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Gilat Presents Strong Growth and Results for Third Quarter 2022

Revenue of $60.4 million, up 21% year-over-year, GAAP operating income of $3.4 million versus $0.8 million in Q3 last year, and adjusted EBITDA of $7.3 million, up 88% year-over-year

PETAH TIKVA, Israel, Nov. 14, 2022 (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 third quarter ended September 30, 2022.

Third Quarter 2022 Financial Highlights

  • Revenues of $60.4 million,up 21% compared with $49.8 million in Q3 last year;
  • GAAP operating income of $3.4 million versus $0.8 million in Q3 last year;
  • Non-GAAP operating income of $4.4 million versus $1.3 million in Q3 last year;
  • GAAP net income of $2.1 million versus breakeven in Q3 last year;
  • Non-GAAP net income of $3 million versus $0.6 million in Q3 last year;
  • Adjusted EBITDA of $7.3 million versus $3.9 million in Q3 last year;

Forward-Looking Expectations

The Company adjusted and narrowed the range of its 2022 revenue guidance, with expectations of between $240 million and $245 million, representing year-over-year growth of approximately 13%.

The Company also increased and narrowed the GAAP operating income guidance range to between $8 million to $10 million representing significant year-over-year growth versus $2.2 million in 2021.

The Company increased and narrowed the adjusted EBITDA range to between $23 to $25 million, representing year-over-year growth of approximately 56%.

Management Commentary

Adi Sfadia, Gilat's CEO, commented: "We are very pleased with our strong third quarter results showing continued year-over-year growth and a recovery in all our markets, in particular IFC. We are also very encouraged with the solid and continued improvement in our profitability demonstrating substantial improvement in our gross, operating and net margins with adjusted EBITDA growing by 88% year-over-year.

Strategically we are very excited with the progress of our newly launched, world leading, SkyEdge IV platform. During the third quarter, a leading service provider selected SkyEdge IV, Gilat's high-performance, multi-orbit platform, to power maritime connectivity. We are confident that this platform will allow us to focus and gain market share in the growing multibillion-dollar market of the next era of satellite communication.

The mobility business continued to pick up, with recent IFC orders of over $12 million. We further solidified our leadership in the cellular backhaul market this quarter, with multimillion-dollar orders from both new customers and mobile operators trusting Gilat's technology to extend their networks even further. In addition, we received multimillion-dollar orders in the Defense segment, where we see significant potential and have increased our focus, as well as in the Enterprise sector for utility and banking applications."

Mr. Sfadia concluded, "Our pipeline continues to increase and broaden, and the release of our next generation platform and growth engine – the SkyEdge IV for VHTS & NGSO satellites – is gaining strong traction among new and existing customers. As such, we are increasingly optimistic and expect to maintain our strong momentum ahead. For 2022 as a whole, we are tracking ahead of our profitability targets, and we look forward to continuing the growth trend into 2023."

Key Recent Announcements

  • World-Leading UAV Manufacturer Selects Gilat in Multi-Year, Multimillion-Dollar Strategic Agreement for UAV Terminals
  • Telefónica Global Solutions Selects Gilat to Extend 4G Cellular Coverage for Mobile Operators in Latin America
  • Antamina Selects Gilat for Multimillion-Dollar E-Learning Project
  • Gilat Awarded Over $10M to Power IFC Applications of Tier-1 Global Aerospace System Integrator
  • Gilat Selected by Sencinet for Petrobras’ Oil and Gas Industry Satellite Connectivity Project
  • SES and Gilat Extend Global Strategic Cooperation with Orders for GEO VHTS and O3b mPOWER NGSO Constellation

Conference Call Details
Gilat’s management will discuss its third quarter 2022 results and business achievements and participate in a question and answer session:

Date: Monday, November 14, 2022
Start: 09:30 AM EST / 16:30 IST
Dial-in: US: 1-888-407-2553
International: +972-3-918-0609

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/gilatq3-2022 

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

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, restructuring and reorganization costs, merger, acquisition and related litigation expense (income), impairment of held for sale asset, other expenses, income tax effect on adjustments and one-time changes of deferred tax assets.

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 over 30 years of experience, we create and deliver deep technology solutions for satellite, ground and new space connectivity and provide comprehensive end-to-end solutions and services, powered by our innovative technology. We believe in the right of all people to be connected and are united in our resolution to provide communication solutions to all reaches of the world.

Delivering high value solutions, our portfolio is comprised of a cloud-based platform and high performance satellite terminals designed to work in harmony with satellite constellations, including Very High Throughput Satellites (VHTS) and Software-Defined Satellites (SDS) in multiple orbits; high performance Satellite On-the-Move (SOTM) antennas; and highly efficient, high-power Solid State Power 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, mobility, cellular backhaul, military, government, and enterprise, all while meeting the most stringent service level requirements. 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 Networks
Doreet Oren, Senior Director Corporate Communications
[email protected]

Ehud Helft
EK Global Investor Relations
[email protected]
+1 212 378 8040

GILAT SATELLITE NETWORKS LTD.        
CONSOLIDATED STATEMENTS OF INCOME (LOSS)       
U.S. dollars in thousands (except share and per share data)       
     Nine months ended
  Three months ended
     September 30,
  September 30,
     2022   2021   2022   2021 
      As Restated (1)   As Restated (1)
    Unaudited Unaudited
           
Revenues  $167,213  $147,947  $60,350  $49,778 
Cost of revenues   108,021   101,376   37,315   32,306 
           
Gross profit   59,192   46,571   23,035   17,472 
           
Research and development expenses, net  25,542   22,884   9,156   7,224 
Selling and marketing expenses  15,724   15,827   5,414   5,359 
General and administrative expenses  13,325   11,042   4,770   4,104 
Impairment of held for sale asset  718   -   279   - 
           
Total operating expenses    55,309   49,753   19,619   16,687 
           
Operating income (loss)    3,883   (3,182)  3,416   785 
           
Financial expenses, net   (2,716)  (1,458)  (1,053)  (701)
           
Income (loss) before taxes on income  1,167   (4,640)  2,363   84 
           
Taxes on income   1,075   523   243   49 
           
Net income (loss)  $ 92  $ (5,163) $ 2,120  $ 35 
           
Earnings (loss) per share (basic and diluted) $ 0.00  $ (0.09) $ 0.04  $ 0.00 
           
Weighted average number of shares used in computing earning (loss) per share        
 Basic   56,585,858   56,355,020   56,608,981   56,525,177 
 Diluted   56,604,854   56,355,020   56,626,283   56,958,250 
           
 (1) The Company restated its previously issued condensed interim consolidated financial statements for the three and nine months ended September 30, 2021.
 For additional information, see Note 2 and Note 17 to the audited consolidated financial statements included in Part III, Item 18 of our 2021 Form 20-F/A filed with the U.S. Securities and Exchange Commission on September 14, 2022.
        

GILAT SATELLITE NETWORKS LTD.           
RECONCILIATION BETWEEN GAAP AND NON-GAAP CONSOLIDATED STATEMENTS OF INCOME (LOSS)    
FOR COMPARATIVE PURPOSES            
U.S. dollars in thousands (except share and per share data)          
  Three months ended Three months ended
  September 30, 2022 September 30, 2021
  GAAP Adjustments (*) Non-GAAP GAAP Adjustments (*) Non-GAAP
        As Restated (1)   As Restated (1)
  Unaudited Unaudited
             
Gross profit$23,035  74  $23,109 $17,472  96  $17,568
Operating expenses 19,619  (879)  18,740  16,687  (448)  16,239
Operating income 3,416  953   4,369  785  544   1,329
Income before taxes on income 2,363  953   3,316  84  544   628
Net income$ 2,120  911  $ 3,031 $ 35  544  $ 579
             
Earning per share (basic and diluted)$ 0.04 $0.02  $ 0.06 $ 0.00 $0.01  $ 0.01
             
             
Weighted average number of shares used in computing earning per share           
        Basic      56,608,981    56,608,981  56,525,177    56,525,177
        Diluted      56,626,283    56,652,855  56,958,250    57,227,810
             
             
 (*) Adjustments reflect the effect of non-cash stock-based compensation as per ASC 718, amortization of intangible assets related to acquisition transactions, impairment of held for sale asset, other expenses and income tax effect on adjustments which is calculated using the blended effective tax rate on the adjustments, based on the statutory tax rates applicable to the adjustments.
             
             
     Three months ended      Three months ended  
     September 30, 2022      September 30, 2021  
          As Restated (1)  
    Unaudited     Unaudited  
             
GAAP net income  $2,120      $35   
             
Gross profit           
Non-cash stock-based compensation expenses  74       91   
Amortization of intangible assets related to acquisition transactions    -       5   
     74       96   
Operating expenses           
Non-cash stock-based compensation expenses  498       398   
Amortization of intangible assets related to acquisition transactions    51       50   
Impairment of held for sale asset   279       -   
Other   51       -   
     879       448   
             
Income tax effect on adjustments   (42)      -   
             
Non-GAAP net income  $3,031      $579   
             
(1) The Company restated its previously issued condensed interim consolidated financial statements for the three and nine months ended September 30, 2021.
 For additional information, see Note 2 and Note 17 to the audited consolidated financial statements included in Part III, Item 18 of our 2021 Form 20-F/A   filed with the U.S. Securities and Exchange Commission on September 14, 2022. 
             

GILAT SATELLITE NETWORKS LTD.           
RECONCILIATION BETWEEN GAAP AND NON-GAAP CONSOLIDATED STATEMENTS OF INCOME (LOSS)  
FOR COMPARATIVE PURPOSES              
U.S. dollars in thousands (except share and per share data)          
    Nine months ended Nine months ended
    September 30, 2022 September 30, 2021
    GAAP Adjustments (*)Non-GAAP GAAP Adjustments (*)Non-GAAP
          As Restated (1)   As Restated (1)
    Unaudited Unaudited
               
Gross profit  $59,192  230  $59,422 $46,571   226  $46,797 
Operating expenses   55,309  (2,394)  52,915  49,753   (735)  49,018 
Operating income (loss)   3,883  2,624   6,507  (3,182)  961   (2,221)
Income (loss) before taxes on income   1,167  2,624   3,791  (4,640)  961   (3,679)
Net income (loss)   92  2,582   2,674  (5,163)  961   (4,202)
               
Earning (loss) per share (basic and diluted)$ 0.00 $0.05  $ 0.05 $ (0.09) $0.02  $ (0.07)
               
               
Weighted average number of shares used in computing earning (loss) per share             
        Basic     56,585,858    56,585,858  56,355,020     56,355,020 
        Diluted     56,604,854    56,659,298  56,355,020     56,355,020 
               
               
(*) Adjustments reflect the effect of non-cash stock-based compensation as per ASC 718, amortization of intangible assets related to acquisition transactions, impairment of held for sale asset, other expenses and income tax effect on adjustments which is calculated using the blended effective tax rate on the adjustments, based on the statutory tax rates applicable to the adjustments.
               
               
        Nine months ended
         Nine months ended
    
        September 30, 2022
         September 30, 2021
    
            As Restated (1)  
      Unaudited     Unaudited  
               
GAAP net income (loss)    $92      $(5,163)  
               
Gross profit             
Non-cash stock-based compensation expenses   220       211   
Amortization of intangible assets related to acquisition transactions      10       15   
       230       226   
Operating expenses             
Non-cash stock-based compensation expenses   1,413       584   
Amortization of intangible assets related to acquisition transactions      152       151   
Impairment of held for sale asset     718       -   
Other     111       -   
       2,394       735   
               
Income tax effect on adjustments     (42)      -   
               
Non-GAAP net income (loss)    $2,674      $(4,202)  
               
(1) The Company restated its previously issued condensed interim consolidated financial statements for the three and nine months ended September 30, 2021.
For additional information, see Note 2 and Note 17 to the audited consolidated financial statements included in Part III, Item 18 of our 2021 Form 20-F/A  filed with the U.S. Securities and Exchange Commission on September 14, 2022.
       

GILAT SATELLITE NETWORKS LTD.        
SUPPLEMENTAL INFORMATION        
U.S. dollars in thousands         
            
ADJUSTED EBITDA:         
            
      Nine months ended
  Three months ended
      September 30,
  September 30,
      2022  2021   2022  2021
       As Restated (1)   As Restated (1)
     Unaudited Unaudited
            
GAAP net income (loss)  $92 $(5,163) $2,120 $35
Adjustments:          
Financial expenses, net     2,716  1,458   1,053  701
Taxes on income     1,075  523   243  49
Non-cash stock-based compensation expenses 1,633  795   572  489
Impairment of held for sale asset   718  -   279  -
Other    111  -   51  -
Depreciation and amortization (*)  8,770  7,365   2,978  2,608
            
Adjusted EBITDA   $15,115 $4,978  $7,296 $3,882
            
(*) Including amortization of lease incentive        
            
SEGMENT REVENUES:         
           
      Nine months ended   Three months ended 
      September 30,   September 30, 
      2022  2021   2022  2021
       As Restated (1)   As Restated (1)
     Unaudited Unaudited
            
Satellite Networks   $83,993 $83,157  $32,366 $23,182
Integrated Solutions    45,047  33,540   15,650  14,704
Network Infrastructure and Services  38,173  31,250   12,334  11,892
            
Total revenues   $ 167,213 $ 147,947  $ 60,350 $ 49,778
            
(1) The Company restated its previously issued condensed interim consolidated financial statements for the three and nine months ended September 30, 2021.
For additional information, see Note 2 and Note 17 to the audited consolidated financial statements included in Part III, Item 18 of our 2021 Form 20-F/A  filed with the U.S. Securities and Exchange Commission on September 14, 2022.
       

      
 GILAT SATELLITE NETWORKS LTD.    
 CONSOLIDATED BALANCE SHEETS    
 U.S. dollars in thousands    
      
   September 30, December 31,
    2022   2021 
   Unaudited Audited
      
 ASSETS    
      
 CURRENT ASSETS:    
 Cash and cash equivalents $68,439  $81,859 
 Short-term deposits  -   2,159 
 Restricted cash  1,425   2,592 
 Trade receivables, net  51,677   39,161 
 Contract assets  29,688   26,008 
 Inventories  33,925   28,432 
 Other current assets  24,808   14,607 
 Held for sale asset  3,997   4,587 
      
    Total current assets  213,959   199,405 
      
 LONG-TERM ASSETS:    
 Restricted cash  12   12 
 Long- term contract assets  11,149   12,539 
 Severance pay funds  5,884   6,795 
 Deferred taxes  15,816   17,551 
 Operating lease right-of-use assets  3,857   4,478 
 Other long term assets  10,654   10,456 
      
 Total long-term assets  47,372   51,831 
      
 PROPERTY AND EQUIPMENT, NET  73,312   72,391 
      
 INTANGIBLE ASSETS, NET  364   640 
      
 GOODWILL  43,468   43,468 
      
 TOTAL ASSETS $378,475  $367,735 
      
 GILAT SATELLITE NETWORKS LTD.    
 CONSOLIDATED BALANCE SHEETS (Cont.)    
 U.S. dollars in thousands    
      
   September 30, December 31,
    2022   2021 
   Unaudited Audited
      
 LIABILITIES AND SHAREHOLDERS' EQUITY    
      
 CURRENT LIABILITIES:    
 Trade payables $24,880  $19,776 
 Accrued expenses  46,207   49,202 
 Advances from customers and deferred revenues  31,192   24,373 
 Operating lease liabilities  1,813   1,818 
 Other current liabilities  15,430   13,339 
      
    Total current liabilities  119,522   108,508 
      
 LONG-TERM LIABILITIES:    
 Accrued severance pay  6,473   7,292 
 Long-term advances from customers  1,838   1,209 
 Operating lease liabilities  1,945   2,283 
 Other long-term liabilities  127   120 
      
    Total long-term liabilities  10,383   10,904 
      
 SHAREHOLDERS' EQUITY:    
 Share capital - ordinary shares of NIS 0.2 par value  2,711   2,706 
 Additional paid-in capital  931,500   929,871 
 Accumulated other comprehensive loss  (7,836)  (6,357)
 Accumulated deficit  (677,805)  (677,897)
      
 Total shareholders' equity  248,570   248,323 
      
 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$378,475  $367,735 
      

GILAT SATELLITE NETWORKS LTD.        
CONSOLIDATED STATEMENTS OF CASH FLOWS        
U.S. dollars in thousands        
          
    Nine months ended
  Three months ended
    September 30,
  September 30,
    2022   2021   2022   2021 
     As Restated (1)   As Restated (1)
   Unaudited Unaudited
Cash flows from operating activities:        
Net income (loss) $92  $(5,163) $2,120  $35 
Adjustments required to reconcile net income (loss)        
 to net cash provided by (used in) operating activities:        
Depreciation and amortization  8,604   7,202   2,921   2,556 
Impairment of held for sale asset  718   -   279   - 
Stock-based compensation of options  1,633   795   572   489 
Accrued severance pay, net  92   (177)  (22)  (49)
Deferred taxes, net  1,823   (47)  159   (232)
Decrease (increase) in trade receivables, net  (12,270)  (2,490)  (387)  4,867 
Decrease (increase) in contract assets  (2,290)  21,334   318   (313)
Increase in other assets (including short-term, long-term        
   and deferred charges)  (8,652)  (5,485)  (889)  (1,476)
Increase in inventories  (6,030)  (347)  (1,955)  (2,121)
Increase (decrease) in trade payables  4,315   (2,719)  110   (1,929)
Decrease in accrued expenses  (1,767)  (2,344)  (77)  (542)
Increase in advance from customers and deferred revenue  7,397   4,473   387   4,811 
Increase (decrease) in other liabilities  365   (1,301)  1,175   (1,107)
Net cash provided by (used in) operating activities  (5,970)  13,731   4,711   4,989 
          
Cash flows from investing activities:        
Purchase of property and equipment  (9,225)  (5,024)  (4,710)  (1,452)
Repayment of short term deposits  2,159   -   -   2,159 
Investment in financial instrument  (1,536)  -   (1,536)  - 
Net cash provided by (used in) investing activities  (8,602)  (5,024)  (6,246)  707 
          
Cash flows from financing activities:        
Dividend payment  -   (35,003)  -   - 
Repayment of long-term loan  -   (4,000)  -   - 
Net cash used in financing activities  -   (39,003)  -   - 
          
Effect of exchange rate changes on cash, cash equivalents and restricted cash  (15)  (252)  (47)  (91)
          
Increase (decrease) in cash, cash equivalents and restricted cash  (14,587)  (30,548)  (1,582)  5,605 
          
Cash, cash equivalents and restricted cash at the beginning of the period  84,463   115,958   71,458   79,805 
          
Cash, cash equivalents and restricted cash at the end of the period $ 69,876  $ 85,410  $ 69,876  $ 85,410 
          
 (1) The Company restated its previously issued condensed interim consolidated financial statements for the three and nine months ended September 30, 2021.  
 For additional information, see Note 2 and Note 17 to the audited consolidated financial statements included in Part III, Item 18 of our 2021 Form 20-F/A filed with the U.S. Securities and Exchange Commission on September 14, 2022.
          
          

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