Gilat Satellite Networks (GILT) 23 May 222022 Q1 Earnings call transcript

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

Following managements formal presentation, instructions will be given for the question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, May 23, 2022. have the should press you now, all Company's received release. By

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

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

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

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

We profitability. are adjusted strong the results the pleased with improved showed quarter of growth of EBITDA which and first XXXX, revenue

$X.X comparing were year First loss million quarter up of EBITDA million revenues $X.X adjusted to year-over-year. million an $XX.X was EBITDA a Adjusted XX% ago.

last recent the constellation More and of to will guidance pleased orbit call, am importantly, we discussed NGSO. planned next SkyEdge we we launch the and VHTS strong ahead, quarter in management February. I to earning reiterate of on Further now focus are high of business the objective that our in some report be and expect very we as and achievements throughput known we XXXX of highlights. non-geostationary as as as a platform, communication consisting to new as some Gilat, generation known announced last I year, the satellites year our IV. satellite progressing and in discuss looking annual of

on well growing major operators. additional are significant platform see and are increased IV competing orders our SkyEdge additional we We important pipeline. accepted continuing to for as opportunities in multi-orbit, being multi-service with interest is satellite

an IV next satellites. by are satellite support we addition, built since plan generation this with to encouraged architecture was In launch geo software-defined additional SkyEdge

planned SSPA major addition we reported to to achievements with other with the that In our like for last as SkyEdge IV, share lines progress I product would quarter. continue two

to to a product potential the additional NGSO well We of have and customize dollars Earth orders satellite strong Orbit which our track goal We years, a reach alone next high multi-year provide up. to IS-XXe this and for we decision the a we pick analyst the NSR. as estimated selected to multi-million constellations. to the for with of Furthermore, of meet platform Ground and a has the SSPA communication North is capturing received few continue part see dollars NGSO mega operator activity market position SkyEdge market. orders of America Intelsat growth with made IV contract, IFC Constellation. technology over throughput in leading millions support to and according as Low Gilat’s development The our the strategic progressing in segment satellite. Gilat industry the as market, hundreds are satellite market are a from potential leading latest in on provide VHTS the dollar mobility multi-billion emerging increased to has line see over solid of services

to its with final network Bed. IV conjunction and is platform terminal with when with operating CXXX and Modem. with expanded SkyEdge On the Intelsat to our achieved our a Taurus Gilat with business we the IFC. another Airbus This for provide work important phase modems electronically experience. the well technology interoperability SES's relationship modems OXb geostationary IFC of Flight report happy multi-million in capabilities additional top Cellular quarter, our in Africa, land. dollar close multi-million a network as testament to breakthrough industry proven operating DRC good during for with million The II-c we we quarter at our for project This satellite Aquarius orders Democratic Backhaul mobile of successful potential aviation, to working Congo. a milestone a its serve will a country platform marks Backhaul global commercial to Taurus Gilat in addition, market in progressing high-quality the user I partners. In In Clean Test enhanced win regional provide Aero lines mPOWER font, of antenna steered the am leveraging jet and the by We largest needed segment, the for to the worldwide. lead and the Tier IV a leading selected to X achieved X the connectivity of travel market capabilities an this in technology growing with from European Modems Maritime air, the use expansion to to on IV IFC Gilat contract deal cruise the to In on II-c. received Intelsat sea Aero Republic Gilat’s will and is fleet. IFC with past the dollar Internet that SES's as we aircraft These SkyEdge SkyEdge network optimistic I’m continue are with project. SkyEdge continue population. deliver and Gilat’s SkyEdge see completion a that segment, the Cellular five-year a leading consisting second satellite to and capture in by operator. was Sky MNOs be XX share for the ESA our provide solution

over Brasil, again, We business thousands network milestone XXXX and network, technology. our over Cellular partner expand related Backhaul XG we yet our with additional of America. to Latin TIM also a sites VSATs significantly indicating Backhaul enriching achieved satellite expect Furthermore, in largest in America leading with satellite Cellular of proven Latin services the

as XX% market on expect focused years. multi-million April support majority retail XXXX NSR Gilat According lead XG SkyEdge being in only the per XXXX XG In for of be grow MNOs to are modem continuity the that of of in of assurance in required with in we with backup market hubs to market transition to with XG always The average the stores storefronts rate VSATs I growth deal over coming next throughout at business has forward, II-c an shipments dollar guarantee support to of additional am to U.S. gateway expected newest each the the the XXXX pleased the to Enterprise this industry connected. the report, revenues States in start the and pick and year support to significantly the thousands the intent and modem our business is worldwide report years. the well up in as United about network. analyst to segment, technology. large as to only XXXX. Looking to an a of through focused XX The shipments XXXX. market XX% market grows

to as our to We our services XXXX, its to profitable. Peru deals increasing making In are progress line for become UAVs. we placed close in and to local with and an by aerial satellite are Amazonas Ayacucho, MNOs. continue UAVs hoping while more tactical corner sharing to the product and Peru, and and Apurimac and in providers strategy our a solution providing for unmanned soon. as A Simca our vehicles like we terrestrial such for focus known to in as Cusco success in well order our seeing satellite we conclude I'd business execute network terminals the few in Huancavelica, UAV Peru points. antenna service expect defense market manufacturer additional as a turn more In successfully and building are for leading world

and to in As our the position to we ahead opportunities of to plan us. leadership continue be for to we invest in heavily that prepared said wealth several the see maintain R&D last calls, of we

partners. most and carefully are of so it to commitments far able we chain customers issues have and have global and also well supply monitoring We meet managed to our the been

to as our We Finally, have reiterate I'm in a visibility that pipeline therefore healthy objective XXXX. say we for and we management announced pleased good backlog strong February. a into and XXXX

to $XXX Our between revenue $XXX is guidance million million.

ready to expect $XX to million We CFO, ahead. million with now adjusted $X your Gil, EBITDA million. are Benyamini. And for of between report. over and like $XX I'd that, to Gil our we operating go $X million hand GAAP income Please between to

Adi. Corona measures help Non-GAAP merger financial stock-based to presented non-GAAP acquisition costs, manage on that current We incentives, of adjustments are to tax of the claims, related measures release a to effect highlights information data measures and now financial initial operating the and fleet losses. of I expenses downturn financial results basis. morning in are afternoon our Adi press carryforward respect prospects and items. mainly increasingly regularly we with excludes supplemental or and in reorganization evaluate and first good quarter. to provide consistent recovery that litigation sale and and continued for future XXXX. the the use we operating asset, the our demonstrate for intangibles, comparable highlights trade earlier, continued We both would about that the in measures pleased Good internally becoming the you, our we understand, table reconciliation and understand our and to of these settlement non-GAAP like on amortization believe of The for quarters are as and secrets to remind mentioned The show move business are make non-GAAP non-GAAP track financial amortization our everyone. and compensation, financial of Overall, to investors presented deferred these results improvement assets GAAP and decisions. ahead. our right Thank performance. costs, everyone our with held recognition exclude that I to income-related purchased from and will litigation results on remain our the optimistic quarter

date. across While to to significant been components our solid remaining I'm that the supply price improvement, have shows able performance to pleased headwinds, increases well that without electronic however our say mitigate issues constraints a the demonstrate impact that performance as including macroeconomic very global the we as ongoing board.

In network terms were in million growth to the in-flight of from operation first $XX.X financial XXXX. quarter first up for million driven of $XX.X terrestrial quarter results. when NGSO improvements our XX% mainly by services. compared connectivity and Revenues the The were

breakdown revenue by of segment. terms In

we equipment As million NGSO driven infrastructure satellite approach provides was customer mobile recovery and satellite Connectivity solutions systems described in growth well IFC and primarily to in $X.X solution XXXX million The end same on-the-Move/on-the-Pause associated [indiscernible] broadband including defense and market. terrestrial professional and and in the XXXX, new XXXX quarter million during report quarter by same three advanced by of in to as the were satellite quarter compared services the and in non-GAAP results. first phase revenues were market and and in segment, revenues to defense Integrated our infrastructure communications segment now provide and segment, integrated the satellite revenues QX networks, the due operating partially the The the Solutions now cellular solutions $XX.X services managing compared in services QX were operations, backhaul, and annual the our year. and and solutions, segment, services. solutions higher operating our quarter offset mission-critical base managed organizational the segments: turnkey network products communications $XX the phase. same was improvement I million operational would $XX.X satellite services markets, year. in to summarize network advanced revenues network in construction which last new satellite initial and network revenue network systems, construction of million project, market, decrease improvement mainly $XX.X from last in in like compared operate revenues strong of year. within the million management broadcast during and the Inflight to XXXX to GAAP as order the QX communication QX commenced defense for $XX.X reflect alignment, enterprise, satellite system which and last of provides which

year. $X.X the operating net per million share or quarter margin improved This same $XX.X is with compared compared GAAP in QX first $X or to million QX the XX.X% in same quarter $XX was expenses the same operating loss million XX.X% of million year. first loss million loss quarter Our of in quarter $X compared in year. the of for with GAAP compared an net $X.X XXXX quarter were last to the loss per $X.XX. to year. in GAAP XXXX GAAP to improved diluted in of last the the loss operating gross last quarter of $X.XX loss in share million quarter last

non-GAAP results. to Moving

the gross of first loss first last was per non-GAAP an last quarter the in QX million last the to compared quarter to This loss million $X.X is of share quarter EBITDA operating in loss XXXX quarter XXXX in last year. loss an compared quarter Non-GAAP million diluted quarter million the same with or loss in $X.X last with in improved XX% to to quarter in loss same Non-GAAP million of operating year. QX $X.XX net net compared $XX.X of Non-GAAP same quarter $X.XX. XX.X% for or compared loss operating of margin Our improved expenses in of same with the were compared in $X.X $X.X of $X.X the in of year. per the the EBITDA year. year. the $X.X $XX.X quarter million adjusted with million for improved million Adjusted share

balance to sheet. Moving the

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

I increased to sales and XX terms XX in quarters previous Infrastructure credit volume and second company revenues at them our cash In operating the first expect of operating during some we upcoming the we payments due see quarters. $X.X used the to get the The to terms not of of DSO, about were do for to two of our activities collection. half quarter. $X.X higher days we revenue receivables out as which XXXX – days quarter changed from used our customers, change about unfavorable get Peru government do that Segment million with in Project of in hasn't its activities flow, and delayed. the know an lower million Terrestrial to expect which we exclude the do of for not compared

decrease the We quarter the DSO XXXX. expect next to during of

March compared as million of the equity of shareholders about Our $XXX XXXX. totaled end XX, $XXX at with million XXXX

to million. expectations now strong I between review. between ahead, and Operator, open of $XXX the million already XX we guidance please. $XX my concludes with XXXX remain call million Adi adjusted million year, as to for a financial and That EBITDA $XXX would our for for of like an the mentioned, our Looking reiterated revenue questions.

Ladies the Instructions] this you. will session. is First Chris go and of gentlemen, begin Thank Please Quilty Quilty from at time, we [Operator ahead. question-and-answer question Analytics.

a order Can macro a and and turbulent to a maybe the year bit start you forecasting the see course and full-year? impacted how orders you. start over obviously you us during wanted any changes of your bit shaped quarter of and give outlook to environment, environment in pretty a the current for growth Thank of with the strong or clearly up of QX you book. are I a has way any did book-to-bill sense of good the the the a here overview

you bit Chris. not remind Hi, XXXX is that The in $XXX the misleading we because Peru. is I that Adi. book-to-bill This data million projects close And it's ratio a a ratio in as in are providing. XXXX, and booked to publicly backlog later on from we this

huge recognize the period to this XX offset quarters to in the need the X. most that XX project, you is years backlog If are ratio book-to-bill of depend above we on over of

satellite are So from generating integrated and solutions networks business. we the backlog

very we As we a with have to operators, some we the pipeline and good orders whom both we quarter for working for especially are with the strong satellite the a and very which large the a the mainly very and strong pipeline Intelsat had for continue new aero process. RFI new IS-XXe and see some macroeconomic, to this to quarter, satellite, RFPs satellite in that IV SkyEdge modem with are orders from

lot good see vibe. of we So a

of my designed the accepted high in IV and the to SkyEdge very well is said NGSO I the the script, As and throughput challenges meet constellation.

a are we it, positioned different to believe market… we take well So

looks really you that the in terms think or of I like feel that growth. of market? think is XX% recovery? where you specifically I'm the point that seeing the in Great. do point not falls year-over-year And its back we're in with, segment activity ordering Do you're terms XX% market that Where IFC Solution familiar like had now, good market, it's with Integrated as you at

basically – line. So the it on which first is in depends exactly segments, two today IFC product

So and satellite necessarily are business, we growth integrated providing. the from aero the network in networks solution is not Intelsat IFC under is solution. integrated the the satellite that SSPA modem from solutions and The gateway the derived line product mainly under is rather

delivering traction see XXX second it of plan is Intelsat end XXX your XXXX. half for to second that believe As megabit on replace of current see the the And reasons do the in need megabit start is the more in the stronger the modems per why per of expansions, We one we to believe question we second aircraft. towards through this decided year to IFC, market. network do the towards modem. or We the modems the more

Great. in And the ended significant it you me, sense but that's forecast, think can into and of improvement us you forecasted Peru that improvement anyway current sounds it you is continues, progress of back is a I Obviously front indicated a in like course this in profitability. embedded prior into or had or even that ended? in give excuse your year the the and or throughout the year, of expect quarters, degree

as expect in reach So several to year. we said $XX to expected past, million – times revenue per recurring the reach we in

large backlog. two this from still that we in reach in we finish order recognizing projects revenues We services. the So construction have need the start to to the

or the is in that I services in it's we'll believe project part QX, of is you effect cases QX. additional that Peru start see – in to along are QX, for see give some, to the each in I and project the So profitability think some take unique spread and

bit but the comes construction, low the because every QX, from very margins profitability we nice phase finish will relatively construction network going see increase to a margins. with expect the Once are Peru we in more So I quarter. profit a

the but year delay of Great. terms with in subsequent rollouts some this They've delays you And your SES timing, rollout program? is contributor that on I orders had minor, planned mPOWER. in have a gateway relatively know or for seen in another big

end affect we book-to-bill for until which the received are of the part and working started we last it's year. the the And the with Actually, deliveries very XXXX, of because already orders year closely today ratio QX Most from No. it in spread we rollout our backlog. also SES. of the

in now of terms for we rollout. any So gateway don't delay see

us. lot for we our a SES. fact, expect include and which global opportunities see with country huge In it's now, orders gateways, of the we will in potential business a deployment. also And increased for the to Right see equipment

you're Great. the not applications? question of seeing or a major mix as of terms of And versus the end of mix, final in markets you give business. but Can there on SSPA defense sort much the IFC us sense where traditional growth

So it's main three in defense, the a solution, and IFC the integrated markets, gateways.

that take the depends on on just see to IFC we a think that we return in we past. it used expect to Defense, normal give and number that got to a to I or budget projects really bit increase the award.

several geo large end of we I We in to from expect that now XXXX. gateways, year especially projects the for the think delivering the for to – have and the deliver on development part the decent in today towards start for are of later come we also and a a gateways. And solution the will LEO gateways phase, growth

Great. queue. circle Thank in much. And you the back very I'll

Thank you, Chris.

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

and good morning. you, Thank

outstanding First, and congratulations performance, on Adi company.

this to anything to thing or is any with SpaceX, to has Is Starlink out of the Earth do evolving maybe relationship continues that that competitive non-competitive? Orbit both satellite. send Secondly, Gilat Low there many there for

So They are now consumer other aiming the with market. market no doubt, start solution Starlink is in and the segments. a they disruptive

our are competing feel to from customers. provide would We they now, they the grow to them, with because so head-to-head we service future. But don't the like with are not Starlink yet will right be they probably also competing itself, in honest, the pressure

have solution do now, our from application So when growth it's maritime, VHTS need also solution. cellular enterprise satellite, but come for main feel is to inflight will it, have that right multi a But backhaul, a consumer consumer our we you to and market platform must focus. and sell you have from unless connectivity, main not the because focus consumer solution the might is We consumer consumers.

pressure from Starlink. feel any competitive So as we of today, don't

Gilat generate Actually, And develops you. could interest regarding the Starlink Thank of structure may which the is last as possibly. actually it a benefit the non-consumer the SpaceX I in [indiscernible] question appears area, have it Board.

by year, better past there Is reflect Chair the plans realigning the Board, dropped ownership? consideration any the is report of last a X%, this the drop. has During XX% FIMI of or nearly share from to which representation big to Board the

a question, good time. an have don't period I for of which getting Board It's the answer, elected is a

We and public. as have have remember up the of members not AGM, will and the you that – info again, the with see it for we far in the coming will election as something – I be some Board discuss then. Right now, it's can

Thank continued you, Adi, and wishes. good

Gunther. you, Thank

[Operator question The go question next Instructions] follow-up Analytics. Chris Please ahead. Quilty is of a from Quilty

now overtures Delta installed. stories I'm new other Thanks news to SpaceX and could some Alaska. just on in several question you're two certain fully interview product years. it get reading making trade years market, meanwhile, developments, a And that where antenna, with both been the operationally recent has be I think been point looking development for you're read to IFC their associated three the guys. for And on where where I the in but in normal is has that up name And and path, thing showed One IFC your another certified, markets. at to enterprise

anticipating of anything a for to of go you sort of that is, And all is period so that know would the some move what to installation I multiyear the at SpaceX question you're certification? a through beyond enable there guess rate

the And correctly, know there of remember cases, the to antenna is as you order developing is the base – the Airlines. something to announced developing to a SpaceX unique have end, product. not of rhythm. have I most solution, customer very have needed are Hawaiian antenna fit we product first all, to need as with and in At but cases – and as specifications. we a we good in most need own electronically-steered the their SpaceX existing to in If Yes. the a it of off-the-shelf far split And

thinking we with we'll utilize significantly And ordering specification it to share places. to point we to progress have technology something you. exact reach we'll won't in In the this a without antenna. able that to customer other once are be a we So of parallel, announce, the how

very you Thank Great. much.

Thank you, Chris.

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

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

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

go may and ahead You disconnect.