GlobeNewswire Inc | Feb 16, 2021 07:18AM EST

February 16, 2021

Fourth Quarter GAAP Net Profitof $62.4million andAdjusted EBITDA of $1.1 millionNet Profit includes termination fees, net of costs

Dov Baharav, Chairman of the Board, Announced His Plans to Step Down During 2021

PETAH TIKVA, Israel, Feb. 16, 2021 (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 fourth quarter and full year ended December 31, 2020.

Fourth Quarter Financial Highlights

-- Revenues of $42.6 million versus $78.3 million in Q4 2019 and improved from $37.3 million in the previous quarter; -- GAAP operating income of $62.7 million versus $9.2 million in Q4 2019 and an operating loss of $10.9 million in Q3 2020; GAAP operating income includes income related to the settlement with Comtech, net of related expenses, of $64.8 million; -- Non-GAAP operating loss of $1.6 million, compared with operating income of $9.9 million in Q4 2019, improved compared with an operating loss of $1.9 million in the previous quarter; -- GAAP net income of $62.4 million, or income of $1.12 per diluted share, compared with net income of $24.0 million, or income of $0.43 per diluted share in Q4 2019 and net loss in the previous quarter of $11.6 million, or loss of $0.21 per share; GAAP net income includes $64.8 million income related to the settlement with Comtech, net of related expenses, while GAAP net income in Q4 2019 includes a $15.5 million tax benefit; -- Non-GAAP net loss of $1.9 million, or loss of $0.03 per diluted share, compared with net income of $9.1 million, or income of $0.16 per diluted share in Q4 2019, and an improvement compared with a net loss of $2.6 million, or loss of $0.05 per share, as reported in the previous quarter; -- Adjusted EBITDA of $1.1 million compared with adjusted EBITDA of $13.1 million in Q4 2019; and improved compared with adjusted EBITDA of $0.6 million in the previous quarter; -- Received $70 million in merger cancellation fees from Comtech; -- Cash dividend of $20 million paid to shareholders during the quarter; additional cash dividend of $35 million declared in the quarter and paid in January 2021;

Full year 2020 Financial Highlights

-- Revenue of $165.9 million, compared with $263.5 million in 2019; -- GAAP operating income of $37.6 million compared to $25.6 million in 2019; GAAP operating income includes income of $53.6 million related to the settlement with Comtech, net of related expenses; -- Non-GAAP operating loss of $13.7 million compared with non-GAAP operating income of $29.2 million in 2019; -- GAAP net income of $34.9 million or $0.63 per diluted share compared with $36.5 million in 2019 or $0.65 per diluted share; GAAP net income includes income of $53.6 million related to the settlement with Comtech, net of related expenses, while GAAP net income in 2019 includes a $15.5 million tax benefit; -- Non-GAAP net loss of $16.4 million or loss of $0.30 per diluted share compared to non-GAAP net income of $24.7 million or income of $0.44 per diluted share in 2019; -- Adjusted EBITDA was $3.3 million loss compared with adjusted EBITDA of $40.2 million in 2019;

Management Commentary

Adi Sfadia, Gilat's CEO, commented: During 2020, and specifically during the second half of the year, we made major technological achievements and closed some very significant deals, all of which position us very well for 2021 and onward. In particular, we saw wins in most of our growth areas, mainly Cellular Backhaul and NGSO.

"We won multiple managed service deals providing us with significant recurring revenue. In 5G backhaul - another growth engine for us, we are making solid headway and during the year, we successfully demonstrated the transport of 5G traffic with outstanding performance over Thaicom's GEO HTS satellite. We also solidified our position, as a front-runner in providing the ground-segment for NGSO constellations, with an award in the fourth quarter with a potential of over $50M in support of a LEO constellation.

In addition, given that IFC is and will continue to play a major role in attracting air travelling customers, I am confident that as air travel resumes its recovery, we will see a significant rise in demand for our IFC products and solutions.

Mr. Sfadiaconcluded, I am very encouraged by our strong bookings in the second half of 2020 which have continued into 2021, as well as the enormous investments targeting our industry. Despite my belief that the pandemic may still effect our 2021 operation to some extent, I am confident that our 2021 operating results will be materially better than those of 2020.

Dov Baharav stated: Today I announced my plan to step down from my position as chairman of Gilat's Board of Directors during 2021 and retire, following a seven year tenure. I will retain my position until a new Chariman is appointed. I conclude my period with great pride and with a feeling of satisfaction. In the last seven years the company reached extraordinary technological and business achievements, and is extremely well positioned to take advantage of the robust opportunities we are currently seeing in the market."

Key Recent Announcements

-- Gilat Shipped Initial Aero Modems Out of a Multi-Million-Dollar Potential in China -- CORPAC Awards Gilat Multi-Million-Dollar Contract to Provide Mission Critical Telecom Systems for Peru's Airports -- Gilat Awarded Contract with a Potential of Over $50 Million to Supply Wavestreams Gateway Solid State Power Amplifiers for Low Earth Orbit Constellation -- Gilats Proven ESA Technology Successfully Demonstrated over Inmarsat's Global Xpress -- AXESS Awards Gilat Multi-Million Dollars to Expand Cellular Coverage for Two Key Mobile Operators in Mexico -- Globe Awards Gilat Multi-Million US Dollar Managed Service Contract for Significant Expansion of Cellular Backhaul Project -- Gilat Declares $35 Million Cash Dividend to Shareholders -- Hispasat Awards Gilat a Multi-Million Dollar Order for Cellular Backhaul over Satellite to Extend Altan La Red Compartida Service to Rural Mexico -- Gilat Equips Hundreds of Boats, Vessels and Cruise Ships with Satellite Communication -- Gilat Receives Multi-Million-Dollar Order for a US Department of Defense Tactical Communications Program -- United States Government Awards Gilat Additional Multi-Million-Dollar Contract for Military Communications Program

Conference Call Details

Gilats management will discuss its fourth quarter and full year 2020 results and business achievements and participate in a question and answer session:

Date: Tuesday, February 16, 2021Start: 09:30 AM EST / 16:30 ISTDial-in: US: 1-866-744-5399 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: www.veidan-stream.com/gilatq4-2020.html

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

Conference Call Replay Start: February 16, 2021 at 12:00 PM EST / 19:00 ISTEnd: February 19, 2021 at 12:00 PM EST / 19:00 ISTDial-in: US: 1-888-326-9310; International: (+972) 3-925-5904

Non-GAAP MeasuresThe 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 net income, operating income, Adjusted EBITDA and earnings per share. The adjustments to the Companys GAAP results are made with the intent of providing both management and investors a more complete understanding of the Companys underlying operational results, trends and performance. Non-GAAP financial measures mainly exclude the effect of stock based compensation, amortization of purchased intangibles, lease incentive amortization, trade secrets and other litigation expenses, restructuring and reorganization costs, merger, acquisition and related litigation expense (income), net and initial recognition of deferred tax asset with respect to carry-forward losses.

Adjusted EBITDA is presented to compare the Companys performance to that of prior periods and evaluate the Companys financial and operating results on a consistent basis from period to period. The Company also believes this measure, when viewed in combination with the Companys 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 Operating income and Adjusted EBITDA is presented in the attached summary financial statements.

Non-GAAP presentations of net income, operating 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 Gilats 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 30 years of experience, we design and manufacture cutting-edge ground segment equipment, and provide comprehensive solutions and end-to-end services, powered by our innovative technology. Delivering high value competitive solutions, our portfolio comprises of a cloud based VSAT network platform, high-speed modems, high performance on-the-move antennas and high efficiency, high power Solid-State Amplifiers (SSPA) and Block Upconverters (BUC).

Gilats comprehensive solutions support multiple applications with a full portfolio of products to address key applications including broadband access, cellular backhaul, enterprise, in-flight connectivity, maritime, trains, defense and public safety, all while meeting the most stringent service level requirements. Gilat controlling shareholders are the FIMI Private Equity Funds. 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 Gilats products, inability to timely develop and introduce new technologies, products and applications, rapid changes in the market for Gilats 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 Companys proprietary technology and risks associated with Gilats international operations and its location in Israel. For additional information regarding these and other risks and uncertainties associated with Gilats business, reference is made to Gilats 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 NetworksDoreet Oren, Director Corporate CommunicationsDoreetO@gilat.com

Ehud HelftGK Investor & Public Relationsgilat@gkir.com+1 646 688 3559

GILATSATELLITE NETWORKS LTD.CONSOLIDATEDSTATEMENTS OF OPERATIONSU.S. dollars inthousands (except share and pershare data) Twelve months ended Three months ended December 31, December 31, 2020 2019 2020 2019 Unaudited Audited Unaudited Revenues $ 165,885 $ 263,492 $ 42,627 $ 78,314 Cost of 124,670 167,615 29,329 51,246 revenues Gross profit 41,215 95,877 13,298 27,068 Research anddevelopment 27,689 32,208 7,474 8,120 expensesLess - grants 1,386 2,024 454 414 Research anddevelopment 26,303 30,184 7,020 7,706 expenses, netSelling andmarketing 16,871 21,488 4,534 5,156 expensesGeneral andadministrative 14,063 18,515 3,794 4,849 expensesMerger,acquisition andrelated (53,633 ) 118 (64,782 ) 118 litigationexpenses(income), net Totaloperating 3,604 70,305 (49,434 ) 17,829 expenses(income) Operating 37,611 25,572 62,732 9,239 income Financial 1,907 2,617 192 677 expenses, net Income beforetaxes on 35,704 22,955 62,540 8,562 income Taxes onincome (tax 793 (13,583 ) 98 (15,459 )benefit) Net income $ 34,911 $ 36,538 $ 62,442 $ 24,021 Basic earnings $ 0.63 $ 0.66 $ 1.12 $ 0.43 per share Dilutedearnings per $ 0.63 $ 0.65 $ 1.12 $ 0.43 share Weighted averagenumber of shares used in computing earnings per share Basic 55,516,113 55,368,703 55,545,654 55,485,961 Diluted 55,583,474 56,030,976 55,815,099 56,034,744

GILAT SATELLITE NETWORKS LTD. RECONCILIATION BETWEEN GAAP AND NON-GAAP STATEMENTS OF OPERATIONS FOR COMPARATIVE PURPOSES U.S. dollars in thousands (except share and per share data) Three months ended Three months ended December 31, 2020 December 31, 2019 GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP Unaudited Unaudited Gross profit $ 13,298 42 $ 13,340 $ 27,068 70 $ 27,138 Operatingexpenses (49,434 ) 64,389 14,955 17,829 (550 ) 17,279 (income)Operatingincome 62,732 (64,347 ) (1,615 ) 9,239 620 9,859 (loss)Income(loss) 62,540 (64,347 ) (1,807 ) 8,562 620 9,182 before taxeson incomeNet income 62,442 (64,347 ) (1,905 ) 24,021 (14,908 ) 9,113 (loss) Basicearnings $ 1.12 $ (1.15 ) $ (0.03 ) $ 0.43 $ (0.27 ) $ 0.16 (loss) pershareDilutedearnings $ 1.12 $ (1.15 ) $ (0.03 ) $ 0.43 $ (0.27 ) $ 0.16 (loss) pershare Weightedaveragenumber of shares usedin computingearnings per shareBasic 55,545,654 55,545,654 55,485,961 55,485,961 Diluted 55,815,099 55,545,654 56,034,744 56,122,960 Three months ended Three months ended December 31, 2020 December 31, 2019 Unaudited Unaudited GAAP net $ 62,442 $ 24,021 income Gross profit Non-cashstock-based 39 58 compensationexpensesAmortizationofintangibleassets 3 12 related toacquisitiontransactions 42 70 Operatingexpenses (income)Non-cashstock-based 254 347 compensationexpensesAmortizationofintangibleassets 54 49 related toacquisitiontransactionsTradesecrets andother 85 36 litigationexpensesMerger,acquisitionand relatedlitigation (64,782 ) 118 expenses(income),net (64,389 ) 550 Tax benefit - (15,528 ) Non-GAAP netincome $ (1,905 ) $ 9,113 (loss)

GILAT SATELLITE NETWORKS LTD.RECONCILIATION BETWEEN GAAP AND NON-GAAP STATEMENTS OF OPERATIONSFOR COMPARATIVE PURPOSESU.S. dollars in thousands (except share and per share data) Twelve months ended Twelve months ended December 31, 2020 December 31, 2019 GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP Unaudited Audited Unaudited Gross profit $ 41,215 186 $ 41,401 $ 95,877 776 $ 96,653 Operating 3,604 51,502 55,106 70,305 (2,890 ) 67,415 expensesOperating 37,611 (51,316 ) (13,705 ) 25,572 3,666 29,238 income (loss)Income (loss)before taxes on 35,704 (51,316 ) (15,612 ) 22,955 3,666 26,621 incomeNet income 34,911 (51,316 ) (16,405 ) 36,538 (11,862 ) 24,676 (loss) Basic earnings(loss) per $ 0.63 $ (0.93 ) $ (0.30 ) $ 0.66 $ (0.21 ) $ 0.45 shareDilutedearnings (loss) $ 0.63 $ (0.93 ) $ (0.30 ) $ 0.65 $ (0.21 ) $ 0.44 per share Weightedaverage number of shares usedincomputingearnings per share Basic 55,516,113 55,516,113 55,368,703 55,368,703 Diluted 55,583,474 55,516,113 56,030,976 56,165,945 Twelve months ended Twelve months ended December 31, 2020 December 31, 2019 Unaudited Unaudited GAAP net income $ 34,911 $ 36,538 Gross profit Non-cashstock-based 166 257 compensationexpensesAmortization ofintangibleassets related 20 490 to acquisitiontransactionsRestructuringand - 29 re-organization costs 186 776 Operatingexpenses (income)Non-cashstock-based 1,114 1,878 compensationexpensesAmortization ofintangibleassets related 204 203 to acquisitiontransactionsTrade secretsand other 96 136 litigationexpensesMerger,acquisition andrelated (53,633 ) 118 litigationexpenses(income), netRestructuringand 717 555 re-organizationcosts (51,502 ) 2,890 Tax benefit - (15,528 ) Non-GAAP net $ (16,405 ) $ 24,676 income (loss)

GILAT SATELLITE NETWORKS LTD.SUPPLEMENTAL INFORMATIONU.S. dollars in thousands ADJUSTED EBITDA: Twelve months ended Three months ended December 31, December 31, 2020 2019 2020 2019 Unaudited Unaudited GAAP operating $ 37,611 $ 25,572 $ 62,732 $ 9,239 incomeAdd (deduct): Non-cashstock-based 1,280 2,135 293 405 compensationexpensesTrade secrets andother litigation 96 136 85 36 expensesRestructuring and - -re-organization 717 584 costsMerger,acquisition andrelated litigation (53,633 ) 118 (64,782 ) 118 expenses (income),netDepreciation and 10,653 11,676 2,729 3,263 amortization (*) Adjusted EBITDA $ (3,276 ) $ 40,221 $ 1,057 $ 13,061 (*) Includingamortization of lease incentive SEGMENT REVENUE: Twelve months ended Three months ended December 31, December 31, 2020 2019 2020 2019 Unaudited Audited Unaudited Fixed Networks $ 92,671 $ 127,265 $ 25,085 $ 33,161 Mobility Solutions 54,169 104,665 11,751 34,050 TerrestrialInfrastructure 19,045 31,562 5,791 11,103 Projects Total revenue $ 165,885 $ 263,492 $ 42,627 $ 78,314

GILAT SATELLITE NETWORKS LTD. CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands December 31, December 31, 2020 2019 Unaudited Audited ASSETS CURRENT ASSETS: Cash and cash equivalents $ 88,754 $ 74,778 Restricted cash 27,162 27,067 Trade receivables, net 27,976 47,731 Contract assets 41,573 23,698 Inventories 31,304 27,203 Other current assets 16,637 23,007 Total current assets 233,406 223,484 LONG-TERM ASSETS: Long-term restricted cash 42 124 Severance pay funds 6,665 6,831 Deferred taxes 19,295 18,455 Operating lease right-of-use assets 4,879 5,211 Other long term receivables 7,797 10,156 Total long-term assets 38,678 40,777 PROPERTY AND EQUIPMENT, NET 77,172 82,584 INTANGIBLE ASSETS, NET 1,082 1,523 GOODWILL 43,468 43,468 TOTAL ASSETS $ 393,806 $ 391,836 GILAT SATELLITE NETWORKS LTD. CONSOLIDATED BALANCE SHEETS (Cont.) U.S. dollars in thousands December 31, December 31, 2020 2019 Unaudited Audited LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term loans $ 4,000 $ 4,096 Trade payables 20,487 20,725 Accrued expenses 46,387 54,676 Advances from customers and deferred revenues 26,244 27,220 Operating lease liabilities 1,911 1,977 Dividend payable 35,003 - Other current liabilities 13,322 12,261 Total current liabilities 147,354 120,955 LONG-TERM LIABILITIES: Long-term loans, net of current maturities - 4,000 Accrued severance pay 7,136 7,061 Long-term advances from customers 1,890 2,866 Operating lease liabilities 2,985 3,258 Other long-term liabilities 631 108 Total long-term liabilities 12,642 17,293 SHAREHOLDERS' EQUITY: Share capital - ordinary shares of NIS 0.2 2,647 2,643 par valueAdditional paid-in capital 928,627 927,348 Accumulated other comprehensive loss (6,017 ) (5,048 )Accumulated deficit (691,447 ) (671,355 ) Total shareholders' equity 233,810 253,588 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 393,806 $ 391,836

GILATSATELLITE NETWORKSLTD.CONSOLIDATEDSTATEMENTS OF CASHFLOWSU.S. dollars in thousands Twelve months ended Three months ended December 31, December 31, 2020 2019 2020 2019 Unaudited UnauditedCash flowsfrom operatingactivities:Net income $ 34,911 $ 36,538 $ 62,442 $ 24,021 Adjustmentsrequired to reconcilenet incometo netcashprovided by operatingactivities:Depreciationand 10,291 10,978 2,534 2,730 amortizationCapital lossfromdisposal of 181 461 147 461 property andequipmentStock-basedcompensation 1,280 2,135 293 405 of optionsAccruedseverance 242 361 205 16 pay, netExchangerate - -differences (12 ) (12 )on long-termloansDeferredincome (865 ) (12,555 ) (966 ) (13,636 )taxes, netDecrease(increase)in trade 19,332 (1,323 ) (1,520 ) (1,464 )receivables,netDecrease(increase) (17,875 ) 24,062 (3,471 ) (1,346 )in contractassetsDecrease(increase)in otherassets (includingshort-term,long-termanddeferred 8,940 (817 ) 1,021 603 charges)Decrease(increase) (5,050 ) (8,076 ) 100 (391 )ininventoriesDecrease(increase) (157 ) (3,884 ) 3,178 631 in tradepayablesDecrease inaccrued (7,549 ) (11,671 ) (7,356 ) (2,767 )expensesIncrease(decrease)in advance (1,898 ) 1,112 2,218 10,019 fromcustomersIncrease(decrease)in current 1,377 (2,527 ) 1,596 765 and noncurrentliabilitiesNet cashprovided by 43,160 34,782 60,421 20,035 operatingactivities Cash flowsfrom investingactivities:Purchase ofproperty and (4,716 ) (7,982 ) (1,976 ) (2,333 )equipmentNet cashused in (4,716 ) (7,982 ) (1,976 ) (2,333 )investingactivities Cash flowsfrom financingactivities:Exercise of - - -stock 375 optionsDividend (19,999 ) (24,864 ) (19,999 ) - payment Repayment of -long-term (4,096 ) (4,447 ) (94 )loansNet cashused in (24,095 ) (28,936 ) (19,999 ) (94 )financingactivities Effect ofexchangerate changeson cash,cash (360 ) (99 ) 270 136 equivalentsandrestrictedcash Increase(decrease)in cash,cash 13,989 (2,235 ) 38,716 17,744 equivalentsandrestrictedcash Cash, cashequivalentsandrestricted 101,969 104,204 77,242 84,225 cash at thebeginning ofthe period Cash, cashequivalentsandrestricted $ 115,958 $ 101,969 $ 115,958 $ 101,969 cash at theend of theperiod