Gilat Reports Third Quarter 2023 Results

Revenues Grew 6% to $63.9 million;
GAAP Operating Income of $12.7 million and Adjusted EBITDA of $9.5 million, 30% Growth Year-over-Year;

PETAH TIKVA, Israel, Nov. 07, 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 third quarter, ended September 30, 2023.

Third Quarter 2023 Financial Highlights

• Revenues of $63.9 million, up 6% compared with $60.4 million in Q3 2022;
• GAAP operating income of $12.7 million compared with $3.4 million in Q3 2022;
  GAAP operating income in this quarter includes a one-time other income, net, of $7.4 million, that was recorded with respect to a settlement of legal proceedings in the Philippines and a real estate sale in Bulgaria;
• Non-GAAP operating income of $6.1 million, up 40% compared with $4.4 million in Q3 2022;
• GAAP net income of $10.2 million, or $0.18 per diluted share, compared with $2.1 million, or $0.04 per diluted share in Q3 2022; GAAP net income in Q3 2023 excluding the one-time other income, net, mentioned above and its relevant tax effect, was $3.8 million, or $0.07 per diluted share;
• Non-GAAP net income of $4.6 million, or $0.08 per diluted share, up 51% compared with $3 million, or $0.06 per diluted share in Q3 2022;
• Adjusted EBITDA of $9.5 million, up 30% compared with $7.3 million in Q3 2022;

Forward-Looking Expectations

The Company narrowed the range of its 2023 revenue guidance, with expectations of between $265 million to $275 million, representing year-over-year growth of 13% at the mid-point. The Company increased the range of its GAAP operating income guidance range to between $29 million to $31 million representing significant year-over-year growth compared with $10 million in 2022. The Company also narrowed the range of its Adjusted EBITDA guidance to between $35 to $37 million, representing year-over-year growth of 43% at the mid-point.

Adi Sfadia, Gilat’s CEO, commented:

“We are deeply saddened by the tragic events of October 7^th in Israel. Our thoughts and prayers are with the victims and families of this horrific attack – the murdered, the hostages, the wounded and their families. We are very proud of our employees’ response to this crisis and their dedication to the company during these times. We also want to thank our customers and suppliers and the world community at large for their full hearted support. 

As a strong global company with operation and development centers worldwide, our operation remains unaffected by recent events in Israel. We continue to closely monitor the situation and have implemented relevant measures, and refreshed our business continuity plans to minimize any potential effect, if at all, to our business.”

Mr. Sfadia continued, ”We are pleased with our results, particularly the continued revenue growth combined with the solid improvement in our profitability. We reported significantly improved profitability including Adjusted EBITDA, demonstrating the operating leverage inherent in our business. The ongoing good performance was due to the continued growing interest in our solutions as well as advancements in the satellite communications space in general.”

Mr. Sfadia concluded, “Our strong performance in 2023 to date, has generated Adjusted EBITDA of $27 million in the nine months ended September 30, 2023 which already exceeds the Adjusted EBITDA from the whole of 2022. Given our leading position in the market and the opportunities we see ahead, we look forward to continuing our growth into 2024 and beyond.”

Key Recent Announcements

• Gilat Awarded Approximately $20 Million in Contract Renewal and Extension from Tier-1 MNO in the USA
• Gilat Awarded Contract for Satellite Network Modernization at Ethio Telecom

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

Date:	Tuesday, November 7, 2023
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/gilatq3-2023

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, 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 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 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 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, 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 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
U.S. dollars in thousands (except share and per share data)
		Nine months ended							Three months ended
		September 30,							September 30,
			2023			2022				2023			2022
		Unaudited							Unaudited
Revenues		$	190,478			$	167,213		$	63,927			$	60,350
Cost of revenues			114,453				108,021			38,123				37,315
Gross profit			76,025				59,192			25,804				23,035
Research and development expenses, net			29,549				25,542			10,546				9,156
Selling and marketing expenses			18,124				15,724			6,183				5,414
General and administrative expenses			12,903			*)	13,214			3,748			*)	4,719
Impairment of held for sale asset			–				718			–				279
Other operating expenses (income), net			(9,757	)		*)	111			(7,417	)		*)	51
Total operating expenses			50,819				55,309			13,060				19,619
Operating income			25,206				3,883			12,744				3,416
Financial expenses, net			1,087				2,716			352				1,053
Income before taxes on income			24,119				1,167			12,392				2,363
Taxes on income			4,062				1,075			2,240				243
Net income		$	20,057			$	92		$	10,152			$	2,120
Earnings per share (basic and diluted)		$	0.35			$	0.00		$	0.18			$	0.04
Weighted average number of shares used in computing earnings per share
Basic			56,618,407				56,585,858			56,623,793				56,608,981
Diluted			56,623,125				56,604,854			56,624,966				56,626,283
*) Reclassified

GILAT SATELLITE NETWORKS LTD.
RECONCILIATION BETWEEN GAAP AND NON-GAAP CONSOLIDATED STATEMENTS OF INCOME
FOR COMPARATIVE PURPOSES
U.S. dollars in thousands (except share and per share data)
		Three months ended										Three months ended
		September 30, 2023										September 30, 2022
		GAAP			Adjustments(*)				Non-GAAP			GAAP			Adjustments(*)				Non-GAAP
		Unaudited										Unaudited
Gross profit		$	25,804		$	108			$	25,912		$	23,035		$	74			$	23,109
Operating expenses			13,060			6,753				19,813			19,619			(879	)			18,740
Operating income			12,744			(6,645	)			6,099			3,416			953				4,369
Income before taxes on income			12,392			(6,645	)			5,747			2,363			953				3,316
Net income		$	10,152		$	(5,568	)		$	4,584		$	2,120		$	911			$	3,031
Earnings per share (basic and diluted)		$	0.18		$	(0.10	)		$	0.08		$	0.04		$	0.02			$	0.06
Weighted average number of shares used in computing earnings per share
	Basic		56,623,793							56,623,793			56,608,981							56,608,981
	Diluted		56,624,966							56,906,057			56,626,283							56,652,855
(*)	Adjustments reflect the effect of non-cash stock-based compensation expenses as per ASC 718, amortization of intangible assets related to acquisition transactions, impairment of held for sale asset, other operating expenses (income), net and income tax effect on adjustments which is calculated using the relevant effective tax rate.
		Three months ended										Three months ended
		September 30, 2023										September 30, 2022
					Unaudited										Unaudited
GAAP net income					$	10,152									$	2,120
Gross profit
Non-cash stock-based compensation expenses						108										74
						108										74
Operating expenses
Non-cash stock-based compensation expenses						614										498
Amortization of intangible assets related to acquisition transactions						50										51
Impairment of held for sale asset						–										279
Other operating expenses (income), net						(7,417	)									51
						(6,753	)									879
Income tax effect on adjustments						1,077										(42	)
Non-GAAP net income					$	4,584									$	3,031

GILAT SATELLITE NETWORKS LTD.
RECONCILIATION BETWEEN GAAP AND NON-GAAP CONSOLIDATED STATEMENTS OF INCOME
FOR COMPARATIVE PURPOSES
U.S. dollars in thousands (except share and per share data)
		Nine months ended										Nine months ended
		September 30, 2023										September 30, 2022
		GAAP			Adjustments(*)				Non-GAAP			GAAP			Adjustments(*)				Non-GAAP
		Unaudited										Unaudited
Gross profit		$	76,025		$	278			$	76,303		$	59,192		$	230			$	59,422
Operating expenses			50,819			8,049				58,868			55,309			(2,394	)			52,915
Operating income			25,206			(7,771	)			17,435			3,883			2,624				6,507
Income before taxes on income			24,119			(7,771	)			16,348			1,167			2,624				3,791
Net income		$	20,057		$	(6,694	)		$	13,363		$	92		$	2,582			$	2,674
Earnings per share (basic and diluted)		$	0.35		$	(0.11	)		$	0.24		$	0.00		$	0.05			$	0.05
Weighted average number of shares used in computing earnings per share
	Basic		56,618,407							56,618,407			56,585,858							56,585,858
	Diluted		56,623,125							56,716,822			56,604,854							56,659,298
(*)	Adjustments reflect the effect of non-cash stock-based compensation expenses as per ASC 718, amortization of intangible assets related to acquisition transactions, impairment of held for sale asset, other operating expenses (income), net and income tax effect on adjustments which is calculated using the relevant effective tax rate.
		Nine months ended										Nine months ended
		September 30, 2023										September 30, 2022
					Unaudited										Unaudited
GAAP net income					$	20,057									$	92
Gross profit
Non-cash stock-based compensation expenses						278										220
Amortization of intangible assets related to acquisition transactions						–										10
						278										230
Operating expenses
Non-cash stock-based compensation expenses						1,558										1,413
Amortization of intangible assets related to acquisition transactions						150										152
Impairment of held for sale asset						–										718
Other operating expenses (income), net						(9,757	)									111
						(8,049	)									2,394
Income tax effect on adjustments						1,077										(42	)
Non-GAAP net income					$	13,363									$	2,674

GILAT SATELLITE NETWORKS LTD.
SUPPLEMENTAL INFORMATION
U.S. dollars in thousands
ADJUSTED EBITDA:
	Nine months ended							Three months ended
	September 30,							September 30,
		2023			2022				2023			2022
	Unaudited							Unaudited
GAAP net income	$	20,057			$	92		$	10,152			$	2,120
Adjustments:
Financial expenses, net		1,087				2,716			352				1,053
Taxes on income		4,062				1,075			2,240				243
Non-cash stock-based compensation expenses		1,836				1,633			722				572
Impairment of held for sale asset		–				718			–				279
Other operating expenses (income), net		(9,757	)			111			(7,417	)			51
Depreciation and amortization (*)		9,765				8,770			3,430				2,978
Adjusted EBITDA	$	27,050			$	15,115		$	9,479			$	7,296
(*) Including amortization of lease incentive
SEGMENT REVENUES:
	Nine months ended							Three months ended
	September 30,							September 30,
		2023			2022				2023			2022
	Unaudited							Unaudited
Satellite Networks	$	115,010			$	83,993		$	40,737			$	32,366
Integrated Solutions		36,630				45,047			11,011				15,650
Network Infrastructure and Services		38,838				38,173			12,179				12,334
Total revenues	$	190,478			$	167,213		$	63,927			$	60,350

GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
		September 30,				December 31,
			2023				2022
		Unaudited				Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	99,530			$	86,591
Restricted cash			749				541
Trade receivables, net			46,966				50,644
Contract assets			20,522				24,971
Inventories			37,673				33,024
Other current assets			20,407				19,283
Total current assets			225,847				215,054
LONG-TERM ASSETS:
Restricted cash			14				13
Long-term contract assets			9,283				11,149
Severance pay funds			5,407				5,947
Deferred taxes			14,500				18,265
Operating lease right-of-use assets			3,609				3,891
Other long-term assets			8,920				10,737
Total long-term assets			41,733				50,002
PROPERTY AND EQUIPMENT, NET			73,697				76,578
INTANGIBLE ASSETS, NET			165				309
GOODWILL			43,468				43,468
TOTAL ASSETS		$	384,910			$	385,411
GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED BALANCE SHEETS (Cont.)
U.S. dollars in thousands
		September 30,				December 31,
			2023				2022
		Unaudited				Audited
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Trade payables		$	13,884			$	20,668
Accrued expenses			45,534				50,356
Advances from customers and deferred revenues			33,108				30,531
Operating lease liabilities			2,128				1,941
Other current liabilities			15,745				22,291
Total current liabilities			110,399				125,787
LONG-TERM LIABILITIES:
Accrued severance pay			6,195				6,580
Long-term advances from customers and deferred revenues			1,123				1,041
Operating lease liabilities			1,403				1,890
Other long-term liabilities			279				5,988
Total long-term liabilities			9,000				15,499
SHAREHOLDERS’ EQUITY:
Share capital – ordinary shares of NIS 0.2 par value			2,712				2,711
Additional paid-in capital			933,921				932,086
Accumulated other comprehensive loss			(7,354	)			(6,847	)
Accumulated deficit			(663,768	)			(683,825	)
Total shareholders’ equity			265,511				244,125
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	384,910			$	385,411

GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
		Nine months ended								Three months ended
		September 30,								September 30,
			2023				2022				2023				2022
		Unaudited								Unaudited
Cash flows from operating activities:
Net income		$	20,057			$	92			$	10,152			$	2,120
Adjustments required to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization			9,597				8,604				3,375				2,921
Capital gain from sale of property			(2,084	)			–				(2,084	)			–
Impairment of held for sale asset			–				718				–				279
Stock-based compensation			1,836				1,633				722				572
Accrued severance pay, net			155				92				(41	)			(22	)
Deferred taxes, net			3,865				1,823				2,045				159
Decrease (increase) in trade receivables, net			3,887				(12,270	)			(5,511	)			(387	)
Decrease (increase) in contract assets			6,110				(2,290	)			(2,268	)			318
Decrease (increase) in other assets and other adjustments (including short-term, long-term and effect of exchange rate changes on cash and cash equivalents)			3,598				(8,652	)			3,355				(889	)
Decrease (increase) in inventories			(6,185	)			(6,030	)			1,710				(1,955	)
Increase (decrease) in trade payables			(5,321	)			4,315				(1,081	)			110
Increase (decrease) in accrued expenses			(2,782	)			(1,767	)			2,257				(77	)
Increase (decrease) in advance from customers and deferred revenues			2,646				7,397				(478	)			387
Increase (decrease) in other liabilities			(13,392	)			365				1,617				1,175
Net cash provided by (used in) operating activities			21,987				(5,970	)			13,770				4,711
Cash flows from investing activities:
Purchase of property and equipment			(8,656	)			(9,225	)			(2,100	)			(4,710	)
Proceeds from short term deposits			–				2,159				–				–
Investment in financial instrument			–				(1,536	)			–				(1,536	)
Receipts from sale of property			2,168				–				2,168				–
Net cash provided by (used in) investing activities			(6,488	)			(8,602	)			68				(6,246	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash			(2,351	)			(15	)			(1,341	)			(47	)
Increase (decrease) in cash, cash equivalents and restricted cash			13,148				(14,587	)			12,497				(1,582	)
Cash, cash equivalents and restricted cash at the beginning of the period			87,145				84,463				87,796				71,458
Cash, cash equivalents and restricted cash at the end of the period		$	100,293			$	69,876			$	100,293			$	69,876