Ladies and gentlemen, thank you for standing by. Welcome to Gilat's Third Quarter 2019 Results Conference Call. All participants are at present in listen-only mode. Following the managements formal presentation instructions will be given for the question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, November 19, 2019. I would now like to turn the call over to June Filingeri of Comm-Partners LLC to read the safe harbor statement. June, please go ahead.

Thank you. Good morning and good afternoon, everyone. Thank you for joining us today for Gilat's Third Quarter 2019 Conference Call and Webcast. A recording of this call will be available beginning at approximately noon Eastern Time, today, November 19, and will be available for telephone replay until November 22nd at noon. The webcast will be archived on the Gilat website for a period of 30 days. Also, please note that investors are urged to read the forward-looking statements in Gilat's earnings release 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 obligations 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 today. I'm very pleased to share with everyone that the third quarter was marked by no less than four landmark achievements that demonstrate Gilat’s progress over the last quarters and years. The first is becoming a prominent player in the ground segment for Non-Geostationary Orbit also abbreviatedly known as NGSO satellites as SES chose our platform for its O3b mPOWER Medium Earth Orbit constellation. The second one is in the Aero Mobility, where we are encouraged by the clear directions of airlines to offer free Wi-Fi, which is already starting to generate significant demand for Gilat equipment in this quarter. The third achievement is the signing of a $10 million multi-year services contract in Peru materializing our vision of making Peru a profitable recurring revenue engine for Gilat over the networks that we have built. The last one is the substantial progress we continue to demonstrate in improving profitability. In fact, we have attained a record achievement of a double-digit millions of dollars of adjusted EBITDA, $10.1 million to be exact. This has been achieved only once before since we made growth in profitability in one of the pillars of our strategy, and we have every intention of repeating this going forward. Summarizing our financial performance for the third quarter, GAAP operating income totaled $7 million, adjusted EBITDA grew to $10.1 million, and revenues totaled $63.4 million. We also achieved bottom-line profitability with GAAP net income of $6.3 million or $0.11 per diluted share. We have updated our management objectives for 2019 as follows; reiterating GAAP operating income of between $23 million and $27 million and adjusted EBITDA of between $38 million and $42 million. While reducing the revenue range to between $260 million…

Thank you, Yona, and good morning and good afternoon everyone. I would like to remind everyone that our financial results are presented both on a GAAP and non-GAAP basis. We regularly used supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and 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 intangible, amortization of lease incentives, litigation expenses or income-related to trade secret claims, the organization costs expenses for tax contingencies to be paid under an amnesty program and initially completion of deferred tax assets with respect to carry-forward losses. Reconciliation table in our press release highlighted data and our non-GAAP information presented exclude these items. I will now move to our financial highlights for the third quarter of 2019. Revenues for the third quarter of 2019 were $63.4 million compared to $62.8 million in the third quarter of 2018 reflecting higher revenues from our Mobility Solutions segment mainly in-flight connectivity and higher revenues from our terrestrial infrastructure projects segment which includes the construction phase of our projects in Peru, partially offset by lower revenues in our Fixed Networks. Revenues in the previous quarter were $59.7 million. Fixed Networks segment revenues were $27.3 million compared with $34.9 million in the same quarter last year. The decrease is mainly due to lower revenues from our Latin America region especially our activity in Colombia, where our governmental project concluded earlier in the year. Fixed Networks revenues in the previous quarter were $30.4 million. Mobility Solutions Segment revenues were $27.1 million compared to $21.8 million in the same quarter last year and $22.6 million in the previous quarters, the increase in our…

[Operator Instructions] First question is from Gunther Karger from Discovery Group. Gunther, please go ahead.

Yes. So good morning or good afternoon. I don't have a question. I just have a statement. Congratulations on doing excellent work. Thank you.

Thank you, Gunther.

Next question is by Michael Hebner of McNally Financial. Michael, please go ahead. Michael.

I'm sorry, there's been some issue. [Operator Instructions]. Next question is by Michael Hebner. Michael Hebner, please go ahead.

Yes. Last year, you paid a dividend or something or I've seen a dividend. Is there any plans for future dividends because I see that's one of the reasons why your cash went down, $24 million?

Yes. Indeed, in early Q2 we paid 25 - close to $25 million of dividend. The dividend was declared as a special dividend. We haven't yet adopted ongoing policy for dividend payments. So now, I don't know what will happen next year.

Yes. I was disconnected from the call. Have you guys given guidance for what's the - what are we looking at for 2020? When are we going to see some numbers on that?

So - and now, we started to work on our 2020 annual operating plan and budget. So, it's too early to provide guidance to the market. All I can say is that we expect to see the same EBITDA growth that we saw in the last few years on average.

Now the mPower, you said that we're not going to receive revenue on that for two years or it's not operational. Could you put some more color around that?

Yes. In general, the satellites are going to be launched in about two years. And in the meantime, we have some development to do. So, once the satellite will be up in the air, we will need to provide ground equipment to support it.

Okay. Now the Peru, what kind of recurring revenue are we expecting to get out of there and when do we expect that to really start to launch?

So, in Peru we won $550 million of project. About two-third is onetime construction revenues and about $220 million are operational revenues. Yearly maintenance for a period of ten years for the entire fixed projects together, so that's gives you about a yearly run rate of $22 million. In addition, we have about $10 million to $12 million recurring revenue for managed service, mainly satellite business that we provide today. In addition, we started to sell services over the network. We recently announced a $10 million deal with one of the network operators in Peru. That gives more than $2 million a year. And actually, we expect this more than double or even triple within few years because its initial order for a few 100 sites, we expect them both to increase the size and to buy more capacity and later on to renew the agreement from five years to up to the ten years that we maintain the network. All-in-all, together with additional opportunities and potential in Peru, we believe that by the end, we will have all networks up and running. We will have about $50 million per year, highly-profitable in Peru recurring revenues.

Thank you.

Thank you Mike.

[Operator Instructions] Please stand by while we pull for more questions. There are no further questions at this time. I am sorry. Next question is Chris Riemenschneider from Wells Fargo. Chris, please go ahead.

Hi Chris Riemenschneider, Wells Fargo. Just can you give us a little update on the 5G race with the federal Communication, FCC wanting to control lucrative airwaves versus Intelsat and SGS. How will that affect our business?

So, now I think it's not relevant for Gilat, those regulations. In general, I would say that in 5G, we are investing a lot in examining the market and technology. Our projects - our products today are 5G ready, and we continue to invest to make sure that we will be at the top of the technology to make sure that we will penetrate the market and take significant market share as we did in the 4G. Other than that, it's too early to say. I hope that answers your question.

All right. And that's a few years out?

Two to four years, I must be honest with you. 5G with satellite, first, we take Manhattan with fiber, and later on we pass to the rurals. What we do believe will happen as we will see more and more in urban areas deployment of 5G, we'll see a lot of shift from 2G and 3G rural areas to 4G, and we believe that this 5G deployment will give us a significant tailwind in the 4G. 5G revenues over satellite, we will see here and there not a lot, but significant one, I think its three to four years at least from today.

Okay. Very good. Thank you.

Thank you, Chris.

Next question is by Michael Hebner of McNally. Michael, please go ahead.

It looks like with the speeds that the satellites are able to produce, do you see a lot - and again with all over the world, and you're not going to be able to put these 5G towers. It seems like their satellite is going to give a lot greater opportunity. What's your thoughts on that?

No doubt, 5G will bring a lot of opportunity for satellite equipment companies. Again, as I said, it's four years from today. And I think that with the NGSO constellation, it is much more relevant for satellite and geostationary, especially because it solves the latency issue that we have with geostationary satellites.

One question I always ask on every conference call. What are you doing - I mean you guys are doing such a great job and you have such great numbers. What are you doing to reach out to the investment community to get some more sponsorship and following of your stock?

We are doing everything that is in our power except of participating in conferences and making one with - with investors both in Israel and the U.S., and actually we recently returned from the Needham Conference in New York. We are considering several media company that will help us distribute our message to wider audience and not only to investors. Other than that, we're doing everything that we get.

Good. Thank you for your time, guys. Great quarter.

Thank you. Michael.

There are no further questions at this time. Before I ask Mr. Adi Sfadia to go ahead with his closing statements, I would like to remind my participants that a replay of this call is scheduled to begin two hours after the conference. In the U.S., please call 1888-326-9310. In Israel, please call 03-9255900. Internationally, please call 972-3-9255900. Mr. Sfadia, would you like to make your concluding statement?

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

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