Gilat Reports Continued Growth in Profitability in Q3 2017 with GAAP Net Income of $2.1 million and Adjusted EBITDA of $7.1 million
PETAH TIKVA, Israel, Nov. 14, 2017 /PRNewswire/ -- 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, 2017.
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Key Financial Highlights:
-- Revenues for Q3 2017 were $69.9 million compared with $66.2 million in
Q2 2017 and $78.6 million in Q3 2016.
-- Profitability improvement continued in Q3 2017:
-- GAAP operating income improved substantially to $3.3 million in Q3
2017 from $1.9 million in Q2 2017, and compared with an operating
loss of $0.2 million in Q3 2016.
-- Non-GAAP operating income grew to $4.9 million from $4.1 million in
Q2 2017 and $3.3 million in Q3 2016.
-- The Company achieved GAAP net income of $2.1 million, or $0.04 per
diluted share in Q3 2017, in line with $2.1 million, or $0.04 per
diluted share, in Q2 2017, and compared with a loss of $2.2 million,
or $0.04 per diluted share, in Q3 2016.
-- Non-GAAP net income was $3.6 million, or $0.07 per diluted share in
Q3 2017, compared with $4.6 million, or $0.08 per diluted share in
Q2 2017, and $1.4 million, or $0.02 per diluted share, in Q3 2016.
-- Adjusted EBITDA increased to $7.1 million, or 10.2% of revenues,
compared with $5.9 million, or 8.9% of revenues, in Q2 2017, and
$5.2 million, or 6.7% of revenues, in Q3 2016.
-- Updated management objectives for 2017: revenue range maintained at
between $280 to $290 million, GAAP operating income narrowed to upper
range between $9 and $11 million (from $7 to $11 million), and Adjusted
EBITDA narrowed to upper range between $24 and $26 million (from $22 to
$26 million).
Yona Ovadia, CEO of Gilat, commented: "I am pleased to report that Gilat again achieved very positive results in the third quarter as we see consistent improvement in our operating income and in our Adjusted EBITDA - two major indicators of our financial progress. I am in particular pleased to note our GAAP net income of $2.1 million for the quarter, as we remain committed to our long-term goal of profitability on a GAAP basis.
"Further, based on our progress year-to-date, we have narrowed our profitability objectives for 2017 towards the high end of the previous range, while maintaining our prior objective for revenues.
"One of our growth initiatives has been to develop multi-year cellular backhaul service projects with recurring revenues, particularly with telco service providers. I am gratified that we have closed four significant such deals in the past few months. We believe they were awarded to Gilat due to both our LTE cellular backhaul carrier-grade technology that meets the stringent requirements of throughput and user experience, as well as our expertise in integrating multi-site satellite-based networks into the MNO's cellular network.
"In the United States, we have just been awarded a major contract with T-Mobile for end-to-end services for LTE cellular backhaul for their network expansion in rural areas, destinations, highways, and elsewhere where fiber delivery is challenging throughout the continental United States. In addition, Sprint has expanded our contract to include a three-year project in addition to the technology provided for their 3G/4G network.
"In the Philippines, we secured a five-year multi-million dollar services contract with Globe for satellite backhaul for 4G cellular services.
"And, we closed a deal with a major telecom service provider in Latin America to provide an end-to-end services project for rapid rollout of high-performance broadband.
"In Mobility, we have reached a noteworthy milestone with our customer, Gogo, with over 150 airplanes now flying with our airborne modem, showing a strong pace of ramp-up, with potential of approximately 2,000 aircraft.
"Equally important, we are making further inroads with our airborne antennas. We are progressing towards completion of development of our dual-band Ku-Ka antenna in early 2018, and have started the development of our next generation antenna. I am optimistic that the interest we see in the market will translate into concrete achievements in the coming quarters.
Mr. Ovadia concluded: "We are pleased with the momentum we gained in both growth engines, and we will continue to execute according to our strategic priorities, with an ongoing emphasis on improving profitability."
Key Recent Announcements:
-- Major Telecom Service Provider in Latin America Selects Gilat for
Managed Service Cellular Backhaul Project
-- Sprint Expands Gilat Contract to a Three-Year Multi-Million Dollar
Managed Service Project
-- Globe Awards Gilat Five Year Multi-Million Dollar Contract for Managed
Service Satellite Backhaul for Cellular Services
Conference Call and Webcast Details:
Gilat management will host a conference call today, Tuesday, November 14, to discuss the third quarter results. The details are as follows:
Conference Call and Webcast
Following the announcement, Yona Ovadia, Chief Executive Officer, and Adi Sfadia, Chief Financial Officer, will discuss Gilat's 2017 third quarter results, participate in a question, and answer session:
Date: Tuesday, November 14, 2017
Start: 09:30 AM EDT / 16:30 IDT
Dial-in: US: 1-888-668-9141
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: www.veidan-stream.com/gilatq3-2017.html
The webcast will also be archived for a period of 30 days on the Company's website and through the link above.
Conference Call Replay
Start: November 14, 2017 at 12:00 PM
EDT /19:00 IDT
End: November 17, 2017 at 12:00 PM
EDT /19:00 IDT
Dial-in: US: 1-888-326-9310
International: (972) 3-925-5901
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.
Adjusted EBITDA (operating income before depreciation, amortization, non-cash stock option expenses, costs related to acquisition transactions, restructuring cost, goodwill impairment, impairment of long lived assets, trade secrets litigation expenses and tax expenses under amnesty program) 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.
This news release also contains a forward-looking estimate of Adjusted EBITDA projected to be generated by Gilat in 2017. A forward-looking estimate of net income and reconciliations of the forward-looking estimates of Adjusted EBITDA to net income are not provided because the items necessary to estimate net income are not estimable at this time. 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 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
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.
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share and per share data)
Nine months ended Three months ended
September 30, September 30,
------------- -------------
2017 2016 2017 2016
---- ---- ---- ----
Unaudited Unaudited
--------- ---------
Revenues $200,104 $199,206 $69,936 $78,643
Cost of revenues 142,845 147,914 49,587 54,930
------- ------- ------ ------
Gross profit 57,259 51,292 20,349 23,713
------ ------ ------ ------
Research and development expenses 20,648 19,374 7,181 6,781
Less - grants 820 1,008 297 370
Research and development expenses, net 19,828 18,366 6,884 6,411
Selling and marketing expenses 17,187 17,224 5,837 6,248
General and administrative expenses 15,026 21,435 4,303 11,283
------ ------ ----- ------
Total operating expenses 52,041 57,025 17,024 23,942
------ ------ ------ ------
Operating income (loss) 5,218 (5,733) 3,325 (229)
Financial expenses, net (3,169) (3,175) (1,123) (1,572)
------ ------ ------ ------
Income (loss) before taxes on income 2,049 (8,908) 2,202 (1,801)
----- ------ ----- ------
Taxes on income (tax benefit) (1,349) 967 152 398
------ --- --- ---
Net income (loss) $3,398 $(9,875) $2,050 $(2,199)
====== ======= ====== =======
Earnings (loss) per share (basic and diluted) $0.06 $(0.19) $0.04 $(0.04)
===== ====== ===== ======
Weighted average number of shares used in
computing earnings (loss) per share
Basic 54,667,795 51,096,829 54,703,658 54,523,585
Diluted 54,723,315 51,096,829 54,788,086 54,523,585
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
September 30, 2017 September 30, 2016
------------------ ------------------
GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP
---- -------------- -------- ---- -------------- --------
Unaudited Unaudited
--------- ---------
Gross profit $20,349 1,210 $21,559 $23,713 1,204 $24,917
Operating expenses 17,024 (357) 16,667 23,942 (2,357) 21,585
Operating income (loss) 3,325 1,567 4,892 (229) 3,561 3,332
Income (loss) before taxes on income 2,202 1,567 3,769 (1,801) 3,561 1,760
----- ----- ----- ------ ----- -----
Net income (loss) $2,050 1,567 $3,617 $(2,199) 3,561 $1,362
====== ===== ====== ======= ===== ======
Earnings (loss) per share (basic and
diluted) $0.04 0.03 $0.07 $(0.04) 0.06 $0.02
===== ==== ===== ====== ==== =====
Weighted average number of shares used in
computing earnings (loss) per share
Basic 54,703,658 54,703,658 54,523,585 54,523,585
Diluted 54,788,086 54,979,360 54,523,585 54,614,252
(1) Adjustments reflect the effect of non-cash stock-based compensation as per ASC 718, amortization of intangible assets related to
shares acquisition transactions and trade secrets litigation expenses.
Three months ended Three months ended
September 30, 2017 September 30, 2016
Unaudited Unaudited
--------- ---------
GAAP net income (loss) $2,050 $(2,199)
Gross profit
Non-cash stock-based compensation expenses 15 9
Amortization of intangible assets related to acquisition transactions 1,195 1,195
----- -----
1,210 1,204
----- -----
Operating expenses
Non-cash stock-based compensation expenses 193 180
Amortization of intangible assets related to acquisition transactions 164 194
Trade secrets litigation expenses - 1,983
357 2,357
--- -----
Non-GAAP income $3,617 $1,362
====== ======
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)
Nine months ended Nine months ended
September 30, 2017 September 30, 2016
------------------ ------------------
GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP
---- -------------- -------- ---- -------------- --------
Unaudited Unaudited
--------- ---------
Gross profit $57,259 3,620 $60,879 $51,292 3,614 $54,906
Operating expenses 52,041 (2,642) 49,399 57,025 (4,826) 52,199
Operating income (loss) 5,218 6,262 11,480 (5,733) 8,440 2,707
Income (loss) before taxes on income 2,049 6,499 8,548 (8,908) 8,440 (468)
Net income (loss) $3,398 6,499 $9,897 $(9,875) 8,440 $(1,435)
====== ===== ====== ======= ===== =======
Earnings (loss) per share (basic and
diluted) $0.06 0.12 $0.18 $(0.19) 0.16 $(0.03)
===== ==== ===== ====== ==== ======
Weighted average number of shares used
in
computing earnings (loss) per share
Basic 54,667,795 54,667,795 51,096,829 51,096,829
Diluted 54,723,315 54,850,309 51,096,829 51,096,829
(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 litigation expenses and tax expenses under amnesty program.
Nine months ended
Nine months ended
30 September 2017 30 September 2016
----------------- -----------------
Unaudited Unaudited
--------- ---------
GAAP net income (loss) $3,398 $(9,875)
Gross profit
Non-cash stock-based compensation
expenses 38 32
Amortization of intangible assets
related to acquisition transactions 3,582 3,582
----- -----
3,620 3,614
----- -----
Operating expenses
Non-cash stock-based compensation
expenses 588 660
Amortization of intangible assets
related to acquisition transactions: 553 583
Trade secrets litigation expenses 873 3,583
Tax expenses under amnesty program 628 -
--- ---
2,642 4,826
----- -----
Finance and taxes on income
Tax expenses under amnesty program 237 -
--- ---
Non-GAAP income (loss) $9,897 $(1,435)
====== =======
GILAT SATELLITE NETWORKS LTD.
ADJUSTED EBITDA
U.S. dollars in thousands
Nine months ended Three months ended
September 30, September 30,
------------- -------------
2017 2016 2017 2016
---- ---- ---- ----
Unaudited Unaudited
--------- ---------
GAAP
operating
income
(loss) $5,218 $(5,733) $3,325 $(229)
Add:
Non-
cash
stock-
based
compensation
expenses 626 692 208 189
Trade
secrets
litigation
expenses 873 3,583 - 1,983
Tax
expenses
under
amnesty
program
expenses 628 - - -
Depreciation
and
amortization 9,884 9,831 3,580 3,306
----- ----- ----- -----
Adjusted
EBITDA $17,229 $8,373 $7,113 $5,249
======= ====== ====== ======
GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED BALANCE SHEET
U.S. dollars in thousands
September 30, December 31,
------------- ------------
2017 2016
---- ----
Unaudited Audited
--------- -------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $77,234 $40,133
Restricted cash 24,275 62,229
Restricted cash held by trustees 6,503 9,058
Trade receivables, net 86,517 89,377
Inventories 29,921 21,469
Other current assets 21,211 17,017
------ ------
Total current assets 245,661 239,283
------- -------
LONG-TERM INVESTMENTS:
Severance pay funds 8,074 7,791
Other long term receivables 400 436
--- ---
Total long-term investments 8,474 8,227
----- -----
PROPERTY AND EQUIPMENT, NET 79,307 80,837
------ ------
INTANGIBLE ASSETS, NET 7,084 11,383
----- ------
GOODWILL 43,468 43,468
------ ------
TOTAL ASSETS $383,994 $383,198
------------ ======== ========
GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED BALANCE SHEET
U.S. dollars in thousands
September 30, December 31,
------------- ------------
2017 2016
---- ----
Unaudited Audited
--------- -------
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current maturities of long-term loans $4,482 $4,617
Trade payables 28,611 29,625
Accrued expenses 68,082 53,429
Advances from customers and deferred
revenues 25,768 37,659
Advances from customers, held by trustees 5,349 7,498
Other current liabilities 16,587 13,846
------ ------
Total current liabilities 148,879 146,674
------- -------
LONG-TERM LIABILITIES:
Accrued severance pay 7,896 7,485
Long-term loans, net of current
maturities 12,690 16,932
Other long-term liabilities 19 2,281
--- -----
Total long-term liabilities 20,605 26,698
------ ------
EQUITY:
Share capital -ordinary shares of NIS
0.2 par value 2,599 2,593
Additional paid-in capital 921,405 920,162
Accumulated other comprehensive loss (3,132) (3,224)
Accumulated deficit (706,362) (709,705)
-------- --------
Total equity 214,510 209,826
------- -------
TOTAL LIABILITIES AND EQUITY $383,994 $383,198
---------------------------- ======== ========
GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Nine months ended Three months ended
September 30, September 30,
------------- -------------
2017 2016 2017 2016
---- ---- ---- ----
Unaudited Unaudited
--------- ---------
Cash flows from operating activities:
-------------------------------------
Net income (loss) $3,398 $(9,875) $2,050 $(2,199)
Adjustments required to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization 9,884 9,831 3,580 3,306
Stock-based compensation of options and RSU's 626 692 208 189
Accrued severance pay, net 129 (202) 23 (105)
Accrued interest and exchange rate differences on
short and long-term restricted cash, net (104) (1,454) (114) 106
Exchange rate differences on long-term loans 151 56 38 8
Deferred income taxes, net (300) 5 (141) 5
Decrease (increase)in trade receivables, net 2,833 10,109 (2,215) 6,115
Decrease (increase) in other assets (including short-term, long-term
and deferred charges) (3,629) 1,119 2,890 2,191
Decrease (increase) in inventories (9,229) 865 (5,671) 3,324
Decrease in restricted cash directly related to operating activities, net 38,123 28,482 144 6,908
Increase (decrease) in trade payables (1,082) 3,847 (1,619) 655
Increase in accrued expenses 14,655 26,014 3,237 11,531
Decrease in advances from customers (11,714) (66,642) (6,004) (30,357)
Increase (decrease) in advances from customers, held
by trustees (2,340) (1,028) 1,002 984
Increase in other current liabilities and other long term liabilities 357 1,630 2,261 933
Net cash provided by (used in) operating activities 41,758 3,449 (331) 3,594
------ ----- ---- -----
Cash flows from investing activities:
-------------------------------------
Purchase of property and equipment (3,409) (2,822) (1,236) (790)
Investment in restricted cash held by trustees (10,802) (10,925) (5,493) (5,497)
Proceeds from restricted cash held by trustees 13,388 13,473 5,388 5,315
Investment in restricted cash (including long-term) (656) (204) (10) (18)
Proceeds from restricted cash (including long-term) 671 7,441 4 15
Net cash provided by (used in) investing activities (808) 6,963 (1,347) (975)
---- ----- ------ ----
Cash flows from financing activities:
-------------------------------------
Capital lease payments - (307) - -
Issuance of shares in a rights offering - 35,095 - -
Issuance of restricted stock units and exercise of stock options 569 527 76 181
Short term bank credit, net - (7,000) - -
Repayment of long-term loans (4,528) (4,416) (145) (139)
Net cash provided by (used in) financing activities (3,959) 23,899 (69) 42
------ ------ --- ---
Effect of exchange rate changes on cash and cash equivalents 110 693 150 18
--- --- --- ---
Increase (decrease) in cash and cash equivalents 37,101 35,004 (1,597) 2,679
Cash and cash equivalents at the beginning of the period 40,133 18,435 78,831 50,760
------ ------ ------ ------
Cash and cash equivalents at the end of the period $77,234 $53,439 $77,234 $53,439
======= ======= ======= =======
Contact:
Gilat Satellite Networks
Doreet Oren
DoreetO@gilat.com
Comm-Partners LLC
June Filingeri, President
+1-203-972-0186
junefil@optonline.net
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