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Gilat Announces Second Quarter 2015 Results

20:00 EDT 11 Aug 2015 | Globe Newswire

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

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