Gilat Presents Fourth Quarter and Full Year 2023 Results

Q4 Revenue of $75.6 million, GAAP Operating Income of $2.9 million and Adjusted EBITDA of $9.4 million

2023 Revenue of $266.1 million, up 11% year over year, GAAP Operating Income of $28.1 million and Adjusted EBITDA of $36.4 million, up 44% YoY

PETAH TIKVA, Israel, Feb. 26, 2024 (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, 2023.

Fourth Quarter 2023 Financial Highlights

  • Revenue of $75.6 million, up 4% compared with $72.6 million in Q4 2022;
  • GAAP operating income of $2.9 million, compared with $6.1 million in Q4 2022;
  • Non-GAAP operating income of $6.1 million, compared with $7.1 million in Q4 2022;
  • GAAP net income of $3.4 million, or $0.06 per diluted share, compared with GAAP net loss of $6.0 million, or $0.11 loss per share, in Q4 2022;
  • Non-GAAP net income of $6.5 million, or $0.11 per diluted share, compared with $7.9 million, or $0.14 per diluted share, in Q4 2022;
  • Adjusted EBITDA of $9.4 million compared with $10.1 million in Q4 2022.

Full year 2023 Financial Highlights

  • Revenue of $266.1 million, up 11% compared with $239.8 million in 2022;
  • GAAP operating income of $28.1 million, almost tripled compared to $10.0 million in 2022;
  • Non-GAAP operating income of $23.5 million, up 73% compared with $13.6 million in 2022;
  • GAAP net income of $23.5 million, or $0.41 per diluted share, compared with GAAP net loss of $5.9 million in 2022, or $0.10 loss per share;
  • Non-GAAP net income of $19.9 million, or $0.35 per diluted share, almost doubled compared to non-GAAP net income of $10.6 million or $0.19 per diluted share in 2022;
  • Adjusted EBITDA was $36.4 million, up 44% compared with adjusted EBITDA of $25.2 million in 2022.

Forward-Looking Expectations

Management’s financial guidance for 2024 is for revenues of between $305 to $325 million, representing year-over-year growth of 18% at the midpoint. GAAP operating income is expected to be between $15 to $19 million, and Adjusted EBITDA is expected to be between $40 to $44 million, representing year-over-year growth of 15% at the midpoint.

Management Commentary

Adi Sfadia, Gilat’s CEO, commented: “We are pleased with the financial results, capping off a strong 2023 with $266 million in revenue, up 11% over last year, and very strong growth in EBITDA at $36.4 million, up 44% over last year. This demonstrates the operating leverage inherent to our business model combined with a favorable product revenue mix during 2023.

“Furthermore, 2023 was also particularly successful from a strategic perspective. Looking back, we have a lot to be proud of. In mid-November, we concluded the acquisition of DataPath in the US, which brings several synergies for both businesses and we see DataPath as a significant long-term growth asset for Gilat in the defense sector. Moreover, our strong cash position is allowing us to explore additional inorganic growth opportunities and we are currently exploring several of these opportunities.

Mr. Sfadia added, “Throughout the year, we achieved highly strategic contract wins with market-dominating satellite operators, and we extended Gilat’s market leadership in satellite-based cellular backhaul and In-Flight Connectivity, including a very significant Electronic Steered Antenna (ESA) award for business aviation.

Mr. Sfadia concluded, “Our ongoing success is due to the continued growing market interest in the satellite communications sector in general and for our leading technological solutions in particular. We see these favorable trends continuing into 2024 and therefore our expectations for the year ahead are for continued strong growth in revenue and profit.”

Key Recent Announcements

  • Gilat Awarded $10 Million Follow-On Order from the US Department of Defense
  • Gilat Awarded Multimillion-Dollar Defense Satellite Connectivity Project
  • Gilat Awarded $17 Million by Pronatel for Expansion of Regional Telecommunications Project in Peru
  • Gilat Announces New Brand Identity Embracing the Company’s Commitment to the New Space Revolution
  • Gilat Awarded Approximately $3M for a Satellite Connectivity Project for a National Police Force
  • US Army Awards Nearly $20 Million Contract Extension to Gilat to Sustain Anytime, Anywhere Satellite Connectivity
  • Gilat Completes Acquisition of DataPath, Inc.

Conference Call Details

Gilat’s management will discuss its fourth quarter and full year 2023 results and business achievements and participate in a question-and-answer session:

Date: Monday, February 26, 2024
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/gilatq4-2023

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

Unaudited Results
The attached summary unaudited financial statements represent the most current information available to management. Audited results will be reported in our annual report on Form 20-F.

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 (loss), Adjusted EBITDA, and earnings (losses) 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 non-cash stock-based compensation expenses, amortization of purchased intangibles, amortization of intangible assets related to acquisition transactions, lease incentive amortization, impairment of held for sale asset, other expenses, one-time changes of deferred tax assets, one-time tax expense related to the release of historical tax-trapped earnings, 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 (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, 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
[email protected]

Gilat Satellite Networks
Mayrav Sher, Head of Finance and Investor Relations
[email protected]

EK Global IR
Ehud Helft, Managing Partner
[email protected]

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,
    2023       2022       2023     2022  
  Unaudited   Audited   Unaudited
               
Revenues $ 266,090     $ 239,840     $ 75,612   $ 72,627  
Cost of revenues   161,145       152,932       46,692     44,911  
               
Gross profit   104,945       86,908       28,920     27,716  
               
Research and development expenses, net   41,173       35,640       11,624     10,098  
Selling and marketing expenses   25,243       21,694       7,119     5,970  
General and administrative expenses   19,215     *) 18,412       6,312   *) 5,198  
Impairment of held for sale asset         771           53  
Other operating expenses (income), net   (8,771 )   *) 438       986   *) 327  
               
Total operating expenses   76,860       76,955       26,041     21,646  
                 
Operating income   28,085       9,953       2,879     6,070  
               
Financial income (expenses), net   109       (2,818 )     1,196     (102 )
               
Income before taxes on income   28,194       7,135       4,075     5,968  
               
Taxes on income   4,690       13,063       628     11,988  
               
Net income (loss) $ 23,504     $ (5,928 )   $ 3,447   $ (6,020 )
               
Earnings (losses) per share (basic and diluted) $ 0.41     $ (0.10 )   $  0.06   $ (0.11 )
               
Weighted average number of shares used in computing earnings (losses) per share              
Basic   56,668,999       56,591,994       56,820,774     56,610,404  
Diluted   56,672,537       56,591,994       56,820,774     56,610,404  
               
*) Reclassified              
               
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, 2023   December 31, 2022
  GAAP   Adjustments (*)   Non-GAAP   GAAP   Adjustments (*)   Non-GAAP
  Unaudited   Unaudited
                       
Gross profit $ 28,920   $ 617     $ 29,537   $ 27,716     $ 73     $ 27,789
Operating expenses   26,041     (2,615 )     23,426     21,646       (943 )     20,703
Operating income   2,879     3,232       6,111     6,070       1,016       7,086
Income before taxes on income   4,075     3,232       7,307     5,968       1,016       6,984
Net income (loss) $ 3,447   $ 3,097     $ 6,544   $ (6,020 )   $ 13,896     $ 7,876
                       
Basic earnings (losses) per share $ 0.06   $ 0.06     $ 0.12   $ (0.11 )   $ 0.25     $ 0.14
                       
Diluted earnings (losses) per share $ 0.06   $ 0.05     $ 0.11   $ (0.11 )   $ 0.25     $ 0.14
                       
                       
Weighted average number of shares used in computing earnings (losses) per share                      
Basic   56,820,774         56,820,774     56,610,404           56,610,404
Diluted   56,820,774         56,987,939     56,610,404           56,623,366
                       
                       
(*) Adjustments reflect the effect of non-cash stock-based compensation expenses as per ASC 718, amortization of intangible assets related to acquisition transactions, impairment of held for sale asset, other operating expenses (income), net, one-time tax expense related to the release of historical tax-exempt earnings and income tax effect on adjustments which is calculated using the relevant effective tax rate.
                       
                       
  Three months ended   Three months ended
  December 31, 2023   December 31, 2022
      Unaudited           Unaudited    
                       
GAAP net income (loss)     $ 3,447             $ (6,020 )    
                       
Gross profit                      
Non-cash stock-based compensation expenses       129               73      
Amortization of intangible assets related to acquisition transactions       448                    
Others       40                    
        617               73      
Operating expenses                      
Non-cash stock-based compensation expenses       1,458               513      
Amortization of intangible assets related to acquisition transactions       162               50      
Impairment of held for sale asset                     53      
Other operating expenses (income), net       986               327      
Others       9                    
        2,615               943      
                       
Taxes on income       (135 )             12,880      
                       
Non-GAAP net income     $ 6,544             $ 7,876      
                       
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, 2023   December 31, 2022
  GAAP   Adjustments (*)
  Non-GAAP   GAAP   Adjustments (*)
  Non-GAAP
  Unaudited   Audited   Unaudited
                       
Gross profit $ 104,945   $ 895     $ 105,840   $ 86,908     $ 303     $ 87,211
Operating expenses   76,860     5,434       82,294     76,955       (3,337 )     73,618
Operating income   28,085     (4,539 )     23,546     9,953       3,640       13,593
Income before taxes on income   28,194     (4,539 )     23,655     7,135       3,640       10,775
Net income (loss) $ 23,504   $ (3,597 )   $ 19,907   $ (5,928 )   $ 16,478     $ 10,550
                       
Earnings (losses) per share (basic and diluted) $ 0.41   $ (0.06 )   $ 0.35   $ (0.10 )   $ 0.29     $ 0.19
                       
                       
Weighted average number of shares used in computing earnings (losses) per share                      
Basic   56,668,999         56,668,999     56,591,994           56,591,994
Diluted   56,672,537         56,784,601     56,591,994           56,650,362
                       
                       
(*) Adjustments reflect the effect of non-cash stock-based compensation expenses as per ASC 718, amortization of intangible assets related to acquisition transactions, impairment of held for sale asset, other operating expenses (income), net, one-time tax expense related to the release of historical tax-exempt earnings and income tax effect on adjustments which is calculated using the relevant effective tax rate.
                       
                       
  Twelve months ended   Twelve months ended
  December 31, 2023   December 31, 2022
      Unaudited           Unaudited    
                       
GAAP net income (loss)     $ 23,504             $ (5,928 )    
                       
Gross profit                      
Non-cash stock-based compensation expenses       407               293      
Amortization of intangible assets related to acquisition transactions       448               10      
Others       40                    
        895               303      
Operating expenses                      
Non-cash stock-based compensation expenses       3,016               1,927      
Amortization of intangible assets related to acquisition transactions       312               201      
Impairment of held for sale asset                     771      
Other operating expenses (income), net       (8,771 )             438      
Others       9                    
        (5,434 )             3,337      
                       
Taxes on income       942               12,838      
                       
Non-GAAP net income     $ 19,907             $ 10,550      
                       
GILAT SATELLITE NETWORKS LTD.              
SUPPLEMENTAL INFORMATION              
U.S. dollars in thousands              
               
ADJUSTED EBITDA:              
               
  Twelve months ended
  Three months ended
  December 31,
  December 31,
    2023       2022       2023       2022  
  Unaudited   Unaudited
               
GAAP net income (loss) $ 23,504     $ (5,928 )   $ 3,447     $ (6,020 )
Adjustments:              
Financial expenses (income), net   (109 )     2,818       (1,196 )     102  
Taxes on income   4,690       13,063       628       11,988  
Non-cash stock-based compensation expenses   3,423       2,220       1,587       586  
Impairment of held for sale asset         771             53  
Depreciation and amortization (*)   13,627       11,832       3,862       3,063  
Other operating expenses (income), net   (8,771 )     438       986       327  
Others   49             49        
               
Adjusted EBITDA $ 36,413     $ 25,214     $ 9,363     $ 10,099  
               
(*) Including amortization of lease incentive              
               
SEGMENT REVENUES:              
  Twelve months ended
  Three months ended
  December 31,
  December 31,
    2023       2022       2023       2022  
  Unaudited   Audited   Unaudited
               
Satellite Networks  $ 168,527     $ 120,381     $ 53,517     $ 36,388  
Integrated Solutions   46,133       61,376       9,503       16,329  
Network Infrastructure and Services   51,430       58,083       12,592       19,910  
               
Total revenues $ 266,090     $ 239,840     $ 75,612     $ 72,627  
               
GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
       
  December 31,   December 31,
    2023       2022  
  Unaudited   Audited
       
ASSETS      
       
CURRENT ASSETS:      
Cash and cash equivalents $ 103,961     $ 86,591  
Restricted cash   736       541  
Trade receivables, net   44,725       50,644  
Contract assets   28,327       24,971  
Inventories   38,525       33,024  
Other current assets   24,299       19,283  
       
Total current assets   240,573       215,054  
       
LONG-TERM ASSETS:      
Restricted cash   54       13  
Long-term contract assets   9,283       11,149  
Severance pay funds   5,737       5,947  
Deferred taxes   11,484       18,265  
Operating lease right-of-use assets   5,105       3,891  
Other long-term assets   9,544       10,737  
       
Total long-term assets   41,207       50,002  
       
PROPERTY AND EQUIPMENT, NET   74,315       76,578  
       
INTANGIBLE ASSETS, NET   16,051       309  
       
GOODWILL   54,740       43,468  
       
TOTAL ASSETS $ 426,886     $ 385,411  
       
GILAT SATELLITE NETWORKS LTD.      
CONSOLIDATED BALANCE SHEETS (Cont.)      
U.S. dollars in thousands      
       
  December 31,   December 31,
    2023       2022  
  Unaudited   Audited
       
LIABILITIES AND SHAREHOLDERS’ EQUITY      
       
CURRENT LIABILITIES:      
Short-term loan $ 7,453     $  
Trade payables   13,873       20,668  
Accrued expenses   51,906       50,356  
Advances from customers and deferred revenues   34,495       30,531  
Operating lease liabilities   2,426       1,941  
Other current liabilities   16,431       22,291  
       
Total current liabilities   126,584       125,787  
       
LONG-TERM LIABILITIES:      
Long-term loan   2,000        
Accrued severance pay   6,537       6,580  
Long-term advances from customers and deferred revenues   1,139       1,041  
Operating lease liabilities   3,022       1,890  
Other long-term liabilities   12,916       5,988  
       
Total long-term liabilities   25,614       15,499  
       
SHAREHOLDERS’ EQUITY:      
Share capital – ordinary shares of NIS 0.2 par value   2,733       2,711  
Additional paid-in capital   937,591       932,086  
Accumulated other comprehensive loss   (5,315 )     (6,847 )
Accumulated deficit   (660,321 )     (683,825 )
       
Total shareholders’ equity   274,688       244,125  
       
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 426,886     $ 385,411  
       
GILAT SATELLITE NETWORKS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
               
  Twelve months ended
  Three months ended
  December 31,
  December 31,
    2023       2022       2023       2022  
  Unaudited   Audited   Unaudited
Cash flows from operating activities:              
Net income (loss) $ 23,504     $ (5,928 )   $ 3,447     $ (6,020 )
Adjustments required to reconcile net income (loss) to net cash provided by operating activities:                  
Depreciation and amortization   13,402       11,608       3,805       3,004  
Capital gain from sale of property   (2,084 )                  
Impairment of held for sale asset         771             53  
Stock-based compensation   3,423       2,220       1,587       586  
Accrued severance pay, net   167       136       12       44  
Deferred taxes, net   2,662       (627 )     (1,203 )     (2,450 )
Decrease (increase) in trade receivables, net   13,448       (11,162 )     9,561       1,108  
Decrease (increase) in contract assets   (1,694 )     2,481       (7,804 )     4,771  
Decrease (increase) in other assets and other adjustments (including short-term, long-term and effect of exchange rate changes on cash and cash equivalents)   (351 )     (3,445 )     (3,949 )     5,208  
Decrease (increase) in inventories   (2,387 )     (5,416 )     3,798       614  
Decrease in trade payables   (7,635 )     (259 )     (2,314 )     (4,574 )
Increase in accrued expenses   735       549       3,517       2,316  
Increase (decrease) in advance from customers and deferred revenues   803       5,929       (1,843 )     (1,468 )
Increase (decrease) in other liabilities   (12,049 )     13,957       1,343       13,592  
Net cash provided by operating activities   31,944       10,814       9,957       16,784  
               
Cash flows from investing activities:              
Purchase of property and equipment   (10,746 )     (12,793 )     (2,090 )     (3,568 )
Proceeds from short-term deposits         2,159              
Investment in financial instrument         (1,536 )            
Acquisitions of subsidiary, net of cash acquired   (4,107 )           (4,107 )      
Receipts from sales of properties   2,168       4,006             4,006  
Net cash provided by (used in) investing activities   (12,685 )     (8,164 )     (6,197 )     438  
               
Cash flows from financing activities:              
Repayment of short-term loan   (1,590 )           (1,590 )      
Net cash used in financing activities   (1,590 )           (1,590 )      
               
Effect of exchange rate changes on cash, cash equivalents and restricted cash   (63 )     32       2,288       47  
               
Increase in cash, cash equivalents and restricted cash   17,606       2,682       4,458       17,269  
               
Cash, cash equivalents and restricted cash at the beginning of the period   87,145       84,463       100,293       69,876  
               
Cash, cash equivalents and restricted cash at the end of the period $ 104,751     $ 87,145     $ 104,751     $ 87,145  
               


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