Gilat Satellite : Reports Strong Growth in Profitability in Q4 2018 and Fiscal Year 2018, Targets Continued Strong Growth in 2019

PETAH TIKVA, Israel, Feb. 12, 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 fourth quarter and full year ended December 31, 2018.

Fourth Quarter and Full Year 2018 Key Financial Highlights: 

• Quarterly revenues were $69.7 million, compared with $82.7 million in Q4 2017. Full year 2018 revenues were $266.4 million versus $282.8 million in 2017.
• Continued strong profitability:
• Quarterly GAAP operating income increased to $7.5 million, up 33.1% from Q4 2017.  Full year GAAP operating income increased 96.0% to $21.3 million.
• Quarterly Non-GAAP operating income rose to $7.9 million, an increase of 12.2% from Q4 2017.  Full year Non-GAAP operating income was up 36.0% to $25.1 million from 2017.
• Quarterly GAAP net income was $5.3 million, or $0.09 per diluted share compared with $3.4 million, or $0.06 per diluted share, in Q4 2017.  Full year GAAP net income was $18.4 million, or $0.33 per diluted share, compared with $6.8 million, or $0.12 per diluted share, in 2017. Full year 2018 net income includes a deferred tax benefit of $4.1 million recognized in the third quarter of 2018.
• Quarterly Non-GAAP net income was $5.7 million, or $0.10 per diluted share, compared to $4.7 million, or $0.09 per diluted share, in Q4 2017. Full year Non-GAAP net income was $18.2 million, or $0.32 per diluted share, compared with $14.6 million, or $0.27 per diluted share, in 2017.
• Adjusted EBITDA for Q4 2018 increased 17.6% from Q4 2017 to $10.5 million. Full year 2018 Adjusted EBITDA rose 34.6% from 2017 to $35.2 million.
• 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.
• The Gilat Board of Directors expects to declare a cash dividend estimated at $25 million (or approximately $0.45 per share), subject to final approval of our audited financial statements to be issued in March 2019. Under the Israeli Companies Law such a dividend will be based on the Company meeting the criteria set out in the Israeli Companies Law.

Yona Ovadia, CEO of Gilat, commented: 

"I am pleased to report that our strong fourth quarter concludes a year of important progress for Gilat as we advanced our business strategy and achieved substantial profitability growth.

"We were successful in achieving our objectives through our continued focus on our growth engines of Broadband, Mobile Cellular Backhaul and Mobility IFC, along with continued efforts to drive costs out of the business.

"We secured significant Broadband business around the globe over the past year including: NBN in Australia, Gazprom in Russia, ChinaSatcom in China, LASCOM in Japan, Hispasat in Latin America and ISRO in India. In the Mobile market, we continued as the front-runner in the LTE/4G satellite backhaul market with expansion of projects with existing customers and additional contract wins such as Telstra in Australia. In the Mobility market, we reached an important milestone with our dual-band aero terminal by passing the standard for the environmental testing of avionics hardware and receiving the DO-160 certification. Lastly, we continued investing in product leadership, as demonstrated by the successful trials for aero and maritime connectivity solutions over Telesat's phase 1 LEO satellite, as well as the announcement of the 5G-ready powerful solution that provides new levels of speeds and capabilities, in support of the growing demand of data consumption.

"Further, we executed our plan to improve profitability, with the result that GAAP operating income for full-year 2018 increased 96.0% from 2017, while Adjusted EBITDA rose 34.6% and GAAP net income reached $18.4 million or $0.33 per diluted share."

Mr. Ovadia concluded:

"Looking at 2019, we will continue our focus on improving profitability, by further developing and expanding our existing growth engines, as we see continued reception to our services and solutions. As the market constantly evolves and requires higher throughputs and greater efficiency, we will also continue to invest substantially in R&D and in our product roadmap, to maintain product leadership especially in the era of NGSO and 5G.  

"I am pleased to say that we have a substantial pipeline going into 2019, which is reflected in our management objectives that include further revenue and profitability growth for the year, even with a significant investment in R&D.

"I am also pleased to say that with this continued and significant progress and the strength of the Gilat balance sheet, the Board is planning to award a cash dividend to shareholders while maintaining our ample liquidity to fund future growth."

Key Recent Announcements:  

• Gilat Demonstrates Exceptional Maritime Connectivity over Telesat's Phase 1 LEO Satellite
• Gilat Awarded Multi-Year Contract for Broadband Solution Over ISRO's GSAT-11 Satellite Covering India
• Gilat Launches 5G-Ready Satellite Backhaul Solution
• Dish Mexico Selects Gilat and Hispasat for Delivery of High-Quality Broadband Services to the People of Mexico
• LASCOM Awards Gilat Multi-Million Dollar Project for Japan's Next Generation Disaster Response Platform
• Gilat's Dual-Band Aero Terminal Receives DO-160 Certification

Conference Call and Webcast Details:

Gilat management will host a conference call today, Tuesday, February 12, to discuss fourth quarter and full year 2018 results. The details are as follows:

Date:              Tuesday, February 12, 2019
Start:              09:30 AM EST / 16:30 IST
Dial-in:           US: [phone]  
                      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/gilatq4-2018.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:             February 12, 2019 at 12:00 PM EST / 19:00 IST
End:              February 17, 2019 at 12:00 PM EST / 19:00 IST
Dial-in:           US: [phone]
                     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. Non-GAAP financial measures mainly exclude the effect of stock based compensation, amortization of purchased intangibles, 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.

Contact:
Gilat Satellite Networks
Doreet Oren, Director Corporate Communications
[e-mail] 

Comm-Partners LLC
June Filingeri, President
[phone]
[e-mail] 

 

GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands (except share and per share data)

					Twelve months ended December 31,				Three months ended December 31,
				2018		2017		2018		2017
				Unaudited		Audited		Unaudited
Revenues				$         266,391		$         282,756		$           69,729		$             82,652
Cost of revenues				172,354		200,261		43,715		57,416
Gross profit				94,037		82,495		26,014		25,236
Research and development expenses				34,449		29,433		9,169		8,785
Less - grants				1,426		1,419		222		599
Research and development expenses, net				33,023		28,014		8,947		8,186
Selling and marketing expenses				22,706		23,759		5,497		6,572
General and administrative expenses				17,024		19,861		4,061		4,835
Total operating expenses				72,753		71,634		18,505		19,593
Operating income				21,284		10,861		7,509		5,643
Financial expenses, net				(4,298)		(4,307)		(1,132)		(1,138)
Income before taxes on income				16,986		6,554		6,377		4,505
Taxes on income (tax benefit)				(1,423)		(247)		1,082		1,102
Net income				$             18,409		$              6,801		$              5,295		$              3,403
Basic earnings per share				$                0.34		$                0.12		$                0.10		$                0.06
Diluted earnings per share				$                0.33		$                0.12		$                0.09		$                0.06
Weighted average number of shares used in computing earnings per share
	Basic			54,927,272		54,680,822		55,134,977		54,719,903
	Diluted			55,752,642		54,851,967		55,962,447		55,237,923

 

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, 2018						December 31, 2017
							GAAP		Adjustments (1)		Non-GAAP		GAAP		Adjustments (1)		Non-GAAP
							Unaudited						Unaudited
Gross profit							$    26,014		269		$     26,283		$     25,236		1,212		$   26,448
Operating expenses							18,505		(91)		18,414		19,593		(160)		19,433
Operating income							7,509		360		7,869		5,643		1,372		7,015
Income before taxes on income							6,377		360		6,737		4,505		1,318		5,823
Net income							$     5,295		360		$      5,655		$       3,403		1,318		$    4,721
Basic earnings per share							$       0.10		$       -		$        0.10		$         0.06		$     0.03		$      0.09
Diluted earnings per share							$       0.09		$    0.01		$        0.10		$         0.06		$     0.03		$      0.09
Weighted average number of shares used in computing earnings per share
	Basic						55,134,977				55,134,977		54,719,903				54,719,903
	Diluted						55,962,447				56,160,425		55,237,923				55,507,634
	(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 income and tax benefit under amnesty program.

							Three months ended						Three months ended
							December 31, 2018						December 31, 2017
									Unaudited						Unaudited
GAAP net income									$      5,295						$   3,403
Gross profit
Non-cash stock-based compensation expenses									37						17
Amortization of intangible assets related to acquisition transactions									232						1,195
									269						1,212
Operating expenses
Non-cash stock-based compensation expenses									239						213
Amortization of intangible assets related to acquisition transactions									52						125
Trade secrets litigation income									(200)						-
Tax benefit under amnesty program									-						(178)
									91						160
Finance and taxes on income under amnesty program									-						(54)
Non-GAAP net income									$      5,655						$   4,721

 

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, 2018						December 31, 2017
							GAAP		Adjustments (1)		Non-GAAP		GAAP		Adjustments (1)		Non-GAAP
							Unaudited						Audited		Unaudited
Gross profit							$      94,037		2,967		$      97,004		$     82,495		4,832		$     87,327
Operating expenses							72,753		(896)		71,857		71,634		(2,802)		68,832
Operating income							21,284		3,863		25,147		10,861		7,634		18,495
Income before taxes on income							16,986		3,863		20,849		6,554		7,817		14,371
Net income							$       18,409		(248)		$      18,161		$      6,801		7,817		$     14,618
Basic earnings per share							$          0.34		$ (0.01)		$          0.33		$        0.12		$    0.15		$         0.27
Diluted earnings per share							$           0.33		$ (0.01)		$          0.32		$        0.12		$    0.15		$         0.27
Weighted average number of shares used in
computing earnings per share
	Basic						54,927,272				54,927,272		54,680,822				54,680,822
	Diluted						55,752,642				55,962,811		54,851,967				55,014,640
	(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 or income, tax expenses under amnesty program and and initial recognition of deferred tax asset with respect to carry forward losses.

 

							Twelve months ended			Twelve months ended
									December 31, 2018		December 31, 2017
									Unaudited		Unaudited
GAAP net income									$                      18,409		$                     6,801
Gross profit
Non-cash stock-based compensation expenses									114		56
Amortization of intangible assets related to acquisition transactions									2,853		4,776
									2,967		4,832
Operating expenses
Non-cash stock-based compensation expenses									892		800
Amortization of intangible assets related to acquisition transactions									204		679
Trade secrets litigation expenses (income)									(200)		873
Tax expenses under amnesty program									-		450
									896		2,802
Finance and taxes on income under amnesty program									-		183
Tax benefit adjustment									(4,111)		-
Non-GAAP net income									$                      18,161		$                    14,618

 

GILAT SATELLITE NETWORKS LTD.
SUPPLEMENTAL INFORMATION
U.S. dollars in thousands
ADJUSTED EBITDA:
				Twelve months ended				Three months ended
					December 31,				December 31,
				2018		2017		2018		2017
				Unaudited				Unaudited
GAAP operating income				$  21,284		$   10,861		$     7,509		$   5,643
Add (deduct):
Non-cash stock-based compensation expenses				1,006		856		276		230
Trade secrets litigation expenses (income)				(200)		873		(200)		-
Tax expenses (benefit) under amnesty program				-		450		-		(178)
Depreciation and amortization				13,149		13,140		2,944		3,256
Adjusted EBITDA				$35,239		$  26,180		$  10,529		$  8,951

SEGMENT REVENUE:
						Twelve months ended			Three months ended
						December 31,			December 31,
				2018		2017		2018		2017
				Unaudited				Unaudited
Fixed Networks				$   144,208		$   116,105		$    35,421		$    34,698
Mobility Solutions				97,180		88,397		29,555		32,600
Terrestrial Infrastructure Projects				25,003		78,254		4,753		15,354
Total revenue				$ 266,391		$ 282,756		$   69,729		$   82,652

GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED BALANCE SHEET
U.S. dollars in thousands
		December 31,		December 31,
		2018		2017
		Unaudited		Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$         67,381		$     52,957
Restricted cash		32,305		29,288
Restricted cash held by trustees		4,372		4,325
Trade receivables, net		94,924		108,842
Inventories		21,109		28,853
Other current assets		26,022		19,415
Total current assets		246,113		243,680
LONG-TERM INVESTMENTS AND RECEIVABLES:
Long-term restricted cash		146		187
Severance pay funds		6,780		8,188
Long term deferred tax asset		4,127		861
Other long term receivables		7,276		7,217
Total long-term investments and receivables		18,329		16,453
PROPERTY AND EQUIPMENT, NET		84,403		82,246
INTANGIBLE ASSETS, NET		2,434		5,709
GOODWILL		43,468		43,468
TOTAL ASSETS		$       394,747		$   391,556
GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED BALANCE SHEET (Cont.)
U.S. dollars in thousands
		December 31,		December 31,
		2018		2017
		Unaudited		Audited
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term loans		$           4,458		$      4,479
Trade payables		24,636		33,715
Accrued expenses		67,533		75,270
Advances from customers and deferred revenues		29,133		16,721
Advances from customers, held by trustees		-		1,416
Other current liabilities		14,588		20,044
Total current liabilities		140,348		151,645
LONG-TERM LIABILITIES:
Accrued severance pay		6,649		7,999
Long-term loans, net of current maturities		8,098		12,582
Other long-term liabilities		580		1,008
Total long-term liabilities		15,327		21,589
SHAREHOLDERS' EQUITY:
Share capital - ordinary shares of NIS 0.2 par value		2,625		2,601
Additional paid-in capital		924,856		921,726
Accumulated other comprehensive loss		(5,380)		(3,046)
Accumulated deficit		(683,029)		(702,959)
Total shareholders' equity		239,072		218,322
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$       394,747		$   391,556
(*) Certain comparative figures have been reclassified to conform to the current year presentation.
The reclassification had no effect on previously reported net income or shareholders' equity.

 

GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS (*)
U.S. dollars in thousands
				Twelve months ended				Three months ended
				December 31,				December 31,
			2018		2017		2018		2017
			Unaudited		Audited		Unaudited
Cash flows from operating activities:
Net income			$      18,409		$      6,801		$    5,295		$  3,403
Adjustments required to reconcile net income
to net cash provided by (used in) operating activities:
Depreciation and amortization			13,149		13,140		2,944		3,256
Capital loss from disposal of property and equipment			761		245		665		110
Stock-based compensation of options and RSU's			1,006		856		276		230
Accrued severance pay, net			57		118		12		(11)
Accrued interest and exchange rate differences on
short and long-term restricted cash, net
Exchange rate differences on long-term loans			(34)		186		(10)		35
Deferred income taxes, net			(3,671)		189		744		489
Decrease (increase) in trade receivables, net			13,090		(19,588)		(9,119)		(22,421)
Decrease (increase) in other assets (including short-term, long-term
and deferred charges)			(4,917)		(9,147)		1,007		(5,307)
Decrease (increase) in inventories			5,257		(10,763)		4,423		(1,534)
Decrease in restricted cash directly related to operating activities, net
Increase (decrease) in trade payables			(8,926)		4,087		3,323		5,169
Increase (decrease) in accrued expenses			(7,206)		19,633		(2,283)		4,978
Increase (decrease) in advance from customers			9,899		(18,959)		(1,230)		(7,245)
Decrease) in advances from customers, held
by trustees			(1,478)		(6,185)		-		(3,845)
Increase (decrease) in other current liabilities and other long term liabilities			(3,379)		2,164		(2,057)		1,806
Net cash provided by (used in) operating activities			32,017		(17,223)		3,990		(20,887)
Cash flows from investing activities:
Purchase of property and equipment			(10,759)		(3,692)		(2,854)		(284)
Investment in restricted cash held by trustees
Proceeds from restricted cash held by trustees
Investment in restricted cash (including long-term)
Proceeds from restricted cash (including long-term)
Net cash used in investing activities			(10,759)		(3,692)		(2,854)		(284)
Cash flows from financing activities:
Capital lease payments							-		-
Issuance of shares in a rights offering			-		-		-		-
Issuance of restricted stock units and exercise of stock options			2,149		661		511		92
Short term bank credit, net			-		-		-		-
Repayment of long-term loans			(4,470)		(4,673)		(114)		(145)
Net cash provided by (used in) financing activities			(2,321)		(4,012)		397		(53)
Effect of exchange rate changes on cash, cash equivalents and restricted cash			(1,490)		51		(652)		(204)
Increase (decrease) in cash, cash equivalents and restricted cash			17,447		(24,876)		881		(21,428)
Cash, cash equivalents and restricted cash at the beginning of the period			86,757		111,633		103,323		108,185
Cash, cash equivalents and restricted cash at the end of the period			$     104,204		$    86,757		$104,204		$86,757
(*) 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:
				December 31,
			2018		2017
			Unaudited		Audited
Cash and cash equivalents			$       67,381		$    52,957
Restricted cash			32,305		29,288
Restricted cash held by trustees			4,372		4,325
Long term restricted cash			146		187
Cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows			$     104,204		$    86,757

 

 

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SOURCE Gilat Satellite Networks