GILT - Earnings call transcript Q3 2024 | Gilat Satellite Networks Ltd.

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to Gilat's Third Quarter 2024 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded November 13, 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 at -- or view it in the News section of the company's website, www.gilat.com. to the like to now would hand call over Ms. I IR. Head of Sher, Finance Mayrav and Ms. Sher, to you would like begin, please?

Mayrav Sher

indicative meaning Third us Yes. and Thank am Investor for Mayrav joining Finance Head Webcast. Relations. good website Act a control facts morning Results the note Gilat's and company Gilat to today obligation found and on forward-looking The historical earnings many Gilat's believes afternoon, which everyone. Sher, new call, any future disclaim Call the and you, Also on earlier information, webcast quarter and excluding Thank Private Also, Securities can in you third noncash, are events Gilat on measures. uncertainties I operator. that, detailed statements that XXXX. and today's assist Quarter materially earnings XXXX Good non-GAAP information The or of comparing days. statements, so. involve results Conference to call me in the update Gilat's of for X-K. and operating does found and to measures the release with available performance. Reform www.gilat.com. of earnings nonrecurring be about refer will that charges these no beginning may contingencies, may please Exchange by issued can and a call of on section of Relations result reporting financial of be the company in the basis actual company press Investor a Securities this risk Eastern not of in turn noon release company's management statements this to these that that approximately such of website at believe of its press beyond The was Gilat's whether SEC including do on XXXX results. filed With Also, at Time under reconciliation of made issued fiscal of be explicitly for results, the will investors core are GAAP measures period XX, All recording it non-GAAP differ deemed can from the be or not today reports factors the management future Commission. regarding be XX found results other November a Form periods non-GAAP year anticipated forward-looking statements, More introduction. risks, obligation or to to cause is and a consistent let our alter today, are operating across these as of which forward-looking to furnished the Litigation performance that within otherwise, statements

I turn Benyamini, ahead, please. CFO. the On Mr. Sfadia, Gilat's would Mr. are the today call Gil to CEO; over Sfadia. now Adi Gilat's like call to and Adi Adi, go

Adi Sfadia

Thank day to you Mayrav, of good XXXX quarter call. us and today for for you, third joining our earnings everyone. Thank

primarily due which year-over-year continued was our of continued business. growth. third quarter to The XXXX momentum was in Gilat, good of we This and another and to in-flight our for acquisition DataPath build revenue defense in connectivity growth quarter

in to expect future. this the sustain We momentum

improvement. drive we profitability to addition, In continue

million. Our reaching EBITDA the by increased year-over-year, quarter in adjusted XX% third $XX.X

midpoint. between company's million, million $XX year-over-year Peru. arbitration revenue million with the approximately and is on operations. at XXXX imposed to narrowed regards are in that from due constraints to in to the growth in $XXX range $XXX Russia the of guidance guidance million operating raised of XX% to range, income narrowed and limitation and mainly We our $XX XXXX the to the $XX The terminate of revenue representing to due GAAP revenue proceeds range between its effect As main outlook, expecting we and have activity our decision million, guidance

We also EBITDA of at $XX XXXX the representing between range million range the and XX% guidance, year-over-year adjusted have million, our adjusted EBITDA to narrowed $XX growth midpoint. expecting of

review events. Now defense will our is for let's Defense move a I to focus business. need. our the is a increased SATCOM business review products pillar of to We sector this of demand of well of see ground a fruit. segment quarter its strategic the this The and Gilat, growing bearing market in with start the third driven and on XXXX. macro positioned and proliferation to defense NGSO answer by leverage for market, solutions innovative the growing is political solutions Gilat

core technology During the for worth quarter, the and over services, terminals signed to we several $X related Defense systems. upgrades contracts insertion U.S. million of and Department with SATCOM

were we for the terminals. $X provide mission These by XXXX portable Gilat awarded DataPath Department addition, flexibility, the control to Defense the hubs DKET connectivity million capacity, U.S. and success needed approximately SATCOM in In world. ensure anywhere of

Middle deploying the $X technical in We connectivity States U.S. services Gilat and defense the from field and critical approximately Gilat and also received Europe, technical the million the of an services. field award East United requirements. to DoD support DataPath users' is U.S. DataPath end for

in application value communication product and key defense ability fast hubs, upgrades field includes is the on than for communication and world. and comprehensive Gilat converters services portable blockup the for communication Ka-band services. transportable defense Another X terminals, leading a connectivity Wavestream communications services. on our the repair, the upgrades our enhance and mission-critical technologies for $X engineering million A of Gilat's along anywhere operational poles portfolio, cutting-edge which deployment applications. a Move demonstrates was test, move and Ku of award for SSPAs, for This range more with the by of satellite defense on systems capabilities strategic and the integrator

believe DataPath to on As coming opening worldwide leverage the the developing and we our to We opportunities are organization, we contracts. potential pipeline fair we are well cross-sell these and our opportunities sales between to continue positioned synergies win Gilat door share of months. new in a

Turning business. connectivity to in-flight

strategic customers supporting adding verticals. more for another IFC in continue Gilat, market, demonstrating developing products, growth, the year-over-year pillar We and to more solid well more execute

the utilizing of family third satellite to for offerings. WiFi quarter, global VSAT received expansion Gilat. the an we for platforms. to growing order This million Sky primarily operator SATCOM for their from potential free creating Gilat is support over extend will a The attractive IFC use $XX During growth leading demand network

pending in Blu our auxiliary and a baseband last well we our market leveraging positioned acquisition progress market. approvals. NGSO and had to IFC we of in now are of our signed making transaction strengthen the longer first the and complete SSPAs and we leader X additional for ISA products. We a and than presence in A our -- The our government with the definite increase worldwide good closing including and very Solutions, terminals, by market, acquire Stellar market is June connectivity strategic of taking networks are share, our GEO antenna steered electronically the delivering NGSO VHTS markets, in wide anticipated, and portfolio, we part to end activity to To in-flight large agreement position the constellation the year, global expect modem initiatives. to

for Space for multi-orbit is announced the and the involved the of for services secured is secured which in In services provide we providing integration that our as first in for system living from satellite $XX for year includes of is segment communication company The a completed for our for set expected for to phase who populations. critical are million multi-orbit supervision. [Indiscernible] connectivity the Recently, X after remote our Consortium, constellations the and well under the is in project networking to antennas of the is IS approximately delays planned of solution is $X order advanced QX, constellation. and including is key for The contract point ESA to that scope towards services. in antenna variety satellite underserved in LEO-only orders the would now lines. implementing operational IV LEO connectivity, SkyEdge several GEO, in carries X as period and gateways than as as of citizens, a in of Pronatel positioned communications million that next-generation a systems for the product faster range Peru, the several capabilities expand we our solutions MEO rely other to a fit operators EU The LEO region region SSPAs the major some a project progressing in implementation I Amazonas expansion we America Gilat is services contract The the LEO process. support full end positive banking market award offering applications. second payment transformation senior NGSO for the our our ground developing demand development years. to and supervision of cloud expansion Latin transactions Gilat people bank for project. potential LEO of recent to ESA out families the and the well begin extremely like Gilat phase significant the across constellations. that growing region well leverage and and on a areas Amazonas now rural Also, during by opportunities to Gilat. Rights of

opportunities and the maturity project a Looking horizon, including with and including ahead of several on expansions Pronatel have in well a the number Peruvian extensions. as we large strong the of Peru, several pipeline, RFPs as government

awarded from our quarter the the against additional of Peruvian million third the won and we progress During from has good payment cases a XXXX, conclude, defense an Ministry and engines, $XX approximately IFC. in been key XXXX growth totaling and million. quarter, the Communications collected approximately $X arbitration Pronatel we To in

the we and over pipeline, strong the important a have months. materialization coming deals of We expect

with I towards acquisition business closing of work approvals, and receipt are Solutions the U.S. the to closing continuing customers. pleased conditions. Stellar and are DoD and the continued customary LEO regulatory am documentation other We awaiting Blu the with of final our of

progressing ground please. to for creating transforming I and platform cloud that, with a will over opportunities, hand SkyEdge Benyamini, X our We With Gil, next-generation CFO. to are LEO. the Gil IV the important segment

Gil Benyamini

This of our Adi Thank Adi. our non-GAAP morning financial mentioned are highlights everyone which move the everyone. both Overall, recent another are in our on would acquisition, will by you, results quarter, with and driven growth. DataPath. revenue. I and third remind year-over-year earlier, very to shows as mainly was we reported quarter year-over-year XXXX. GAAP We afternoon that growth XX% pleased financial I to now presented Good to for like basis. good

year-over-year. our year. over Excluding XX% last DataPath, decreased and by XX% million, our adjusted revenue Non-GAAP was $XX.X gross EBITDA margin reached organic QX growth XX%

and the EBITDA of alongside of expected operating performance our narrowed we timing adjusted guidance, which date, cover deliverables the end and GAAP and revenue guidance with to our increased our later. will proximity income Given year, I QX to the

The million. of higher quarter by $XX.X $XX.X were of of Integrated our quarter the results in improvement the third Networks year, growth driven XX% Solutions and terms for detail. was third million, Satellite Revenue in those financial which In the last in more than was segment.

And the Network In now same million the in were both terms segment QX the Networks results. $XX.X same the the million QX $XX.X segment, quarter, in $X.X compared Services last quarter compared in million quarter of and segment revenues our revenue compared million were year. and $XX GAAP to of I 'XX by 'XX would the summarize revenues QX Solutions $XX.X $XX Integrated quarter million segment non-GAAP last Infrastructure breakdown year. like same revenues the of of to Satellite to were to third 'XX million year. last

compared This last year. QX to gross margin margin was than with GAAP by the the of services QX partially asset to amortization favorable our mix a 'XX average the and product in acquisition reduction $XX.X XX.X% of same million gross was the XX.X% offset and was last in versus associated year. The last gross million, same are year. due quarter quarter GAAP QX for operating compared 'XX margins, increase of which an of in intangible mainly $X.X backlog expenses lower Gilat's quarter the current in to DataPath a DataPath. were Our

or to in by QX received a share. quarter have last compared accounting arbitration net impacts in we only the approximately GAAP income related included earnings GAAP to the diluted is results income million, last from million the adjustments a the net were to to of $XX.X in $XX.X $X.XX $X.XX net M&A income Peru, million in in of same described included due in of million settlement $X.X last included offset I year, operating quarter the is to compared income numbers. DataPath, proceeding $X.X other This $X.X from third the mainly of quarter, of that year. compared was the Philippines. quarter year. related which legal third million $X.X expenses GAAP per other are million not These million approximately $X.X of per operating which or quarter above. a this quarter diluted in This includes also in share the note same mainly last income GAAP decrease in to quarter the for year, the operational

Moving to the non-GAAP results.

was non-GAAP in compared quarter same last 'XX QX XX.X% margin Our to gross in year. XX.X% the

As non-GAAP Non-GAAP million quarter the $XX.X or in I difference diluted operating $X.X quarter due 'XX last adjusted compared in And gross diluted the same same last of average. per an million million last margin $XX.X million quarter or compared per in XX% to the DataPath million, share is same the income Gilat mentioned in This year. EBITDA with $X.X QX to for of for $X.X year. compared last million of million the the with And Non-GAAP is year. quarter share XX%. increase to with were compared earlier, income of $X.X the mainly year. quarter quarter $X.XX $X.X $XX.X in expenses adjusted earnings compared to in the quarter the operating improved same improved third net to earnings lower EBITDA was million

balance our to sheet. Moving

September of compared on million compared $XXX.X XX, and million cash total $XX.X XX, and equivalents to XXXX, debt as XXXX. XXXX, $XXX net of were cash and cash of As restricted million XX, September with June short-term

of exclude million credit we this and network DSO, of DSOs, activities $X.X of range days. revenues which were million third our KPI days, quarter construction the increased Peru in to terms operating terrestrial days. XXXX. lower which previous within of XX quarter during These by In were XX of the receivables flow, our net. by cash $XX.X projects generated XX than is quarter Short-term facility normal up

compared as equity 'XX. end to million million XXXX, September of at to XX, shareholders' of $XXX the Our $XXX increased June

mentioned, the adjusted EBITDA guidance to our already as we for our narrowed proximity year-end, due ahead, Looking range have to guidance and revenue year.

acquisition-related Given of our QX target operating of in from during and this $XX for the the the arbitration remaining adjustment year. million collection Peru the GAAP increasing we're and DataPath expenses QX in income the year,

are representing GAAP from the to raised main of to $XX for XX% imposed to due the arbitration $XXX in to income $XX The growth $XXX of and Peru. limitations million the are updated between mainly Our expectation Russia between range to is XXXX company's on decision terminate to $XX that year-over-year operations. at and regards constraints revenue effect with million million, activities due the million, We revenues the guidance of and midpoint. the narrowed XXXX our operating the receipt million proceeds its in

Operator, our would the $XX questions. representing EBITDA midpoint. financial growth narrowed happy million, concludes call to to of That between please. to take also at like range I year-over-year be We review. your $XX a would million now of XX% open my and the to adjusted

Operator

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

Ryan Koontz

still It want few speak, Russia we to Russia about on quarters, now, excluding And that terms are in is over should organic and of profitability out the questions Russia are the then past say, sounds tracking business? my the track. so right of year-to-date, Russia? -- see hear you the you guide organic pull how next business. ask I are, your if your to the completely performing exclude think on how tracking, you out there. organic or, is business from to business Nice that -- about DataPath I And forward? the

Adi Sfadia

Yes.

we midst we we but process, selling. getting of the is of are but out a the stopped country in So now are the process,

revenues of, so. average, not on million or $XX business a year from expecting of from Russia a Russia range QX. any So around a was new we are

year, you what so. So or take this exclude want to if you to give compare include need the is give take, prior is to this or --

Ryan Koontz

Perfect. crystallizing time of in if kind a on simplify updates I hard And that. wonder business of picture had you helpful. what's there on could us the would Peru. you for there. interesting have of some recap be you big Can going Peru didn't I kind the maybe

Adi Sfadia

operate we received we one an networks award. the and project -- Peru, to got late year, expansion government. several the Earlier of we of build that or we in an operate last So some regions

we weeks with we during So we government. year. construction -- a acceptance started a had phase the recently, And few the the process ago,

have addition, X up In we we regions operate. and running that

to is communication the is and region Peru inclusion in is managed service revenues I now, revenues. Another -- Peru the quarter. recurring of end Peru business hopefully, would -- addition, most other have business we there. social And satellite from of project should in recurring operation over day any that It's say in in other revenues. by XX% start the business of the

Of on but highly depend it course, it's in recurring some renewal, cases, profitable. revenues,

Ryan Koontz

Stellar their you And close, update I objectives? on the Got delay the it. can business some in their key with understand as company the from progress That's Great. any business then helpful. anything far of as Blu? but share

Adi Sfadia

longer the general, takes In than expected. we as Yes. I said, slightly So... closing

await million expect capacity they regulatory fourth the to in other We And their non-GAAP We towards the working $XX production million. $XXX between more quarter should to EBITDA them ratio. customers. half next the or year, we we commercial XX% and results. conditions. revenues be We units in U.S., are And to to maximum second deliver quarter, towards of to to between of some closing the mainly CFIUS their reach XXXX, $XX to expect million we be will once $XXX than the see accretive and efficient documentation revenues million last already we started closing. And expect still to said in some standard approvals, as deliver

Operator

is The next William from of question Louie Blair. DiPalma

Michael Louie DiPalma

you development of terms the a major for supplier in procurement with the competitive positive Gilat constellation? environment do be Square. Europe to the Is Iris process? And that how discussed view in You positioned

Adi Sfadia

Yes.

has they see received of several RFIs the have the when vendor one project, From So the EU of and stick of be their Spain. approval in vendors think Gilat ST vendors, another We itself. the subsidiaries several EU in space first side. that to very And initiative. a soon I industry, and one iDirect, Belgium in main there assuming competition the the to now we only X think and expect already I the Madrid basement might EU Square months to The a Bulgaria and like facility would development division [Indiscernible] in with the a where the answered for consortium non-U.S. good Iris competitors The of the Bulgarian ago. RFP all, a most it's will view, participate EU, of the for be EU point from constellation. awarded over right to course, the to Engineering LEO positive on answer. modem and on in around we the the come one

terminal several antenna. side, that steered mechanical the there electronically a companies On compete are and European can on

Michael Louie DiPalma

Great. implications the And there Gen the update on any is is timing for Gen there X for any procurement? X? OneWeb with OneWeb And Iris

Gil Benyamini

This is question. a good

it need I mainly refer Eutelsat. to think to to you

like wants defense Eutelsat is X. one see synergies Square X I of not constellation because would to some those and start it's to with Iris think sure mainly synergies commercial doable that applications. between the I'm Gen

synergy, and will opportunities Of projects it But separate it's even potential. greater X at the for end, Gilat. be as we a look if course, at it

Operator

Serge Guillermo. is question from next The

Serge Guillermo

revenue first most questions a around despite and question, EBITDA XX middle narrowing are expectation points. guidance million have guidance the the of point. I is to of still My them EUR at couple related

cuts all in or improvements be third further connected whether profitability or in so And the are manufacturing of place may cost operating with quarter?

Gil Benyamini

Serge...

products favorable current X. gross of also which operational or a EBITDA. of it's efficiency, on a improved and was expected some mix better mainly with the So mix It's than margin better the the more a

compensate So change all that contributed revenue. some this in for all, in profitability more the

Adi Sfadia

our ongoing profitability targets, I priority, can lot would is a is procurement initiatives and like side companies. make within The own the also internal have to is and company. worldwide department something and we that and product and top reductions cost reduction process an emphasize cost see increasing efficiency has their this that different efficiencies locations to how and we our of the synergies increase between how on our

Serge Guillermo

great. Stellar question sounds second related to And Blu. is my Yes,

now guidance health Stellar the Boeing risk Stellar million revenue restated colors to may range But Blu. some it and situation, million. XXXX for for can? Blu You the of production for $XXX put this we if some can $XXX you financial at Would impose the rate look in you and

Adi Sfadia

commercial electronically win is Blu including lose backlog line The both Stellar see, business. market for mainly they rapidly. and And The steered actual growing aviation, have, we we that In one fit we see future. customers cases, focus we LEO-only see is demand gave to on opportunities evolving on terminals in both on multi-orbit for and they additional antenna, opportunities. the Blu LEO And terminals Stellar other for that hand, business. GEO retrofit also and for based

bottom think will I and line So growth it rationale that IFC, top believe of the acquisition -- we the and the place, in still in drive is both line. strategic significant

Serge Guillermo

Yes. stated company is, my supports now affect August, can boost that how Great revenue? How final it news. SCPC can it Gilat in of And acquire the sales And modem? mode. that question

Adi Sfadia

the trunking large I is customers But it we one part Usually, for offer markets, the portfolio. of for mode think another our of and our our product that solution to great work main the defense already some already in application. since general, defense use product. for focus in a technology is there we is potential that of it's And that The for to guidance guidance, accounted you market. this kind SCPC believe that of our new mode. we need

Operator

Chris question next The Analytics. from Quilty of Congrats. is Quilty

Christopher Quilty

the other builds but service the at couple looking was mean, of end in the X the anything next satellite the than that of out Is program? that potentially there I NRE that in that thought program, over see time with year never a towards decade. are it they years we'll or thought the gner, or But Square on I line line. got I Iris we're

Adi Sfadia

I are think right. you

And to revenues see think X years revenues at mainly before probably the and project I we'll be year, the product participants, it's it think service. development launch NRE fourth all the least some as they will for well. X I towards

I as think the to possible. like launch as discussions ago, based on from months the service EU prior that several would soon

mPOWER I OneWood [Indiscernible] probably Sky So some IV, SES using consider might and But Iris they only solution SkydXC towards constellation that Eurostat, and But I revenues constellation, guess fourth revenues, might itself, award. business. would existing Geosatellite. an the Edge our interim that from expect drive Square product of year after getting

Christopher Quilty

Is mean, Got Iris in but you. to involved mentioned, you ground NRE you're in that for those And use some there, the as want I about. to network efforts to your will dovetailing be virtualization, push not would the a that's Square there's doing direction it assumption talk is development subsidize, and I be say Square happen going which that your in Iris parallel? do of to going efforts there hence, to X

Adi Sfadia

in has think have on happen and can synergies now, There it and between on the Iris own its think we think vision projects. -- I parallel. some will info that But own company the EU -- regulator each has Iris are I of its on Based X some that I Square. the vision constellation the

long we not So information don't the it the based at today. have see term, for I that combined on least

Christopher Quilty

the SkyEdge future question, that term road think to map? when the IV talk back And about Understand. is virtualization that same cloud-based, you as but used the we using I

Adi Sfadia

a SkyEdge This main we into cloud yes, shift to is the effort. IV would environment. general, In native like the

same addition, modem there to initiatives In that use able platform. run the several virtualized will be some hardware on are companies' waveforms to a

Christopher Quilty

Is can a DataPath mechanism government is Understand. And as programs I DoD know some in something government area. the where that that you those looking of for some with some there's acquisition, that -- that for use U.S. projects?

Adi Sfadia

defense to Yes, increased DataPath I with trying both solution exploring think Wavestream. we also we'll a partner, And the from from that several see in see that. interest and units. in and has also use We within operators our closely progress that DoD. satellite who Gilat in the work are XXXX, on business significant fronts, We're

Christopher Quilty

Great.

didn't I talk cellular really the backhaul market. general, Just in don't we -- about

happening in moment. any nothing discernible you projects going right the stalling there out, But exciting obviously, are So overall, mean forward? growing, the at this pipeline right trend? shifting seeing I to

Adi Sfadia

in nothing subsegment. shifting today technology over big the project to initiative right. right new now see but see and there, mainly expansions is this there. We the we here big What in market some refresh, do No

Christopher Quilty

kind question. so And other a they you've report into been day, program, Great. one it's I the for know that of but that's and on SES spoke long obviously did final progressing about that the rate -- it the How is for but of how behind satellite Is rollout about time kind point? operational this do the the at Boeing of about just transitioning working phase. you? issues, obviously, is mPower program with feel ramp you the

Adi Sfadia

we place. good are think in general, I a In

R&D A lot all in equipment of see the for SES and SES service gateways, of supporting work are some X our launch. we groups of time. quite with We deployed some expansions. their their

process, satellites will see area. they and they start once get selling course, more on will significant or a we additional Of expect significant this to growth with

Christopher Quilty

more really is XXXX... activity of So that a

Adi Sfadia

Not necessarily.

last but significant seeing including 'XX, business think years, But SES satellite larger see with we are few the also growth. in XXXX, even initiative. we'll in I on on in Empire, GEO

Operator

The Gunther is Discovery Group. next from Karger of question

Gunther Karger

your delay specific to particular any there that reason of comes Anything Is the CFIUS approval? mind? for the

Adi Sfadia

exercise react specific. they anticipated. a XX we And we raised. lapse I will their taking -- to days longer XX answered nothing will all the ability. frame the extend it be their in when of the -- DataPath. before ability the days. was think believe was To we approval just They And We have days questions it honest, and we so. because bought year CFIUS with I in to can the of ago is they do see course, specific Nothing next XX they than same -- and additional time we have the are

Gunther Karger

that the negative see And change in on plus focused on the administration election, do in the change to DataPath, United States with particularly a or is in question you the administration? other a

Adi Sfadia

business. I the don't administration DataPath change the affect of think

I U.S. think player DataPath very that even potential saw last year not greater and and high revenue selling but a the that enough not equipment next need modems to large expect growth. in success U.S. a only success year, we has are DoD there nice and today, big also networking to solutions, Gilat in the and we over DataPath and budget to to remember DoD. for is the the sell the Gilat have Army DoD. We We

Operator

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

Gil Benyamini

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

Gilat Satellite Networks (GILT) 13 Nov 242024 Q3 Earnings call transcript