GILT Gilat Satellite Networks Ltd

FORM 6 – K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report on Foreign Issuer

Pursuant to Rule 13a – 16 or 15d – 16

of the Securities Exchange Act of 1934

For the Month of November, 2019

Gilat Satellite Networks Ltd.

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(Translation of Registrant’s Name into English)

Gilat House, Yegia Kapayim Street

Daniv Park, Kiryat Arye, Petah Tikva, Israel

(Address of Principal Corporate Offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F  ☒       Form 40-F  ☐

Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ☐       No  ☒

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):   N/A

Attached hereto is Registrant’s press release dated November 19, 2019, announcing Gilat’s Third Quarter 2019 results.

We consent to the incorporation by reference of the GAAP financial information included herein, in the Registration Statements on Form S-8 (Registration Nos. 333-180552, 333-187021, 333-204867, 333-210820, 333-217022, 333-221546, 333-223839 and 333-231442) and on Form F-3 (Registration No. 333-232597).

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Gilat Reports Strong Growth in Q3 2019

GAAP Operating Income Increases 43.1% sequentially; Adjusted EBITDA

reaches double digits totaling $10.1 million

Gilat wins coveted deal for SES O3b mPOWER MEO Communications System

Petah Tikva, Israel – November 19, 2019 – Gilat Satellite Networks Ltd. (NASDAQ, TASE: GILT), a worldwide leader in satellite networking technology, solutions and services, today reported its results for the third quarter ended September 30, 2019.

 

Key Financial Highlights:

 

 

Yona Ovadia, CEO of Gilat, commented:
"We achieved significant milestones in the Third Quarter, both on the financial and the business sides, as we continued to execute our strategy to build high quality, profitable revenues through our growth engines of Broadband, Mobile Cellular Backhaul and Mobility IFC.

"On the financial side we attained substantial progress as we continued to improve profitability. We have attained a record achievement of double-digit millions of dollars of Adjusted EBITDA, $10.1 million to be exact. This has been achieved only once before since we made growth in profitability one of the pillars of our strategy, and we have every intention to repeat it going forward.

"On the business side, I am excited to report that Gilat reached a landmark achievement with the selection of Gilat's platform by SES for the O3b mPOWER Medium Earth Orbit (MEO) Communications System. Gilat was selected due to our innovative ground segment, that significantly reduces cost per bit, best-in-class spectral efficiency, and a step function in modem performance. This win positions Gilat at the forefront of ground networks for Non-Geo Stationary Orbit (NGSO) constellations and as well as a prominent player for the new generation of HTS and VHTS GEO satellites.

"In Peru, our goal has always been the profitable recurring revenues from operations and sales of services, and indeed, further to last quarter’s achievement of moving to Operations in three awarded regions, I am pleased to share that this quarter we won a $10 million five-year project for 3G/4G backhaul services over the network that we built and just started to operate. We are pleased to see our vision materializing, and expect that this contract will significantly expand over time to additional multiple millions of dollars, as well as to selling additional services over our networks.

"In Australia we have reached an important milestone this quarter with NBN Co. with the launch of NBN’s business satellite services. The commercial launch of this flagship project initiates our managed service to NBN, delivering revenue of tens of millions of US dollars over a ten-year period.

"In addition, we have seen continued progress in our mobile and mobility growth areas. Particularly in cellular backhaul Gilat continues to be recognized as the global leader with the selection of the leading Japanese MNO, NTT DoCoMo. In Aero Mobility, we are encouraged by the clear direction of airlines to offer free wifi, as we already saw it starting to generate significant demand for Gilat equipment in this quarter. Both mobile and mobility continue to be major growth engines for Gilat.

"Lastly, in Q3, we also continued to strengthen our partnership with China Satcom with an agreement to upgrade to the most up-to-date, efficient, and high-performance communication network for aero and maritime mobility applications as well as fixed applications."

Mr. Ovadia concluded:

“In closing, we are pleased with our momentum in the market-place and in parallel with our continued improvement in our bottom line. We are engaged these days in planning our work plan for 2020. We will base it on the same guidelines as the existing growth engines, with continued if not increased investment in maintaining our product leadership, and in improvement of both the top line and bottom line."   

Key Recent Announcements:

 

 

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/gilatq3-2019.html

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

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, 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.

This news release also contains a forward-looking estimate of Adjusted EBITDA projected to be generated by Gilat in 2019. A forward-looking estimate of net income and reconciliations of the forward-looking estimates of Adjusted EBITDA to net income are not provided because the items necessary to estimate net income are not estimable at this time. 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, 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. We undertake no obligation to update or revise any forward-looking statements for any reason. 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.

Contact:

Gilat Satellite Networks

Doreet Oren, Director Corporate Communications

DoreetO@gilat.com

Comm-Partners LLC

June Filingeri, President

+1-203-972-0186

junefil@optonline.net

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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
		September 30, 2019												September 30, 2018
		GAAP				Adjustments (1)				Non-GAAP				GAAP				Adjustments (1)				Non-GAAP
		Unaudited												Unaudited
Gross profit		$	23,254				68			$	23,322			$	24,194				268			$	24,462
Operating expenses			16,263				(433	)			15,830				18,223				(254	)			17,969
Operating income			6,991				501				7,492				5,971				522				6,493
Income before taxes on income			6,451				501				6,952				4,993				522				5,515
Net income			6,288				501				6,789				8,652				(3,589	)			5,063
Earnings per share (basic and diluted)		$	0.11			$	0.01			$	0.12			$	0.16			$	(0.07	)		$	0.09
Weighted average number of shares used in
computing earnings per share
Basic			55,463,945								55,463,945				54,950,327								54,950,327
Diluted			56,059,239								56,179,331				55,818,557								56,020,550
(1) Adjustments reflect the effect of non-cash stock-based compensation as per ASC 718, amortization of intangible assets related to shares acquisition transactions, trade secrets litigation expenses and re-organiztion costs.
						Three months ended												Three months ended
						September 30, 2019												September 30, 2018
						Unaudited												Unaudited
GAAP net income						$	6,288											$	8,652
Gross profit
Non-cash stock-based compensation expenses							55												35
Amortization of intangible assets related to acquisition transactions							13												233
							68												268
Operating expenses
Non-cash stock-based compensation expenses							382												203
Amortization of intangible assets related to acquisition transactions							51												51
							433												254
Tax benefit adjustment							-												(4,111	)
Non-GAAP net income						$	6,789											$	5,063

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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)

		Nine months ended												Nine months ended
		September 30, 2019												September 30, 2018
		GAAP				Adjustments (1)				Non-GAAP				GAAP				Adjustments (1)				Non-GAAP
		Unaudited												Unaudited
Gross profit		$	68,809				706			$	69,515			$	68,023				2,698			$	70,721
Operating expenses			52,476				(2,339	)			50,137				54,248				(805	)			53,443
Operating income			16,333				3,045				19,378				13,775				3,503				17,278
Income before taxes on income			14,393				3,045				17,438				10,609				3,503				14,112
Net income			12,517				3,045				15,562				13,114				(608	)			12,506
Basic earnings per share		$	0.23			$	0.05			$	0.28			$	0.24			$	(0.01	)		$	0.23
Diluted earnings per share		$	0.22			$	0.06			$	0.28			$	0.24			$	(0.02	)		$	0.22
Weighted average number of shares used in
computing earnings per share
Basic			55,329,617								55,329,617				54,858,038								54,858,038
Diluted			56,029,698								56,180,242				55,682,707								55,896,940
(1) Adjustments reflect the effect of non-cash stock-based compensation as per ASC 718, amortization of intangible assets related to shares acquisition transactions, trade secrets litigation expenses or income and re-organization costs.
						Nine months ended												Nine months ended
						September 30, 2019												September 30, 2018
						Unaudited												Unaudited
GAAP net income						$	12,517											$	13,114
Gross profit
Non-cash stock-based compensation expenses							198												77
Amortization of intangible assets related to acquisition transactions							479												2,621
Re-organization costs							29												-
							706												2,698
Operating expenses
Non-cash stock-based compensation expenses							1,532												653
Amortization of intangible assets related to acquisition transactions							152												152
Trade secrets litigation expenses							100												-
Re-organization costs							555												-
							2,339												805
Tax benefit adjustment							-												(4,111	)
Non-GAAP net income						$	15,562											$	12,506

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GILAT SATELLITE NETWORKS LTD.

SUPPLEMENTAL INFORMATION

U.S. dollars in thousands

ADJUSTED EBITDA:

		Nine months ended								Three months ended
		September 30,								September 30,
		2019				2018				2019				2018
		Unaudited								Unaudited
GAAP operating income		$	16,333			$	13,775			$	6,991			$	5,971
Add:
Non-cash stock-based compensation expenses			1,730				730				437				238
Re-organization costs			585				-				-				-
Trade secrets litigation expenses			100				-				-				-
Depreciation and amortization (*)			8,413				10,205				2,627				2,883
Adjusted EBITDA		$	27,161			$	24,710			$	10,055			$	9,092

(*) includng amortization of lease incentive

SEGMENT REVENUE:

		Nine months ended								Three months ended
		September 30,								September 30,
		2019				2018				2019				2018
		Unaudited								Unaudited
Fixed Networks		$	94,104			$	108,786			$	27,268			$	34,943
Mobility Solutions			70,615				67,626				27,116				21,848
Terrestrial Infrastructure Projects			20,459				20,250				9,000				5,989
Total revenue		$	185,178			$	196,662			$	63,384			$	62,780

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GILAT SATELLITE NETWORKS LTD.

CONSOLIDATED BALANCE SHEET

U.S. dollars in thousands

		September 30,				December 31,
		2019				2018
		Unaudited				Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	53,089			$	67,381
Restricted cash			30,916				32,305
Restricted cash held by trustees			75				4,372
Trade receivables, net			44,184				47,164
Contract assets			21,392				47,760
Inventories			27,512				21,109
Other current assets			25,901				26,022
Total current assets			203,069				246,113
LONG-TERM INVESTMENTS AND RECEIVABLES:
Long-term restricted cash			145				146
Severance pay funds			6,871				6,780
Long term deferred tax assets			2,491				4,127
Operating lease right-of-use assets			4,595				-
Other long term receivables			13,519				7,276
Total long-term investments and receivables			27,621				18,329
PROPERTY AND EQUIPMENT, NET			82,976				84,403
INTANGIBLE ASSETS, NET			1,640				2,434
GOODWILL			43,468				43,468
TOTAL ASSETS		$	358,774			$	394,747

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GILAT SATELLITE NETWORKS LTD.

CONSOLIDATED BALANCE SHEET

U.S. dollars in thousands

		September 30,				December 31,
		2019				2018
		Unaudited				Audited
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term loans		$	4,203			$	4,458
Trade payables			20,070				24,636
Accrued expenses			57,906				67,533
Advances from customers and deferred revenues			20,056				29,133
Operating lease liabilities			1,628				-
Other current liabilities			12,104				14,588
Total current liabilities			115,967				140,348
LONG-TERM LIABILITIES:
Accrued severance pay			7,085				6,649
Long-term loans, net of current maturities			4,000				8,098
Operating lease liabilities			2,975				-
Other long-term liabilities			109				580
Total long-term liabilities			14,169				15,327
SHAREHOLDERS' EQUITY:
Share capital - ordinary shares of NIS 0.2 par value			2,642				2,625
Additional paid-in capital			926,944				924,856
Accumulated other comprehensive loss			(5,572	)			(5,380	)
Accumulated deficit			(695,376	)			(683,029	)
Total shareholders' equity			228,638				239,072
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	358,774			$	394,747