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Gilat Announces Second Quarter 2015 Results

PETAH TIKVA, Israel, Aug. 12, 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 second quarter ended June 30, 2015.

Key Financial Updates:

  • Revenues for the second quarter of 2015 were $44.3 million compared to $45.2 million in the first quarter of 2015 and $54.1 million in the comparable period of 2014.
  • EBITDA for the second quarter of 2015 was a loss of $2.5 million compared to an income of $0.2 million in the first quarter of 2015 and an income of $3.9 million in the comparable period of 2014.
  • Cash balances, including restricted cash, net of short-term bank credits, increased by $42.4 million compared to December 31, 2014, resulting in a cash balance of $95.9 million as of June 30, 2015.
  • Modified management objectives for 2015: reiterated revenues objective to between $250 to $260 million and modified EBITDA objective to between $20 to $21 million.

Revenues for the second quarter of 2015 were $44.3 million, compared to $54.1 million for the same period in 2014.

On a non-GAAP basis, operating loss was $5.2 million in the second quarter of 2015 as compared to an operating income of $1.5 million in the comparable quarter of 2014.

On a GAAP basis, operating loss was $7.2 million in the second quarter of 2015 as compared to an operating loss of $0.5 million in the comparable quarter of 2014.

On a non-GAAP basis, net loss for the quarter was $7.1 million or $0.16 per diluted share compared to net income of $0.6 million or $0.01 per diluted share in the same quarter of 2014.

On a GAAP basis, net loss for the quarter was $9.1 million or a loss of $0.21 per diluted share compared to a net loss of $1.4 million or a loss of $0.03 per diluted share in the same quarter of 2014.

EBITDA for the second quarter of 2015 was a loss of $2.5 million compared with an income of $3.9 million in the comparable period in 2014.

"The second quarter and the remainder of 2015 are negatively impacted by two main factors. The first is the weaker than expected performance of our Defense sector, mainly resulting from delayed orders from the US DOD and other clients, coupled with lower than expected margins. The second factor is the lower than expected performance of the Colombia Kioscos project, coupled with the sharp devaluation of the Colombian Peso.

"However, we see a stronger second half which will accelerate in Q4 due to growth in all sectors, mainly in our projects in Peru", said Dov Baharav, Interim CEO and Chairman of the Board of Gilat.

"I am very proud to announce a key development in our HTS business. Gilat is partnering with leading China Satellite Communication Companies to provide multiple network segments and VSAT terminals for the first Ka HTS multi-spot beam satellite ChinaSat 16. This agreement presents a major opportunity to develop a long term substantial relationship with our new partners in China to drive further potential business," Mr. Baharav highlighted.

"With the reassurance of our growth drivers' strength, namely HTS, Cellular Backhaul, airborne mobility and the exceptionally large funnel of deals we have, we are optimistic about the business outlook for 2016 and beyond for Gilat," concluded Mr. Baharav.

Key Recent Announcements:

  • Bolivian Space Agency Selects Gilat for its National VSAT Platform Enabling Comprehensive Connectivity Capabilities
  • Fixed VSAT operators can now take advantage of Inmarsat's wholesale service, powered by Gilat Satellite Networks and Global Xpress
  • Gilat Presents Compelling Business Case for MNOs to Deploy Satellite Backhaul for their LTE Networks
  • Gilat Delivers Mission-Critical UAV Connectivity and Maximizes Payload with Comprehensive BLoS SATCOM Solutions

Conference Call and Webcast Details:

Gilat management will host a conference call today at 13:30 GMT / 09:30 EDT / 16:30 IDT to discuss the results. International participants are invited to access the call at (972)3-918-0664, and US-based participants are invited to access the call by dialing (1)888-281-1167. 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, 2015. International participants are invited to access the call at (972)3-925-5921, and US-based participants are invited to access the call by dialing (1)877-456-0009. 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 90 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. Gilat's controlling shareholders are the FIMI Private Equity Funds. 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,
2015 2014
Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 25,596 27,726
Restricted cash 73,156 25,983
Restricted cash held by trustees 6,162 15,441
Trade receivables, net 50,558 57,728
Inventories 26,922 25,112
Other current assets 16,390 14,760
Total current assets 198,784 166,750
LONG-TERM INVESTMENTS AND RECEIVABLES:
Long-term restricted cash 201 216
Severance pay funds 8,372 8,085
Other long term receivables and deferred charges 9,483 12,124
Total long-term investments and receivables 18,056 20,425
PROPERTY AND EQUIPMENT, NET 88,263 90,893
INTANGIBLE ASSETS, NET 20,040 22,970
GOODWILL 63,870 63,870
TOTAL ASSETS 389,013 364,908
GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
US dollars in thousands
June 30, December 31,
2015 2014
Unaudited
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term bank credit and loans 9,220 15,857
Current maturities of long-term loans 4,552 4,595
Trade payables 17,310 22,850
Accrued expenses 20,092 22,475
Advances from customers 60,268 2,940
Short-term advances from customers, held by trustees 8,132 12,858
Other current liabilities 19,532 18,587
Total current liabilities 139,106 100,162
LONG-TERM LIABILITIES:
Accrued severance pay 8,175 8,157
Long-term loans, net of current maturities 21,816 26,271
Other long-term liabilities 4,880 5,179
Total long-term liabilities 34,871 39,607
COMMITMENTS AND CONTINGENCIES
EQUITY:
Share capital - ordinary shares of NIS 0.2 par value 2,019 1,966
Additional paid-in capital 881,439 876,624
Accumulated other comprehensive loss (1,703) (1,420)
Accumulated deficit (666,719) (652,031)
Total equity 215,036 225,139
TOTAL LIABILITIES AND EQUITY 389,013 364,908
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
  30 June 2015     30 June 2014  
GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
Revenues 44,324 -- 44,324 54,050 -- 54,050
Cost of revenues 33,274 (1,230) 32,044 34,730 (1,248) 33,482
Gross profit 11,050 1,230 12,280 19,320 1,248 20,568
25% 28% 36% 38%
Research and development expenses:
Expenses incurred 6,594 (109) 6,485 6,878 (119) 6,759
Less - grants 222 -- 222 594 -- 594
6,372 (109) 6,263 6,284 (119) 6,165
Selling and marketing expenses 6,412 (346) 6,066 8,677 (350) 8,327
General and administrative expenses 5,471 (339) 5,132 4,841 (290) 4,551
Operating income (loss) (7,205) 2,024 (5,181) (482) 2,007 1,525
Financial expenses, net (1,559) -- (1,559) (515) -- (515)
Income (loss) before taxes on income (8,764) 2,024 (6,740) (997) 2,007 1,010
Taxes on income 318 -- 318 434 -- 434
Net income (loss) from continuing operations (9,082) 2,024 (7,058) (1,431) 2,007 576
Net income (loss) from discontinued operations -- -- -- 8 (8) --
Net income (loss) (9,082) 2,024 (7,058) (1,423) 1,999 576
Basic net income (loss) per share from continuing operations (0.21) (0.03)
Basic net income (loss) per share from discontinued operations --   (0.00)  
Basic net income (loss) per share (0.21) (0.16) (0.03) 0.01
Diluted net income (loss) per share from continuing operations (0.21) (0.03)
Diluted net income (loss) per share from discontinued operations --   (0.00)  
Diluted net income (loss) per share (0.21) (0.16) (0.03) 0.01
Weighted average number of shares used in computing net income (loss) per share
Basic 42,883,469 42,883,469 42,357,784 42,357,784
Diluted 42,883,469 42,883,469 42,357,784 43,579,048
(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
30 June 2015 30 June 2014
Unaudited Unaudited
Non-cash stock-based compensation expenses:
Cost of revenues 54 60
Research and development 109 119
Selling and marketing 133 138
General and administrative 339 290
635 607
Amortization of intangible assets related to acquisition transactions:
Cost of revenues 1,176 1,188
Selling and marketing 213 212
1,389 1,400
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
  30 June 2015     30 June 2014  
GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
Revenues 89,514 -- 89,514 104,901 -- 104,901
Cost of revenues 65,272 (2,481) 62,791 65,606 (2,515) 63,091
Gross profit 24,242 2,481 26,723 39,295 2,515 41,810
27% 30% 37% 40%
Research and development expenses:
Expenses incurred 13,128 (219) 12,909 14,117 (241) 13,876
Less - grants 412 -- 412 948 -- 948
12,716 (219) 12,497 13,169 (241) 12,928
Selling and marketing expenses 12,675 (683) 11,992 18,367 (692) 17,675
General and administrative expenses 10,062 (580) 9,482 9,753 (593) 9,160
Operating income (loss) (11,211) 3,963 (7,248) (1,994) 4,041 2,047
Financial expenses, net (2,910) -- (2,910) (1,549) -- (1,549)
Income (loss) before taxes on income (14,121) 3,963 (10,158) (3,543) 4,041 498
Taxes on income 567 -- 567 524 -- 524
Loss from continuing operations (14,688) 3,963 (10,725) (4,067) 4,041 (26)
Loss from discontinued operations -- -- -- (43) 43 --
Loss (14,688) 3,963 (10,725) (4,110) 4,084 (26)
Basic loss per share from continuing operations (0.34) (0.10)
Basic loss per share from discontinued operations --   (0.00)  
Basic loss per share (0.34) (0.25) (0.10) (0.00)
Diluted loss per share from continuing operations (0.34) (0.10)
Diluted loss per share from discontinued operations --   (0.00)  
Diluted loss per share (0.34) (0.25) (0.10) (0.00)
Weighted average number of shares used in computing loss per share
Basic 43,139,303 43,139,303 42,266,861 42,266,861
Diluted 43,139,303 43,139,303 42,266,861 42,266,861
(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.
Six months ended Six months ended
30 June 2015 30 June 2014
Unaudited Unaudited
Non-cash stock-based compensation expenses:
Cost of revenues 106 118
Research and development 219 241
Selling and marketing 258 268
General and administrative 580 593
1,163 1,220
Amortization of intangible assets related to acquisition transactions:
Cost of revenues 2,375 2,397
Selling and marketing 425 424
2,800 2,821
GILAT SATELLITE NETWORKS LTD.
CONDENSED 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,
2015 2014 2015 2014
Unaudited Unaudited Unaudited Unaudited
Revenues 89,514 104,901 44,324 54,050
Cost of revenues 65,272 65,606 33,274 34,730
Gross profit 24,242 39,295 11,050 19,320
Research and development expenses:
Expenses incurred 13,128 14,117 6,594 6,878
Less - grants 412 948 222 594
12,716 13,169 6,372 6,284
Selling and marketing expenses 12,675 18,367 6,412 8,677
General and administrative expenses 10,062 9,753 5,471 4,841
Operating loss (11,211) (1,994) (7,205) (482)
Financial expenses, net (2,910) (1,549) (1,559) (515)
Loss before taxes on income (14,121) (3,543) (8,764) (997)
Taxes on income 567 524 318 434
Loss from continuing operations (14,688) (4,067) (9,082) (1,431)
Net income (loss) from discontinued operations -- (43) -- 8
Loss (14,688) (4,110) (9,082) (1,423)
Loss per share from continuing operations (basic and diluted) (0.34) (0.10) (0.21) (0.03)
Net income (loss) per share from discontinued operations (basic and diluted) -- (0.00) -- (0.00)
Loss per share (basic and diluted) (0.34) (0.10) (0.21) (0.03)
Weighted average number of shares used in computing net loss per share
Basic 43,139,303 42,266,861 42,883,469 42,357,784
Diluted 43,139,303 42,266,861 42,883,469 42,357,784
GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
US dollars in thousands
Six months ended Three months ended
June 30, June 30,
2015 2014 2015 2014
Unaudited Unaudited Unaudited Unaudited
Cash flows from continuing operations    
Cash flows from operating activities:
Loss (14,688) (4,110) (9,082) (1,423)
Net income (loss) from discontinued operations -- (43) -- 8
Loss from continuing operations (14,688) (4,067) (9,082) (1,431)
Adjustments required to reconcile net loss to net cash generated provided by (used in) operating activities:
Depreciation and amortization 7,699 7,428 4,041 3,744
Stock-based compensation 1,163 1,220 635 607
Accrued severance pay, net (270) (103) (169) 19
Accrued interest and exchange rate differences on short and long-term restricted cash, net 87 (32) 44 (118)
Exchange rate differences on long-term loans (226) (34) 103 (40)
Capital loss from disposal of property and equipment 48 60 48 43
Deferred income taxes (38) (47) 3 (11)
Decrease (increase) in trade receivables, net 6,335 (8,034) 5,614 (5,994)
Decrease (increase) in other assets (including short-term, long-term and deferred charges) 16 (12,535) (2,918) (4,752)
Decrease (increase) in inventories (2,817) 699 1,365 29
Increase in restricted cash directly related to operating activities (54,318) -- (54,318) --
Increase (decrease) in trade payables (5,301) (52) (5,106) 1,998
Increase (decrease) in accrued expenses (1,760) 4,176 413 2,501
Increase (decrease) in advance from customers 57,332 (4,921) 58,099 (3,726)
Increase (decrease) in advances from customers, held by trustees (4,158) 3,451 1,020 (777)
Increase (decrease) in other current liabilities and other long term liabilities 1,742 (921) (3,275) 127
Net cash used in operating activities (9,154) (13,712) (3,483) (7,781)
GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
US dollars in thousands
Six months ended Three months ended
June 30, June 30,
2015 2014 2015 2014
Unaudited Unaudited Unaudited Unaudited
Cash flows from investing activities:
Purchase of property and equipment (1,839) (10,319) (1,098) (9,794)
Investment in restricted cash held by trustees (6,109) (4,228) (6,109) --
Proceeds from restricted cash held by trustees 14,652 6,588 3,730 3,638
Investment in restricted cash (including long-term) (21,202) (7,516) (11,150) (7,516)
Proceeds from restricted cash (including long-term) 28,276 176 6,159 100
Net cash provided by (used in) investing activities 13,778 (15,299) (8,468) (13,572)
Cash flows from financing activities:
Capital lease payments (204) -- (102) --
Issuance of restricted stock units and exercise of stock options 3,705 746 2,912 453
Short term bank credit, net (5,569) 7,216 4,438 5,564
Repayment of long-term loans (4,272) (4,330) (137) (165)
Net cash provided by (used in) financing activities (6,340) 3,632 7,111 5,852
Effect of exchange rate changes on cash and cash equivalents (414) 355 71 322
Decrease in cash and cash equivalents (2,130) (25,024) (4,769) (15,179)
Cash and cash equivalents at the beginning of the period 27,726 58,424 30,365 48,579
Cash and cash equivalents at the end of the period 25,596 33,400 25,596 33,400
GILAT SATELLITE NETWORKS LTD.
CONDENSED EBITDA
US dollars in thousands
Six months ended Three months ended
June 30, June 30,
2015 2014 2015 2014
Unaudited Unaudited Unaudited Unaudited
Operating loss (11,211) (1,994) (7,205) (482)
Add:
Non-cash stock-based compensation expenses 1,163 1,220 635 607
Depreciation and amortization 7,699 7,428 4,041 3,744
EBITDA (2,349) 6,654 (2,529) 3,869

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

Source:Gilat Satellite Networks Ltd.