Gilat Reports Q1 2020 Results

6/3, 10:15 PM (Source: GlobeNewswire)

PETAH TIKVA, Israel, June 03, 2020 (GLOBE NEWSWIRE) -- Gilat Satellite Networks Ltd. (NASDAQ, TASE: GILT), a worldwide leader in satellite networking technology, solutions and services, today reported its results for the first quarter ended March 31, 2020.

Key Financial Highlights:

  • Revenues for Q1 2020 totaled $47.7 million compared with $62.1 million for Q1 2019.
  • Results for the quarter:
    • Q1 2020 - GAAP operating loss was $10.8 million compared to operating income of $4.5 million in Q1 2019. Q1 2020 Non-GAAP operating loss was $7.6 million compared to Non-GAAP operating income of $5.6 in Q1 2019.
    • Q1 2020 GAAP net loss was $11.8 million, or loss of $0.21 per diluted share, compared with net income of $2.8 million, or income of $0.05 per diluted share in Q1 2019. Q1 2020 non-GAAP net loss was $8.6 million, or $0.15 per diluted share, compared with net income of $4.0 million, or $0.07 per diluted share, in Q1 2019. 
    • Q1 2020 Adjusted EBITDA loss was $5.0 million compared with Adjusted EBITDA of $8.2 million in Q1 2019.
    • The results of the first quarter of 2020 were significantly impacted by the COVID-19 outbreak. The pandemic has had an adverse impact on Gilat’s different segments though to varying degrees. It has significantly impacted the travel and aviation markets in which Gilat's IFC customers operate and has resulted in a slowdown of our business with these customers. Other parts of Gilat's business such as the Fixed networks and Cellular Backhaul have demonstrated relative resilience, however order postponements and delays were experienced. In order to mitigate the impact to the business, Gilat executed a plan to reduce expenses, including a reduction in headcount as well as other cost-saving measures.

The acquisition of Gilat by Comtech Telecommunications Corp ("Comtech") was approved at the general meeting of Gilat’s shareholders held on May 8, by shareholders representing approximately 99.7% of the Gilat shares present and voting at the meeting. The acquisition remains subject to certain conditions to closing, including regulatory approval in Russia from the Federal Antimonopoly Service, which had notified Comtech in May 2020 that it was extending the review period for Comtech’s application pending a decision under the Foreign Investment Law whether approval is required from the Chairman of the Russian Government Commission for Supervising Foreign Investments.

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, re-organization costs, merger and acquisition costs, expenses for tax contingencies to be paid under an amnesty program 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

Safe Harbor Statement

Certain statements made herein that are not historical are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks and uncertainties that could cause the actual results, performance or achievements of Gilat, or the expected results of the proposed transaction with Comtech to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. Due to such uncertainties and risks, no assurances can be given that such expectations will prove to have been correct, and readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. The forward-looking statements contained herein include, but are not limited to, statements about the results, performance or achievements of Gilat, Gilat’s plans, objectives and expectations for future operations, the expected completion of the proposed transaction with Comtech, the satisfaction or waiver of any conditions to the proposed transaction, and other events relating to the proposed transaction. Forward-looking statements are often characterized by the use of forward-looking terminology such as “may,” “will,” “expect,” “anticipate,” “estimate,” “continue,” “believe,” “should,” “intend,” “plan,” “project” or other similar words, but are not the only way these statements are identified.  These forward-looking statements are based upon Gilat’s management’s current estimates and projections of future results or trends.  In addition to the risks and uncertainties described in the Annual Report on Form 20-F for the year ended December 31, 2019 and in the proxy statement/prospectus dated April 3, 2020 and those described in any other documents filed with the Securities and Exchange Commission, such risks and uncertainties include, among others, (i) changes in general economic and business conditions, (ii) the inability to maintain market acceptance of Gilat's products, (iii) the inability to timely develop and introduce new technologies, products and applications, (iv) rapid changes in the market for Gilat's products, (v) loss of market share and pressure on prices resulting from competition, (vi) introduction of competing products by other companies, (vii) the inability to manage growth and expansion, (viii) loss of key OEM partners, (ix) the inability to attract and retain qualified personnel, (x) the inability to protect the Company's proprietary technology, (xi) risks associated with Gilat's international operations and its location in Israel and (xii) risks relating to the Merger of wholly owned subsidiary of Comtech with and into Gilat (the “Merger”), including, among others: (1) the risk that the conditions to the closing of the are not satisfied, including the risk that required approvals for the Merger from governmental authorities are not received; (2) changes or circumstances that could give rise to the termination of the Merger Agreement; (3) the risk that the value of the stock merger consideration will fluctuate over time; (4) litigation relating to the Merger; (5) uncertainties as to the timing of the consummation of the Merger and the ability of each party to consummate the Merger; (6) risks that the proposed Merger disrupts the current plans and operations of Gilat or Comtech, or both; (7) the ability of Gilat and Comtech to retain and hire key personnel; (8) competitive responses to the proposed Merger and the impact of competitive products; (9) unexpected costs, charges or expenses resulting from the Merger; (10) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the Merger; (11) the combined company’s ability to achieve the financial and operating results, growth prospects and synergies expected from the Merger, as well as delays, challenges and expenses associated with integrating the existing businesses of Comtech and Gilat; (12) the combined company’s ability to maintain and improve relationships with customers, suppliers and other third parties following the Merger; (13) the terms and availability of the indebtedness that may be incurred in connection with the Merger; (14) the timing and funding of government contracts; (15) risks associated with international sales; (16) risks associated with legal proceedings, customer claims for indemnification and other similar matters; (17) risks associated with Comtech’s obligations under its credit facility; (18) risks associated with the outbreak and global spread of the coronavirus (COVID-19) pandemic; and (19) legislative, regulatory, technological, political and economic developments, including changing business conditions in the industries in which Comtech and Gilat operate and the overall economy. as well as the financial performance and expectations of Comtech’s and Gilat’s existing and prospective customers.

The foregoing list of factors is not exclusive and you should not place undue reliance on any forward-looking statement. All forward-looking statements contained herein are made only as of the date of the date hereof and, except as required by law, Gilat does not undertake any obligation to update publicly any of these forward-looking statements to reflect events or circumstances that may arise after the date hereof.

For additional information regarding these and other risks and uncertainties associated with Gilat's business and the pending acquisition of Gilat by Comtech, reference is made to Gilat's reports filed from time to time with the Securities and Exchange Commission.

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

 



GILAT SATELLITE NETWORKS LTD. 
CONSOLIDATED STATEMENTS OF OPERATIONS 
U.S. dollars in thousands (except share and per share data) 
   Three months ended
   March, 31
   2020   2019 
  Unaudited
     
Revenues$47,673  $62,109 
Cost of revenues 38,787   38,539 
     
Gross profit 8,886   23,570 
     
Research and development expenses 7,634   8,857 
Less - grants 272   555 
Research and development expenses, net 7,362   8,302 
Selling and marketing expenses 5,066   5,871 
General and administrative expenses 4,545   4,942 
Merger and acquisition costs 2,405   - 
Restructuring costs 273   - 
     
Total operating expenses 19,651   19,115 
     
Operating income (loss) (10,765)  4,455 
     
Financial expenses, net (972)  (821)
     
Income (loss) before taxes on income (11,737)  3,634 
     
Taxes on income 18   810 
     
Net income (loss)$ (11,755) $ 2,824 
     
Basic and Diluted earnings (loss) per share$ (0.21) $ 0.05 
     
Weighted average number of shares used in    
 computing earnings (loss) per share   
 Basic 55,493,258   55,197,588 
 Diluted 55,493,258   55,959,504 
     



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, 2020 March 31, 2019
 GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP
     Unaudited        Unaudited
   
            
Gross profit$8,886   62  $8,948  $23,570  326  $23,896
Operating expenses 19,651   (3,106)  16,545   19,115  (829)  18,286
Operating income (loss) (10,765)  3,168   (7,597)  4,455  1,155   5,610
Income (loss) before taxes on income (11,737)  3,168   (8,569)  3,634  1,155   4,789
Net income (loss) (11,755)  3,168   (8,587)  2,824  1,155   3,979
            
Earnings (loss) per share (basic and diluted)$ (0.21) $0.06  $ (0.15) $ 0.05 $0.02  $ 0.07
            
            
Weighted average number of shares used in           
  computing earnings per share           
Basic 55,493,258     55,493,258   55,197,588    55,197,588
Diluted 55,493,258     55,493,258   55,959,504    56,142,723
            
            
(1) Adjustments reflect the effect of non-cash stock-based compensation as per ASC 718, amortization of intangible assets related to shares acquisition transactions,    
  merger and acquisition costs, trade secrets and other litigation expenses and restructuring costs.          
            
     Three months ended        Three months ended   
     March 31, 2020        March 31, 2019   
   Unaudited     Unaudited  
            
GAAP net income (loss)  $(11,755)     $2,824   
            
Gross profit           
Non-cash stock-based compensation expenses   57       94   
Amortization of intangible assets related to acquisition transactions   5       232   
    62       326   
Operating expenses           
Non-cash stock-based compensation expenses   366       777   
Amortization of intangible assets related to acquisition transactions   51       52   
Trade secrets and other litigation expenses   11       -   
Merger and acquisition costs   2,405       -   
Restructuring costs   273       -   
    3,106       829   
            
Non-GAAP net income (loss)  $(8,587)     $3,979   



GILAT SATELLITE NETWORKS LTD.
SUPPLEMENTAL INFORMATION
U.S. dollars in thousands
    
    
ADJUSTED EBITDA:   
    
  Three months ended
  March 31,
  2020   2019
 Unaudited
    
GAAP operating income (loss)$(10,765) $4,455
Add:   
Non-cash stock-based compensation expenses 423   871
Trade secrets and other litigation expenses 11   -
Restructuring costs 273   -
Merger and acquisition costs 2,405   -
Depreciation and amortization (*) 2,664   2,877
    
Adjusted EBITDA$ (4,989) $ 8,203
    
(*) includng amortization of lease incentive   
    
SEGMENT REVENUE:   
    
 Three months ended
 March 31,
 2020 2019
 Unaudited
    
Fixed Networks$23,011  $36,428
Mobility Solutions 19,201   20,912
Terrestrial Infrastructure Projects 5,461   4,769
    
Total revenue$ 47,673  $ 62,109


GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
    
 March 31, December 31,
 2020 2019
 Unaudited Audited
    
ASSETS   
    
CURRENT ASSETS:   
Cash and cash equivalents$66,818  $74,778 
Restricted cash 25,710   27,067 
Trade receivables, net 33,667   47,731 
Contract assets 28,549   23,698 
Inventories 33,515   27,203 
Other current assets 18,245   23,007 
    
Total current assets 206,504   223,484 
    
LONG-TERM ASSETS:   
Long-term restricted cash 116   124 
Severance pay funds 6,588   6,831 
Deferred taxes 17,794   18,455 
Operating lease right-of-use assets 6,726   5,211 
Other long term receivables 10,504   10,156 
    
Total long-term assets 41,728   40,777 
    
PROPERTY AND EQUIPMENT, NET 80,918   82,584 
    
INTANGIBLE ASSETS, NET 1,413   1,523 
    
GOODWILL 43,468   43,468 
    
TOTAL ASSETS$374,031  $391,836 
    
    
    
GILAT SATELLITE NETWORKS LTD.   
CONSOLIDATED BALANCE SHEETS (Cont.)   
U.S. dollars in thousands   
    
 March 31, December 31,
  2020  2019
 Unaudited Audited
    
LIABILITIES AND SHAREHOLDERS' EQUITY   
    
CURRENT LIABILITIES:   
Current maturities of long-term loans$4,000  $4,096 
Trade payables 23,019   20,725 
Accrued expenses 52,726   54,676 
Advances from customers and deferred revenues 25,878   27,220 
Operating lease liabilities 2,130   1,977 
Other current liabilities 13,701   12,261 
    
Total current liabilities 121,454   120,955 
    
LONG-TERM LIABILITIES:   
Long-term loans, net of current maturities -   4,000 
Accrued severance pay 6,860   7,061 
Long-term advances from customers 1,330   2,866 
Operating lease liabilities 4,535   3,258 
Other long-term liabilities 107   108 
    
Total long-term liabilities 12,832   17,293 
    
SHAREHOLDERS' EQUITY:   
Share capital - ordinary shares of NIS 0.2 par value 2,643   2,643 
Additional paid-in capital 927,771   927,348 
Accumulated other comprehensive loss (7,559)  (5,048)
Accumulated deficit (683,110)  (671,355)
    
Total shareholders' equity 239,745   253,588 
    
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$374,031  $391,836 



GILAT SATELLITE NETWORKS LTD.    
CONSOLIDATED STATEMENTS OF CASH FLOWS    
U.S. dollars in thousands    
     
   Three months ended
   March 31,
   2020  2019
  Unaudited
Cash flows from operating activities:    
Net income (loss) $(11,755) $2,824 
Adjustments required to reconcile net income     
 to net cash provided by operating activities:    
Depreciation and amortization  2,604   2,822 
Capital loss (gain) from disposal of property and equipment  (33)  7 
Stock-based compensation of options  423   871 
Accrued severance pay, net  43   285 
Deferred income taxes, net  634   683 
Decrease in trade receivables, net  13,607   7,831 
Increase in contract assets  (4,851)  (430)
Decrease (increase) in other assets (including short-term, long-term    
  and deferred charges)  1,673   (86)
Increase in inventories  (6,635)  (3,659)
Increase (decrease) in trade payables  2,375   (922)
Decrease in accrued expenses  (1,652)  (2,169)
Decrease in advance from customers  (2,827)  (3,087)
Increase in current and non current liabilities  2,811   863 
Net cash provided by (used in) operating activities  (3,583)  5,833 
     
Cash flows from investing activities:    
Purchase of property and equipment  (951)  (2,014)
Net cash used in investing activities  (951)  (2,014)
     
Cash flows from financing activities:    
Exercise of stock options  -   338 
Repayment of long-term loans  (4,096)  (4,123)
Net cash used in financing activities  (4,096)  (3,785)
     
Effect of exchange rate changes on cash, cash equivalents and restricted cash  (695)  97 
     
Increase (decrease) in cash, cash equivalents and restricted cash  (9,325)  131 
     
Cash, cash equivalents and restricted cash at the beginning of the period  101,969   104,204 
     
Cash, cash equivalents and restricted cash at the end of the period $ 92,644  $ 104,335 
     
Supplementary disclosure of cash flows activities:    
Non-cash transactions:    
     
Declaration of cash dividend not yet distributed $ -  $ 24,862 

 

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