GlobeNewswire Inc | Nov 10, 2020 06:47AM EST

November 10, 2020

PETAH TIKVA, Israel, Nov. 10, 2020 (GLOBE NEWSWIRE) -- Gilat Satellite Networks Ltd. (NASDAQ, TASE: GILT), a worldwide leader in satellite networking technology, solutions and services, today reported its results for the third quarter ended September 30, 2020.

Third Quarter Key Financial Highlights

-- Revenues were $37.3 million; compared to $63.4 million in Q3 2019 and similar to that of the previous quarter. -- GAAP operating loss was $10.9 million compared to operating income of $7.0 million in Q3 2019 and an operating loss of $3.5 million in the previous quarter. The GAAP operating loss in the quarter includes $8.2 million in expenses related to the Comtech merger and litigation and their effects. -- Non-GAAP operating loss in the quarter was $1.9 million compared with operating income of $7.5 million in Q3 2019 and compared to an operating loss of $2.6 million in the previous quarter. -- GAAP net loss was $11.6 million, or loss of $0.21 per share, compared with net income of $6.3 million, or income of $0.11 per diluted share in Q3 2019; GAAP net loss in the previous quarter was $4.2 million, or loss of $0.08 per share. -- Non-GAAP net loss was $2.6 million, or $0.05 per diluted share, compared with net income of $6.8 million, or $0.12 per diluted share, in Q3 2019, and compared with net loss of $3.3 million, or $0.06 per share, as reported in the prior quarter. -- Adjusted EBITDA was $0.6 million compared with adjusted EBITDA of $10.1 million in Q3 2019, and adjusted EBITDA of $0.1 million in the previous quarter. -- Gilat plans to distribute $55 million as a cash dividend, out of which $20 million was declared and will be paid on December 2nd, 2020 and an additional $35 million to be declared subject to court approval. -- Income from the merger termination and litigation settlement paid by Comtech will be recorded in Q4 2020.

Adi Sfadia, Gilat's Interim CEO, commented, Albeit our third quarter results were still negatively impacted by the ongoing pandemics effect and even more so by the litigation with Comtech, I am very optimistic as we continue to see a recovery in most of our areas of operations. During this quarter we made several significant achievements in our strategic growth engines of Cellular Backhaul, NGSO, and in our business in Peru which have resulted in significant increase in our backlog.

"Gilat continues to lead the market of Cellular Backhaul and we continue to reap the benefits of our cellular backhaul managed service strategy that allows us to enjoy larger contracts with recurring revenue. As an example, in North America we had two such major achievements this quarter. Gilat was awarded $20 Million for a three-year managed-service contract-renewal and expansion from a Tier-1 MNO in the United States and a three-year managed service contract by Southern Linc, for coverage to remote areas as well as emergency response.

"In NGSO and VHTS, we are progressing according to schedule with our partner SES to provide our next generation innovative baseband platform for O3B mPOWER. Throughout the last year, we have been working closely with SES with the joint goal of bringing to market unparalleled customer experience in all target verticals.

"Further, we just announced that SES and Gilat expanded the O3b mPower partnership with a multi-million-dollar follow-on order for high-speed modems. The modems will deliver multi Gbps throughput, targeting high-end services over the O3b mPOWER MEO constellation.

"Lastly, in Peru, we were awarded this quarter a large contract by IPT, a consortium consisting of Telefonica and Facebook among others."

Mr. Sfadia concluded:

"I am pleased with our business accomplishments and with the healthy pipeline of significant and large opportunities and believe that these accomplishments will enable us to demonstrate a sequentially improved fourth quarter, both in terms of revenues and profitability."

Key Recent Announcements

-- SES and Gilat Expand Partnership with Multi-Million-Dollar Follow-on Order for High-Speed Modems -- Gilat Hires BG (Res.) Eyal Zelinger as Global Defense Vice President and General Manager -- Gilat Plans to Distribute $55 Million in Dividends to Shareholders -- Gilat Successfully Demonstrates Carrying 5G Traffic with Outstanding Performance over Thaicom's GEO HTS Satellite -- US Department of Defense Awards Gilat Multi-Million-Dollar Orders for Military Communications Program -- Gilat Awarded $20 Million Cellular Backhaul Managed Service Contract Renewal and Expansion from Tier-1 MNO in the United States -- Gilat Satellite Networks Chosen by Southern Linc for 4G Cellular Backhaul Services -- Comtech Telecommunications Corp. and Gilat Satellite Networks Ltd. Terminate Merger Agreement and Settle Litigation

Conference call detailsGilats management will discuss its third quarter 2020 results and business achievements and participate in a question and answer session:

Date: Tuesday, November 10, 2020Start: 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/gilatq3-2020.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: November 10, 2020 at 12:00 PM EST / 19:00 ISTEnd: November 13, 2020 at 12:00 PM EST / 19:00 ISTDial-in: US: 1-888-326-9310 International: (972) 3-925-5904

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 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 costs 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 OPERATIONSU.S. dollars in thousands (except share and per share data)

Nine months ended Three months ended September, 30 September, 30 2020 2019 2020 2019 Unaudited Unaudited Revenues $ 123,258 $ 185,178 $ 37,270 $ 63,384 Cost of 95,341 116,369 27,827 40,130 revenues Gross profit 27,917 68,809 9,443 23,254 Research anddevelopment 20,215 24,088 6,442 7,596 expensesLess - grants 932 1,610 460 516 Research anddevelopment 19,283 22,478 5,982 7,080 expenses, netSelling andmarketing 12,337 16,332 3,687 5,044 expensesGeneral andadministrative 10,269 13,666 2,478 4,139 expensesMerger,acquisition 11,149 - 8,198 - and relatedlitigation Totaloperating 53,038 52,476 20,345 16,263 expenses Operating (25,121 ) 16,333 (10,902 ) 6,991 income (loss) Financialexpenses, (1,715 ) (1,940 ) (286 ) (540 )net Income (loss)before taxes (26,836 ) 14,393 (11,188 ) 6,451 on income Taxes on 695 1,876 363 163 income Net income $ (27,531 ) $ 12,517 $ (11,551 ) $ 6,288 (loss) Basic earnings(loss) per $ (0.50 ) $ 0.23 $ (0.21 ) $ 0.11 share Dilutedearnings $ (0.50 ) $ 0.22 $ (0.21 ) $ 0.11 (loss) pershare Weightedaverage number of shares usedin computing earnings (loss) per share Basic 55,506,266 55,329,617 55,520,197 55,463,945 Diluted 55,506,266 56,029,698 55,520,197 56,059,239



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 September 30, 2020 September 30, 2019 GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP (1) (1) Unaudited Unaudited Gross profit $ 9,443 28 $ 9,471 $ 23,254 68 $ 23,322Operating 20,345 (8,950 ) 11,395 16,263 (433 ) 15,830expensesOperating (10,902 ) 8,978 (1,924 ) 6,991 501 7,492income (loss)Net income (11,551 ) 8,978 (2,573 ) 6,288 501 6,789(loss) Earnings (loss)per share $ (0.21 ) $ 0.16 $ (0.05 ) $ 0.11 $ 0.01 $ 0.12(basic anddiluted) Weightedaverage number of shares usedincomputingearnings per share Basic 55,520,197 55,520,197 55,463,945 55,463,945 Diluted 55,520,197 55,520,197 56,059,239 56,179,331 (1) Adjustments reflect the effect of non-cash stock-based compensation as perASC 718, amortization of intangible assets related to shares acquisitiontransactions, Merger, acquisition and relatedlitigation and restructuring andre-organization costs. Three months ended Three months ended September 30, 2020 September 30, 2019 Unaudited Unaudited GAAP net income $ (11,551 ) $ 6,288 (loss) Gross profit Non-cash stock-based 21 55 compensation expensesAmortization of intangibleassets related to acquisition 7 13 transactions 28 68 Operating expensesNon-cash stock-based 259 382 compensation expensesAmortization of intangibleassets related to acquisition 49 51 transactionsMerger,acquisition and 8,198 - relatedlitigationRestructuringand 444 - re-organizationcosts 8,950 433 Non-GAAP net $ (2,573 ) $ 6,789 income (loss)



GILAT SATELLITE NETWORKS LTD.RECONCILIATION BETWEEN GAAP AND NON-GAAP STATEMENTS OF OPERATIONSFOR COMPARATIVE PURPOSES U.S. dollars in thousands (except share and per share data) Nine months ended Nine months ended September 30, 2020 September 30, 2019 GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP (1) (1) Unaudited Unaudited Gross profit $ 27,917 144 $ 28,061 $ 68,809 706 $ 69,515Operating 53,038 (12,887 ) 40,151 52,476 (2,339 ) 50,137expensesOperating (25,121 ) 13,031 (12,090 ) 16,333 3,045 19,378income (loss)Net income (27,531 ) 13,031 (14,500 ) 12,517 3,045 15,562(loss) Basic earnings(loss) per $ (0.50 ) $ 0.24 $ (0.26 ) $ 0.23 $ 0.05 $ 0.28shareDilutedearnings (loss) $ (0.50 ) $ 0.24 $ (0.26 ) $ 0.22 $ 0.06 $ 0.28per share Weighted average number of shares used incomputingearnings per share Basic 55,506,266 55,506,266 55,329,617 55,329,617 Diluted 55,506,266 55,506,266 56,029,698 56,180,242 (1) Adjustments reflect the effect of non-cash stock-based compensation as perASC 718, amortization of intangible assets related to shares acquisitiontransactions, Merger, acquisition and related litigation, trade secrets and otherlitigation expenses and restructuring and re-organization costs. Nine months ended Nine months ended September 30, 2020 September 30, 2019 Unaudited Unaudited GAAP net income $ (27,531 ) $ 12,517 (loss) Gross profit Non-cash stock-based 127 198 compensation expensesAmortization of intangible assets 17 479 related to acquisition transactionsRestructuringand - 29 re-organizationcosts 144 706 Operating expensesNon-cash stock-based 860 1,532 compensation expensesAmortization of intangible assets 150 152 related to acquisition transactionsTrade secretsand other 11 100 litigationexpensesMerger,acquisition and 11,149 - relatedlitigationRestructuringand 717 555 re-organizationcosts 12,887 2,339 Non-GAAP net $ (14,500 ) $ 15,562 income (loss)



GILAT SATELLITE NETWORKS LTD.SUPPLEMENTAL INFORMATIONU.S. dollars in thousands ADJUSTED EBITDA: Nine months ended Three months ended September 30, September 30, 2020 2019 2020 2019 Unaudited Unaudited GAAP operating $ (25,121 ) $ 16,333 $ (10,902 ) $ 6,991 income (loss)Add: Non-cashstock-based 987 1,730 280 437 compensationexpensesTrade secrets andother litigation 11 100 - - expensesRestructuring andre-organization 717 585 444 - costsMerger,acquisition and 11,149 - 8,198 - related litigationDepreciationand 7,924 8,413 2,542 2,627 amortization(*) Adjusted EBITDA $ (4,333 ) $ 27,161 $ 562 $ 10,055 (*) Includingamortization of lease incentive SEGMENT REVENUE: Nine months ended Three months ended September 30, September 30, 2020 2019 2020 2019 Unaudited Unaudited Fixed Networks $ 67,587 $ 94,104 $ 22,797 $ 27,268 Mobility 42,417 70,615 9,210 27,116 SolutionsTerrestrialInfrastructure 13,254 20,459 5,263 9,000 Projects Total revenue $ 123,258 $ 185,178 $ 37,270 $ 63,384



GILAT SATELLITE NETWORKS LTD. CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands September 30, December 31, 2020 2019 Unaudited Audited ASSETS CURRENT ASSETS: Cash and cash equivalents $ 51,574 $ 74,778 Restricted cash 25,628 27,067 Trade receivables, net 26,199 47,731 Contract assets 38,102 23,698 Inventories 31,816 27,203 Other current assets 16,558 23,007 Total current assets 189,877 223,484 LONG-TERM ASSETS: Long-term restricted cash 40 124 Severance pay funds 6,227 6,831 Deferred taxes 18,329 18,455 Operating lease right-of-use assets 5,665 5,211 Other long term receivables 7,796 10,156 Total long-term assets 38,057 40,777 PROPERTY AND EQUIPMENT, NET 77,618 82,584 INTANGIBLE ASSETS, NET 1,192 1,523 GOODWILL 43,468 43,468 TOTAL ASSETS $ 350,212 $ 391,836 GILAT SATELLITE NETWORKS LTD. CONSOLIDATED BALANCE SHEETS (Cont.) U.S. dollars in thousands September 30, December 31, 2020 2019 Unaudited Audited LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term loans $ 4,000 $ 4,096 Trade payables 17,302 20,725 Accrued expenses 54,075 54,676 Advances from customers and deferred revenues 25,908 27,220 Operating lease liabilities 1,940 1,977 Other current liabilities 10,406 12,261 Total current liabilities 113,631 120,955 LONG-TERM LIABILITIES: Long-term loans, net of current maturities - 4,000 Accrued severance pay 6,493 7,061 Long-term advances from customers - 2,866 Operating lease liabilities 3,754 3,258 Other long-term liabilities 1,069 108 Total long-term liabilities 11,316 17,293 SHAREHOLDERS' EQUITY: Share capital - ordinary shares of NIS 0.2 2,644 2,643 par valueAdditional paid-in capital 928,337 927,348 Accumulated other comprehensive loss (6,830 ) (5,048 )Accumulated deficit (698,886 ) (671,355 ) Total shareholders' equity 225,265 253,588 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 350,212 $ 391,836



GILAT SATELLITE NETWORKS LTD.CONSOLIDATED STATEMENTS OF CASH FLOWSU.S. dollars in thousands Nine months ended Three months ended September 30, September 30, 2020 2019 2020 2019 Unaudited UnauditedCash flowsfrom operatingactivities:Net income $ (27,531 ) $ 12,517 $ (11,551 ) $ 6,288 (loss)Adjustmentsrequired to reconcile netincometo net cashprovided by operatingactivities:Depreciationand 7,757 8,247 2,486 2,565 amortizationCapital lossfrom disposal 34 - 11 - of propertyand equipmentStock-basedcompensation 987 1,730 280 437 of optionsAccruedseverance 37 345 11 (37 )pay, netDeferredincome taxes, 101 1,081 (39 ) (304 )netDecrease(increase) intrade 20,852 141 2,488 (2,365 )receivables,netDecrease(increase) in (14,404 ) 25,408 (6,042 ) 25,640 contractassetsDecrease(increase) inother assets (includingshort-term,long-termand deferred 7,919 (1,419 ) 1,209 (1,390 )charges)Decrease(increase) in (5,150 ) (7,685 ) 548 (1,548 )inventoriesDecrease intrade (3,335 ) (4,515 ) (2,825 ) (8,448 )payablesIncrease(decrease) in (193 ) (8,904 ) 5,616 (1,828 )accruedexpensesIncrease(decrease) in (4,116 ) (9,540 ) 1,609 (1,135 )advance fromcustomersDecrease incurrent and (219 ) (2,659 ) (904 ) (708 )non currentliabilitiesNet cashprovided by(used in) (17,261 ) 14,747 (7,103 ) 17,167 operatingactivities Cash flowsfrom investingactivities:Purchase ofproperty and (2,740 ) (5,649 ) (861 ) (2,062 )equipmentNet cash used in investing (2,740 ) (5,649 ) (861 ) (2,062 )activities Cash flowsfrom financingactivities:Exercise of - 375 - - stock optionsDividend - (24,864 ) - - paymentRepayment oflong-term (4,096 ) (4,353 ) - (122 )loansNet cash usedin financing (4,096 ) (28,842 ) - (122 )activities Effect ofexchange ratechanges oncash, cash ) (235 ) (91 ) )equivalents (630 (256andrestrictedcash Increase(decrease) incash, cashequivalents (24,727 ) (19,979 ) (8,055 ) 14,727 andrestrictedcash Cash, cashequivalentsandrestricted 101,969 104,204 85,297 69,498 cash at thebeginning ofthe period Cash, cashequivalentsandrestricted $ 77,242 $ 84,225 $ 77,242 $ 84,225 cash at theend of theperiod