Gilat Satellite Networks Ltd.

Ladies and gentlemen, thank you for standing by. Welcome to GILAT's second quarter 2023 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 8, 2023. 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 EK Global Investor 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 EK Global 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 2023 results conference call and webcast. A recording of this call will be available beginning at approximately noon Eastern time today, August 8th, 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 releases. with the reminder that statements made on this earning call that are not historical facts may be deemed forward-looking statements within the meaning of the Private Securities Integration Reform Act of 1995. All such forward-looking statements, including statements regarding future financial operating results, involve risk uncertainties and contingency, many of which are beyond the control of Gilad and which may cause actual results to differ materially from 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 disclaimed any obligation to do so. More detailed information about risk factors can be found in Gilad's report filed with the Security and Exchange Commission. With that said, let me turn to introductions. On the call today are Mr. Adis Fadia, Gilad's CEO, and Mr. Gil Benyamini, Gilad's CFO. I would now like to turn over the call to Hadith Fadiadi. We're ready to begin.

Thank you, Yirudh. I want to thank you for joining us today for our second quarter of 2023 earning call. The second quarter of 2023 was another strong quarter in which we showed strong year-over-year revenue growth. Our growth was broad across multiple business areas and totaled 22% above the same quarter last year. Adding to that, we significantly improved our profitability. We more than tripled our GAAP operating income year-over-year and had an adjusted EBITDA of $9.2 million, which is 74% higher than the adjusted EBITDA of the second quarter last year. As you can imagine, I am very pleased with the results of the second quarter and the first half of 2023. Looking ahead, we are increasing our revenues and profitability expectations for the full year 2020. We expect revenues of between $265 to $285 million, GAAP operating income of between $18 to $22 million, and adjusted EBITDA of between $33 to $37 million. 2023 continues to demonstrate a strong and profitable year for Gilad. I will now focus on our business achievements and opportunities in the quarter. The massive industry activity in the new era of satellite communications continues to fuel Gilad's growth engines, which revolve around very high-throughput satellites and non-geostationary satellite constellations. Like in the last several quarters, also this quarter, we received millions of dollars of orders from our strategic partners, the satellite operators. Network expansions and delivery of SkyH4 and Aquarius VSATs are taking place globally in support of multiple applications such as in-flight connectivity, cellular backhaul, and enterprise. In our SSPA product line, I am pleased to report on continued successful engagement in a major project with significant potential for large NGSO constellation. We are on track and moving to production in the third quarter of this year. I am excited to report that in our important growth engines, of in-flight connectivity, we are making significant progress with two important new strategic partnerships. First, as we recently announced, we signed an agreement with a new strategic partner, Satcom Direct, to develop and supply new ultra-low profile electronically steered antennas to operate over OneWeb's LEO constellation. Satcom Direct is a leading provider of fully integrated end-to-end global satellite communication solutions. Their solutions are in use today in over 7,000 aircraft. They are dedicated to delivering SATCOM connectivity to business and government aviation worldwide. During the quarter, we received the first orders valued at tens of millions of dollars. This agreement has additional potential of several tens of millions of dollars over the next few years. The development of an ultra-low-profile ESA terminal will enable Gilad to increase its presence by entering new market segments such as IFC for business jets, as well as connectivity for government and military aviation. This first ESA project is an important turning point and an important future growth engine as we enter the new promising and growing ESA market. Second, we are expanding our IFC business with another strategic partnership, receiving this quarter the first multi-million dollar orders from Tier 1 Aerospace System Integrator. We will support next-generation IFC equipment to reinforce our industry-leading position as the premier supplier of SSPAs for the IFC marketplace. Following the signature of the agreement to acquire DataPass Inc. at the end of the previous quarter, we are progressing in obtaining the necessary regulatory approvals. Together with DataPass, we submitted the required notices with CFIUS and other U.S. agencies and we already received an answer of several sets of questions. Conditioned upon the process satisfactory conclusion, we anticipate that the closing of the transaction will occur during Q4. During the second quarter, we booked multi-million dollars of orders in defense market. This includes an additional order of our antennas demonstrating confidence in our strategic partnership with the leading UAV customers. Furthermore, we received initial orders for our SkyH4 Aquarius modems from two leading defense system integrators in the U.S. These are the first steps in establishing a significant channel for Gilad next-generation modems based on the U.S. government demand. In cellular backhaul and other strategic growth engines, we continue expanding our global presence with multi-million-dollar orders. I am pleased to say that the SkyH4, our next-generation platform, is continually chosen by the satellite operators to provide cellular backhaul services. This is in addition to receiving orders from new and existing mobile network operators that are expanding their network based on SkyH2C, our current leading cellular backhaul platform of a satellite. An important example is in Mexico, where Gilad was awarded millions of dollars to connect hundreds of 4G sites in the CFE telecommunication and Internet for All initiative led by a Mexican federal agency. Within this framework, global satellite operators are working with Gilad to provide the best available solution. Gilad's leading technology and local presence are instrumental in addressing the special deployment requirements of the federal agency. In Peru, we made progress this quarter in the Amazonas region, where we concluded the construction of about 75% of the access network nodes. We are moving towards finishing the construction of the networks this year in line with the recent extension that we received from Pronatel for the implementation of this project. In the ICA region, we passed the acceptance and moved to the operational phase. This is the fifth region in operation out of six awarded to Gilad. To conclude, we had a strong quarter in which we showed strong revenue growth and significantly improved profitability, demonstrating the leverage in our business model. In addition, we had a strong booking with some very important strategic deals, especially with our IFC business, which is one of our key growth areas. The recent significant achievements are not only important achievements for this quarter, but are a huge stepping stone for further expansion in the existing exciting IFC market as we embark on future growth engines and enter into the new promising ISA market. I am optimistic about our ability to continue our growth and improved profitability path in the coming quarters, as reflected in our increased revenues and profitability guidance. And with that, I hand over to Gil Binyamini, our CFO.