Gilat Satellite Networks Ltd.

Ladies and gentlemen, thank you for standing by. Welcome to Gilad's first quarter 2025 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 May 19th, 2025. By now, you should have all received the company's press release. If you have not received it, please view it in the news section. of the company's website, www.gilott.com. I would now like to hand over the call to Mr. Alex Vialta of Alliance Advisors IR. Mr. Vialta, would you like to begin, please?

Thank you, operator, and good morning and afternoon to everyone. Thank you for joining us for Gilott Satellite Network's earnings conference call for the first quarter of 2025. With us on the call are Mr. Adi Safia, Gilad's CEO, and Mr. Gil Benyamini, Gilad's CFO. The earnings press release was issued earlier today and is available on Gilad's website underneath the investor relations section. Before turning the call over to management, I would like to remind everyone that some statements made during this conference call contain forward-looking statements based on current expectations. Actual results could differ materially from those projected as a result of various risks and uncertainties. The potential risks and uncertainties that could cause actual results to differ materially include uncertain global economic conditions, reductions in revenues from key customers, delays or deductions in U.S. and foreign military spending, acceptance of new products on a global basis, and disruptions or delays in supply of raw materials and components due to business conditions, global conflicts, whether or other factors not under our control. The company cautions investors not to place undue reliance on forward-looking statements, which reflect the company's analysis as of today's date. The company undertakes no obligation to publicly update forward-looking statements to reflect subsequent events or circumstances. Further information on these factors and other factors that could affect QLAS financial results is included in the company's filings with the SEC, including the latest quarterly report on Form 10-Q. In addition, on today's call, management will refer to certain non-GAAP financial measures that management considers to be useful and differ from GAAP. These non-GAAP measures should be considered supplemental to configuring corresponding GAAP figures. With that, I would now like to turn the call over to Mr. Adi. Please go ahead, Adi.

Thank you, Alex, and good day to everyone. Thank you for joining us today as we discuss our first quarter of 2025 earning results. The first quarter of 2025 marks the first quarter operating under our newly aligned organizational structure. Today, we will provide an update on our Gilad Defense, Gilad Commercial, and Gilad Peru divisions, offering insight into how our strategies are driving growth and capturing opportunities in key markets. We will discuss key achievements for the quarter and our opportunities and plans to continue accelerating revenues in 2025 as we capitalize on the acquisition of Stellar Blue and the continued strong demand for Gilad defense solutions. We are already seeing the benefits of this change, particularly in our main growth engines, defense, VHTS and NGSO constellations, and in-flight connectivity. We began 2025 with a good first quarter. Q1 revenues reached $92 million, a 21% increase year-over-year. Adjusted EBITDA was $7.6 million. Q1 2025 was the first quarter we included Stellar Blue's results in our financial results. Stellar Blue contributed about $25 million to our top line and incurred an adjusted EBITDA loss of about $3.6 million. Excluding the loss, our adjusted EBITDA for the quarter was about $11.2 million, representing a 20% year-over-year increase. Stellar Blue's yearly performance remains on track, with revenue expectation of between $120 and $150 million. We also expect Stellar Blue to reach a 10% adjusted EBITDA margin run rate during the second half of the year. Before reviewing the performance of each division, I want to address the impact of the current global macroeconomic turmoil and the shifting international trade policies and tariffs on Gilad business. The global economic uncertainty and the shifting international trade policies are creating new challenges. It is still too early to fully assess the impact as new facts emerge daily. Recognizing these trends early, we proactively initiated adjustment to our raw material sourcing several months ago. This involved strategically shifting from higher to lower-tariff countries and to the U.S., Importantly, a significant share of our U.S. defense business is sourced and manufactured domestically in the U.S., supporting stability in this environment. We intend to monitor the worldwide development closely and will adapt our strategies as needed to ensure business continuity and minimize potential disruption. Now on the business review. We had a strong start to the year with successful launch of Gilad Defense Division during the Satellite 2025 Conference in Washington, D.C. in early March. The market response has been very positive, and we are already seeing results that confirm we made the right decision to unify our defense portfolio into a single Gilad Defense business. The dynamic macro-geopolitical landscape is driving increased defense budgets And accordingly, there is a growing demand for secure, high-performance communication over satellites. We are well positioned to meet these mission-critical needs. We are seeing demand from diverse geographical markets, including North America, Europe, and Asia-Pacific region. In Europe specifically, recent events have accelerated efforts to develop sovereign communications networks with growing investments from both the European Union, and individual countries. This trend is creating significant opportunities, and we believe Europe will become an increasingly important market for Gilad Defense going forward. In Q1, our world spent a diverse global customer base, reflecting demand for a broad range of products and services. This broad portfolio, coupled with our global presence, continues to position us as a trusted and reliable partner for defense organizations worldwide. During Q1, Elad Defense was awarded over $5 million to support critical connectivity for the U.S. DoD and international defense forces with our DCAT terminals and field support services. We also secured $4 million in orders for unique CCT portable satellite terminals for global defense customers and another $6 million contract in Asia for our market-leading SkyEdge platform. Gilad Data Pass was also awarded up to $23 million for a multi-year contract to service satellite transportable terminals for the U.S. DoD customers. Gilad Data Pass will deliver critical program management, field services, and technical support, ensuring operation readiness and continued reliability of these vital communication assets. Gilad Datapass was also awarded a contract of more than $11 million for DCAT-3420 terminals to a leading UAV company. In addition, we received a multi-million dollar order from a global defense organization for the supply of advanced antenna technology to be integrated into the organization's state-of-the-art defense communication systems. These wins validate the strengths of our integrated technologies across Gilad Defense product lines and highlight the increasing trust customers have in our ability to deliver mission-critical communication in challenging environments. As I mentioned during the fourth quarter call, we are increasing our investment in allocating more resources to R&D as well as to sales and marketing at Gilad Defense in 2025. This quarter, we launched several new products, including our new GLT modem, the Aquarius Pro DS modem, and the Gilad Data Pass 2.6 meter terminal. We are highly optimistic that these products will be adopted to serve on GEO, MEO, and LEO constellations for critical government applications. We plan to continue investing significantly in Gilad Defense as we execute our strategy to lead in this important sector. Turning to our commercial business, we are seeing continued momentum in both system deliveries and customer expansions as airlines prioritize next-generation connectivity experience for passengers, including free Wi-Fi plans and connectivity on regional jets. We received $15 million in orders from various satellite operators, including for our SkyEdge 4 platform to support IFC services and for high-performance SSPAs designed to support LEO constellations. The growing adoption of LEO and MEO constellations Connectivity is creating favorable conditions for growth. These developments underscore the increasing demand for our solutions in this rapidly evolving market. Also, in the IFC sector, with respect to StellarBlue, Intelsat has already installed SideWinder, ESA, the market's most advanced and only operational multi-orbit LEO and geo-electronically steered array terminal, on more than 150 aircraft, delivering to date more than 70,000 flight hours of seamless connectivity across North America. The feedback we are receiving from customers and partners has been outstanding. A key milestone this quarter was successfully testing and certification of SideRender ISA by Panasonic, one of the major IFC service providers, further validating its leadership in the market. We are optimistic that this will lead to additional business for us. At the same time, our next-generation LEO business aviation ESA, the ESR 2030 terminal, was tested successfully during flights, and we expect these efforts to allow us to have a production-ready antenna by the end of 2025. Gilad is expanding its strategic collaboration with partners to drive the advancement of next-generation aviation ESA terminals. This development project focused on further developing our Sidewinder ISA and also extend its reach to adjacent aviation markets, including ISR, military, defense, and VVIP. A key aspect of this development is making the Sidewinder platform compliant for OEM offerability with Boeing as part of Boeing's technical service agreement. The platform is progressing through OEM qualification with availability expected in early 2026. This represents a significant step forward in strengthening our position in the evolving aviation connectivity landscape. Importantly, as IFC deployments ramp up, we are also seeing increased demand for our SkyEdge4 and SkyEdge2C basement platforms, further strengthening our position in this market. Building on this momentum, we are also responding to rising demand from satellite operators who are looking for cloud-based, software-driven ground segment architectures. As a result, we have stepped up development of virtualization capabilities for SkyH4, positioning Gilad at the forefront of next-generation cloud-native solutions for satellite communications designed to run on standard cloud hardware and expected to serve the needs of very large software-defined satellites. In other commercial verticals, the demand for digital inclusion is also accelerating as more governments and organizations prioritize access to essential services like education, employment, and healthcare. Satellite communications are playing an increasingly critical role in bridging the digital divide and expanding connectivity to remote and underserved areas. We are leveraging the proven capabilities of Gilad Peru to compete on projects worldwide, with multiple digital inclusion projects currently in the pipeline, reflecting the strong momentum we are seeing in this important area. In Peru, we are progressing on several important fronts. We received network acceptance and began operation of the Amazonas transport network, and we are moving forward with the acceptance process across the Amazonas access network. Additionally, we successfully transferred the ICA transport network to Puanatel, the first such transfer and are working towards transferring the additional regions' transport network as well. While the strong pipeline remains intact, several large projects, be it renewal, expansion and extension, continue to face delays. That said, we remain optimistic about future opportunities in Peru. I am pleased to say that we continue to have a strong backlog and a healthy pipeline. Therefore, we feel comfortable reiterating our 2025 annual guidance. Gilad is strategically positioned for sustained growth driven by strong demand for mission critical defense connectivity, the increasing satellite capacity, and the accelerating adoption of multi-orbit architectures. Our diverse product portfolio is ideally suited to support this evolution, offering the essential flexibility, scalability, and the performance our customers require. Our defense business is off to a strong start this year, benefiting from strong tailwinds driven by the macroeconomic development. Gilad Defense is building momentum and expanding its critical role in delivering resilient, high-performance satellite communication in support of national security and global stability. In our commercial business, we are seeing solid execution and continued growth. Stellar Blue's innovative SideWinder ISA is gaining significant market traction, and we are working closely with our partners to broaden its application into new verticals and advance its certification for line-fit installation. At the same time, the increasing demand for both IFC and multi-orbit solutions is driving further adoption of our Baseband and RF avionics technologies reinforcing our leadership position in the global aground segment market. We are encouraged by the momentum across our business segment and remain confident in our strategic direction as we continue to deliver innovation, execution, and long-term value to our customers and stakeholders. And with that, I will hand over the call to Gil Binyamini, our CFO. Gil, please go ahead.