Gilat Satellite Networks .(GILT) - 2023 Q1 - Quarterly Report

Filing Information Details the SEC filing of Gilat Satellite Networks Ltd.'s Q4 and FY 2022 results and formal signature SEC Filing Details Details the Form 6-K filing by Gilat Satellite Networks Ltd. for Q4 and FY 2022 results, clarifying its 'furnished' status - The report is a Form 6-K for February 2023, filed by Gilat Satellite Networks Ltd., a foreign issuer[1] - On February 14, 2023, the Registrant issued a press release announcing its unaudited fourth quarter and full year 2022 results[3] - The attached press release is furnished and not deemed 'filed' for purposes of Section 18 of the Securities Exchange Act of 1934, nor incorporated by reference in other filings[4] Signature The report is formally signed by Doron Kerbel, General Counsel & Company Secretary, for Gilat Satellite Networks Ltd - The report was signed on February 14, 2023, by Doron Kerbel, General Counsel & Company Secretary, for Gilat Satellite Networks Ltd[6] Executive Summary Overview of Gilat Satellite Networks' strong Q4 and full year 2022 financial performance and key leadership changes Q4 and Full Year 2022 Highlights Gilat reported strong Q4 and FY 2022 financial results with significant revenue growth and improved profitability, alongside leadership changes Q4 and Full Year 2022 Key Financial Highlights | Metric | Q4 2022 | YoY Change (Q4) | FY 2022 | YoY Change (FY) | | :-------------------- | :------ | :-------------- | :------ | :-------------- | | Revenue | $73 million | 8% | $240 million | 12% | | GAAP Operating Income | $6 million | - | $10 million | - | | Adjusted EBITDA | $10 million | - | $25 million | 64% | - Mr. Isaac Angel, Chairman of the Board, announced his plans to step down, and Mr. Ami Boehm was named as the new Chairman of the Board[7] Financial Performance Analysis Details Gilat's financial results for Q4 and full year 2022, including segment revenues and 2023 forward-looking expectations Fourth Quarter 2022 Financial Performance Gilat's Q4 2022 revenues grew 8% to $72.6 million, with GAAP operating income up 13% and a net loss primarily due to a one-time tax expense Q4 2022 Financial Highlights (vs. Q4 2021) | Metric | Q4 2022 (USD millions) | Q4 2021 (USD millions) | YoY Change | | :-------------------------- | :--------------------- | :--------------------- | :--------- | | Revenues | 72.6 | 67.0 | 8% | | GAAP Operating Income | 6.1 | 5.4 | 13% | | Non-GAAP Operating Income | 7.1 | 6.6 | 8% | | GAAP Net Loss | (6.0) | 2.1 (Net Income) | N/A | | GAAP EPS (per share) | (0.11) | 0.04 | N/A | | Non-GAAP Net Income | 7.9 | 5.6 | N/A | | Non-GAAP EPS (per diluted share) | 0.14 | 0.10 | N/A | | Adjusted EBITDA | 10.1 | 10.4 | (2.9%) | - GAAP net loss in Q4 2022 includes a one-time tax expense of $12.9 million related to historical trapped earnings; excluding this, net income would have been $6.9 million[10] Full Year 2022 Financial Performance Gilat's FY 2022 revenue grew 12% to $239.8 million, with GAAP operating income increasing 4.6x and Adjusted EBITDA up 64% Full Year 2022 Financial Highlights (vs. FY 2021) | Metric | FY 2022 (USD millions) | FY 2021 (USD millions) | YoY Change | | :-------------------------- | :--------------------- | :--------------------- | :--------- | | Revenue | 239.8 | 215.0 | 12% | | GAAP Operating Income | 10.0 | 2.2 | 4.6x | | Non-GAAP Operating Income | 13.6 | 4.4 | 3.1x | | GAAP Net Loss | (5.9) | (3.0) | N/A | | GAAP EPS (per share) | (0.10) | (0.05) | N/A | | Non-GAAP Net Income | 10.6 | 1.4 | 7.3x | | Non-GAAP EPS (per diluted share) | 0.19 | 0.03 | N/A | | Adjusted EBITDA | 25.2 | 15.4 | 64% | - GAAP net income for FY 2022, excluding the one-time tax expense of $12.9 million, was $7.0 million[10] 2023 Forward-Looking Expectations Gilat projects continued growth in 2023 revenues, GAAP operating income, and Adjusted EBITDA, driven by satellite communications demand 2023 Management Guidance | Metric | 2023 Guidance (USD millions) | YoY Growth (Midpoint) | | :-------------------- | :--------------------------- | :-------------------- | | Revenues | $260 - $280 | 13% | | GAAP Operating Income | $15 - $19 | 70% | | Adjusted EBITDA | $30 - $34 | 27% | Segment Revenues All segments contributed to FY 2022 revenue growth, with Satellite Networks as the largest, while Q4 saw varied performance Segment Revenues (USD thousands) | Segment | FY 2022 | FY 2021 | YoY Change (FY) | Q4 2022 | Q4 2021 (Restated) | YoY Change (Q4) | | :-------------------------- | :------ | :------ | :-------------- | :------ | :----------------- | :-------------- | | Satellite Networks | 120,381 | 115,408 | 4.3% | 36,388 | 32,252 | 12.8% | | Integrated Solutions | 61,376 | 50,054 | 22.6% | 16,329 | 16,514 | (1.1%) | | Network Infrastructure and Services | 58,083 | 49,508 | 17.3% | 19,910 | 18,258 | 9.0% | | Total Revenues | 239,840 | 214,970 | 11.6% | 72,627 | 67,024 | 8.4% | Management Review and Strategic Highlights Covers management's commentary on 2022 performance, strategic achievements, and recent significant contract awards Management Commentary CEO Adi Sfadia highlighted strong 2022 financial results, strategic achievements in SkyEdge IV, Mobility, Maritime, and Cellular Backhaul, and an optimistic 2023 outlook - Achieved solid revenue growth, strong gross margins, and significant improvement in profitability, particularly operating income and adjusted EBITDA in 2022[13] - Delivered SkyEdge IV, a leading ground segment for next-generation satellite communication, to over 20 gateways worldwide, enabling hundreds of Gbps of capacity and securing tens of millions of dollars in contract awards[14] - Achieved a record year in Mobility with Inflight Connectivity (IFC), securing tens of millions of dollars in orders for ground segment platform, modems, and transceiver product line[15] - Secured a new win for SkyEdge IV in the Maritime sector and made excellent progress with SES on the cruise premium maritime service[15] - Had a record year in Cellular Backhaul with tens of millions of dollars in orders and made progress in Defense with important multi-million dollar wins and a growing pipeline[16] - Expressed optimism for further top and bottom-line growth in 2023, driven by the satellite communications sector gaining traction and an increasing, broadening pipeline[16] Key Recent Announcements (Contract Awards) Gilat secured multimillion-dollar contracts for SATCOM expansion in Asia-Pacific, expanded its IFC partnership with Intelsat, and was selected by Comlabs - Gilat was awarded a multimillion-dollar contract for SATCOM expansion on trains in Asia-Pacific[23] - Gilat and Intelsat expanded their strategic Inflight Connectivity (IFC) partnership with multimillion-dollar agreements for the Americas[23] - Comlabs selected Gilat for US Government critical communications requirements[23] Corporate Governance Details the planned retirement of the Chairman of the Board, Mr. Isaac Angel, and the appointment of Mr. Ami Boehm as his successor Changes in Chairman of the Board Position Mr. Isaac Angel will retire as Chairman effective March 8, 2023, with Mr. Ami Boehm appointed as the new Chairman of the Board - Mr. Isaac Angel, Chairman of the Board, announced his plans to step down from his chairman and directorship positions effective March 8, 2023, due to personal time constraints[12][17] - The Board has appointed Mr. Ami Boehm, an invaluable Board Member for the last 10 years, as the new Chairman of the Board, effective upon Mr. Angel's departure[12][18] Non-GAAP Measures Explains Gilat's use of non-GAAP financial measures to provide a clearer view of operational results, excluding non-cash and one-time items Explanation of Non-GAAP Financial Measures Gilat uses non-GAAP measures to clarify operational performance by excluding non-cash items and one-time tax expenses, emphasizing they are not GAAP replacements - Non-GAAP presentations are used to provide management and investors a more complete understanding of the Company's underlying operational results, trends, and performance[20] - Adjustments to GAAP results mainly exclude stock-based compensation, amortization of purchased intangibles, lease incentive amortization, litigation expenses, restructuring costs, and certain one-time tax expenses related to historical tax-trapped earnings[20] - Adjusted EBITDA is presented for consistent period-to-period comparison but should not be considered an alternative to operating income or net income under GAAP[21][22] About Gilat Satellite Networks Ltd. Overview of Gilat Satellite Networks Ltd., a global leader in satellite-based broadband communications with over 35 years of experience Company Overview Gilat Satellite Networks Ltd. is a global leader in satellite-based broadband communications, offering deep technology solutions and end-to-end services for diverse applications - Gilat Satellite Networks Ltd. is a leading global provider of satellite-based broadband communications with over 35 years of experience[24][25] - The company creates and delivers deep technology solutions for satellite, ground, and new space connectivity, providing comprehensive end-to-end solutions and services[25] - Gilat's portfolio includes a cloud-based platform, high-performance satellite terminals (VHTS, SDS), Satellite On-the-Move (SOTM) antennas, and high-power Solid State Power Amplifiers (SSPA) and Block Upconverters (BUC)[26] - Solutions support key applications such as broadband access, mobility, cellular backhaul, military, government, and enterprise[27] Consolidated Financial Statements Presents Gilat's GAAP consolidated statements of income (loss), balance sheets, and cash flows for Q4 and full year 2022 Consolidated Statements of Income (Loss) Presents GAAP consolidated statements of income (loss) for Q4 and FY 2022, detailing revenues, expenses, and the impact of a one-time tax expense Consolidated Statements of Income (Loss) (USD thousands) | Metric | FY 2022 | FY 2021 | Q4 2022 | Q4 2021 (Restated) | | :-------------------------------- | :------ | :------ | :------ | :----------------- | | Revenues | 239,840 | 214,970 | 72,627 | 67,024 | | Cost of revenues | 152,932 | 143,703 | 44,911 | 42,328 | | Gross profit | 86,908 | 71,267 | 27,716 | 24,696 | | Total operating expenses | 76,955 | 69,086 | 21,646 | 19,333 | | Operating income | 9,953 | 2,181 | 6,070 | 5,363 | | Income before taxes on income | 7,135 | 459 | 5,968 | 5,099 | | Taxes on income | 13,063 | 3,492 | 11,988 | 2,969 | | Net income (loss) | (5,928) | (3,033) | (6,020) | 2,130 | | Earnings (losses) per share (basic and diluted) | (0.10) | (0.05) | (0.11) | 0.04 | Consolidated Balance Sheets Presents consolidated balance sheets as of December 31, 2022 and 2021, showing total assets increased to $385.4 million driven by current assets Consolidated Balance Sheets (USD thousands) | Metric | December 31, 2022 | December 31, 2021 | | :-------------------------------- | :------------------ | :------------------ | | ASSETS | | | | Total current assets | 215,054 | 199,405 | | Total long-term assets | 50,002 | 51,831 | | Property and equipment, net | 76,578 | 72,391 | | Intangible assets, net | 309 | 640 | | Goodwill | 43,468 | 43,468 | | TOTAL ASSETS | 385,411 | 367,735 | | LIABILITIES AND SHAREHOLDERS' EQUITY | | | | Total current liabilities | 125,787 | 108,508 | | Total long-term liabilities | 15,499 | 10,904 | | Total shareholders' equity | 244,125 | 248,323 | | TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 385,411 | 367,735 | Consolidated Statements of Cash Flows Net cash from operating activities was $10.8 million in FY 2022, with investing activities using $8.2 million and no net financing cash flow Consolidated Statements of Cash Flows (USD thousands) | Metric | FY 2022 | FY 2021 (Restated) | Q4 2022 | Q4 2021 (Restated) | | :------------------------------------ | :------ | :----------------- | :------ | :----------------- | | Net cash provided by operating activities | 10,814 | 18,903 | 16,784 | 5,172 | | Net cash provided by (used in) investing activities | (8,164) | (11,092) | 438 | (6,068) | | Net cash used in financing activities | - | (39,003) | - | - | | Increase (decrease) in cash, cash equivalents and restricted cash | 2,682 | (31,495) | 17,269 | (947) | | Cash, cash equivalents and restricted cash at end of period | 87,145 | 84,463 | 87,145 | 84,463 | GAAP to Non-GAAP Reconciliation Provides detailed reconciliations of GAAP to non-GAAP financial measures for Q4 and full year 2022, including Adjusted EBITDA Q4 2022 GAAP to Non-GAAP Reconciliation Details the Q4 2022 GAAP to non-GAAP reconciliation, highlighting adjustments for non-cash items and a one-time tax expense that led to non-GAAP net income Q4 2022 GAAP to Non-GAAP Reconciliation (USD thousands) | Metric | GAAP (Q4 2022) | Adjustments (Q4 2022) | Non-GAAP (Q4 2022) | GAAP (Q4 2021) | Adjustments (Q4 2021) | Non-GAAP (Q4 2021) | | :-------------------------- | :------------- | :-------------------- | :----------------- | :------------- | :-------------------- | :----------------- | | Gross profit | 27,716 | 73 | 27,789 | 24,696 | 71 | 24,767 | | Operating expenses | 21,646 | (943) | 20,703 | 19,333 | (1,147) | 18,186 | | Operating income | 6,070 | 1,016 | 7,086 | 5,363 | 1,218 | 6,581 | | Net income (loss) | (6,020) | 13,896 | 7,876 | 2,130 | 3,517 | 5,647 | | EPS (basic and diluted) | (0.11) | 0.25 | 0.14 | 0.04 | 0.06 | 0.10 | - Key adjustments for Q4 2022 include $73 thousand for non-cash stock-based compensation in gross profit, $943 thousand in operating expenses (comprising $513 thousand stock-based compensation, $50 thousand amortization, $53 thousand impairment, $327 thousand other), and a significant $12,880 thousand in taxes on income[31] Full Year 2022 GAAP to Non-GAAP Reconciliation Details the FY 2022 GAAP to non-GAAP reconciliation, showing how adjustments for non-cash items and one-time tax expenses converted a GAAP net loss of $5.9 million into a non-GAAP net income of $10.6 million Full Year 2022 GAAP to Non-GAAP Reconciliation (USD thousands) | Metric | GAAP (FY 2022) | Adjustments (FY 2022) | Non-GAAP (FY 2022) | GAAP (FY 2021) | Adjustments (FY 2021) | Non-GAAP (FY 2021) | | :-------------------------- | :------------- | :-------------------- | :----------------- | :------------- | :-------------------- | :----------------- | | Gross profit | 86,908 | 303 | 87,211 | 71,267 | 297 | 71,564 | | Operating expenses | 76,955 | (3,337) | 73,618 | 69,086 | (1,882) | 67,204 | | Operating income | 9,953 | 3,640 | 13,593 | 2,181 | 2,179 | 4,360 | | Net income (loss) | (5,928) | 16,478 | 10,550 | (3,033) | 4,478 | 1,445 | | EPS (basic and diluted) | (0.10) | 0.29 | 0.19 | (0.05) | 0.08 | 0.03 | - Key adjustments for FY 2022 include $303 thousand for non-cash stock-based compensation and amortization in gross profit, $3,337 thousand in operating expenses (including $1,927 thousand stock-based compensation, $201 thousand amortization, $771 thousand impairment, $438 thousand other), and $12,838 thousand in taxes on income[32] Adjusted EBITDA Reconciliation Provides a detailed reconciliation of GAAP net income (loss) to Adjusted EBITDA for Q4 and FY 2022, outlining specific adjustments made Adjusted EBITDA Reconciliation (USD thousands) | Metric | FY 2022 | FY 2021 (Restated) | Q4 2022 | Q4 2021 (Restated) | | :------------------------------------ | :------ | :----------------- | :------ | :----------------- | | GAAP net income (loss) | (5,928) | (3,033) | (6,020) | 2,130 | | Financial expenses, net | 2,818 | 1,722 | 102 | 264 | | Taxes on income | 13,063 | 3,492 | 11,988 | 2,969 | | Non-cash stock-based compensation expenses | 2,220 | 1,304 | 586 | 511 | | Impairment of held for sale asset | 771 | 651 | 53 | 651 | | Other | 438 | - | 327 | - | | Depreciation and amortization | 11,832 | 11,214 | 3,063 | 3,848 | | Adjusted EBITDA | 25,214 | 15,350 | 10,099 | 10,373 |