Gilat Satellite Networks Ltd.

Ladies and gentlemen, thank you for standing by. Welcome to Gilad's third quarter 2024 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 November 13th, 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 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 Ms. Mayrav Sher, Head of Finance and IR. Ms. Sher, would you like to begin, please?

Yes. Thank you, Operator. Good morning and good afternoon, everyone. Thank you for joining us today for Gilad's third quarter 2024 results conference call and webcast. I am Rav Sher, Gilad's head of finance and investor relations. The earnings press release that was issued can be found in the investor relations section of our website at www.gilad.com. Also, a recording of this call will be available beginning at approximately noon Eastern time today, November 13th, and a webcast on Gilad's website for a period of 30 days. Also, please note that statements made on this earning call that are not historical facts may be deemed forward-looking statements within the meaning of the Private Security 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 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 Security and Exchange Commission. Also on today's call, management will refer to non-GAAP measures. The company believes these non-GAAP measures assist management and investors in comparing the company's performance across reporting periods on a consistent basis by excluding these non-cash, non-recurring, or other charges that it does not believe are indicative of its core operating performance. The reconciliation of GAAP results to non-GAAP measures can be found in the third quarter of fiscal year 2024 earning press release that the company issued and furnished to the SEC earlier today on form 6K. With that, let me turn to introduction. On the call today are Mr. Adit Sfadia, Gilad CEO, and Mr. Gibby Yamini, Gilad CFO. I would now like to turn the call over to Adi Sfadia. Adi, go ahead, please.

Thank you, Mirav, and good day to everyone. Thank you for joining us today for our third quarter of 2024 earning call. The third quarter of 2024 was another good quarter for Gilad, in which we continued to build euro-very revenue growth. This growth was primarily due to our acquisition of DataPass and continued momentum in our defense and in-flight connectivity business. We expect to sustain this momentum in the future. In addition, we continue to drive profitability improvement. Our adjusted EBITDA increased in the third quarter by 13% euro-very, reaching $10.7 million. As of the 2024 outlook, we have narrowed our revenues guidance range, expecting revenue to range between $305 and $315 million, representing year-over-year growth of 17% at the midpoint. The main effect on revenue guidance is the company's decision to terminate its activity in Russia due to the limitations and constraints that are imposed with regards to operations there. We raised and narrowed the range of our 2024 GAAP operating income guidance to between $24 and $26 million, mainly due to approximately $10 million in proceeds from arbitration in Peru. We also have narrowed the range of our 2024 adjusted EBITDA guidance, expecting adjusted EBITDA to range between $41 and $43 million, representing year-over-year growth of 15% at the midpoint. Now let's move to the business review of the third quarter of 2024. I will start with the review of our defense business. The defense sector is a strategic pillar for Gilad, and our increased focus on this market is bearing fruit. We see a growing demand for defense outcome solutions in the market, driven by the proliferation of NGSO and macro political events. Gilad is well positioned to leverage innovative ground segment products and solutions to answer this growing need. During the quarter, we signed several contracts with the U.S. Department of Defense worth over $5 million for core terminals and related services, technology insertion, and upgrades to SATCOM systems. In addition, we were awarded approximately $4 million by the U.S. Department of Defense for GILAT data pass ticket 3421 terminals. These portable SATCOM hubs provide the flexibility, capacity, connectivity, and control needed to ensure mission success anywhere in the world. We also received an award of approximately $3 million from the U.S. DoD for Gila Data Pass technical and field services. Gila Data Pass is deploying technical and field services in Europe, the Middle East, and the United States to support the U.S. defense and users' critical connectivity requirements. Another award of more than $2 million was for Gilad Wavestream by a leading defense integrator for our XKU and KA band block up converters for communications on the move systems, along with test, repair, upgrades, and engineering services. Gilad's cutting-edge satellite communication technologies and comprehensive services enhance mission-critical connectivity and operational capabilities for defense applications. A key application is the ability for fast deployment anywhere in the world. This demonstrates the strategic value of our communication-on-the-post and communication-on-the-move defense product portfolio, which includes a range of transportable hubs, portable terminals, SSPAs, upgrades, and field services. As we continue to leverage cross-cell synergies between Gilad Datapass and our worldwide sales organization, we are opening the door to new opportunities and developing a pipeline of potential contracts. We believe we are well positioned to win our fair share on these opportunities in the coming months. Turning to in-flight connectivity business. We continue to execute well in the IFC market, another strategic pillar for Gilad, demonstrating solid year-over-year growth, developing more products, adding more customers, and supporting more verticals. During the third quarter, we received an order for over $12 million from leading satellite operators to extend their global SATCOM network utilizing Gilad's SkyEdge family of VSAT platforms. This extension will use primarily to support their ISP offering. The growing demand for free Wi-Fi is creating attractive growth potential for Gilad. We are well positioned to increase our market share, leveraging our presence in Jio and NGSO global networks, and our worldwide and our wide portfolio including basements, modems, ISA terminals, SSPAs, and additional auxiliary products. To strengthen our position in the IFC market, we signed a definite agreement last June to acquire Stellar Blue Solutions, a leader and first to market in delivering electronically steered antenna for the in-flight connectivity market. The closing of the acquisition is taking longer than we had anticipated, and we now expect to complete the transaction by the end of the year. Pending government approvals. A part of our strategic activity in VHTS and NGSO constellation markets, we are making good progress with two very large initiatives. The first involves the transformation of SkyH4 to the cloud, and the second is developing ground segment systems for a next generation LEO constellation. Gilad is offering a full set of capabilities for a communication system and integration services in order to expand our scope of services. Recently, we announced that the company secured approximately $15 million in orders from several major satellite operators for our advanced satellite communications solution for GEO, MEO, and LEO constellations. I would like to point out that Gilad is extremely well positioned to leverage the growing demand for LGSO and LEO constellations across several key product lines. Our multi-orbit ESA antennas, as well as our ESA antenna for LEO-only SSPAs for LEO Gateway, and our range of multi-orbit networking solutions that suit a variety of market applications. The recent award of the Iris Square contract by the EU to the SpaceRise consortium, which includes Eurosat OneWeb, SCS, and ISPASAT, is a positive development that carries significant opportunities and potential for Gilad. Also, during Q3, we secured a $4 million contract to provide rural connectivity, including banking transactions in Latin America, for a period of three years. Gilad is providing critical connectivity for people living in remote areas who rely on the bank for payment services as well as support services for senior citizens, families, and other under-served populations. In Peru, we are progressing faster than planned in implementing the Amazonas region's expansion project. The implementation phase is now completed and the expansion project is under supervision. The operational phase in the six-region project of Pronatel in the Amazonas region is now expected to begin towards the end of the year after some delays in the supervision process. Looking ahead in Peru, we have a strong pipeline, including a number of opportunities on the horizon, including the maturity of several large RFPs with Pronatel and the Peruvian government, as well as several project expansions and extensions. During the quarter, we collected an additional approximately $4 million payment from the arbitration we won against Parantel and the Peruvian Ministry of Communications from cases awarded in 2018 and 2020, totaling approximately $29 million. To conclude, the third quarter has been a good progress in our key growth engines, defense and IFC. We have a strong pipeline and we expect the materialization of important deals over the coming months. We are continuing to work towards the closing of the acquisition of Stellar Blue Solutions and are awaiting the receipt of final regulatory approvals, documentations, and other customary closing conditions. I am pleased with our continued business with the U.S. DoD and Leo customers. We are progressing with two important opportunities, transforming the SkyEdge 4 platform to the cloud and creating a next-generation ground segment for Leo. With that, I will hand over to Gilbin Yaminia, CFO. Gilbin, please.