Gilat Presents Fourth Quarter and Full Year 2023 Results

Gilat Satellite Networks Ltd.

Q4 Revenue of $75.6 million, GAAP Operating Income of $2.9 million and Adjusted EBITDA of $9.4 million

2023 Revenue of $266.1 million, up 11% year over year, GAAP Operating Income of $28.1 million and Adjusted EBITDA of $36.4 million, up 44% YoY

PETAH TIKVA, Israel, Feb. 26, 2024 (GLOBE NEWSWIRE) -- Gilat Satellite Networks Ltd. (NASDAQ: GILT, TASE: GILT), a worldwide leader in satellite networking technology, solutions and services, today reported its unaudited results for the fourth quarter and full year ended December 31, 2023.

Fourth Quarter 2023 Financial Highlights

• Revenue of $75.6 million, up 4% compared with $72.6 million in Q4 2022;

• GAAP operating income of $2.9 million, compared with $6.1 million in Q4 2022;

• Non-GAAP operating income of $6.1 million, compared with $7.1 million in Q4 2022;

• GAAP net income of $3.4 million, or $0.06 per diluted share, compared with GAAP net loss of $6.0 million, or $0.11 loss per share, in Q4 2022;

• Non-GAAP net income of $6.5 million, or $0.11 per diluted share, compared with $7.9 million, or $0.14 per diluted share, in Q4 2022;

• Adjusted EBITDA of $9.4 million compared with $10.1 million in Q4 2022.

Full year 2023 Financial Highlights

• Revenue of $266.1 million, up 11% compared with $239.8 million in 2022;

• GAAP operating income of $28.1 million, almost tripled compared to $10.0 million in 2022;

• Non-GAAP operating income of $23.5 million, up 73% compared with $13.6 million in 2022;

• GAAP net income of $23.5 million, or $0.41 per diluted share, compared with GAAP net loss of $5.9 million in 2022, or $0.10 loss per share;

• Non-GAAP net income of $19.9 million, or $0.35 per diluted share, almost doubled compared to non-GAAP net income of $10.6 million or $0.19 per diluted share in 2022;

• Adjusted EBITDA was $36.4 million, up 44% compared with adjusted EBITDA of $25.2 million in 2022.

Forward-Looking Expectations

Management’s financial guidance for 2024 is for revenues of between $305 to $325 million, representing year-over-year growth of 18% at the midpoint. GAAP operating income is expected to be between $15 to $19 million, and Adjusted EBITDA is expected to be between $40 to $44 million, representing year-over-year growth of 15% at the midpoint.

Management Commentary

Adi Sfadia, Gilat’s CEO, commented: “We are pleased with the financial results, capping off a strong 2023 with $266 million in revenue, up 11% over last year, and very strong growth in EBITDA at $36.4 million, up 44% over last year. This demonstrates the operating leverage inherent to our business model combined with a favorable product revenue mix during 2023.

“Furthermore, 2023 was also particularly successful from a strategic perspective. Looking back, we have a lot to be proud of. In mid-November, we concluded the acquisition of DataPath in the US, which brings several synergies for both businesses and we see DataPath as a significant long-term growth asset for Gilat in the defense sector. Moreover, our strong cash position is allowing us to explore additional inorganic growth opportunities and we are currently exploring several of these opportunities.

Mr. Sfadia added, “Throughout the year, we achieved highly strategic contract wins with market-dominating satellite operators, and we extended Gilat’s market leadership in satellite-based cellular backhaul and In-Flight Connectivity, including a very significant Electronic Steered Antenna (ESA) award for business aviation.

Mr. Sfadia concluded, “Our ongoing success is due to the continued growing market interest in the satellite communications sector in general and for our leading technological solutions in particular. We see these favorable trends continuing into 2024 and therefore our expectations for the year ahead are for continued strong growth in revenue and profit.”

Key Recent Announcements

• Gilat Awarded $10 Million Follow-On Order from the US Department of Defense

• Gilat Awarded Multimillion-Dollar Defense Satellite Connectivity Project

• Gilat Awarded $17 Million by Pronatel for Expansion of Regional Telecommunications Project in Peru

• Gilat Announces New Brand Identity Embracing the Company’s Commitment to the New Space Revolution

• Gilat Awarded Approximately $3M for a Satellite Connectivity Project for a National Police Force

• US Army Awards Nearly $20 Million Contract Extension to Gilat to Sustain Anytime, Anywhere Satellite Connectivity

• Gilat Completes Acquisition of DataPath, Inc.
  

Conference Call Details

Gilat’s management will discuss its fourth quarter and full year 2023 results and business achievements and participate in a question-and-answer session:

Date:	Monday, February 26, 2024
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/gilatq4-2023

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

Unaudited Results
The attached summary unaudited financial statements represent the most current information available to management. Audited results will be reported in our annual report on Form 20-F.

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, other expenses, one-time changes of deferred tax assets, one-time tax expense related to the release of historical tax-trapped earnings, other operating expenses (income), net and income tax effect on the relevant adjustments.

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 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, 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 35 years of experience, we create and deliver deep technology solutions for satellite, ground and new space connectivity and provide comprehensive, secure end-to-end solutions and services for mission-critical operations, 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.

Our portfolio includes a diverse offering to deliver high value solutions for multiple orbit constellations with very high throughput satellites (VHTS) and software defined satellites (SDS). Our offering is comprised of a cloud-based platform and high-performance satellite terminals; high performance Satellite On-the-Move (SOTM) antennas; highly efficient, high-power Solid State Power Amplifiers (SSPA) and Block Upconverters (BUC) and includes integrated ground systems for commercial and defense, field services, network management software, and cybersecurity services.

Gilat’s comprehensive offering supports multiple applications with a full portfolio of products and tailored solutions to address key applications including broadband access, mobility, cellular backhaul, enterprise, defense, aerospace, broadcast, government, and critical infrastructure clients 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, 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, including those related to the current terrorist attacks by Hamas, and the war and hostilities between Israel and Hamas and Israel and Hezbollah. 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
Hagay Katz, Chief Products and Marketing Officer
hagayk@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)
	Twelve months ended								Three months ended
	December 31,								December 31,
		2023				2022				2023			2022
	Unaudited				Audited				Unaudited
Revenues	$	266,090			$	239,840			$	75,612		$	72,627
Cost of revenues		161,145				152,932				46,692			44,911
Gross profit		104,945				86,908				28,920			27,716
Research and development expenses, net		41,173				35,640				11,624			10,098
Selling and marketing expenses		25,243				21,694				7,119			5,970
General and administrative expenses		19,215			*)	18,412				6,312		*)	5,198
Impairment of held for sale asset		-				771				-			53
Other operating expenses (income), net		(8,771	)		*)	438				986		*)	327
Total operating expenses		76,860				76,955				26,041			21,646
Operating income		28,085				9,953				2,879			6,070
Financial income (expenses), net		109				(2,818	)			1,196			(102	)
Income before taxes on income		28,194				7,135				4,075			5,968
Taxes on income		4,690				13,063				628			11,988
Net income (loss)	$	23,504			$	(5,928	)		$	3,447		$	(6,020	)
Earnings (losses) per share (basic and diluted)	$	0.41			$	(0.10	)		$	0.06		$	(0.11	)
Weighted average number of shares used in computing earnings (losses) per share
Basic		56,668,999				56,591,994				56,820,774			56,610,404
Diluted		56,672,537				56,591,994				56,820,774			56,610,404
*) Reclassified

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
	December 31, 2023										December 31, 2022
	GAAP			Adjustments (*)				Non-GAAP			GAAP				Adjustments (*)				Non-GAAP
	Unaudited										Unaudited
Gross profit	$	28,920		$	617			$	29,537		$	27,716			$	73			$	27,789
Operating expenses		26,041			(2,615	)			23,426			21,646				(943	)			20,703
Operating income		2,879			3,232				6,111			6,070				1,016				7,086
Income before taxes on income		4,075			3,232				7,307			5,968				1,016				6,984
Net income (loss)	$	3,447		$	3,097			$	6,544		$	(6,020	)		$	13,896			$	7,876
Basic earnings (losses) per share	$	0.06		$	0.06			$	0.12		$	(0.11	)		$	0.25			$	0.14
Diluted earnings (losses) per share	$	0.06		$	0.05			$	0.11		$	(0.11	)		$	0.25			$	0.14
Weighted average number of shares used in computing earnings (losses) per share
Basic		56,820,774							56,820,774			56,610,404								56,610,404
Diluted		56,820,774							56,987,939			56,610,404								56,623,366
(*) Adjustments reflect the effect of non-cash stock-based compensation expenses as per ASC 718, amortization of intangible assets related to acquisition transactions, impairment of held for sale asset, other operating expenses (income), net, one-time tax expense related to the release of historical tax-exempt earnings and income tax effect on adjustments which is calculated using the relevant effective tax rate.
	Three months ended										Three months ended
	December 31, 2023										December 31, 2022
				Unaudited											Unaudited
GAAP net income (loss)				$	3,447										$	(6,020	)
Gross profit
Non-cash stock-based compensation expenses					129											73
Amortization of intangible assets related to acquisition transactions					448											-
Others					40											-
					617											73
Operating expenses
Non-cash stock-based compensation expenses					1,458											513
Amortization of intangible assets related to acquisition transactions					162											50
Impairment of held for sale asset					-											53
Other operating expenses (income), net					986											327
Others					9											-
					2,615											943
Taxes on income					(135	)										12,880
Non-GAAP net income				$	6,544										$	7,876

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)
	Twelve months ended										Twelve months ended
	December 31, 2023										December 31, 2022
	GAAP			Adjustments (*)				Non-GAAP			GAAP				Adjustments (*)				Non-GAAP
	Unaudited										Audited				Unaudited
Gross profit	$	104,945		$	895			$	105,840		$	86,908			$	303			$	87,211
Operating expenses		76,860			5,434				82,294			76,955				(3,337	)			73,618
Operating income		28,085			(4,539	)			23,546			9,953				3,640				13,593
Income before taxes on income		28,194			(4,539	)			23,655			7,135				3,640				10,775
Net income (loss)	$	23,504		$	(3,597	)		$	19,907		$	(5,928	)		$	16,478			$	10,550
Earnings (losses) per share (basic and diluted)	$	0.41		$	(0.06	)		$	0.35		$	(0.10	)		$	0.29			$	0.19
Weighted average number of shares used in computing earnings (losses) per share
Basic		56,668,999							56,668,999			56,591,994								56,591,994
Diluted		56,672,537							56,784,601			56,591,994								56,650,362
(*) Adjustments reflect the effect of non-cash stock-based compensation expenses as per ASC 718, amortization of intangible assets related to acquisition transactions, impairment of held for sale asset, other operating expenses (income), net, one-time tax expense related to the release of historical tax-exempt earnings and income tax effect on adjustments which is calculated using the relevant effective tax rate.
	Twelve months ended										Twelve months ended
	December 31, 2023										December 31, 2022
				Unaudited											Unaudited
GAAP net income (loss)				$	23,504										$	(5,928	)
Gross profit
Non-cash stock-based compensation expenses					407											293
Amortization of intangible assets related to acquisition transactions					448											10
Others					40											-
					895											303
Operating expenses
Non-cash stock-based compensation expenses					3,016											1,927
Amortization of intangible assets related to acquisition transactions					312											201
Impairment of held for sale asset					-											771
Other operating expenses (income), net					(8,771	)										438
Others					9											-
					(5,434	)										3,337
Taxes on income					942											12,838
Non-GAAP net income				$	19,907										$	10,550

GILAT SATELLITE NETWORKS LTD.
SUPPLEMENTAL INFORMATION
U.S. dollars in thousands
ADJUSTED EBITDA:
	Twelve months ended								Three months ended
	December 31,								December 31,
		2023				2022				2023				2022
	Unaudited								Unaudited
GAAP net income (loss)	$	23,504			$	(5,928	)		$	3,447			$	(6,020	)
Adjustments:
Financial expenses (income), net		(109	)			2,818				(1,196	)			102
Taxes on income		4,690				13,063				628				11,988
Non-cash stock-based compensation expenses		3,423				2,220				1,587				586
Impairment of held for sale asset		-				771				-				53
Depreciation and amortization (*)		13,627				11,832				3,862				3,063
Other operating expenses (income), net		(8,771	)			438				986				327
Others		49				-				49				-
Adjusted EBITDA	$	36,413			$	25,214			$	9,363			$	10,099
(*) Including amortization of lease incentive
SEGMENT REVENUES:
	Twelve months ended								Three months ended
	December 31,								December 31,
		2023				2022				2023				2022
	Unaudited				Audited				Unaudited
Satellite Networks	$	168,527			$	120,381			$	53,517			$	36,388
Integrated Solutions		46,133				61,376				9,503				16,329
Network Infrastructure and Services		51,430				58,083				12,592				19,910
Total revenues	$	266,090			$	239,840			$	75,612			$	72,627

GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
	December 31,				December 31,
		2023				2022
	Unaudited				Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	103,961			$	86,591
Restricted cash		736				541
Trade receivables, net		44,725				50,644
Contract assets		28,327				24,971
Inventories		38,525				33,024
Other current assets		24,299				19,283
Total current assets		240,573				215,054
LONG-TERM ASSETS:
Restricted cash		54				13
Long-term contract assets		9,283				11,149
Severance pay funds		5,737				5,947
Deferred taxes		11,484				18,265
Operating lease right-of-use assets		5,105				3,891
Other long-term assets		9,544				10,737
Total long-term assets		41,207				50,002
PROPERTY AND EQUIPMENT, NET		74,315				76,578
INTANGIBLE ASSETS, NET		16,051				309
GOODWILL		54,740				43,468
TOTAL ASSETS	$	426,886			$	385,411
GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED BALANCE SHEETS (Cont.)
U.S. dollars in thousands
	December 31,				December 31,
		2023				2022
	Unaudited				Audited
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term loan	$	7,453			$	-
Trade payables		13,873				20,668
Accrued expenses		51,906				50,356
Advances from customers and deferred revenues		34,495				30,531
Operating lease liabilities		2,426				1,941
Other current liabilities		16,431				22,291
Total current liabilities		126,584				125,787
LONG-TERM LIABILITIES:
Long-term loan		2,000				-
Accrued severance pay		6,537				6,580
Long-term advances from customers and deferred revenues		1,139				1,041
Operating lease liabilities		3,022				1,890
Other long-term liabilities		12,916				5,988
Total long-term liabilities		25,614				15,499
SHAREHOLDERS' EQUITY:
Share capital - ordinary shares of NIS 0.2 par value		2,733				2,711
Additional paid-in capital		937,591				932,086
Accumulated other comprehensive loss		(5,315	)			(6,847	)
Accumulated deficit		(660,321	)			(683,825	)
Total shareholders' equity		274,688				244,125
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	426,886			$	385,411

GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
	Twelve months ended								Three months ended
	December 31,								December 31,
		2023				2022				2023				2022
	Unaudited				Audited				Unaudited
Cash flows from operating activities:
Net income (loss)	$	23,504			$	(5,928	)		$	3,447			$	(6,020	)
Adjustments required to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		13,402				11,608				3,805				3,004
Capital gain from sale of property		(2,084	)			-				-				-
Impairment of held for sale asset		-				771				-				53
Stock-based compensation		3,423				2,220				1,587				586
Accrued severance pay, net		167				136				12				44
Deferred taxes, net		2,662				(627	)			(1,203	)			(2,450	)
Decrease (increase) in trade receivables, net		13,448				(11,162	)			9,561				1,108
Decrease (increase) in contract assets		(1,694	)			2,481				(7,804	)			4,771
Decrease (increase) in other assets and other adjustments (including short-term, long-term and effect of exchange rate changes on cash and cash equivalents)		(351	)			(3,445	)			(3,949	)			5,208
Decrease (increase) in inventories		(2,387	)			(5,416	)			3,798				614
Decrease in trade payables		(7,635	)			(259	)			(2,314	)			(4,574	)
Increase in accrued expenses		735				549				3,517				2,316
Increase (decrease) in advance from customers and deferred revenues		803				5,929				(1,843	)			(1,468	)
Increase (decrease) in other liabilities		(12,049	)			13,957				1,343				13,592
Net cash provided by operating activities		31,944				10,814				9,957				16,784
Cash flows from investing activities:
Purchase of property and equipment		(10,746	)			(12,793	)			(2,090	)			(3,568	)
Proceeds from short-term deposits		-				2,159				-				-
Investment in financial instrument		-				(1,536	)			-				-
Acquisitions of subsidiary, net of cash acquired		(4,107	)			-				(4,107	)			-
Receipts from sales of properties		2,168				4,006				-				4,006
Net cash provided by (used in) investing activities		(12,685	)			(8,164	)			(6,197	)			438
Cash flows from financing activities:
Repayment of short-term loan		(1,590	)			-				(1,590	)			-
Net cash used in financing activities		(1,590	)			-				(1,590	)			-
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(63	)			32				2,288				47
Increase in cash, cash equivalents and restricted cash		17,606				2,682				4,458				17,269
Cash, cash equivalents and restricted cash at the beginning of the period		87,145				84,463				100,293				69,876
Cash, cash equivalents and restricted cash at the end of the period	$	104,751			$	87,145			$	104,751			$	87,145