Gilat Reports Substantial Growth in 2017 Profitability, Tops Adjusted EBITDA Target, Plans Significant Profitability Increase in 2018
PETAH TIKVA, Israel, Feb. 13, 2018 /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 fourth quarter and full year ended December 31, 2017.
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Key Financial Highlights:
-- Revenues for Q4 2017 totaled $82.7 million. Full year 2017 revenues of
$282.8 million compare with $279.6 million in 2016.
-- Continued strong profitability:
-- Q4 2017 GAAP operating income was $5.6 million and non-GAAP
operating income was $7.0 million.
-- Full year 2017 GAAP operating income climbed substantially to $10.9
million from $0.8 million in 2016. Non-GAAP operating income for
2017 reached $18.5 million compared to $11.7 million in 2016, an
increase of 58.6%.
-- Q4 2017 GAAP net income was $3.4 million, or $0.06 per diluted
share. Q4 2017 non-GAAP net income was $4.7 million, or $0.09 per
diluted share.
-- Full year 2017 GAAP net income increased to $6.8 million, or $0.12
per diluted share, from a loss of $5.3 million, or $0.10 per diluted
share, in 2016. Non-GAAP net income for 2017 more than doubled to
$14.6 million, or $0.27 per diluted share, from $5.6 million, or
$0.11 per diluted share, in 2016.
-- Q4 2017 Adjusted EBITDA was $9.0 million, or 10.8% of revenues. Full
Year 2017 Adjusted EBITDA increased 36.2% to $26.2 million or 9.3%
of revenues, from $19.2 million, or 6.9% of revenues in 2016.
-- Management objectives for 2018: revenue range between $285 million to
$305 million, GAAP operating income of between $17 million and $21
million, and Adjusted EBITDA between $30 million and $34 million.
Yona Ovadia, CEO of Gilat, commented:
"I am very pleased to report that we had a good fourth quarter which concluded a year of significant progress for Gilat, including substantial growth in our full-year profitability as we topped our upwardly revised management objectives for 2017. Our Adjusted EBITDA reached $26.2 million, above our adjusted objective of $24 million to $26 million, which was itself modified upwards mid-year from a range of $20 million to $24 million, and represents an increase of more than 36% from 2016's $19.2 million. Further, for the first time in seven years, we achieved full-year GAAP net income, which totaled $6.8 million, hence delivering on our commitment to GAAP profitability.
"Over the past year we have made substantial progress in executing our strategy, focusing on building a mix of quality and profitable revenues through our strategic growth engines of Mobile Cellular Backhaul and Mobility In-Flight Connectivity (IFC), combined with our efforts to reduce costs.
"We secured several LTE cellular backhauling deals, mainly in North America, and established a strong presence in the IFC market as exemplified by our partnership with Gogo with over 2,000 aircraft according to their backlog. These achievements coupled with our financial performance in 2017, are indicative of the progress we have made on both fronts, and of the solid and healthy foundation on which Gilat stands today, with a growing portion of recurring services.
Mr. Ovadia concluded: "Looking at 2018, we are focused on improving our profitability while growing the top line. We will continue to develop and expand our growth engines of Mobile Cellular Backhaul and Mobility IFC as we see growing reception to our services and solutions. We plan to expand our offering in these areas, and we still see room to improve the efficiency of our operations. Therefore, our management objectives for 2018 are growth in our top line to a range of $285 million to $305 million, and Adjusted EBITDA between $30 million and $34 million, which represents growth of 15% to 30% from 2017's $26.2 million."
Key Recent Announcements:
-- NBN Co and Speedcast Select Gilat for Business and Enterprise Satellite
Service in Australia; Valued at Tens of Millions of Dollars
-- KDDI Selects Gilat's Satellite Based LTE Cellular Backhaul Solution for
Nationwide LTE Network in Japan
Conference Call and Webcast Details:
Gilat management will host a conference call today, Tuesday, February 13, to discuss the fourth quarter and full year 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 fourth quarter and full year results and participate in a question and answer session:
Date: Tuesday, February 13, 2018
Start: 09:30 AM EST / 16:30 IST
Dial-in: US: 1-888-407-2553
International: (972) 3-918-0610
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/gilatq4-2017.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: February 13, 2018 at 12:00 PM
EST /19:00 IST
End: February 16, 2018 at 12:00 PM
EST /19:00 IST
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 2018. 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)
Twelve months ended Three months ended
December 31, December 31,
------------ ------------
2017 2016 2017 2016
---- ---- ---- ----
Unaudited Audited Unaudited
--------- ------- ---------
Revenues $282,756 $279,551 $82,652 $80,345
Cost of revenues 200,261 204,061 57,416 56,147
------- ------- ------ ------
Gross profit 82,495 75,490 25,236 24,198
------ ------ ------ ------
Research and development expenses 29,433 26,477 8,785 7,103
Less - grants 1,419 1,624 599 616
Research and development expenses, net 28,014 24,853 8,186 6,487
Selling and marketing expenses 23,759 23,411 6,572 6,187
General and administrative expenses 19,861 26,471 4,835 5,036
------ ------ ----- -----
Total operating expenses 71,634 74,735 19,593 17,710
------ ------ ------ ------
Operating income 10,861 755 5,643 6,488
Financial expenses, net (4,307) (4,843) (1,138) (1,668)
------ ------ ------ ------
Income (loss) before taxes on income 6,554 (4,088) 4,505 4,820
----- ------ ----- -----
Taxes on income (tax benefit) (247) 1,252 1,102 285
---- ----- ----- ---
Net income (loss) $6,801 $(5,340) $3,403 $4,535
====== ======= ====== ======
Earnings (loss) per share (basic and diluted) $0.12 $(0.10) $0.06 $0.08
===== ====== ===== =====
Weighted average number of shares used in
computing earnings (loss) per share
Basic 54,680,822 51,970,458 54,719,903 54,591,346
Diluted 54,851,967 51,970,458 55,237,923 54,615,092
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
December 31, 2017 December 31, 2016
----------------- -----------------
GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP
---- -------------- -------- ---- -------------- --------
Unaudited Unaudited
--------- ---------
Gross profit $25,236 1,212 $26,448 $24,198 1,204 $25,402
Operating expenses 19,593 (160) 19,433 17,710 (1,264) 16,446
Operating income 5,643 1,372 7,015 6,488 2,468 8,956
Income before taxes on income 4,505 1,318 5,823 4,820 2,468 7,288
Net income $3,403 1,318 $4,721 $4,535 2,468 $7,003
====== ===== ====== ====== ===== ======
Earnings per share (basic and diluted) $0.06 0.03 $0.09 $0.08 0.05 $0.13
===== ==== ===== ===== ==== =====
Weighted average number of shares used in
computing earnings per share
Basic 54,719,903 54,719,903 54,591,346 54,591,346
=====
Diluted 55,237,923 55,507,634 54,615,092 54,652,640
=======
(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 benefit under amnesty program.
Three months ended Three months ended
December 31, 2017 December 31, 2016
Unaudited Unaudited
--------- ---------
GAAP net income $3,403 $4,535
Gross profit
Non-cash stock-based compensation expenses 17 9
Amortization of intangible assets related to acquisition transactions 1,195 1,195
----- -----
1,212 1,204
----- -----
Operating expenses
Non-cash stock-based compensation expenses 213 207
Amortization of intangible assets related to acquisition transactions 125 193
Trade secrets litigation expenses - 864
Tax benefit under amnesty program (178) -
---- ---
160 1,264
--- -----
Finance and taxes on income (54) -
--- ---
Non-GAAP net income $4,721 $7,003
====== ======
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)
Twelve months ended
Twelve months ended
December 31, 2017 December 31, 2016
----------------- -----------------
GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP
---- -------------- -------- ---- -------------- --------
Unaudited Unaudited
--------- ---------
Gross profit $82,495 4,832 $87,327 $75,490 4,817 $80,307
Operating expenses 71,634 (2,802) 68,832 74,735 (6,091) 68,644
Operating income 10,861 7,634 18,495 755 10,908 11,663
Income (loss) before taxes on income 6,554 7,817 14,371 (4,088) 10,908 6,820
Net income (loss) $6,801 7,817 $14,618 $(5,340) 10,908 $5,568
====== ===== ======= ======= ====== ======
Earnings (loss) per share (basic and diluted) $0.12 0.15 $0.27 $(0.10) 0.21 $0.11
===== ==== ===== ====== ==== =====
Weighted average number of shares used in
computing earnings (loss) per share
Basic 54,680,822 54,680,822 51,970,458 51,970,458
=====
Diluted 54,851,967 55,014,640 51,970,458 52,123,677
=======
(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.
Twelve months ended Twelve months ended
31 December 2017 31 December 2016
Unaudited Unaudited
--------- ---------
GAAP net income (loss) $6,801 $(5,340)
Gross profit
Non-cash stock-based compensation expenses 56 41
Amortization of intangible assets related to 4,776 4,776
acquisition transactions
4,832 4,817
----- -----
Operating expenses
Non-cash stock-based compensation expenses 800 867
Amortization of intangible assets related to 679 777
acquisition transactions
Trade secrets litigation expenses 873 4,447
Tax expenses under amnesty program 450 -
--- ---
2,802 6,091
----- -----
Finance and taxes on income 183 -
--- ---
Non-GAAP net income $14,618 $5,568
======= ======
GILAT SATELLITE NETWORKS LTD.
ADJUSTED EBITDA
U.S. dollars in thousands
Twelve months ended Three months ended
December 31, December 31,
------------ ------------
2017 2016 2017 2016
---- ---- ---- ----
Unaudited Unaudited
--------- ---------
GAAP operating
income $10,861 $755 $5,643 $6,488
Add (deduct):
Non-cash stock-
based compensation
expenses 856 908 230 216
Trade secrets
litigation expenses 873 4,447 - 864
Tax expenses
(benefit) under
amnesty program 450 - (178) -
Depreciation and
amortization 13,140 13,108 3,256 3,277
------ ------ ----- -----
Adjusted EBITDA $26,180 $19,218 $8,951 $10,845
======= ======= ====== =======
GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED BALANCE SHEET
U.S. dollars in thousands
December 31, December 31,
------------ ------------
2017 2016
---- ----
Unaudited Audited
--------- -------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $52,957 $40,133
Restricted cash 29,288 62,229
Restricted cash held by
trustees 4,325 9,058
Trade receivables, net 108,842 89,377
Inventories 28,853 21,469
Other current assets 21,970 17,017
------ ------
Total current assets 246,235 239,283
------- -------
LONG-TERM INVESTMENTS:
Severance pay funds 8,188 7,791
Other long term
receivables 974 436
--- ---
Total long-term
investments 9,162 8,227
----- -----
PROPERTY AND EQUIPMENT,
NET 82,246 80,837
------ ------
INTANGIBLE ASSETS, NET 5,709 11,383
----- ------
GOODWILL 43,468 43,468
------ ------
TOTAL ASSETS $386,820 $383,198
------------ ======== ========
GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED BALANCE SHEET
U.S. dollars in thousands
December 31, December 31,
------------ ------------
2017 2016
---- ----
Unaudited Audited
--------- -------
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current maturities of
long-term loans $4,479 $4,617
Trade payables 33,715 29,625
Accrued expenses 70,534 53,429
Advances from customers
and deferred revenues 16,721 37,659
Advances from customers,
held by trustees 1,416 7,498
Other current liabilities 20,044 13,846
------ ------
Total current liabilities 146,909 146,674
------- -------
LONG-TERM LIABILITIES:
Accrued severance pay 7,999 7,485
Long-term loans, net of
current maturities 12,582 16,932
Other long-term
liabilities 1,008 2,281
----- -----
Total long-term
liabilities 21,589 26,698
------ ------
EQUITY:
Share capital -ordinary
shares of NIS 0.2 par
value 2,601 2,593
Additional paid-in capital 921,726 920,162
Accumulated other
comprehensive loss (3,046) (3,224)
Accumulated deficit (702,959) (709,705)
-------- --------
Total equity 218,322 209,826
------- -------
TOTAL LIABILITIES AND
EQUITY $386,820 $383,198
--------------------- ======== ========
GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Twelve months ended Three months ended
December 31, December 31,
------------ ------------
2017 2016 2017 2016
---- ---- ---- ----
Unaudited Audited Unaudited
--------- ------- ---------
Cash flows from operating activities:
-------------------------------------
Net income (loss) $6,801 $(5,340) $3,403 $4,535
Adjustments required to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization 13,140 13,108 3,256 3,277
Stock-based compensation of options and RSU's 856 908 230 216
Accrued severance pay, net 118 (267) (11) (65)
Accrued interest and exchange rate differences on
short and long-term restricted cash, net (239) (442) (135) 1,012
Exchange rate differences on long-term loans 186 (43) 35 (99)
Deferred income taxes, net 189 4 489 (1)
Increase in trade receivables, net (19,588) (37,586) (22,421) (47,695)
Increase in other assets (including short-term, long-term
and deferred charges) (4,029) (3,474) (400) (4,593)
Decrease (increase) in inventories (10,763) 2,221 (1,534) 1,356
Decrease in restricted cash directly related to operating activities, net 38,123 48,519 - 12,991
Increase in trade payables 4,087 12,454 5,169 8,607
Increase in accrued expenses 14,898 30,149 243 4,135
Increase (decrease) in advances from customers (18,959) (53,081) (7,245) 13,561
Increase (decrease) in advances from customers, held
by trustees (6,185) (18) (3,845) 1,010
Increase in other current liabilities and other long term liabilities 2,165 3,666 1,808 2,036
Net cash provided by (used in) operating activities 20,800 10,778 (20,958) 283
------ ------ ------- ---
Cash flows from investing activities:
-------------------------------------
Purchase of property and equipment (3,692) (4,307) (283) (1,485)
Investment in restricted cash held by trustees (14,218) (16,200) (3,416) (5,275)
Proceeds from restricted cash held by trustees 18,974 16,498 5,586 3,025
Investment in restricted cash (including long-term) (5,700) (17,001) (5,044) (9,751)
Proceeds from restricted cash (including long-term) 661 7,441 (10) -
Net cash used in investing activities (3,975) (13,569) (3,167) (13,486)
------ ------- ------ -------
Cash flows from financing activities:
-------------------------------------
Capital lease payments - (309) - (2)
Issuance of shares in a rights offering - 35,085 - (12)
Issuance of restricted stock units and exercise of stock options 661 588 92 63
Short term bank credit, net - (7,000) - -
Repayment of long-term loans (4,673) (4,443) (145) (27)
Net cash provided by (used in) financing activities (4,012) 23,921 (53) 22
------ ------ --- ---
Effect of exchange rate changes on cash and cash equivalents 11 568 (99) (125)
--- --- --- ----
Increase (decrease) in cash and cash equivalents 12,824 21,698 (24,277) (13,306)
Cash and cash equivalents at the beginning of the period 40,133 18,435 77,234 53,439
------ ------ ------ ------
Cash and cash equivalents at the end of the period $52,957 $40,133 $52,957 $40,133
======= ======= ======= =======
Contact:
Gilat Satellite Networks
Doreet Oren
DoreetO@gilat.com
Comm-Partners LLC
June Filingeri, President
203-972-0186
junefil@optonline.net
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SOURCE Gilat Satellite Networks Ltd
