Gilat Reports Significant Improvement in Results for the Fourth Quarter and Full Year 2014


Significant improvement on all major operational parameters

2014 EBITDA grows 43% to $23.4 million

Continued growth in revenue and profitability expected for 2015

PETAH TIKVA, Israel, Feb. 18, 2015 (GLOBE NEWSWIRE) -- Gilat Satellite Networks Ltd. (Nasdaq:GILT) (TASE:GILT), a worldwide leader in satellite networking technology, solutions and services, today reported its results for the fourth quarter and year ended December 31, 2014.

Key Financial Updates:

  • Revenue for 2014 was $235.1 million compared to $234.9 million in 2013
  • EBITDA increased by 43% in 2014 to $23.4 million from $16.3 million in 2013
  • Non-GAAP operating income increased by 200% to $13.1 million in 2014, from $4.4 million in 2013
  • GAAP operating income was $5.0 million as compared to a loss of $4.1 million in 2013
  • Management objectives for 2015: continued growth to revenues between $250 to $260 million and EBITDA between $26 to $28 million

Revenues for the fourth quarter of 2014 were $73.1 million, compared to $55.7 million for the same period in 2013. Revenues for the year ended December 31, 2014 were $235.1 million, compared to $234.9 million in the year ended December 31, 2013.

On a non-GAAP basis, operating income was $7.5 million in the fourth quarter of 2014 as compared to an operating loss of $0.1 million in the comparable quarter of 2013. Operating income for 2014 on a non-GAAP basis was $13.1 million compared to operating income of $4.4 million in 2013.

On a GAAP basis, operating income was $5.5 million in the fourth quarter of 2014 as compared to an operating loss of $2.7 million in the comparable quarter of 2013. Operating income for 2014 on a GAAP basis was $5 million compared to operating loss of $4.1 million in 2013.

On a non-GAAP basis, net income for the quarter was $4.4 million or $0.1 per diluted share compared to net loss of $1.0 million or $0.02 per diluted share in the same quarter of 2013. Net income for 2014 on a non-GAAP basis was $7.4 million or $0.17 per diluted share compared to net loss of $1.1 million or $0.03 per diluted share in 2013.

On a GAAP basis, net income for the quarter was $2.4 million or $0.06 per diluted share compared to net loss from continuing operations of $3.6 million or $0.09 per diluted share in the same quarter of 2013. Net loss from continuing operations for 2014 on a GAAP basis was $0.7 million or $0.02 per diluted share compared to net loss from continuing operations of $9.6 million or $0.23 per diluted share in 2013.

EBITDA for the fourth quarter of 2014 reached $10.4 million compared with $2.5 million in the comparable period in 2013. EBITDA for the twelve months of 2014 reached $23.4 million compared with $16.3 million in the comparable period in 2013.

"2014 was a good year for Gilat, with significant improvement in all major operational parameters, most of all: profitability," said Erez Antebi, CEO of Gilat. "Looking forward, we begin 2015 with a growth focused strategy and a strong product portfolio that enables us to position ourselves successfully in the growing markets, such as HTS, Mobility and Cellular Backhaul. We expect continued improvements in 2015, and our management objectives are to reach revenues between $250 and $260 million and EBIDTA between $26 to $28 million for the year. As in 2014, we expect the second half of 2015 to be significantly stronger than the first half."

Key Recent Announcements:

  • Delnet International Corp. taps Gilat to provide cellular backhaul solution for SMART
  • Gilat Announces Appointment of Yuval Ronen as Chief Financial Officer
  • O3b Certifies Gilat's meoEdge TDMA/SCPC Terminal
  • LATAM Telco Selects Gilat's High-Throughput Satellite Platform
  • Delnet Philippines Selects Gilat to Provide Enterprise VSAT Network Solution for PLDT
  • Uruguay's OpenSky Orders Gilat VSATs for ANTEL
  • Azercosmos and Gilat Sign Partnership Agreement to Offer Managed Services on Azerspace-1
  • Gilat Reports SkyEdge II-c Orders for SES's Astra Connect Service

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, 2015. 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, 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 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,
  2014 2013
  Unaudited  
     
ASSETS    
     
CURRENT ASSETS:    
Cash and cash equivalents  27,726  58,424
Restricted cash  25,983  18,891
Restricted cash held by trustees  15,441  3,221
Trade receivables, net  57,728  56,466
Inventories  25,112  27,141
Other current assets  14,760  10,143
Total current assets  166,750  174,286
     
LONG-TERM INVESTMENTS AND RECEIVABLES:    
Long-term restricted cash  216  6,279
Severance pay funds  8,085  9,856
Other long term receivables and deferred charges  12,124  278
Total long-term investments and receivables  20,425  16,413
     
PROPERTY AND EQUIPMENT, NET  90,893  85,369
     
INTANGIBLE ASSETS, NET  22,970  28,830
     
GOODWILL  63,870  63,870
     
TOTAL ASSETS  364,908  368,768
     
GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
US dollars in thousands 
  December 31, December 31,
  2014 2013
  Unaudited  
     
LIABILITIES AND EQUITY    
     
CURRENT LIABILITIES:    
Short-term bank credit and loans  15,857  -- 
Current maturities of long-term loans  4,595  4,665
Trade payables   22,850  20,900
Accrued expenses   22,475  16,748
Short-term advances from customers, held by trustees  12,858  -- 
Other current liabilities  21,527  54,666
     
 Total current liabilities  100,162  96,979
     
LONG-TERM LIABILITIES:    
Accrued severance pay  8,157  9,628
Long-term loans, net of current maturities  26,271  31,251
Other long-term liabilities  5,179  4,877
     
Total long-term liabilities  39,607  45,756
     
COMMITMENTS AND CONTINGENCIES    
     
EQUITY:    
Share capital - ordinary shares of NIS 0.2 par value   1,966  1,932
Additional paid-in capital  876,624  873,045
Accumulated other comprehensive income  (1,420)  1,591
Accumulated deficit  (652,031)  (650,535)
     
Total equity  225,139  226,033
     
TOTAL LIABILITIES AND EQUITY  364,908  368,768
 
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 2014     31 December 2013  
  GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP
  Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
             
Revenues  73,097  --   73,097  55,728  --   55,728
Cost of revenues  47,325  (1,251)  46,074  35,519  (1,256)  34,263
Gross profit  25,772  1,251  27,023  20,209  1,256  21,465
  35%   37% 36%   39%
Research and development expenses:            
Expenses incurred  6,804  (112)  6,692  7,627  (129)  7,498
Less - grants  675  --   675  142  --   142
   6,129  (112)  6,017  7,485  (129)  7,356
Selling and marketing expenses  7,257  (346)  6,911  8,535  (344)  8,191
General and administrative expenses  6,892  (283)  6,609  6,341  (312)  6,029
Restructuring Costs  --   --   --   564  (564)  -- 
Operating income (loss)  5,494  1,992  7,486  (2,716)  2,605  (111)
Financial income (expenses), net   (1,939)  --   (1,939)  (1,602)  --   (1,602)
Income (loss) before taxes on income  3,555  1,992  5,547  (4,318)  2,605  (1,713)
Taxes on income  1,118  --   1,118  (708)  --   (708)
Net income (loss) from continuing operations  2,437  1,992  4,429  (3,610)  2,605  (1,005)
Net income (loss) from discontinued operations  --   --   --   (3,911)  3,911  -- 
Net income (loss)  2,437  1,992  4,429  (7,521)  6,516  (1,005)
             
Basic net earnings (loss) per share from continuing operations  0.06      (0.09)    
Basic net earnings (loss) per share from discontinued operations  --       (0.09)    
Basic net earnings (loss) per share  0.06    0.10  (0.18)    (0.02)
             
Diluted net earnings (loss) per share from continuing operations  0.06      (0.09)    
Diluted net earnings (loss) per share from discontinued operations  --       (0.09)    
Diluted net earnings (loss) per share  0.06    0.10  (0.18)    (0.02)
             
Weighted average number of shares used in computing net earnings (loss) per share            
Basic 42,664,812   42,664,812 42,098,075   42,098,075
Diluted 43,165,834   43,640,235 42,098,075   42,098,075
             
(1) Adjustments reflect the effect of non-cash stock based compensation as per ASC 718, amortization of intangible assets related to Shares acquisition transactions, and net income (loss) from discontinued operations.  
             
     Three months ended       Three months ended   
    31 December 2014     31 December 2013  
    Unaudited     Unaudited  
Non-cash stock-based compensation expenses:            
Cost of revenues    53      58  
Research and development    112      129  
Selling and marketing    134      131  
General and administrative    283      312  
     582      630  
             
Amortization of intangible assets related to acquisition transactions:            
Cost of revenues    1,198      1,198  
Selling and marketing    212      213  
     1,410      1,411  
             
             
GILAT SATELLITE NETWORKS LTD.
RECONCILIATION BETWEEN GAAP AND NON-GAAP STATEMENTS OF OPERATIONS
FOR COMPARATIVE PURPOSES 
U.S. dollars in thousands (except share and per share data)
     Year ended       Year ended   
    31 December 2014     31 December 2013  
  GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP
  Unaudited Unaudited Unaudited   Unaudited Unaudited
             
Revenues  235,133  --   235,133  234,866  --   234,866
Cost of revenues  151,498  (5,024)  146,474  155,210  (4,993)  150,217
Gross profit  83,635  5,024  88,659  79,656  4,993  84,649
  36%   38% 34%   36%
Research and development expenses:            
Expenses incurred  27,635  (474)  27,161  29,491  (468)  29,023
Less - grants  2,477  --   2,477  1,591  --   1,591
   25,158  (474)  24,684  27,900  (468)  27,432
Selling and marketing expenses  32,537  (1,388)  31,149  32,214  (1,297)  30,917
General and administrative expenses  20,903  (1,181)  19,722  23,071  (1,151)  21,920
Restructuring Costs  --   --   --   564  (564)  -- 
Operating income (loss)  5,037  8,067  13,104  (4,093)  8,473  4,380
Financial income (expenses), net   (3,837)  --   (3,837)  (6,239)  --   (6,239)
Income (loss) before taxes on income  1,200  8,067  9,267  (10,332)  8,473  (1,859)
Taxes on income  1,901  --   1,901  (755)  --   (755)
Net income (loss) from continuing operations  (701)  8,067  7,366  (9,577)  8,473  (1,104)
Net income (loss) from discontinued operations  (795)  795  --   (8,320)  8,320  -- 
Net income (loss)  (1,496)  8,862  7,366  (17,897)  16,793  (1,104)
             
Basic net earnings (loss) per share from continuing operations  (0.02)      (0.23)    
Basic net loss per share from discontinued operations  (0.02)      (0.20)    
Basic net earnings (loss) per share  (0.04)    0.17  (0.43)    (0.03)
             
Diluted net earnings (loss) per share from continuing operations  (0.02)      (0.23)    
Diluted net loss per share from discontinued operations  (0.02)      (0.20)    
Diluted net earnings (loss) per share  (0.04)    0.17  (0.43)    (0.03)
             
Weighted average number of shares used in computing net earnings (loss) per share            
Basic 42,444,482   42,444,482 41,960,925   41,960,925
Diluted 42,444,482   43,621,979 41,960,925   41,960,925
             
(1) Adjustments reflect the effect of non-cash stock based compensation as per ASC 718, amortization of intangible assets related to Shares acquisition transactions, and net income (loss) from discontinued operations.  
             
     Year ended       Year ended   
    31 December 2014     31 December 2013  
     Unaudited       Unaudited   
Non-cash stock-based compensation expenses:            
Cost of revenues    232      201  
Research and development    474      468  
Selling and marketing    538      448  
General and administrative    1,181      1,151  
     2,425      2,268  
             
Amortization of intangible assets related to acquisition transactions:            
Cost of revenues    4,792      4,792  
Selling and marketing    850      849  
     5,642      5,641  
             
GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share and per share data)
  Year ended Three months ended
  December 31, December 31,
  2014 2013 2014 2013
  Unaudited   Unaudited Unaudited
         
Revenues  235,133  234,866  73,097  55,728
Cost of revenues  151,498  155,210  47,325  35,519
Gross profit  83,635  79,656  25,772  20,209
         
Research and development expenses:        
Expenses incurred  27,635  29,491  6,804  7,627
Less - grants  2,477  1,591  675  142
   25,158  27,900  6,129  7,485
Selling and marketing expenses  32,537  32,214  7,257  8,535
General and administrative expenses  20,903  23,071  6,892  6,341
Restructuring Costs  --   564  --   564
Operating income (loss)  5,037  (4,093)  5,494  (2,716)
Financial expenses, net   (3,837)  (6,239)  (1,939)  (1,602)
Income (loss) before taxes on income  1,200  (10,332)  3,555  (4,318)
Taxes on income (tax benefit)  1,901  (755)  1,118  (708)
Net income (loss) from continuing operations  (701)  (9,577)  2,437  (3,610)
Net loss from discontinued operations  (795)  (8,320)  --   (3,911)
Net income (loss)  (1,496)  (17,897)  2,437  (7,521)
         
Net income (loss) per share from continuing operations (basic and diluted)  (0.02)  (0.23)  0.06  (0.09)
Net loss per share from discontinued operations (basic and diluted)  (0.02)  (0.20)  --   (0.09)
Net income (loss) per share (basic and diluted)  (0.04)  (0.43)  0.06  (0.18)
         
Weighted average number of shares used in computing net earnings (loss) per share      
Basic 42,444,482 41,960,925 42,664,812 42,098,075
Diluted 42,444,482 41,960,925 43,165,834 42,098,075
         
GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
US dollars in thousands
         
  Year ended Three months ended
  December 31, December 31,
  2014 2013 2014 2013
  Unaudited   Unaudited Unaudited
Cash flows from continuing operations        
Cash flows from operating activities:        
Net income (loss)  (1,496)  (17,897)  2,437  (7,521)
Net loss from discontinued operations  (795)  (8,320)  --   (3,911)
Net income (loss) from continuing operations  (701)  (9,577)  2,437  (3,610)
Adjustments required to reconcile net income (loss)        
to net cash generated provided by (used in) operating activities:        
Depreciation and amortization  15,951  17,559  4,325  4,049
Stock-based compensation  2,425  2,268  582  630
Accrued severance pay, net  301  (38)  259  (37)
Accrued interest and exchange rate differences on short and long-term restricted cash, net  858  307  394  (1,075)
Exchange rate differences on long-term loans  (416)  157  (105)  65
Capital loss from disposal of property and equipment  430  48  189  35
Deferred income taxes  7  (2,733)  63  (3,024)
Increase in trade receivables, net  (2,457)  (4,228)  (3,995)  (4,894)
Decrease (increase) in other assets (including short-term, long-term and deferred charges)  (20,251)  10,740  (8,520)  9,596
Decrease (increase) in inventories  (445)  (6,502)  781  1,289
Increase (decrease) in trade payables  2,226  (1,225)  6,930  (4,854)
Increase (decrease) in accrued expenses  5,401  (4,703)  3,910  (464)
Increase (decrease) in advances from customers, held by trustees  14,068  (4,448)  14,133  -- 
Increase (decrease) in other current liabilities and other long term liabilities  (33,559)  18,772  (13,958)  24,360
Net cash provided by (used in) operating activities  (16,162)  16,397  7,425  22,066
         
GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
US dollars in thousands
         
  Year ended Three months ended
  December 31, December 31,
  2014 2013 2014 2013
  Unaudited   Unaudited Unaudited
Cash flows from investing activities:        
Purchase of property and equipment  (12,630)  (4,063)  (435)  (1,246)
Investment in restricted cash held by trustees  (24,869)  (17,587)  (18,955)  (3,132)
Proceeds from restricted cash held by trustees  12,306  13,744  3,681  3,461
Investment in restricted cash (including long-term)  (12,788)  (25,961)  (2,207)  (23,480)
Proceeds from restricted cash (including long-term)  11,228  2,975  10,996  418
Purchase of intangible assets  --   (16)  --   -- 
         
Net cash used in investing activities  (26,753)  (30,908)  (6,920)  (23,979)
         
         
Cash flows from financing activities:        
Capital lease payments  (234)  --   (148)  -- 
Issuance of restricted stock units and exercise of stock options  1,185  581  437  2
Payment of obligation related to the purchase of intangible assets  (500)  (500)  --   -- 
Short term bank credit, net  16,571  (3,518)  2,394  (3,426)
Repayment of long-term loans  (4,633)  (12,950)  (149)  (146)
         
Net cash provided by (used in) financing activities  12,389  (16,387)  2,534  (3,570)
         
Cash flows from discontinued operations        
Net cash used in operating activities  --   (5,996)  --   (4,688)
Net cash provided by investing activities  --   15,791  --   15,086
Net cash provided by (used in) financing activities  --   12,884  --   (300)
   --   22,679  --   10,098
         
Effect of exchange rate changes on cash and cash equivalents  (172)  (325)  49  (105)
         
Decrease in cash and cash equivalents  (30,698)  (8,544)  3,088  4,510
         
Cash and cash equivalents at the beginning of the period  58,424  66,968  24,638  53,914
         
Cash and cash equivalents at the end of the period  27,726  58,424  27,726  58,424
         
GILAT SATELLITE NETWORKS LTD.
CONDENSED EBITDA
US dollars in thousands
  Year ended Three months ended
  December 31, December 31,
  2014 2013 2014 2013
  Unaudited Unaudited Unaudited Unaudited
         
Operating income (loss)  5,037  (4,093)  5,494  (2,716)
Add:        
Non-cash stock-based compensation expenses  2,425  2,268  582  630
Restructuring costs  --   564  --   564
Depreciation and amortization  15,951  17,559  4,325  4,049
EBITDA  23,413  16,298  10,401  2,527
         


            

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