Please go ahead.

Good morning and good afternoon, everyone. Thank you for joining us today for Gilat's third quarter 2016 conference call and webcast. A recording of this call will be available beginning at approximately noon Eastern Time today, November 15, and will be available on our Gilat Web site until November 17 at noon. The webcast also will be archived on the Gilat Web site for a period of 30 days. Also please note that investors are urged to read the forward-looking statements in Gilat's earnings releases, with a reminder that statements made on this earnings call that are not historical facts may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All such forward-looking statements, including statements regarding future financial operating results, involve risks, uncertainties and contingencies, many of which are beyond the control of Gilat and which may cause actual results to differ materially from anticipated results. Gilat is under no obligation to update or alter these forward-looking statements whether as a result of new information, future events or otherwise. The company expressly disclaims any obligation to do so. More detailed information about risk factors can be found in Gilat's reports filed with the Securities and Exchange Commission. With that said, let me turn to introductions. On the call today are Yona Ovadia, Gilat's CEO; and Adi Sfadia, Gilat's Chief Financial Officer. I would now like to turn the call over to Yona Ovadia. Yona, we are ready to begin.

Thank you June, and good day, everyone. Thank you for joining us. We are pleased today to report that Gilat achieved positive third quarter results as our growth strategy continues to gain traction. Our progress can be seen both in our top line as well as our bottom line performance, with growth across key markets and as highlighted by two important business wins this quarter. In total, third quarter revenues were $78.6 million, up 16% quarter-over-quarter. Year-to-date revenues reached $199 million. This quarter will report a profitable third quarter with a trend of improving profitability as the adjusted EBITDA increased to $5.2 million in Q3 compared to $763,000 in Q1 and $2.4 million in Q2. And with a non-GAAP operating income of $3.3 million and GAAP operating income which is near breakeven at negative $200,000, and a non-GAAP net income of $1.4 million. Further, this was achieved despite an accrual of about $4.6 million we had to take this quarter for bad debt of a government customer in Venezuela and Adi Sfadia, our CFO, will elaborate later. We remain committed to the trend of improved profitability and we believe that we will see yet better results in Q4 towards our goal of profitability on a GAAP basis. My review today will cover three topics, our growth engine, our technology leadership, and our financial objective. First our growth engine. We have progressed this quarter in all five of our growth pillars including our large projects in Peru. In this call, however, I would like to focus on two major areas, cellular backhaul and mobility, both are part of our broadband based growth strategy. Let met begin with broadband and 4G LTE cellular backhaul. Gilat technology by now is well recognized as providing the world's fastest satellite based LTE backhaul, enabling mobile…

Thank you, Yona, and good morning and good afternoon, everyone, I would like to remind everyone that our financial results are presented both on GAAP and non-GAAP basis. The GAAP financial results include the effect of stock-based compensation, amortization of purchased intangibles, impairment of goodwill and long-lived assets, restructuring cost, litigation expenses related to trade secret claim, and net income or loss from discontinued operations. The consolidation table in our press release highlights this data and our non-GAAP information presented excludes these items. I will now move to our financial highlights for the third quarter of 2016. Our results were in line with our 2016 plan. Revenues for the third quarter of 2016 were $78.6 million, a 95% increase compared to $40.3 million in the third quarter of 2015, a 16% increase compared to the previous quarter. This reflects quarter-over-quarter and [indiscernible] growth in all segments. Our commercial segment includes revenues from our project in China, for China SATCOM and Synertone, as expected more than offset lower revenues in Latin America where the economic conditions continued to be challenging. This is especially true in Venezuela where recent bond swap by its national oil company caused S&P to downgrade the corporate debt to selective default, which is expected to further pressure the government's dwindling external reserve. In contrast, Peru's economy is in growth mode and we have increased revenues from our project in Peru for FITEL, which are included in our service segment revenue. In addition, we saw growth on our mobility segment revenues led by revenues from in-flight connectivity product. In the third quarter of 2016, our GAAP gross margin increased to 30% of revenues compared with 24% in the same quarter of last year and 22% in the previous quarter. The increase in our gross margins is mainly due…

Thank you, Adi. So in summary, we achieved continued progress in this quarter in our mobility and broadband pillars as we witnessed with the two wins we announced. As well as progress in our journey to profitability. Looking forward, we are optimistic about final quarter of the year, both for growth engine as well as continued improvement in profitability. And this concludes our review. Thank you for your attention and I would like to open the call now for questions. Operator, please.

[Operator Instructions] The first question is from Martha Masiarz of Wells Fargo. Please go ahead.

Just a couple of questions around that. The first off is, how big is the potential cellular backhaul work in the U.S., do you believe?

In general, I think it's a big market. We don’t have the exact amount and we have increased pipeline and preliminary order we received from Sprint is significant. And we expect to achieve more orders in the future but we don’t have yet the exact potential market.

Okay. Great. And just another question following up on that. Do you see an opportunity in Europe and do you think it's likely the careers in Europe adopt satellite backhaul.

The answer is definitely, yes. We already have one major project in Europe in the U.K. with Everything Everywhere. And this project is already bigger than the initial intent as they see the benefit of our technology and we see increased interest around Europe as our project is being deployed and they see the actual results in the field. So, yes, there is a lot of interest and I think we will grow as we move forward with the implementation in the U.K.

Great. And is this a KU or a KA antenna?

It depends on the project. We support both. Depending on the technology the carrier prefers to select, depending on the conditions under which the network will operate, depending on the territory, the availability of spec segments. In the EE it is KA, if that was what you referred to. But we are agnostic, we can do both, but the EE specifically is a KA, I am sorry.

Okay. Wonderful. Just another thing, how many backhaul installations will you be doing for Sprint?

In terms of...

In terms of number, like is it ten or is it 100s. Trying to get perspective.

Well, I can't give the exact number of course, but in the many 100s.

[Operator Instructions] There are no further questions at this time. One moment, we have a question from Gunther Karger of Discovery Group. Please go ahead.

Question has to do with the in-fight Internet services. Where are we on the implementation with regards to, a, global express, and b, on the Gogo project.

We are working closely with Gogo on the project. We have delivered several large portion of the equipment. We expect that we launched the service later on in 2017 and currently part of it is in certification process.

Before I ask Mr. Yona Ovadia to go ahead with his closing statement, I would like to remind participants that a replay of this call is scheduled to begin within two hours after the conference. In the U.S. please call, 1888-782-429. In Israel please call 03-925-5904. Internationally, please call 972-392-55904. Mr. Ovadia, would you like to make a concluding statement?

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

Thank you. This concludes Gilat's third quarter 2016 results conference call. Thank you for your participation. You may go ahead and disconnect.