reconcile net loss to net cash generated from operating activities:      
Depreciation and amortization  17,559  18,672  4,049  5,088
Impairment of goodwill and other intangible assets  --   31,879  --   31,879
Stock-based compensation  2,268  1,934  630  556
Accrued severance pay, net  (38)  88  (37)  (150)
Accrued interest and exchange rate differences on short and long-term restricted cash, net  2,359  (209)  977  (114)
Exchange rate differences on long-term loans  157  90  65  81
Capital loss from disposal of property and equipment  48  43  35  6
Deferred income taxes  (1,571)  (3,614)  (1,862)  (2,571)
Increase in trade receivables, net  (4,228)  (11,735)  (4,894)  (51)
Decrease (increase) in other assets (including short-term, long-term and deferred charges)  8,688  (3,293)  7,544  (1,519)
Decrease (increase) in inventories  (6,502)  2,025  1,289  912
Decrease in trade payables  (1,225)  (727)  (4,854)  (1,941)
Increase (decrease) in accrued expenses  (4,703)  250  (464)  1,763
Increase (decrease) in advances from customer, held by trustees, net   (4,448)  2,897  --   (39)
Increase in other accounts payable and other long term liabilities  18,772  2,621  24,360  5,987
Net cash generated from operating activities  17,559  19,999  23,228  14,653
         
GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
US dollars in thousands
 
  Year ended Three months ended
  December 31, December 31,
  2013 2012 2013 2012
  Unaudited Unaudited Unaudited Unaudited
Cash flows from investing activities:        
Purchase of property and equipment  (4,063)  (3,965)  (1,246)  (1,090)
Investment in restricted cash held by trustees  (17,587)  (35,442)  (3,132)  (6,741)
Proceeds from restricted cash held by trustees  13,744  35,447  3,461  12,931
Investment in restricted cash (including long-term)  (25,961)  (903)  (23,480)  (2)
Proceeds from restricted cash (including long-term)  2,975  3,355  418  28
Purchase of intangible assets  (16)  (89)  --   (7)
         
Net cash generated from (used in) investing activities  (30,908)  (1,597)  (23,979)  5,119
         
         
Cash flows from financing activities:        
Repayment of convertible notes  --   (14,322)  --   (14,322)
Issuance of restricted stock units and exercise of stock options  581  254  2  236
Payment of obligation related to the purchase of intangible assets  (500)  --   --   -- 
Short-term bank credit, net  (3,518)  546  (3,426)  (644)
Proceeds from long-term loans  --   10,000  --   -- 
Repayment of long-term loans  (12,950)  (6,452)  (146)  (1,017)
         
Net cash used in financing activities  (16,387)  (9,974)  (3,570)  (15,747)
         
Cash flows from discontinued operations        
Net cash generated from (used in) operating activities  (7,158)  1,572  (5,850)  3,428
Net cash generated from (used in) investing activities  15,791  999  15,086  (1,482)
Net cash generated from (used in) financing activities  12,884  --   (300)  -- 
   21,517  2,571  8,936  1,946
         
Effect of exchange rate changes on cash and cash equivalents  (325)  (262)  (105)  (29)
         
Increase (decrease) in cash and cash equivalents  (8,544)  10,737  4,510  5,942
         
Cash and cash equivalents at the beginning of the period  66,968  56,231  53,914  61,026
         
Cash and cash equivalents at the end of the period  58,424  66,968  58,424  66,968
 
GILAT SATELLITE NETWORKS LTD.
CONDENSED EBITDA
US dollars in thousands
  Year ended Three months ended
  December 31, December 31,
  2013 2012 2013 2012
  Unaudited Unaudited Unaudited Unaudited
         
Operating loss  (4,093)  (22,112)  (2,716)  (28,897)
Add:        
Non-cash stock-based compensation expenses  2,268  1,934  630  556
Restructuring costs  564  315  564  315
Impairment of goodwill and Intangible assets  --   31,879  --   31,879
Depreciation and amortization  17,559  18,672  4,049  5,088
EBITDA  16,298  30,688  2,527  8,941
Phil Carlson / Jared Stone, KCSA
 / 
(212) 896 1233 / 1208

David Leichner, Gilat Satellite Networks Ltd.

(972) 3 925 2009