Gilat Satellite Networks Ltd.

Ladies and gentlemen, thank you for standing by. Welcome to GELOT's third quarter 2021 results conference call. All participants are at present in listen-only mode. Following the 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 November 9th, 2021. By now, you should have all received the company's press release. If you have not received it, please contact Gilad's investor relations team at GK Investor and Public Relations at 1646-688-3559 or view it in the news section of the company's website, www.gilad.com. I would now like to hand over the call to Mr. Ehud Helf of GQ Investor Relations. Mr. Helft, would you like to begin, please?

Good morning. Good afternoon, everyone. Thank you for joining us today for Gilad's third quarter 2021 results conference call and webcast. The recording of this call will be available beginning at approximately noon Eastern time today, November 9, 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 the 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 Delegation Act reform 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 the anticipated results. Gilad is under no obligation to update or alter these forward-looking statements whether as a result of new information, future events, or otherwise, and the company exclusively disclaims any obligation to do so. More detailed information about risk factors can be found in Gilad's report filed with Securities and Exchange Commission. And with that, let me turn to introductions. On the call today are Mr. Adis Fadia, Gilad's CEO, and Ms. Bosmat Harpen, Gilad's CFO. I would now like to turn the call over to Adi Saadia. Adi, we are ready to begin.

Thank you, Ehud, and good day to everyone. I would like to thank you all for joining us today for our third quarter 2021 earning call. I am pleased with our results this quarter, which continue to show progress and recovery with improvement in our gross profitability and the return to operating and net profit. We grew revenue by 34% year-over-year to $50 million, and our adjusted EBITDA was $4 million, significantly above the third quarter of last year, and about $1.5 million above the previous quarter. I'm excited to share that this quarter was a very strong quarter in our strategic focus areas of non-geostationary orbit constellations and the very high throughput satellites. Furthermore, during this quarter, we had some substantial strategic gains and new customer wins. We continued recovery and progress in all our markets, including in the IFC segment. These gains will be reflected in our financial performance in future quarters. The global supply issues, component scarcity, and price increase are affecting the satellite industry as well. Like others, we are facing some significant headwinds, however, are making great efforts to overcome these challenges. Thus far, we have been mostly successful and we hope that this will continue to be the case until the ease that is expected towards the second half of next year. As I explained last quarter, in order to materialize the significant opportunities we are already experiencing and see ahead, we are increasing our R&D investment to better support future growth. Now we'll focus on some of the business achievements in more detail and discuss some of the recent highlights. In the last few months, we have been experiencing significant activity in the strategic non-geostationary orbit satellite constellation and the very high throughput satellite segments. Specifically, the third quarter was a very strong quarter for Gilad in those segments. We continue this quarter to receive orders of approximately $17 million from a leading satellite operator for support of a low Earth orbit constellation to be delivered later on in 2022 and beyond. In addition, we have major projects on our pipeline, of which we hope to secure several in the coming quarters. These projects will utilize our next-generation platform, new GEO and NGSO modems, and solid-state power amplifiers. Furthermore, we are making additional investments and putting in substantial efforts in R&D that are supporting major progress with the ground segment for the SCS-03BM power satellite constellation and other projects in our pipeline. we expect to start seeing significant revenues from the SES Empire project in the coming quarters. As a leading provider for this market, we see solid growth potentials comprising of hundreds of millions of dollars in market opportunities that we expect to materialize in the coming years. Mobility is a major focus area and growth engine for Gilad. In the IFC market, we are seeing initial feeds of recovery evidenced by significant orders summing for more than $15 million from several key players with delivery plans for 2022 and beyond. This will support a future growth. Upon an industry recovery, we expect the mobility segment to return to be a substantial part of our business as passengers increasingly demand reliable high-speed internet connections during travel and the expectation of connectivity all the time and anywhere has only strengthened during the pandemic. Gilad is highly committed to this strategic market and we view the pandemic impact over the past 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's IFC segment to recover to its full potential. In Peru, we were awarded approximately $28 million in multi-year service agreements by Pronatel for operating the regional transport networks to support broadband connectivity and services across the four regions of Ayacucho, Apurima, Huancavelica, and Cusco. With these wins, we are meeting our stated goal of about $50 million in annual recurring revenues run rate from Peru ahead of the stated objective. During the quarter, Gilad continued to lead the 4G solar backhaul of the satellite market segment. as Tier 1 global mobile operators expand their networks with orders totaling multi-millions of dollars. Gilad's well-recognized solution supports leading mobile operators worldwide with applications such as emergency response and coverage to remote regions, and at times, as an obligation to answer local government mandates. This market segment is strategic value for Gilad, and as such, we see great potential to expand our leadership as market adoption of 5G is growing. In the enterprise segment, we have a significant win with SCS for a multi-million dollar contract for multiple broadband applications in Latin America. Gilad's multi-service platform was chosen to support SCS in cellular backhauling, enterprise, and universal service obligation projects in the regions of Andin and in rural Argentina. In addition, Gilad continues to secure orders totaling multi-million of dollars for a variety of enterprise applications throughout the world, including in the United States, Russia, India, Australia, and the Philippines. Overall, when I'm looking into the future with the recent wins and the strong momentum we are seeing across our business, I'm increasingly confident that we'll show significant top-line growth and double-digit growth in adjusted EBITDA in 2022. And I'm sure that this is only the beginning of a long growth path ahead of us in the years to come. And with that, I'd like to hand over to Bosmat. Bosmat, we are now ready for your report. Please, go ahead.