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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