Ladies and gentlemen, thank you for standing by. Welcome to Gilat's Third Quarter 2022 Results Conference Call. All participants are present in a 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 14th, 2022. 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 EK Global Investor Relations at 1-646-688-3559 or view it in the news section of the company's website www.gilat.com. I would now like to hand over the call to Mr. Ehud Helft of EK Global Investor Relations. Mr. Helft would you like to begin please?

Yes. Thank you, operator. Good morning and good afternoon everyone. Thank you for joining us today for Gilat's third quarter 2020 results conference call and webcast. A recording of this call will be available beginning at approximately noon Eastern Time today November 14th as a webcast on Gilat website for a period of 30 days. Also please note that investors are urged to read the forward-looking statements in the last earnings release with a reminder that statements made on this earning call there are no historical effects may deem forward-looking statements within the meaning of the Private 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. Our detailed information about the risk factors can be found in Gilat's reports filed with the Securities and Exchange Commission. And with that, let me turn to introduction on the call today are Mr. Adi Sfadia, Gilat's CEO and Mr. Gil Benyamini, Gilat's CFO. I would now like to turn the call to Adi Sfadia. Adi, we are ready to begin.

Thank you, Ehud and good day to everyone. I would like to thank you for joining us today for our third quarter of 2022 earnings call. We are pleased with the results of the third quarter. We are particularly happy with the solid improvement in profitability across the board as well as the growth in our revenues and bottom-line. Third quarter revenues were $60.4 million, 21% above the third quarter of last year. Non-GAAP gross margin, operating income margin, and net income margin were 38.3%, 7.2%, and 5.1% respectively all improved versus the same quarter of last year. Adjusted EBITDA improved to $7.3 million, 88% above our adjusted EBITDA of $3.9 million in the third quarter last year. Our adjusted EBITDA margin was 12% versus 8% in the third quarter a year ago. Looking ahead we increased and narrowed our profitability expectation for 2022, which is turning out to be a strong year of recovery and growth for Gilat. Our revenue expectation are adjusted to between $240 million to $245 million, representing year-over-year growth of 13% at midpoint. GAAP operating income expectations are narrowed and adjusted upward to between $8 million to $10 million and adjusted EBITDA expectations are narrowed and adjusted upward to between $23 million to $25 million, representing year-over-year growth of 56% at midpoint. I will now focus on some of our business achievements and discuss some of the recent highlights. The new era of satellite communication continues to be a primary focus for Gilat. We are continuing to expand our strategic relationship with the satellite operators. I am pleased to say that we are seeing a growing interest and strong market traction for our next-generation ground platform the SkyEdge IV. The need for a multi-orbit multi-service software defense platform that works in harmony with the newest…

Thank you, Adi. Good morning and good afternoon to everyone. I would like to remind everyone that our financial results are presented both on a 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, list incentive amortization, litigation expenses, income related to trade secrets claims, restructuring and reorganization costs, merger, acquisition, and related litigation expenses, impairment of held-for-sale assets, other expenses, income tax effect on adjustments, and one-time changes of deferred tax assets. 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 third quarter of 2022. Overall as Adi mentioned earlier, we are pleased with the continued improvement in our results and especially the strong improvement in our profitability. The results show continued growth in revenue and strong improvement in our gross operating and net margins, while our performance demonstrates a solid improvement there remain global macroeconomic headwinds including ongoing electronic component supply constraints, as well as price increases across the board. I'm pleased to say, however, that our performance in the quarter and year-to-date shows that we've been able to mitigate most of these issues without a significant impact on our profitability. In terms of financial results, revenue for the third quarter was $16.4 million 21% higher of those of the third quarter of last year, which were $49.8 million. In terms of revenue breakdown by segment, Q3 2022 revenues of the Satellite Network segment, which provides advanced broadband satellite…

Thank you. ladies and gentlemen, at this time, we will begin the question-and-answer session. [Operator Instructions] The first question is from Gunther Karger from Discovery Group. Please go ahead.

Yes. Congratulations on the excellent quarter. And -- yes so far a question regarding the defense business. Historically that's been rather minimal, and lately I've noticed that some increase in business acquisitions in the sector. What percentage of the total revenue is presently the defense military business? And, what do you expect it to rise to over the next year?

Hi, Gunther, nice to hear from you again, and thank you for the warm congratulations. Indeed defense business was not in our focus in the last few years. In the last year, or so it's become more and more in our focus, we are investing both in R&D and sales and marketing, to promote and refresh our product portfolio. Yet, it's not a big portion of our revenues. It's not a number that we are disclosing right now, but we expect defense to become a significant growth engine for Gilat in the next two to three years. It's important to say that, in defense and I'm sure you're aware the selling cycles are long and it takes time for investment to become fruitful. But we are sure that, the defense can become a significant part of Gilat revenue growth in the next two to three years.

Thank you, Adi. As a follow-up item on that, the trend in defense and military technologies is trending towards the unmanned remote type of operations. And I believe that's accelerating. That's one point. And the other part is the current unrest, with regard to the Ukraine war. Is the Ukraine war accelerating this trend, or what's your comment on that?

So, I agree with the first comment that unmanned solution require, a satellite communication and we are seeing this trend as well in opportunities in the market. As for Ukraine, of course, the satellite communication supported Ukraine during the war. But we doesn't feel it yet. What we do feel is increased demand for our SKUs and RFIs regarding satellite communication for the defense sector. So we believe, this is part – will be part of our growth potential in the next few quarters.

Thank you, Adi. And best wishes for the coming New Year.

Thank you very much.

[Operator Instructions] The next question is from Martin Levin of EML Associates. Please go ahead.

Hello. This is Martin Levin, I'm calling from the United States. And I'm curious about how – it sounds like you have projects underway in numerous different countries. I'm curious about the top five countries that you're dealing with at this time?

Nice to meet you. The top five countries, yeah, we have business worldwide. And in general, it's – we are not focused on one or two countries. Every quarter, it's a different all those comes from different countries or top five. I can say that, we have significantly business in the United States. We have significantly business in Peru. We have a decent business in Japan and Australia, but it's vary between the quarters. Those are the main that we see every – repeatedly almost every quarter, US, Peru, Japan. Other than that every quarter most of the orders come from different countries.

Okay. Thank you so much. And I also congratulate you on a wonderful year so far and look forward to hearing your results in the coming year.

So thank you very much. Thank you very much.

The next question is from Caleb Henry of Quilty Analytics. Please go ahead.

Hi. Just a short question from me. I was wondering if are any updates that Gilat can offer on the electronically steered antenna that was being developed for the aviation market. I recall last you mentioned that there was – you're waiting for sort of an anchor customer to help develop that. Has there been any progress on that front or any plans to further that technology?

Hi, Caleb. Yes. Indeed in the electronically steered antenna we are waiting for anchor customer in order to accelerate the development. At the end the antenna needs to be tied very closely with the customer and his needs. Having said that, we have several opportunities and we progress with the development both for ESA antenna for IFC and also for electronically steered antenna for military and defense use. I hope that we will be able to get the award we expect and we'll announce it once it would be relevant.

Okay. The defense antenna, does that have a similar stipulation? In other words, you would need a defense customer to basically anchor it and sort of guide the development. Or is that something that you can create independently and then go to the market rate?

Our plan is to build a product that will be available off the shelf. But we figure that every customer will have several specifications that we need to adjust the antenna fully but it won't be a major adjustment as we expect it to be in the ISP.

Okay. Thank you.

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

I want to thank you all for joining us on 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 2020 results conference call. Thank you for your participation. You may go ahead and disconnect.