Gilat Reports First Quarter 2024 Results

Gilat Satellite Networks Ltd.

Strong Revenue Growth of 29% Year-over-Year, GAAP Operating Income of $5.4 Million and Adjusted EBITDA of $9.3 Million

PETAH TIKVA, Israel, May 08, 2024 (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 first quarter, ended March 31, 2024.

First Quarter 2024 Financial Highlights

• Revenue of $76.1 million, up 29% compared with $59.0 million in Q1 2023;

• GAAP operating income of $5.4 million, compared with $7.0 million in Q1 2023;

  • The decline is mainly due to lower other income, higher stock-based compensation, mainly related to the Datapath acquisition, and amortization of purchased intangibles;

• Non-GAAP operating income of $6.6 million, up 25% compared with $5.3 million in Q1 2023;

• GAAP net income of $5.0 million, or $0.09 per diluted share, compared with $5.6 million, or $0.10 per diluted share, in Q1 2023;

• Non-GAAP net income of $6.0 million, or $0.11 per diluted share, almost doubled compared with $3.8 million, or $0.07 per diluted share, in Q1 2023;

• Adjusted EBITDA of $9.3 million compared with $8.4 million in Q1 2023.

Forward-Looking Expectations

The Company today reiterated its guidance for 2024.

Expectations are for revenue between $305 and $325 million, representing year-over-year growth of 18% at the midpoint. GAAP operating income is expected to be between $15 and $19 million, and Adjusted EBITDA is expected to be between $40 and $44 million, representing year-over-year growth of 15% at the mid-point.

Management Commentary

Adi Sfadia, Gilat's CEO, commented: “We are pleased with our financial results representing another strong quarter of growth and profitability, with revenue up 29% year-over-year and Adjusted EBITDA up 11% year-over-year. Our revenue growth was driven by solid organic growth in both our Satellite Networks and our Network Infrastructure and Services segments, as well as a full quarter of contribution from Datapath, the defense communications business we acquired in November of last year. Our pipeline of potential orders throughout our business continues to increase and broaden, supported by our next-generation platforms and growth engines.”

Mr. Sfadia added, “Our strong revenue growth demonstrates the continued growing traction for many of Gilat’s products and services among both new and existing customers. In particular, we are pleased with the strong level of orders from the Defense sector in recent months, which is a strategic growth vector for us. We continue to work on extracting potential synergies from the Datapath acquisition, which we believe will increasingly benefit our profitability over the coming quarters.”

Mr. Sfadia concluded, “Given the fundamental advantages of satellite communications that are driving market interest and generating growing orders for our leading technological solutions, we are excited by Gilat’s potential in both the near and long term. Furthermore, Gilat’s strong financial position is allowing us to explore potential inorganic growth opportunities, which we believe can significantly accelerate our growth trajectory.”

Key Recent Announcements

• SES’s O3b mPOWER System Launches Service via Gilat’s SkyEdge IV Platform

• Gilat Received Approximately $5 Million for Providing Services to a Leading LATAM Service Provider

• Gilat Received Multimillion-Dollar Order from a Leading Defense Organization

• Gilat Expanding into Additional IFC Market Segments After Receiving Over $3 Million in Orders from a Leading IFC Service Provider

• Gilat Awarded Over $3M Follow-On Order for Public WiFi Service in Latin America

• Gilat Awarded over $5 Million Order from the US Department of Defense

• US Army Awards $12 Million Contract Extension to Gilat to Sustain Anytime, Anywhere Satellite Connectivity

• Gilat Awarded Over $13M in Additional Orders from Satellite Operators for its World Leading SkyEdge IV and SkyEdge II-c Platforms
  

Conference Call Details

Gilat’s management will discuss its first quarter 2024 results and business achievements and participate in a question-and-answer session:

Date:	Wednesday, May 8, 2024
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/gilatq1-2024

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 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 stock-based compensation expenses, amortization of purchased intangibles, lease incentive amortization, other integration expenses, one-time changes of deferred tax assets, 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 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
U.S. dollars in thousands (except share and per share data)
				Three months ended
				March 31,
					2024				2023
				Unaudited
Revenues				$	76,078			$	58,962
Cost of revenues					48,024				34,277
Gross profit					28,054				24,685
Research and development expenses, net					9,319				9,619
Selling and marketing expenses					7,077				6,009
General and administrative expenses					8,077				4,431
Other operating income, net					(1,810	)			(2,387	)
Total operating expenses					22,663				17,672
Operating income					5,391				7,013
Financial income (expenses), net					513				(149	)
Income before taxes on income					5,904				6,864
Taxes on income					940				1,284
Net income				$	4,964			$	5,580
Earnings per share (basic and diluted)				$	0.09			$	0.10
Weighted average number of shares used in
	computing earnings per share
	Basic				57,016,585				56,613,485
	Diluted				57,016,585				56,623,432

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
			March 31, 2024												March 31, 2023
			GAAP				Adjustments (*)				Non-GAAP				GAAP				Adjustments (*)										Non-GAAP
			Unaudited												Unaudited
Gross profit			$	28,054				726			$	28,780			$	24,685				75									$	24,760
Operating expenses				22,663				(499	)			22,164				17,672				1,809										19,481
Operating income				5,391				1,225				6,616				7,013				(1,734							)			5,279
Income before taxes on income				5,904				1,225				7,129				6,864				(1,734							)			5,130
Net income			$	4,964				1,050			$	6,014			$	5,580				(1,734							)		$	3,846
Earnings per share (basic and diluted)			$	0.09			$	0.02			$	0.11			$	0.10			$	(0.03							)		$	0.07
Weighted average number of shares used in
computing earnings per share
Basic				57,016,585								57,016,585				56,613,485														56,613,485
Diluted				57,016,585								57,108,734				56,623,432														56,623,432
(*) Adjustments reflect the effect of stock-based compensation expenses as per ASC 718, amortization of purchased intangibles, other operating income, net,
other integration expenses and income tax effect on such adjustments which is calculated using the relevant effective tax rate.
					Three months ended												Three months ended
							March 31, 2024												March 31, 2023
							Unaudited												Unaudited
GAAP net income							$	4,964											$	5,580
Gross profit
Stock-based compensation expenses								150												75
Amortization of purchased intangibles								507												-
Other integration expenses								69												-
								726												75
Operating expenses
Stock-based compensation expenses								717												527
Stock-based compensation expenses related to business combination								1,324												-
Amortization of purchased intangibles								257												51
Other operating income, net								(1,810	)											(2,387							)
Other integration expenses								11												-
								499												(1,809							)
Taxes on income								(175	)											-
Non-GAAP net income							$	6,014											$	3,846

GILAT SATELLITE NETWORKS LTD.
SUPPLEMENTAL INFORMATION
U.S. dollars in thousands
ADJUSTED EBITDA:
				Three months ended
				March 31,
					2024				2023
				Unaudited
GAAP net income				$	4,964			$	5,580
Adjustments:
Financial expenses (income), net					(513	)			149
Taxes on income					940				1,284
Stock-based compensation expenses					867				602
Stock-based compensation expenses related to business combination					1,324				-
Depreciation and amortization (*)					3,481				3,163
Other operating income, net					(1,810	)			(2,387	)
Other integration expenses					80				-
Adjusted EBITDA				$	9,333			$	8,391
(*) Including amortization of lease incentive
SEGMENT REVENUES:
				Three months ended
				March 31,
					2024				2023
				Unaudited
Satellite Networks				$	46,773			$	33,546
Integrated Solutions					11,650				12,919
Network Infrastructure and Services					17,655				12,497
Total revenues				$	76,078			$	58,962

GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
		March 31,					December 31,
		2024					2023
		Unaudited					Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	104,057				$	103,961
Restricted cash			1,057					736
Trade receivables, net			53,459					44,725
Contract assets			22,775					28,327
Inventories			41,241					38,525
Other current assets			20,873					24,299
Total current assets			243,462					240,573
LONG-TERM ASSETS:
Restricted cash			52					54
Long-term contract assets			8,587					9,283
Severance pay funds			5,673					5,737
Deferred taxes			10,893					11,484
Operating lease right-of-use assets			4,911					5,105
Other long-term assets			9,772					9,544
Total long-term assets			39,888					41,207
PROPERTY AND EQUIPMENT, NET			72,624					74,315
INTANGIBLE ASSETS, NET			15,354					16,051
GOODWILL			54,740					54,740
TOTAL ASSETS		$	426,068				$	426,886
GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED BALANCE SHEETS (Cont.)
U.S. dollars in thousands
		March 31,					December 31,
		2024						2023
		Unaudited					Audited
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt		$	4,709				$	7,453
Trade payables			13,169					13,873
Accrued expenses			50,489					51,906
Advances from customers and deferred revenues			31,967					34,495
Operating lease liabilities			2,643					2,426
Other current liabilities			18,915					16,431
Total current liabilities			121,892					126,584
LONG-TERM LIABILITIES:
Long-term loan			2,000					2,000
Accrued severance pay			6,418					6,537
Long-term advances from customers and deferred revenues			906					1,139
Operating lease liabilities			2,516					3,022
Other long-term liabilities			11,516					12,916
Total long-term liabilities			23,356					25,614
SHAREHOLDERS' EQUITY:
Share capital - ordinary shares of NIS 0.2 par value			2,733					2,733
Additional paid-in capital			939,062					937,591
Accumulated other comprehensive loss			(5,618		)			(5,315		)
Accumulated deficit			(655,357		)			(660,321		)
Total shareholders' equity			280,820					274,688
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	426,068				$	426,886

GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
			Three months ended
			March 31,
				2024				2023
			Unaudited
Cash flows from operating activities:
Net income			$	4,964			$	5,580
Adjustments required to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization				3,425				3,107
Stock-based compensation expenses				2,191				602
Accrued severance pay, net				(55	)			297
Deferred taxes, net				451				1,126
Decrease (increase) in trade receivables, net				(8,797	)			6,491
Decrease in contract assets				6,248				4,917
Decrease (increase) in other assets and other adjustments (including short-term, long-term
and effect of exchange rate changes on cash and cash equivalents)				3,507				(2,767	)
Increase in inventories				(3,193	)			(7,623	)
Increase (decrease) in trade payables				(666	)			1,989
Decrease in accrued expenses				(1,240	)			(2,199	)
Decrease in advances from customers and deferred revenues				(2,754	)			(4,469	)
Increase (decrease) in other liabilities				139				(848	)
Net cash provided by operating activities				4,220				6,203
Cash flows from investing activities:
Purchase of property and equipment				(793	)			(3,032	)
Net cash used in investing activities				(793	)			(3,032	)
Cash flows from financing activities:
Repayment of short-term debt, net				(2,744	)			-
Net cash used in financing activities				(2,744	)			-
Effect of exchange rate changes on cash, cash equivalents and restricted cash				(268	)			(577	)
Increase in cash, cash equivalents and restricted cash				415				2,594
Cash, cash equivalents and restricted cash at the beginning of the period				104,751				87,145
Cash, cash equivalents and restricted cash at the end of the period			$	105,166			$	89,739