GILT Gilat Satellite Networks Ltd

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 of 2021.

Second Quarter Financial Highlights

• Revenues of $56.9 million, a 49% increase from $38.3 million in Q2 2020 and up 27% from $44.7 million in the previous quarter.
• GAAP operating loss of $0.3 million, an improvement compared with an operating loss of $3.5 million in Q2 2020 and an operating loss of $3.7 million in Q1 2021.
• Non-GAAP operating income of $0.2 million, compared with an operating loss of $2.6 million in Q2 2020 and an operating loss of $3.8 million in the previous quarter.
• GAAP net loss of $0.1 million, or zero per share, compared with a net loss of $4.2 million, or a loss of $0.08 per share in Q2 2020 and a net loss of $5.1 million, or a loss of $0.09 per share in the previous quarter.
• Non-GAAP net income of $0.4 million, which is $0.01 per share, compared with a net loss of $3.3 million, or a loss of $0.06 per share in Q2 2020, and compared with a net loss of $5.2 million, or a loss of $0.09 per share, in the previous quarter.
• Adjusted EBITDA of $2.5 million compared with adjusted EBITDA of $0.1 million in Q2 2020; and an adjusted EBITDA loss of $1.4 million in the previous quarter.

Management Commentary

Adi Sfadia, Gilat's CEO, commented: “I am very pleased with the improvement in our second quarter results which showed very strong revenue growth and a return to Non-GAAP profitability.

"We are experiencing strong business momentum in nearly all our end markets and have secured several significant awards. In our Mobility segment we solidified our leadership position in maritime with a multi-million-dollar award from SES, and our leading position in NGSO with orders for more than $15 million from a leading satellite operator for support of a Low Earth Orbit Constellation. Very importantly, we are most pleased with the rapid growth in our Defense segment in which we secured deals for over $10 million in Asia, Latin America and the US.

"Further to the many opportunities we see ahead of us, we continue investing heavily in our R&D efforts in order to capture these opportunities and accelerate our future growth. Given the improving momentum and strong backlog, we expect to continue with our high revenue and profitability growth through the second half of 2021. We expect this growth to increase even further in 2022, as the inflight connectivity sector recovers, in addition to continued growth expected from the Maritime, Cellular Backhaul, NGSO and Defense market segments, as well as our operations in Peru.”

Key Recent Announcements

• Tier-1 US Terminal Provider Awards Gilat over $5M for Solid State Amplifiers Powering Militaries Worldwide
• Gilat’s Global Mobility Platform Selected by SES in Multi-Million Dollar Order
• Gilat Receives Multi-Million Dollar Award from US Army to Supply High Performance BUCs for Tactical Communications
• Gilat Signed a Strategic Agreement Estimated at Over $5 Million with Pacific Dataport for Delivery of Ubiquitous Broadband Coverage in Alaska
• Gilat Received $2 Million in Orders for Support of Low Earth Orbit Constellation
• Gilat Awarded Multi-Million Dollar Contract to Provide Satellite Communication Equipment for Defense Forces in Asia
• Gilat Awarded $9 Million in Orders for Support of Low Earth Orbit Constellation
• Gilat Awarded Multiple Projects for Armed Forces in Latin America
• Gilat Awarded Contract to Supply Satellite Communication Equipment for Military Usage
• Gilat Awarded $13M Contract by Pronatel for Delivery of Internet Services to Hundreds of Sites in Peru
• Gilat Extends Multi-Million Dollar IoT Project in Latin America
• Gilat Awarded Over $4 Million in Orders for Support of Low Earth Orbit Constellation
• Telefonica Global Solutions (TGS) Selects Gilat to Equip Strategic Teleport in Arica, Chile

Conference Call Details

Gilat’s management will discuss its second quarter 2021 results and business achievements and participate in a questions and answers session:

Date:	Tuesday, August 10, 2021
Start:	9:30 AM ET / 4:30 PM IT
Dial-in:	US: 1-866-744-5399
	International: +972-3-918-0610

 

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/gilatq2-2021

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

Non-GAAP MeasuresThe 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), net 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

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 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. We undertake no obligation to update or revise any forward-looking statements for any reason.

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

Ehud HelftGK Investor & Public Relationsgilat@gkir.com+1 646 688 3559

GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share and per share data)
		Six months ended								Three months ended
		June, 30								June, 30
			2021				2020				2021				2020
		Unaudited								Unaudited
Revenues		$	101,636			$	85,988			$	56,923			$	38,315
Cost of revenues			72,564				67,514				40,208				28,727
Gross profit			29,072				18,474				16,715				9,588
Research and development expenses			16,034				13,773				7,923				6,139
Less - grants			374				472				190				200
Research and development expenses, net			15,660				13,301				7,733				5,939
Selling and marketing expenses			10,468				8,650				5,464				3,584
General and administrative expenses			6,938				7,518				3,855				2,973
Restructuring costs			-				273				-				-
Merger, acquisition and related litigation expense, net			-				2,951				-				546
Total operating expenses			33,066				32,693				17,052				13,042
Operating loss			(3,994	)			(14,219	)			(337	)			(3,454	)
Financial income (expenses), net			(757	)			(1,429	)			435				(457	)
Income (loss) before taxes on income			(4,751	)			(15,648	)			98				(3,911	)
Taxes on income			474				332				227				314
Net loss		$	(5,225	)		$	(15,980	)		$	(129	)		$	(4,225	)
Basic and Diluted loss per share		$	(0.09	)		$	(0.29	)		$	(0.00	)		$	(0.08	)
Weighted average number of shares used in
	computing earnings (loss) per share
	Basic and Diluted		56,269,941				55,499,300				56,508,539				55,505,342

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
		June 30, 2021											June 30, 2020
		GAAP				Adjustments (1)				Non-GAAP			GAAP				Adjustments (1)				Non-GAAP
		Unaudited											Unaudited
Gross profit		$	16,715				64			$	16,779		$	9,588				54			$	9,642
Operating expenses (income)			17,052				(456	)			16,596			13,042				(831	)			12,211
Operating income (loss)			(337	)			520				183			(3,454	)			885				(2,569	)
Income (loss) before taxes on income			98				520				618			(3,911	)			885				(3,026	)
Net income (loss)			(129	)			520				391			(4,225	)			885				(3,340	)
Earnings (loss) per share (basic and diluted)		$	(0.00	)		$	0.01			$	0.01		$	(0.08	)		$	0.02			$	(0.06	)
Weighted average number of shares used in
computing earnings per share
	Basic		56,508,539								56,508,539			55,505,342								55,505,342
	Diluted		56,508,539								57,328,088			55,505,342								55,505,342
(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 merger and acquisition and related litigation, net.
		Three months ended											Three months ended
		June 30, 2021											June 30, 2020
						Unaudited											Unaudited
GAAP net loss						$	(129	)									$	(4,225	)
Gross profit
Non-cash stock-based compensation expenses							59											49
Amortization of intangible assets related to acquisition transactions							5											5
							64											54
Operating expenses
Non-cash stock-based compensation expenses							406											235
Amortization of intangible assets related to acquisition transactions							50											50
Merger and acquisition and related litigation, net							-											546
							456											831
Non-GAAP net income (loss)						$	391										$	(3,340	)

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)
		Six months ended												Six months ended
		June 30, 2021												June 30, 2020
		GAAP				Adjustments (1)				Non-GAAP				GAAP				Adjustments (1)				Non-GAAP
		Unaudited												Unaudited
Gross profit		$	29,072				130			$	29,202			$	18,474				116			$	18,590
Operating expenses (income)			33,066				(287	)			32,779				32,693				(3,937	)			28,756
Operating income (loss)			(3,994	)			417				(3,577	)			(14,219	)			4,053				(10,166	)
Income (loss) before taxes on income			(4,751	)			417				(4,334	)			(15,648	)			4,053				(11,595	)
Net income (loss)			(5,225	)			417				(4,808	)			(15,980	)			4,053				(11,927	)
Earnings (loss) per share (basic and diluted)		$	(0.09	)		$	0.01			$	(0.08	)		$	(0.29	)		$	0.08			$	(0.21	)
Weighted average number of shares used in
computing earnings per share
	Basic and Diluted		56,269,941								56,269,941				55,499,300								55,499,300
(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 and related litigation, net, trade secrets and other litigation expenses and restructuring costs.
		Six months ended												Six months ended
		June 30, 2021												June 30, 2020
						Unaudited												Unaudited
GAAP net loss						$	(5,225	)										$	(15,980	)
Gross profit
Non-cash stock-based compensation expenses							120												106
Amortization of intangible assets related to acquisition transactions							10												10
							130												116
Operating expenses
Non-cash stock-based compensation expenses							186												601
Amortization of intangible assets related to acquisition transactions							101												101
Trade secrets and other litigation expenses							-												11
Merger, acquisition and related litigation expense, net							-												2,951
Restructuring costs							-												273
							287												3,937
Non-GAAP net loss						$	(4,808	)										$	(11,927	)

GILAT SATELLITE NETWORKS LTD.
SUPPLEMENTAL INFORMATION
U.S. dollars in thousands
ADJUSTED EBITDA:
	Six months ended								Three months ended
	June 30,								June 30,
		2021				2020				2021				2020
	Unaudited								Unaudited
GAAP operating loss	$	(3,994	)		$	(14,219	)		$	(337	)		$	(3,454	)
Add:
Non-cash stock-based compensation expenses		306				707				465				284
Trade secrets and other litigation expenses		-				11				-				-
Restructuring and re-organization costs		-				273				-				-
Merger, acquisition and related litigation expense, net		-				2,951				-				546
Depreciation and amortization (*)		4,758				5,382				2,373				2,718
Adjusted EBITDA	$	1,070			$	(4,895	)		$	2,501			$	94
(*) Including amortization of lease incentive
SEGMENT REVENUE:
	Six months ended								Three months ended
	June 30,								June 30,
		2021				2020				2021				2020
	Unaudited								Unaudited
Fixed Networks	$	56,127			$	44,790			$	30,825			$	21,779
Mobility Solutions		31,002				33,207				19,923				14,006
Terrestrial Infrastructure Projects		14,507				7,991				6,175				2,530
Total revenue	$	101,636			$	85,988			$	56,923			$	38,315

	GILAT SATELLITE NETWORKS LTD.
	CONSOLIDATED BALANCE SHEETS
	U.S. dollars in thousands
		June 30,				December 31,
		2021				2020
		Unaudited				Audited
	ASSETS
	CURRENT ASSETS:
	Cash and cash equivalents	$	57,882			$	88,754
	Short-term deposits		2,159				-
	Restricted cash		21,910				27,162
	Trade receivables, net		33,009				27,976
	Contract assets		23,830				41,573
	Inventories		29,644				31,304
	Other current assets		22,508				16,637
	Total current assets		190,942				233,406
	LONG-TERM ASSETS:
	Restricted cash		13				42
	Severance pay funds		6,616				6,665
	Tax assets		2,489				2,482
	Deferred taxes		16,621				16,813
	Operating lease right-of-use assets		4,338				4,879
	Other long term receivables		8,691				7,797
	Total long-term assets		38,768				38,678
	PROPERTY AND EQUIPMENT, NET		76,584				77,172
	INTANGIBLE ASSETS, NET		861				1,082
	GOODWILL		43,468				43,468
	TOTAL ASSETS	$	350,623			$	393,806
	GILAT SATELLITE NETWORKS LTD.
	CONSOLIDATED BALANCE SHEETS (Cont.)
	U.S. dollars in thousands
		June 30,				December 31,
			2021				2020
		Unaudited				Audited
	LIABILITIES AND SHAREHOLDERS' EQUITY
	CURRENT LIABILITIES:
	Current maturities of long-term loans	$	-			$	4,000
	Trade payables		19,705				20,487
	Accrued expenses		48,359				46,387
	Advances from customers and deferred revenues		23,881				26,244
	Operating lease liabilities		1,800				1,911
	Dividend payable		-				35,003
	Other current liabilities		14,319				13,322
	Total current liabilities		108,064				147,354
	LONG-TERM LIABILITIES:
	Accrued severance pay		6,959				7,136
	Long-term advances from customers		4,184				1,890
	Operating lease liabilities		2,584				2,985
	Other long-term liabilities		118				631
	Total long-term liabilities		13,845				12,642
	SHAREHOLDERS' EQUITY:
	Share capital - ordinary shares of NIS 0.2 par value		2,705				2,647
	Additional paid-in capital		928,874				928,626
	Accumulated other comprehensive loss		(6,194	)			(6,017	)
	Accumulated deficit		(696,671	)			(691,446	)
	Total shareholders' equity		228,714				233,810
	TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	350,623			$	393,806

GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
	Six months ended								Three months ended
	June 30,								June 30,
		2021				2020				2021				2020
	Unaudited								Unaudited
Cash flows from operating activities:
Net loss	$	(5,225	)		$	(15,980	)		$	(129	)		$	(4,225	)
Adjustments required to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization		4,646				5,271				2,316				2,667
Capital loss from disposal of property and equipment		-				23				-				56
Stock-based compensation of options		306				707				465				284
Accrued severance pay, net		(128	)			26				(118	)			(17	)
Deferred taxes, net		185				140				(333	)			(494	)
Decrease (increase) in trade receivables, net		(7,068	)			18,364				(5,135	)			4,757
Decrease (increase) in contract assets		17,743				(8,362	)			22,230				(3,511	)
Decrease (increase) in other assets (including short-term, long-term and deferred charges)		(4,009	)			6,710				(3,789	)			5,037
Decrease (increase) in inventories		1,774				(5,698	)			3,986				937
Decrease in trade payables		(790	)			(510	)			(1,740	)			(2,885	)
Increase (decrease) in accrued expenses		1,693				(5,809	)			724				(4,157	)
Decrease in advance from customers and deferred revenue		(191	)			(5,725	)			(7,879	)			(2,898	)
Increase (decrease) in current and non current liabilities		(194	)			685				(2,197	)			(2,126	)
Net cash provided by (used in) operating activities		8,742				(10,158	)			8,401				(6,575	)
Cash flows from investing activities:
Purchase of property and equipment		(3,572	)			(1,879	)			(2,089	)			(928	)
Investment in short term deposits		(2,159	)			-				(2,159	)			-
Net cash used in investing activities		(5,731	)			(1,879	)			(4,248	)			(928	)
Cash flows from financing activities:
Dividend payment		(35,003	)			-				-				-
Repayment of long-term loans		(4,000	)			(4,096	)			-				-
Net cash used in financing activities		(39,003	)			(4,096	)			-				-
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(161	)			(539	)			93				156
Increase (decrease) in cash, cash equivalents and restricted cash		(36,153	)			(16,672	)			4,246				(7,347	)
Cash, cash equivalents and restricted cash at the beginning of the period		115,958				101,969				75,559				92,644
Cash, cash equivalents and restricted cash at the end of the period	$	79,805			$	85,297			$	79,805			$	85,297