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CORRECTING and REPLACING -- Gilat Announces Second Quarter 2014 Results

In a release issued under the same headline earlier today by Gilat Satellite Networks Ltd. (Nasdaq:GILT) (TASE:GILT), certain figures have been updated, specifically in the "RECONCILIATION BETWEEN GAAP AND NON-GAAP STATEMENTS OF OPERATIONS (Six months ended)" table. The corrected release follows:

PETAH TIKVA, Israel, Aug. 13, 2014 (GLOBE NEWSWIRE) -- 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, 2014.

Key Financial Highlights:

  • Revenues for the second quarter increased to $54.1 million compared to $50.9 million in the first quarter of 2014.
  • Non-GAAP operating income was $1.5 million, compared to operating income of $0.5 million in the first quarter of 2014. GAAP operating loss was $0.5 million compared to a loss of $1.5 million in the first quarter of 2014
  • Management reaffirms 2014 objectives for annual revenues of $240-$245 million and EBITDA margin levels of approximately 9%

Revenues for the second quarter were $54.1 million, compared to $50.9 million in the first quarter of 2014 and to $61.9 million for the comparable period in 2013. The difference between the second quarter of 2014 and the comparable quarter in 2013 is mostly attributed to the decrease in revenues in our Services Division.

On a non-GAAP basis, operating income was $1.5 million in the second quarter as compared to operating income of $0.5 million in the first quarter of 2014 and of $1.9 million in the comparable quarter of 2013. On a non-GAAP basis, net income for the quarter was $0.6 million or an income of $0.01 per diluted share compared to a net loss of $0.6 million or a loss of $0.01 per diluted share in the first quarter of 2014 and to a net loss of $0.9 million or $0.02 per diluted share in the comparable period in 2013.

GAAP operating loss for the second quarter was $0.5 million as compared to an operating loss of $1.5 million in the first quarter of 2014 and of $0.1 million in the comparable period in 2013. GAAP net loss from continuing operations for the quarter was $1.4 million, or a loss of $0.03 per diluted share, compared to a net loss from continuing operations of $2.6 million, or a loss of $0.06 per diluted share for the first quarter of 2014 and compared to a net loss from continuing operations of $2.9 million, or a loss of $0.07 per diluted share in the comparable period in 2013.

EBITDA for the second quarter was $3.9 million compared to $2.8 million in the first quarter of 2014 and to $5.3 million in the comparable period in 2013.

Erez Antebi, Chief Executive Officer of Gilat stated, "Our improved results in the second quarter come from both of our Commercial and Defense Divisions, as well as from the cost-reduction measures we took last year. Our Defense business continued to grow, with increase in demand for both On-The-Pause as well as On-The-Move solutions."

Antebi concluded, "We anticipate the second half of 2014 to be stronger than the first half thanks to significant revenues to be generated by projects in Peru and Colombia as well as growth in the commercial and defense activities. We are confident that we are on track to meet our previously stated 2014 management objectives."

Key Recent Announcements:

  • Gilat Announces a Breakthrough in LTE Backhauling using its Capricorn TDMA VSAT
  • Gilat Upgrades Wireless Nation's Broadband Services for Consumers and Businesses
  • Gilat's Low-profile Maritime Terminals Deployed

The GAAP financial results include the effect of non-cash stock options expenses, amortization of intangible assets resulting from the purchase price allocation, restructuring costs and net income (loss) from discontinued operations.

Conference Call and Webcast Details:

Gilat management will host a conference call today at 13:30 GMT/ 09:30 EDT/ 16:30 IDT (Israel Daylight Time) to discuss the results. International participants are invited to access the call at (972) 3-918-0644, and US-based participants are invited to access the call by dialing (888) 407-2553. A replay of the conference call will be available beginning at approximately 16:00 GMT/ 12:00 EDT/ 19:00 IDT today, until 16:00 GMT/ 12:00 EDT/ 19:00 IDT August 15, 2014. International participants are invited to access the replay at (972) 3-925-5900 and US-based participants are invited to access the replay by dialing (888) 326-9310. A replay of the call may also be accessed as a webcast via Gilat's website at www.gilat.com and will be archived for 30 days.

Notes:

(1) The attached summary financial statements were prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). The attached summary financial statements are unaudited. To supplement the consolidated financial information and statements presented in accordance with GAAP, the Company presents its EBITDA before the impact of non-cash stock based compensation, depreciation and amortization, other income and other costs related to acquisition transactions. Non-GAAP presentations of net income, EBITDA and earnings per share are provided to enhance the understanding of the Company's historical financial performance and comparability between periods.

We regularly use supplemental non-GAAP financial measures internally to understand manage and evaluate our business and make operating decisions. We believe these non-GAAP financial measures provide consistent and comparable measures to help investors understand our current and future operating cash flow performance. These non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies.

(2) Operating income before depreciation, amortization, non-cash stock based compensation as per ASC 718 and other costs related to acquisition transactions ('EBITDA') is presented because it is a measure commonly used and is presented solely in order to improve the understanding of the Company's operating results and to provide further perspective on these results. EBITDA, however, should not be considered as an alternative to operating income or net income for the period as an indicator of the operating performance of the Company.

Similarly, EBITDA should not be considered as an alternative to cash flows from operating activities as a measure of liquidity. EBITDA is not a measure of financial performance under generally accepted accounting principles and may not be comparable to other similarly titled measures for other companies. EBITDA may not be indicative of the historic operating results of the Company; nor is it meant to be predictive of potential future results. . A reconciliation of specific adjustments to GAAP results is provided in the tables below.

About Gilat

Gilat Satellite Networks Ltd (Nasdaq:GILT) (TASE:GILT) is a leading provider of products and services for satellite-based broadband communications. Gilat develops and markets a wide range of high-performance satellite ground segment equipment and VSATs, with an increasing focus on the consumer and Ka-band market. In addition, Gilat enables mobile SOTM (Satellite-on-the-Move) solutions providing low-profile antennas, next generation solid-state power amplifiers and modems. Gilat also provides managed network and satellite-based services for rural telephony and Internet access via its subsidiaries in Peru and Colombia.

With over 25 years of experience, and over a million products shipped to more than 85 countries, Gilat has provided enterprises, service providers and operators with efficient and reliable satellite-based connectivity solutions, including cellular backhaul, banking, retail, e-government and rural communication networks. Gilat also enables leading defense, public security and news organizations to implement advanced, on-the-move tactical communications on board their land, air and sea fleets using Gilat's high-performance SOTM solutions. For more information, please visit us at 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. 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.
CONDENSED CONSOLIDATED BALANCE SHEET
US dollars in thousands
June 30, December 31,
2014 2013
Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 33,400 58,424
Restricted cash 32,197 18,891
Restricted cash held by trustees 877 3,221
Trade receivables, net 64,828 56,466
Inventories 24,700 27,141
Other current assets 17,759 10,143
Total current assets 173,761 174,286
LONG-TERM INVESTMENTS AND RECEIVABLES:
Long-term restricted cash 304 6,279
Severance pay funds 9,454 9,856
Other long term receivables and deferred charges 5,267 278
Total long-term investments and receivables 15,025 16,413
PROPERTY AND EQUIPMENT, NET 93,311 85,369
INTANGIBLE ASSETS, NET 25,900 28,830
GOODWILL 63,870 63,870
TOTAL ASSETS 371,867 368,768
GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
US dollars in thousands
June 30, December 31,
2014 2013
Unaudited
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term bank credit 7,518 --
Current maturities of long-term loans 4,664 4,665
Trade payables 20,991 20,900
Accrued expenses 21,037 16,748
Short-term advances from customers, held by trustees 3,596 --
Other current liabilities 45,146 54,666
Total current liabilities 102,952 96,979
LONG-TERM LIABILITIES:
Accrued severance pay 9,123 9,628
Long-term loans, net of current maturities 26,888 31,251
Other long-term liabilities 8,936 4,877
Total long-term liabilities 44,947 45,756
COMMITMENTS AND CONTINGENCIES
EQUITY:
Share capital - ordinary shares of NIS 0.2 par value 1,957 1,932
Additional paid-in capital 874,986 873,045
Accumulated other comprehensive income 1,670 1,591
Accumulated deficit (654,645) (650,535)
Total equity 223,968 226,033
TOTAL LIABILITIES AND EQUITY 371,867 368,768
GILAT SATELLITE NETWORKS LTD.
RECONCILIATION BETWEEN GAAP AND NON-GAAP STATEMENTS OF OPERATIONS
FOR COMPARATIVE PURPOSES
U.S. dollars in thousands (except per share data)
Three months ended Three months ended
30 June 2014 30 June 2013
GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
Revenues 54,050 -- 54,050 61,916 -- 61,916
Cost of revenues 34,730 (1,248) 33,482 41,930 (1,244) 40,686
Gross profit 19,320 1,248 20,568 19,986 1,244 21,230
36% 38% 32% 34%
Research and development expenses:
Expenses incurred 6,878 (119) 6,759 7,145 (112) 7,033
Less - grants 594 -- 594 532 -- 532
6,284 (119) 6,165 6,613 (112) 6,501
Selling and marketing expenses 8,677 (350) 8,327 7,774 (313) 7,461
General and administrative expenses 4,841 (290) 4,551 5,672 (273) 5,399
Operating income (loss) (482) 2,007 1,525 (73) 1,942 1,869
Financial expenses, net (515) -- (515) (2,396) -- (2,396)
Income (loss) before taxes on income (997) 2,007 1,010 (2,469) 1,942 (527)
Taxes on income 434 -- 434 381 -- 381
Net income (loss) from continuing operations (1,431) 2,007 576 (2,850) 1,942 (908)
Net income (loss) from discontinued operations 8 (8) -- (1,126) 1,126 --
Net income (loss) (1,423) 1,999 576 (3,976) 3,068 (908)
Basic net earnings (loss) per share from continuing operations (0.03) (0.07)
Basic net earnings (loss) per share from discontinued operations 0.00 (0.03)
Basic net earnings (loss) per share (0.03) 0.01 (0.10) (0.02)
Diluted net earnings (loss) per share from continuing operations (0.03) (0.07)
Diluted net earnings (loss) per share from discontinued operations 0.00 (0.03)
Diluted net earnings (loss) per share (0.03) 0.01 (0.10) (0.02)
Weighted average number of shares used in
computing net earnings (loss) per share
Basic 42,358 42,358 41,932 41,932
Diluted 42,358 43,579 41,932 41,932
(1) Adjustments reflect the effect of non-cash stock based compensation as per ASC 718, amortization of intangible assets related to acquisition transactions, and net income (loss) from discontinued operations.
Three months ended Three months ended
30 June 2014 30 June 2013
Unaudited Unaudited
Non-cash stock-based compensation expenses:
Cost of revenues 60 46
Research and development 119 112
Selling and marketing 138 102
General and administrative 290 273
607 533
Amortization of intangible assets related to acquisition transactions:
Cost of revenues 1,188 1,198
Selling and marketing 212 211
1,400 1,409
GILAT SATELLITE NETWORKS LTD.
RECONCILIATION BETWEEN GAAP AND NON-GAAP STATEMENTS OF OPERATIONS
FOR COMPARATIVE PURPOSES
U.S. dollars in thousands (except per share data)
Six months ended Six months ended
30 June 2014 30 June 2013
GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP
Unaudited Unaudited Unaudited Unaudited Unaudited
Revenues 104,901 -- 104,901 127,336 -- 127,336
Cost of revenues 65,606 (2,515) 63,091 84,569 (2,482) 82,087
Gross profit 39,295 2,515 41,810 42,767 2,482 45,249
37% 40% 34% 36%
Research and development expenses:
Expenses incurred 14,117 (241) 13,876 14,776 (211) 14,565
Less - grants 948 -- 948 864 -- 864
13,169 (241) 12,928 13,912 (211) 13,701
Selling and marketing expenses 18,367 (692) 17,675 16,760 (614) 16,146
General and administrative expenses 9,753 (593) 9,160 11,117 (535) 10,582
Operating income (loss) (1,994) 4,041 2,047 978 3,842 4,820
Financial expenses, net (1,549) -- (1,549) (3,147) -- (3,147)
Income (loss) before taxes on income (3,543) 4,041 498 (2,169) 3,842 1,673
Taxes on income 524 -- 524 757 -- 757
Net income (loss) from continuing operations (4,067) 4,041 (26) (2,926) 3,842 916
Net income (loss) from discontinued operations (43) 43 -- (3,406) 3,406 --
Net income (loss) (4,110) 4,084 (26) (6,332) 7,248 916
Basic net earnings (loss) per share from continuing operations (0.10) (0.07)
Basic net loss per share from discontinued operations (0.00) (0.08)
Basic net earnings (loss) per share (0.10) (0.00) (0.15) 0.02
Diluted net earnings (loss) per share from continuing operations (0.10) (0.07)
Diluted net loss per share from discontinued operations (0.00) (0.08)
Diluted net earnings (loss) per share (0.10) (0.00) (0.15) 0.02
Weighted average number of shares used in
computing net earnings (loss) per share
Basic 42,267 42,267 41,849 41,849
Diluted 42,267 42,267 41,849 43,906
(1) Adjustments reflect the effect of non-cash stock based compensation as per ASC 718, amortization of intangible assets related to acquisition transactions, and net income (loss) from discontinued operations.
Six months ended Six months ended
30 June 2014 30 June 2013
Unaudited Unaudited
Non-cash stock-based compensation expenses:
Cost of revenues 118 86
Research and development 241 211
Selling and marketing 268 191
General and administrative 593 535
1,220 1,023
Amortization of intangible assets related to acquisition transactions:
Cost of revenues 2,397 2,396
Selling and marketing 424 423
2,821 2,819
GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except per share data)
Six months ended Three months ended
June 30, June 30,
2014 2013 2014 2013
Unaudited Unaudited Unaudited Unaudited
Revenues 104,901 127,336 54,050 61,916
Cost of revenues 65,606 84,569 34,730 41,930
Gross profit 39,295 42,767 19,320 19,986
Research and development expenses:
Expenses incurred 14,117 14,776 6,878 7,145
Less - grants 948 864 594 532
13,169 13,912 6,284 6,613
Selling and marketing expenses 18,367 16,760 8,677 7,774
General and administrative expenses 9,753 11,117 4,841 5,672
Operating income (loss) (1,994) 978 (482) (73)
Financial expenses, net (1,549) (3,147) (515) (2,396)
Income (loss) before taxes on income (3,543) (2,169) (997) (2,469)
Taxes on income 524 757 434 381
Net loss from continuing operations (4,067) (2,926) (1,431) (2,850)
Net loss from discontinued operations (43) (3,406) 8 (1,126)
Net loss (4,110) (6,332) (1,423) (3,976)
Net loss per share from continuing operations (basic and diluted) (0.10) (0.07) (0.03) (0.07)
Net loss per share from discontinued operations (basic and diluted) (0.00) (0.08) 0.00 (0.03)
Net loss per share (basic and diluted) (0.10) (0.15) (0.03) (0.10)
Weighted average number of shares used in computing net loss per share
Basic and diluted 42,267 41,849 42,358 41,932
GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
US dollars in thousands
Six months ended Three months ended
June 30, June 30,
2014 2013 2014 2013
Unaudited Unaudited Unaudited Unaudited
Cash flows from continuing operations
Cash flows from operating activities:
Net loss from continuing operations (4,067) (2,926) (1,431) (2,850)
Adjustments required to reconcile net loss
to net cash generated provided by (used in) operating activities:
Depreciation and amortization 7,428 9,512 3,744 4,815
Stock-based compensation 1,220 1,023 607 533
Accrued severance pay, net (103) 64 19 50
Accrued interest and exchange rate differences on short and long-term restricted cash, net (32) 392 (118) 353
Exchange rate differences on long-term loans (34) (46) (40) 86
Capital loss from disposal of property and equipment 60 12 43 --
Deferred income taxes (47) 1,117 (11) 1,133
Increase in trade receivables, net (8,034) (2,205) (5,994) (6,385)
Decrease (increase) in other assets (including short-term, long-term and deferred charges) (12,535) 3,802 (4,752) 4,422
Decrease (increase) in inventories 699 (4,450) 29 (538)
Increase (decrease) in trade payables (52) 3,026 1,998 2,769
Increase (decrease) in accrued expenses 4,176 (3,443) 2,501 (2,611)
Increase (decrease) in advances from customers, held by trustees 3,451 (3,923) (777) 306
Increase (decrease) in other current liabilities and other long term liabilities (5,842) (4,491) (3,599) 644
Net cash provided by (used in) operating activities (13,712) (2,536) (7,781) 2,727
GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
US dollars in thousands
Six months ended Three months ended
June 30, June 30,
2014 2013 2014 2013
Unaudited Unaudited Unaudited Unaudited
Cash flows from investing activities:
Purchase of property and equipment (10,319) (1,820) (9,794) (887)
Investment in restricted cash held by trustees (4,228) (11,236) -- (9,454)
Proceeds from restricted cash held by trustees 6,588 9,771 3,638 6,364
Investment in restricted cash (including long-term) (7,516) (2,365) (7,516) (202)
Proceeds from restricted cash (including long-term) 176 2,021 100 1,956
Purchase of intangible assets -- (16) -- --
Net cash used in investing activities (15,299) (3,645) (13,572) (2,223)
Cash flows from financing activities:
Issuance of restricted stock units and exercise of stock options 746 562 453 9
Payment of obligation related to the purchase of intangible assets -- (500) -- (500)
Short-term bank credit, net 7,216 (458) 5,564 (975)
Repayment of long-term loans (4,330) (5,975) (165) (988)
Net cash provided by (used in) financing activities 3,632 (6,371) 5,852 (2,454)
Cash flows from discontinued operations
Net cash used in operating activities -- (3,336) -- (3,254)
Net cash provided by investing activities -- 1,170 -- 160
Net cash provided by (used in) financing activities -- 13,818 -- (442)
-- 11,652 -- (3,536)
Effect of exchange rate changes on cash and cash equivalents 355 (227) 322 (190)
Decrease in cash and cash equivalents (25,024) (1,127) (15,179) (5,676)
Cash and cash equivalents at the beginning of the period 58,424 66,968 48,579 71,517
Cash and cash equivalents at the end of the period 33,400 65,841 33,400 65,841
GILAT SATELLITE NETWORKS LTD.
CONDENSED EBITDA
US dollars in thousands
Six months ended Three months ended
June 30, June 30,
2014 2013 2014 2013
Unaudited Unaudited Unaudited Unaudited
Operating income (loss) (1,994) 978 (482) (73)
Add:
Non-cash stock-based compensation expenses 1,220 1,023 607 533
Depreciation and amortization 7,428 9,512 3,744 4,815
EBITDA 6,654 11,513 3,869 5,275

CONTACT: KCSA Strategic Communications Phil Carlson - Vice President (212) 896-1233 pcarlson@kcsa.com Vincent G. Piazza - Account Executive (212) 896-1289 vpiazza@kcsa.com Gilat Satellite Networks Joelle Inowlocki JoelleI@gilat.com

Source:Gilat Satellite Networks Ltd.