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Gilat Announces Third Quarter 2015 Results

PETAH TIKVA, Israel, Nov. 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 third quarter, ended September 30, 2015.

Key Financial Updates:

  • Revenues for the third quarter of 2015 were $40.3 million compared to $44.3 million in the second quarter of 2015 and $57.1 million in the comparable period of 2014.
  • EBITDA for the third quarter of 2015 was a loss of $3.4 million compared to a loss of $2.5 million in the second quarter of 2015 and EBITDA of $6.4 million in the comparable period of 2014.
  • Cash balances, including restricted cash, net of short-term bank credits, increased by $34.9 million compared to December 31, 2014, resulting in a cash balance of $88.4 million as of September 30, 2015.
  • Company recorded a non-cash impairment of goodwill in the amount of $20.4 million related to Wavestream.
  • Reiterated management objectives for 2015: Revenues of between $210 to $220 million and EBITDA of between $6 to $8 million.

On a non-GAAP basis, operating loss was $5.8 million in the third quarter of 2015, compared to an operating income of $3.6 million in the comparable quarter of 2014.

On a GAAP basis, operating loss, including impairment of goodwill and restructuring costs, was $29.1 million in the third quarter of 2015, compared to an operating income of $1.5 million in the comparable quarter of 2014.

On a non-GAAP basis, net loss for the quarter was $8.9 million or $0.20 per diluted share, compared to net income of $3.0 million or $0.07 per diluted share in the same quarter of 2014.

On a GAAP basis, net loss for the quarter was $32.4 million or a loss of $0.73 per diluted share compared to a net income of $0.2 million in the same quarter of 2014.

“As I mentioned in our previous release regarding our organizational change, the company is continuing its transition as it seeks to maximize the potential for growth in two key areas: High Throughput Satellite (HTS) and In-Flight Connectivity (IFC)," said Dov Baharav, Interim CEO and Chairman of the Board of Gilat.

"The industry shift to HTS, in some cases at the expense of the traditional enterprise equipment sales, represents an opportunity for large end-to-end deals and substantial growth for Gilat, given the significant technological advantage we have with our X-Architecture, coupled with our service offering. However, the HTS business is characterized by a longer decision-making process. This longer decision-making process has affected our results in the third quarter. At the same time, as previously mentioned, the defense-related business is still weak impacting our third quarter results. On the other hand, we see high-growth in IFC and during the third quarter we have ramped-up our IFC production capabilities, and expect it to translate into revenues starting in the fourth quarter. Furthermore, our results were adversely impacted by the rapid devaluation of the Brazilian Real and the Colombian Peso.

"Looking forward, given the growing demand we see for our IFC offering, the expected new HTS business, and the pickup of our Fitel projects in Peru, we anticipate continued growth in 2016, and a strong fourth quarter in 2015 with a substantial increase in revenues and EBITDA.”

As previously announced, Adi Sfadia has joined Gilat and assumed the role of Gilat's Chief Financial Officer on November 16, 2015. He will be joining Dov Baharav on the earnings call later today.

Key Recent Announcements:

  • Gilat Launches its Revolutionary Distributed X-Architecture to Address the Growing Demands of High-Throughput Satellites (HTS) in a Single Platform
  • Gilat Announces Structural Organizational Changes to Support Key Strategic Opportunities
  • Gilat Signed Agreement with Major Satellite Broadband Provider to Deliver High-Performance Dual Ku/Ka-Band Terminal
  • Nordnet Orders Gilat SkyEdge II-c HTS Consumer Kits for High-Speed Internet Access in France

Conference Call and Webcast Details:
Gilat management will host a conference call today at 15:00 GMT / 10:00 EST / 17:00 IST to discuss the results. International participants are invited to access the call at (972) 3-918-0687, and US-based participants are invited to access the call by dialing (866)-744-5399 or (888)-642-5032. 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 November 21, 2015. International participants are invited to access the call at (972)3-9255940, and US-based participants are invited to access the call by dialing (866)-276-1485. 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, goodwill impairment and restructuring costs. 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)),goodwill impairment and restructuring costs ('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
September 30,December 31,
2015 2014
Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 27,723 27,726
Restricted cash 68,405 25,983
Restricted cash held by trustees 1,204 15,441
Trade receivables, net 38,731 57,728
Inventories 28,830 25,112
Other current assets 16,036 14,760
Total current assets 180,929 166,750
LONG-TERM INVESTMENTS AND RECEIVABLES:
Long-term restricted cash 177 216
Severance pay funds 7,690 8,085
Other long term receivables and deferred charges 7,081 12,124
Total long-term investments and receivables 14,948 20,425
PROPERTY AND EQUIPMENT, NET 85,972 90,893
INTANGIBLE ASSETS, NET 18,597 22,970
GOODWILL 43,468 63,870
TOTAL ASSETS 343,914 364,908
September 30,December 31,
2015 2014
Unaudited
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term bank credit and loans 9,124 15,857
Current maturities of long-term loans 4,557 4,595
Trade payables 14,661 22,850
Accrued expenses 20,284 22,475
Advances from customers 58,545 2,940
Short-term advances from customers, held by trustees 2,614 12,858
Other current liabilities 17,349 18,587
Total current liabilities 127,134 100,162
LONG-TERM LIABILITIES:
Accrued severance pay 7,489 8,157
Long-term loans, net of current maturities 21,680 26,271
Other long-term liabilities 4,380 5,179
Total long-term liabilities 33,549 39,607
EQUITY:
Share capital - ordinary shares of NIS 0.2 par value 2,046 1,966
Additional paid-in capital 883,803 876,624
Accumulated other comprehensive loss (3,502) (1,420)
Accumulated deficit (699,116) (652,031)
Total equity 183,231 225,139
TOTAL LIABILITIES AND EQUITY 343,914 364,908

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 September 2015 30 September 2014
GAAPAdjustments (1)Non-GAAPGAAPAdjustments (1)Non-GAAP
UnauditedUnauditedUnauditedUnauditedUnauditedUnaudited
Revenues 40,347 - 40,347 57,135 - 57,135
Cost of revenues 30,865 (1,278) 29,587 38,567 (1,258) 37,309
Gross profit 9,482 1,278 10,760 18,568 1,258 19,826
24% 27% 32% 35%
Research and development expenses:
Expenses incurred 6,115 (102) 6,013 6,714 (121) 6,593
Less - grants 151 - 151 854 - 854
5,964 (102) 5,862 5,860 (121) 5,739
Selling and marketing expenses 6,050 (317) 5,733 6,913 (350) 6,563
General and administrative expenses 5,164 (214) 4,950 4,258 (305) 3,953
Restructuring Costs 986 (986) - - - -
Goodwill Impairment 20,402 (20,402) - - - -
Operating income (loss) (29,084) 23,299 (5,785) 1,537 2,034 3,571
Financial expenses, net (2,940) - (2,940) (349) - (349)
Income (loss) before taxes on income (32,024) 23,299 (8,725) 1,188 2,034 3,222
Taxes on income 173 - 173 259 - 259
Net income (loss) from continuing operations (32,197) 23,299 (8,898) 929 2,034 2,963
Loss from discontinued operations (200) 200 - (752) 752 -
Net income (loss) (32,397) 23,499 (8,898) 177 2,786 2,963
Basic net income (loss) per share from continuing operations (0.73) 0.02
Basic loss per share from discontinued operations (0.00) (0.02)
Basic net income (loss) per share (0.73) (0.20) 0.00 0.07
Diluted net income (loss) per share from continuing operations (0.73) 0.02
Diluted loss per share from discontinued operations (0.00) (0.02)
Diluted net income (loss) per share (0.73) (0.20) 0.00 0.07
Weighted average number of shares used in
computing net income (loss) per share
Basic44,030,805 44,030,805 42,579,396 42,579,396
Diluted44,030,805 44,030,805 42,995,059 43,586,395
(1) Adjustments reflect the effect of non-cash stock based compensation as per ASC 718, amortization of intangible assets related to Shares acquisition transactions, goodwill impairment, restructuring costs and net income (loss) from discontinued operations.
Three months ended Three months ended
30 September 2015 30 September 2014
Unaudited Unaudited
Non-cash stock-based compensation expenses:
Cost of revenues 59 61
Research and development 102 121
Selling and marketing 127 136
General and administrative 214 305
502 623
Amortization of intangible assets related to acquisition transactions:
Cost of revenues 1,219 1,197
Selling and marketing 190 214
1,409 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)
Nine months ended Nine months ended
30 September 2015 30 September 2014
GAAPAdjustments (1)Non-GAAPGAAPAdjustments (1)Non-GAAP
UnauditedUnauditedUnauditedUnauditedUnauditedUnaudited
Revenues 129,861 - 129,861 162,036 - 162,036
Cost of revenues 96,137 (3,759) 92,378 104,173 (3,773) 100,400
Gross profit 33,724 3,759 37,483 57,863 3,773 61,636
26% 29% 36% 38%
Research and development expenses:
Expenses incurred 19,243 (321) 18,922 20,831 (362) 20,469
Less - grants 563 - 563 1,802 - 1,802
18,680 (321) 18,359 19,029 (362) 18,667
Selling and marketing expenses 18,725 (1,000) 17,725 25,280 (1,042) 24,238
General and administrative expenses 15,226 (794) 14,432 14,011 (898) 13,113
Restructuring Costs 986 (986) - - - -
Goodwill Impairment 20,402 (20,402) - - - -
Operating income (loss) (40,295) 27,262 (13,033) (457) 6,075 5,618
Financial expenses, net (5,850) - (5,850) (1,898) - (1,898)
Income (loss) before taxes on income (46,145) 27,262 (18,883) (2,355) 6,075 3,720
Taxes on income 740 - 740 783 - 783
Net income (loss) from continuing operations (46,885) 27,262 (19,623) (3,138) 6,075 2,937
Loss from discontinued operations (200) 200 - (795) 795 -
Net income (loss) (47,085) 27,462 (19,623) (3,933) 6,870 2,937
Basic loss per share from continuing operations (1.08) (0.07)
Basic loss per share from discontinued operations (0.00) (0.02)
Basic net income (loss) per share (1.08) (0.45) (0.09) 0.07
Diluted loss per share from continuing operations (1.08) (0.07)
Diluted loss per share from discontinued operations (0.00) (0.02)
Diluted net income (loss) per share (1.08) (0.45) (0.09) 0.07
Weighted average number of shares used in
computing net income (loss) per share
Basic43,436,470 43,436,470 42,371,039 42,371,039
Diluted43,436,470 43,436,470 42,371,039 43,615,894
(1) Adjustments reflect the effect of non-cash stock based compensation as per ASC 718, amortization of intangible assets related to Shares acquisition transactions, goodwill impairment, restructuring costs and net income (loss) from discontinued operations.
Nine months ended Nine months ended
30 September 2015 30 September 2014
Unaudited Unaudited
Non-cash stock-based compensation expenses:
Cost of revenues 165 179
Research and development 321 362
Selling and marketing 385 404
General and administrative 794 898
1,665 1,843
Amortization of intangible assets related to acquisition transactions:
Cost of revenues 3,594 3,594
Selling and marketing 615 638
4,209 4,232

GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share and per share data)
Nine months endedThree months ended
September 30,September 30,
2015 2014 2015 2014
UnauditedUnauditedUnauditedUnaudited
Revenues 129,861 162,036 40,347 57,135
Cost of revenues 96,137 104,173 30,865 38,567
Gross profit 33,724 57,863 9,482 18,568
Research and development expenses:
Expenses incurred 19,243 20,831 6,115 6,714
Less - grants 563 1,802 151 854
18,680 19,029 5,964 5,860
Selling and marketing expenses 18,725 25,280 6,050 6,913
General and administrative expenses 15,226 14,011 5,164 4,258
Restructuring Costs 986 - 986 -
Goodwill Impairment 20,402 - 20,402 -
Operating income (loss) (40,295) (457) (29,084) 1,537
Financial expenses, net (5,850) (1,898) (2,940) (349)
Income (loss) before taxes on income (46,145) (2,355) (32,024) 1,188
Taxes on income 740 783 173 259
Income (loss) from continuing operations (46,885) (3,138) (32,197) 929
Loss from discontinued operations (200) (795) (200) (752)
Net income (loss) (47,085) (3,933) (32,397) 177
Net income (loss) per share from continuing operations (basic and diluted) (1.08) (0.07) (0.73) 0.02
Loss per share from discontinued operations (basic and diluted) (0.00) (0.02) (0.00) (0.02)
Net Income (loss) per share (basic and diluted) (1.08) (0.09) (0.73) 0.00
Weighted average number of shares used in
computing net income (loss) per share
Basic 43,436,470 42,371,039 44,030,80542,579,396
Diluted 43,436,470 42,371,039 44,030,80542,995,059

GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
US dollars in thousands
Nine months endedThree months ended
September 30,September 30,
2015 2014 2015 2014
UnauditedUnauditedUnauditedUnaudited
Cash flows from continuing operations
Cash flows from operating activities:
Net income (loss) (47,085) (3,933) (32,397) 177
Loss from discontinued operations (200) (795) (200) (752)
Net income (loss) from continuing operations (46,885) (3,138) (32,197) 929
Adjustments required to reconcile net income (loss)
to net cash generated provided by (used in) operating activities:
Depreciation and amortization 11,459 11,626 3,760 4,198
Goodwill impairment 20,402 - 20,402 -
Stock-based compensation 1,665 1,843 502 623
Accrued severance pay, net (274) 42 (4) 145
Accrued interest and exchange rate differences on
short and long-term restricted cash, net 207 464 120 496
Exchange rate differences on long-term loans (221) (311) 5 (277)
Capital loss from disposal of property and equipment 121 241 73 181
Deferred income taxes 11 (56) 49 (9)
Decrease in trade receivables, net 16,730 1,538 10,395 9,572
Decrease (increase) in other assets (including short-term, long-term
and deferred charges) 862 (11,731) 846 804
Increase in inventories (4,911) (1,226) (2,094) (1,925)
Decrease (increase) in restricted cash directly related to operating activities (52,736) - 1,582 -
Decrease in trade payables (7,647) (4,704) (2,346) (4,652)
Increase (decrease) in accrued expenses (509) 1,491 1,251 (2,685)
Increase (decrease) in advance from customers 55,616 (12,424) (1,716) (7,503)
Decrease in advances from customers, held
by trustees (8,411) (65) (4,253) (3,516)
Decrease in other current liabilities and other long term liabilities (406) (7,177) (2,148) (6,256)
Net cash used in operating activities (14,927) (23,587) (5,773) (9,875)
GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
US dollars in thousands
Nine months endedThree months ended
September 30,September 30,
2015 2014 2015 2014
UnauditedUnauditedUnauditedUnaudited
Cash flows from investing activities:
Purchase of property and equipment (3,109) (12,195) (1,270) (1,876)
Investment in restricted cash held by trustees (6,109) (5,914) - (1,686)
Proceeds from restricted cash held by trustees 18,649 8,625 3,997 2,037
Investment in restricted cash (including long-term) (22,411) (10,581) (1,209) (3,065)
Proceeds from restricted cash (including long-term) 32,559 232 4,283 56
Net cash provided by (used in) investing activities 19,579 (19,833) 5,801 (4,534)
Cash flows from financing activities:
Capital lease payments (408) (86) (204) (86)
Issuance of restricted stock units and exercise of stock options 5,595 748 1,890 2
Payment of obligation related to the purchase of intangible assets (500) (500) (500) (500)
Short term bank credit, net (3,811) 14,177 1,758 6,961
Repayment of long-term loans (4,409) (4,484) (137) (154)
Net cash provided by (used in) financing activities (3,533) 9,855 2,807 6,223
Effect of exchange rate changes on cash and cash equivalents (1,122) (221) (708) (576)
Increase (decrease) in cash and cash equivalents (3) (33,786) 2,127 (8,762)
Cash and cash equivalents at the beginning of the period 27,726 58,424 25,596 33,400
Cash and cash equivalents at the end of the period 27,723 24,638 27,723 24,638

GILAT SATELLITE NETWORKS LTD.
CONDENSED EBITDA
US dollars in thousands
Nine months endedThree months ended
September 30,September 30,
2015 2014 2015 2014
UnauditedUnauditedUnauditedUnaudited
Operating income (loss) (40,295) (457) (29,084)1,537
Add:
Non-cash stock-based compensation expenses 1,665 1,843 502 623
Restructuring costs 986 - 986 -
Goodwill impairment 20,402 - 20,402 -
Depreciation and amortization 11,459 11,626 3,760 4,198
EBITDA (5,783) 13,012 (3,434) 6,358


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.