Acquisitions Spur Gilat's Growth in 2010

[Satellite TODAY Insider 02-24-11] Gilat’s acquisition of RaySat Antenna Systems and Wavestream enabled the company to capitalize on cross-selling opportunities to larger markets and generate significant gains during its 2010 fiscal year, Gilat CEO Amiram Levinberg said during a Feb. 22 investor conference call.
    Gilat combined the acquisitions under Spacenet Integrated Government Systems, which opened up doors for its government and defense businesses, according to Levingberg. "A little over a year ago, we made a strategic decision to grow our business in the Defense and Homeland Security markets. In the months that followed, we made significant progress in implementing our strategy. Gilat’s Defense and Homeland Security unit in the U.S. had demonstrated progress during the quarter and end year within the U.S. Department of Defense market related to communications-on-the-move technology."
    Gilat increased its fourth quarter revenues from $57 million in 2009 to approximately $66 million in 2010, which allowed the company achieve modest full-year revenue gains of $11 million at $233 million. The company also generated $30.6 million in 2010 full-year net profits compared to the $1.9 million it reported during 2009.
    "During the [fourth] quarter and year, we saw improvements in our overall business and progress advancing our strategy. In fact, this quarter was recorded the strongest bookings in year. The Wavestream acquisition closed during the quarter and earlier in the year, we acquired RaySat Antenna Systems. Both of these acquisitions are important to our strategy to increase our presence in the Homeland Security and Defense markets," said Levinberg.
    Levinberg said Gilat’s settlement of litigation against Mivtach Shamir Holdings, LR Group, Gores Capital Partners and DGB Investments, which failed to pay a termination fee after the consortium of investors withdrew an offer to buy the company for $475 million in 2008, helped Gilat refocus its efforts on growth in 2010. Gilat grew its backlog from $180 million at the end of 2009 to about $232 million at the end of 2010.
    Gilat’s Spacenet VSAT business prospered during the 2010 fourth quarter, with increased bookings largely supported by growth in the gaming industry. During the quarter, Spacenet deployed three VSAT network systems to GTECH, Scientific Games and Intralot and signed additional contracts for a lottery network to be deployed in Texas and an expansion in Maryland.
    "Once installation [in Texas and Maryland] is complete, Spacenet will manage over 84,000 gaming sites in North America, more than half of our total sites under Spacenet service. … These contracts typically have both equipment and service components, so we entered 2011 with a healthy backlog for Spacenet," said Levinberg.
    The company also enjoyed satellite sector success in Latin America during the year, extending its service agreements with the Colombian Ministry of Information Technology and Communications for an additional one-year term through the end of 2011. Gilat will continue to provide telephony and public data access to remote communities throughout rural Colombia. "The current expansion of the agreement covers approximately 1,600 sites that will be served by Gilat throughout 2011 and includes certain performance indicators and schedules of new installations. This is an important accomplishment, and the contracts are valued at about $21 million," said Levinberg.

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Acquisitions Spur Gilat’s Growth in 2010

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