Gilat Announces Second Quarter 2013 Results

- EBITDA Up 6% to $5.4 Million as Compared to Q1 2013

- Non-GAAP Operating Income Increased 20% as Compared to Q1 2013

PETAH TIKVA, Israel, Aug. 14, 2013 (GLOBE NEWSWIRE) -- Gilat Satellite Networks Ltd. (Nasdaq:GILT) (TASE:GILT), a worldwide leader in satellite networking technology, solutions and services, today reported its results for the second quarter ended June 30, 2013.

Key Financial Highlights:
  • Non-GAAP operating income increased by 20% to $1.3 million compared to $1.0 million in the first quarter of 2013
  • EBITDA increased to $5.4 million, up 6% compared to $5.1 million in the first quarter of 2013

Revenues for the second quarter of 2013 were $80.2 million, compared to $82.8 million in the first quarter of 2013 and $85.3 million in the second quarter of 2012.

On a non-GAAP basis, operating income for the second quarter of 2013 was $1.3 million compared to an operating income of $1.0 million in the first quarter of 2013 and $4.8 million in the second quarter of 2012. Net loss for the period on a non-GAAP basis was $1.9 million, or $0.05 per diluted share, compared to net loss of $0.3 million, or $0.01 per diluted share, in the first quarter of 2013 and a net income of $3.2 million, or $0.07 per diluted share in the second quarter of 2012.

EBITDA for the second quarter of 2013 reached $5.4 million, representing a margin of 6.8%, compared with $5.1 million in the first quarter of 2013 and $8.6 million in the second quarter of 2012.

"We were able to gain traction across our businesses this quarter, particularly in our Commercial Division, which was highlighted by new client wins, continued execution on existing projects and a significant partnership agreement with THAICOM," commented Erez Antebi, Gilat's Chief Executive Officer. "In our Defense Division, though we felt the effects this quarter of the budget cuts and purchasing slowdowns in the United States, we believe strongly in our long term prospects and the strategic nature of the programs of record that we are targeting."

"Looking forward to the second half of 2013 and beyond, we continue to focus on our long-term strategic plan providing products and solutions to enable broadband internet access via high throughput satellite networks and on-the-move applications. We strongly believe these growth engines will provide a solid base for our company in the years to come," added Antebi.

Key Recent Announcements:
  • Gilat's Spacenet Introduces Enhanced Wi-Fi Solutions Suite;
  • RESCUE Consortium Demonstrates Technologies for First Responders;
  • THAICOM and Gilat Satellite Networks Announce Partnership Agreement;
  • Gilat Awarded $6.75M Contract Extension to Continue the Provision of Internet Connectivity Services to Schools in Colombia;
  • Gilat's SkyEdge II HUB and VSATs to Deliver Education to Around 2,500 Schools in Southeast Asia;
  • Gilat Satellite Networks Wins 'VSAT Provider of the Year Award' at SatCom Africa 2013;
  • Gilat Satellite Networks to Introduce Enhanced Forward and Return Channel Technology in SkyEdge II-c for Increased Performance.

Conference Call and Webcast Details:

Gilat management will host a conference call today at 13:30 GMT/ 09:30 EDT/ 16:30 IDT (Israel Daylight Time) to discuss the results. International participants are invited to access the call at (972) 3-918-0609, and US-based participants are invited to access the call by dialing (888) 668-9141. A replay of the conference call will be available beginning at approximately 16:00 GMT/ 12:00 EDT/ 19:00 IDT today, until 16:00 GMT/ 12:00 EDT/ 19:00 IDT August 16, 2013. International participants are invited to access the replay at (972) 3-925-5927 and US-based participants are invited to access the replay by dialing (888) 782-4291. A replay of the call may also be accessed as a webcast via Gilat's website at www.gilat.com and will be archived for 30 days.

Notes:

(1) The attached summary financial statements were prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). The attached summary financial statements are unaudited. To supplement the consolidated financial information and statements presented in accordance with GAAP, the Company presents its EBITDA before the impact of non-cash stock based compensation, depreciation and amortization, other income and other costs related to acquisition transactions. Non-GAAP presentations of net income, EBITDA and earnings per share are provided to enhance the understanding of the Company's historical financial performance and comparability between periods.

(2) Operating income before depreciation, amortization, non-cash stock based compensation as per ASC 718 and other costs related to acquisition transactions ('EBITDA') is presented because it is a measure commonly used and is presented solely in order to improve the understanding of the Company's operating results and to provide further perspective on these results. EBITDA, however, should not be considered as an alternative to operating income or net income for the period as an indicator of the operating performance of the Company.

Similarly, EBITDA should not be considered as an alternative to cash flows from operating activities as a measure of liquidity. EBITDA is not a measure of financial performance under generally accepted accounting principles and may not be comparable to other similarly titled measures for other companies. EBITDA may not be indicative of the historic operating results of the Company; nor is it meant to be predictive of potential future results. Reconciliation between the Company's Operating income and EBITDA is presented in the attached summary financial statements.

About Gilat Satellite Networks Ltd.

Gilat Satellite Networks Ltd (Nasdaq:GILT) (TASE:GILT) is a leading provider of products and services for satellite-based broadband communications. Gilat develops and markets a wide range of high-performance satellite ground segment equipment and VSATs, with an increasing focus on the consumer and Ka-band market. In addition, Gilat enables mobile SOTM (Satellite-on-the-Move) solutions providing low-profile antennas, next generation solid-state power amplifiers and modems. Gilat also provides managed network and satellite-based services for rural telephony and Internet access via its subsidiaries in the United States, Peru and Colombia.

With over 25 years of experience, and over a million products shipped to more than 85 countries, Gilat has provided enterprises, service providers and operators with efficient and reliable satellite-based connectivity solutions, including cellular backhaul, banking, retail, e-government and rural communication networks. Gilat also enables leading defense, public security and news organizations to implement advanced, on-the-move tactical communications on board their land, air and sea fleets using Gilat's high-performance SOTM solutions. For more information, please visit us at www.gilat.com

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,
  2013 2012
  Unaudited  
     
ASSETS    
     
CURRENT ASSETS:    
Cash and cash equivalents  65,841  66,968
Short-term restricted cash  2,316  3,794
Restricted cash held by trustees  2,827  1,664
Trade receivables, net  62,929  60,991
Inventories  29,384  24,973
Other current assets  21,353  29,140
Total current assets  184,650  187,530
     
LONG-TERM INVESTMENTS AND RECEIVABLES:    
Long-term restricted cash  1,184  1,151
Severance pay fund  9,562  9,703
Long-term trade receivables, receivables in respect of capital leases and other receivables  20,268  19,781
Total long-term investments and receivables  31,014  30,635
     
PROPERTY AND EQUIPMENT, NET  92,139  94,727
     
INTANGIBLE ASSETS, NET  32,772  35,991
     
GOODWILL  65,760  65,760
     
TOTAL ASSETS  406,335  414,643
     
     
GILAT SATELLITE NETWORKS LTD.    
CONDENSED CONSOLIDATED BALANCE SHEET    
US dollars in thousands    
  June 30, December 31,
  2013 2012
  Unaudited  
     
LIABILITIES AND EQUITY    
     
CURRENT LIABILITIES:    
Short-term bank credit  3,060  3,517
Current maturities of long-term loans  7,959  7,963
Trade payables   26,758  23,240
Accrued expenses   21,698  24,353
Short-term advances from customer, held by trustees  524  4,448
Other current liabilities  41,408  40,336
     
Total current liabilities  101,407  103,857
     
LONG-TERM LIABILITIES:    
Accrued severance pay  9,436  9,513
Long-term loans, net   34,728  40,747
Other long-term liabilities  24,676  18,569
     
Total long-term liabilities  68,840  68,829
     
COMMITMENTS AND CONTINGENCIES    
     
EQUITY:    
Share capital - ordinary shares of NIS 0.2 par value   1,926  1,909
Additional paid in capital  871,540  869,822
Accumulated other comprehensive income  1,592  2,864
Accumulated deficit  (638,970)  (632,638)
     
Total equity  236,088  241,957
     
TOTAL LIABILITIES AND EQUITY  406,335  414,643
             
GILAT SATELLITE NETWORKS LTD.
RECONCILIATION BETWEEN GAAP AND NON-GAAP STATEMENTS OF OPERATIONS
FOR COMPARATIVE PURPOSES 
U.S. dollars in thousands (except per share data)
    Three months ended      Three months ended   
    30 June 2013     30 June 2012  
  GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP
  Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
             
Revenues  80,206  --   80,206  85,319  --   85,319
Cost of revenues  56,084  (1,295)  54,789  57,890  (1,649)  56,241
Gross profit  24,122  1,295  25,417  27,429  1,649  29,078
  30%   32% 32%   34%
Research and development expenses:            
Expenses incurred  7,145  (112)  7,033  8,355  (75)  8,280
Less - grants  532  --   532  1,227  --   1,227
   6,613  (112)  6,501  7,128  (75)  7,053
Selling and marketing expenses  9,827  (334)  9,493  9,597  (314)  9,283
General and administrative expenses  8,518  (347)  8,171  8,322  (344)  7,978
Operating income (loss)  (836)  2,088  1,252  2,382  2,382  4,764
Financial expenses, net   (2,515)  --   (2,515)  (1,557)  --   (1,557)
Income (loss) before taxes on income  (3,351)  2,088  (1,263)  825  2,382  3,207
Taxes on income (tax benefit)  625  --   625  (25)  --   (25)
Net income (loss)  (3,976)  2,088  (1,888)  850  2,382  3,232
             
Basic net earnings (loss) per share  (0.09)    (0.05)  0.02    0.08
Diluted net earnings (loss) per share  (0.09)    (0.05)  0.02    0.07
             
Weighted average number of shares used in computing net earnings (loss) per share             
Basic  41,932    41,932  41,347    41,347
Diluted  41,932    41,932  42,243    43,420
             
(1) Adjustments reflect the effect of non-cash stock options expenses as per SFAS123R and amortization of intangible assets related to acquisition transactions.
             
    Three months ended      Three months ended   
    30 June 2013     30 June 2012  
    Unaudited     Unaudited  
Non-cash stock-based compensation expenses:            
Cost of revenues    46      76  
Research and development    112      75  
Selling and marketing    105      84  
General and administrative    347      344  
     610      579  
             
Amortization of intangible assets related to acquisition transactions:          
Cost of revenues    1,249      1,573  
Selling and marketing    229      230  
     1,478      1,803  
             
GILAT SATELLITE NETWORKS LTD.
RECONCILIATION BETWEEN GAAP AND NON-GAAP STATEMENTS OF OPERATIONS
FOR COMPARATIVE PURPOSES 
U.S. dollars in thousands (except per share data)
    Six months ended      Six months ended   
    30 June 2013     30 June 2012  
  GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP
  Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
             
Revenues  163,033  --   163,033  161,926  --   161,926
Cost of revenues  113,370  (2,583)  110,787  110,208  (3,287)  106,921
Gross profit  49,663  2,583  52,246  51,718  3,287  55,005
  30%   32% 32%   34%
Research and development expenses:            
Expenses incurred  14,776  (211)  14,565  16,575  (129)  16,446
Less - grants  864  --   864  1,684  --   1,684
   13,912  (211)  13,701  14,891  (129)  14,762
Selling and marketing expenses  21,022  (654)  20,368  20,751  (628)  20,123
General and administrative expenses  16,561  (680)  15,881  16,274  (636)  15,638
Operating income (loss)  (1,832)  4,128  2,296  (198)  4,680  4,482
Financial expenses, net   (3,449)  --   (3,449)  (2,015)  --   (2,015)
Income (loss) before taxes on income  (5,281)  4,128  (1,153)  (2,213)  4,680  2,467
Taxes on income (tax benefit)  1,051  --   1,051  (2)  --   (2)
Net income (loss)  (6,332)  4,128  (2,204)  (2,211)  4,680  2,469
             
Basic net earnings (loss) per share  (0.15)    (0.05)  (0.05)    0.06
Diluted net earnings (loss) per share  (0.15)    (0.05)  (0.05)    0.06
             
Weighted average number of shares used in computing net earnings (loss) per share            
Basic  41,849    41,849  41,288    41,288
Diluted  41,849    41,849  41,288    43,129
             
(1) Adjustments reflect the effect of non-cash stock options expenses as per SFAS123R and amortization of intangible assets related to acquisition transactions.
             
    Six months ended      Six months ended   
    30 June 2013     30 June 2012  
    Unaudited     Unaudited  
Non-cash stock-based compensation expenses:            
Cost of revenues    86      142  
Research and development    211      129  
Selling and marketing    196      169  
General and administrative    680      636  
     1,173      1,076  
             
Amortization of intangible assets related to acquisition transactions:            
Cost of revenues    2,497      3,145  
Selling and marketing    458      459  
     2,955      3,604  
         
GILAT SATELLITE NETWORKS LTD.        
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS        
U.S. dollars in thousands (except per share data)        
  Six months ended Three months ended
  June 30, June 30,
  2013 2012 2013 2012
  Unaudited Unaudited Unaudited Unaudited
         
Revenues  163,033  161,926  80,206  85,319
Cost of revenues  113,370  110,208  56,084  57,890
Gross profit  49,663  51,718  24,122  27,429
Research and development expenses:        
Expenses incurred  14,776  16,575  7,145  8,355
Less - grants  864  1,684  532  1,227
   13,912  14,891  6,613  7,128
Selling and marketing expenses  21,022  20,751  9,827  9,597
General and administrative expenses  16,561  16,274  8,518  8,322
Operating income (loss)  (1,832)  (198)  (836)  2,382
Financial expenses, net   (3,449)  (2,015)  (2,515)  (1,557)
Income (loss) before taxes on income  (5,281)  (2,213)  (3,351)  825
Taxes on income (tax benefit)  1,051  (2)  625  (25)
Net income (loss)  (6,332)  (2,211)  (3,976)  850
         
Basic net earnings (loss) per share  (0.15)  (0.05)  (0.09)  0.02
Diluted net earnings (loss) per share  (0.15)  (0.05)  (0.09)  0.02
         
Weighted average number of shares used in computing net earnings (loss) per share      
Basic 41,849 41,288 41,932 41,347
Diluted 41,849 41,288 41,932 42,243
 
GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
US dollars in thousands
 
  Six months ended Three months ended
  June 30, June 30,
  2013 2012 2013 2012
  Unaudited Unaudited Unaudited Unaudited
         
Cash flows from operating activities:        
Net income (loss)  (6,332)  (2,211)  (3,976)  850
Adjustments required to reconcile net income (loss) to net cash generated from (used in) operating activities:        
Depreciation and amortization  11,208  10,698  5,648  5,660
Stock-based compensation  1,173  1,076  610  579
Accrued severance pay, net  64  311  50  410
Accrued interest and exchange rate differences on short and long-term restricted cash, net  392  (69)  353  178
Exchange rate differences on long-term loans  (46)  (124)  86  (284)
Capital loss from disposal of property and equipment  13  (3)  1  3
Deferred income taxes  (45)  (330)  (29)  (152)
Decrease (increase) in trade receivables, net  (2,225)  (7,114)  (8,224)  811
Decrease (increase) in other assets (including short-term, long-term and deferred charges)  4,114  (5,428)  5,321  (5,698)
Decrease (increase) in inventories  (5,464)  (395)  (1,640)  2,869
Increase in trade payables  3,537  5,409  2,740  7,595
Decrease in accrued expenses  (2,655)  (6,147)  (2,042)  (2,241)
Increase (decrease) in advances from customer, held by trustees, net   (3,923)  5,002  306  (653)
Increase (decrease) in other accounts payable and other long term liabilities  (5,683)  (5,719)  269  (6,681)
Net cash generated from (used in) operating activities  (5,872)  (5,044)  (527)  3,246
         
GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
US dollars in thousands
 
  Six months ended Three months ended
  June 30, June 30,
  2013 2012 2013 2012
  Unaudited Unaudited Unaudited Unaudited
Cash flows from investing activities:        
Purchase of property and equipment  (2,231)  (2,166)  (1,100)  (1,131)
Investment in restricted cash held by trustees  (11,236)  (17,620)  (9,454)  (4,382)
Proceeds from restricted cash held by trustees  9,771  9,075  6,364  5,016
Investment in restricted cash (including long-term)  (18,000)  (9,114)  (9,297)  (3,365)
Proceeds from restricted cash (including long-term)  19,339  14,624  11,526  6,496
Purchase of intangible assets  (118)  (72)  (102)  (63)
Net cash generated from (used in) investing activities  (2,475)  (5,273)  (2,063)  2,571
         
         
Cash flows from financing activities:        
Issuance of restricted stock units and exercise of stock options  562  12  9  6
Payment of obligation related to the purchase of intangible assets  (500)  --   (500)  -- 
Proceeds from financing contract  14,472  --   --   -- 
Short-term bank credit, net  (458)  1,201  (975)  1,618
Proceeds from long-term loans  --   10,000  --   10,000
Repayment according to financing contract  (654)  --   (442)  -- 
Repayment of long-term loans  (5,975)  (4,423)  (988)  (175)
Net cash generated from (used in) financing activities  7,447  6,790  (2,896)  11,449
         
Effect of exchange rate changes on cash and cash equivalents  (227)  (164)  (190)  (295)
         
Increase (decrease) in cash and cash equivalents  (1,127)  (3,691)  (5,676)  16,971
         
Cash and cash equivalents at the beginning of the period  66,968  56,231  71,517  35,569
         
Cash and cash equivalents at the end of the period  65,841  52,540  65,841  52,540
         
GILAT SATELLITE NETWORKS LTD.
CONDENSED EBITDA
US dollars in thousands
  Six months ended Three months ended
  June 30, June 30,
  2013 2012 2013 2012
  Unaudited Unaudited Unaudited Unaudited
         
Operating income (loss)  (1,832)  (198)  (836)  2,382
Add:        
Non-cash stock-based compensation expenses  1,173  1,076  610  579
Depreciation and amortization  11,208  10,698  5,648  5,660
EBITDA  10,549  11,576  5,422  8,621
CONTACT: Phil Carlson / Josh Dver, KCSA         pcarlson@kcsa.com / jdver@kcsa.com         1 (212) 896 1233 / 1239                  David Leichner, Gilat Satellite Networks Ltd.         davidle@gilat.com         (972) 3 925 2321

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