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Gilat Reports Significant Improvement in Results for the Fourth Quarter and Full Year 2014

Significant improvement on all major operational parameters

2014 EBITDA grows 43% to $23.4 million

Continued growth in revenue and profitability expected for 2015

PETAH TIKVA, Israel, Feb. 18, 2015 (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 fourth quarter and year ended December 31, 2014.

Key Financial Updates:

  • Revenue for 2014 was $235.1 million compared to $234.9 million in 2013
  • EBITDA increased by 43% in 2014 to $23.4 million from $16.3 million in 2013
  • Non-GAAP operating income increased by 200% to $13.1 million in 2014, from $4.4 million in 2013
  • GAAP operating income was $5.0 million as compared to a loss of $4.1 million in 2013
  • Management objectives for 2015: continued growth to revenues between $250 to $260 million and EBITDA between $26 to $28 million

Revenues for the fourth quarter of 2014 were $73.1 million, compared to $55.7 million for the same period in 2013. Revenues for the year ended December 31, 2014 were $235.1 million, compared to $234.9 million in the year ended December 31, 2013.

On a non-GAAP basis, operating income was $7.5 million in the fourth quarter of 2014 as compared to an operating loss of $0.1 million in the comparable quarter of 2013. Operating income for 2014 on a non-GAAP basis was $13.1 million compared to operating income of $4.4 million in 2013.

On a GAAP basis, operating income was $5.5 million in the fourth quarter of 2014 as compared to an operating loss of $2.7 million in the comparable quarter of 2013. Operating income for 2014 on a GAAP basis was $5 million compared to operating loss of $4.1 million in 2013.

On a non-GAAP basis, net income for the quarter was $4.4 million or $0.1 per diluted share compared to net loss of $1.0 million or $0.02 per diluted share in the same quarter of 2013. Net income for 2014 on a non-GAAP basis was $7.4 million or $0.17 per diluted share compared to net loss of $1.1 million or $0.03 per diluted share in 2013.

On a GAAP basis, net income for the quarter was $2.4 million or $0.06 per diluted share compared to net loss from continuing operations of $3.6 million or $0.09 per diluted share in the same quarter of 2013. Net loss from continuing operations for 2014 on a GAAP basis was $0.7 million or $0.02 per diluted share compared to net loss from continuing operations of $9.6 million or $0.23 per diluted share in 2013.

EBITDA for the fourth quarter of 2014 reached $10.4 million compared with $2.5 million in the comparable period in 2013. EBITDA for the twelve months of 2014 reached $23.4 million compared with $16.3 million in the comparable period in 2013.

"2014 was a good year for Gilat, with significant improvement in all major operational parameters, most of all: profitability," said Erez Antebi, CEO of Gilat. "Looking forward, we begin 2015 with a growth focused strategy and a strong product portfolio that enables us to position ourselves successfully in the growing markets, such as HTS, Mobility and Cellular Backhaul. We expect continued improvements in 2015, and our management objectives are to reach revenues between $250 and $260 million and EBIDTA between $26 to $28 million for the year. As in 2014, we expect the second half of 2015 to be significantly stronger than the first half."

Key Recent Announcements:

  • Delnet International Corp. taps Gilat to provide cellular backhaul solution for SMART
  • Gilat Announces Appointment of Yuval Ronen as Chief Financial Officer
  • O3b Certifies Gilat's meoEdge TDMA/SCPC Terminal
  • LATAM Telco Selects Gilat's High-Throughput Satellite Platform
  • Delnet Philippines Selects Gilat to Provide Enterprise VSAT Network Solution for PLDT
  • Uruguay's OpenSky Orders Gilat VSATs for ANTEL
  • Azercosmos and Gilat Sign Partnership Agreement to Offer Managed Services on Azerspace-1
  • Gilat Reports SkyEdge II-c Orders for SES's Astra Connect Service

Conference Call and Webcast Details:

Gilat management will host a conference call today at 14:30 GMT / 09:30 EST / 16:30 IST (Israel Standard Time) to discuss the results. International participants are invited to access the call at (972) 3-918-0609, and US-based participants are invited to access the call by dialing (888) 668-9141. A replay of the conference call will be available beginning at approximately 17:00 GMT/ 12:00 EST/ 19:00 IST today, until 17:00 GMT/ 12:00 EST/ 19:00 IST February 20, 2015. International participants are invited to access the replay at (972) 3-925-5904, 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 statements presented in accordance with GAAP, the Company presents Gilat's EBITDA before the impact of non-cash share-based payment charges, depreciation and amortization, other income and other costs related to acquisition transactions. Non-GAAP presentations of net income, operating income, EBITDA and earnings per share are provided to enhance the understanding of the Company's historical financial performance and comparability between periods.

(2) Operating income before depreciation, amortization, non-cash stock option expenses as per ASC 718 (formerly SFAS 123(R)) 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. Reconciliation between the Company's Operating income and EBITDA is presented in the attached summary financial statements.

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
December 31, December 31,
2014 2013
Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 27,726 58,424
Restricted cash 25,983 18,891
Restricted cash held by trustees 15,441 3,221
Trade receivables, net 57,728 56,466
Inventories 25,112 27,141
Other current assets 14,760 10,143
Total current assets 166,750 174,286
LONG-TERM INVESTMENTS AND RECEIVABLES:
Long-term restricted cash 216 6,279
Severance pay funds 8,085 9,856
Other long term receivables and deferred charges 12,124 278
Total long-term investments and receivables 20,425 16,413
PROPERTY AND EQUIPMENT, NET 90,893 85,369
INTANGIBLE ASSETS, NET 22,970 28,830
GOODWILL 63,870 63,870
TOTAL ASSETS 364,908 368,768
GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
US dollars in thousands
December 31, December 31,
2014 2013
Unaudited
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term bank credit and loans 15,857 --
Current maturities of long-term loans 4,595 4,665
Trade payables 22,850 20,900
Accrued expenses 22,475 16,748
Short-term advances from customers, held by trustees 12,858 --
Other current liabilities 21,527 54,666
Total current liabilities 100,162 96,979
LONG-TERM LIABILITIES:
Accrued severance pay 8,157 9,628
Long-term loans, net of current maturities 26,271 31,251
Other long-term liabilities 5,179 4,877
Total long-term liabilities 39,607 45,756
COMMITMENTS AND CONTINGENCIES
EQUITY:
Share capital - ordinary shares of NIS 0.2 par value 1,966 1,932
Additional paid-in capital 876,624 873,045
Accumulated other comprehensive income (1,420) 1,591
Accumulated deficit (652,031) (650,535)
Total equity 225,139 226,033
TOTAL LIABILITIES AND EQUITY 364,908 368,768
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
  31 December 2014     31 December 2013  
GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
Revenues 73,097 -- 73,097 55,728 -- 55,728
Cost of revenues 47,325 (1,251) 46,074 35,519 (1,256) 34,263
Gross profit 25,772 1,251 27,023 20,209 1,256 21,465
35% 37% 36% 39%
Research and development expenses:
Expenses incurred 6,804 (112) 6,692 7,627 (129) 7,498
Less - grants 675 -- 675 142 -- 142
6,129 (112) 6,017 7,485 (129) 7,356
Selling and marketing expenses 7,257 (346) 6,911 8,535 (344) 8,191
General and administrative expenses 6,892 (283) 6,609 6,341 (312) 6,029
Restructuring Costs -- -- -- 564 (564) --
Operating income (loss) 5,494 1,992 7,486 (2,716) 2,605 (111)
Financial income (expenses), net (1,939) -- (1,939) (1,602) -- (1,602)
Income (loss) before taxes on income 3,555 1,992 5,547 (4,318) 2,605 (1,713)
Taxes on income 1,118 -- 1,118 (708) -- (708)
Net income (loss) from continuing operations 2,437 1,992 4,429 (3,610) 2,605 (1,005)
Net income (loss) from discontinued operations -- -- -- (3,911) 3,911 --
Net income (loss) 2,437 1,992 4,429 (7,521) 6,516 (1,005)
Basic net earnings (loss) per share from continuing operations 0.06 (0.09)
Basic net earnings (loss) per share from discontinued operations --   (0.09)  
Basic net earnings (loss) per share 0.06 0.10 (0.18) (0.02)
Diluted net earnings (loss) per share from continuing operations 0.06 (0.09)
Diluted net earnings (loss) per share from discontinued operations --   (0.09)  
Diluted net earnings (loss) per share 0.06 0.10 (0.18) (0.02)
Weighted average number of shares used in computing net earnings (loss) per share
Basic 42,664,812 42,664,812 42,098,075 42,098,075
Diluted 43,165,834 43,640,235 42,098,075 42,098,075
(1) Adjustments reflect the effect of non-cash stock based compensation as per ASC 718, amortization of intangible assets related to Shares acquisition transactions, and net income (loss) from discontinued operations.
Three months ended Three months ended
31 December 2014 31 December 2013
Unaudited Unaudited
Non-cash stock-based compensation expenses:
Cost of revenues 53 58
Research and development 112 129
Selling and marketing 134 131
General and administrative 283 312
582 630
Amortization of intangible assets related to acquisition transactions:
Cost of revenues 1,198 1,198
Selling and marketing 212 213
1,410 1,411
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)
Year ended Year ended
  31 December 2014     31 December 2013  
GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP
Unaudited Unaudited Unaudited   Unaudited Unaudited
Revenues 235,133 -- 235,133 234,866 -- 234,866
Cost of revenues 151,498 (5,024) 146,474 155,210 (4,993) 150,217
Gross profit 83,635 5,024 88,659 79,656 4,993 84,649
36% 38% 34% 36%
Research and development expenses:
Expenses incurred 27,635 (474) 27,161 29,491 (468) 29,023
Less - grants 2,477 -- 2,477 1,591 -- 1,591
25,158 (474) 24,684 27,900 (468) 27,432
Selling and marketing expenses 32,537 (1,388) 31,149 32,214 (1,297) 30,917
General and administrative expenses 20,903 (1,181) 19,722 23,071 (1,151) 21,920
Restructuring Costs -- -- -- 564 (564) --
Operating income (loss) 5,037 8,067 13,104 (4,093) 8,473 4,380
Financial income (expenses), net (3,837) -- (3,837) (6,239) -- (6,239)
Income (loss) before taxes on income 1,200 8,067 9,267 (10,332) 8,473 (1,859)
Taxes on income 1,901 -- 1,901 (755) -- (755)
Net income (loss) from continuing operations (701) 8,067 7,366 (9,577) 8,473 (1,104)
Net income (loss) from discontinued operations (795) 795 -- (8,320) 8,320 --
Net income (loss) (1,496) 8,862 7,366 (17,897) 16,793 (1,104)
Basic net earnings (loss) per share from continuing operations (0.02) (0.23)
Basic net loss per share from discontinued operations (0.02)   (0.20)  
Basic net earnings (loss) per share (0.04) 0.17 (0.43) (0.03)
 
Diluted net earnings (loss) per share from continuing operations (0.02) (0.23)
Diluted net loss per share from discontinued operations (0.02)   (0.20)  
Diluted net earnings (loss) per share (0.04) 0.17 (0.43) (0.03)
Weighted average number of shares used in computing net earnings (loss) per share
Basic 42,444,482 42,444,482 41,960,925 41,960,925
Diluted 42,444,482 43,621,979 41,960,925 41,960,925
(1) Adjustments reflect the effect of non-cash stock based compensation as per ASC 718, amortization of intangible assets related to Shares acquisition transactions, and net income (loss) from discontinued operations.
Year ended Year ended
31 December 2014 31 December 2013
Unaudited Unaudited
Non-cash stock-based compensation expenses:
Cost of revenues 232 201
Research and development 474 468
Selling and marketing 538 448
General and administrative 1,181 1,151
2,425 2,268
Amortization of intangible assets related to acquisition transactions:
Cost of revenues 4,792 4,792
Selling and marketing 850 849
5,642 5,641
GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share and per share data)
Year ended Three months ended
December 31, December 31,
2014 2013 2014 2013
Unaudited   Unaudited Unaudited
Revenues 235,133 234,866 73,097 55,728
Cost of revenues 151,498 155,210 47,325 35,519
Gross profit 83,635 79,656 25,772 20,209
Research and development expenses:
Expenses incurred 27,635 29,491 6,804 7,627
Less - grants 2,477 1,591 675 142
25,158 27,900 6,129 7,485
Selling and marketing expenses 32,537 32,214 7,257 8,535
General and administrative expenses 20,903 23,071 6,892 6,341
Restructuring Costs -- 564 -- 564
Operating income (loss) 5,037 (4,093) 5,494 (2,716)
Financial expenses, net (3,837) (6,239) (1,939) (1,602)
Income (loss) before taxes on income 1,200 (10,332) 3,555 (4,318)
Taxes on income (tax benefit) 1,901 (755) 1,118 (708)
Net income (loss) from continuing operations (701) (9,577) 2,437 (3,610)
Net loss from discontinued operations (795) (8,320) -- (3,911)
Net income (loss) (1,496) (17,897) 2,437 (7,521)
Net income (loss) per share from continuing operations (basic and diluted) (0.02) (0.23) 0.06 (0.09)
Net loss per share from discontinued operations (basic and diluted) (0.02) (0.20) -- (0.09)
Net income (loss) per share (basic and diluted) (0.04) (0.43) 0.06 (0.18)
Weighted average number of shares used in computing net earnings (loss) per share
Basic 42,444,482 41,960,925 42,664,812 42,098,075
Diluted 42,444,482 41,960,925 43,165,834 42,098,075
GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
US dollars in thousands
Year ended Three months ended
December 31, December 31,
2014 2013 2014 2013
Unaudited   Unaudited Unaudited
Cash flows from continuing operations    
Cash flows from operating activities:
Net income (loss) (1,496) (17,897) 2,437 (7,521)
Net loss from discontinued operations (795) (8,320) -- (3,911)
Net income (loss) from continuing operations (701) (9,577) 2,437 (3,610)
Adjustments required to reconcile net income (loss)
to net cash generated provided by (used in) operating activities:
Depreciation and amortization 15,951 17,559 4,325 4,049
Stock-based compensation 2,425 2,268 582 630
Accrued severance pay, net 301 (38) 259 (37)
Accrued interest and exchange rate differences on short and long-term restricted cash, net 858 307 394 (1,075)
Exchange rate differences on long-term loans (416) 157 (105) 65
Capital loss from disposal of property and equipment 430 48 189 35
Deferred income taxes 7 (2,733) 63 (3,024)
Increase in trade receivables, net (2,457) (4,228) (3,995) (4,894)
Decrease (increase) in other assets (including short-term, long-term and deferred charges) (20,251) 10,740 (8,520) 9,596
Decrease (increase) in inventories (445) (6,502) 781 1,289
Increase (decrease) in trade payables 2,226 (1,225) 6,930 (4,854)
Increase (decrease) in accrued expenses 5,401 (4,703) 3,910 (464)
Increase (decrease) in advances from customers, held by trustees 14,068 (4,448) 14,133 --
Increase (decrease) in other current liabilities and other long term liabilities (33,559) 18,772 (13,958) 24,360
Net cash provided by (used in) operating activities (16,162) 16,397 7,425 22,066
GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
US dollars in thousands
Year ended Three months ended
December 31, December 31,
2014 2013 2014 2013
Unaudited   Unaudited Unaudited
Cash flows from investing activities:
Purchase of property and equipment (12,630) (4,063) (435) (1,246)
Investment in restricted cash held by trustees (24,869) (17,587) (18,955) (3,132)
Proceeds from restricted cash held by trustees 12,306 13,744 3,681 3,461
Investment in restricted cash (including long-term) (12,788) (25,961) (2,207) (23,480)
Proceeds from restricted cash (including long-term) 11,228 2,975 10,996 418
Purchase of intangible assets -- (16) -- --
       
Net cash used in investing activities (26,753) (30,908) (6,920) (23,979)
Cash flows from financing activities:
Capital lease payments (234) -- (148) --
Issuance of restricted stock units and exercise of stock options 1,185 581 437 2
Payment of obligation related to the purchase of intangible assets (500) (500) -- --
Short term bank credit, net 16,571 (3,518) 2,394 (3,426)
Repayment of long-term loans (4,633) (12,950) (149) (146)
       
Net cash provided by (used in) financing activities 12,389 (16,387) 2,534 (3,570)
Cash flows from discontinued operations
Net cash used in operating activities -- (5,996) -- (4,688)
Net cash provided by investing activities -- 15,791 -- 15,086
Net cash provided by (used in) financing activities -- 12,884 -- (300)
-- 22,679 -- 10,098
Effect of exchange rate changes on cash and cash equivalents (172) (325) 49 (105)
Decrease in cash and cash equivalents (30,698) (8,544) 3,088 4,510
Cash and cash equivalents at the beginning of the period 58,424 66,968 24,638 53,914
Cash and cash equivalents at the end of the period 27,726 58,424 27,726 58,424
GILAT SATELLITE NETWORKS LTD.
CONDENSED EBITDA
US dollars in thousands
Year ended Three months ended
December 31, December 31,
2014 2013 2014 2013
Unaudited Unaudited Unaudited Unaudited
Operating income (loss) 5,037 (4,093) 5,494 (2,716)
Add:
Non-cash stock-based compensation expenses 2,425 2,268 582 630
Restructuring costs -- 564 -- 564
Depreciation and amortization 15,951 17,559 4,325 4,049
EBITDA 23,413 16,298 10,401 2,527

CONTACT: Gilat Satellite Networks Joelle Inowlocki JoelleI@gilat.com KCSA Strategic Communications Phil Carlson, Vice President (212) 896-1233 pcarlson@kcsa.com Thomas Mei, Account Executive (212) 896-1208 tmei@kcsa.com

Source:Gilat Satellite Networks Ltd.