Gilat Presents Strong Growth and Results for Third Quarter 2022

Rhea-AI Summary

Gilat Satellite Networks Ltd. (NASDAQ: GILT) reported strong financial results for Q3 2022, highlighting a 21% increase in revenue to $60.4 million compared to the previous year. The company achieved a GAAP operating income of $3.4 million, up from $0.8 million, while adjusted EBITDA surged 88% year-over-year to $7.3 million. GAAP net income stood at $2.1 million versus breakeven in Q3 last year, demonstrating significant operational improvement.

Positive

• Revenue increased by 21% year-over-year, reaching $60.4 million.
• GAAP operating income rose to $3.4 million from $0.8 million in Q3 2021.
• Adjusted EBITDA grew by 88%, totaling $7.3 million.

Negative

• None.

Revenue of $60.4 million, up 21% year-over-year, GAAP operating income of $3.4 million versus $0.8 million in Q3 last year, and adjusted EBITDA of $7.3 million, up 88% year-over-year

PETAH TIKVA, Israel, Nov. 14, 2022 (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, 2022.

Third Quarter 2022 Financial Highlights

• Revenues of $60.4 million,up 21% compared with $49.8 million in Q3 last year;
• GAAP operating income of $3.4 million versus $0.8 million in Q3 last year;
• Non-GAAP operating income of $4.4 million versus $1.3 million in Q3 last year;
• GAAP net income of $2.1 million versus breakeven in Q3 last year;
• Non-GAAP net income of $3 million versus $0.6 million in Q3 last year;
• Adjusted EBITDA of $7.3 million versus $3.9 million in Q3 last year;

Forward-Looking Expectations

The Company adjusted and narrowed the range of its 2022 revenue guidance, with expectations of between $240 million and $245 million, representing year-over-year growth of approximately 13%.

The Company also increased and narrowed the GAAP operating income guidance range to between $8 million to $10 million representing significant year-over-year growth versus $2.2 million in 2021.

The Company increased and narrowed the adjusted EBITDA range to between $23 to $25 million, representing year-over-year growth of approximately 56%.

Management Commentary

Adi Sfadia, Gilat's CEO, commented: "We are very pleased with our strong third quarter results showing continued year-over-year growth and a recovery in all our markets, in particular IFC. We are also very encouraged with the solid and continued improvement in our profitability demonstrating substantial improvement in our gross, operating and net margins with adjusted EBITDA growing by 88% year-over-year.

Strategically we are very excited with the progress of our newly launched, world leading, SkyEdge IV platform. During the third quarter, a leading service provider selected SkyEdge IV, Gilat's high-performance, multi-orbit platform, to power maritime connectivity. We are confident that this platform will allow us to focus and gain market share in the growing multibillion-dollar market of the next era of satellite communication.

The mobility business continued to pick up, with recent IFC orders of over $12 million. We further solidified our leadership in the cellular backhaul market this quarter, with multimillion-dollar orders from both new customers and mobile operators trusting Gilat's technology to extend their networks even further. In addition, we received multimillion-dollar orders in the Defense segment, where we see significant potential and have increased our focus, as well as in the Enterprise sector for utility and banking applications."

Mr. Sfadia concluded, "Our pipeline continues to increase and broaden, and the release of our next generation platform and growth engine – the SkyEdge IV for VHTS & NGSO satellites – is gaining strong traction among new and existing customers. As such, we are increasingly optimistic and expect to maintain our strong momentum ahead. For 2022 as a whole, we are tracking ahead of our profitability targets, and we look forward to continuing the growth trend into 2023."

Key Recent Announcements

• World-Leading UAV Manufacturer Selects Gilat in Multi-Year, Multimillion-Dollar Strategic Agreement for UAV Terminals
• Telefónica Global Solutions Selects Gilat to Extend 4G Cellular Coverage for Mobile Operators in Latin America
• Antamina Selects Gilat for Multimillion-Dollar E-Learning Project
• Gilat Awarded Over $10M to Power IFC Applications of Tier-1 Global Aerospace System Integrator
• Gilat Selected by Sencinet for Petrobras’ Oil and Gas Industry Satellite Connectivity Project
• SES and Gilat Extend Global Strategic Cooperation with Orders for GEO VHTS and O3b mPOWER NGSO Constellation

Conference Call Details
Gilat’s management will discuss its third quarter 2022 results and business achievements and participate in a question and answer session:

Date: Monday, November 14, 2022
Start: 09:30 AM EST / 16:30 IST
Dial-in: US: 1-888-407-2553
International: +972-3-918-0609

A simultaneous webcast of the conference call will be available on the Gilat website at www.gilat.com and through this link: https://veidan.activetrail.biz/gilatq3-2022 

The webcast will also be archived for a period of 30 days on the Company’s website and through the link above.

Non-GAAP Measures
The attached summary unaudited financial statements were prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). To supplement the consolidated financial statements presented in accordance with GAAP, the Company presents non-GAAP presentations of net income, operating income, Adjusted EBITDA and earnings per share.

The adjustments to the Company’s GAAP results are made with the intent of providing both management and investors a more complete understanding of the Company’s underlying operational results, trends, and performance. Non-GAAP financial measures mainly exclude the effect of stock-based compensation, amortization of purchased intangibles, lease incentive amortization, litigation expenses, income related to trade secrets claims, restructuring and reorganization costs, merger, acquisition and related litigation expense (income), impairment of held for sale asset, other expenses, income tax effect on adjustments and one-time changes of deferred tax assets.

Adjusted EBITDA is presented to compare the Company’s performance to that of prior periods and evaluate the Company’s financial and operating results on a consistent basis from period to period. The Company also believes this measure, when viewed in combination with the Company’s financial results prepared in accordance with GAAP, provides useful information to investors to evaluate ongoing operating results and trends. Adjusted EBITDA, however, should not be considered as an alternative to operating income or net income for the period and may not be indicative of the historic operating results of the Company; nor is it meant to be predictive of potential future results. Adjusted EBITDA is not a measure of financial performance under GAAP and may not be comparable to other similarly titled measures for other companies. Reconciliation between the Company's operating income and adjusted EBITDA is presented in the attached summary financial statements.

Non-GAAP presentations of net income, operating income, adjusted EBITDA and earnings per share should not be considered in isolation or as a substitute for any of the consolidated statements of operations prepared in accordance with GAAP, or as an indication of Gilat’s operating performance or liquidity.

About Gilat

Gilat Satellite Networks Ltd. (NASDAQ: GILT, TASE: GILT) is a leading global provider of satellite-based broadband communications.

With over 30 years of experience, we create and deliver deep technology solutions for satellite, ground and new space connectivity and provide comprehensive end-to-end solutions and services, powered by our innovative technology. We believe in the right of all people to be connected and are united in our resolution to provide communication solutions to all reaches of the world.

Delivering high value solutions, our portfolio is comprised of a cloud-based platform and high performance satellite terminals designed to work in harmony with satellite constellations, including Very High Throughput Satellites (VHTS) and Software-Defined Satellites (SDS) in multiple orbits; high performance Satellite On-the-Move (SOTM) antennas; and highly efficient, high-power Solid State Power Amplifiers (SSPA) and Block Upconverters (BUC).

Gilat’s comprehensive solutions support multiple applications with a full portfolio of products to address key applications including broadband access, mobility, cellular backhaul, military, government, and enterprise, all while meeting the most stringent service level requirements. For more information, please visit: 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, risks associated with the outbreak and global spread of the coronavirus (COVID-19) pandemic; 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. We undertake no obligation to update or revise any forward-looking statements for any reason.

Contact:
Gilat Satellite Networks
Doreet Oren, Senior Director Corporate Communications
DoreetO@gilat.com

Ehud Helft
EK Global Investor Relations
ehud@ekgir.com
+1 212 378 8040

GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
U.S. dollars in thousands (except share and per share data)
					Nine months ended								Three months ended
					September 30,								September 30,
						2022				2021				2022				2021
									As Restated (1)								As Restated (1)
					Unaudited								Unaudited
Revenues					$	167,213			$	147,947			$	60,350			$	49,778
Cost of revenues						108,021				101,376				37,315				32,306
Gross profit						59,192				46,571				23,035				17,472
Research and development expenses, net						25,542				22,884				9,156				7,224
Selling and marketing expenses						15,724				15,827				5,414				5,359
General and administrative expenses						13,325				11,042				4,770				4,104
Impairment of held for sale asset						718				-				279				-
Total operating expenses						55,309				49,753				19,619				16,687
Operating income (loss)						3,883				(3,182	)			3,416				785
Financial expenses, net						(2,716	)			(1,458	)			(1,053	)			(701	)
Income (loss) before taxes on income						1,167				(4,640	)			2,363				84
Taxes on income						1,075				523				243				49
Net income (loss)					$	92			$	(5,163	)		$	2,120			$	35
Earnings (loss) per share (basic and diluted)					$	0.00			$	(0.09	)		$	0.04			$	0.00
Weighted average number of shares used in computing earning (loss) per share
		Basic				56,585,858				56,355,020				56,608,981				56,525,177
		Diluted				56,604,854				56,355,020				56,626,283				56,958,250
(1) The Company restated its previously issued condensed interim consolidated financial statements for the three and nine months ended September 30, 2021.
For additional information, see Note 2 and Note 17 to the audited consolidated financial statements included in Part III, Item 18 of our 2021 Form 20-F/A filed with the U.S. Securities and Exchange Commission on September 14, 2022.

GILAT SATELLITE NETWORKS LTD.
RECONCILIATION BETWEEN GAAP AND NON-GAAP CONSOLIDATED STATEMENTS OF INCOME (LOSS)
FOR COMPARATIVE PURPOSES
U.S. dollars in thousands (except share and per share data)
					Three months ended										Three months ended
					September 30, 2022										September 30, 2021
					GAAP			Adjustments (*)				Non-GAAP			GAAP			Adjustments (*)				Non-GAAP
															As Restated (1)							As Restated (1)
					Unaudited										Unaudited
Gross profit					$	23,035			74			$	23,109		$	17,472			96			$	17,568
Operating expenses						19,619			(879	)			18,740			16,687			(448	)			16,239
Operating income						3,416			953				4,369			785			544				1,329
Income before taxes on income						2,363			953				3,316			84			544				628
Net income					$	2,120			911			$	3,031		$	35			544			$	579
Earning per share (basic and diluted)					$	0.04		$	0.02			$	0.06		$	0.00		$	0.01			$	0.01
Weighted average number of shares used in computing earning per share
Basic						56,608,981							56,608,981			56,525,177							56,525,177
Diluted						56,626,283							56,652,855			56,958,250							57,227,810
(*) Adjustments reflect the effect of non-cash stock-based compensation as per ASC 718, amortization of intangible assets related to acquisition transactions, impairment of held for sale asset, other expenses and income tax effect on adjustments which is calculated using the blended effective tax rate on the adjustments, based on the statutory tax rates applicable to the adjustments.
								Three months ended										Three months ended
								September 30, 2022										September 30, 2021
																		As Restated (1)
								Unaudited										Unaudited
GAAP net income								$	2,120									$	35
Gross profit
Non-cash stock-based compensation expenses									74										91
Amortization of intangible assets related to acquisition transactions									-										5
									74										96
Operating expenses
Non-cash stock-based compensation expenses									498										398
Amortization of intangible assets related to acquisition transactions									51										50
Impairment of held for sale asset									279										-
Other									51										-
									879										448
Income tax effect on adjustments									(42	)									-
Non-GAAP net income								$	3,031									$	579
(1) The Company restated its previously issued condensed interim consolidated financial statements for the three and nine months ended September 30, 2021.
For additional information, see Note 2 and Note 17 to the audited consolidated financial statements included in Part III, Item 18 of our 2021 Form 20-F/A   filed with the U.S. Securities and Exchange Commission on September 14, 2022.

GILAT SATELLITE NETWORKS LTD.
RECONCILIATION BETWEEN GAAP AND NON-GAAP CONSOLIDATED STATEMENTS OF INCOME (LOSS)
FOR COMPARATIVE PURPOSES
U.S. dollars in thousands (except share and per share data)
					Nine months ended										Nine months ended
					September 30, 2022										September 30, 2021
					GAAP			Adjustments (*)				Non-GAAP			GAAP				Adjustments (*)				Non-GAAP
															As Restated (1)								As Restated (1)
					Unaudited										Unaudited
Gross profit					$	59,192			230			$	59,422		$	46,571				226			$	46,797
Operating expenses						55,309			(2,394	)			52,915			49,753				(735	)			49,018
Operating income (loss)						3,883			2,624				6,507			(3,182	)			961				(2,221	)
Income (loss) before taxes on income						1,167			2,624				3,791			(4,640	)			961				(3,679	)
Net income (loss)						92			2,582				2,674			(5,163	)			961				(4,202	)
Earning (loss) per share (basic and diluted)					$	0.00		$	0.05			$	0.05		$	(0.09	)		$	0.02			$	(0.07	)
Weighted average number of shares used in computing earning (loss) per share
Basic						56,585,858							56,585,858			56,355,020								56,355,020
Diluted						56,604,854							56,659,298			56,355,020								56,355,020
(*) Adjustments reflect the effect of non-cash stock-based compensation as per ASC 718, amortization of intangible assets related to acquisition transactions, impairment of held for sale asset, other expenses and income tax effect on adjustments which is calculated using the blended effective tax rate on the adjustments, based on the statutory tax rates applicable to the adjustments.
								Nine months ended											Nine months ended
								September 30, 2022											September 30, 2021
																			As Restated (1)
								Unaudited											Unaudited
GAAP net income (loss)								$	92										$	(5,163	)
Gross profit
Non-cash stock-based compensation expenses									220											211
Amortization of intangible assets related to acquisition transactions									10											15
									230											226
Operating expenses
Non-cash stock-based compensation expenses									1,413											584
Amortization of intangible assets related to acquisition transactions									152											151
Impairment of held for sale asset									718											-
Other									111											-
									2,394											735
Income tax effect on adjustments									(42	)										-
Non-GAAP net income (loss)								$	2,674										$	(4,202	)
(1) The Company restated its previously issued condensed interim consolidated financial statements for the three and nine months ended September 30, 2021.
For additional information, see Note 2 and Note 17 to the audited consolidated financial statements included in Part III, Item 18 of our 2021 Form 20-F/A  filed with the U.S. Securities and Exchange Commission on September 14, 2022.

GILAT SATELLITE NETWORKS LTD.
SUPPLEMENTAL INFORMATION
U.S. dollars in thousands
ADJUSTED EBITDA:
						Nine months ended							Three months ended
						September 30,							September 30,
							2022			2021				2022			2021
									As Restated (1)							As Restated (1)
						Unaudited							Unaudited
GAAP net income (loss)						$	92		$	(5,163	)		$	2,120		$	35
Adjustments:
Financial expenses, net							2,716			1,458				1,053			701
Taxes on income							1,075			523				243			49
Non-cash stock-based compensation expenses							1,633			795				572			489
Impairment of held for sale asset							718			-				279			-
Other							111			-				51			-
Depreciation and amortization (*)							8,770			7,365				2,978			2,608
Adjusted EBITDA						$	15,115		$	4,978			$	7,296		$	3,882
(*) Including amortization of lease incentive
SEGMENT REVENUES:
						Nine months ended							Three months ended
						September 30,							September 30,
							2022			2021				2022			2021
									As Restated (1)							As Restated (1)
						Unaudited							Unaudited
Satellite Networks						$	83,993		$	83,157			$	32,366		$	23,182
Integrated Solutions							45,047			33,540				15,650			14,704
Network Infrastructure and Services							38,173			31,250				12,334			11,892
Total revenues						$	167,213		$	147,947			$	60,350		$	49,778
(1) The Company restated its previously issued condensed interim consolidated financial statements for the three and nine months ended September 30, 2021.
For additional information, see Note 2 and Note 17 to the audited consolidated financial statements included in Part III, Item 18 of our 2021 Form 20-F/A  filed with the U.S. Securities and Exchange Commission on September 14, 2022.

	GILAT SATELLITE NETWORKS LTD.
	CONSOLIDATED BALANCE SHEETS
	U.S. dollars in thousands
			September 30,				December 31,
				2022				2021
			Unaudited				Audited
	ASSETS
	CURRENT ASSETS:
	Cash and cash equivalents		$	68,439			$	81,859
	Short-term deposits			-				2,159
	Restricted cash			1,425				2,592
	Trade receivables, net			51,677				39,161
	Contract assets			29,688				26,008
	Inventories			33,925				28,432
	Other current assets			24,808				14,607
	Held for sale asset			3,997				4,587
	Total current assets			213,959				199,405
	LONG-TERM ASSETS:
	Restricted cash			12				12
	Long- term contract assets			11,149				12,539
	Severance pay funds			5,884				6,795
	Deferred taxes			15,816				17,551
	Operating lease right-of-use assets			3,857				4,478
	Other long term assets			10,654				10,456
	Total long-term assets			47,372				51,831
	PROPERTY AND EQUIPMENT, NET			73,312				72,391
	INTANGIBLE ASSETS, NET			364				640
	GOODWILL			43,468				43,468
	TOTAL ASSETS		$	378,475			$	367,735
	GILAT SATELLITE NETWORKS LTD.
	CONSOLIDATED BALANCE SHEETS (Cont.)
	U.S. dollars in thousands
			September 30,				December 31,
				2022				2021
			Unaudited				Audited
	LIABILITIES AND SHAREHOLDERS' EQUITY
	CURRENT LIABILITIES:
	Trade payables		$	24,880			$	19,776
	Accrued expenses			46,207				49,202
	Advances from customers and deferred revenues			31,192				24,373
	Operating lease liabilities			1,813				1,818
	Other current liabilities			15,430				13,339
	Total current liabilities			119,522				108,508
	LONG-TERM LIABILITIES:
	Accrued severance pay			6,473				7,292
	Long-term advances from customers			1,838				1,209
	Operating lease liabilities			1,945				2,283
	Other long-term liabilities			127				120
	Total long-term liabilities			10,383				10,904
	SHAREHOLDERS' EQUITY:
	Share capital - ordinary shares of NIS 0.2 par value			2,711				2,706
	Additional paid-in capital			931,500				929,871
	Accumulated other comprehensive loss			(7,836	)			(6,357	)
	Accumulated deficit			(677,805	)			(677,897	)
	Total shareholders' equity			248,570				248,323
	TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	378,475			$	367,735

GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
				Nine months ended								Three months ended
				September 30,								September 30,
					2022				2021				2022				2021
								As Restated (1)								As Restated (1)
				Unaudited								Unaudited
Cash flows from operating activities:
Net income (loss)				$	92			$	(5,163	)		$	2,120			$	35
Adjustments required to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization					8,604				7,202				2,921				2,556
Impairment of held for sale asset					718				-				279				-
Stock-based compensation of options					1,633				795				572				489
Accrued severance pay, net					92				(177	)			(22	)			(49	)
Deferred taxes, net					1,823				(47	)			159				(232	)
Decrease (increase) in trade receivables, net					(12,270	)			(2,490	)			(387	)			4,867
Decrease (increase) in contract assets					(2,290	)			21,334				318				(313	)
Increase in other assets (including short-term, long-term
and deferred charges)					(8,652	)			(5,485	)			(889	)			(1,476	)
Increase in inventories					(6,030	)			(347	)			(1,955	)			(2,121	)
Increase (decrease) in trade payables					4,315				(2,719	)			110				(1,929	)
Decrease in accrued expenses					(1,767	)			(2,344	)			(77	)			(542	)
Increase in advance from customers and deferred revenue					7,397				4,473				387				4,811
Increase (decrease) in other liabilities					365				(1,301	)			1,175				(1,107	)
Net cash provided by (used in) operating activities					(5,970	)			13,731				4,711				4,989
Cash flows from investing activities:
Purchase of property and equipment					(9,225	)			(5,024	)			(4,710	)			(1,452	)
Repayment of short term deposits					2,159				-				-				2,159
Investment in financial instrument					(1,536	)			-				(1,536	)			-
Net cash provided by (used in) investing activities					(8,602	)			(5,024	)			(6,246	)			707
Cash flows from financing activities:
Dividend payment					-				(35,003	)			-				-
Repayment of long-term loan					-				(4,000	)			-				-
Net cash used in financing activities					-				(39,003	)			-				-
Effect of exchange rate changes on cash, cash equivalents and restricted cash					(15	)			(252	)			(47	)			(91	)
Increase (decrease) in cash, cash equivalents and restricted cash					(14,587	)			(30,548	)			(1,582	)			5,605
Cash, cash equivalents and restricted cash at the beginning of the period					84,463				115,958				71,458				79,805
Cash, cash equivalents and restricted cash at the end of the period				$	69,876			$	85,410			$	69,876			$	85,410
(1) The Company restated its previously issued condensed interim consolidated financial statements for the three and nine months ended September 30, 2021.
For additional information, see Note 2 and Note 17 to the audited consolidated financial statements included in Part III, Item 18 of our 2021 Form 20-F/A filed with the U.S. Securities and Exchange Commission on September 14, 2022.

FAQ

What were Gilat's Q3 2022 revenue figures?

Gilat reported revenue of $60.4 million in Q3 2022, a 21% increase year-over-year.

What is the significance of Gilat's GAAP operating income in Q3 2022?

Gilat's GAAP operating income for Q3 2022 was $3.4 million, up from $0.8 million in Q3 2021.

How much did Gilat's adjusted EBITDA increase in Q3 2022?

Gilat's adjusted EBITDA increased by 88% year-over-year, reaching $7.3 million.

What was Gilat's net income in Q3 2022 compared to last year?

Gilat reported a GAAP net income of $2.1 million in Q3 2022, compared to breakeven in Q3 2021.