Gilat Reports Fourth Quarter and Full Year 2020 Results

Rhea-AI Summary

Gilat Satellite Networks reported a GAAP net profit of $62.4 million for Q4 2020, significantly improving from a net loss of $11.6 million in Q3 2020. The revenue decreased to $42.6 million, down from $78.3 million in Q4 2019, although it showed improvement from the previous quarter. Adjusted EBITDA was $1.1 million, a decline from $13.1 million in Q4 2019. The company also received $70 million in merger cancellation fees and declared a $35 million dividend. Looking forward, CEO Adi Sfadia expressed optimism about revenue growth in 2021.

Positive

• GAAP net profit increased to $62.4 million in Q4 2020, compared to a net loss of $11.6 million in Q3 2020.
• Successfully secured $70 million in merger cancellation fees from Comtech.
• Declared a cash dividend of $35 million to shareholders.
• CEO highlighted strong bookings in the second half of 2020, indicating positive momentum into 2021.

Negative

• Revenue fell to $42.6 million in Q4 2020 from $78.3 million in Q4 2019.
• Adjusted EBITDA decreased to $1.1 million compared to $13.1 million in Q4 2019.
• Non-GAAP operating loss of $1.6 million in Q4 2020 versus operating income of $9.9 million in Q4 2019.
• Full year revenue declined to $165.9 million from $263.5 million in 2019.

Fourth Quarter GAAP Net Profit of $62.4 million and Adjusted EBITDA of $1.1 million
Net Profit includes termination fees, net of costs

Dov Baharav, Chairman of the Board, Announced His Plans to Step Down During 2021

PETAH TIKVA, Israel, Feb. 16, 2021 (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 full year ended December 31, 2020.

Fourth Quarter Financial Highlights

• Revenues of $42.6 million versus $78.3 million in Q4 2019 and improved from $37.3 million in the previous quarter;
• GAAP operating income of $62.7 million versus $9.2 million in Q4 2019 and an operating loss of $10.9 million in Q3 2020; GAAP operating income includes income related to the settlement with Comtech, net of related expenses, of $64.8 million;
• Non-GAAP operating loss of $1.6 million, compared with operating income of $9.9 million in Q4 2019, improved compared with an operating loss of $1.9 million in the previous quarter;
• GAAP net income of $62.4 million, or income of $1.12 per diluted share, compared with net income of $24.0 million, or income of $0.43 per diluted share in Q4 2019 and net loss in the previous quarter of $11.6 million, or loss of $0.21 per share; GAAP net income includes $64.8 million income related to the settlement with Comtech, net of related expenses, while GAAP net income in Q4 2019 includes a $15.5 million tax benefit;
• Non-GAAP net loss of $1.9 million, or loss of $0.03 per diluted share, compared with net income of $9.1 million, or income of $0.16 per diluted share in Q4 2019, and an improvement compared with a net loss of $2.6 million, or loss of $0.05 per share, as reported in the previous quarter;
• Adjusted EBITDA of $1.1 million compared with adjusted EBITDA of $13.1 million in Q4 2019; and improved compared with adjusted EBITDA of $0.6 million in the previous quarter;
• Received $70 million in merger cancellation fees from Comtech;
• Cash dividend of $20 million paid to shareholders during the quarter; additional cash dividend of $35 million declared in the quarter and paid in January 2021;

Full year 2020 Financial Highlights

• Revenue of $165.9 million, compared with $263.5 million in 2019;
• GAAP operating income of $37.6 million compared to $25.6 million in 2019; GAAP operating income includes income of $53.6 million related to the settlement with Comtech, net of related expenses;
• Non-GAAP operating loss of $13.7 million compared with non-GAAP operating income of $29.2 million in 2019;
• GAAP net income of $34.9 million or $0.63 per diluted share compared with $36.5 million in 2019 or $0.65 per diluted share; GAAP net income includes income of $53.6 million related to the settlement with Comtech, net of related expenses, while GAAP net income in 2019 includes a $15.5 million tax benefit;
• Non-GAAP net loss of $16.4 million or loss of $0.30 per diluted share compared to non-GAAP net income of $24.7 million or income of $0.44 per diluted share in 2019;
• Adjusted EBITDA was $3.3 million loss compared with adjusted EBITDA of $40.2 million in 2019;

Management Commentary

Adi Sfadia, Gilat's CEO, commented: “During 2020, and specifically during the second half of the year, we made major technological achievements and closed some very significant deals, all of which position us very well for 2021 and onward. In particular, we saw wins in most of our growth areas, mainly Cellular Backhaul and NGSO.

"We won multiple managed service deals providing us with significant recurring revenue. In 5G backhaul - another growth engine for us, we are making solid headway and during the year, we successfully demonstrated the transport of 5G traffic with outstanding performance over Thaicom's GEO HTS satellite. We also solidified our position, as a front-runner in providing the ground-segment for NGSO constellations, with an award in the fourth quarter with a potential of over $50M in support of a LEO constellation.

“In addition, given that IFC is and will continue to play a major role in attracting air travelling customers, I am confident that as air travel resumes its recovery, we will see a significant rise in demand for our IFC products and solutions.”

Mr. Sfadia concluded, “I am very encouraged by our strong bookings in the second half of 2020 which have continued into 2021, as well as the enormous investments targeting our industry. Despite my belief that the pandemic may still effect our 2021 operation to some extent, I am confident that our 2021 operating results will be materially better than those of 2020.”

Dov Baharav stated: “Today I announced my plan to step down from my position as chairman of Gilat's Board of Directors during 2021 and retire, following a seven year tenure. I will retain my position until a new Chariman is appointed. I conclude my period with great pride and with a feeling of satisfaction. In the last seven years the company reached extraordinary technological and business achievements, and is extremely well positioned to take advantage of the robust opportunities we are currently seeing in the market." 

Key Recent Announcements

• Gilat Shipped Initial Aero Modems Out of a Multi-Million-Dollar Potential in China
• CORPAC Awards Gilat Multi-Million-Dollar Contract to Provide Mission Critical Telecom Systems for Peru's Airports
• Gilat Awarded Contract with a Potential of Over $50 Million to Supply Wavestream’s Gateway Solid State Power Amplifiers for Low Earth Orbit Constellation
• Gilat’s Proven ESA Technology Successfully Demonstrated over Inmarsat's Global Xpress
• AXESS Awards Gilat Multi-Million Dollars to Expand Cellular Coverage for Two Key Mobile Operators in Mexico
• Globe Awards Gilat Multi-Million US Dollar Managed Service Contract for Significant Expansion of Cellular Backhaul Project
• Gilat Declares $35 Million Cash Dividend to Shareholders
• Hispasat Awards Gilat a Multi-Million Dollar Order for Cellular Backhaul over Satellite to Extend Altan La Red Compartida Service to Rural Mexico
• Gilat Equips Hundreds of Boats, Vessels and Cruise Ships with Satellite Communication
• Gilat Receives Multi-Million-Dollar Order for a US Department of Defense Tactical Communications Program
• United States Government Awards Gilat Additional Multi-Million-Dollar Contract for Military Communications Program
  

Conference Call Details

Gilat’s management will discuss its fourth quarter and full year 2020 results and business achievements and participate in a question and answer session:

Date:	Tuesday, February 16, 2021
Start:	09:30 AM EST / 16:30 IST
Dial-in:	US: 1-866-744-5399
	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: www.veidan-stream.com/gilatq4-2020.html

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

Conference Call Replay
Start:	February 16, 2021 at 12:00 PM EST / 19:00 IST
End:	February 19, 2021 at 12:00 PM EST / 19:00 IST
Dial-in:	US: 1-888-326-9310; International: (+972) 3-925-5904

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, trade secrets and other litigation expenses, restructuring and reorganization costs, merger, acquisition and related litigation expense (income), net and initial recognition of deferred tax asset with respect to carry-forward losses.

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 30 years of experience, we design and manufacture cutting-edge ground segment equipment, and provide comprehensive solutions and end-to-end services, powered by our innovative technology. Delivering high value competitive solutions, our portfolio comprises of a cloud based VSAT network platform, high-speed modems, high performance on-the-move antennas and high efficiency, high power Solid-State 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, cellular backhaul, enterprise, in-flight connectivity, maritime, trains, defense and public safety, all while meeting the most stringent service level requirements. Gilat controlling shareholders are the FIMI Private Equity Funds. 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, Director Corporate Communications
DoreetO@gilat.com

Ehud Helft
GK Investor & Public Relations
gilat@gkir.com
+1 646 688 3559

GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share and per share data)
			Twelve months ended								Three months ended
			December 31,								December 31,
				2020				2019				2020				2019
			Unaudited				Audited				Unaudited
Revenues			$	165,885			$	263,492			$	42,627			$	78,314
Cost of revenues				124,670				167,615				29,329				51,246
Gross profit				41,215				95,877				13,298				27,068
Research and development expenses				27,689				32,208				7,474				8,120
Less - grants				1,386				2,024				454				414
Research and development expenses, net				26,303				30,184				7,020				7,706
Selling and marketing expenses				16,871				21,488				4,534				5,156
General and administrative expenses				14,063				18,515				3,794				4,849
Merger, acquisition and related litigation expenses (income), net				(53,633	)			118				(64,782	)			118
Total operating expenses (income)				3,604				70,305				(49,434	)			17,829
Operating income				37,611				25,572				62,732				9,239
Financial expenses, net				1,907				2,617				192				677
Income before taxes on income				35,704				22,955				62,540				8,562
Taxes on income (tax benefit)				793				(13,583	)			98				(15,459	)
Net income			$	34,911			$	36,538			$	62,442			$	24,021
Basic earnings per share			$	0.63			$	0.66			$	1.12			$	0.43
Diluted earnings per share			$	0.63			$	0.65			$	1.12			$	0.43
Weighted average number of shares used in
	computing earnings per share
	Basic			55,516,113				55,368,703				55,545,654				55,485,961
	Diluted			55,583,474				56,030,976				55,815,099				56,034,744

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
	December 31, 2020												December 31, 2019
	GAAP				Adjustments				Non-GAAP				GAAP			Adjustments				Non-GAAP
	Unaudited												Unaudited
Gross profit	$	13,298				42			$	13,340			$	27,068			70			$	27,138
Operating expenses (income)		(49,434	)			64,389				14,955				17,829			(550	)			17,279
Operating income (loss)		62,732				(64,347	)			(1,615	)			9,239			620				9,859
Income (loss) before taxes on income		62,540				(64,347	)			(1,807	)			8,562			620				9,182
Net income (loss)		62,442				(64,347	)			(1,905	)			24,021			(14,908	)			9,113
Basic earnings (loss) per share	$	1.12			$	(1.15	)		$	(0.03	)		$	0.43		$	(0.27	)		$	0.16
Diluted earnings (loss) per share	$	1.12			$	(1.15	)		$	(0.03	)		$	0.43		$	(0.27	)		$	0.16
Weighted average number of shares used in
computing earnings per share
Basic		55,545,654								55,545,654				55,485,961							55,485,961
Diluted		55,815,099								55,545,654				56,034,744							56,122,960
	Three months ended												Three months ended
	December 31, 2020												December 31, 2019
					Unaudited											Unaudited
GAAP net income					$	62,442										$	24,021
Gross profit
Non-cash stock-based compensation expenses						39											58
Amortization of intangible assets related to acquisition transactions						3											12
						42											70
Operating expenses (income)
Non-cash stock-based compensation expenses						254											347
Amortization of intangible assets related to acquisition transactions						54											49
Trade secrets and other litigation expenses						85											36
Merger, acquisition and related litigation expenses (income), net						(64,782	)										118
						(64,389	)										550
Tax benefit						-											(15,528	)
Non-GAAP net income (loss)					$	(1,905	)									$	9,113

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)
		Twelve months ended												Twelve months ended
		December 31, 2020												December 31, 2019
		GAAP				Adjustments				Non-GAAP				GAAP				Adjustments				Non-GAAP
		Unaudited												Audited				Unaudited
Gross profit		$	41,215				186			$	41,401			$	95,877				776			$	96,653
Operating expenses			3,604				51,502				55,106				70,305				(2,890	)			67,415
Operating income (loss)			37,611				(51,316	)			(13,705	)			25,572				3,666				29,238
Income (loss) before taxes on income			35,704				(51,316	)			(15,612	)			22,955				3,666				26,621
Net income (loss)			34,911				(51,316	)			(16,405	)			36,538				(11,862	)			24,676
Basic earnings (loss) per share		$	0.63			$	(0.93	)		$	(0.30	)		$	0.66			$	(0.21	)		$	0.45
Diluted earnings (loss) per share		$	0.63			$	(0.93	)		$	(0.30	)		$	0.65			$	(0.21	)		$	0.44
Weighted average number of shares used in
computing earnings per share
	Basic		55,516,113								55,516,113				55,368,703								55,368,703
	Diluted		55,583,474								55,516,113				56,030,976								56,165,945
		Twelve months ended												Twelve months ended
		December 31, 2020												December 31, 2019
						Unaudited												Unaudited
GAAP net income						$	34,911											$	36,538
Gross profit
Non-cash stock-based compensation expenses							166												257
Amortization of intangible assets related to acquisition transactions							20												490
Restructuring and re-organization costs							-												29
							186												776
Operating expenses (income)
Non-cash stock-based compensation expenses							1,114												1,878
Amortization of intangible assets related to acquisition transactions							204												203
Trade secrets and other litigation expenses							96												136
Merger, acquisition and related litigation expenses (income), net							(53,633	)											118
Restructuring and re-organization costs							717												555
							(51,502	)											2,890
Tax benefit							-												(15,528	)
Non-GAAP net income (loss)						$	(16,405	)										$	24,676

GILAT SATELLITE NETWORKS LTD.
SUPPLEMENTAL INFORMATION
U.S. dollars in thousands
ADJUSTED EBITDA:
		Twelve months ended							Three months ended
		December 31,							December 31,
			2020				2019			2020				2019
		Unaudited							Unaudited
GAAP operating income		$	37,611			$	25,572		$	62,732			$	9,239
Add (deduct):
Non-cash stock-based compensation expenses			1,280				2,135			293				405
Trade secrets and other litigation expenses			96				136			85				36
Restructuring and re-organization costs			717				584			-				-
Merger, acquisition and related litigation expenses (income), net			(53,633	)			118			(64,782	)			118
Depreciation and amortization (*)			10,653				11,676			2,729				3,263
Adjusted EBITDA		$	(3,276	)		$	40,221		$	1,057			$	13,061
(*) Including amortization of lease incentive
SEGMENT REVENUE:
		Twelve months ended							Three months ended
		December 31,							December 31,
			2020				2019			2020				2019
		Unaudited				Audited			Unaudited
Fixed Networks		$	92,671			$	127,265		$	25,085			$	33,161
Mobility Solutions			54,169				104,665			11,751				34,050
Terrestrial Infrastructure Projects			19,045				31,562			5,791				11,103
Total revenue		$	165,885			$	263,492		$	42,627			$	78,314

GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
		December 31,				December 31,
			2020				2019
		Unaudited				Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	88,754			$	74,778
Restricted cash			27,162				27,067
Trade receivables, net			27,976				47,731
Contract assets			41,573				23,698
Inventories			31,304				27,203
Other current assets			16,637				23,007
Total current assets			233,406				223,484
LONG-TERM ASSETS:
Long-term restricted cash			42				124
Severance pay funds			6,665				6,831
Deferred taxes			19,295				18,455
Operating lease right-of-use assets			4,879				5,211
Other long term receivables			7,797				10,156
Total long-term assets			38,678				40,777
PROPERTY AND EQUIPMENT, NET			77,172				82,584
INTANGIBLE ASSETS, NET			1,082				1,523
GOODWILL			43,468				43,468
TOTAL ASSETS		$	393,806			$	391,836
GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED BALANCE SHEETS (Cont.)
U.S. dollars in thousands
		December 31,				December 31,
			2020				2019
		Unaudited				Audited
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term loans		$	4,000			$	4,096
Trade payables			20,487				20,725
Accrued expenses			46,387				54,676
Advances from customers and deferred revenues			26,244				27,220
Operating lease liabilities			1,911				1,977
Dividend payable			35,003				-
Other current liabilities			13,322				12,261
Total current liabilities			147,354				120,955
LONG-TERM LIABILITIES:
Long-term loans, net of current maturities			-				4,000
Accrued severance pay			7,136				7,061
Long-term advances from customers			1,890				2,866
Operating lease liabilities			2,985				3,258
Other long-term liabilities			631				108
Total long-term liabilities			12,642				17,293
SHAREHOLDERS' EQUITY:
Share capital - ordinary shares of NIS 0.2 par value			2,647				2,643
Additional paid-in capital			928,627				927,348
Accumulated other comprehensive loss			(6,017	)			(5,048	)
Accumulated deficit			(691,447	)			(671,355	)
Total shareholders' equity			233,810				253,588
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	393,806			$	391,836

GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
		Twelve months ended								Three months ended
		December 31,								December 31,
			2020				2019				2020				2019
		Unaudited								Unaudited
Cash flows from operating activities:
Net income		$	34,911			$	36,538			$	62,442			$	24,021
Adjustments required to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization			10,291				10,978				2,534				2,730
Capital loss from disposal of property and equipment			181				461				147				461
Stock-based compensation of options			1,280				2,135				293				405
Accrued severance pay, net			242				361				205				16
Exchange rate differences on long-term loans			-				(12	)			-				(12	)
Deferred income taxes, net			(865	)			(12,555	)			(966	)			(13,636	)
Decrease (increase) in trade receivables, net			19,332				(1,323	)			(1,520	)			(1,464	)
Decrease (increase) in contract assets			(17,875	)			24,062				(3,471	)			(1,346	)
Decrease (increase) in other assets (including short-term, long-term
and deferred charges)			8,940				(817	)			1,021				603
Decrease (increase) in inventories			(5,050	)			(8,076	)			100				(391	)
Decrease (increase) in trade payables			(157	)			(3,884	)			3,178				631
Decrease in accrued expenses			(7,549	)			(11,671	)			(7,356	)			(2,767	)
Increase (decrease) in advance from customers			(1,898	)			1,112				2,218				10,019
Increase (decrease) in current and non current liabilities			1,377				(2,527	)			1,596				765
Net cash provided by operating activities			43,160				34,782				60,421				20,035
Cash flows from investing activities:
Purchase of property and equipment			(4,716	)			(7,982	)			(1,976	)			(2,333	)
Net cash used in investing activities			(4,716	)			(7,982	)			(1,976	)			(2,333	)
Cash flows from financing activities:
Exercise of stock options			-				375				-				-
Dividend payment			(19,999	)			(24,864	)			(19,999	)			-
Repayment of long-term loans			(4,096	)			(4,447	)			-				(94	)
Net cash used in financing activities			(24,095	)			(28,936	)			(19,999	)			(94	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash			(360	)			(99	)			270				136
Increase (decrease) in cash, cash equivalents and restricted cash			13,989				(2,235	)			38,716				17,744
Cash, cash equivalents and restricted cash at the beginning of the period			101,969				104,204				77,242				84,225
Cash, cash equivalents and restricted cash at the end of the period		$	115,958			$	101,969			$	115,958			$	101,969

FAQ

What were Gilat's financial results for Q4 2020?

Gilat reported a GAAP net profit of $62.4 million for Q4 2020, with revenues of $42.6 million.

How did Gilat's revenue in Q4 2020 compare to previous quarters?

Revenue in Q4 2020 was $42.6 million, down from $78.3 million in Q4 2019 but up from $37.3 million in Q3 2020.

What impact did the merger with Comtech have on Gilat's financials?

Gilat received $70 million in merger cancellation fees from Comtech, contributing to its Q4 net profit.

What were the dividends declared by Gilat in February 2021?

Gilat declared a cash dividend of $35 million in February 2021, following a $20 million dividend paid during Q4 2020.

What was the adjusted EBITDA for Gilat in Q4 2020?

Gilat's adjusted EBITDA for Q4 2020 was $1.1 million, down from $13.1 million in Q4 2019.