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Gilat Announces Fourth Quarter and Full Year 2012 Results

Gilat Satellite Networks Logo

PETAH TIKVA, Israel, Feb. 13, 2013 (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, 2012.

Key Highlights:

  • Quarterly revenues of $97.4 million, compared to $93.6 million in the fourth quarter of 2011
  • Full year revenues increased to $348.4 million, up from $339.2 million in 2011
  • In the fourth quarter EBITDA increased to $10.7 million or a margin of 11%
  • Cash generated from operating activities increased significantly to $18.1 million in Q4 2012
  • Net cash over debt of $21.4 million up from $4.4 million at end of 2011
  • Operational costs decreased by $8.3 million during 2012
  • Company recorded a non-cash impairment of goodwill and other intangible assets in the amount of $31.9 million related to Wavestream

Revenues for the fourth quarter of 2012 were $97.4 million, compared to $93.6 million for the same period in 2011. Revenues for the year ended December 31, 2012 were $348.4 million, compared to $339.2 million in the year ended December 31, 2011.

On a GAAP basis, the Company had an operating loss in the fourth quarter of 2012 of $28.1 million compared to an operating loss of $15.2 million in the fourth quarter of 2011. On a GAAP basis, the Company had an operating loss for the year 2012 of $25.1 million, compared with an operating loss of $12.3 million in the prior year. The Company's GAAP operating loss was mainly affected by a non-cash impairment of goodwill and other intangible assets in the amount of $31.9 million relating to Wavestream.

On a non-GAAP basis, operating income for the fourth quarter of 2012 was $6.6 million similar to the operating income in the fourth quarter of 2011. On a non-GAAP basis, operating income for the year ended December 31, 2012 was $16.8 million compared to $17.5 million in the full year 2011.

On a non-GAAP basis, net income for the fourth quarter was $7.7 million, or $0.18 per diluted share, compared to net income of $8.4 million, or $0.20 per diluted share, in the comparable period in 2011. Non-GAAP net income for 2012 was $16.0 million or $0.37 per diluted share, compared to net income of $15.9 million, or $0.37 per diluted share, in the comparable period in 2011.

EBITDA for the fourth quarter of 2012 reached $10.7 million compared with $10.8 million in the comparable period in 2011. EBITDA for the twelve months of 2012 reached $32.1 million compared with $33.5 million in the comparable period in 2011. Cash generated from operating activities was $18.1 million in the fourth quarter of 2012.

"We are very pleased with our overall numbers for the fourth quarter as well as year-end 2012, and our prospects going forward," said Erez Antebi, Chief Executive Officer of Gilat. "This quarter was highlighted by a 9% revenue growth from the third quarter of 2012, EBITDA margin of 11% and over $18 million of cash generation from operating activities. With regards to Wavestream, we believe they will continue to grow in the future, as it has done over the last three quarters, both in revenue and profitability. However, the continuing pressure and ongoing uncertainties surrounding future spending on DoD budgets in the U.S., as well as other elements, have led us to extend our anticipated timeframe and moderate the forecasted pace of growing the Wavestream business. Therefore in accordance with ASC 350, we are taking this quarter a non-cash impairment of goodwill and other intangible assets charge related to Wavestream."

"On the commercial side of the business, we continue to see a strong rate of implementation at NBN Co. in Australia, and new orders for our Ka CPE from several European ISPs as the SES Broadband Services consumer rollout was launched in mid-December. We closed several new Defense deals in the quarter and continue to expand our position as a leader in Satellite-on-the-Move technology as exemplified by our recent wins in the avionics industry. We have also closed several significant contracts in our Services Division with new and existing customers."

Antebi concluded, "Looking forward into 2013, we will continue to focus on achieving revenue targets, increased profitability and improved cash generation. Our management objectives for 2013 are to generate revenues in the range of $350 million to $360 million with EBITDA margins of 9%, similar to what we achieved in 2012."

Key Recent Announcements:

  • Gilat's Spacenet Awarded Multi-Year Contract with One of World's Leading Delivery Service Organizations;
  • Gilat Awarded Premier VSAT Vendor for Mexican Government New Broadband Connectivity Initiative;
  • Gilat's Wavestream Wins Contract with Honeywell for In-flight Connectivity;
  • Gilat Peru Wins $9.6m Contract with Banco de la Nacion to Provide Satellite Connectivity;
  • Gilat and Huawei Partnering to Deliver Cellular Backhaul Solution to a SE Asian MNO;
  • Gilat Expands Military Customer Portfolio with Southeast Asian Navy Contract;
  • Gilat Announces the Release of the Wavestream Ku-Band Matchbox Mini BUC;
  • Gilat's Wavestream Delivering Airborne Transceivers to TECOM.

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 15, 2013. 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) 295-2634. 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 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, 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 Satellite Networks Ltd.

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 the United States, 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

The Gilat Satellite Networks Ltd. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5848

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,
2012 2011
Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 66,968 56,231
Short-term restricted cash 3,794 7,034
Restricted cash held by trustees 1,664 1,549
Trade receivables, net 60,991 51,654
Inventories 24,973 31,933
Other current assets 29,140 25,767
Total current assets 187,530 174,168
LONG-TERM INVESTMENTS AND RECEIVABLES:
Long-term restricted cash 1,151 2,025
Severance pay fund 9,703 9,722
Long-term trade receivables, receivables in respect of capital leases and other receivables 19,781 20,219
Total long-term investments and receivables 30,635 31,966
PROPERTY AND EQUIPMENT, NET 94,727 100,926
INTANGIBLE ASSETS, NET 35,991 49,927
GOODWILL 65,760 89,691
TOTAL ASSETS 414,643 446,678
GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
US dollars in thousands
December 31, December 31,
2012 2011
Unaudited
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term bank credit 3,517 2,971
Current maturities of long-term loans and convertible notes 7,963 19,092
Trade payables 23,240 25,477
Accrued expenses 24,353 25,609
Short-term advances from customer, held by trustees 4,448 1,551
Other current liabilities 40,336 36,764
Total current liabilities 103,857 111,464
LONG-TERM LIABILITIES:
Accrued severance pay 9,513 9,445
Long-term loans, net 40,747 40,353
Other long-term liabilities 18,569 25,341
Total long-term liabilities 68,829 75,139
COMMITMENTS AND CONTINGENCIES
EQUITY:
Share capital - ordinary shares of NIS 0.2 par value 1,909 1,882
Additional paid in capital 869,822 867,098
Accumulated other comprehensive income 2,864 541
Accumulated deficit (632,638) (609,446)
Total equity 241,957 260,075
TOTAL LIABILITIES AND EQUITY 414,643 446,678
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
December 31, 2012 December 31, 2011

GAAP

Adjustments (1)
Non-GAAP
GAAP

Adjustments (1)
Non-GAAP
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
Revenues 97,428 -- 97,428 93,604 -- 93,604
Cost of revenues 64,567 (1,742) 62,825 59,943 (1,699) 58,244
Gross profit 32,861 1,742 34,603 33,661 1,699 35,360
34% 36% 36% 38%
Research and development expenses:
Expenses incurred 8,022 (111) 7,911 8,963 (48) 8,915
Less - grants 710 -- 710 635 -- 635
7,312 (111) 7,201 8,328 (48) 8,280
Selling and marketing expenses 12,534 (362) 12,172 11,776 (325) 11,451
General and administrative expenses 8,961 (354) 8,607 9,270 (263) 9,007
Impairment of goodwill and Intangible assets and restructuring costs 32,194 (32,194) -- 19,478 (19,478) --
Operating income (loss) (28,140) 34,763 6,623 (15,191) 21,813 6,622
Financial expenses, net (215) -- (215) (113) -- (113)
Other income 2,729 (2,729) -- 1,863 (1,863) --
Income (loss) before taxes on income (25,626) 32,034 6,408 (13,441) 19,950 6,509
Tax benefit (1,324) -- (1,324) (1,911) -- (1,911)
Net income (loss) (24,302) 32,034 7,732 (11,530) 19,950 8,420
Basic net earnings (loss) per share (0.58) 0.19 (0.28) 0.20
Diluted net earnings (loss) per share (0.58) 0.18 (0.28) 0.20
Weighted average number of shares used in computing net earnings (loss) per share:
Basic 41,603 41,603 41,111 41,111
Diluted 41,603 43,556 41,111 42,782
(1) Adjustments reflect the effect of non-cash stock options expenses as per ASC 718, amortization of intangible assets related to acquisition transactions,
Costs related to acquisition transactions, impairment of goodwill and intangible assets and restructuring costs and other income.
Three months ended Three months ended
December 31, 2012 December 31, 2011
Unaudited Unaudited
Non-cash stock-based compensation expenses:
Cost of Revenues 70 69
Research and development 111 48
Selling and marketing 132 95
General and administrative 354 263
667 475
Amortization of intangible assets related to acquisition transactions:
Cost of Revenues 1,672 1,630
Selling and marketing 230 230
1,902 1,860
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)
Year Ended Year Ended
December 31, 2012 December 31, 2011

GAAP

Adjustments (1)
Non-GAAP
GAAP

Adjustments (1)
Non-GAAP
Unaudited Unaudited Unaudited Unaudited Unaudited
Revenues 348,363 -- 348,363 339,201 -- 339,201
Cost of revenues 235,363 (6,690) 228,673 217,574 (7,416) 210,158
Gross profit 113,000 6,690 119,690 121,627 7,416 129,043
32% 34% 36% 38%
Research and development expenses:
Expenses incurred 32,296 (354) 31,942 35,076 (222) 34,854
Less - grants 3,055 -- 3,055 3,375 -- 3,375
29,241 (354) 28,887 31,701 (222) 31,479
Selling and marketing expenses 42,631 (1,335) 41,296 46,523 (1,379) 45,144
General and administrative expenses 34,075 (1,374) 32,701 36,005 (1,058) 34,947
Costs related to acquisition transactions -- -- -- 256 (256) --
Impairment of goodwill and intangible assets and restructuring costs 32,194 (32,194) -- 19,478 (19,478) --
Operating income (loss) (25,141) 41,947 16,806 (12,336) 29,809 17,473
Financial expenses, net (2,642) -- (2,642) (1,931) -- (1,931)
Other income 2,729 (2,729) -- 8,074 (8,074) --
Income (loss) before taxes on income (25,054) 39,218 14,164 (6,193) 21,735 15,542
Tax benefit (1,862) -- (1,862) (343) -- (343)
Net income (loss) (23,192) 39,218 16,026 (5,850) 21,735 15,885
Basic net earnings (loss) per share (0.56) 0.39 (0.14) 0.39
Diluted net earnings (loss) per share (0.56) 0.37 (0.14) 0.37
Weighted average number of shares used in computing net earnings (loss) per share
Basic 41,410 41,410 40,929 40,929
Diluted 41,410 43,406 40,929 42,889
(1) Adjustments reflect the effect of non-cash stock options expenses as per ASC 718, amortization of intangible assets related to acquisition transactions,
Costs related to acquisition transactions, impairment of goodwill and intangible assets and restructuring costs and other income.
Year Ended Year Ended
December 31, 2012 December 31, 2011
Unaudited Unaudited
Non-cash stock-based compensation expenses:
Cost of Revenues 300 295
Research and development 354 222
Selling and marketing 417 434
General and administrative 1,374 1,058
2,445 2,009
Amortization of intangible assets related to acquisition transactions:
Cost of Revenues 6,390 7,121
Selling and marketing 918 945
7,308 8,066
GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except per share data)
Year ended Three months ended
December 31, December 31,
2012 2011 2012 2011
Unaudited Unaudited Unaudited
Revenues 348,363 339,201 97,428 93,604
Cost of revenues 235,363 217,574 64,567 59,943
Gross profit 113,000 121,627 32,861 33,661
Research and development expenses:
Expenses incurred 32,296 35,076 8,022 8,963
Less - grants 3,055 3,375 710 635
29,241 31,701 7,312 8,328
Selling and marketing expenses 42,631 46,523 12,534 11,776
General and administrative expenses 34,075 36,005 8,961 9,270
Costs related to acquisition transactions -- 256 -- --
Impairment of goodwill and Intangible assets and restructuring costs 32,194 19,478 32,194 19,478
Operating loss (25,141) (12,336) (28,140) (15,191)
Financial expenses, net (2,642) (1,931) (215) (113)
Other income 2,729 8,074 2,729 1,863
Loss before taxes on income (25,054) (6,193) (25,626) (13,441)
Tax benefit (1,862) (343) (1,324) (1,911)
Net loss (23,192) (5,850) (24,302) (11,530)
Basic net loss per share (0.56) (0.14) (0.58) (0.28)
Diluted net loss per share (0.56) (0.14) (0.58) (0.28)
Weighted average number of shares used in computing net loss per share
Basic 41,410 40,929 41,603 41,111
Diluted 41,410 40,929 41,603 41,111
GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
US dollars in thousands
Year ended Three months ended
December 31, December 31,
2012 2011 2012 2011
Unaudited Unaudited Unaudited
Cash flows from operating activities:
Net loss (23,192) (5,850) (24,302) (11,530)
Adjustments required to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 22,582 24,121 5,991 6,070
Impairment of goodwill and other intangible assets 31,879 18,043 31,879 18,043
Gain from the sale of an investment accounted for at cost -- (3,034) -- --
Stock-based compensation related to employees 2,445 2,009 667 475
Accrued severance pay, net 88 (285) (150) (21)
Accrued interest and exchange rate differences on short and long-term restricted cash, net (209) 500 (114) 269
Exchange rate differences on long-term loans 90 (112) 81 (262)
Capital loss from disposal of property and equipment 61 286 14 168
Deferred income taxes (3,657) (428) (2,578) (1,589)
Decrease (increase) in trade receivables, net (9,891) 646 733 3,553
Increase in other assets (including short-term, long-term and deferred charges) (3,054) (21,062) (728) (1,825)
Decrease (increase) in inventories 4,969 (4,889) 2,522 (1,194)
Increase (decrease) in trade payables (2,176) 7,066 (3,009) 3,912
Increase (decrease) in accrued expenses (1,265) 11 1,366 575
Increase (decrease) in advances from customer, held by trustees, net 2,897 547 (39) (1,062)
Increase (decrease) in other accounts payable and other long term liabilities 4 (8,972) 5,748 1,407
Net cash generated from operating activities 21,571 8,597 18,081 16,989
GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
US dollars in thousands
Year ended Three months ended
December 31, December 31,
2012 2011 2012 2011
Unaudited Unaudited Unaudited
Cash flows from investing activities:
Purchase of property and equipment (4,646) (8,948) (1,218) (2,844)
Proceeds from sale of an investment accounted for at cost -- 3,034 -- --
Investment in restricted cash held by trustees (35,442) (11,737) (6,741) (5,417)
Proceeds from restricted cash held by trustees 35,447 10,660 12,931 6,213
Investment in restricted cash (including long-term) (24,507) (23,548) (9,090) (8,817)
Proceeds from restricted cash (including long-term) 28,639 23,014 7,762 6,045
Proceeds from working capital adjustment to subsidiary purchase price -- 1,465 -- --
Acquisitions of subsidiaries, net of cash acquired -- (1,867) -- --
Purchase of intangible asset (89) (38) (7) (12)
Net cash generated from (used in) investing activities (598) (7,965) 3,637 (4,832)
Cash flows from financing activities:
Repayment of convertible notes (14,322) (835) (14,322) (441)
Issuance of restricted stock units and exercise of stock options 254 27 236 7
Short-term bank credit, net 546 842 (644) 200
Proceeds from long-term loans 10,000 -- -- --
Repayment of long-term loans (6,452) (1,225) (1,017) (178)
Net cash used in financing activities (9,974) (1,191) (15,747) (412)
Effect of exchange rate changes on cash and cash equivalents (262) (448) (29) (9)
Increase (decrease) in cash and cash equivalents 10,737 (1,007) 5,942 11,736
Cash and cash equivalents at the beginning of the period 56,231 57,238 61,026 44,495
Cash and cash equivalents at the end of the period 66,968 56,231 66,968 56,231
GILAT SATELLITE NETWORKS LTD.
CONDENSED EBITDA
US dollars in thousands
Year ended Three months ended
December 31, December 31,
2012 2011 2012 2011
Unaudited Unaudited Unaudited Unaudited
Operating loss (25,141) (12,336) (28,140) (15,191)
Add:
Non-cash stock-based compensation expenses 2,445 2,009 667 475
Costs related to acquisition transactions -- 256 -- --
Impairment of goodwill and Intangible assets and restructuring costs 32,194 19,478 32,194 19,478
Depreciation and amortization 22,582 24,121 5,991 6,070
EBITDA 32,080 33,528 10,712 10,832

CONTACT: Phil Carlson / Josh Dver, KCSA pcarlson@kcsa.com / jdver@kcsa.com 1 (212) 896 1233 / 1239 David Leichner, Gilat Satellite Networks Ltd. davidle@gilat.com (972) 3 925 2321

Source:Gilat Satellite Networks Ltd.