- Earnings call transcript Q3 2022

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to Gilat's Third Quarter 2022 Results Conference Call. All participants are present in a listen-only mode.

Following the managements' formal presentation, instructions will be given for the question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded November 14th, 2022. have the should press you now all company's received release. By

view begin please have Investor Investor would Investor or would news now not the www.gilat.com. you Global hand to company's contact please? of Relations in like the section you received X-XXX-XXX-XXXX like Global If EK I EK Mr. Helft it, Gilat's Ehud Relations. website of the Mr. at Relations at to over to it call team Helft

Ehud Helft

statements uncertainties, future XX morning to and to information note joining available or do deem so. of these investors this are are new forward-looking to forward-looking release regarding Good within which alter and of may made afternoon everyone. cause as statements Gilat's beyond expressly Yes. or actual under result quarter disclaims results as a webcast Time to the financial control statements earning meaning for operator. Thank differ involve company Private of the will conference materially on update beginning obligation read recording Litigation of is no statements good from with Thank anticipated you statements noon otherwise there results. Gilat forward-looking Eastern obligation the many webcast. of Reform any Also today All us Act are including a Gilat may that effects future a results and whether of third days. Gilat operating website such and the be last contingencies of you, risks, urged XXXX. approximately this the on the which call A events statements call for period for November in today forward-looking at that call earnings historical XXth XXXX reminder please results no a and

introduction on can let turn detailed Adi I Gilat's Exchange the Gilat's CFO. and and like Sfadia, Benyamini, reports to in Mr. Sfadia. would are with me Commission. with that, And the risk today ready we to about the Gilat's now found Adi Our to Adi, the turn information are CEO be Gil call factors filed Securities Mr. call begin. to

Adi Sfadia

Ehud you, of to you would earnings us call. today thank third joining for everyone. to our like good I for Thank XXXX day and quarter

We the are results pleased with of quarter. third the

We are particularly the solid as in revenues board growth and well improvement happy bottom-line. in our with across profitability the as the

X.X% year. last Third net quarter million, margin, Non-GAAP above improved million, adjusted $XX.X revenues were above the income our in all quarter respectively of same million last third $X.X year. quarter EBITDA and of were versus third XX% margin, income the quarter year. and last to operating the improved margin X.X%, XX% $X.X of XX.X%, EBITDA gross Adjusted

year Our adjusted EBITDA XX% margin in quarter versus the third X% ago. a was

turning narrowed and growth expectation increased and we ahead is which Looking to for our Gilat. for be year XXXX, out a strong profitability recovery of

highlights. Gilat. to million be some of to a I adjusted EBITDA growth continues revenue some satellite business achievements upward at are narrowed our on narrowed million, $XX communication million, $X to million $XX focus $XX between the $XXX now expectation upward expectations to and million GAAP XX% adjusted will representing are XX% are growth between focus at million of midpoint. and midpoint. year-over-year to operating and expectations Our of adjusted recent representing between primary income adjusted of of new for to year-over-year to discuss and era The $XXX

of IV. platform say am to pleased are satellite must in the defense are today our to to platform and operators. growing launched strategic strong and satellites We traction I software-defined that the communication expand with smart being continuing a for multi-service harmony need multi-orbit interest with seeing the are ground needs currently we that newest a software for tomorrow. our market that is SkyEdge The works provide relationship the next-generation the

of well-positioned reported The due line, connectivity. multi-orbit over solid analyst with industry SSPA major million market who over platform orders mPOWER are market of and few communication rely to on continued closely millions family potential we capabilities. is high-performance multi-million our to this we to SCS received of adopt new our have industry large hundreds both our a rubbing alone to to customers with in of new be provider aerospace potential $XX for constellation. growing service upcoming a of global to segment on to pick the partner opportunity new are mobility IV our a SkyEdge making expansions. and meet in IV OXb orders line. list strong We market. as goal joined of see next according dollars has and maritime business growth products continued a ground segment for with The headway we on launch chosen AeroStream is satellite In working The I'm opportunities for large in with market product product position who our enable to from multibillion-dollar further for excited track a and to and SSPA its estimated continue era our Gilat from win of SkyEdge the of leaders key mega years dollar We Gilat IFC Gilat's NSR. enable track are transceiver integrator the years to previously for up for NGSO for in-flight see projects Ka-band further this applications. capturing share platform additional system

Gilat orders, from to signed lead proven in expansions dollars in XG to multiyear is facilitate a in customers network the to multi-million of with interest further. orders see With from connectivity we thus wins, and dollar both continue new In this customers. contract Africa. continues existing in ready growing saw growing with market even and with expect to deliver Gilat to market. saying in We XG potential segment, millions leadership Gilat new and Africa these to presence cellular our IFC the backhaul a of quarter the remote whom from a its market lead customer great in new strengthening area further business market our increase transition that we additional to technology is

dollars Brazil over IoT Gilat. In active a a Gilat awarded a coming including this market a the from information integrator we communication additional years several become service for II-c provide growing to utilities Tier-X and of enterprise leading project new company. empower Gilat that the for the As gas Gilat's XG several global create and sites critical leading telemetry the in millions a ready be financial optimistic the for defense banking. will utility transition satellite Europe, and chose of we across large in a continued provider hundreds both sectors to segment, business Petrobras, Brazil's XG, opportunities are service contracts Sencinet of in all oil were national on network. In largest chose SkyEdge infrastructure to remote to company pipeline. market distribution company with weather platform with

This provide company manufacturer. for the dollar aerial quarter, terminal and multiyear next-generation agreement will its defense a with major strategic vehicles. unmanned we BRPXX Gilat world-leading UAV multi-million closed a

Furthermore, and for United emergency for defense select with an of deal project. market application we Army Gilat's support a a progress agencies we closed pursue this will services. Warning I with of Satcom US US System. launched mission-critical Army the millions and our National addition, other accept the the federal sector. pleased local addressable States the which we orders making to a follow-on with new coming program and to With achievement, US thousands of network than dollars newly years service million. the network hub enable In more in integrator defense $XXX government state are in support provider, US ability of SSPAs am

we few out market quarter, area, of focus increase completes Ica Gilat our As completed fifth our of regions is the Ica years. this construction Peru grow the the to six in awarded. share we the expect and In next the region. region over investment we this

operational step a in Internet and move We and of recurring our phase services others. for of Peru. revenue are network This important towards the stream and initiate healthy to health waiting approval now an the to to supervision center order in the goal is acceptance schools,

financial award third a mines Antamina, from and students results Peru. The and area the Municipality in of received San consists the In in rural connectivity near in project one of pleased multimillion-dollar zinc the and the of our thousands are a summary, very in of development largest copper the with Marcos, world. quarter. also We to mine we Antamina services

growing Our continue to we market segment end of communication strong satellite new is market. increasingly developing a era of grow. capturing position ground this and and improve quickly in the are The markets

profitability quarter. with the we In our very the board. and well profitability terms significant financial well net higher previous higher as across growth year in and as those the We operating income revenue XX% in results, our in QX as income year-over-year of which of are quarter. as -- than as focus We with significantly recorded pleased on deals improvement performance the all margins of higher margins, margin gross reflected last margin, of

than I'd is EBITDA levels as see expecting year-over-year million to growth million. over allowed about narrowed was Gil ahead. we continued and to $XX opportunity delivered quarter, forward of chain million range orders expected to in increasingly adjust adjusted higher And of is us. due we be revenue to CFO. our in Gil to that slightly million, and profitability, which downwards go have primarily both disruption XX% progress Nonetheless, $XX the look Benyamini to and of downward, next received narrow term longer deals, $XXX and slight large the now more experienced and between adjusted realizing the are which Peru. expected at optimistic with upwards on projects to near since prospects like The in delivered construction can the to to it revenues year, later higher-margin ahead you our we than we phases that, than guidance growth we've some and implementation $XXX We and which of All-in-all, some our compensated guidance be adjustment midpoint. slower supply us to will

Gil Benyamini

understand, quarter changes Thank provide to manage and everyone We this decisions. highlights internally non-GAAP our our now most our believe a operating and component release are our good across GAAP one-time we've purchased understand continued that remain non-GAAP reorganization as litigation to Non-GAAP non-GAAP costs, expenses, global and our Overall results headwinds profitability. our restructuring XXXX. price incentive the We to current merger, solid everyone. press supplemental presented regularly assets. measures improvement ongoing tax the these Good of data adjustments, are impairment and trade to and investors significant show improvement as as performance third well of year-to-date mitigate you, pleased measures net without consistent remind reconciliation business and our to strong on of effect on demonstrates in measures move table and revenue both claims, measures there increases deferred results performance board. and and highlights our margins, amortization, profitability. like issues secrets comparable continued related the our able financial these The mentioned we afternoon information operating income electronic operating including financial our to will compensation, of list would I'm in of been make especially amortization financial evaluate improvement related income morning effect expenses, gross other on intangibles, to say, pleased the our Adi held-for-sale litigation help and financial of growth tax a and shows while constraints, and that our I Adi. earlier, the the with expenses, financial strong The that stock-based future I a presented these non-GAAP performance. basis. to acquisition, in quarter use mainly and however, for to exclude in and assets, supply macroeconomic impact items. in results in exclude improvement

was of which year, quarter of were those financial of terms last XX% of for results, third million. the quarter revenue million $XX.X third higher $XX.X the In

quarter In pole on mainly communication IFC was on increase backhaul solutions segment improvement QX $XX.X terms the The by of revenues million, solutions million, the products million, summarize our the was revenues compared delivered the the last partially GAAP compared same revenues in terrestrial defense for higher and deals revenues the during advanced reason services for XXXX third was network’s in QX NGSO revenue phase. same and $XX.X satellite of segment, now year. mainly year. quarter Satellite and from Infrastructure I by satellite in services, which due airborne communication The The connectivity during in million move of and which enterprise, decrease strategic a mobile to quarter mission-critical construction year. same operation driven Integrated Network quarter to the XXXX. $XX.X the the of project, turnkey phase revenues segment, revenues large to for XXXX results. provides compared satellite like the the operating were associated broadcast due and Solutions network in-flight managed systems were $XX.X Services of to primarily million segment, the XXXX would breakdown mainly the professional services higher and which in to the improvement advanced difference offset and non-GAAP recurring broadband including equipment, market and million and ground solutions and last in $XX.X by and QX in markets. construction networks cellular were $XX.X to segment, the provides last QX provides

the margin and to this a the QX year. last XXXX due future operating same R&D last to in and quarter The improved GAAP quarter to also per $XX.X strong quarter compared quarter million $XX.X compared support were in to product income GAAP same income margin net and recognized diluted the net with growth, improved with GAAP revenue. the million due current mainly in breakeven the The due last to in of $X.X to year. GAAP XX.X% quarter share COVID received quarter increase QX investment operating higher income in volume our in year. grant expenses in diluted is for favorable and to the year. was is the Our to XXXX. last a in of compared $X.X in $X.XX. efforts third share million, million quarter income in the This QX XX.X% income gross services a or same was $X.X a XXXX and compared in per improvement same mix our million, quarter gross

results. Moving to non-GAAP

revenues. XXXX were XX.X% in margin compared and same to non-GAAP this The year. operating in expenses in Our in improvement higher volume improved XX.X% quarter XXXX year. same margin favorable $XX.X QX to strong gross our compared the due million the to quarter deal was last with gross recognized quarter million, of Non-GAAP in last mix QX $XX.X

of quarters, As in support order in we said to are the last in front few we increasing our R&D opportunities investment us. the

the in million, We expect to million, quarter in improved $X same income quarter income quarter compared EBITDA million, improved year. for $X.X the quarter share $X.X $X.XX of to million coming the operating million or with Adjusted same net to operating with income last quarter grow few Non-GAAP an of last $X.X $X.X million of $X.X third last compared in quarters. income an $X.XX. Non-GAAP income in per was share EBITDA is the This of this compared same the the or per year. quarter adjusted in the net of year. diluted for investment a income to

balance to sheet. Moving our

As cash debt. XX, $XX.X cash deposits million and including equivalents, XXXX of XXXX. September any total XX, not compared June and do our hold with We on million, restricted cash $XX.X short-term were

in similar we The to quarter were XXXX. during whereas the operating projects $X.X our than and is mainly XX DSOs generated lower Peru of flow, increase activities revenue cash In of construction in of receivables third receivables slightly terrestrial were revenues quarter level. decrease DSO due remained the network days of terms days. which XX million exclude previous in from which

$XXX XXXX. Our totaled as XX, of about June in compared September XXXX $XXX with million, shareholders' million equity XX,

expectations Looking the million ahead, as representing growth of we year-over-year range at between narrowed midpoint. million, Adi our already XX% mentioned, of with XXXX and adjusted guidance and $XXX the revenue $XXX of approximately

between would $XX Operator, the please? questions. XX% adjusted the growth call I my range EBITDA at the open representing to to increased now concludes million, and like financial midpoint. approximately That $XX for of narrowed also to We year-over-year million review.

Operator

and question from Instructions] this we Gunther ladies you. session. is from Discovery the Please at go Thank Karger will question-and-answer [Operator first ahead. The begin gentlemen, Group. time,

Gunther Karger

it business? excellent I've the do defense expect rise regarding business. and you that over Historically defense the so some increase on that's minimal, a quarter. next -- to the Congratulations question in percentage noticed And, been rather Yes. is total And yes acquisitions to business What far lately sector. in the military of year? the the presently what revenue

Adi Sfadia

investing significant defense now, become the and sure focus you not more in Indeed two few cycles important right become that, I'm It's or say the not you we portfolio. growth become years. for was selling engine year, to nice Yet, and but it's that, our Gunther, business in our again, But we in and of in time for three years. the two Hi, that portion Gilat Gilat warm next last both disclosing promote become congratulations. our the so we defense sales for are expect three a aware years. our a defense it's to in you're to hear are more and focus, to it not thank refresh in the last In growth are a and we defense a from next marketing, in sure revenue big investment significant R&D and and the product are of can It's to number revenues. long part the takes fruitful. to to

Gunther Karger

Thank you, Adi.

one That's comment war the Ukraine on point. with other and that, follow-up this is trend, type item that? As that's I unrest, the military Is trend current regard Ukraine accelerating your what's in towards technologies or war. trending the And operations. remote the of unmanned is accelerating. part the to defense on believe a And the

Adi Sfadia

the this I unmanned So, agree comment solution require, seeing communication a in opportunities market. the we trend are as with first satellite that in well and

communication the is communication during As course, Ukraine doesn't for demand SKUs But of sector. feel for regarding supported and it our for do we the satellite satellite Ukraine, increased feel the yet. What war. we RFIs defense

So growth we is few part this our next believe, be the quarters. will part potential in of –

Gunther Karger

New for Adi. And wishes Year. coming you, the best Thank

Adi Sfadia

Thank you very much.

Operator

next ahead. Martin Please EML The is Associates. from Instructions] go question Levin of [Operator

Martin Levin

different projects Hello. with you dealing you're this This the And United States. it is sounds curious that in five underway Levin, numerous at from calling top about have how I'm the Martin countries – time? curious I'm I'm like about countries.

Adi Sfadia

countries, you. business from different And in different top Nice or countries to say we meet five. on two or are general, I all comes The have those top five can in focused not significantly United States. have we Every business yeah, it's – worldwide. a it's quarter, one we the countries. that,

significantly Peru. have business We in

We almost come in but most quarter every Australia, and we US, vary the between are decent Those have repeatedly that every every the business the that a of from it's than countries. Other Japan. Peru, different see – quarter, Japan main quarters. orders

Martin Levin

Okay. wonderful year. in results and a I also so the your forward coming on Thank congratulate far year And hearing you look much. to you so

Adi Sfadia

very you you Thank much. thank So very much.

Operator

The next go Caleb Analytics. question Quilty is of from Please Henry ahead.

Caleb Henry

Hi.

for front I there that a if you to plans that. to mentioned that was last on been help progress are was – that of an sort wondering technology? waiting or market. any me. that on question Has there recall develop electronically further steered anchor developed the for aviation antenna you're that Just offer updates any Gilat was can from the I being short any customer

Adi Sfadia

the and electronically development. tied with electronically announce to military also the both we for once the we antenna needs we'll to and end that, it hope ESA IFC will customer for needs. award and Yes. we get and Caleb. development with able be in customer the antenna said antenna very defense opportunities anchor for to we Having Indeed his Hi, and steered progress have be several I would that we use. antenna steered relevant. for be expect in waiting order it At accelerate are the the closely for the

Caleb Henry

defense guide Okay. customer words, The the something that similar to stipulation? create it have development. In Or a then rate? and and would that go to defense need basically does can sort anchor is you of a the that independently you antenna, market other

Adi Sfadia

that off ISP. expect But antenna be customer will to is a adjustment product we be as we in have that adjust major plan shelf. the won't Our a fully to available figure will specifications several be we the that need the but it every build to it

Caleb Henry

Thank Okay. you.

Operator

statements. no are time. questions There to further concluding Mr. Benyamini, you would like at this make your

Gil Benyamini

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

Operator

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

You disconnect. may go ahead and

Gilat Satellite Networks (GILT) 14 Nov 222022 Q3 Earnings call transcript