Earnings Release • May 16, 2017
Earnings Release
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Washington, D.C. 20549
Report on Foreign Issuer
Pursuant to Rule 13a – 16 or 15d – 16 of the Securities Exchange Act of 1934 For the Month of May, 2017
(Translation of Registrant's Name into English)
Gilat House, Yegia Kapayim Street Daniv Park, Kiryat Arye, Petah Tikva, Israel (Address of Principal Corporate Offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ☐ No ☒
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A
Attached hereto is Registrant's press release dated May 16, 2017, announcing Gilat's First Quarter 2017 results.
We consent to the incorporation by reference of the GAAP financial information included herein, in the Registration Statements on Form S-8 (Registration Nos. 333-180552, 333-187021, 333- 204867 and 333-210820).
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Gilat Satellite Networks Ltd. (Registrant)
Dated May 16, 2017 By: /s/ Yael Shofar Yael Shofar General Counsel
Petah Tikva, Israel – May 16, 2017 – Gilat Satellite Networks Ltd. (NASDAQ, TASE: GILT), a worldwide leader in satellite networking technology, solutions and services, today reported its results for the first quarter ended March 31, 2017.
Yona Ovadia, CEO of Gilat, commented: "I am pleased to report that Gilat achieved further positive results in the first quarter of 2017 as evidenced by continued year-over-year improvement in profitability, both on a GAAP and non-GAAP basis. It shows the fruit of focusing on our growth engines and on more profitable revenues, along with our continued drive to reduce costs.
"Our management objectives for 2017 indicate that profitability remains our priority, while we continue to develop our broadband and mobility growth engines based on product innovation and technology leadership.
"In the first quarter, we saw important substantiation of our strategic direction. I am pleased to report that in a high-profile live airborne event held last week by Gogo, the leading IFC player, our IFC modem demonstrated unprecedented performance and received high marks from the analyst and media community.
"In addition, we are seeing industry acknowledgement of cellular backhaul over satellite, now moving into the mainstream and competing with terrestrial solutions. A number of Tier 1 customers are already implementing their LTE networks with our de-facto leading cellular backhaul solution, and we see additional opportunity ahead.

Mr. Ovadia concluded: "We are pleased with the first quarter results that are due to focusing on our strategy. We will continue to execute upon this strategy, and are optimistic regarding the rest of the year."
Gilat management will host a conference call today, Tuesday, May 16, to discuss the first quarter results. The details are as follows:
Date: Tuesday, May 16, 2017 Start: 14:30 GMT / 09:30 AM EDT / 16:30 IDT Dial-in: US: 1-888-407-2553 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: http://www.veidan-stream.com/? con=Gilat_Satellite_Networks_Q1_2017_Results
The webcast will also be archived for a period of 30 days on the Company's website and through the link above.
| Start: | May 16, 2017 at 17:00 GMT / 12:00 PM EDT / 19:00 IDT |
|---|---|
| End: | May 19, 2017 at 17:00 GMT / 12:00 PM EDT / 19:00 IDT |
| Dial-in: | US: 1-888-782-4291 |
| International: (972) 3-925-5918 |
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 company's GAAP results are made with the intent of providing both management and investors a more complete understanding of the company's underlying operational results, trends and performance. Gilat is presenting Adjusted EBITDA (operating income before depreciation, amortization, non-cash stock option expenses and other costs related to acquisition transactions, restructuring cost, goodwill impairment, impairment of long lived assets and trade secrets litigation expenses) due to significant litigation expenses relating to a trade secrets litigation that was recently resolved.
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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 generally accepted accounting principles 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 Gilat's operating performance or liquidity.
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).
Gilat's 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, 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. We undertake no obligation to update or revise any forward-looking statements for any reason. 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.
Contact:
Gilat Satellite Networks Doreet Oren [email protected]
Comm-Partners LLC June Filingeri, President 203-972-0186 [email protected]
| Three months ended March 31, |
||||
|---|---|---|---|---|
| 2017 | 2016 | |||
| Unaudited | ||||
| Revenues | \$ 63,931 |
\$ 52,665 |
||
| Cost of revenues | 46,590 | 40,267 | ||
| Gross profit | 17,341 | 12,398 | ||
| Research and development expenses | 6,755 | 5,888 | ||
| Less - grants | 47 | 86 | ||
| Research and development, net | 6,708 | 5,802 | ||
| Selling and marketing expenses | 5,795 | 5,123 | ||
| General and administrative expenses | 4,820 | 4,438 | ||
| Total operating expenses | 17,323 | 15,363 | ||
| Operating income (loss) | 18 | (2,965) | ||
| Financial expenses, net | (804) | (743) | ||
| Loss before taxes on income | (786) | (3,708) | ||
| Taxes on income (tax benefit) | (2) | 318 | ||
| Loss | \$ (784) |
\$ (4,026) |
||
| Loss per share (basic and diluted) | \$ (0.01) |
\$ (0.09) |
||
| Weighted average number of shares used in computing loss per share (basic and diluted) |
54,623,685 | 44,382,379 |
U.S. dollars in thousands (except share and per share data)
| Three months ended March 31, 2017 |
Three months ended March 31, 2016 |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| GAAP | Adjustments (1) | Non-GAAP | GAAP | Adjustments (1) | Non-GAAP | |||||||
| Unaudited | Unaudited | |||||||||||
| Gross profit | \$ | 17,341 | 1,205 | \$ | 18,546 | \$ | 12,398 | 1,184 | \$ | 13,582 | ||
| Operating expenses | 17,323 | (1,236) | 16,087 | 15,363 | (631) | 14,732 | ||||||
| Operating income (loss) | 18 | 2,441 | 2,459 | (2,965) | 1,815 | (1,150) | ||||||
| Income (loss) before taxes on income | (786) | 2,441 | 1,655 | (3,708) | 1,815 | (1,893) | ||||||
| Income (loss) | \$ | (784) | 2,441 | \$ | 1,657 | \$ | (4,026) | 1,815 | \$ | (2,211) | ||
| Income (loss) per share (basic and diluted) | \$ | (0.01) | 0.04 | \$ | 0.03 | \$ | (0.09) | 0.04 | \$ | (0.05) | ||
| Weighted average number of shares used in computing income (loss) per share |
||||||||||||
| Basic | 54,623,685 | 54,623,685 | 44,382,379 | 44,382,379 | ||||||||
| Diluted | 54,623,685 | 54,836,436 | 44,382,379 | 44,382,379 |
(1) Adjustments reflect the effect of non-cash stock-based compensation as per ASC 718, amortization of intangible assets related to shares acquisition transactions and trade secrets litigation expenses.
| Three months ended |
Three months ended March 31, 2016 |
|||
|---|---|---|---|---|
| March 31, 2017 | ||||
| Unaudited | Unaudited | |||
| GAAP loss | \$ (784) |
\$ | (4,026) | |
| Gross profit | ||||
| Non-cash stock-based compensation expenses (income) | 10 | (11) | ||
| Amortization of intangible assets related to acquisition transactions | 1,195 | 1,195 | ||
| 1,205 | 1,184 | |||
| Operating expenses | ||||
| Non-cash stock-based compensation expenses | 194 | 212 | ||
| Amortization of intangible assets related to acquisition transactions | 194 | 193 | ||
| Trade secrets litigation expenses | 848 | 226 | ||
| 1,236 | 631 | |||
| Non GAAP income (loss) | \$ 1,657 |
\$ | (2,211) |
| Three months ended March 31, |
||||
|---|---|---|---|---|
| 2017 | 2016 | |||
| Unaudited | ||||
| GAAP operating income (loss) | \$ 18 |
\$ | (2,965) | |
| Add: | ||||
| Non-cash stock-based compensation expenses | 204 | 201 | ||
| Trade secrets litigation expenses | 848 | 226 | ||
| Depreciation and amortization | 3,165 | 3,301 | ||
| Adjusted EBITDA | \$ 4,235 |
\$ | 763 |
| March 31, 2017 Unaudited |
December 31, 2016 Audited |
||||
|---|---|---|---|---|---|
| ASSETS | |||||
| CURRENT ASSETS: | |||||
| Cash and cash equivalents | \$ | 65,076 | \$ | 40,133 | |
| Restricted cash | 23,817 | 62,229 | |||
| Restricted cash held by trustees | 4,081 | 9,058 | |||
| Trade receivables, net | 96,360 | 89,377 | |||
| Inventories | 24,634 | 21,469 | |||
| Other current assets | 20,996 | 17,017 | |||
| Total current assets | 234,964 | 239,283 | |||
| LONG-TERM INVESTMENTS AND RECEIVABLES: | |||||
| Severance pay funds | 8,228 | 7,791 | |||
| Other long term receivables | 402 | 436 | |||
| Total long-term investments and receivables | 8,630 | 8,227 | |||
| PROPERTY AND EQUIPMENT, NET | 80,408 | 80,837 | |||
| INTANGIBLE ASSETS, NET | 9,940 | 11,383 | |||
| GOODWILL | 43,468 | 43,468 | |||
| TOTAL ASSETS | \$ | 377,410 | \$ | 383,198 | |
| March 31, | December 31, | ||
|---|---|---|---|
| 2017 | 2016 | ||
| Unaudited | Audited | ||
| LIABILITIES AND EQUITY | |||
| CURRENT LIABILITIES: | |||
| Current maturities of long-term loans | 4,493 | 4,617 | |
| Trade payables | 29,317 | 29,625 | |
| Accrued expenses | 61,025 | 53,429 | |
| Advances from customers and deferred revenues | 32,147 | 37,659 | |
| Advances from customers, held by trustees | 3,334 | 7,498 | |
| Other current liabilities | 14,368 | 13,846 | |
| Total current liabilities | 144,684 | 146,674 | |
| LONG-TERM LIABILITIES: | |||
| Accrued severance pay | 7,860 | 7,485 | |
| Long-term loans, net of current maturities | 12,840 | 16,932 | |
| Other long-term liabilities | 1,768 | 2,281 | |
| Total long-term liabilities | 22,468 | 26,698 | |
| EQUITY: | |||
| Share capital - ordinary shares of NIS 0.2 par value | 2,596 | 2,593 | |
| Additional paid-in capital | 920,687 | 920,162 | |
| Accumulated other comprehensive loss | (2,481) | (3,224) | |
| Accumulated deficit | (710,544) | (709,705) | |
| Total equity | 210,258 | 209,826 | |
| TOTAL LIABILITIES AND EQUITY | \$ 377,410 |
\$ 383,198 |
|
| Three months ended March 31, |
|||
|---|---|---|---|
| 2017 | 2016 | ||
| Unaudited | |||
| Cash flows from operating activities: | |||
| Loss | \$ (784) |
\$ | (4,026) |
| Adjustments required to reconcile loss | |||
| to net cash provided by (used in) operating activities: | |||
| Depreciation and amortization | 3,165 | 3,301 | |
| Stock-based compensation of options and RSU's | 204 | 201 | |
| Accrued severance pay, net | (61) | (123) | |
| Accrued interest and exchange rate differences on | |||
| short and long-term restricted cash, net | (141) | (409) | |
| Exchange rate differences on long-term loans | 25 | 90 | |
| Deferred income taxes, net | (16) | - | |
| Increase in trade receivables, net | (6,955) | (1,394) | |
| Increase in other assets (including short-term, long-term | |||
| and deferred charges) | (3,254) | (2,154) | |
| Increase in inventories | (3,312) | (2,685) | |
| Decrease in restricted cash directly related to operating activities, net | 37,879 | 6,304 | |
| Increase (decrease) in trade payables | (392) | 4,089 | |
| Increase in accrued expenses | 7,493 | 7,408 | |
| Decrease in advances from customers | (3,098) | (11,823) | |
| Decrease in advances from customers, held | |||
| by trustees | (4,412) | (4,063) | |
| Increase (decrease) in other current liabilities and other long term liabilities | (2,338) | 1,221 | |
| Net cash provided by (used in) operating activities | \$ 24,003 |
\$ | (4,063) |
| Three months ended March 31, |
||||
|---|---|---|---|---|
| 2017 | 2016 | |||
| Unaudited | ||||
| Cash flows from investing activities: | ||||
| Purchase of property and equipment | \$ (1,212) |
\$ (1,104) |
||
| Proceeds from restricted cash held by trustees | 5,356 | 3,675 | ||
| Investment in restricted cash (including long-term) | (28) | (179) | ||
| Proceeds from restricted cash (including long-term) | 670 | 7,347 | ||
| Net cash provided by investing activities | 4,786 | 9,739 | ||
| Cash flows from financing activities: | ||||
| Capital lease payments | - | (51) | ||
| Issuance of shares in a rights offering | - | 15,243 | ||
| Issuance of restricted stock units and exercise of stock options | 266 | 336 | ||
| Short term bank credit, net | - | (2,750) | ||
| Repayment of long-term loans | (4,241) | (4,139) | ||
| Net cash provided by (used in) financing activities | (3,975) | 8,639 | ||
| Effect of exchange rate changes on cash and cash equivalents | 129 | 410 | ||
| Increase in cash and cash equivalents | 24,943 | 14,725 | ||
| Cash and cash equivalents at the beginning of the period | 40,133 | 18,435 | ||
| Cash and cash equivalents at the end of the period | \$ 65,076 |
\$ 33,160 |
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