Gilat Satellite Networks Ltd.

Ladies and gentlemen, thank you for standing by. Welcome to GILAT's second quarter 2021 results conference call. All participants are present in listen-only mode. Following management's formal presentation, instructions will be given for the question and answer session. For operator assistance during the conference, please press star zero. As a reminder, this conference is being recorded August 10, 2021. By now, you should have all received the company's press release. If you have not received it, please contact Gilat's investor relations team at GK Investor and Public Relations at 1-646-688-3559 or view it in the news section of the company's website, www.gilat.com. I would now like to hand over the call to Mr. Ehud Helft of GK Investor Relations. Mr. Helft, would you like to begin, please?

Thank you, Operator. Good morning and good afternoon, everyone. Thank you for joining us today for Gilad's second quarter results conference call and webcast. A recording of this call will be available beginning at approximately noon Eastern time today, August 10, as a webcast on Gilad's website for a period of 30 days. Also, please note that investors are urged to read the forward-looking statements in Gilad's earnings release with a reminder that statements made on this earnings call that are not historical facts may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All such forward-looking statements, including statements regarding future financial operating results, involve risks, uncertainties, and contingencies, many of which are beyond the control of Gilad, and which may cause actual results to differ materially from those anticipated results. Gilad is under no obligation to update or alter these forward-looking statements, whether a result of new information, future events, or otherwise, and the company expressly disclaims any obligation to do this. More detailed information about risk factors can be found on Gilad's report filed with the Securities and Exchange Commission. And with that, let me turn to introductions. On the call today are Mr. Adi Sfadia, Gilad's CEO, and Ms. Basmat Harpen, Gilad's CFO. I would now like to turn the call over to Adi. Adi, we are ready to begin.

Thank you, Elwood, and good day, everyone. I would like to thank you for joining us today for our second quarter of 2021 Earnings Call. I am very pleased with our results this quarter which demonstrate a solid improvement and return to profitability in our business. We showed strong revenue growth of 49% year-over-year and 27% quarter-over-quarter. The improvement was throughout our income statement with improved gross margins and a return to profitability on non-gap basis with positive EBIT of $200,000 and adjusted EBITDA of $2.5 million. Our performance was driven by the cellular backhaul, NGSO, enterprise broadband and defense markets, which have shown significant progress and we expect this momentum to continue for the foreseeable future. We also made significant progress in the mobility market and in our operation in Peru, securing significant deals. Looking ahead throughout 2021, we expect to continue our growth trend in both revenues and profitability. We expect the solar backhaul, NGSO, and our operation in Peru will be the main growth drivers for the remainder of 2021 and beyond. Moreover, looking further out into 2022, we believe that it will be a year of significant growth for our company as our NGSO projects further materialize and our mobility segment grows with maritime and defense opportunities and the expected recovery of IFC. In order to materialize the significant opportunities we see ahead, we are investing increased efforts in R&D to better support our future growth. Now I will focus on some of the business achievements and highlights for the quarter. Mobility is a major focus area and growth engine for Gilad. We recently secured a multi-million dollar agreement with SCS for our next-generation mobility platform. This is a breakthrough in solidifying our leadership in the mobility market, enabling supply of initial maritime services to some of the world's top cruise liners and maritime service providers. Connectivity will be delivered by our multi-orbit platform utilizing the O3B Empire constellation and other SES GEO satellites, including SES17. In the IFC market, we are seeing initial seeds of recovery. This remains a highly strategic market for Gilad and we view the short-term impact from the pandemic over the past few quarters as a temporary issue. However, we do believe it will still take some time for the IFC industry to return to its pre-COVID levels and for Gilad IFC segment to recover to its full potential. In the defense segment, we are seeing growing global opportunities as we mentioned last quarter. We closed several important multi-million dollar deals in both Latin America and Asia. Furthermore, we were awarded a $5 million contract by Tier 1 U.S. terminal provider to power tactical SATCOM terminals for militaries worldwide. This is in addition to our ongoing successful supply of high-quality military communication products to the U.S. Department of Defense and the U.S. Army from our U.S. subsidiary, WaveStream. In Peru, we received a $13 million award from Pronatel to provide public free Wi-Fi services across hundreds of sites in the regions of Ayacucho, Apurímac, Huancavelica and Cusco. This two-year project has potential for further expansion to thousands of additional sites and extensions for additional years. We are making significant progress with our strategy to deliver services over the network and as such expect to meet our previously stated goal of $50 million in annual recurring revenues from Peru. The non-geostationary orbit satellite constellation and the very high throughput satellite segments continue to be a major strategic focus area and growth engine for Gilad. As a leading provider for this market, we see solid growth potential, comprising of hundreds of millions of dollars in market opportunities for which we are making very significant progress in several fronts. We continue to receive multi-million dollar orders from a leading satellite operator for support of low Earth orbit constellations. As we reported in the past, our subsidiary Wavestream was chosen to supply Gateway solid-state power amplifiers for this project. We also continue our development of the ground segment for the SCS-03BM power satellite constellation and expect to start seeing significant revenue from this project in the coming quarters. The cellular backup segment continued to be of strategic importance to us. We saw significant expansion and follow-on orders during the quarter from our Tier 1 MNO globally. This is a testament to the great value that our customers see in our solution as they continue to expand their networks. I would like to highlight our leading MNO customer in Latin America who expanded a multi-million dollar IoT project for additional coverage provided by Gilad's cellular background solution. The mobile operators expand its agricultural IoT network to address the critical need for enabling better communication between the field and the office. On the 5G front, as the market adoption of 5G is growing, we see strong potential for Gilad to expand its leadership. This will initially be with the drive towards additional 4G deployments and as a next step with 5G as it spreads to rural areas. In North America, we closed a deal estimated at over $5 million with Pacific Data Port to provide broadband coverage in Alaska for everyone, everywhere. This strategic agreement will utilize Gilad's multi-application platform to provide both fixed and mobility applications. In the enterprise segment, we also closed important deals in Latin America, including one with Telefonica. In summary, as you can see, it has been a very active and successful quarter for Gilad, and I am particularly satisfied with our solid strategic and financial performance over the past quarter. The strength was driven by cellular backhaul, NGSO, and defense markets, enabling very strong revenue growth and our return to profitability on non-GAAP and EBITDA level, following the COVID-19 downturn over the past year. Furthermore, We want new service projects in Peru, which will bring us recurring revenues in the future, as well as new contracts in defense and maritime markets. We expect our momentum to continue for the remainder of 2021, providing continued growth in both revenues and profits. Moreover, looking further out into 2022 and beyond, we expect significant growth primarily in the following market segments. In the NGSO and VHTS segment, we see opportunities of hundreds of millions of dollars for which we are making very significant progress. In the mobility segment, we expect to strengthen our leadership with the SCS award for our mobility and maritime platform, as well as with the expected recovery of the IFC market as air travel picks up. In the solar and backhaul of our satellite segment, we are the global leaders in 4G and LTE, and as such we expect to enjoy the growing opportunity as markets adopt 5G, for which we have proven technology. In the defense segment, we believe that our gain momentum with global wins this quarter has further potential of tens of millions of dollars. I am excited with our potential and look forward to reporting on our progress over the coming quarters and years. And with that, I'd like to hand over to Bosmat. Bosmat, we are now ready for your report. Please go ahead.