Gilat Reports Continued Strong Growth in Profitability in Q2 2018
PETAH TIKVA, Israel, Aug. 7, 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 second quarter ended June 30, 2018.
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Key Financial Highlights:
-- Revenues for Q2 2018 were $66.5 million, compared with $66.2 million in
Q2 2017.
-- Continued strong profitability:
-- Q2 2018 GAAP operating income increased to $4.1 million, up 121.0%
from Q2 2017.
-- Q2 2018 Non-GAAP operating income rose to $5.7 million, up 37.1%
year over year.
-- Q2 2018 GAAP net income was $2.2 million, or $0.04 per diluted
share, compared with $2.1 million, or $0.04 per diluted share, in Q2
2017.
-- Q2 2018 non-GAAP net income was $3.7 million, or $0.07 per diluted
share, versus $4.6 million, or $0.08 per diluted share, in Q2 2017.
-- Q2 2018 Adjusted EBITDA increased 37.6% year over year to $8.1
million, or 12.2 % of revenues.
-- Reiterated management objectives for 2018: revenue range between $285
million to $305 million, GAAP operating income between $17 million and
$21 million, and Adjusted EBITDA between $30 million and $34 million.
Yona Ovadia, CEO of Gilat, commented:
"I am pleased to report that the second quarter of 2018 was another strong quarter for Gilat. We continued the trend of improvement in profitability as well as continued growth momentum in our business, as evidenced with the following achievements:
"In our strategic area of LTE cellular backhaul we have secured two additional wins, one with Telstra in Australia and the other with a major MNO in Latin America. In both these areas of the globe, Gilat was selected for its recognized global leadership in large, efficient and reliable LTE networks, which is what the businesses and residents in the remote locations of these countries expect and are willing to pay for.
"The win in LATAM is joined by the announcement on an expansion of our relationships with Hispasat for the delivery of affordable high quality broadband services to consumers and enterprises in the vast areas of Brazil that currently do not have this service, which marks our continued efforts and recovery of the business in this key part of the world.
"Finally, we also announced the win of two new regional telecommunications infrastructure projects for Fitel in Peru, bringing Gilat's awarded regions to six out of the 13 regions. Gilat's long term goal in Peru is for multi-year high margin recurring revenues from services, which is the motivation for these projects rather than the construction dollars."
Mr. Ovadia concluded: "We remain committed to our target of improving the bottom line, and are confident that as capacity prices continue to decrease and demand grows, new opportunities will continue to be generated. This, together with our ongoing significant investment in R&D will drive further momentum in our strategic growth engines."
Key Recent Announcements:
-- Hispasat and Gilat Partner to Commercialize High Throughput Satellite
(HTS) Capacity of Amazonas 3 and 5 Satellites over Brazil
-- Tier-1 Mobile Network Operator in Latin America Selects Gilat for LTE
Satellite Backhaul
-- Telstra Selects Gilat's Satellite-based Cellular Backhaul Solution for
4G Mobile Service Expansion to Remote Locations Across Australia
-- Telesat and Gilat Join Forces to Develop Broadband Communication Modem
Technology for Low Earth Orbit (LEO) Satellites
-- Gilat Awarded $153.6 Million by Fitel Peru for Regional
Telecommunications Projects
Conference Call and Webcast Details:
Gilat management will host a conference call today, Tuesday, August 7, to discuss the second quarter results. The details are as follows:
Conference Call and Webcast
Following the release, Yona Ovadia, Chief Executive Officer, and Adi Sfadia, Chief Financial Officer, will discuss Gilat's second quarter 2018 results and participate in a question and answer session:
Date: Tuesday, August 7, 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/gilatq2-2018.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: August 7, 2018 at 12:00 PM EST / 19:00 IST
End: August 10, 2018 at 12:00 PM EST / 19:00 IST
Dial-in: US: 1-888-295-2634
International: (972) 3-925-5904
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 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)
Six months ended Three months ended
June 30, June 30,
-------- --------
2018 2017 2018 2017
---- ---- ---- ----
Unaudited Unaudited
--------- ---------
Revenues $133,882 $130,168 $66,508 $66,237
Cost of revenues 90,053 93,258 44,066 46,668
------ ------ ------ ------
Gross profit 43,829 36,910 22,442 19,569
------ ------ ------ ------
Research and development
expenses 16,730 13,467 8,284 6,712
Less - grants 810 523 343 476
Research and development
expenses, net 15,920 12,944 7,941 6,236
Selling and marketing expenses 11,716 11,350 6,303 5,555
General and administrative
expenses 8,389 10,723 4,054 5,903
----- ------ ----- -----
Total operating expenses 36,025 35,017 18,298 17,694
------ ------ ------ ------
Operating income 7,804 1,893 4,144 1,875
Financial expenses, net (2,188) (2,046) (1,605) (1,242)
------ ------ ------ ------
Income (loss) before taxes on
income 5,616 (153) 2,539 633
----- ---- ----- ---
Taxes on income (tax benefit) 1,154 (1,501) 388 (1,499)
----- ------ --- ------
Net income $4,462 $1,348 $2,151 $2,132
====== ====== ====== ======
Earnings per share (basic and
diluted) $0.08 $0.02 $0.04 $0.04
===== ===== ===== =====
Weighted average number of
shares used in
computing
earnings
per share
Basic 54,811,893 54,649,863 54,858,330 54,676,042
Diluted 55,614,782 54,690,930 55,639,202 54,701,316
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
June 30, 2018 June 30, 2017
------------- -------------
GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP
---- -------------- -------- ---- -------------- --------
Unaudited Unaudited
--------- ---------
Gross profit $22,442 1,230 $23,672 $19,569 1,205 $20,774
Operating expenses 18,298 (288) 18,010 17,694 (1,049) 16,645
Operating income 4,144 1,518 5,662 1,875 2,254 4,129
Income before taxes on income 2,539 1,518 4,057 633 2,491 3,124
Net income $2,151 1,518 $3,669 $2,132 2,491 $4,623
====== ===== ====== ====== ===== ======
Earnings per share (basic and diluted) $0.04 $0.03 $0.07 $0.04 $0.04 $0.08
===== ===== ===== ===== ===== =====
Weighted average number of shares used in
computing earnings per share
Basic 54,858,330 54,858,330 54,676,042 54,676,042
=====
Diluted 55,639,202 55,854,231 54,701,316 54,735,130
=======
(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.
Three
months
ended Three months ended
June 30,
2018 June 30, 2017
--------- -------------
Unaudited
Unaudited
---------
GAAP net income $2,132
$2,151
Gross profit
Non-cash stock-based compensation
expenses 36 11
Amortization of intangible assets
related to acquisition
transactions 1,194 1,194
----- -----
1,205
1,230
-----
Operating expenses
Non-cash stock-based compensation
expenses 238 203
Amortization of intangible assets
related to acquisition
transactions 50 193
Trade secrets litigation expenses 25
-
Tax expenses under amnesty program 628
-
---
1,049
288
---
Finance and taxes on income under
amnesty program - 237
--- ---
Non-GAAP net income $4,623
$3,669
--- ------
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)
Six months ended Six months ended
June 30, 2018 June 30, 2017
------------- -------------
GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP
---- -------------- -------- ---- -------------- --------
Unaudited Unaudited
--------- ---------
Gross profit $43,829 2,430 $46,259 $36,910 2,410 $39,320
Operating expenses 36,025 (551) 35,474 35,017 (2,285) 32,732
Operating income 7,804 2,981 10,785 1,893 4,695 6,588
Income (loss) before taxes on income 5,616 2,981 8,597 (153) 4,932 4,779
Net income $4,462 2,981 $7,443 $1,348 4,932 $6,280
====== ===== ====== ====== ===== ======
Basic income per share $0.08 $0.06 $0.14 $0.02 $0.09 $0.11
===== ===== ===== ===== ===== =====
Diluted income per share $0.08 $0.05 $0.13 $0.02 $0.09 $0.11
===== ===== ===== ===== ===== =====
Weighted average number of shares used in
computing earnings per share
Basic 54,811,893 54,811,893 54,649,863 54,649,863
=====
Diluted 55,614,782 55,835,134 54,690,930 54,785,783
=======
(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.
Six months ended Six months ended
June 30, 2018 June 30, 2017
------------- -------------
Unaudited Unaudited
--------- ---------
GAAP net income $4,462 $1,348
Gross profit 42 22
Non-cash stock-based
compensation expenses 2,388 2,388
----- -----
Amortization of
intangible assets
related to
acquisition
transactions 2,430 2,410
----- -----
Operating expenses 450 396
Non-cash stock-based
compensation expenses 101 388
Amortization of
intangible assets
related to
acquisition
transactions - 873
Trade secrets
litigation expenses - 628
--- ---
Tax expenses under
amnesty program 551 2,285
--- -----
Finance and taxes on
income under amnesty
program - 237
--- ---
Non-GAAP net income $7,443 $6,280
------------------- ------ ------
GILAT
SATELLITE
NETWORKS
LTD.
SUPPLEMENTAL
INFORMATION
U.S.
dollars
in
thousands
ADJUSTED
EBITDA:
Six months ended Three months ended
June 30, June 30,
-------- --------
2018 2017 2018 2017
---- ---- ---- ----
Unaudited Unaudited
--------- ---------
GAAP
operating
income $7,804 $1,893 $4,144 $1,875
Add:
Non-cash
stock-
based
compensation
expenses 492 418 274 214
Trade
secrets
litigation
expenses - 873 - 25
Tax
expenses
under
amnesty
program - 628 - 628
Depreciation
and
amortization 7,322 6,304 3,672 3,139
----- ----- ----- -----
Adjusted
EBITDA $15,618 $10,116 $8,090 $5,881
======= ======= ====== ======
SEGMENT
REVENUE:
Six months ended Three months ended
June 30, June 30,
-------- --------
2018 2017 2018 2017
---- ---- ---- ----
Unaudited Unaudited
--------- ---------
Fixed
Networks $73,843 $51,801 $36,228 $24,928
Mobility
Solutions 45,778 36,909 25,021 22,005
Terrestrial
Infrastructure
Projects 14,261 41,458 5,259 19,304
------ ------ ----- ------
Total
revenue $133,882 $130,168 $66,508 $66,237
======== ======== ======= =======
GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED BALANCE SHEET
U.S. dollars in thousands
June 30, December 31,
-------- ------------
2018 2017
---- ----
Unaudited Audited
--------- -------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $57,010 $52,957
Restricted cash 32,295 29,288
Restricted cash held by trustees 6,334 4,325
Trade receivables, net 78,995 108,842
Inventories 27,380 28,853
Other current assets 31,856 21,686
------ ------
Total current assets 233,870 245,951
------- -------
LONG-TERM INVESTMENTS:
Long-term restricted cash 153 187
Severance pay funds 7,264 8,188
Other long term receivables 1,447 1,071
----- -----
Total long-term investments 8,864 9,446
----- -----
PROPERTY AND EQUIPMENT, NET 82,498 82,246
------ ------
INTANGIBLE ASSETS, NET 3,110 5,709
----- -----
GOODWILL 43,468 43,468
------ ------
TOTAL ASSETS $371,810 $386,820
------------ ======== ========
GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED BALANCE SHEET
U.S. dollars in thousands
June 30, December 31,
-------- ------------
2018 2017
---- ----
Unaudited Audited
--------- -------
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current maturities of long-
term loans $4,466 $4,479
Trade payables 22,013 33,715
Accrued expenses 67,606 70,534
Advances from customers and
deferred revenues 15,210 16,721
Advances from customers,
held by trustees - 1,416
Other current liabilities 22,955 20,044
------ ------
Total current liabilities 132,250 146,909
------- -------
LONG-TERM LIABILITIES:
Accrued severance pay 7,122 7,999
Long-term loans, net of
current maturities 8,333 12,582
Other long-term liabilities 962 1,008
--- -----
Total long-term liabilities 16,417 21,589
------ ------
EQUITY:
Share capital -ordinary
shares of NIS 0.2 par value 2,610 2,601
Additional paid-in capital 922,778 921,726
Accumulated other
comprehensive loss (5,269) (3,046)
Accumulated deficit (696,976) (702,959)
-------- --------
Total equity 223,143 218,322
------- -------
TOTAL LIABILITIES AND EQUITY $371,810 $386,820
---------------------------- ======== ========
GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED STATEMENTS OF CASH
FLOWS (*)
U.S. dollars in thousands
Six months ended Three months ended
June 30, June 30,
-------- --------
2018 2017 2018 2017
---- ---- ---- ----
Unaudited Unaudited
--------- ---------
Cash flows from operating
activities:
-------------------------
Net income $4,462 $1,348 $2,151 $2,132
Adjustments required to reconcile
net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 7,322 6,304 3,672 3,139
Stock-based compensation of
options and RSU's 492 418 274 214
Accrued severance pay, net 47 106 (41) 167
Exchange rate differences on long-
term loans (13) 113 (43) 88
Deferred income taxes, net (29) (159) (41) (143)
Decrease (increase) in trade
receivables, net 29,469 5,048 (6,040) 12,003
Increase in other assets
(including short-term, long-
term
and deferred charges) (9,151) (6,590) (9,865) (3,340)
Decrease (increase) in inventories 332 (3,558) 1,777 (246)
Increase (decrease) in trade
payables (11,634) 537 (3,362) 929
Increase (decrease) in accrued
expenses (1,980) 11,418 27 3,925
Decrease in advances from
customers (4,980) (5,710) (78) (2,612)
Increase (decrease) in advances
from customers, held
by trustees (1,478) (3,342) - 1,070
Increase (decrease) in other
current liabilities and other
long term liabilities 5,575 (1,905) 4,011 433
Net cash provided by (used in)
operating activities 18,434 4,028 (7,558) 17,759
------ ----- ------ ------
Cash flows from investing
activities:
-------------------------
Purchase of property and equipment (5,014) (2,172) (2,153) (960)
Net cash used in investing
activities (5,014) (2,172) (2,153) (960)
------ ------ ------ ----
Cash flows from financing
activities:
-------------------------
Issuance of restricted stock units
and exercise of stock options 573 493 267 227
Repayment of long-term loans (4,249) (4,383) (249) (142)
Net cash provided by (used in)
financing activities (3,676) (3,890) 18 85
------ ------ --- ---
Effect of exchange rate changes on
cash, cash equivalents and
restricted cash (709) (109) (1,005) (537)
---- ---- ------ ----
Increase (decrease) in cash, cash
equivalents and restricted cash 9,035 (2,143) (10,698) 16,347
Cash, cash equivalents and
restricted cash at the beginning
of the period 86,757 111,633 106,490 93,143
------ ------- ------- ------
Cash, cash equivalents and
restricted cash at the end of the
period $95,792 $109,490 $95,792 $109,490
======= ======== ======= ========
(*) In November 2016, the Financial Accounting Standards Board (the "FASB") issued ASU 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash",
which requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when
reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for annual and interim periods
beginning after December 15, 2017. The Company adopted this standard during the first quarter of 2018 using the retrospective transition method,
as required by the new standard.
The following table provides a reconciliation of cash and cash equivalents, restricted cash, restricted cash held by trustees and long term restricted cash reported within
the consolidated balance sheets that sum to the total of such amounts in the consolidated statements of cash flows:
June 30,
--------
2018 2017
---- ----
Unaudited
---------
Cash and cash equivalents $57,010 $78,831
Restricted cash 32,295 24,379
Restricted cash held by trustees 6,334 6,110
Long term restricted cash included in
other assets 153 170
--- ---
Cash, cash equivalents and restricted
cash shown in the consolidated
statement of cash flows $95,792 $109,490
======= ========
Contact:
Gilat Satellite Networks
Doreet Oren, Director Corporate Communications
DoreetO@gilat.com
Comm-Partners LLC
June Filingeri, President
junefil@optonline.net
203-972-0186
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SOURCE Gilat Satellite Networks
