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Gilat Reports Full Year 2015 Results with a Good Fourth Quarter and Forecasted Profitable Growth For 2016

Q4 demonstrated strong profitability with quarter-over-quarter revenue growth and substantial wins

Petah Tikva, Israel – February 17, 2016 – Gilat Satellite Networks Ltd. (NASDAQ, TASE: GILT), a worldwide leader in satellite networking technology, solutions and services, today reported its results for the fourth quarter and year ended December 31, 2015.

Key Financial Updates:

• Revenues for the fourth quarter of 2015 were $67.7 million compared to $40.3 million in the third quarter of 2015 and $73.1 million in the comparable period of 2014.
• Revenue for 2015 was $197.5 million compared to $235.1 million in 2014.
• EBITDA for the fourth quarter of 2015 was of $11.1 million compared to a loss of $3.4 million in the third quarter of 2015 and EBITDA of $10.4 million in the comparable period of 2014.
• EBITDA for 2015 was $5.3 million compared to EBITDA of $23.4 million in 2014.
• Cash balances, including restricted cash, net of short-term bank credits, increased by $32.5 million compared to September 30, 2015, resulting in a cash balance of $120.9 million as of December 31, 2015.
• Company recorded $10.1 million impairment of long-lived assets related to the Kioscos project in Colombia.
• Management objectives for 2016 of revenues between $290 and $310 million and EBITDA between $18 and $24 million.

“I am pleased with the results of Q4 2015, in which we demonstrated strong revenue, profit and wins, providing a positive ending to a challenging year,” said Dov Baharav, Gilat’s Interim CEO and Chairman of the Board. “We made very encouraging progress in the In-Flight Connectivity (IFC) market, further penetration to the Chinese market, with sales to Synertone, and an additional win of a $108 million project in Peru, together with high acceptance of Gilat’s HTS
X-Architecture for mobility and fixed applications including cellular backhaul.

“A prime example is SoftBank, which selected Gilat’s satellite-based cellular backhaul technology for the provision of LTE services to remote sites in Japan. Gilat’s SkyEdge II-c Capricorn platform is the first satellite solution to deliver a 4G handset user experience on par with terrestrial networks.

“The positive developments of Q4 vindicate our strategy and give us confidence in our projected growth for 2016 and beyond,” Mr. Baharav added.

Revenues for the fourth quarter of 2015 were $67.7 million, compared to $73.1 million for the same period in 2014. Revenues for the year ended December 31, 2015 were $197.5 million, compared to $235.1 million in the year ended December 31, 2014. Revenues in the fourth quarter were below the updated management objectives, mainly due to temporary delays resulting from some regulatory issues relating to the Fitel projects in Peru.

On a non-GAAP basis, the operating income was $8.9 million in the fourth quarter of 2015 as compared to the operating income of $7.5 million in the comparable quarter of 2014. The operating loss for 2015 on a non-GAAP basis was $4.2 million compared to the operating income of $13.1 million in 2014.

On a GAAP basis, the operating loss was $3.4 million in the fourth quarter of 2015 as compared to the operating income of $5.5 million in the comparable quarter of 2014. The operating loss for 2015 on a GAAP basis was $43.7 million compared to the operating income of $5 million in 2014.

On a non-GAAP basis, the net income for the quarter was $7 million or $0.16 per diluted share compared to the net income of $4.4 million or $0.1 per diluted share in the same quarter of 2014. The net loss for 2015 on a non-GAAP basis was $12.6 million or $0.29 per diluted share compared to the net income of $7.4 million or $0.17 per diluted share in 2014.

On a GAAP basis, the net loss for the quarter was $5.2 million or $0.12 per diluted share compared to the net income from continuing operations of $2.4 million or $0.06 per diluted share in the same quarter of 2014. The net loss from continuing operations for 2015 on a GAAP basis was $52.1 million or $1.19 per diluted share compared to the net loss from continuing operations of $0.7 million or $0.02 per diluted share in 2014.

EBITDA for the fourth quarter of 2015 reached $11.1 million compared with $10.4 million in the comparable period in 2014. EBITDA for the twelve months of 2015 was $5.3 million compared with $23.4 million in the comparable period in 2014.

Key Recent Announcements:

• Avanti Deploys HTS VSAT Networks from Gilat for Broadband Connectivity Across the UK
• Gilat Wins Bid of $108 Million for a New Project in Peru
• Gilat Announces Phased-Array Antenna (PAA) Program Following the Signing of a Development Agreement with an Aerospace Systems Integrator
• Synertone, a leading Chinese satellite solutions provider, selects Gilat to enable its fixed and mobile offerings throughout China in a $12 million deal
• CRRC, the World’s Largest Railway Transportation Supplier, Selects Gilat to Bring Satellite Connectivity to all its Trains, Worldwide
• Gilat Launches its Revolutionary Distributed X-Architecture to Address the Growing Demands of High-Throughput Satellites (HTS) in a Single Platform

Conference Call and Webcast Details:
Gilat management will host a conference call today at 14:30 GMT / 09:30 EST / 16:30 IST (Israel Standard Time) to discuss the results. International participants are invited to access the call on (972) 3-918-0644, and US-based participants are invited to access the call by dialing (888) 281-1167. A replay of the conference call will be available beginning at approximately 17:00 GMT/ 12:00 EST/ 19:00 IST today, until 17:00 GMT/ 12:00 EST/ 19:00 IST February 20, 2016. International participants are invited to access the replay on (972) 3-925-5900, and US-based participants are invited to access the replay by dialing (888) 326-9310. A replay of the call may also be accessed as a webcast via Gilat’s website at gilat.com and will be archived for 30 days.

Notes:
(1) The attached summary financial statements were prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). The attached summary financial statements are unaudited. To supplement the consolidated financial statements presented in accordance with GAAP, the Company presents Gilat’s EBITDA before the impact of non-cash share-based payment charges, depreciation and amortization, other income and other costs related to acquisition transactions. Non-GAAP presentations of net income, operating income, EBITDA and earnings per share are provided to enhance the understanding of the Company’s historical financial performance and comparability between periods.
(2) Operating income before depreciation, amortization, non-cash stock option expenses as per ASC 718 (formerly SFAS 123(R)) and other costs related to acquisition transactions (‘EBITDA’) is presented because it is a measure commonly used and is presented solely in order to improve the understanding of the Company’s operating results and to provide further perspective on these results. EBITDA, however, should not be considered as an alternative to operating income or net income for the period as an indicator of the operating performance of the Company.
Similarly, EBITDA should not be considered as an alternative to cash flows from operating activities as a measure of liquidity. 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. EBITDA may not be indicative of the historic operating results of the Company; nor is it meant to be predictive of potential future results. Reconciliation between the Company’s Operating income and EBITDA is presented in the attached summary financial statements.
About Gilat
Gilat Satellite Networks Ltd (NASDAQ, TASE: GILT) is a leading provider of products and services for satellite-based broadband communications. Gilat develops and markets a wide range of high-performance satellite ground segment equipment and VSATs, with an increasing focus on the consumer and Ka-band market. In addition, Gilat enables mobile SOTM (Satellite-on-the-Move) solutions providing low-profile antennas, next generation solid-state power amplifiers and modems. Gilat also provides managed network and satellite-based services for rural telephony and Internet access via its subsidiaries in Peru and Colombia.

With over 25 years of experience, and over a million products shipped to more than 90 countries, Gilat has provided enterprises, service providers and operators with efficient and reliable satellite-based connectivity solutions, including cellular backhaul, banking, retail, e-government and rural communication networks. Gilat also enables leading defense, public security and news organizations to implement advanced, on-the-move tactical communications on board their land, air and sea fleets using Gilat’s high-performance SOTM solutions. Gilat controlling shareholders are the FIMI Private Equity Funds. For more information, please visit us at 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.