Gilat Announces Second Quarter 2016 Results

Second-quarter revenues grew 53% from comparable 2015 quarter


PETAH TIKVA, Israel, Aug. 10, 2016 (GLOBE NEWSWIRE) -- 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 ended June 30, 2016.

Key Financial Updates:

  • Revenues for Q2 2016 increased 53% to $67.9 million from $44.3 million in the comparable period of 2015. Revenues rose 29% compared with Q1 2016.
  • Loss on a GAAP basis for Q2 2016 decreased to $3.7 million compared to a loss of $9.1 million in the second quarter of 2015.
  • EBITDA for Q2 2016 increased to $1.0 million compared to a loss of $2.5 million in the comparable period of 2015.
  • Reiterated management objectives for 2016: revenues between $290 to $310 million, and EBITDA of between $18 to $24 million. In 2015, revenues totaled $197.5 million and EBITDA was $5.3 million.

On a GAAP basis, operating loss was $2.5 million in the second quarter of 2016 as compared to an operating loss of $7.2 million in the comparable quarter of 2015.

On a non-GAAP basis, operating loss was $0.8 million in the second quarter of 2016 as compared to an operating loss of $5.2 million in the comparable quarter of 2015.

On a GAAP basis, the loss for the second quarter of 2016 was $3.7 million or $0.07 per diluted share compared to a loss of $9.1 million or $0.21 per diluted share in the same quarter of 2015.

On a non-GAAP basis, the loss for the second quarter of 2016 was $2.0 million or $0.04 per diluted share compared to a loss of $7.1 million or $0.16 per diluted share in the same quarter of 2015.

EBITDA for the second quarter of 2016 improved to $1.0 million, compared to a loss of $2.5 million in the comparable period in 2015.

"We are pleased with our second quarter results,” said Yona Ovadia, CEO of Gilat. "We continue to make progress with our strategy across all segments, especially in In-Flight Connectivity (IFC) and broadband networks."

Mr. Ovadia continued: "Gilat's five-pillar strategy is focused on winning the markets unlocked by the global demand for broadband and the increasingly-abundant HTS capacity, based on our advanced solutions and our ongoing investment in technological innovation.

“Indeed, this quarter we are pleased to announce a significant win in broadband networks, one of our growth pillars. The recent choice of our X-Architecture for UK-based EE's (Everything Everywhere) LTE network testifies to our leadership in this area.  This win adds to our momentum in cellular backhaul that began with our success with SoftBank earlier in the year. With these achievements, Gilat is solidifying its leadership in the markets of satellite backhauling for LTE cellular networks and broadband access services.

"Looking forward, we are reiterating our management objectives for full year 2016: revenues of $290 to $310 million and EBITDA of between $18 to $24 million. These objectives represent a sizeable stepping up of revenues and a target of positive operating income in the second half of 2016, based on our strong backlog in Peru and China as well as additional revenues from projects won as part of our strategy, and despite a challenging business environment in Latin America.”

Key Recent Announcements:

  • Avanti Selects Gilat’s X-Architecture to Enhance Reach and Resilience of EE’s LTE Network in the UK
  • Brazilian ISP Ruralweb Deploys Gilat’s Solution for its Rural Broadband VSAT Network
  • Dizengoff Ghana Selects Gilat for Turnkey Delivery of Broadband for Rural Schools and Cellular Services
  • Gilat Satellite Networks Shares Included in the TA-100 Index of the Tel Aviv Stock Exchange
  • Sky Net Selects Gilat’s Network for Cellular Backhaul in Myanmar
  • SES and Gilat to Launch Hybrid Broadband Solution in Asia
  • Gilat’s Market-Leading SkyEdge II-c Platform is DVB-S2X Ready

Conference Call and Webcast Details:
Gilat management will host a conference call today, August 10, at 13:30 GMT / 09:30 EDT / 16:30 IDT to discuss the second quarter results. International participants are invited to access the call at (972)3-918-0644, and US-based participants are invited to access the call by dialing (1)888-407-2553.

A simultaneous Webcast of the conference call will be available on the Gilat website at www.gilat.com and through this link: 
http://www.veidan-stream.com/?con=Gilat_Satellite_Networks_Q2_2016_Results 

Conference Call and Webcast Replay
A replay of the conference call will be available beginning approximately 16:00 GMT/ 12:00 EDT/ 19:00 IDT today, until 16:00 GMT/ 12:00 EDT/ 19:00 IDT August 13, 2016. International participants are invited to access the replay of the call at (972)3-925-5921, and US-based participants are invited to access the call by dialing (1)888-295-2634.

A replay of the call may also be accessed as a webcast via Gilat’s website at www.gilat.com and will be archived for 30 days.

Notes:
(1) The attached summary financial statements were prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). The attached summary financial statements are unaudited. To supplement the consolidated financial statements presented in accordance with GAAP, the Company presents Gilat's EBITDA before the impact of non-cash share-based payment charges, depreciation and amortization, other income and other costs related to acquisition transactions. Non-GAAP presentations of net income, operating income, EBITDA and earnings per share are provided to enhance the understanding of the Company's historical financial performance and comparability between periods.

(2) Operating income before depreciation, amortization, non-cash stock option expenses as per ASC 718 (formerly SFAS 123(R)) and other costs related to acquisition transactions ('EBITDA') is presented because it is a measure commonly used and is presented solely in order to improve the understanding of the Company's operating results and to provide further perspective on these results. EBITDA, however, should not be considered as an alternative to operating income or net income for the period as an indicator of the operating performance of the Company.

Similarly, EBITDA should not be considered as an alternative to cash flows from operating activities as a measure of liquidity. EBITDA is not a measure of financial performance under generally accepted accounting principles and may not be comparable to other similarly titled measures for other companies. EBITDA may not be indicative of the historic operating results of the Company; nor is it meant to be predictive of potential future results. Reconciliation between the Company's Operating income and EBITDA is presented in the attached summary financial statements.

About Gilat
Gilat Satellite Networks Ltd (NASDAQ:GILT) (TASE:GILT) is a leading provider of products and services for satellite-based broadband communications. Gilat develops and markets a wide range of high-performance satellite ground segment equipment and VSATs, with an increasing focus on the consumer and Ka-band market. In addition, Gilat enables mobile SOTM (Satellite-on-the-Move) solutions providing low-profile antennas, next generation solid-state power amplifiers and modems. Gilat also provides managed network and satellite-based services for rural telephony and Internet access via its subsidiaries in Peru and Colombia.

With over 25 years of experience, and over a million products shipped to more than 90 countries, Gilat has provided enterprises, service providers and operators with efficient and reliable satellite-based connectivity solutions, including cellular backhaul, banking, retail, e-government and rural communication networks. Gilat also enables leading defense, public security and news organizations to implement advanced, on-the-move tactical communications on board their land, air and sea fleets using Gilat's high-performance SOTM solutions. Gilat controlling shareholders are the FIMI Private Equity Funds. For more information, please visit us at 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.

  
GILAT SATELLITE NETWORKS LTD. 
CONDENSED 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,
 
     2016   2015   2016   2015  
    Unaudited Unaudited Unaudited Unaudited 
            
Revenues   $120,563  $89,514  $67,898  $44,324  
Cost of revenues    92,984   65,272   52,717   33,274  
Gross profit      27,579      24,242      15,181      11,050   
            
Research and development expenses    12,593   13,128   6,705   6,594  
Less - grants    638   412   552   222  
Research and development, net    11,955   12,716   6,153   6,372  
Selling and marketing expenses    10,976   12,675   5,853   6,412  
General and administrative expenses    10,152   10,062   5,714   5,471  
Total operating expenses      33,083      35,453      17,720      18,255   
Operating loss      (5,504)    (11,211)    (2,539)    (7,205) 
Financial expenses, net    (1,603)  (2,910)  (860)  (1,559) 
Loss before taxes       (7,107)    (14,121)    (3,399)    (8,764) 
Taxes on income    569   567   251   318  
Loss   $   (7,676) $   (14,688) $   (3,650) $   (9,082) 
            
Loss per share (basic and diluted)   $   (0.16) $   (0.34) $   (0.07) $   (0.21) 
            
            
Weighted average number of shares used in computing loss per share (basic and diluted)    49,383,450    43,139,303    54,384,521    42,883,469   
 

 

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, 2016 June 30, 2015 
       GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP 
       Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited 
                   
Gross profit      $15,181   1,225  $16,406  $11,050   1,230  $12,280  
Operating expenses       17,720   (465)  17,255   18,255   (794)  17,461  
Operating loss       (2,539)  1,690   (849)  (7,205)  2,024   (5,181) 
Loss before taxes       (3,399)  1,690   (1,709)  (8,764)  2,024   (6,740) 
Loss      $   (3,650)    1,690   $   (1,960) $   (9,082)    2,024   $   (7,058) 
                   
Loss per share (basic and diluted)      $(0.07) $0.03  $(0.04) $(0.21) $0.05  $(0.16) 
                   
Weighted average number of shares used in computing loss per share (basic and diluted)       54,384,521     54,384,521   42,883,469     42,883,469  
                   
(1) Adjustments reflect the effect of non-cash stock-based compensation as per ASC 718 and amortization of intangible assets related to shares acquisition transactions. 
                   
                   
         Three months ended     Three months ended   
         June 30, 2016     June 30, 2015   
         Unaudited     Unaudited   
                   
GAAP loss        $(3,650)     $(9,082)   
Gross profit:                  
Non-cash stock-based compensation expenses         32       54    
Amortization of intangible assets related to acquisition transactions         1,193       1,176    
          1,225       1,230    
Operating expenses:                  
Non-cash stock-based compensation expenses         270       581    
Amortization of intangible assets related to acquisition transactions         195       213    
          465       794    
                   
Non GAAP loss        $(1,960)     $(7,058)   
                   

 

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, 2016 June 30, 2015 
       GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP 
       Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited 
                   
Gross profit      $27,579   2,409  $29,988  $24,242   2,481  $26,723  
Operating expenses       33,083   (870)  32,213   35,453   (1,482)  33,971  
Operating loss       (5,504)  3,279   (2,225)  (11,211)  3,963   (7,248) 
Loss before taxes       (7,107)  3,279   (3,828)  (14,121)  3,963   (10,158) 
Loss      $   (7,676)    3,279   $   (4,397) $   (14,688)    3,963   $   (10,725) 
                   
Loss per share (basic and diluted)      $(0.16) $0.07  $(0.09) $(0.34) $0.09  $(0.25) 
                   
Weighted average number of shares used in computing loss per share (basic and diluted)       49,383,450     49,383,450   43,139,303     43,139,303  
                   
(1) Adjustments reflect the effect of non-cash stock-based compensation as per ASC 718 and amortization of intangible assets related to shares acquisition transactions.  
                   
                   
       Six months ended Six months ended 
       June 30, 2016  June 30, 2015  
          Unaudited       Unaudited    
                   
GAAP loss        $(7,676)     $(14,688)   
Gross profit:                  
Non-cash stock-based compensation expenses         21       106    
Amortization of intangible assets related to acquisition transactions         2,388       2,375    
          2,409       2,481    
Operating expenses:                  
Non-cash stock-based compensation expenses         482       1,057    
Amortization of intangible assets related to acquisition transactions         388       425    
          870       1,482    
                   
Non GAAP loss        $(4,397)     $(10,725)   
                   

 

GILAT SATELLITE NETWORKS LTD. 
CONDENSED EBITDA 
U.S. dollars in thousands 
    Six months ended
 Three months ended
 
    June 30, June 30, 
     2016   2015   2016   2015  
    Unaudited Unaudited Unaudited Unaudited 
            
GAAP operating loss   $(5,504) $(11,211) $(2,539) $(7,205) 
Add:           
Non-cash stock-based compensation expenses    503   1,163   302   635  
Depreciation and amortization    6,525   7,699   3,224   4,041  
EBITDA   $   1,524   $   (2,349) $   987   $   (2,529) 
            

 

 GILAT SATELLITE NETWORKS LTD. 
 CONDENSED CONSOLIDATED BALANCE SHEETS 
 U.S. dollars in thousands 
       
   June 30, December 31, 
    2016   2015  
   Unaudited Audited 
       
 ASSETS     
       
 CURRENT ASSETS:     
 Cash and cash equivalents $50,760  $18,435  
 Restricted cash  72,539   100,779  
 Restricted cash held by trustees  6,617   8,524  
 Trade receivables, net  48,106   50,984  
 Inventories  26,856   25,358  
 Other current assets  16,674   16,223  
 Total current assets  221,552   220,303  
       
 LONG-TERM INVESTMENTS AND RECEIVABLES:     
 Long-term restricted cash  205   179  
 Severance pay funds  7,827   7,545  
 Other long term receivables  224   221  
 Total long-term investments and receivables  8,256   7,945  
       
 PROPERTY AND EQUIPMENT, NET  81,436   81,963  
       
 INTANGIBLE ASSETS, NET  14,268   17,154  
       
 GOODWILL  43,468   43,468  
       
 TOTAL ASSETS $368,980  $370,833  
       
 GILAT SATELLITE NETWORKS LTD. 
 CONDENSED CONSOLIDATED BALANCE SHEETS 
 U.S. dollars in thousands 
   June 30, December 31, 
    2016   2015  
   Unaudited Audited 
       
 LIABILITIES AND EQUITY     
       
 CURRENT LIABILITIES:     
 Short-term bank credit and loans $-  $7,000  
 Current maturities of long-term loans  4,558   4,542  
 Trade payables  20,386   17,210  
 Accrued expenses  38,080   23,481  
 Advances from customers  46,549   82,813  
 Advances from customers held by trustees  6,852   8,515  
 Other current liabilities  17,768   16,213  
 Total current liabilities  134,193   159,774  
       
 LONG-TERM LIABILITIES:     
 Accrued severance pay    7,691     7,506  
 Long-term loans, net of current maturities    17,248     21,493  
 Other long-term liabilities    3,207     3,978  
 Total long-term liabilities    28,146     32,977  
       
 EQUITY:     
 Share capital - ordinary shares of NIS 0.2 par value     2,587     2,048  
 Additional paid-in capital    919,530     884,126  
 Accumulated other comprehensive loss    (3,435)    (3,727) 
 Accumulated deficit    (712,041)    (704,365) 
 Total equity    206,641     178,082  
       
 TOTAL LIABILITIES AND EQUITY $  368,980  $  370,833  
       

 

GILAT SATELLITE NETWORKS LTD. 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
U.S. dollars in thousands 
          
    Six months ended Three months ended 
    June 30, June 30, 
     2016   2015   2016   2015  
    Unaudited Unaudited Unaudited Unaudited 
Cash Flows from Operating Activities:           
Loss   $(7,676) $(14,688) $(3,650) $(9,082) 
Adjustments required to reconcile loss           
to net cash provided by (used in) Operating Activities:           
Depreciation and amortization    6,525   7,699   3,224   4,041  
Stock-based compensation    503   1,163   302   635  
Accrued severance pay, net    (97)  (270)  26   (169) 
Accrued interest and exchange rate differences on short and long-term restricted cash, net    (1,560)  87   (1,151)  44  
Exchange rate differences on long-term loans    48   (226)  (42)  103  
Deferred income taxes, net    -   (38)  -   3  
Decrease in trade receivables, net    3,994   6,335   5,388   5,614  
Decrease (increase) in other assets (including short-term, long-term and deferred charges)    (1,072)  64   1,082   (2,870) 
Decrease (increase) in inventories    (2,459)  (2,817)  226   1,365  
Decrease (increase) in restricted cash directly related to operating activities, net    21,574   (54,318)  15,270   (54,318) 
Increase (decrease) in trade payables    3,192   (5,301)  (897)  (5,106) 
Increase (decrease) in accrued expenses    14,483   (1,760)  7,075   413  
Increase (decrease) in advances from customers    (36,285)  57,332   (24,462)  58,099  
Increase (decrease) in advances from customers held by trustees    (2,012)  (4,158)  2,051   1,020  
Increase (decrease) in other current liabilities and other long term liabilities    697   1,742   (524)  (3,275) 
Net cash provided by (used in) Operating Activities      (145)    (9,154)    3,918      (3,483) 
            
Cash Flows from Investing Activities:           
Purchase of property and equipment    (2,032)  (1,839)  (928)  (1,098) 
Investment in restricted cash held by trustees    (5,428)  (6,109)  (5,428)  (6,109) 
Proceeds from restricted cash held by trustees    8,158   14,652   4,483   3,730  
Investment in restricted cash (including long-term)    (186)  (21,202)  (7)  (11,150) 
Proceeds from restricted cash (including long-term)    7,426   28,276   79   6,159  
Net cash provided by (used in) Investing Activities      7,938      13,778      (1,801)    (8,468) 
            
Cash Flows from Financing Activities:           
Capital lease payments    (307)  (204)  (256)  (102) 
Issuance of shares in a rights offering    35,095   -   19,852   -  
Issuance of restricted stock units and exercise of stock options    346   3,705   10   2,912  
Short term bank credit, net    (7,000)  (5,569)  (4,250)  4,438  
Repayment of long-term loans    (4,277)  (4,272)  (138)  (137) 
Net cash provided by (used in) Financing Activities      23,857      (6,340)    15,218      7,111   
            
Effect of exchange rate changes on cash and cash equivalents      675      (414)    265      71   
            
Increase (decrease) in cash and cash equivalents      32,325      (2,130)    17,600      (4,769) 
            
Cash and cash equivalents at the beginning of the period      18,435      27,726      33,160      30,365   
            
Cash and cash equivalents at the end of the period   $   50,760   $   25,596   $   50,760   $   25,596   
            

 


            

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