Gilat Reports Second Quarter 2023 Results

Presents a Robust 22% Year-over-Year Growth in Revenues; GAAP Operating Income More Than Tripled and Adjusted EBITDA Grew by 74%. The Company Raises its Full Year 2023 Guidance

PETAH TIKVA, Israel, Aug. 08, 2023 (GLOBE NEWSWIRE) -- Gilat Satellite Networks Ltd. (NASDAQ: GILT, TASE: GILT), a worldwide leader in satellite networking technology, solutions and services, reported today its results for the second quarter, ended June 30, 2023.

Second Quarter 2023 Financial Highlights

• Revenues of $67.6 million, up 22% compared with $55.5 million in Q2 2022;
• GAAP operating income of $5.4 million, compared with $1.5 million in Q2 2022;
• Non-GAAP operating income of $6.1 million, compared with $2.4 million in Q2 2022;
• GAAP net income of $4.3 million, or $0.08 earnings per diluted share, compared with $0.5 million, or $0.01 earnings per diluted share in Q2 2022;
• Non-GAAP net income of $4.9 million, or $0.09 earnings per diluted share, compared with $1.4 million, or $0.03 earnings per diluted share in Q2 2022;
• Adjusted EBITDA of $9.2 million, up 74% compared with $5.3 million in Q2 2022;

Forward-Looking Expectations

The Company today raised its 2023 revenues guidance to between $265 to $285 million, representing year-over-year growth of 15% at the mid-point, as well as increased its GAAP operating income guidance to between $18 to $22 million, representing year-over-year growth of 101% at the mid-point and its adjusted EBITDA guidance to between $33 to $37 million, representing year-over-year growth of 39% at the mid-point.

Adi Sfadia, Gilat's CEO, commented:

“We are very pleased with our strong second quarter results, with solid growth in revenue, which was up 22% year-over-year, and a stronger growth in Adjusted EBITDA, up 74% year-over-year, demonstrating operating leverage in our business model. The revenue growth was broad across most of our business areas, a testimony to the strong market interest in Gilat’s solutions as well as growing interest in satellite communications overall.

We are experiencing a significant expansion in our in-flight connectivity (IFC) business with a growing demand for both electronically steered antennas (ESA) and Solid-State Power Amplifiers (SSPA) from existing and new customers.

We signed a significant agreement and received the first orders from Satcom Direct, for the development and supply of new ultra-low profile electronically steered antennas (ESA) to operate over OneWeb’s LEO constellation. This ESA project is an important turning point and an important future growth engine as we increase our presence by entering new market segments such as IFC for business jets, as well as connectivity for government and military aviation.

We are progressing in obtaining the necessary regulatory approvals for our acquisition of DataPath Inc., which was announced during the first quarter. Conditioned upon this process's satisfactory conclusion, we anticipate that the closing of the transaction will occur in Q4 2023."

Mr. Sfadia concluded, "Not only did we report strong results in the quarter, but we also had strong bookings and signed some strategic deals this quarter, all of which led us to increase our 2023 guidance and makes me confident about our ability to materialize our long-term growth potential.”

Key Recent Announcements

• Satcom Direct and Gilat Sign Strategic Agreement for Joint ESA Project to Expand Plane Simple® Portfolio
• Tier 1 Telecom Operator Selects Gilat Satellite Connectivity for a Major Western European Utility Company
• Gilat Awarded Millions of Dollars in Orders for Cellular Backhaul Over Satellite Project in Mexico
  

Conference Call Details
Gilat’s management will discuss its second quarter 2023 results and business achievements and participate in a question-and-answer session:

Date: Tuesday, August 8, 2023
Start: 09:30 AM EDT / 16:30 IDT
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/gilatq2-2023

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 gross profit, operating expenses, operating income, income before taxes on income, net income (loss), adjusted EBITDA, and earnings (losses) per share. The adjustments to the Company’s GAAP results are made with the intent of providing both management and investors with a more complete understanding of the Company’s underlying operational results, trends, and performance. Non-GAAP financial measures mainly exclude, if and when applicable, the effect of non-cash stock-based compensation expenses, amortization of purchased intangibles, amortization of intangible assets related to acquisition transactions, lease incentive amortization, impairment of held for sale asset, income tax effect on adjustments, one-time changes of deferred tax assets, and other operating expenses (income), net.

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 (loss) 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 net income (loss) and adjusted EBITDA is presented in the attached summary financial statements.

Non-GAAP presentations of gross profit, operating expenses, operating income, income before taxes on income, net income (loss), adjusted EBITDA and earnings (losses) 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 35 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

Gilat Satellite Networks
Mayrav Sher, Head of Finance and Investor Relations
MayravS@gilat.com

EK Global IR
Ehud Helft, Managing Partner
ehud@ekgir.com

GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
U.S. dollars in thousands (except share and per share data)
				Six months ended									Three months ended
				June 30,									June 30,
					2023					2022				2023				2022
				Unaudited									Unaudited
Revenues				$	126,551			$		106,863			$	67,589		$		55,454
Cost of revenues					76,330					70,706				42,053				35,685
Gross profit					50,221					36,157				25,536				19,769
Research and development expenses, net					19,003					16,386				9,384				8,718
Selling and marketing expenses					11,941					10,310				5,932				4,960
General and administrative expenses					9,155				*)	8,495				4,724			*)	4,311
Impairment of held for sale asset					-					439				-				229
Other operating expenses (income), net					(2,340	)			*)	60				47			*)	60
Total operating expenses					37,759					35,690				20,087				18,278
Operating income					12,462					467				5,449				1,491
Financial expenses, net					735					1,663				586				468
Income (loss) before taxes on income					11,727					(1,196	)			4,863				1,023
Taxes on income					1,822					832				538				517
Net income (loss)				$	9,905			$		(2,028	)		$	4,325		$		506
Earnings (losses) per share (basic and diluted)				$	0.17			$		(0.04	)		$	0.08		$		0.01
Weighted average number of shares used in computing earnings (losses) per share
	Basic				56,615,714					56,574,296				56,617,943				56,597,523
	Diluted				56,622,204					56,574,296				56,620,977				56,637,208
*) Reclassified

GILAT SATELLITE NETWORKS LTD.
RECONCILIATION BETWEEN GAAP AND NON-GAAP CONSOLIDATED STATEMENTS OF INCOME
FOR COMPARATIVE PURPOSES
U.S. dollars in thousands (except share and per share data)
	Three months ended										Three months ended
	June 30, 2023										June 30, 2022
	GAAP			Adjustments(*)				Non-GAAP			GAAP			Adjustments(*)				Non-GAAP
	Unaudited										Unaudited
Gross profit	$	25,536			95			$	25,631		$	19,769			81			$	19,850
Operating expenses		20,087			(513	)			19,574			18,278			(832	)			17,446
Operating income		5,449			608				6,057			1,491			913				2,404
Income before taxes on income		4,863			608				5,471			1,023			913				1,936
Net income	$	4,325			608			$	4,933		$	506			913			$	1,419
Earnings per share (basic and diluted)	$	0.08		$	0.01			$	0.09		$	0.01		$	0.02			$	0.03
Weighted average number of shares used in computing earnings per share
Basic		56,617,943							56,617,943			56,597,523							56,597,523
Diluted		56,620,977							56,620,977			56,637,208							56,773,970
(*) 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 and other operating expenses
	Three months ended										Three months ended
	June 30, 2023										June 30, 2022
				Unaudited										Unaudited
GAAP net income				$	4,325									$	506
Gross profit
Non-cash stock-based compensation expenses					95										76
Amortization of intangible assets related to acquisition transactions					-										5
					95										81
Operating expenses
Non-cash stock-based compensation expenses					417										493
Amortization of intangible assets related to acquisition transactions					49										50
Impairment of held for sale asset					-										229
Other operating expenses					47										60
					513										832
Non-GAAP net income				$	4,933									$	1,419

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)
	Six months ended										Six months ended
	June 30, 2023										June 30, 2022
	GAAP			Adjustments(*)				Non-GAAP			GAAP				Adjustments(*)				Non-GAAP
	Unaudited										Unaudited
Gross profit	$	50,221			170			$	50,391		$	36,157				156			$	36,313
Operating expenses		37,759			1,296				39,055			35,690				(1,515	)			34,175
Operating income		12,462			(1,126	)			11,336			467				1,671				2,138
Income (loss) before taxes on income		11,727			(1,126	)			10,601			(1,196	)			1,671				475
Net income (loss)		9,905			(1,126	)			8,779			(2,028	)			1,671				(357	)
Earnings (losses) per share (basic and diluted)	$	0.17		$	(0.01	)		$	0.16		$	(0.04	)		$	0.03			$	(0.01	)
Weighted average number of shares used in computing earnings (losses) per share
Basic		56,615,714							56,615,714			56,574,296								56,574,296
Diluted		56,622,204							56,622,204			56,574,296								56,574,296
(*) 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 and other operating expenses (income), net
	Six months ended										Six months ended
	June 30, 2023										June 30, 2022
				Unaudited											Unaudited
GAAP net income (loss)				$	9,905										$	(2,028	)
Gross profit
Non-cash stock-based compensation expenses					170											145
Amortization of intangible assets related to acquisition transactions					-											11
					170											156
Operating expenses
Non-cash stock-based compensation expenses					944											916
Amortization of intangible assets related to acquisition transactions					100											100
Impairment of held for sale asset					-											439
Other operating expenses (income), net					(2,340	)										60
					(1,296	)										1,515
Non-GAAP net income (loss)				$	8,779										$	(357	)

GILAT SATELLITE NETWORKS LTD.
SUPPLEMENTAL INFORMATION
U.S. dollars in thousands
ADJUSTED EBITDA:
		Six months ended								Three months ended
		June 30,								June 30,
			2023				2022				2023			2022
		Unaudited								Unaudited
GAAP net income (loss)		$	9,905			$	(2,028	)		$	4,325		$	506
Adjustments:
Financial expenses, net			735				1,663				586			468
Taxes on income			1,822				832				538			517
Non-cash stock-based compensation expenses			1,114				1,061				512			569
Impairment of held for sale asset			-				439				-			229
Other operating expenses (income), net			(2,340	)			60				47			60
Depreciation and amortization (*)			6,335				5,792				3,172			2,941
Adjusted EBITDA		$	17,571			$	7,819			$	9,180		$	5,290
(*) Including amortization of lease incentive
SEGMENT REVENUES:
		Six months ended								Three months ended
		June 30,								June 30,
			2023				2022				2023			2022
		Unaudited								Unaudited
Satellite Networks		$	74,273			$	51,627			$	40,727		$	26,857
Integrated Solutions			25,619				29,397				12,700			15,691
Network Infrastructure and Services			26,659				25,839				14,162			12,906
Total revenues		$	126,551			$	106,863			$	67,589		$	55,454

	GILAT SATELLITE NETWORKS LTD.
	CONSOLIDATED BALANCE SHEETS
	U.S. dollars in thousands
			June 30,				December 31,
				2023				2022
			Unaudited				Audited
	ASSETS
CURRENT ASSETS:
	Cash and cash equivalents		$	87,408			$	86,591
	Restricted cash			374				541
	Trade receivables, net			41,577				50,644
	Contract assets			17,557				24,971
	Inventories			40,049				33,024
	Other current assets			22,744				19,283
	Total current assets			209,709				215,054
LONG-TERM ASSETS:
	Restricted cash			14				13
	Long-term contract assets			9,980				11,149
	Severance pay funds			5,551				5,947
	Deferred taxes			16,445				18,265
	Operating lease right-of-use assets			3,198				3,891
	Other long-term assets			9,086				10,737
	Total long-term assets			44,274				50,002
PROPERTY AND EQUIPMENT, NET				73,895				76,578
INTANGIBLE ASSETS, NET				209				309
GOODWILL				43,468				43,468
TOTAL ASSETS			$	371,555			$	385,411
GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED BALANCE SHEETS (Cont.)
U.S. dollars in thousands
			June 30,				December 31,
				2023				2022
			Unaudited				Audited
	LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
	Trade payables		$	14,662			$	20,668
	Accrued expenses			43,091				50,356
	Advances from customers and deferred revenues			33,240				30,531
	Operating lease liabilities			1,870				1,941
	Other current liabilities			14,353				22,291
	Total current liabilities			107,216				125,787
LONG-TERM LIABILITIES:
	Accrued severance pay			6,381				6,580
	Long-term advances from customers and deferred revenues			1,480				1,041
	Operating lease liabilities			1,261				1,890
	Other long-term liabilities			181				5,988
	Total long-term liabilities			9,303				15,499
SHAREHOLDERS' EQUITY:
	Share capital - ordinary shares of NIS 0.2 par value			2,711				2,711
	Additional paid-in capital			933,200				932,086
	Accumulated other comprehensive loss			(6,955	)			(6,847	)
	Accumulated deficit			(673,920	)			(683,825	)
	Total shareholders' equity			255,036				244,125
	TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	371,555			$	385,411

GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
			Six months ended								Three months ended
			June 30,								June 30,
				2023				2022				2023				2022
			Unaudited								Unaudited
Cash flows from operating activities:
Net income (loss)			$	9,905			$	(2,028	)		$	4,325			$	506
Adjustments required to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization				6,222				5,683				3,115				2,887
Impairment of held for sale asset				-				439				-				229
Stock-based compensation of options				1,114				1,061				512				569
Accrued severance pay, net				196				114				(101	)			177
Deferred taxes, net				1,820				1,664				694				1,358
Decrease (increase) in trade receivables, net				9,398				(11,883	)			2,907				(5,471	)
Decrease (increase) in contract assets				8,378				(2,608	)			3,461				(599	)
Decrease (increase) in other assets and other adjustments (including short-term, long-term and effect of exchange rate changes on cash and cash equivalents)				243				(7,763	)			3,010				(4,047	)
Increase in inventories				(7,895	)			(4,075	)			(272	)			(1,731	)
Increase (decrease) in trade payables				(4,240	)			4,205				(6,229	)			2,533
Decrease in accrued expenses				(5,039	)			(1,690	)			(2,840	)			(2,442	)
Increase in advance from customers and deferred revenue				3,124				7,010				7,593				4,700
Decrease in other liabilities				(15,009	)			(810	)			(14,161	)			(1,975	)
Net cash provided by (used in) operating activities				8,217				(10,681	)			2,014				(3,306	)
Cash flows from investing activities:
Purchase of property and equipment				(6,556	)			(4,515	)			(3,524	)			(2,314	)
Repayment of short term deposits				-				2,159				-				2,159
Net cash used in investing activities				(6,556	)			(2,356	)			(3,524	)			(155	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash				(1,010	)			32				(433	)			(221	)
Increase (decrease) in cash, cash equivalents and restricted cash				651				(13,005	)			(1,943	)			(3,682	)
Cash, cash equivalents and restricted cash at the beginning of the period				87,145				84,463				89,739				75,140
Cash, cash equivalents and restricted cash at the end of the period			$	87,796			$	71,458			$	87,796			$	71,458