Ladies and gentlemen, thank you for standing by. Welcome to Gilat's Fourth Quarter 2022 Results Conference Call. All participants are at present in listen-only mode. Following management's formal presentation, instruction will be given for the question and answer session. [Operator Instructions]. As a reminder, this conference is being recorded, February 14, 2023. 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 GK Investor and Public 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 GK Investor Relations. Mr. Helft, would you like to begin, please?

Good morning, and good afternoon, everyone. Thank you for joining us today for Gilat's fourth quarter 2022 results conference call and webcast. A recording of this call will be available beginning at approximately noon Eastern Time today, February 14, 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 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 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, let me turn to introductions. 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 over to Adi Sfadia. Adi, would you like to begin.

Thank you, Ehud, and good day to everyone. I would like to thank you for joining us today for our fourth quarter of 2022 full year earnings call. We are pleased with the results reporting fourth quarter revenues of $73 million, bringing us the full year revenue of about $240 million, which is year-over-year growth of 12%. Most importantly, we are particularly happy with the solid improvement in profitability across the board, with first quarter adjusted EBITDA of more than $10 million bringing us to a full year adjusted EBITDA of more than $25 million, which represents significant year-over-year growth of 64%. Today, we are introducing our 2023 guidance. Following our solid growth in 2022, we expect continued revenue growth with further significant increase in profitability in 2023. We expect revenue of between $260 million to $280 million representing year-over-year growth of 13% at the midpoint. GAAP operating income of between $15 million to $19 million representing year-over-year growth of 70% at the midpoint and adjusted EBITDA are between $30 million to $34 million representing year-over-year growth of 27% at the midpoint. I will now focus on some of the business achievements and discuss some of the recent highlights. The new era of satellite communication continues to be a major focus area for us, as we are strengthening our strategic partnership with the satellite operators. Furthermore, it is mostly, we're going to see growing market expectation and interest in Gilat's multi-orbit, multi-service platforms to SkyEdge IV. The satellite operators continue to launch Smart Software-Defined Satellites and NGSO constellations. I am pleased to report the HISPASAT, the leading global Spanish operators selected Gilat SkyEdge IV platform for it's highly flexible Amazonas Nexus high-throughput satellites. This will enable HISPASAT to offer the highest performing satellite based fixed data and mobility services. We…

Thank you, Adi. Good morning and good afternoon to 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, lease incentive amortization, litigation expenses, income related to trade secrets claim, restructuring and reorganization costs, merger acquisition and related litigation income or expenses, impairment of health for sale asset, other expenses, income tax effect on adjustments, one-time changes of deferred tax assets and one-time tax expense related to the release of historical tax draft earnings. The reconciliation table in our press release highlights these data and our non-GAAP information presented towards these items. I will now move to our financial highlights for the fourth quarter of 2022 followed by our full year 2022 highlights. Overall, as Adi mentioned earlier, we are very pleased with the continued improvement in our results and especially the strong improvement in our full calendar year revenue and profitability year-over-year. I'm pleased to say that despite the macroeconomic headwinds and global supply chain issues, our performance in the quarter and the full year -- full calendar year shows that we've been able to mitigate most of these issues without significant impact on our profitability. Even though 2023 contain some potential macro challenges ahead, we believe that we can overcome these challenges and continue to improve our financial performance furthermore, in 2023, In terms of our financial results in 2022, revenues for the fourth quarter were $72.6 million, 8% higher of those of the…

Thank you. [Operator Instructions] The first question is from Chris Quilty from Quilty Analytics. Please go ahead.

Thank, guys, congratulations. Adi, I think in your commentary, you mentioned a record year in the cellular backhaul market. Was that in terms of revenues, or orders or market share, or how did you measure that?

The record year were in terms of orders, I don't remember the exact amount of revenues, but usually most of the solar backhaul revenue is booked to ship in a relatively small time. So it's either few weeks or maybe a shift to the quarter.

Good. And so, maybe that brings up a question on inventory. The inventory levels have been a little bit elevated over the last year or so. Should we expect those to stay at that level or supply chain issues start to clear, should they come down?

So, indeed, inventory went significantly up in the last I think 18 months. But it was intentional, because of supply chain, we took a decision to buy -- to inventory and order for 24 months ahead. Now, we are starting to see a bit of a ease on the supply chain, but not as expected. We believe that in the second half of the year, we'll start to see a significantly reduced lead time, which will allow us to reduce our inventory as well.

Okay, great. And if I back-up maybe on the segment level, obviously, good revenue growth in aggregate. But should we expect that to show up in one particular segment over another, whether satellite networks, integrated solutions or the network infrastructure?

I would expect the gross going further to be in the satellite network, mainly the satellite network, and also slightly in the integrated solution. In Peru, we reached to the level of revenues, $50 million recurring revenues. And we expect to finish the construction of the network towards the end of the year, maybe it's will slip too early next year. And with that, around $15 million to $20 million of construction revenues a year will disappear.

Understand. And if I remember, you are hoping to get that fifth region completed by the end of this year, but just due to the political situation and probably first quarter, second quarter, and then the sixth region by the end of the year?.

Correct. We already finished the ICA region at the beginning of Q4, but due to the political turmoil in Peru, and since the government project, it takes them much more time to accept the network. And then, it use to take -- we do expect them to accept the network during the coming quarter, maybe in April, but we are still under audit. Most of the audit already finished, as always, there are some reject that we need to fix, but it's immaterial. And we believe that they will accept the network in the next two to three months.

Great. And just a question on any changes in the CapEx spending. And when we think about cash flow for next year. Should we think about it is been sort of in line with the revenue growth or do you expect to get some balance sheet leverage on a go forward basis?

So, our CapEx has been increasing in the last year mainly due to investments in their CapEx in the Peru in projects that we buy the CapEx, and in the next step is we enjoy revenues. We believe that CapEx level shouldn't increase significantly in the future.

And cash flows?

So, with cash flows, we expect to keep positive cash flow in line with the increase of EBITDA.

Great. And that will do it for now. Thank you.

Thank you Chris.

[Operator Instructions] Please standby while we pause for more questions. There are no further questions at this time. Mr. Benyamini, would you like to make the concluding statement?

Thank you, everyone, for joining us for the conference call. And we hope to see you soon or stick with you on our next call.

Mr. Benyamini, there's a additional question, would you like to take it?

Sure.

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

Yes. Thank you. I don't have a question. I have a statement. I've observed the company for quite a number of years, and I must congratulate Adi and his management on excellent performance in the quarter and the year, and in potentially vastly improved communications. I think you're on your way. Thank you so much.

Thank you Gunther.

Okay. So, 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. We'll stick to you in our next call. Thank you very much and have a great day.

Thank you. This concludes Gilat's fourth quarter 2022 results conference call. Thank you for your participation. You may go ahead and disconnect.