Ladies and gentlemen, thank you for standing by. Welcome to Gilat's first quarter 2019 results conference call. All participants are present in a listen-only mode. Following the management's formal presentation, instructions will be given for the question-and-answer session. [Operator Instructions]. As a reminder, this conference is being recorded, May 14, 2019. I would now like to turn the call over to June Filingeri of Comm-Partners LLC to read the Safe Harbor statements. June, please go ahead.

Hi. Thank you. Good morning and good afternoon everyone. Thank you for joining us today for Gilat's first quarter 2019 conference call and webcast. A recording of this call will be available beginning at approximately noon Eastern Time today, May 14 and will be available for telephone replay until May 17 at noon. The webcast will be archived on the Gilat's website 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 and 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. Good morning, good afternoon and good evening everybody. Thank you for joining us. As you may have seen in our announcement earlier today, I am pleased to share with you that Gilat achieved positive results for the first quarter of 2019 as we continue to focus on building a mix of high quality revenues through our growth engines of broadband, mobile cellular backhaul and mobility IFC as well as improving profitability. In addition, Gilat received market recognition for our leadership in the 4G LTE cellular backhaul. As a result, we achieved adjusted EBITDA of $8.2 million versus $7.5 million in the first quarter of 2018 as well as GAAP operating income of $4.5 million versus $3.7 million in the first quarter of 2018, an increase of 21.7%. We also reported revenues of $62.1 million. The 7.8% decrease in total revenues versus the first quarter of 2018 mainly reflecting lower infrastructure revenues from our project for Fitel in Peru. As planned, we are winding down the construction phase in our first three regions of Huancavelica, Apurimac and Ayacucho and preparing to move to the operational phase in these regions throughout 2019. We are pleased to see our other growth engines largely compensating for the reduction in construction revenues and I will elaborate on our progress in Peru in a few moments. Moving on to a review of the business. In our focus area of mobility IFC, we see continued progress further solidifying and expanding our leadership in the fast growing IFC market. First, Gilat continues to supply Gogo with aero-modems for their 2Ku solution, reaching more than 1,100 aircraft at the end of the first quarter with a backlog of approximately additional 900 aircrafts. Additionally, Honeywell has selected Gilat's aero-modem for its JetWave satellite communication solution. The integration…

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. We regularly use supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and to make operating decisions. We believe these non-GAAP financial measures provide consistent and comparable measures to help investors understand our current and future operating performance. Non-GAAP financial measures mainly exclude the effect of stock-based compensation, amortization of purchased intangibles, amortization of lease incentive litigation expenses or income related to trade secret claims, expenses for tax contingency to be paid under an amnesty program and initial recognition of deferred tax assets with respect to carryforward losses. The reconciliation table in our press release highlights this data and our non-GAAP information presented exclude these items. I will now move to our financial highlights for the first quarter of 2019. Revenues for the first quarter of 2019 was $62.1 million, about 8% lower compared to $67.4 million in the first quarter of 2018, mainly due to lower revenues recognized on the Fitel project in Peru. Our fixed segment revenues which include cellular backhaul revenues for the first quarter of 2019 were $36.4 million compared to $37.6 million in the same quarter last year and $35.4 million in the previous quarter. Our mobility solution revenues for the first quarter were $20.5 million compared to $20.8 million in the same quarter last year. Mobility revenues in the first quarter of 2018 were $29.6 million. The decrease is primarily due to seasonality in our business with our fourth quarter typically our strongest and the first quarter our lightest. Terrestrial infrastructure project segment revenues were $4.8 million compared to $9 million in the same quarter last year and $4.8 million in the previous…

[Operator Instructions]. The first question is from Gunther Carter of Discovery Group. Please go ahead.

Hello. Good morning and of course good afternoon. So the only comment I have is to congratulate you on setting your goals and executing them so well. Thank you.

Thank you Gunther.

The next question is from Michael Hebner of IFS Securities. Please go ahead.

Yes. Good morning. Every time, I think there's been three or four calls now, what are you doing to reach out to the investment community to get more people interested in this? It seems like a lot of people are interested in 5G and this backhaul stuff.

We are doing the regular stuff, trying to use media, trying to meet investors, present in IR conferences, the regular stuff, investing a lot of effort both on the media and the investor community.

What are you seeing in 5G? Like what type of backhaul, what type of increased stuff? When are these phone companies and various players going to start spending on this?

I am sorry. What was the question again?

As you are looking forward, are you seeing more money coming into the industry? I see that Elon Musk is putting up these little flying satellites and I see in your press release that people are using your business. So, what types of opportunity are you seeing with the 5G and these low flying satellites?

Well, I think that there is a tectonic change, a change that will apply in the industry once those constellations are operational because the amount of capacity that these constellations will add is much bigger than what is up there today. And I am sure that as a result, many things will happen among which are, first of all, reduction of the cost of capacity. Secondly, the reduction and the abundance of capacity will create more demand because it's more affordable in larger part of the world. And as a result, the consumption of the average person in the world and particularly in territories that are hard to reach will go up probably significantly up. This creates new markets and this is part of our strategy to try and capture these markets. So we are currently competing, for starters, on the baseband platforms for these NGSO operators and we are in discussions with some of them. We are also promoting the use of this capacity and particularly 5G with the telcos which are our prime market, when we talk about cellular backhaul. And we also believe that it will positively influence the IFC market which is another strategic growth area for us. So in general, from our perspective, once the NGSO constellations are operational, the affordability and the availability of capacity will be such that it will be a boost to our business and therefore we are adapting our technology to support 5G, to support large pipelines and we believe that there will be a need for this investment. The only thing I would just be cautious about is, we are not talking about those constellations up there and operational in 2019 or 2020. Some of them may be partly operational in 2021, but then it will intensify in 2022, 2023 and so forth. So it will take a few years for this to mature, but I am definite, unquestionably it's going to revolutionize the market.

So in your opinion like now at home we can get broadband. We get to use whatever we want. Most of the satellite services where you get broadband from, they limit you to so much per month. So in the future the satellite companies are going to be able to offer unlimited like the cable companies?

I think that the models are beginning to move to unlimited. If you look at North America, what we see the large operators offering instead of reduced cost, they are offering more capacity which is natural. So they are moving from a certain amount to unlimited in an effort to defend the price. And I think that like I said, I think they will be able to hold the line by only so much. In a question of years, it's not months but not too many years, I think there will be a significant price reduction in parallel to increase in available capacity.

Thank you.

[Operator Instructions]. There are no further questions at this time. Before I ask Mr. Sfadia to go ahead with his closing statement, I would like to remind participants that a replay of this call is scheduled to begin two hours after the conference. In the U.S., please call 1-888-326-9310. In Israel, please call 03-925-5900. Internationally, please call 972-3-925-5900. Mr. Sfadia, would you like to make your concluding statement.

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

Thank you. This concludes Gilat's first quarter 2019 results conference call. Thank you for your participation. You may go ahead and disconnect.