GlobeNewswire Inc | May 4, 2021 07:07AM EDT

May 04, 2021

PETAH TIKVA, Israel, May 04, 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 first quarter of 2021.

First Quarter Financial Highlights

-- Revenues of $44.7million versus $47.7 million in Q1 2020 and up from $42.6 million in the previous quarter; -- GAAP operating lossof $3.7million versus operating loss of $10.8 million in Q1 2020 and an operating income of $62.7 million in Q4 2020; GAAP operating income in Q4 2020 included income related to the legal settlement with Comtech, net of related expenses, of $64.8 million; -- Non-GAAP operating loss of $3.8million, compared with operating loss of $7.6 million in Q1 2020, and an operating loss of $1.6 million in the previous quarter; -- GAAP net lossof $5.1million, or loss of $0.09 per diluted share, compared with net loss of $11.8 million, or loss of $0.21 per diluted share in Q1 2020 and net income in the previous quarter of $62.4 million, or income of $1.12 per share; GAAP net income in the previous quarter included $64.8 million income related to the settlement with Comtech, net of related expenses; -- Non-GAAP net loss of $5.2million, or loss of $0.09 per diluted share, compared with net loss of $8.6 million, or loss of $0.15 per diluted share in Q1 2020, and compared with a net loss of $1.9 million, or loss of $0.03 per share, as reported in the previous quarter; -- Adjusted EBITDA loss of$1.4million compared with adjusted EBITDA loss of $5.0 million in Q1 2020; and adjusted EBITDA of $1.1 million in the previous quarter;

Management Commentary

Adi Sfadia, Gilat's CEO, commented: We continue to see strong momentum across all our business units, with the exception of the IFC market segment, which is yet to show a recovery. We believe that this growth trend will continue during 2021 and expect to show sequential quarterly growth throughout the year and increasing profitability. Looking further out, 2022 is expected to show significant improvement both in revenue and profitability with the pick-up in IFC, Cellular Backhaul and NGSO.

"As a testament to the strong momentum we are seeing, I am very pleased to report that we entered a mega strategic agreement valued at tens of millions of dollars, including a potential for significant project expansions, with a large government corporation in Asia Pacific. I believe that we will see additional large strategic transactions in the near future.

In light of the many opportunities we see ahead of us, we are investing significant R&D efforts in order to capture these opportunities and accelerate our future growth. We expect that NGSO, IFC and Cellular Backhaul will be the main market segments that will drive this growth during 2021 and beyond, and we also see strong potential for the defense business to support our growth in a more meaningful way than it has done in the past.

"We made positive progress during the first quarter in our strategic growth areas of NGSO and Cellular Backhaul. We received additional orders for a LEO constellation, where our gateway Solid State Power Amplifiers (SSPAs) have been selected as the solution of choice. On the Cellular Backhaul front, we received a multi-million-dollar expansion and follow-on orders from Tier-1 mobile operators around the globe including in Japan, Australia, Europe and South America.

"In addition, we have made great progress in Peru with the government's acceptance for the operational phase in the Cusco region, bringing us significantly closer to our goal of recurring revenue of over $50M in Peru."

Key Recent Announcements

-- Gilat Enters Strategic Agreement Valued at Tens of Millions of Dollars with a Large Government Corporation in Asia Pacific -- Gilat Achieves Critical Milestone in Peru with Approval to Enter Operational Phase, Unlocking Access to Recurring Revenue of Multi Million Dollars per Annum -- Tier-1 Telco in Latin America Awards Gilat Over $3M to Provide Broadband Connectivity in Support of Bridging the Digital Divide -- Gilat Receives Over $5M for Cellular Backhaul Expansion from Tier-1 Mobile Network Carrier in Japan -- Gilat Awarded Over $20 Million in Orders for Support of Low Earth Orbit Constellation -- SES Selected Gilat to Enable Tier-1 4G/LTE MNO in Brazil to Provide Broadband Connectivity for Education -- Telespazio Selects Gilat to Supply Enterprise Connectivity in Brazil for a Multinational Leading Energy Company -- Gilat Announces Appointment of Isaac Angel as Chairman of the Board -- Gilats In-Flight Connectivity High-Power Transceiver Successfully Tested by Global Eagle Entertainment for DO-160G Certification -- Gilat Launches Next Generation VSAT Family Supporting 5G Networks and LEO/MEO Constellations

Conference Call Details

Gilats management will discuss its first quarter 2021 results and business achievements and participate in a questions and answers session:

Date: Tuesday, May 4, 2021Start: 9:30 AM ET / 4:30 PM ITDial-in: US: 1-866-744-5399 International: +972-3-918-0610



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/gilatq1-2021.html

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

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, litigation expenses, income related to trade secrets claims, 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 GilatGilat 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

GILAT SATELLITE NETWORKS LTD. CONSOLIDATED STATEMENTS OF OPERATIONS U.S. dollars in thousands (except share and per share data) Three months ended March 31, 2021 2020 Unaudited Revenues $ 44,713 $ 47,673 Cost of revenues 32,356 38,787 Gross profit 12,357 8,886 Research and development expenses 8,111 7,634 Less - grants 184 272 Research and development expenses, net 7,927 7,362 Selling and marketing expenses 5,004 5,066 General and administrative expenses 3,083 4,818 Merger, acquisition and related litigation - 2,405 expenses Total operating expenses 16,014 19,651 Operating loss (3,657 ) (10,765 ) Financial expenses, net (1,192 ) (972 ) Loss before taxes on income (4,849 ) (11,737 ) Taxes on income 247 18 Net loss $ (5,096 ) $ (11,755 ) Basic loss per share $ (0.09 ) $ (0.21 ) Diluted loss per share $ (0.09 ) $ (0.21 ) Weighted average number of shares used incomputing loss per shareBasic 56,031,343 55,493,258 Diluted 56,031,343 55,493,258

GILAT SATELLITE NETWORKS LTD. RECONCILIATION BETWEEN GAAP AND NON-GAAP STATEMENTS OF OPERATIONS FOR COMPARATIVE PURPOSESU.S. dollars in thousands (except share and per share data) Three months ended Three months ended March 31, 2021 March 31, 2020 GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP Unaudited Unaudited Gross profit $ 12,357 66 $ 12,423 $ 8,886 62 $ 8,948 Operating 16,014 169 16,183 19,651 (3,106 ) 16,545 expensesOperating loss (3,657 ) (103 ) (3,760 ) (10,765 ) 3,168 (7,597 )Loss before (4,849 ) (103 ) (4,952 ) (11,737 ) 3,168 (8,569 )taxes on incomeNet loss (5,096 ) (103 ) (5,199 ) (11,755 ) 3,168 (8,587 ) Basic loss per $ (0.09 ) $ - $ (0.09 ) $ (0.21 ) $ 0.06 $ (0.15 )shareDiluted loss $ (0.09 ) $ - $ (0.09 ) $ (0.21 ) $ 0.06 $ (0.15 )per share Weightedaverage numberof shares used incomputingloss per shareBasic 56,031,343 56,031,343 55,493,258 55,493,258 Diluted 56,031,343 56,031,343 55,493,258 55,493,258 Three months ended Three months ended March 31, March 31, 2021 2020 Unaudited Unaudited GAAP net loss $ (5,096 ) $ (11,755 ) Gross profit Non-cashstock-based 61 57 compensationexpensesAmortization ofintangibleassets related 5 5 to acquisitiontransactions 66 62 Operatingexpenses (income)Non-cashstock-based (220 ) 366 compensationexpensesAmortization ofintangibleassets related 51 51 to acquisitiontransactionsTrade secretsand other - 11 litigationexpensesMerger,acquisition andrelated - 2,405 litigationexpensesRestructuringand - 273 re-organizationcosts (169 ) 3,106 Non-GAAP net $ (5,199 ) $ (8,587 ) loss

GILAT SATELLITE NETWORKS LTD. SUPPLEMENTAL INFORMATION U.S. dollars in thousands ADJUSTED EBITDA: Three months ended March 31, 2021 2020 Unaudited GAAP operating loss $ (3,657 ) $ (10,765 )Add (deduct): Non-cash stock-based compensation expenses (159 ) 423 Trade secrets and other litigation expenses - 11 Restructuring and re-organization costs - 273 Merger, acquisition and related litigation - 2,405 expensesDepreciation and amortization (*) 2,385 2,664 Adjusted EBITDA $ (1,431 ) $ (4,989 ) (*) Including amortization of lease incentive SEGMENT REVENUE: Three months ended March 31, 2021 2020 Unaudited Fixed Networks $ 25,302 $ 23,011 Mobility Solutions 11,079 19,201 Terrestrial Infrastructure Projects 8,332 5,461 Total revenue $ 44,713 $ 47,673

GILAT SATELLITE NETWORKS LTD. CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands March 31, December 31, 2021 2020 Unaudited Audited ASSETS CURRENT ASSETS: Cash and cash equivalents $ 48,905 $ 88,754 Restricted cash 26,642 27,162 Trade receivables, net 27,820 27,976 Contract assets 46,060 41,573 Inventories 33,339 31,304 Other current assets 18,832 16,637 Total current assets 201,598 233,406 LONG-TERM ASSETS: Long-term restricted cash 12 42 Severance pay funds 6,414 6,665 Deferred taxes 18,778 19,295 Operating lease right-of-use assets 4,478 4,879 Other long term receivables 8,339 7,797 Total long-term assets 38,021 38,678 PROPERTY AND EQUIPMENT, NET 76,612 77,172 INTANGIBLE ASSETS, NET 971 1,082 GOODWILL 43,468 43,468 TOTAL ASSETS $ 360,670 $ 393,806 GILAT SATELLITE NETWORKS LTD. CONSOLIDATED BALANCE SHEETS (Cont.) U.S. dollars in thousands March 31, December 31, 2021 2020 Unaudited Audited LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term loans $ - $ 4,000 Trade payables 21,428 20,487 Accrued expenses 47,465 46,387 Advances from customers and deferred revenues 35,404 26,244 Operating lease liabilities 1,678 1,911 Dividend payable - 35,003 Other current liabilities 16,161 13,322 Total current liabilities 122,136 147,354 LONG-TERM LIABILITIES: Accrued severance pay 6,875 7,136 Long-term advances from customers 307 1,890 Operating lease liabilities 2,847 2,985 Other long-term liabilities 396 631 Total long-term liabilities 10,425 12,642 SHAREHOLDERS' EQUITY: Share capital - ordinary shares of NIS 0.2 par 2,704 2,647 valueAdditional paid-in capital 928,410 928,626 Accumulated other comprehensive loss (6,463 ) (6,017 )Accumulated deficit (696,542 ) (691,446 ) Total shareholders' equity 228,109 233,810 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 360,670 $ 393,806

GILAT SATELLITE NETWORKS LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. dollars in thousands Three months ended March 31, 2021 2020 UnauditedCash flows from operating activities: Net loss $ (5,096 ) $ (11,755 )Adjustments required to reconcile net income to net cash provided by (used in) operating activities:Depreciation and amortization 2,330 2,604 Capital loss from disposal of property and - (33 )equipmentStock-based compensation of options (159 ) 423 Accrued severance pay, net (10 ) 43 Deferred income taxes, net 518 634 Decrease (increase) in trade receivables, net (1,933 ) 13,607 Increase in contract assets (4,487 ) (4,851 )Decrease (increase) in other assets (including short-term, long-termand deferred charges) (220 ) 1,673 Increase in inventories (2,212 ) (6,635 )Increase in trade payables 950 2,375 Increase (decrease) in accrued expenses 969 (1,652 )Increase (decrease) in advance from customer and 7,688 (2,827 )deferred revenuesIncrease in current and non current liabilities 2,003 2,811 Net cash provided by (used in) operating 341 (3,583 )activities Cash flows from investing activities: Purchase of property and equipment (1,483 ) (951 )Net cash used in investing activities (1,483 ) (951 ) Cash flows from financing activities: Dividend payment (35,003 ) - Repayment of long-term loans (4,000 ) (4,096 )Net cash used in financing activities (39,003 ) (4,096 ) Effect of exchange rate changes on cash, cash (254 ) (695 )equivalents and restricted cash Decrease in cash, cash equivalents and (40,399 ) (9,325 )restricted cash Cash, cash equivalents and restricted cash at 115,958 101,969 the beginning of the period Cash, cash equivalents and restricted cash at $ 75,559 $ 92,644 the end of the period