Gilat Satellite Networks Ltd. (NASDAQ, TASE: GILT), a worldwide leader in satellite networking technology, solutions and services, today reported its unaudited financial results for the fourth quarter and full year ended December 31, 2019.

Key Financial Highlights:

  • Revenues for Q4 2019 were $78.3 million compared to $69.7 million for Q4 2018. Full year 2019 revenues totaled $263.5 million versus $266.4 million in 2018.
  • Continued strong profitability:
    • Q4 2019 GAAP operating income increased to $9.2 million from $7.5 million in Q4 2018. Non-GAAP operating income in Q4 2019 totaled $9.9 million, compared to $7.9 million in Q4 2018.  Full year 2019 GAAP operating income totaled $25.6 million versus $21.3 million for 2018.  Non-GAAP operating income for full year 2019 of increased to $29.2 million from $25.1 million in 2018.
    • Q4 2019 GAAP net income totaled $24.0 million, or $0.43 per diluted share, including a tax benefit of $15.5 million due to the first-time recording of deferred tax assets on NOLs mainly in Israel. GAAP net income was $5.3 million, or $0.09 per diluted share, in Q4 2018.  Non-GAAP Q4 2019 net income increased to $9.1 million, from $5.7 million in Q4 2018. 
    • Full year 2019 GAAP net income totaled $36.5 million, or $0.65 per diluted share, including the Q4 tax benefit.  Non-GAAP net income for full year 2019 increased to $24.7 million, or $0.44 per diluted share, compared with $18.2 million, or $0.32 per diluted share in 2018.
    • Q4 2019 Adjusted EBITDA was $13.1 million, compared to $10.5 million in Q4 2018.  Full Year 2019 Adjusted EBITDA was $40.2 million versus $35.2 million for full year 2018.
    • Gilat's tail-mount Ku-band antenna project, previously announced on August 5th, 2019, was discontinued. Gilat will refocus on other opportunities that the significant growth in the IFC terminal market offers.

In light of the merger agreement between Comtech and Gilat and as previously announced, Gilat will not hold a fourth quarter and fiscal 2019 year-end conference call and webcast.

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 GilatGilat 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 StatementCertain 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. For example, when we discuss the benefits of the pending acquisition of Gilat by Comtech Telecommunications Corp., we are using forward-looking statements. In addition, announced results for the fourth quarter and full year 2019 are preliminary, unaudited and subject to year-end audit adjustment. 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 and uncertainties relating to the pending acquisition of Gilat by Comtech Telecommunications Corp., 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.

Contacts:Gilat Satellite NetworksDoreet Oren, Director Corporate CommunicationsDoreetO@gilat.com

Comm-Partners LLCJune Filingeri, President+1-203-972-0186junefil@optonline.net

             
GILAT SATELLITE NETWORKS LTD.            
CONSOLIDATED STATEMENTS OF OPERATIONS            
U.S. dollars in thousands (except share and per share data)          
  Twelve months ended   Three months ended
  December 31,   December 31,
  2019   2018   2019   2018
           
  Unaudited   Audited   Unaudited
             
             
Revenues $ 263,492     $ 266,391     $ 78,314     $ 69,729
Cost of revenues   167,615       172,354       51,246       43,715
             
             
Gross profit   95,877       94,037       27,068       26,014
                             
             
Research and development expenses   32,208       34,449       8,120       9,169
Less - grants   2,024       1,426       414       222
Research and development expenses, net   30,184       33,023       7,706       8,947
Selling and marketing expenses   21,488       22,706       5,156       5,497
General and administrative expenses   18,633       17,024       4,967       4,061
             
             
Total operating expenses   70,305       72,753       17,829       18,505
             
             
Operating income   25,572       21,284       9,239       7,509
             
Financial expenses, net   2,617       4,298       677       1,132
             
             
Income before taxes on income   22,955       16,986       8,562       6,377
             
             
Taxes on income (tax benefit)   (13,583 )     (1,423 )     (15,459 )     1,082
             
             
Net income $ 36,538     $ 18,409     $ 24,021     $ 5,295
             
             
Basic earnings per share $ 0.66     $ 0.34     $ 0.43     $ 0.10
             
             
Diluted earnings per share $ 0.65     $ 0.33     $ 0.43     $ 0.09
             
             
Weighted average number of shares used in computing earnings per share            
Basic   55,368,703       54,927,272       55,485,961       55,134,977
Diluted   56,030,976       55,752,642       56,034,744       55,962,447
             
             
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  
  December 31, 2019   December 31, 2018  
  GAAP   Adjustments (1)   Non-GAAP   GAAP   Adjustments (1)   Non-GAAP  
         
  Unaudited   Unaudited  
                         
Gross profit $ 27,068     70     $ 27,138   $ 26,014     269     $ 26,283  
Operating expenses   17,829     (550 )     17,279     18,505     (91 )     18,414  
Operating income   9,239     620       9,859     7,509     360       7,869  
Income before taxes on income   8,562     620       9,182     6,377     360       6,737  
Net income $ 24,021     (14,908 )   $ 9,113   $ 5,295     360     $ 5,655  
                         
Basic earnings per share $ 0.43   $ (0.27 )   $ 0.16   $ 0.10   $ -     $ 0.10  
                         
Diluted earnings per share $ 0.43   $ (0.27 )   $ 0.16   $ 0.09   $ 0.01     $ 0.10  
                         
Weighted average number of shares used in computing earnings per share                        
Basic   55,485,961         55,485,961     55,134,977         55,134,977  
Diluted   56,034,744         56,122,960     55,962,447         56,160,425  
                         
                         
(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 and other litigation expenses, re-organiztion costs, merger and acquisition costs and initial recogniztion of deferred tax asset with respect to carry forward losses. 
                         
        Three months ended               Three months ended        
        December 31, 2019               December 31, 2018        
      Unaudited           Unaudited      
                         
GAAP net income     $ 24,021             $ 5,295        
                         
Gross profit                        
Non-cash stock-based compensation expenses       58               37        
Amortization of intangible assets related to acquisition transactions       12               232        
        70               269        
Operating expenses                        
Non-cash stock-based compensation expenses       347               239        
Amortization of intangible assets related to acquisition transactions       49               52        
Trade secrets and other litigation expenses (income)       36               (200 )      
Merger and acquisition costs       118               -        
        550               91        
                         
Tax benefit       (15,528 )             -        
                         
Non-GAAP net income     $ 9,113             $ 5,655        
                         
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)                        
  Twelve months ended   Twelve months ended  
  December 31, 2019   December 31, 2018  
  GAAP   Adjustments (1)   Non-GAAP   GAAP   Adjustments (1)   Non-GAAP  
             
  Unaudited   Audited   Unaudited  
                         
Gross profit $ 95,877     776     $ 96,653   $ 94,037     2,967     $ 97,004  
Operating expenses   70,305     (2,890 )     67,415     72,753     (896 )     71,857  
Operating income   25,572     3,666       29,238     21,284     3,863       25,147  
Income before taxes on income   22,955     3,666       26,621     16,986     3,863       20,849  
Net income $ 36,538     (11,862 )   $ 24,676   $ 18,409     (248 )   $ 18,161  
                         
Basic earnings per share $ 0.66   $ (0.21 )   $ 0.45   $ 0.34   $ (0.01 )   $ 0.33  
                         
Diluted earnings per share $ 0.65   $ (0.21 )   $ 0.44   $ 0.33   $ (0.01 )   $ 0.32  
                         
                         
Weighted average number of shares used in computing earnings per share                        
Basic   55,368,703         55,368,703     54,927,272         54,927,272  
Diluted   56,030,976         56,165,945     55,752,642         55,962,811  
                         
                         
(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 and other litigation expenses, re-organiztion costs, merger and acquisition costs and initial recogniztion of deferred tax asset with respect to carry forward losses.
                         
  Twelve months ended   Twelve months ended  
      December 31, 2019           December 31, 2018      
      Unaudited           Unaudited      
                         
GAAP net income     $ 36,538             $ 18,409        
                         
Gross profit                        
Non-cash stock-based compensation expenses       257               114        
Amortization of intangible assets related to acquisition transactions       490               2,853        
Re-organization costs       29               -        
        776               2,967        
Operating expenses                        
Non-cash stock-based compensation expenses       1,878               892        
Amortization of intangible assets related to acquisition transactions       203               204        
Trade secrets and other litigation expenses (income)       136               (200 )      
Merger and acquisition costs       118               -        
Re-organization costs       555               -        
        2,890               896        
                         
Tax benefit       (15,528 )             (4,111 )      
                         
Non-GAAP net income     $ 24,676             $ 18,161        
                         
GILAT SATELLITE NETWORKS LTD.                      
SUPPLEMENTAL INFORMATION                      
U.S. dollars in thousands                      
                       
                       
ADJUSTED EBITDA:                      
                       
   Twelve months ended     Three months ended 
   December 31,     December 31, 
  2019   2018     2019     2018
       
  Unaudited   Unaudited
                       
GAAP operating income  $   25,572    $   21,284   $    9,239   $    7,509
Add (deduct):                      
Non-cash stock-based compensation expenses     2,135       1,006       405       276
Re-organization costs     584       -        -        - 
Trade secrets and other litigation expenses (income)     136       (200)       36       (200)
Merger and acquisition costs     118       -        118       - 
Depreciation and amortization (*)     11,676       13,149       3,263       2,944
                       
Adjusted EBITDA $    40,221    $   35,239   $    13,061   $    10,529
                       
(*) includng amortization of lease incentive                      
                       
SEGMENT REVENUE:                      
                       
   Twelve months ended     Three months ended 
   December 31,     December 31, 
    2019     2018     2019     2018
       
  Unaudited   Unaudited
                       
Fixed Networks $   127,265   $   144,208   $   33,161   $   35,421
Mobility Solutions   104,665     97,180     34,050     29,555
Terrestrial Infrastructure Projects   31,562     25,003     11,103     4,753
                       
Total revenue $    263,492    $   266,391    $   78,314   $    69,729
                       
       
GILAT SATELLITE NETWORKS LTD.      
CONSOLIDATED BALANCE SHEETS      
U.S. dollars in thousands      
       
  December 31,   December 31,
  2019   2018
  Unaudited   Audited
       
ASSETS      
       
CURRENT ASSETS:      
Cash and cash equivalents $ 74,778     $ 67,381  
Restricted cash   27,067       32,305  
Restricted cash held by trustees   -       4,372  
Trade receivables, net   47,731       47,164  
Contract assets   23,698       47,760  
Inventories   27,203       21,109  
Other current assets   23,007       26,022  
       
  Total current assets   223,484       246,113  
       
LONG-TERM ASSETS:      
Long-term restricted cash   124       146  
Severance pay funds   6,831       6,780  
Deferred taxes   18,455       4,127  
Operating lease right-of-use asset   5,211       -  
Other long term receivables   10,156       7,276  
       
Total long-term assets   40,777       18,329  
       
PROPERTY AND EQUIPMENT, NET   82,584       84,403  
       
INTANGIBLE ASSETS, NET   1,523       2,434  
       
GOODWILL   43,468       43,468  
       
TOTAL ASSETS $ 391,836     $ 394,747  
       
       
GILAT SATELLITE NETWORKS LTD.      
CONSOLIDATED BALANCE SHEETS (Cont.)      
U.S. dollars in thousands      
       
  December 31,   December 31,
  2019   2018
  Unaudited   Audited
       
LIABILITIES AND SHAREHOLDERS' EQUITY      
       
CURRENT LIABILITIES:      
Current maturities of long-term loans $ 4,096     $ 4,458  
Trade payables   20,725       24,636  
Accrued expenses   54,676       67,533  
Advances from customers and deferred revenues   27,220       29,133  
Operating lease liability   1,977       -  
Other current liabilities   12,261       14,588  
       
  Total current liabilities   120,955       140,348  
       
LONG-TERM LIABILITIES:      
Long-term loans, net of current maturities   4,000       8,098  
Accrued severance pay   7,061       6,649  
Long-term advances from customers   2,866       -  
Operating lease liability   3,258       -  
Other long-term liabilities   108       580  
       
  Total long-term liabilities   17,293       15,327  
       
SHAREHOLDERS' EQUITY:      
Share capital - ordinary shares of NIS 0.2 par value   2,643       2,625  
Additional paid-in capital   927,348       924,856  
Accumulated other comprehensive loss   (5,048 )     (5,380 )
Accumulated deficit   (671,355 )     (683,029 )
       
Total shareholders' equity   253,588       239,072  
       
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 391,836     $ 394,747  
       
GILAT SATELLITE NETWORKS LTD.              
CONSOLIDATED STATEMENTS OF CASH FLOWS              
U.S. dollars in thousands              
               
  Twelve months ended   Three months ended
  December 31,   December 31,
  2019   2018   2019   2018
           
  Unaudited   Audited   Unaudited
Cash flows from operating activities:              
Net income $ 36,538     $ 18,409     $ 24,021     $ 5,295  
Adjustments required to reconcile net income to net cash provided by (used in) operating activities:              
Depreciation and amortization   10,978       13,149       2,730       2,944  
Capital loss from disposal of property and equipment   461       761       461       665  
Stock-based compensation of options   2,135       1,006       405       276  
Accrued severance pay, net   361       57       16       12  
Exchange rate differences on long-term loans   (12 )     (34 )     (12 )     (10 )
Deferred income taxes, net   (12,555 )     (3,672 )     (13,636 )     744  
Decrease (increase) in trade receivables, net   (1,323 )     2,061       (1,464 )     (9,355 )
Decrease (increase) in contract assets   24,062       11,029       (1,346 )     236  
Decrease (increase) in other assets (including short-term, long-term and deferred charges)   (817 )     (4,917 )     603       1,007  
Decrease (increase) in inventories   (8,076 )     5,257       (391 )     4,423  
Increase (decrease) in trade payables   (3,884 )     (8,926 )     631       3,323  
Decrease in accrued expenses   (11,671 )     (7,206 )     (2,767 )     (2,283 )
Increase (decrease) in advance from customers and deferred revenues   1,112       12,433       10,019       (2,703 )
Decrease in advances from customers, held by trustees   -       (1,478 )     -       -  
Decrease (increase) in other current and non current liabilities   (2,527 )     (5,912 )     765       (584 )
Net cash provided by operating activities   34,782       32,017       20,035       3,990  
               
Cash flows from investing activities:              
Purchase of property and equipment   (7,982 )     (10,759 )     (2,333 )     (2,854 )
Net cash used in investing activities   (7,982 )     (10,759 )     (2,333 )     (2,854 )
               
Cash flows from financing activities:              
Exercise of stock options   375       2,149       -       511  
Repayment of long-term loans   (4,447 )     (4,470 )     (94 )     (114 )
Dividend payment   (24,864 )     -       -       -  
Net cash provided by (used in) financing activities   (28,936 )     (2,321 )     (94 )     397  
               
Effect of exchange rate changes on cash, cash equivalents and restricted cash   (99 )     (1,490 )     136       (652 )
               
Increase (decrease) in cash, cash equivalents and restricted cash   (2,235 )     17,447       17,744       881  
               
Cash, cash equivalents and restricted cash at the beginning of the period   104,204       86,757       84,225       103,323  
               
Cash, cash equivalents and restricted cash at the end of the period $ 101,969     $ 104,204     $ 101,969     $ 104,204  
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