Gilat Reports Continued Growth in Profitability in Q1 2019
PETAH TIKVA, Israel, May 14, 2019 /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 first quarter ended March 31, 2019.
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Key Financial Highlights:
-- Revenues for Q1 2019 totaled $62.1 million compared with $67.4 million
for Q1 2018.
-- Continued strong profitability:
-- Q1 2019 GAAP operating income increased 21.7% to $4.5 million from
$3.7 million in Q1 2018. Q1 2019 Non-GAAP operating income rose to
$5.6 million, or by 9.5% from Q1 2018.
-- Q1 2019 GAAP net income increased 22.2% to $2.8 million, or $0.05
per diluted share, compared with $2.3 million, or $0.04 per diluted
share in Q1 2018. Q1 2019 non-GAAP net income increased 5.4% to $4.0
million, or $0.07 per diluted share, compared with $3.8 million, or
$0.07 per diluted share, in Q1 2018.
-- Q1 2019 Adjusted EBITDA increased 9.0% year over year to $8.2
million, or 13.2 % of revenues.
-- Reiterated management objectives for 2019: revenue range between $275
million to $295 million, GAAP operating income of between $23 million
and $27 million, and Adjusted EBITDA between $38 million and $42
million.
Yona Ovadia, CEO of Gilat, commented:
"I am pleased to report that Gilat continued to achieve good results in the first quarter, and am proud that Gilat received market recognition for our leadership in 4G/LTE Cellular Backhaul.
"These results come hand in hand with significant business progress in our strategic focus areas of Mobility IFC and Mobile Cellular Backhaul.
We marked a significant milestone in our IFC focus area, with Honeywell's selection of Gilat's aero modem for its JetWave Satellite Communication Solution. The Honeywell-Gilat solution is to be deployed first in China for both domestic and cross border flights, and then expected to expand to additional regions around the globe.
"In the cellular backhaul focus area we have secured an important deal with TIM Brasil to enable 4G services for the agriculture IoT business. The initial forecast calls for one thousand Gilat VSATs to complement "4G TIM in the Field" cellular coverage program.
Gilat also continued as the front-runner in the LTE/4G satellite backhaul market, and was recognized by the industry analyst NSR, as the world leader in shipments of cellular backhaul over satellite, achieving a 35% market share in modem shipments.
"We also made progress in the new era of digital communications with NGSO (non-geostationary satellite) constellations and 5G networks. Gilat's modem was used for a first-ever important successful test that was conducted at the 5G Innovation Centre at the University of Surrey, demonstrating 5G connectivity over Telesat's LEO test satellite."
Mr. Ovadia concluded: "As we have announced previously, we have substantially increased R&D investment in 2019, to maintain our current technology advantage as well as to press forward with our product roadmap including our IFC antennas as well as our NGSO baseband, in support of the opportunities in LEO and MEO satellites and 5G. As we proceed through the remainder of 2019, we are encouraged with the opportunities ahead, as we continue to maintain a strategic balance among materializing our product pipeline, investing in our technology leadership, and growing our profitability."
Key Recent Announcements:
-- Honeywell Selects Gilat's Aero Modem for its JetWave Satellite
Communication Solution
-- Gilat Announces First Ever Successful Demonstration of 5G Connectivity
over a LEO Satellite, Powered by Gilat using Telesat's Phase 1 LEO
-- Gilat is World Leader in Shipments of Cellular Backhaul over Satellite
According to NSR
-- TIM Brasil Selects Gilat's Satellite Backhaul to Enable 4G Services for
the Agriculture IoT Business
-- Gilat Declares a $25 Million Cash Dividend
Conference Call and Webcast Details:
Following the release, Yona Ovadia, Chief Executive Officer, and Adi Sfadia, Chief Financial Officer, will discuss Gilat's first quarter 2019 results and participate in a question and answer session:
Date: Tuesday, May 14, 2019
Start: 09:30 AM EDT / 16:30 IDT
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/gilatq1-2019.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: May 14, 2019 at 12:00 PM EDT / 19:00 IDT
End: May 17, 2019 at 12:00 PM EDT / 19:00 IDT
Dial-in: US: 1-888-326-9310
International: (972) 3-925-5900
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. Non-GAAP financial measures mainly exclude the effect of stock based compensation, amortization of purchased intangibles, lease incentive amortization, litigation expenses, income related to trade secrets claims and expenses for tax contingencies to be paid under an amnesty program and initial recognition of deferred tax asset with respect to carry-forward losses.
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 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 2019. 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)
Three months ended
March, 31
2019 2018
Unaudited
Revenues $62,109 $67,374
Cost of revenues 38,539 45,987
Gross profit 23,570 21,387
Research and development expenses 8,857 8,446
Less - grants 555 467
Research and development expenses, net 8,302 7,979
Selling and marketing expenses 5,871 5,413
General and administrative expenses 4,942 4,335
Total operating expenses 19,115 17,727
Operating income 4,455 3,660
Financial expenses, net (821) (583)
Income before taxes on income 3,634 3,077
Taxes on income 810 766
Net income $2,824 $2,311
Basic and Diluted earnings per share $0.05 $0.04
Weighted average number of shares used in
computing earnings per share
Basic 55,197,588 54,765,456
Diluted 55,959,504 55,590,362
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)
Three months ended
Three months ended
March 31, 2019
March 31, 2018
GAAP
Adjustments (1) Non-GAAP
GAAP
Adjustments (1) Non-GAAP
Unaudited
Unaudited
Gross profit $23,570 326 $23,896 $21,387 1,200 $22,587
Operating expenses 19,115 (829) 18,286 17,727 (263) 17,464
Operating income 4,455 1,155 5,610 3,660 1,463 5,123
Income before taxes on income 3,634 1,155 4,789 3,077 1,463 4,540
Net income 2,824 1,155 3,979 2,311 1,463 3,774
===
Earnings per share (basic and diluted) $0.05 $0.02 $0.07 $0.04 $0.03 $0.07
Weighted average number of shares used in
computing earnings per share
Basic 55,197,588 55,197,588 54,765,456 54,765,456
Diluted 55,959,504 56,142,723 55,590,362 55,816,038
(1) Adjustments reflect the effect of non-cash stock-based compensation as per ASC 718 and amortization of intangible assets related to
shares acquisition transactions.
Three months ended
Three months ended
March 31, 2019
March 31, 2018
Unaudited
Unaudited
GAAP net income $2,824 $2,311
Gross profit
Non-cash stock-based compensation expenses 94 6
Amortization of intangible assets related to acquisition transactions 232 1,194
326 1,200
Operating expenses
Non-cash stock-based compensation expenses 777 212
Amortization of intangible assets related to acquisition transactions 52 51
Non-GAAP net income $3,979 $3,774
GILAT SATELLITE NETWORKS LTD.
SUPPLEMENTAL INFORMATION
U.S. dollars in thousands
ADJUSTED EBITDA:
Three months ended
March 31,
2019 2018
Unaudited
GAAP operating income $4,455 $3,660
Add:
Non-cash stock-based compensation expenses 871 218
Depreciation and amortization (*) 2,877 3,650
Adjusted EBITDA $8,203 $7,528
(*) includng amortization of lease incentive
SEGMENT REVENUE:
Three months ended
March 31,
2019 2018
Unaudited
Fixed Networks $36,428 $37,614
Mobility Solutions 20,912 20,758
Terrestrial Infrastructure Projects 4,769 9,002
Total revenue $62,109 $67,374
GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED BALANCE SHEET
U.S. dollars in thousands
March 31,
December 31,
2019 2018
Unaudited
Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $69,109 $67,381
Restricted cash 32,428 32,305
Restricted cash held by trustees 2,649 4,372
Trade receivables, net 40,049 47,164
Contract assets 47,504 47,760
Inventories 24,379 21,109
Other current assets 26,912 26,022
Total current assets 243,030 246,113
LONG-TERM INVESTMENTS AND RECEIVABLES:
Long-term restricted cash 149 146
Severance pay funds 6,607 6,780
Long term deferred tax assets 3,445 4,127
Operating lease right-of-use assets 4,983
Other long term receivables 8,264 7,276
Total long-term investments and receivables 23,448 18,329
PROPERTY AND EQUIPMENT, NET 83,210 84,403
INTANGIBLE ASSETS, NET 2,095 2,434
GOODWILL 43,468 43,468
TOTAL ASSETS $395,251 $394,747
GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED BALANCE SHEET (Cont.)
U.S. dollars in thousands
March 31,
December 31,
2019 2018
Unaudited
Audited
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term loans $4,433 $4,458
Trade payables 23,726 24,636
Accrued expenses 64,369 67,533
Advances from customers and deferred revenues 26,335 29,133
Operating lease right-of-use liabilities 1,727
Dividend payable 24,862
Other current liabilities 15,606 14,588
Total current liabilities 161,058 140,348
LONG-TERM LIABILITIES:
Accrued severance pay 6,761 6,649
Long-term loans, net of current maturities 4,000 8,098
Operating lease right-of-use liabilities 3,277
Other long-term liabilities 580 580
Total long-term liabilities 14,618 15,327
SHAREHOLDERS' EQUITY:
Share capital -ordinary shares of NIS 0.2 par value 2,629 2,625
Additional paid-in capital 926,061 924,856
Accumulated other comprehensive loss (4,047) (5,380)
Accumulated deficit (705,068) (683,029)
Total shareholders' equity 219,575 239,072
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $395,251 $394,747
GILAT SATELLITE NETWORKS
LTD.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
U.S. dollars in thousands
Three months ended
March 31,
2019 2018
Unaudited
Cash flows from operating
activities:
---
Net income $2,824 $2,311
Adjustments required to
reconcile net income
to net cash provided by
operating activities:
Depreciation and
amortization 2,822 3,650
Stock-based compensation of
options 871 218
Accrued severance pay, net 285 88
Exchange rate differences on
long-term loans 30
Deferred income taxes, net 683 12
Decrease in trade
receivables, net 7,831 18,417
Decrease (increase) in
contract assets (430) 17,092
Decrease (increase) in other
assets (including short-
term, long-term
and deferred charges) (79) 714
Increase in inventories (3,659) (1,445)
Decrease in trade payables (922) (8,272)
Decrease in accrued expenses (2,169) (2,007)
Decrease in advance from
customers (3,087) (4,902)
Decrease in advances from
customers, held
by trustees (1,478)
Increase in other current
liabilities and other long
term liabilities 863 1,564
Net cash provided by
operating activities 5,833 25,992
Cash flows from investing
activities:
---
Purchase of property and
equipment (2,014) (2,861)
Net cash used in investing
activities (2,014) (2,861)
Cash flows from financing
activities:
---
Exercise of stock options 338 306
Repayment of long-term
loans (4,123) (4,000)
Net cash used in financing
activities (3,785) (3,694)
Effect of exchange rate
changes on cash, cash
equivalents and restricted
cash 97 296
Increase in cash, cash
equivalents and restricted
cash 131 19,733
Cash, cash equivalents and
restricted cash at the
beginning of the period 104,204 86,757
Cash, cash equivalents and
restricted cash at the end
of the period $104,335 $106,490
Supplementary disclosure of
cash flows activities:
Non-cash transactions:
Declaration of cash dividend
not yet distributed $24,862
$ -
Contact:
Gilat Satellite Networks
Doreet Oren, Director Corporate Communications
DoreetO@gilat.com
Comm-Partners LLC
June Filingeri, President
+1-203-972-0186
junefil@optonline.net
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SOURCE Gilat Satellite Networks
