Gilat Presents Strong Fourth Quarter and Full Year 2022 Results

Gilat Satellite Networks Ltd.

Q4 revenue of $73 million, up 8% year over year, GAAP operating income of $6 million and Adjusted EBITDA of $10 million

2022 revenue of $240 million, up 12% year over year, GAAP operating income of $10 million and Adjusted EBITDA of $25 million, up 64% YoY

Mr. Isaac Angel, Chairman of the Board, announced his plans to step down. Mr. Ami Boehm named as the new Chairman of the Board

PETAH TIKVA, Israel, Feb. 14, 2023 (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, 2022.

Fourth Quarter 2022 Financial Highlights

• Revenues of $72.6 million, up 8% compared with $67.0 million in Q4 2021;

• GAAP operating income of $6.1 million, up 13% compared with $5.4 million in Q4 2021;

• Non-GAAP operating income of $7.1 million, up 8% compared with $6.6 million in Q4 2021;

• GAAP net loss of $6.0 million, or $0.11 per share, compared with GAAP net income of $2.1 million, or $0.04 per diluted share, in Q4 2021;

  • GAAP net loss in Q4 2022 includes a one-time tax expense of $12.9 million that was recorded with respect to historical trapped earnings. The Company elected to take advantage of the temporary Israeli tax relief of 2022 and pay a reduced tax rate to allow certain distribution of dividends or acquisitions without additional corporate tax liability in the future;

  • Net income in Q4 2022 excluding this one-time tax expense was $6.9 million;

• Non-GAAP net income of $7.9 million, or $0.14 per diluted share, compared with $5.6 million, or $0.1 per diluted share, in Q4 2021;

• Adjusted EBITDA of $10.1 million compared with $10.4 million in Q4 2021.

Full year 2022 Financial Highlights

• Revenue of $239.8 million, up 12% compared with $215.0 million in 2021;

• GAAP operating income of $10.0 million, up 4.6x compared to $2.2 million in 2021;

• Non-GAAP operating income of $13.6 million, up 3.1x compared with $4.4 million in 2021;

• GAAP net loss of $5.9 million or $0.1 per share, compared with GAAP net loss of $3.0 million in 2021 or $0.05 per share; GAAP net income excluding the above-mentioned one-time tax expense of $12.9 million was $7.0 million;

• Non-GAAP net income of $10.6 million or $0.19 per diluted share, up 7.3x compared to non-GAAP net income of $1.4 million or $0.03 per diluted share in 2021;

• Adjusted EBITDA was $25.2 million, up 64% compared with adjusted EBITDA of $15.4 million in 2021.

Forward-Looking Expectations

Management guidance for 2023 are for revenues of between $260 to $280 million, representing year-over-year growth of 13% at the midpoint, GAAP operating income of between $15 to $19 million, representing year-over-year growth of 70% at the midpoint, and Adjusted EBITDA of between $30 to $34 million, representing year-over-year growth of 27% at the mid-point.

Changes in Chairman of the Board Position

Mr. Isaac Angel, Chairman of the Board, announced his plans to step down from his chairman and directorship positions effective March 8, 2023. The Board has appointed Mr. Ami Boehm as the new Chairman of the Board.

Management Commentary

Adi Sfadia, Gilat's CEO, commented: "We are very pleased with our financial results for the fourth quarter, capping off a strong 2022. For both the quarter and the year, we achieved solid revenue growth, strong gross margins, and significant improvement in our profitability- particularly in our operating income and adjusted EBITDA.

"2022 marked key achievements in several strategic areas. We delivered SkyEdge IV, our leading ground segment for next generation satellite communication to over 20 gateways worldwide, enabling hundreds of Gbps of capacity and securing tens of millions of dollars' worth of contract awards.

"We had a record year in Mobility with Inflight Connectivity (IFC), bringing in orders valued at tens of millions of dollars, for both our ground segment platform, modems and our transceiver product line. In the Maritime sector, we secured a new win for SkyEdge IV to enable maritime applications and are making excellent progress with SES on the cruise premium maritime service with SkyEdge IV.

"In Cellular Backhaul, we also had a record year with tens of millions of dollars in orders and in Defense, we made progress with important multi-million dollar wins and a growing pipeline."

Mr. Sfadia concluded, "In summary, we are very pleased with our performance over the past year. We look forward to further growth on our top and bottom lines in 2023 as the satellite communications sector strongly gains additional traction. Our pipeline continues to increase and broaden as we continue to see growing demand for our products and services among new as well as existing customers. As we move through 2023, we are increasingly optimistic and as our guidance demonstrates, we expect to maintain our strong momentum ahead.

"After an intensive two-year period of helping to rebuild the company following the pandemic's repercussions, Mr. Isaac Angel has decided to retire as Chairman of the Board, effective March 8, 2023, due to personal time constraints. I would like thank Mr. Angel for his great contribution over the past two years and to wish him success in the future.

"The Board has appointed Mr. Ami Boehm as Chairman of the Board effective upon Mr. Angel's departure. On behalf of Gilat, I would like to welcome Mr. Boehm who has been an invaluable Board Member for the last 10 years and I am most pleased that we will now gain even more from his vast experience in directing Gilat to maximize the great potential that we see ahead."

Key Recent Announcements

• Gilat Awarded Multimillion-Dollar Contract for SATCOM Expansion on Trains in Asia-Pacific

• Gilat and Intelsat Expand Their Strategic IFC Partnership with Multimillion-Dollar Agreements for the Americas

• Comlabs Selects Gilat for US Government Critical Communications Requirements
  

Conference Call Details
Gilat's management will discuss its fourth quarter and full year 2022 results and business achievements and participate in a question-and-answer session:

Date:		Tuesday February 14, 2023
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/gilatq4-2022

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 gross profit, operating expenses, operating income, income before taxes on income, net 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, if and when applicable, 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, one-time changes of deferred tax assets and one-time tax expense related to the release of historical tax-trapped earnings.

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 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)
			Twelve months ended								Three months ended
			December 31,								December 31,
				2022				2021				2022				2021
															As Restated (1)
			Unaudited				Audited				Unaudited
Revenues			$	239,840			$	214,970			$	72,627			$	67,024
Cost of revenues				152,932				143,703				44,911				42,328
Gross profit				86,908				71,267				27,716				24,696
Research and development expenses, net				35,640				31,336				10,098				8,452
Selling and marketing expenses				21,694				21,512				5,970				5,685
General and administrative expenses				18,850				15,587				5,525				4,545
Impairment of held for sale asset				771				651				53				651
Total operating expenses				76,955				69,086				21,646				19,333
Operating income				9,953				2,181				6,070				5,363
Financial expenses, net				(2,818	)			(1,722	)			(102	)			(264	)
Income before taxes on income				7,135				459				5,968				5,099
Taxes on income				13,063				3,492				11,988				2,969
Net income (loss)			$	(5,928	)		$	(3,033	)		$	(6,020	)		$	2,130
Earnings (losses) per share (basic and diluted)			$	(0.10	)		$	(0.05	)		$	(0.11	)		$	0.04
Weighted average number of shares used in computing earnings (losses) per share
		Basic		56,591,994				56,401,074				56,610,404				56,539,237
		Diluted		56,591,994				56,401,074				56,610,404				56,627,907

 

(1)	The Company restated its previously issued condensed interim consolidated financial statements for the three months ended December 31, 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
	December 31, 2022											December 31, 2021
	GAAP				Adjustments (*)				Non-GAAP			GAAP			Adjustments (*)				Non-GAAP
												As Restated (1)							As Restated (1)
	Unaudited											Unaudited
Gross profit	$	27,716				73			$	27,789		$	24,696			71			$	24,767
Operating expenses		21,646				(943	)			20,703			19,333			(1,147	)			18,186
Operating income		6,070				1,016				7,086			5,363			1,218				6,581
Income before taxes on income		5,968				1,016				6,984			5,099			1,218				6,317
Net income (loss)	$	(6,020	)			13,896			$	7,876		$	2,130			3,517			$	5,647
Earnings (losses) per share (basic and diluted)	$	(0.11	)		$	0.25			$	0.14		$	0.04		$	0.06			$	0.10
Weighted average number of shares used in
computing earnings (losses) per share
Basic		56,610,404								56,610,404			56,539,237							56,539,237
Diluted		56,610,404								56,623,366			56,627,907							56,928,169
(*) 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 certain taxes on income adjustments (mainly one-time tax expense related to the release of historical tax-exempt earnings and one-time changes to deferred tax assets)
	Three months ended											Three months ended
	December 31, 2022													December 31, 2021
															As Restated (1)
					Unaudited										Unaudited
GAAP net income (loss)					$	(6,020	)								$	2,130
Gross profit
Non-cash stock-based compensation expenses						73										66
Amortization of intangible assets related to acquisition transactions						-										5
						73										71
Operating expenses
Non-cash stock-based compensation expenses						513										445
Amortization of intangible assets related to acquisition transactions						50										51
Impairment of held for sale asset						53										651
Other						327										-
						943										1,147
Taxes on income						12,880										2,299
Non-GAAP net income					$	7,876									$	5,647

(1)	The Company restated its previously issued condensed interim consolidated financial statements for the three months ended December 31, 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)
	Twelve months ended											Twelve months ended
	December 31, 2022											December 31, 2021
	GAAP				Adjustments (*)				Non-GAAP			GAAP				Adjustments (*)				Non-GAAP
																				As Restated (1)
	Unaudited											Audited				Unaudited
Gross profit	$	86,908				303			$	87,211		$	71,267				297			$	71,564
Operating expenses		76,955				(3,337	)			73,618			69,086				(1,882	)			67,204
Operating income		9,953				3,640				13,593			2,181				2,179				4,360
Income before taxes on income		7,135				3,640				10,775			459				2,179				2,638
Net income (loss)		(5,928	)			16,478				10,550			(3,033	)			4,478				1,445
Earnings (losses) per share (basic and diluted)	$	(0.10	)		$	0.29			$	0.19		$	(0.05	)		$	0.08			$	0.03
Weighted average number of shares used in
computing earnings (losses) per share
Basic		56,591,994								56,591,994			56,401,074								56,401,074
Diluted		56,591,994								56,650,362			56,401,074								56,878,852
(*) 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 certain taxes on income adjustments (mainly one-time tax expense related to the release of historical tax-exempt earnings and one-time changes to deferred tax assets)
	Twelve months ended											Twelve months ended
	December 31, 2022											December 31, 2021
																As Restated (1)
					Unaudited											Unaudited
GAAP net loss					$	(5,928	)									$	(3,033	)
Gross profit
Non-cash stock-based compensation expenses						293											277
Amortization of intangible assets related to acquisition transactions						10											20
						303											297
Operating expenses
Non-cash stock-based compensation expenses						1,927											1,027
Amortization of intangible assets related to acquisition transactions						201											204
Impairment of held for sale asset						771											651
Other						438											-
						3,337											1,882
Taxes on income						12,838											2,299
Non-GAAP net income					$	10,550										$	1,445

 

(1)	The Company restated its previously issued condensed interim consolidated financial statements for the three months ended December 31, 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:
			Twelve months ended								Three months ended
			December 31,								December 31,
				2022				2021				2022				2021
							As Restated (1)								As Restated (1)
			Unaudited								Unaudited
GAAP net income (loss)			$	(5,928	)		$	(3,033	)		$	(6,020	)		$	2,130
Adjustments:
Financial expenses, net				2,818				1,722				102				264
Taxes on income				13,063				3,492				11,988				2,969
Non-cash stock-based compensation expenses				2,220				1,304				586				511
Impairment of held for sale asset				771				651				53				651
Other				438				-				327				-
Depreciation and amortization (*)				11,832				11,214				3,063				3,848
Adjusted EBITDA			$	25,214			$	15,350			$	10,099			$	10,373
(*) Including amortization of lease incentive
SEGMENT REVENUES:
			Twelve months ended								Three months ended
			December 31,								December 31,
				2022				2021				2022				2021
															As Restated (1)
			Unaudited				Audited				Unaudited
Satellite Networks			$	120,381			$	115,408			$	36,388			$	32,252
Integrated Solutions				61,376				50,054				16,329				16,514
Network Infrastructure and Services				58,083				49,508				19,910				18,258
Total revenues			$	239,840			$	214,970			$	72,627			$	67,024

 

(1)	The Company restated its previously issued condensed interim consolidated financial statements for the three months ended December 31, 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
	December 31,
		2022				2021
	Unaudited				Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	86,591			$	81,859
Short-term deposits		-				2,159
Restricted cash		541				2,592
Trade receivables, net		50,644				39,161
Contract assets		24,971				26,008
Inventories		33,024				28,432
Other current assets		19,283				14,607
Held for sale asset		-				4,587
Total current assets		215,054				199,405
LONG-TERM ASSETS:
Restricted cash		13				12
Long-term contract assets		11,149				12,539
Severance pay funds		5,947				6,795
Deferred taxes		18,265				17,551
Operating lease right-of-use assets		3,891				4,478
Other long-term assets		10,737				10,456
Total long-term assets		50,002				51,831
PROPERTY AND EQUIPMENT, NET		76,578				72,391
INTANGIBLE ASSETS, NET		309				640
GOODWILL		43,468				43,468
TOTAL ASSETS	$	385,411			$	367,735
GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED BALANCE SHEETS (Cont.)
U.S. dollars in thousands
	December 31,
		2022				2021
	Unaudited				Audited
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables	$	20,668			$	19,776
Accrued expenses		50,356				49,202
Advances from customers and deferred revenues		30,531				24,373
Operating lease liabilities		1,941				1,818
Other current liabilities		22,291				13,339
Total current liabilities		125,787				108,508
LONG-TERM LIABILITIES:
Accrued severance pay		6,580				7,292
Long-term advances from customers and deferred revenues		1,041				1,209
Operating lease liabilities		1,890				2,283
Other long-term liabilities		5,988				120
Total long-term liabilities		15,499				10,904
SHAREHOLDERS' EQUITY:
Share capital - ordinary shares of NIS 0.2 par value		2,711				2,706
Additional paid-in capital		932,086				929,871
Accumulated other comprehensive loss		(6,847	)			(6,357	)
Accumulated deficit		(683,825	)			(677,897	)
Total shareholders' equity		244,125				248,323
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	385,411			$	367,735

GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
			Twelve months ended								Three months ended
			December 31,								December 31,
				2022				2021				2022				2021
															As Restated (1)
			Unaudited				Audited				Unaudited
Cash flows from operating activities:
Net income (loss)			$	(5,928	)		$	(3,033	)		$	(6,020	)		$	2,130
Adjustments required to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization				11,608				10,991				3,004				3,789
Impairment of held for sale asset				771				651				53				651
Stock-based compensation of options				2,220				1,304				586				511
Accrued severance pay, net				136				26				44				203
Deferred taxes, net				(627	)			1,744				(2,450	)			1,694
Decrease (increase) in trade receivables, net				(11,162	)			(11,205	)			1,108				(8,715	)
Decrease in contract assets				2,481				21,412				4,771				78
Decrease (increase) in other assets (including short-term, long-term
and deferred charges)				(3,445	)			(247	)			5,208				5,238
Decrease (increase) in inventories				(5,416	)			2,449				614				2,796
Increase (decrease) in trade payables				(259	)			(711	)			(4,574	)			2,007
Increase (decrease) in accrued expenses				549				(1,482	)			2,316				861
Increase (decrease) in advance from customers and deferred revenue				5,929				(917	)			(1,468	)			(5,390	)
Increase (decrease) in other liabilities				13,957				(2,079	)			13,592				(681	)
Net cash provided by operating activities				10,814				18,903				16,784				5,172
Cash flows from investing activities:
Purchase of property and equipment				(12,793	)			(8,933	)			(3,568	)			(3,909	)
Repayment of (investment in) short term deposits				2,159				(2,159	)			-				(2,159	)
Investment in financial instrument				(1,536	)			-				-				-
Receipts from sale of held for sale asset				4,006				-				4,006				-
Net cash provided by (used in) investing activities				(8,164	)			(11,092	)			438				(6,068	)
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				32				(303	)			47				(51	)
Increase (decrease) in cash, cash equivalents and restricted cash				2,682				(31,495	)			17,269				(947	)
Cash, cash equivalents and restricted cash at the beginning of the period				84,463				115,958				69,876				85,410
Cash, cash equivalents and restricted cash at the end of the period			$	87,145			$	84,463			$	87,145			$	84,463

(1)	The Company restated its previously issued condensed interim consolidated financial statements for the three months ended December 31, 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.