Gilat Satellite Networks Ltd.

Ladies and gentlemen, thank you for standing by. Welcome to GILAT's second quarter 2024 results conference call. All participants are at 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 7, 2024. 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 2024 results conference call and webcast. A recording of this call will be available beginning at approximately noon Eastern time today, August 7, as a webcast on Gilad's website for a period of 30 days. Also, please note that investors are urged to read their 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 Security Litigation Reforms Act of 1995. All such forward-looking statements, including statements regarding future financial and 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 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 explicitly disclaims any obligation to do so. More detailed information about risk factors can be found in Gilad's report filed with the Securities and Exchange Commission. With that, 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 the call over to Adis Fadia. Adi, go ahead, please.

Thank you, Ehud, and good day to you. Thank you for joining us today for our second quarter of 2024 earning call. The second quarter of 2024 was a good quarter for Gilad, in which we showed real revenue growth. This was primarily due to the strong momentum in our defense business, with a significant contribution following the acquisition of DataPass. We expect this strong momentum to continue in the quarters ahead, In addition, another key achievement was our ability to increase our adjusted EBITDA by 10% year-over-year, exceeding $10 million. Most importantly, during the second quarter, we took a major strategic step and announced the acquisition of Stellar Blue Solutions, a leader and first to market in delivering electronically steerable antenna for the in-flight connectivity market. The closing of the acquisition is on track and expected around the beginning of the fourth quarter this year. In a minute, Gil will discuss the financial elements of the deal in more detail. But before that, I want to discuss why I'm so excited about this acquisition and why this acquisition carries significant potential for Gilad. The acquisition of Stellar Blue culminated many months of deep due diligence looking at all aspects of the IFC market, the company, its long-term growth potential, and potential synergies with Gilad's existing business infrastructure. This deal has the potential to unlock new strategic customers and create additional significant revenue for GILAX. Just recently, Stellar Blue completed qualification and earned supplemental type certification on the multi-orbit sidewinder aeroterminal. We have a vision to broaden this product line with a more comprehensive suite of products for the IFC market. I can share that the company has started delivering the first ISA terminal units to its customers. As such, we expect Stellar Blue to add between $120 to $150 million in revenues in 2025 and be accretive to our non-GAAP results. Furthermore, we estimate that once Stellar Blue reaches its target manufacturing capacity during the second half of 2025, its EBITDA margin will be above 10%. Assuming closing will happen at the beginning of Q4, we estimate Stellar Blue revenues to be between $25 to $35 million in Q4 of 2024. I am confident in Stellar Blue's team, its leadership, its offering, and its go-to-market strategy. This acquisition will position us as a market leader for aviation ISA, a market that we believe is set to explode in the coming years. In the longer term, we can leverage the technology portfolio into other large adjacent markets. Overall, I believe this acquisition can transform Gilad into a high-growth company for the years to come, and I look forward to welcoming Stellar Blue's team to Gilad once we close. As for 2024 outlook, we are reiterating the guidance we gave earlier this year in February 2024. I would note that once we close the Stellar Blue acquisition, we will provide updated guidance to account for the contribution from Stellar Blue in 2024. Now let's move to the business review of the second quarter of 2024. In the very high throughput satellite, the VHTF, and the non-geostationary satellite, the NGSO Constellations Market, we continue to lead the market and grow our business with follow-on multi-million dollar orders from our strategic partners, the satellite operators, which mainly include SCS and Intelsat, among others. This is driven by increasing demand for Gilad's SkyEdge platforms, as satellite operators expand their networks and deliver a wider range of applications to a growing number of users. Recently, we announced that the company was awarded over $9 million in cumulative orders from multiple satellite operators to expand their global SATCOM networks by utilizing Gilad's innovative and field-proven solutions. Gilad's solutions will enable a wide range of services and applications over GEO, MEO, and LEO, including in-flight connectivity, maritime, land mobility, cellular backhaul, enterprise services, and more. Also during the quarter, we announced that SES O3B Empower launched its services via Gilad's SkyH4 platform. In scratch form, the industry-first multi-orbit Miogeo system is enabling SCS O3B Empire software-driven constellation to deliver services with unparalleled flexibility and scale. Our increased focus on the defense market is already bearing fruits. During the second quarter, we announced that Nicole Robinson has been appointed president of Datapath. Ms. Robinson is an international satellite industry executive with a proven record of driving growth, managing global sales and operational teams, and deploying next-generation technology for the benefit of government and defense organizations, businesses, and communities globally. Q2 is also our second full quarter of consolidating revenues from Datapath into the defense sector under the satellite network segment. Furthermore, we recently announced several new projects that were awarded to Datapath and Wavestream. DataBus received over $9 million in orders in support of the U.S. Department of Defense and other agencies participating in field service and technical service programs worldwide. DataBus is deploying technical services and field services in Europe, the Middle East, and the United States to support U.S. defense and users' critical connectivity requirements. These orders include both contract extensions and new contracts from various partners and agencies. DataPass was also awarded a multi-year contract of over $5 million from National Defense Organization to upgrade their DCAT transportable SATCOM network hubs. DataPass multi-band tactical DCAT terminals deliver the operation flexibility, capacity, connectivity, rapid deployability, and control required to support demanding communication in remote locations. DCAT terminals deliver secure, reliable communication anywhere needed to establish network connectivity to support a mission with minimal manpower. In addition, WaveStream, one of our U.S.-based subsidiaries, received a significant order from a Tier 1 U.S. global military terminal provider for the Microstream solid-state power amplifier for satellite communication terminals sold to militaries throughout the world. We continue to make great progress in the mobility sector. demonstrating solid year-over-year growth, developing more products, adding more customers, and supporting more verticals. During the second quarter, we received over $14 million in orders from several prominent service providers and system integrators for the IFC products and solutions. This includes network equipment, VSATs, hub, solid-state power amplifiers, and additional IFC auxiliary products. These orders from new partnerships and existing customers demonstrate the company's leadership position in the growing IFC market for commercial and business aviation. During the quarter, SES announced its Open Orbit initiative, which will allow the use of KA networks for global IFC connectivity. I am optimistic that this initiative will be part of our significant growth in this market. In Peru, we are progressing faster than planned in implementing the Amazonas region's $17 million expansion project. We expect to finish the implementation of this expansion before the end of the year. In addition, we expect to move to the operational phase in the six regions project of Puanatel in the Amazonas region during the third quarter. This follows the completion of the acceptance process which is currently underway. During the quarter, we received the following orders for over $2 million from Internet Para Todos IPT is a consortium comprised of Telefonica and Metafacebook to deliver several record services across rural areas in Peru. IPT is a global collaborative initiative to bridge the digital divide in Latin America under a sustainable model that would allow to overcome the obstacles of bringing connectivity to rural and geographically complex areas. Gilad will provide access to high-speed terrestrial connectivity to over 1 million more people living in rural areas. Furthermore, in Peru, we are expecting additional progress in the next few months. This includes the maturity of several large RFPs with PONATEL and the Peruvian government, as well as several project extensions. We are very pleased with the strong pipeline in Peru for the rest of the year. To conclude, the second quarter has been very valuable for Gilad. Our acquisition of Stellar Blue Solutions has the potential to be a significant growth engine for Gilad, and it will establish us as a market leader for aviation ISA, a market that we believe is set to explode in the coming years. I am pleased with our second quarter results, which include the contribution of our acquisition of DataPass and strong momentum in our defense business. We continue to lead with our next generation platform, which support multiple orbits, verticals, and applications, including our strategic markets of mobility, cellular backup, and defense. We are particularly proud of our contribution to the SCS OSRB Empire service launch. During the second quarter, we made significant progress in expanding our IFC footprint into business and commercial aviation, including the SCS Open Orbit Initiative. We have a strong pipeline and expect the materialization of important deals over the coming months. With that, I will hand over to Gil Beniamini, RCFO.