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Gilat Reports Second Quarter 2023 Results

Presents a Robust 22% Year-over-Year Growth in Revenues; GAAP Operating Income More Than Tripled and Adjusted EBITDA Grew by 74%. The Company Raises its Full Year 2023 Guidance

PETAH TIKVA, Israel, Aug. 08, 2023 (GLOBE NEWSWIRE) — Gilat Satellite Networks Ltd. (NASDAQ: GILT, TASE: GILT), a worldwide leader in satellite networking technology, solutions and services, reported today its results for the second quarter, ended June 30, 2023.

Second Quarter 2023 Financial Highlights

  • Revenues of $67.6 million, up 22% compared with $55.5 million in Q2 2022;
  • GAAP operating income of $5.4 million, compared with $1.5 million in Q2 2022;
  • Non-GAAP operating income of $6.1 million, compared with $2.4 million in Q2 2022;
  • GAAP net income of $4.3 million, or $0.08 earnings per diluted share, compared with $0.5 million, or $0.01 earnings per diluted share in Q2 2022;
  • Non-GAAP net income of $4.9 million, or $0.09 earnings per diluted share, compared with $1.4 million, or $0.03 earnings per diluted share in Q2 2022;
  • Adjusted EBITDA of $9.2 million, up 74% compared with $5.3 million in Q2 2022;

Forward-Looking Expectations

The Company today raised its 2023 revenues guidance to between $265 to $285 million, representing year-over-year growth of 15% at the mid-point, as well as increased its GAAP operating income guidance to between $18 to $22 million, representing year-over-year growth of 101% at the mid-point and its adjusted EBITDA guidance to between $33 to $37 million, representing year-over-year growth of 39% at the mid-point.

Adi Sfadia, Gilat’s CEO, commented:

“We are very pleased with our strong second quarter results, with solid growth in revenue, which was up 22% year-over-year, and a stronger growth in Adjusted EBITDA, up 74% year-over-year, demonstrating operating leverage in our business model. The revenue growth was broad across most of our business areas, a testimony to the strong market interest in Gilat’s solutions as well as growing interest in satellite communications overall.

We are experiencing a significant expansion in our in-flight connectivity (IFC) business with a growing demand for both electronically steered antennas (ESA) and Solid-State Power Amplifiers (SSPA) from existing and new customers.

We signed a significant agreement and received the first orders from Satcom Direct, for the development and supply of new ultra-low profile electronically steered antennas (ESA) to operate over OneWeb’s LEO constellation. This ESA project is an important turning point and an important future growth engine as we increase our presence by entering new market segments such as IFC for business jets, as well as connectivity for government and military aviation.

We are progressing in obtaining the necessary regulatory approvals for our acquisition of DataPath Inc., which was announced during the first quarter. Conditioned upon this process’s satisfactory conclusion, we anticipate that the closing of the transaction will occur in Q4 2023.”

Mr. Sfadia concluded, “Not only did we report strong results in the quarter, but we also had strong bookings and signed some strategic deals this quarter, all of which led us to increase our 2023 guidance and makes me confident about our ability to materialize our long-term growth potential.”

Key Recent Announcements

  • Satcom Direct and Gilat Sign Strategic Agreement for Joint ESA Project to Expand Plane Simple® Portfolio
  • Tier 1 Telecom Operator Selects Gilat Satellite Connectivity for a Major Western European Utility Company
  • Gilat Awarded Millions of Dollars in Orders for Cellular Backhaul Over Satellite Project in Mexico

Conference Call Details
Gilat’s management will discuss its second quarter 2023 results and business achievements and participate in a question-and-answer session:

Date: Tuesday, August 8, 2023
Start: 09:30 AM EDT / 16:30 IDT
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/gilatq2-2023

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 gross profit, operating expenses, operating income, income before taxes on income, net income (loss), adjusted EBITDA, and earnings (losses) per share. The adjustments to the Company’s GAAP results are made with the intent of providing both management and investors with a more complete understanding of the Company’s underlying operational results, trends, and performance. Non-GAAP financial measures mainly exclude, if and when applicable, the effect of non-cash stock-based compensation expenses, amortization of purchased intangibles, amortization of intangible assets related to acquisition transactions, lease incentive amortization, impairment of held for sale asset, income tax effect on adjustments, one-time changes of deferred tax assets, and other operating expenses (income), net.

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 (loss) 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 net income (loss) and adjusted EBITDA is presented in the attached summary financial statements.

Non-GAAP presentations of gross profit, operating expenses, operating income, income before taxes on income, net income (loss), adjusted EBITDA and earnings (losses) 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 35 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
DoreetO@gilat.com

Gilat Satellite Networks
Mayrav Sher, Head of Finance and Investor Relations
MayravS@gilat.com

EK Global IR
Ehud Helft, Managing Partner
ehud@ekgir.com

GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
U.S. dollars in thousands (except share and per share data)
    Six months ended
 		Â Three months ended
    June 30,
 		Â June 30,
     2023     2022    2023    2022 Â
    Unaudited  Unaudited Â
           Â
Revenues   $ 126,551   $  106,863   $ 67,589  $  55,454 Â
Cost of revenues    76,330     70,706    42,053    35,685 Â
           Â
Gross profit    50,221     36,157    25,536    19,769 Â
           Â
Research and development expenses, net   19,003     16,386    9,384    8,718 Â
Selling and marketing expenses   11,941     10,310    5,932    4,960 Â
General and administrative expenses   9,155    *)  8,495    4,724   *)  4,311 Â
Impairment of held for sale asset   –     439    –    229 Â
Other operating expenses (income), net   (2,340 )   *)  60    47   *) 60 Â
           Â
Total operating expenses    37,759     35,690    20,087    18,278 Â
           Â
Operating income    12,462     467    5,449    1,491 Â
           Â
Financial expenses, net    735     1,663    586    468 Â
           Â
Income (loss) before taxes on income   11,727     (1,196 )   4,863    1,023 Â
           Â
Taxes on income    1,822     832    538    517 Â
           Â
Net income (loss) Â Â $ 9,905 Â Â $ Â (2,028 ) Â $ 4,325 Â $ Â 506 Â
           Â
Earnings (losses) per share (basic and diluted) Â $ 0.17 Â Â $ Â (0.04 ) Â $ 0.08 Â $ Â 0.01 Â
           Â
Weighted average number of shares used in computing earnings (losses) per share         Â
 Basic    56,615,714     56,574,296    56,617,943    56,597,523 Â
 Diluted    56,622,204     56,574,296    56,620,977    56,637,208 Â
           Â
*) Reclassified          Â
           Â

GILAT SATELLITE NETWORKS LTD. Â
RECONCILIATION BETWEEN GAAP AND NON-GAAP CONSOLIDATED STATEMENTS OF INCOMEÂ
Â
FOR COMPARATIVE PURPOSES Â
U.S. dollars in thousands (except share and per share data)        Â
 Three months ended  Three months ended Â
 June 30, 2023  June 30, 2022 Â
 GAAP  Adjustments(*)  Non-GAAP  GAAP  Adjustments(*)  Non-GAAP Â
 Unaudited  Unaudited Â
            Â
Gross profit $ 25,536 Â Â 95 Â Â $ 25,631 Â $ 19,769 Â Â 81 Â Â $ 19,850 Â
Operating expenses  20,087   (513 )   19,574   18,278   (832 )   17,446 Â
Operating income  5,449   608    6,057   1,491   913    2,404 Â
Income before taxes on income  4,863   608    5,471   1,023   913    1,936 Â
Net income $ 4,325 Â Â 608 Â Â $ 4,933 Â $ 506 Â Â 913 Â Â $ 1,419 Â
            Â
Earnings per share (basic and diluted) $ 0.08 Â $ 0.01 Â Â $ 0.09 Â $ 0.01 Â $ 0.02 Â Â $ 0.03 Â
            Â
            Â
Weighted average number of shares used in computing earnings per share            Â
Basic  56,617,943     56,617,943   56,597,523     56,597,523 Â
Diluted  56,620,977     56,620,977   56,637,208     56,773,970 Â
            Â
            Â
(*) 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 and other operating expenses Â
            Â
            Â
 Three months ended    Three months ended Â
 June 30, 2023    June 30, 2022 Â
   Unaudited      Unaudited   Â
            Â
GAAP net income   $ 4,325       $ 506    Â
            Â
Gross profit            Â
Non-cash stock-based compensation expenses   95        76    Â
Amortization of intangible assets related to acquisition transactions   –        5    Â
    95        81    Â
Operating expenses            Â
Non-cash stock-based compensation expenses   417        493    Â
Amortization of intangible assets related to acquisition transactions   49        50    Â
Impairment of held for sale asset   –        229    Â
Other operating expenses    47        60    Â
    513        832    Â
            Â
Non-GAAP net income   $ 4,933       $ 1,419    Â
            Â

GILAT SATELLITE NETWORKS LTD.          Â
RECONCILIATION BETWEEN GAAP AND NON-GAAP CONSOLIDATED STATEMENTS OF INCOME (LOSS)Â
FOR COMPARATIVE PURPOSES
U.S. dollars in thousands (except share and per share data)  Â
 Six months ended  Six months ended
 June 30, 2023  June 30, 2022
 GAAP  Adjustments(*) Non-GAAP  GAAP  Adjustments(*) Non-GAAP
 Unaudited  Unaudited
           Â
Gross profit $ 50,221 Â Â 170 Â Â $ 50,391 Â $ 36,157 Â Â Â 156 Â Â $ 36,313 Â
Operating expenses  37,759   1,296    39,055   35,690    (1,515 )   34,175 Â
Operating income  12,462   (1,126 )   11,336   467    1,671    2,138 Â
Income (loss) before taxes on income  11,727   (1,126 )   10,601   (1,196 )   1,671    475 Â
Net income (loss) Â 9,905 Â Â (1,126 ) Â Â 8,779 Â Â (2,028 ) Â Â 1,671 Â Â Â (357 )
           Â
Earnings (losses) per share (basic and diluted) $ 0.17 Â $ (0.01 ) Â $ 0.16 Â $ (0.04 ) Â $ 0.03 Â Â $ (0.01 )
           Â
           Â
Weighted average number of shares used in computing earnings (losses) per share                Â
Basic  56,615,714     56,615,714   56,574,296      56,574,296 Â
Diluted  56,622,204     56,622,204   56,574,296      56,574,296 Â
           Â
           Â
(*) 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 and other operating expenses (income), net
           Â
           Â
           Â
 Six months ended  Six months ended
 June 30, 2023  June 30, 2022
   Unaudited      Unaudited  Â
           Â
GAAP net income (loss) Â Â $ 9,905 Â Â Â Â Â Â $ (2,028 ) Â Â
           Â
Gross profit           Â
Non-cash stock-based compensation expenses    170        145   Â
Amortization of intangible assets related to acquisition transactions    –        11   Â
    170        156   Â
Operating expenses           Â
Non-cash stock-based compensation expenses    944        916   Â
Amortization of intangible assets related to acquisition transactions    100        100   Â
Impairment of held for sale asset    –        439   Â
Other operating expenses (income), net    (2,340 )       60   Â
    (1,296 )       1,515   Â
           Â
Non-GAAP net income (loss) Â Â $ 8,779 Â Â Â Â Â Â $ (357 ) Â Â
           Â

GILAT SATELLITE NETWORKS LTD. Â Â Â Â Â Â Â Â Â
SUPPLEMENTAL INFORMATION Â Â Â Â Â Â Â Â Â
U.S. dollars in thousands         Â
         Â
         Â
ADJUSTED EBITDA: Â Â Â Â Â Â Â Â Â
         Â
  Six months ended
 		Â Three months ended
  June 30,
 		Â June 30,
   2023    2022    2023   2022 Â
  Unaudited  Unaudited Â
         Â
GAAP net income (loss) Â $ 9,905 Â Â $ (2,028 ) Â $ 4,325 Â $ 506 Â
Adjustments: Â Â Â Â Â Â Â Â Â
Financial expenses, net   735    1,663    586   468 Â
Taxes on income   1,822    832    538   517 Â
Non-cash stock-based compensation expenses  1,114    1,061    512   569 Â
Impairment of held for sale asset   –    439    –   229 Â
Other operating expenses (income), net   (2,340 )   60    47   60 Â
Depreciation and amortization (*) Â Â 6,335 Â Â Â 5,792 Â Â Â 3,172 Â Â 2,941 Â
         Â
Adjusted EBITDA Â $ 17,571 Â Â $ 7,819 Â Â $ 9,180 Â $ 5,290 Â
         Â
(*) Including amortization of lease incentive         Â
         Â
SEGMENT REVENUES: Â Â Â Â Â Â Â Â Â
        Â
  Six months ended  Three months ended Â
  June 30,  June 30, Â
   2023    2022    2023   2022 Â
  Unaudited  Unaudited Â
         Â
Satellite Networks  $ 74,273   $ 51,627   $ 40,727  $ 26,857 Â
Integrated Solutions   25,619    29,397    12,700   15,691 Â
Network Infrastructure and Services   26,659    25,839    14,162   12,906 Â
         Â
Total revenues  $ 126,551   $ 106,863   $ 67,589  $ 55,454 Â
         Â

      Â
 GILAT SATELLITE NETWORKS LTD.     Â
 CONSOLIDATED BALANCE SHEETS     Â
 U.S. dollars in thousands     Â
      Â
   June 30,  December 31, Â
    2023    2022  Â
   Unaudited  Audited Â
      Â
 ASSETS     Â
      Â
 CURRENT ASSETS:     Â
 Cash and cash equivalents  $ 87,408   $ 86,591  Â
 Restricted cash   374    541  Â
 Trade receivables, net   41,577    50,644  Â
 Contract assets   17,557    24,971  Â
 Inventories   40,049    33,024  Â
 Other current assets   22,744    19,283  Â
      Â
 Total current assets   209,709    215,054  Â
      Â
 LONG-TERM ASSETS:     Â
 Restricted cash   14    13  Â
 Long-term contract assets   9,980    11,149  Â
 Severance pay funds   5,551    5,947  Â
 Deferred taxes   16,445    18,265  Â
 Operating lease right-of-use assets   3,198    3,891  Â
 Other long-term assets   9,086    10,737  Â
      Â
 Total long-term assets   44,274    50,002  Â
      Â
 PROPERTY AND EQUIPMENT, NET   73,895    76,578  Â
      Â
 INTANGIBLE ASSETS, NET   209    309  Â
      Â
 GOODWILL   43,468    43,468  Â
      Â
 TOTAL ASSETS  $ 371,555   $ 385,411  Â
      Â
 GILAT SATELLITE NETWORKS LTD.     Â
 CONSOLIDATED BALANCE SHEETS (Cont.)     Â
 U.S. dollars in thousands     Â
      Â
   June 30,  December 31, Â
    2023    2022  Â
   Unaudited  Audited Â
      Â
 LIABILITIES AND SHAREHOLDERS’ EQUITY     Â
      Â
 CURRENT LIABILITIES:     Â
 Trade payables  $ 14,662   $ 20,668  Â
 Accrued expenses   43,091    50,356  Â
 Advances from customers and deferred revenues   33,240    30,531  Â
 Operating lease liabilities   1,870    1,941  Â
 Other current liabilities   14,353    22,291  Â
      Â
 Total current liabilities   107,216    125,787  Â
      Â
 LONG-TERM LIABILITIES:     Â
 Accrued severance pay   6,381    6,580  Â
 Long-term advances from customers and deferred revenues   1,480    1,041  Â
 Operating lease liabilities   1,261    1,890  Â
 Other long-term liabilities   181    5,988  Â
      Â
 Total long-term liabilities   9,303    15,499  Â
      Â
 SHAREHOLDERS’ EQUITY:     Â
 Share capital – ordinary shares of NIS 0.2 par value   2,711    2,711  Â
 Additional paid-in capital   933,200    932,086  Â
 Accumulated other comprehensive loss   (6,955 )   (6,847 ) Â
 Accumulated deficit   (673,920 )   (683,825 ) Â
      Â
 Total shareholders’ equity   255,036    244,125  Â
      Â
 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 371,555   $ 385,411  Â
      Â

GILAT SATELLITE NETWORKS LTD. Â Â Â Â Â Â Â Â
CONSOLIDATED STATEMENTS OF CASH FLOWS Â Â Â Â Â Â Â Â
U.S. dollars in thousands        Â
         Â
   Six months ended
 		Â Three months ended
   June 30,
 		Â June 30,
    2023    2022    2023    2022 Â
   Unaudited  Unaudited
Cash flows from operating activities: Â Â Â Â Â Â Â Â
Net income (loss) Â $ 9,905 Â Â $ (2,028 ) Â $ 4,325 Â Â $ 506 Â
Adjustments required to reconcile net income (loss) to net cash provided by (used in) operating activities:        Â
Depreciation and amortization   6,222    5,683    3,115    2,887 Â
Impairment of held for sale asset   –    439    –    229 Â
Stock-based compensation of options   1,114    1,061    512    569 Â
Accrued severance pay, net   196    114    (101 )   177 Â
Deferred taxes, net   1,820    1,664    694    1,358 Â
Decrease (increase) in trade receivables, net   9,398    (11,883 )   2,907    (5,471 )
Decrease (increase) in contract assets   8,378    (2,608 )   3,461    (599 )
Decrease (increase) in other assets and other adjustments (including short-term, long-term and effect of exchange rate changes on cash and cash equivalents) Â Â 243 Â Â Â (7,763 ) Â Â 3,010 Â Â Â (4,047 )
Increase in inventories   (7,895 )   (4,075 )   (272 )   (1,731 )
Increase (decrease) in trade payables   (4,240 )   4,205    (6,229 )   2,533 Â
Decrease in accrued expenses   (5,039 )   (1,690 )   (2,840 )   (2,442 )
Increase in advance from customers and deferred revenue   3,124    7,010    7,593    4,700 Â
Decrease in other liabilities   (15,009 )   (810 )   (14,161 )   (1,975 )
Net cash provided by (used in) operating activities   8,217    (10,681 )   2,014    (3,306 )
         Â
Cash flows from investing activities: Â Â Â Â Â Â Â Â
Purchase of property and equipment   (6,556 )   (4,515 )   (3,524 )   (2,314 )
Repayment of short term deposits   –    2,159    –    2,159 Â
Net cash used in investing activities   (6,556 )   (2,356 )   (3,524 )   (155 )
         Â
Effect of exchange rate changes on cash, cash equivalents and restricted cash   (1,010 )   32    (433 )   (221 )
         Â
Increase (decrease) in cash, cash equivalents and restricted cash   651    (13,005 )   (1,943 )   (3,682 )
         Â
Cash, cash equivalents and restricted cash at the beginning of the period   87,145    84,463    89,739    75,140 Â
         Â
Cash, cash equivalents and restricted cash at the end of the period  $ 87,796   $ 71,458   $ 87,796   $ 71,458 Â
         Â

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