GILT - Earnings call transcript Q2 2021 | Gilat Satellite Networks Ltd.

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to Gilat’s Second Quarter 2021 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded August 10th, 2021. 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 GK Investor & Public Relations at 1-646-688-3559 or view it in the News section of the company’s website www.gilat.com. to the like to now would hand call over Mr. I of GK Helft Investor Ehud Relations. Mr. like please? to you would Helft, begin,

Ehud Helft

financial and let results. beyond or All of any otherwise results forward-looking regarding information under the new Securities and statements these involve this. may do the Yes. cause Gilat’s investors XX Thank Gilat’s made in Private anticipated webcast as materially forward-looking future you such statements to a Also, the are to of turn approximately with they filed Securities factors everyone. obligation no which of Exchange is read introductions. note a conference facts urged results, alter of statements Thank on noon of actual events forward-looking operator. for a on differ uncertainties statements, statements from maybe and the on historical forward-looking me the reports this and and Good XXXX. call morning the for call whether statements today available as to expressly period many that earnings that us can Gilat disclaims are and Litigation call which joining and those with Eastern will days. website earnings operating risks, result release Gilat And today Gilat including beginning A are Form Gilat’s not update Time control risk information, meaning detailed future contingencies, of obligation about within the a deemed for webcast. second to please of or reminder be results you that, quarter with to company More be Commission. found this recording good at Act afternoon, XX, August

begin. ready CFO. Adi. call would the we Halpern, are over are CEO; like to call Mrs. Sfadia, Adi, Mr. to now Gilat’s Adi On to Gilat’s and I the today turn Bosmat

Adi Sfadia

of Thank you of Ehud our like today return solid in and to thank was $XXX,XXX am second you, our our XX% I earnings business. which and of this result quarter very income and a return growth with everyone. demonstrate XXXX EBITDA statement I us would revenue throughout profitability showed joining The gross margins the improvement to year-over-year our for and improvement call. which good quarter quarter-over-quarter. adjusted XX% positive to day with non-GAAP or for strong was EBIT, includes pleased We $X.X million. and basis profitability

enterprise and have Our performance continue this was NGSO, broadband and backhaul, which shown defense significant foreseeable market we driven expect for progress by cellular the to the future. momentum

significant and also made progress the in deals. in Peru, our securing in mobility market significant We operation

to Looking our growth ahead throughout continue XXXX, we both profitability. trend and revenues expect in

will for NGSO operation the drivers be growth remainder Peru expect main beyond. our of the in the cellular We backhaul and XXXX and met,

Now project we be it opportunities significant mobility our and of opportunities expected ever to investing to many R&D efforts the looking further NGSO increased we materialize In our in and company and support different recovery growth growth. see believe was we further order time segment our will for material the future our ahead, that significant IFC. are of a as out growth into XXXX, year better

feasible leadership world's We business agreement in pandemic FCS IFC top to by the from them the in utilizing area the market, other SES issue. recovery. on SES-XX. Mobility mobility and the service our initial will Now, of dollar engine a GEO including be of This multi-million providers. the our solidifying OXBM with secured remain our focus achievement Collectivity supply initial of the strategic view delivered for impact enabling growth we we'll platform. seeing market focus is satellite mobility maritime some a is and recently quarter. over for some breakthrough Gilat constellation major temporary next multi-orbit maritime of cruise the few the power market, for generation show Gilat. the highlight the in is past the services This in In for platform lines we highly are and quarters

is to military PRONATEL Gilat for However, mentioned Terminal worldwide. to last the our Wavestream. US our to high-quality tactical America addition U.S. Asia, it still dollar defense Defense terminals segment, multi-million to successful ongoing $XX we supply are in its global U.S. take contract in to from product the power some we million seeing important will received opportunities Department This levels we do believe and and Satcom U.S. award a Peru, from by recover subsidiary communication of $X several and Army In IFC of in further for provide sites to million XXXs regions of In bills pre-COVID for and potential. additional sites for and the Cusco. both has full services closed extensions two-year hand to and awarded across Huancavelica, of to the Wi-Fi Provider we XXXXs a Apurimac, quarter. to free growing use. Latin as additional more to its time of Tier-X in We expansion this the This potential public return were project segment Ayacucho, we further military for IFC

over for growth orbit $XX area meet the significant the segments to non-GEO throughput deliver very stationary expect a satellite services strategy satellite and as be annual stated high Peru. The previously in network on are million strategic revenues making our to engine recurring Gilat. such goal and progress continue in We constellation focus to with our of major

of we significant a for of are we for comprising of which growth potential solid millions progress dollars making in market, provider XXXs fronts. several very this opportunities market see As in winning

of a satellite multi-million constellation. low We continue receive support to earth dollar orders orbit from operator for leading

past, As chosen amplifiers Wavestream our supply the solid-state to power project. for reported was gateway in subsidiary this

sees communication I like in solution. as project constellation IoT continue MNO power continue the solution the customers provided coverage in a networks. is continue to importance our who backhaul coming and our field strategic our adjust their Gilat additional expect in be would The us. OXBM office. testament the to multi-million enable ground significant cellular also from network great during quarters. MNO the expansion from cellular and between to segment by to the backhaul to the its revenue in satellite leading significant SES We a This agriculture start for customer highlight need a orders We saw development globally. seeing dollar our expand expand full-on they mobile IoT The better to segment this value America critical our project of expanded that the quarter for operator to Latin for Tier-X the

for we a platform particularly active segment, important America, you and we see, XG closed adoption On Dataport the XG was very successful deployment and Defense profitability past America spread In new enabling Gilat and backhaul fixed solid strategic rural This with as with am XG won we or project in coverage return over performance summary, deal the broadband step strong our and strength everyone estimated market level, with financial will defense to as provide it the $X we over the is over initially to the mobility maritime NGSO utilize the everywhere. for us front, to in The non-GAAP million to the provide strategic XG one expand Peru Latin deals very including recurring This also been new this growth as Gilat enterprise see a leadership. at Telefonica. a Alaska revenues in and In quarter. to following in by its next market service be can markets. closed with downturn COVID-XX towards cellular revenue Gilat year. has and will and multi-application strong quarter well contract both past for applications. our a is in potential satisfied will as -- and areas. In as driven growing, the additional of Pacific and Furthermore, environment which drive EBITDA future it bring with North the

enjoy we the dollars expect continue In growth for growth air of millions in to strengthen award we platform progress. segment, segment, up. XXXs as both see leadership into VHTS the XXXX of expect to In picks cellular NGSO opportunities out travel the expect momentum we're LTE market gain for segment. further And our news. ahead. with providing for are with market as wins have Bosmat. of following of which the our SES mobility expect well opportunity report, to the to our In we and with I'll segment, as of potential Bosmat, look now progress global with leaders and adopt satellite over the on such for are ready backhaul markets the believe we excited of technology. momentum forward to in that, and dollars. go to potential quarter quarters reporting XXs which and and the revenues remainder the the In the of as significant like looking I'm making We further segment, our that this expect over and and primarily as XXXX handover please we for we IFC very coming millions significant beyond, your maritime our recovery profits. Moreover, of XG the XG in proven we continued we Defense as and mobility global we our growing

Bosmat Halpern

managing claims, morning in to considered decision. amortization operating respect should as non-GAAP Good remind help and and pleased afternoon compensation, earlier, data quarter litigation highlight comparable We with carry financial and operating now measures good represented measures We forward reconciliation income I non-GAAP merger GAAP not and and and presented impairment the to leaving secrets effect our investors I for basis. future performance. and exclusive supplemental Non-GAAP tangible, to of of believe related the non-GAAP everyone financial measures non-GAAP to Overall, with table move addition of information or our Adi. tax and stock-based everyone. to second be financial assets mainly our financial are provide in make understand GAAP of accordance current comparable G financial measures. litigation to measures both press results. The like costs trade our requirements. our we understand acquisition purchasing Thank that in to release losses. to cost, will XXXX. use financial measures highlights on exclude our differed you, results this mentioned recognition business Adi the incentive, financial of in and would These internally evaluate of with these and Reg regularly amortization related initial non-GAAP the reorganization items to lieu expenses consistent and

and on profitability sequential in and remains to year-over-year expect quarters. the continued we're Notably, the happy maintain we improve a improvement in a profitability. even indicates moving basis trend showed clear results in in strong non-GAAP have COVID there direction the which coming the and quarterly to in to of The while improvement end pandemic stabilization Our our we is the quarter right revenue both very returned markets. background, and are that

yet improvement which IFC contribution have of Our inflight weak. does not the remains or the vertical connectivity significant

In $XX.X was terms to The cellular market. compared our driven the in second from of NGSO backhaul, million revenue of increase revenues and when broadband, quarter quarter the enterprise for quarter. were growth million results, and previous compared to second financial defense million up $XX.X $XX.X XX% in XXXX by up the XX%

in million breakdown compared segment, segment In $XX.X same was the quarter the of last revenue terms million fixed by to year. $XX.X network revenues

in network saw seeing same were in show million were this PRONATEL, million. Mobility significant quarter, an will we in compared also project the compared the $XX This same compared operating same operating results, the the it year million. and to million business $X.X for from XX% improved half million in loss and includes demonstrate and in solution year for segment quarter is continued gross $X.X revenues $XXX,XXX to last XX% construction GAAP loss GAAP GAAP that segment share of fixed infrastructure summarize the to loss $X.XX $XXX,XXX the improvement $XX.X same $X.XX the revenues quarter. loss with we $X.XX share. margin previous and of quarter with by In or We the previous loss same in previous which the GAAP last in we've quarter. saw to projects $X.X XX% to of revenues year quarter of a Peru, defense quarterly $XX.X a in GAAP quarter to the loss loss in quarter in second of previous year. second results the or the million $XX.X To improvement segment revenues million the expect million driven markets been in we in improvement improvement last is million per million from and in loss net last previous increase compared million IFC remains $X.X our last quarter, weak. this year. Terrestrial per improved $X.X an the quarter per our a improved operating $X.X for the share Compared the in $X.X net net to or revenues quarter. The of NGSO of quarter previous to segment had compared while compared XXXX.

and a quarter quarter in very same to I in the the by non-GAAP previous with last $X.X continue as operating gross in basis In an while the at quarter basis. last year was that year non-GAAP to looking the second million in operating non-GAAP we quarterly our on the $X.X quarter $XXX,XXX significantly million. million quarter. non-GAAP million compared $XX.X note said in operating was quarter. in I'm results loss I the the of quarter compared had expenses margin improved compared operating last in Non-GAAP return loss before XX% R&D. the Now, million. year XX% $XX.X on and invest with we for the quarter, profitability same to in the of a previous income encouraged XX% $XX.X to previous

XX% our We mainly of all work XXXX. returned workforce December cost XXX% work second which employees of our year reduction The to scope. temporary of to quarter scope in global last included reductions consisted

quarter quarter the and We million invest Non-GAAP large reported an us. capture income $XXX,XXX also EBITDA delivery million In previous existing constellations quarter same ensure EBITDA timely to continue per same MEO effort the $X.X we per of the we of to we've loss share. of or year. In to reported million been EBITDA a loss $X.X last quarter, In improved to $X.XX or significant share. $X.XX Adjusted quarter the we adjusted ahead LEO and the adjusted with or opportunities the $XXX,XXX of loss net R&D other of $X.X in last mainly in of the in projects quarter, $X.X $X.XX reported compared in million. previous per net ordered, year, net share. was of for we an see

Moving to our balance sheet.

total cash our at or and XXXX, restricted short-term million compared XXth, $XX.X quarter. $XX including previous equivalence June of in As the a with cash deposits million end of the

operating our days XXXX of has company. heard, With regard a terms early quarter. components $X.X you previous the since there effecting shortage and of solutions cash is is global activity. known million exclude and networks our project In to numerous inventory, and from materials our electronic DSOs, XX and which and in other segment as of and which ongoing days probably us to and now been compared infrastructure revenues include Terrestrial fixed flow, decreased XX receivables we mobility generated segments to

the cash ensure inventory work and are able thus hard been However, management, the to have demand our we inventory and continue to meet given manage available we we position and for to far to impact prudent solutions. careful have a leveraging our strong sufficient planning

Our previous the of both $XXX.X with shareholders the $XXX.X quarter. quarter million of the end equity at at end second million to compared the

continued results sequential both line. improvement a top are on and bottom the with Looking ahead, we all-in-all, encouraged in our

and my open we now Operator, so which revenue in mentioned, questions. XXXX financial from please? the XXXX. That improved We COVID-XX and I review. call would Adi continued to year forward much of year As for more a of look like in concludes to view crisis. a profitability recovering emerge the we as XXXX growth

Operator

[Operator Thank Chris go Quilty Instructions] question Analytics. from first from is you. Please Quilty The ahead.

Chris Quilty

that mentioned and good or either think you, worse Question Are of in impact margins the on capability about is the we you situation Thank around results. you congratulation the Bosmat, shortages. improvements on should seeing the on and terms there for the or for how last restricted chip of year. point sales balance the getting

Bosmat Halpern

are of Thank and for managing why see our shortages. by now, control Right an are the of the We Chris. lead that's those equipment mainly that you, of impact we ordering of ahead times in question. Hi, time. do we

year or not to have I we advance. a margin it Sometimes on on it our material order do in as to need our manage we expect impact results correctly.

However, inventory I levels shortages. because our that do will grow expect slightly of those

Chris Quilty

of by I on trends either with angle variant, you shall in the delta activity. guess Also are globally market resurgence terms the the or we And that? your seeing impact to similar cash by any of region fund on have business a

Adi Sfadia

Adi. or think from vaccine it ago to that is now the need significantly this and to six from due I some result us But far again the learnt variant, travel business months last We But and see we now, of seems Israel restriction again. but from you months. same delta say the effect perspective, with situation six to that episode. month Chris, less additional same more that now something the learn the the COVID last are The started Hi vaccination customers this right in our see as And don’t we every We the rate. I XX finishing in in we is it last was months. we version it's new. behind two like a it's meet and reduce months worldwide

Chris Quilty

of you reported will gross terrestrial of kind to half? in the the on follow-up have year. that side the growth you I the primary the come services year for to the expected you Peru in relative that a driver the Is or material a that think half back that any had the script And the first be on on expect Right. margins stated to and in half back impact

Adi Sfadia

only significantly from The terrestrial as on P&L, service Most the should increase them come it mix, mainly standalone, Peru. additional the all it margin. services. we increase margin bid revenue on increase consolidated to be especially take But building also not on gross and are guess margin The a Peru from will services Peru on of if our winning network overall growth Peru. the with should that our will it's we I that and effect the in depends growing

Chris Quilty

defense starts congrats program segment going And help you're to us those the you're defense business away taking wins. these Can in and Right. you competitively? that on programs understand new are wins where generally in the new seeing or

Adi Sfadia

But all in-house some Its new the we're solution, for basket orders. of a U.S., in. trying of existing in project program combination In And In under If consider and to those. gateway, new U.S. we a get that countries. find that there broadband more-and-more programs programs it's see way do we are programs we a the the DoD. business non-U.S some budget continue under cases, huge a see outside for do we're the especially some now DoD our to VSATs around.

Chris Quilty

you know And picking year-to-date. trend book-to-bill early in you Right. of leads specifically the to of sense either a you're what but would or don’t typically per us generally regard whether the with I give quarter looking like and can any seeing up? is top IFC at activity a order there order I provide level se guess,

Adi Sfadia

baseband it’s will by our seeing orders the going box quarters, us. initial quarter understand will last beginning. now We delta two are situation. beginning trend. than both it's we probably recovery also book-to-revenue until take and where a ratio higher was IFC, the for people be honest, to To the one or which fills again I a of on the amplifiers On hope for a of it’s delay think average but and SSPA, its the In good few variant

Chris Quilty

COVID obviously partners the Gogo IFC strategy there? directly customers, set at with to all and And former the your to opportunity are terms are primarily airline your changing to anchor in you with regard the large Intelsat you anything has the of customer but changed market, approach post working or

Adi Sfadia

some we their Honeywell, talk supporting seems do Global requirements. the go them Well, focused but are few new it and -- We we providers the new but that the partners, Gogo, strategy and on quarters participate we RFPs of no our and months of have airlines. each end We intention in in our users there additional haven’t with changed. directly the do to service supporting last next to few Eagle, primarily issue probably the here in we'll

Chris Quilty

and market. in competitive final mPOWER potential going Amazon next with driver XX but NGSO Obviously largest the you big say or other is opportunities are there constellations additional the to on there wins that question the out FCS are XX months? into opportunities Telesat there the growth XXXX. And potential But see being obviously

Adi Sfadia

are working Yes. either working startups, lot are big Without to with well. SpaceX, a quarters. raising private naming a that believe success that with think except names, satellite we with there and of under are we the all all next onwards trying discussion I operators. we stocks, money getting in are a with money work new do few the initiatives, I in There have as or little with a IPO, we them see we'll

Chris Quilty

Great, congratulations.

Adi Sfadia

Chris. you, Thank

Operator

The is go Discovery of Karger ahead. next from Gunther Please Group. question

Gunther Karger

Good yes. on excellent and morning Hi, continued results. congratulations

Adi Sfadia

thank Gunther. you Quite,

Gunther Karger

military of represented wins. Regarding by total worldwide? reminder. number know wrongful a the time, ago increasing Since the business present defense that so business. the noticed business what percentage is At defense was the I've that military of year and then, I that,

Adi Sfadia

and had ago, quarters saying strongest several relatively We the quarters from award, or quarter, the think defense I more-and-more it last was this we are minor three quarter defense we few traction that Indeed, are in the worldwide. two second seeing was business one. seeing

-- is mix. more-and-more do the it's revenue, of do But say increased that and terms I it's a data revenues. a coming defense revenue but quarterly everyone business on a see from of lot in vary remind a both our from portion in. a see it's It's and quarter-to-quarter total becoming quarter-over-quarter can't we business trend depend that defense not we a provide margins I although In there trend. the we

Gunther Karger

Adi. thank Yes, you,

Adi Sfadia

Gunther. you, Thank

Operator

Ms. Halpern, make to would are this concluding time. There statement? Instructions] your you questions at no [Operator like further

Bosmat Halpern

your to you much see Yes, for a and speak for the joining in call thank very or you We have on everyone thank this I attention. and to Thank us call. want and great time soon hope day. you. to next

Operator

Thank you. participation. your quarter call. concludes Gilat's XXXX conference Thank you, second This results for

go and may ahead disconnect. You

Gilat Satellite Networks (GILT) 10 Aug 212021 Q2 Earnings call transcript