Gilat Reports Strong Second Quarter 2022 Results

Petah-Tikva, ISRAEL


Revenue of $55.5 million, operating profit $1.5 million and Adjusted EBITDA of $5.3 million; Reiterates 2022 guidance

PETAH TIKVA, Israel, Aug. 09, 2022 (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 second quarter ended June 30, 2022.

Second Quarter 2022 Financial Highlights

  • Revenues of $55.5 million,up 1.2% compared with Q2 of last year;

  • GAAP operating income of $1.5 million versus operating loss of $0.4 million in Q2 last year;

  • Non-GAAP operating income of $2.4 million versus Non-GAAP operating income of $0.1 million in Q2 last year;

  • GAAP net income of $0.5 million versus loss of $0.2 million in Q2 last year;

  • Non-GAAP net income of $1.4 million versus Non-GAAP income of $0.3 million in Q2 last year;

  • Adjusted EBITDA of $5.3 million versus Adjusted EBITDA of $2.4 million in Q2 last year;

  • Reiterates and on-track with 2022 financial guidance;

Forward-Looking Expectations

The Company reiterates its 2022 guidance issued in 2022, of revenues between $245 to $265 million, representing year-over-year growth of between 14% and 23%, GAAP operating income of between $5 to $9 million and Adjusted EBITDA of between $20 to $24 million, representing year-over-year growth of Adjusted EBITDA between 30% to 56%.

Management Commentary

Adi Sfadia, Gilat's CEO, commented: "We are pleased with our strong results, especially with the solid improvement in our profitability. We continue to successfully capitalize on the opportunities in our pipeline, and we see increasing growth potential in our end-markets for the coming years. Looking out to the rest of the year, we feel increasingly comfortable and remain on target to meet our goals.

This was an exceptional quarter with significant multimillion dollar orders for Gilat's next generation platform, SkyEdge IV. We expanded the global strategic relationships with our partners, the satellite operators, SES and Intelsat, and are competing on important GEO VHTS opportunities in our pipeline with additional major satellite operators. Furthermore, our SSPA business for this new and exciting market is progressing as planned, and as such, we believe we are well positioned to seize opportunities in the multibillion market of the next era of satellite communication.

We received more than $10 million in new Cellular Backhaul orders this quarter as we continue to expand our global leadership. We are encouraged with the progress in our strategic markets of Inflight Connectivity and Maritime as well as with our growing business in Defense and Enterprise, and we see a growing set of additional opportunities."

Mr. Sfadia concluded, “Given our ongoing strong performance, we reiterate our 2022 guidance and expect a year of solid growth in revenue and improved profitability."

Key Recent Announcements

  • Internet Para Todos Expands Services Contract with Gilat
  • Gilat Signs Agreement to Enable a Central Asian Government to Provide Digital Services over Satellite
  • Gilat and Intelsat Expand Their Strategic In-Flight Connectivity Partnership in Japan
  • Tier-1 MNO Awards Multimillion-Dollar Order to Gilat for 4G Cellular Backhaul Network Expansion in Latin America
  • Gilat Awarded Order of Over $7M from Tier-1 Mobile Network Carrier in APAC for 4G Cellular Backhaul Network Expansion
  • Gilat Awarded Follow-On Orders to Expand Defense Force SATCOM Network in an Asian Nation
  • Gilat Receives Over $8 Million Follow-On Order for Support of Low Earth Orbit Constellation

Conference Call Details

Gilat’s management will discuss its second quarter 2022 results and business achievements and participate in a question and answer session:

Date:              Tuesday, August 9, 2022
Start:              09:30 AM EDT / 16:30 IDT
Dial-in:            US: 1-866-744-5399
                       International: +972-3-918-0609

A simultaneous webcast of the conference call will be available on the Gilat website at www.gilat.com and through this link: https://Veidan.activetrail.biz/gilatq2-2022

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), impairment of held for sale asset, and one-time changes of deferred tax assets.

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. 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 Gilats products, inability to timely develop and introduce new technologies, products and applications, rapid changes in the market for Gilats 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 Companys proprietary technology and risks associated with Gilats international operations and its location in Israel. For additional information regarding these and other risks and uncertainties associated with Gilats business, reference is made to Gilats 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, Senior Director Corporate Communications
DoreetO@gilat.com

Ehud Helft
EK Global Investor Relations
gilat@ekgir.com
+1 212 378 8040

GILAT SATELLITE NETWORKS LTD.       
CONSOLIDATED STATEMENTS OF INCOME (LOSS)     
U.S. dollars in thousands (except share and per share data)     
    Six months ended
  Three months ended
     June 30,
 June 30,
 
     2022   2021   2022   2021  
      As Restated (1)
    As Restated (1)
  
    Unaudited Unaudited 
            
Revenues  $106,863  $98,169  $55,454  $54,798  
Cost of revenues  70,706   69,070   35,685   38,179  
            
Gross profit   36,157   29,099   19,769   16,619  
            
Research and development expenses, net    16,386   15,660   8,718   7,733  
Selling and marketing expenses    10,310   10,468   4,960   5,464  
General and administrative expenses    8,555   6,938   4,371   3,855  
Impairment of held for sale asset    439   -   229   -  
            
Total operating expenses 35,690   33,066   18,278   17,052  
            
Operating income (loss) 467   (3,967)  1,491   (433) 
            
Financial income (expenses), net    (1,663)  (757)  (468)  435  
            
Income (loss) before taxes on income    (1,196)  (4,724)  1,023   2  
            
Taxes on income  832   474   517   227  
            
Net income (loss) $(2,028) $(5,198) $506  $(225) 
            
Earnings (loss) per share (basic and diluted)   $(0.04) $(0.09) $0.01  $(0.00)  
            
Weighted average number of shares used in       
computing earning (loss) per share

       
Basic   56,574,296   56,269,941   56,597,523   56,508,539  
Diluted  56,574,296   56,269,941   56,637,208   56,508,539  
            
(1)  The Company restated its previously issued condensed interim consolidated financial statements for the three and six months ended June 30, 2021.
 For additional information, see Item 5 of our 2021 Form 20-F and Notes 2 and 13 of our Condensed Interim Consolidated Financial Statements filed
 with the U.S. Securities and Exchange Commission on May 16, 2022 and August 9, 2022, respectively. 
            


GILAT SATELLITE NETWORKS LTD.            
RECONCILIATION BETWEEN GAAP AND NON-GAAP CONSOLIDATED STATEMENTS OF INCOME (LOSS) 
FOR COMPARATIVE PURPOSES             
U.S. dollars in thousands (except share and per share data)          
       Three months ended Three months ended 
       June 30, 2022 June 30, 2021 
       GAAP
 Adjustments (*) Non-GAAP
 GAAP
  Adjustments (*) Non-GAAP
             As Restated (1)
      As Restated (1)
       Unaudited Unaudited 
                   
Gross profit     $19,769  81  $19,850 $16,619    64  $16,683 
Operating expenses     18,278  (832)  17,446  17,052    (456)  16,596 
Operating income (loss)    1,491  913   2,404  (433)  520   87 
Income before taxes on income   1,023  913   1,936  2   520   522 
Net income (loss)    $506  913  $1,419 $(225)   520  $295 
                   
Earnings (loss) per share (basic and diluted)$0.01 $0.02  $0.03 $(0.00)  $0.01  $0.01 
                   
                   
Weighted average number of shares used in            
computing earning (loss) per share             
 Basic      56,597,523    56,597,523  56,508,539      56,508,539 
 Diluted     56,637,208    56,773,970  56,508,539      57,328,088 
                   
                   
 (*) Adjustments reflect the effect of non-cash stock-based compensation as per ASC 718, amortization of intangible assets related to shares acquisition transactions and
 impairment of held for sale asset.            
                   
                   
          Three months ended
     Three months ended
   
          June 30, 2022
     June 30, 2021  
               As Restated (1)
   
         Unaudited    Unaudited  
                   
GAAP net income (loss)     $506      $(225)   
                   
Gross profit                 
Non-cash stock-based compensation expenses   75       59    
Amortization of intangible assets related to acquisition transactions         55       5    
          130       64    
Operating expenses                
Non-cash stock-based compensation expenses   494       406    
Amortization of intangible assets related to acquisition transactions         60       50    
Impairment of held for sale asset     229       -    
          783       456    
                   
                   
Non-GAAP net income     $1,419      $295    
                   
(1)  The Company restated its previously issued condensed interim consolidated financial statements for the three and six months ended June 30, 2021.
 For additional information, see Item 5 of our 2021 Form 20-F and Notes 2 and 13 of our Condensed Interim Consolidated Financial Statements filed
 with the U.S. Securities and Exchange Commission on May 16, 2022 and August 9, 2022, respectively.   
                   


GILAT SATELLITE NETWORKS LTD.            
RECONCILIATION BETWEEN GAAP AND NON-GAAP CONSOLIDATED STATEMENTS OF INCOME (LOSS)     
FOR COMPARATIVE PURPOSES             
U.S. dollars in thousands (except share and per share data)           
       Six months ended Six months ended 
       June 30, 2022 June 30, 2021 
       GAAP Adjustments (*) Non-GAAP GAAP Adjustments (*) Non-GAAP 
             As Restated (1)
   As Restated (1)
       Unaudited Unaudited 
                   
Gross profit     $36,157   156  $36,313  $29,099   130  $29,229  
Operating expenses     35,690   (1,515)  34,175   33,066   (287)  32,779  
Operating income (loss)    467   1,671   2,138   (3,967)  417   (3,550) 
Income (loss) before taxes on income  (1,196)  1,671   475   (4,724)  417   (4,307) 
Net loss      (2,028)  1,671   (357)  (5,198)  417   (4,781) 
                   
Loss per share (basic and diluted)  $(0.04) $0.03  $(0.01) $(0.09) $0.01  $(0.08) 
                   
                   
Weighted average number of shares used in            
computing loss per share               
 Basic     56,574,296     56,574,296   56,269,941     56,269,941  
 Diluted     56,574,296     56,574,296   56,269,941     56,269,941  
                   
                   
 (*) Adjustments reflect the effect of non-cash stock-based compensation as per ASC 718, amortization of intangible assets related to shares acquisition transactions and 
 impairment of held for sale asset.            
                   
                   
           Six months ended
         Six months ended
    
           June 30, 2022
         June 30, 2021
    
               As Restated (1)  
         Unaudited     Unaudited   
                   
GAAP net loss      $(2,028)     $(5,198)   
                   
Gross profit                 
Non-cash stock-based compensation expenses   145       120    
Amortization of intangible assets related to acquisition transactions 60       10    
          205       130    
Operating expenses                
Non-cash stock-based compensation expenses   916       186    
Amortization of intangible assets related to acquisition transactions 111       101    
Impairment of held for sale asset     439       -    
          1466       287    
                   
                   
Non-GAAP net loss      $(357)     $(4,781)   
                   
(1)  The Company restated its previously issued condensed interim consolidated financial statements for the three and six months ended June 30, 2021.   
 For additional information, see Item 5 of our 2021 Form 20-F and Notes 2 and 13 of our Condensed Interim Consolidated Financial Statements filed  
 with the U.S. Securities and Exchange Commission on May 16, 2022 and August 9, 2022, respectively.       
                   


          
GILAT SATELLITE NETWORKS LTD.         
SUPPLEMENTAL INFORMATION         
U.S. dollars in thousands          
            
            
ADJUSTED EBITDA:          
            
     Six months ended
  Three months ended
     June 30,
  June 30,
 
     2022   2021   2022  2021  
      As Restated (1)   As Restated (1) 
    Unaudited Unaudited 
            
GAAP net income (loss)  $(2,028) $(5,198) $506 $(225) 
Adjustments:           
Financial expenses (income), net   1,663   757   468  (435) 
Taxes on income    832   474   517  227  
Non-cash stock-based compensation expenses    1,061   306   569  465  
Impairment of held for sale asset   439   -   229  -  
Other    60   -   60  -  
Depreciation and amortization (*)  5,792   4,758   2,941  2,373  
            
Adjusted EBITDA   $7,819  $1,097  $5,290 $2,405  
            
(*) Including amortization of lease incentive         
            
SEGMENT REVENUE:          
            
     Six months ended   Three months ended  
     June 30,   June 30,  
     2022   2021   2022  2021  
      As Restated (1)   As Restated (1) 
    Unaudited Unaudited 
            
Satellite Networks   $51,627  $59,975  $26,857 $34,351  
Integrated Solutions    29,397   18,836   15,691  12,127  
Network Infrastructure and Services  25,839   19,358   12,906  8,320  
            
Total revenues   $ 106,863  $ 98,169  $ 55,454 $ 54,798  
            
            
            
(1) The Company restated its previously issued condensed interim consolidated financial statements for the three and six months ended June 30, 2021. 
      For additional information, see Item 5 of our 2021 Form 20-F and Notes 2 and 13 of our Condensed Interim Consolidated Financial Statements filed 
      with the U.S. Securities and Exchange Commission on May 16, 2022 and August 9, 2022, respectively.     
            


      
GILAT SATELLITE NETWORKS LTD.   
CONSOLIDATED BALANCE SHEETS   
U.S. dollars in thousands    
      
  June 30, December 31, 
   2022   2021  
  Unaudited Audited 
      
ASSETS    
      
CURRENT ASSETS:    
Cash and cash equivalents$70,133  $81,859  
Short-term deposits -   2,159  
Restricted cash 1,313   2,592  
Trade receivables, net 51,303   39,161  
Contract assets 29,310   26,008  
Inventories 32,156   28,432  
Other current assets 22,458   14,607  
Held for sale asset 4,276   4,587  
      
Total current assets 210,949   199,405  
      
LONG-TERM ASSETS:    
Restricted cash 12   12  
Long- term contract assets 11,845   12,539  
Severance pay funds 5,937   6,795  
Deferred taxes 15,885   17,551  
Operating lease right-of-use assets  3,845   4,478  
Other long term assets 11,225   10,456  
      
Total long-term assets 48,749   51,831  
      
PROPERTY AND EQUIPMENT, NET  72,410   72,391  
      
INTANGIBLE ASSETS, NET  419   640  
      
GOODWILL 43,468   43,468  
      
TOTAL ASSETS$375,995  $367,735  
      
GILAT SATELLITE NETWORKS LTD.   
CONSOLIDATED BALANCE SHEETS (Cont.)  
U.S. dollars in thousands    
      
  June 30, December 31, 
   2022   2021  
  Unaudited Audited 
      
LIABILITIES AND SHAREHOLDERS' EQUITY  
      
CURRENT LIABILITIES:   
Trade payables$24,010  $19,776  
Accrued expenses 47,654   49,202  
Advances from customers and deferred revenues  31,932   24,373  
Operating lease liabilities 1,747   1,818  
Other current liabilities 15,458   13,339  
      
Total current liabilities 120,801   108,508  
      
LONG-TERM LIABILITIES:   
Accrued severance pay 6,548   7,292  
Long-term advances from customers  722   1,209  
Operating lease liabilities 2,056   2,283  
Other long-term liabilities 132   120  
      
Total long-term liabilities  9,458   10,904  
      
SHAREHOLDERS' EQUITY:   
Share capital - ordinary shares of NIS 0.2 par value  2,711   2,706  
Additional paid-in capital 930,927   929,871  
Accumulated other comprehensive loss  (7,977)  (6,357) 
Accumulated deficit (679,925)  (677,897) 
      
Total shareholders' equity  245,736   248,323  
      
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $375,995  $367,735  
      


GILAT SATELLITE NETWORKS LTD.        
CONSOLIDATED STATEMENTS OF CASH FLOWS        
U.S. dollars in thousands        
          
   Six months ended
  Three months ended
   June 30,
  June 30,
 
   2022   2021   2022   2021  
    As Restated (1)   As Restated (1) 
  Unaudited Unaudited 
Cash flows from operating activities:        
Net income (loss)$(2,028) $(5,198) $506  $(225) 
Adjustments required to reconcile net loss        
 to net cash provided by (used in) operating activities:        
Depreciation and amortization 5,683   4,646   2,887   2,316  
Impairment of held for sale asset 439   -   229   -  
Stock-based compensation of options 1,061   306   569   465  
Accrued severance pay, net 114   (128)  177   (118) 
Deferred taxes, net 1,664   185   1,358   (333) 
Increase in trade receivables, net (11,883)  (7,357)  (5,471)  (5,424) 
Decrease (increase) in contract assets (2,608)  21,647   (599)  24,826  
Increase in other assets (including short-term, long-term        
   and deferred charges) (7,763)  (4,009)  (4,047)  (3,789) 
Decrease (increase) in inventories (4,075)  1,774   (1,731)  3,986  
Increase (decrease) in trade payables 4,205   (790)  2,533   (1,740) 
Decrease in accrued expenses (1,690)  (1,802)  (2,442)  (1,304) 
Increase (decrease) in advance from customers and deferred revenue 7,010   (338)  4,700   (8,062) 
Decrease in other liabilities (810)  (194)  (1,975)  (2,197) 
Net cash provided by (used in) operating activities (10,681)  8,742   (3,306)  8,401  
          
Cash flows from investing activities:        
Purchase of property and equipment (4,515)  (3,572)  (2,314)  (2,089) 
Repayment of (investment in) short term deposits 2,159   (2,159)  2,159   (2,159) 
Net cash used in investing activities (2,356)  (5,731)  (155)  (4,248) 
          
Cash flows from financing activities:        
Dividend payment -   (35,003)  -   -  
Repayment of long-term loan -   (4,000)  -   -  
Net cash used in financing activities -   (39,003)  -   -  
          
Effect of exchange rate changes on cash, cash equivalents and restricted cash 32   (161)  (221)  93  
          
Increase (decrease) in cash, cash equivalents and restricted cash (13,005)  (36,153)  (3,682)  4,246  
          
Cash, cash equivalents and restricted cash at the beginning of the period 84,463   115,958   75,140   75,559  
          
Cash, cash equivalents and restricted cash at the end of the period$ 71,458  $ 79,805  $ 71,458  $ 79,805  
          
(1)     The Company restated its previously issued condensed interim consolidated financial statements for the three and six months ended June 30, 2021.   
 For additional information, see Item 5 of our 2021 Form 20-F and Notes 2 and 13 of our Condensed Interim Consolidated Financial Statements filed   
 with the U.S. Securities and Exchange Commission on May 16, 2022 and August 9, 2022, respectively.