GILT - Earnings call 3 2023 | Gilat Satellite Networks Ltd.

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Operator

Ladies and gentlemen, thank you for standing by. The conference will begin shortly. Ladies and gentlemen, thank you for standing by. Welcome to Gilat's Third Quarter 2023 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded November 7, 2023. have the should press you now, all company's received release. By

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

Ehud Helft

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

today Gil Benyamini, Gilatâ€™s Adi Adi call call Gilatâ€™s ready over the like CEO; the are Sfadia, to On Mr. start CFO.I to now turn to Sfadia, would and we're Mr.

Adi Sfadia

want good today joining for day for X of to tragic our quarter Thank you to moment on everyone. war call. XXXX I I events you, to October to the third thank Israel. in and of us take a and the comment want earnings

the victims thoughts attack. Our of and this with and are horrific prayers families

times.We to thank customers, at proud the employees' support. to during company of these want are hearted the their We our also our response to full for their dedication world very crisis partners, large community this and and suppliers,

Gilat the discuss centers I and with worldwide. quarter, of a strong to company emphasize is the Before I development want business results operation that global

recent by Israel. unaffected event operation the Our remains in

and the to We XXXX. third any continue minimize at relevant implemented to move have biggest plans the our let's measures all, situation monitor potential quarter if our to business.Now, and continuity on of of refreshed closely review the business effect,

market adjusted business. with quarter.We combined third as our in reported that satellite for due EBITDA, this improved profitability. continued in-flight space In inherent the advancement was good would growth The our in in of particularly profitability our interest and performance with and pleased leverage growing are the our the I revenue operating continued general. demonstrating the communication the mention We revenue significantly the particular, connectivity growth contributes significantly to profitability results well as in improvement solutions quarter, our to

adjusted EBITDA million In already our from EBITDA adjusted exceed year-to-date XXXX. of $XX the the of fact, all

we trend the are year expectations revenue continue.Looking XXXX. full we ahead, and the to this We pleased for year and with are this very our progress narrowing made expect profitability

million. of We $XXX revenues to $XXX between million expect

$XX midpoint. NGSO satellite application multiple IV multi and new secured cellular dollars throughput the we lead VHTS globally cellular with third the of report the the are strategic support constellations delivery throughput progress to that non-geostationary our enterprise. will with between potential and $XX continue one-time due backhaul, take Benyamini, to million, the at next-generation line, to high of multimillion and we increasing applications. we from In are for be EBITDA product pleased satellite, a our secondary connectivity, as to multi-orbit to our million in partners, used primarily large of maritime the CFO satellite.This applications to satellite such Aquarius we project adjusted backhaul in-flight of the place operators.Network satellite, will in million significant millions for business, XX% as irrelevant major quarter, a VSATs million between taking follow constellation. Iâ€™m $XX $XX comments.And in income a income expect discuss We platform GAAP his that for In continue holders Gilat high for dollar support the of the SkyEdge to IFC operating NGSO SSPA Gil net representing with expansions In and very our to growth on win platform, new

deliver Geospace Fiber at be previously services inaccessible of made service throughput prouder within in end-to-end We contract quarter services.Furthermore, services. happen. quarter who our continues Congress. based in the the million high are Tier United be Jio a response customer extension to this award outstanding per significant second this for connectivity cellular on strong support India one was of India.I milestone States. first demonstrates The for QX gigabits emergency contract of XG amazing approximately high success Reliance geographic X fiber track and performance backhaul OXb services to backhauling An to Gilat a was India's backhaul A achieved in a showcased solution called based cellular satellite with Mobile year.This long-term a giga India satellite. Tier mPOWER for expect IV, Gilatâ€™s SkyEdge most a over to SES this exciting pass VSAT X qualification in a with over backhaul quarter Aquarius process for and satellite this technical team speed for from managed multiyear with MNO continued to cellular couldn't satellite $XX

During the with and dollar on SkyEdge network activity quarter, additional deal and Modems with global operate Intelsat built SkyEdge to upon IV multimillion deployments an both II-c. our Taurus enhance that ongoing the we

addition, business. next we year, March in have business integrator, IFC longtime our SSPA in in to business in market, In hope engage we IFC large ongoing this opportunities partner another in months.This a our new government mature defense extension to generation aerospace we initiative This a in an the In other the continually Gilat on market. with Inc, in is growing several as addition defense success a our our DoD of satellite the and defense which international equipment, relied integrator. government next markets. The major in U.S. the we for will business step into few signed into an agreement to important DataPath, sector, and well acquire increase presence Gilat is U.S. strategically leading as acquisition step the

well We closing the are very of transaction. the towards progressing

final by closing expect the acquisition, happen closing this the should provide tailwind following our will arrive major approximately forthcoming in of a defense of closing sector quarter. yearly approval, $XX We DataPath which expect soon, indication the expect for now further revenues are acquisition we recent to which that opportunities. a We defense this million waiting regulatory basis.Following to we by on imminent increase

advanced Southeast great on seeing the project have defense this we and with are a As slow the progress we mentioned expect I already in area but in focus the Asia. bear quarter, market we and in Defense putting focus of third soon.In country extra past, Ministry of will good are a the this fruit

deal II-c provide We on inclusion continue and government the network continue deployed pipeline a Coms-on-the-Post, service a us received providing social not big emergency Asia-Pacific have backhaul, to near applications, strategy, of is new to opportunities nation. of we applications to our opportunities connectivity our with provide progressing awarded new region, mobility are from and to to to, Gilat in the such back but new and and global and part large to response as a across towards unconnected, a in grow arise.For will This was deals Amazonas working applications customers construction a leveraging Xth Furthermore, in for strong includes, to worldwide enterprise hope in expansion multiple example, limited we Gemini enhance the the are their completing depend enterprise for Peru, the our which we on XXXX. corporation several platform exemplified also contract our VSAT.In several SkyEdge exciting to managed we connectivity and which region continue the materialize business Philippines, future. is Coms-on-the-Move the

XXXX.Furthermore, months. move to in into process progress of We enabling soon, as expect as in the [indiscernible] the extensions. the several This and first with half we maturity the and next to of phase us few expecting acceptance Pronatel are operational includes in well RFPs the the to project government, additional network Peruvian to Peru, enter several large deliver

to We our of well we with partners pipeline our as the I are support new strong pleased most significant have Peru.To ongoing in with opportunities. capture our pleased conclude, as am ability

our with support of vehicle We to verticals, platform, strategic lead continue and our solar that mobility, markets defense. multiple next-generation orbits and IV including SkyEdge

business, line are also and We the of increased for that secured especially opportunities business. opportunities SSPA in in our new segment, seeing IFC

CFO. I months.And deals a please. Gil, materialization and that, of have strong our important pipeline hand to We coming expect Benyamini, over the over Gil the with

Gil Benyamini

to improvement changes in presented effect to The are and to data profitability. other compared financial exclude strong Adi. and incentive evaluate income effect measures basis. stock-based our internally impairment on comparable operating Good future results and purchased non-cash, financial measures assets presented margin financial amortization income the or was this I operating our of move mainly for million understand Adi business operating these of now and use on morning financial would with lease everyone adjusted items.I amortization, will measures manage last solid of pleased our gross higher release X% to consistent of measures table and press are our in exclude $X.X of like GAAP held expenses. you, expenses, and Non-GAAP assets intangibles, provide amortization performance. in non-GAAP that and Non-GAAP intangible mentioned of year. Thank both We for reported EBITDA growth and XXXX. non-GAAP one-time reached assets, tax regularly the a year-over-year everyone. We to sale to related our afternoon make highlights revenue quarter. investors a tax acquisition non-GAAP and transactions, supplemental QX by good these earlier, third as decisions. to we We understand, financial believe and information compensation to deferred remind quarter our current XX% adjustments, of help non-GAAP the very reconciliation results our Overall, highlights XX% this

the which and those resulted were and I last performance by the to a enterprise quarter between quarter proximity third our than by million, Given was and revenues $XX.X Satellite growth the in well the last income mainly third with QX $XX were and Satellite the our $XX.X timing quarter results the to to cellular increase higher increased revenue same high our mainly the deliverables of adjusted revenues year. quarter Network was year.I to million mainly this were market with of as $XX.X segment guidance date, and GAAP third to financial revenue large segment Network due was breakdown $XX.X in the summarize mobility million for projects XXXX customer the compared revenues transition million, the segment, million to verticals.In quarter solar alongside will Infrastructure some were of last segment. $XX.X strong mobility same million, segment backhaul, QX X% results. The non-GAAP Services operating of guidance, from This same GAAP Solutions significant narrowed strategic end which compared of enterprise backhaul our would segments, in to the the as strategic and expected XXXX our QX EBITDA deals, from in of year. of the driven decline of terms our the both volume and revenues compared last terms in large to base.QX period our quarter we like later.In cover of Network $XX.X The delivered XXXX in Integrated customers million the year. quarter and now year,

revenue or operating million quarter well the to as quarter year. in million of the diluted over actual margins a gross this XX.X% XXXX GAAP by million, the income outcome due this in in million per XXXX.GAAP income other $X.XX. in and expenses and a $X.X the deal per expenses level year. income quarter GAAP last QX the to same last was third Philippines the $X.X net revenue, diluted compared Bulgaria the quarter is GAAP income $X.X last income earnings significant last as that excluding of year. and higher QX same XX% to net quarter GAAP operating of QX double note in The million to operating in due was margin in was XXXX, which our in between other decline share almost a sale XX% services The or the improved to recognized to one-time and QX the income $X.X of million, excluding compared quarters higher quarter XX.X%, estate improvement compared were fluctuate lawsuit, revenue share reduction XXXX I of revenue million third to revenue. $XX.X income operating in the a that or million.GAAP resulted margin mainly same same in to net $XX.X quarter GAAP compared for a in $XX.X Our in gross in of the quarter profitability an results. million one-time the a favorable to mix.GAAP compared and product mix of revenues year. a one-time real XXXX, and quarter was OpEx earnings improved the quarter $XX.X GAAP income or XX% of other QX of with non-GAAP therefore This in in $X.XX $X.X year.Moving as of volume last settled was was win may

in compared operating per Our QX in net quarter non-GAAP last million million, same or million last to same same the income XXXX $X.X the year. to million, EBITDA $X.XX. same last in income of diluted share quarter expenses net XX.X%, were $XX.X in year. million, the compared million QX $XX.X Non-GAAP gross improved operating was year. XXXX in improved compared the quarter to Adjusted quarter with the quarter XX% for This XX.X% the with last margin in of Non-GAAP was improvement Non-GAAP third to same diluted $X.X the a compared $X.X for quarter $X.XX earnings earnings million, balance share million, with $X.X our EBITDA last of or quarter compared income in of an $X.X the quarter an Adjusted year.Moving $X is per of sheet. non-GAAP year. in to

cash as We cash As on of with do compared $XX.X million any XXXX. XXXX, total and XX, cash September hold September compared XX, $XX.X our of XXXX equivalents, restricted XX, million, $XXX.X to million debt. June including not and was

revenue award also which our from operating flow, cash quarter we which $XX.X the by with Peru activities and days of XX In the Philippines million terms collection and third was with during in receivables revenues from mentioned lawsuits receivables, XXXX, XX of increase of in which generated the earlier.DSOs, an credit I exclude in increase the includes as the higher projects DSO, our days. in impacted previous network partially The quarter in were than policy. line offset construction increase were is terrestrial

have mentioned, due guidance proximity equity I XXXX.Looking with million to totaled the about the XX, shareholders ahead, end guidance compared and for our we $XXX adjusted at already XXXX June narrowed as end, Our to $XXX year. of EBITDA as year revenue range September of million our

your income between to a the year.Our strong the expect with $XXX between please. be a Operator, of our at operating with income my growth around date million, $XX our income That questions. mentioned growth million, are the now expectations $XX to would midpoint.All of updated to pleased year-over-year XX% target all, are $XXX other of I performance to between million, of conclude GAAP mentioned, one-time updating like representing the XX% Gilat. revenue we in concludes XXXX we call open and Adi very of for $XX for million to we financial adjusted at year-over-year million midpoint, at as would to as review. XXXX as and operating Given before, and million representing Xx the the midpoint, representing of happy take year $XX GAAP to growth strong EBITDA year-over-year show

Operator

is Ryan first The Instructions] [Operator question from & of Koontz Company. Needham

Ryan Koontz

maybe for Thanks some puts through and maybe hear mix Hi. implied the Can company December. is everyone are like maybe step the gross Maybe product be gross on gross there another in a with into the we of sequentially for is takes there swinging reading and question up nice Iâ€™m to glad start margins in and down. guidance but that September, around? Itâ€™ll Looks margin the step talk Iâ€™m margins. safe. issues some

Gil Benyamini

Yes. Hi, Ryan.

and are know, margins due affected So some of with the profit to Plus mix. lowered The gross QX have mainly the during products, was and IFC in between gross the which stronger changes as quarters other products, delivering with products more and by you volume effect, lower our mainly year we for in this NGSO, of while usually Peru margins mix changes a and were margins instance, higher ones. bit. the

that think I throughout But year. what fluctuates. trend the it is see the we now So

picture. I that trailing XX at I So basis on be say would quarter-by-quarter Gilat a And I a also basis a may months year-to-date better give looking would look that this bit would on think misleading. and or a

Ryan Koontz

expectations recent might in U.S. timing see Thatâ€™s your like that to revenue Thanks backhaul, win any from the sounds clarification. Gil. around you that. on start large for And operator, your when fair, for a with

Adi Sfadia

the third Itâ€™s extension are Ryan. Hi, we project. already. of Actually, revenues seeing this

that some quarter, that, of more $X.X itâ€™s actually We the than with entered we million every quarter. upside around seventh slightly are customer doing and â€“ with year already business entering per

Ryan Koontz

Nice. Great. sounds more near-term, us in quarters? Any it you progress either with QX strong the can market IFC in here on color quarter. next was in like And the share your few the the IFC in or

Adi Sfadia

the interest. In what IFC of lot see we a is

other we We terminal is expansions orders, and U.S. additional very quarter have additional small large SSPA. Intelsat, bundles The basement regular and and modems, additional and one main customers main SSPA our this large almost have or every see continue some integrator a for â€“ its customers. and business several network do for have modems maybe our SSPAs.We who customers with

are We on large become with SSPA awards product some will seeing that very small lot line a soon of interest customers. our

So have general also a to we in in strong in year expect IFC. the a strong XXXX in and year XXXX

Ryan Koontz

Thatâ€™s of really kind this types Great. And going of the helpful. going is business these more planes on jets? are market down to,

Adi Sfadia

Also jets. on yes. the business also is the main now business Right on the jets, focus but commercial,

Ryan Koontz

Helpful. it. Got

I think pass for thatâ€™s all I the call had. now. Iâ€™ll

Adi Sfadia

Yes. another thing. would I to like mention Ryan, just

If last electronically you announced to quarter steered Satcom antenna. remember Direct we our develop deal

and process So expect are letâ€™s the months development we we today. see from to within, in say, revenue XX

expect XXXX, this So in in we growth additional sector.

Ryan Koontz

transmission Great. And thatâ€™s for ofâ€¦

Adi Sfadia

thatâ€™s business jets, for jets. for Yes, is yes. this business Yes,

Operator

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

Christopher Quilty

product. wise Iâ€™m know But address something how order. jets, quarter Delta up Hughes the last you has against jumped the Speaking thatâ€™s entrant with your youâ€™re recent assuming what And stack into announcement. because from with developing timing now the ring this does just new Direct Satcom product announcement competitively, announcements? you of you Direct the got business the Hughes couldnâ€™t the Satcom were guys we that the new quarter of

Adi Sfadia

Yes.

we ESA, is that jets Direct, they focus from antenna into news the in jets using the or being getting Satcom regional and steered flat developing them antenna. main Syncom. and itâ€™s HNS panel jets focus â€“ is their for the military all, are of are main IFC. the electronically Their business service on first provider is on and So,

a of itâ€™s completely terminal. So different type

Christopher Quilty

other at see Direct Does you line Satcom level it Do up Understand. extensions? product the starting Youâ€™re the bizjet any aircraft? scale with commercial to product.

Adi Sfadia

has Direct is on jet business The and OneWeb antenna Satcom a focused antenna constellation. smaller

GEO. is aviation bigger commercial antenna our roadmap of not GEO for will we for and be well, a need and antenna, LEO as only But for part For well. will this as GEO, this

Christopher Quilty

much. gears. Got wasnâ€™t Aquarius you. talked product Switching line a about The you

you XXXX or think in relaunch a XXXX. I SkyEdge with IV that correct? did Is

Adi Sfadia

Yes.

Christopher Quilty

product product gain So line that it the ultra-high that in it performance that to market? longer just on has an the caught traction in way line for such it Or much IV is the just SkyEdge takes has?

Adi Sfadia

Aquarius with more not see IV. II-c IV. but that for So SkyEdge is several is We with But we in and the new started product on mPOWER, the cruise do now on SkyEdge portfolio are cellular backhaul SES dedicated product SkyEdge it new also seeing have of line works a the only future. modems the we portfolio Aquarius product

mentioned in very As achievement supposed gigabytes my I high and notes, a robust India, in with to of SES those course the one be recently Jio modems fits is Reliance requirements. performance, second we demo to XG this with speed per and are

Christopher Quilty

us repeat Great. all you revenue first again may think perspective, or I you well, I contribution DataPath it for the Gil, in There land all Switching think networks integrated be indicated from classified all, as remind very it could a of multiple gears spread you can get defense. across in does mentioned, but But segments? small just does year? you that's commercial there sliver next reporting

Gil Benyamini

So it's it's still probably say. on the satellite review so and but networks minus accounting million or revenues $XX the a will under around plus early to land DataPath is XX% bit

Christopher Quilty

I you I fair order QX? don't general, back you mean and as of All What strength orders you provide you course in as the in know what XXXX? â€“ an go have what enough. but I sort seen over guess book, right, in you trendline of per se look terms of into over year you towards are order weakness seen the or In how the have baking

Adi Sfadia

the are would in you in sales when beginning very guidance, of the traction that pipeline.I'm on our defense the we developing I or know are IFC ins defense. cycle our long a year the the order depends cellular seeing in we bookings lot the and expected is at of put are in segment. that give sure in But backhaul, we say really as the or general, it So take

but a we acquisition. slow DataPath So seeing progress good once we and the hope we are to tailwind close very have

up We few to are expect know in government next but launch RFPs local in and the we seeing some some it depend that the really expansions two.And large next weeks or ramp we and also we the extensions. quarter slowness in and to in integrated Peru, solution expect RFPs several order, contract very on plan

So we expect the a year strong in for Peru. close

Christopher Quilty

you Got the about it Do on you, most obviously of it seen order lot been I is integrated of you is slowness with is us government mentioned macro there's certainly the this you purchasing year. delays? have with and solutions or you're that, remind programs mean the deal a I Can that to weakness the related some think defense more government? environment companies that to you've that specific talked working

Gil Benyamini

two awarded. the large that of and that early slowness I is other combination the XXXX which XXXX, it's but several during majority say that we ended of projects projects think are we the would I shift between the seeing large

year. We expect uplift end towards to them next mid or of

a seems transition it So like year.

Christopher Quilty

little that That's one good Gil, I I you catch but looks a color Never the lost you. Got this it like on crap, of. then final in question guess, model. I'll offline. sorry you're mind. it â€“ is And wasn't and esoteric aware

Operator

The of Karger from Discovery next Gunther question is Group.

Gunther Karger

comment. you give comment Excellent Do you second the this I year? expect close on hear you. update didn't any on Peru. Peru quarter, also the please? to missed may thank Yes, And Could the an question have DataPath on I congratulations. is,

Gil Benyamini

about repeat Sorry, again question can your Peru? you

Gunther Karger

I on update general hearing on a just missed Peru, that. anything Yes,

Gil Benyamini

Sure.

region usual, the finishing we So are in close awarded Peru, back Amazonas the business end in to XXXX. that the sixth region, as of

bids of end with We to and the quarter of a acceptance switch to several are parallel, operation the we Peru. and In to for a expansion then government see mid of and next expect procedures soon and in strong final up lot to expect start also before year we that the extensions.So have coming quarter phase. the quarter booking expecting acceptance are to we the contract the of

indication We next customary days to this condition if are received of next, leftover to And there we achieve by awaiting than indeed it closing weeks.And weeks. government some approval. in DataPath, already get for closing in expect towards still CFIUS expect as approval quarter. not well the recent one As which the we last we which are few progressing we

are we close expecting indeed, So to transaction the quarter. this

Gunther Karger

expect and And regarding DataPath, the you military separate as integrate also, defense that you or anticipate operation into to operations? do your you. a subsidiary, do that Thank keeping

Adi Sfadia

DataPath to overall leg Combination be independently and our of defense to in an presence resources grow the strategy. work business two, expect to the to do order in and important Gilat continue using is Wavestream going increase in we defense their the them Gilat while But to defense of worldwide.

Operator

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

Gil Benyamini

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

Operator

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

ahead may and You disconnect go

Gilat Satellite Networks (GILT) 7 Nov 232023 Q3 Earnings call transcript