Ladies and gentlemen, thank you for standing by. I would like to welcome all of you to Gilat Satellite's webinar to discuss Gilat's recent acquisition of Stellar Blu Solutions. My name is Kenny Green, and I'm part of the investor relations team at Gilat. All participants, other than the presenters, are currently muted. Following the presentation, I will provide some instructions for participating in the live question and answer session. I would also like to remind everyone that this webinar is being recorded, and the recording will be available on Gilat Satellite's website in a few hours after the end of the webinar. You should all have received by now the company's press release. If not, please view it on the company's website. With me today on the call, we have Mr. Adi Sfadia, Gilat Satellite CEO, and Mr. Gil Benyamini, Gilat Satellite CFO. Adi Sfadia will open by providing an overview, and after that, we'll open the webinar to take your questions. At the same time, you can also type your questions in, in the Q&A box at the bottom. I would also like to point out that the safe harbor statement on today's presentation and in today's press release also applies to this webinar. And now, I'd like to hand the call over to Adi Sfadia, Gilat CEO. Adi, please go ahead. Thank you, Kenny. Good day to everyone. I would like to thank you for joining us today on a short notice to discuss the Stellar Blu Solutions acquisition we announced earlier today. We are very excited about the acquisition of Stellar Blu. This acquisition introduces a new era in in-flight connectivity, where two market leaders are joining forces to provide the industry's most comprehensive and complete IFC product suite. On our call today, I will review the key motivation behind this acquisition and the commercial and financial benefits both companies stand to achieve. At the end of the session, there will be time for questions and answers. The acquisition positions Gilat as a market leader in in-flight technologies and solutions for commercial and business aviation. Stellar Blu first to market Sidewinder family of ESA, electronically steered antenna, will become a core component of Gilat IFC growth strategy. This will provide significant revenues and profitable growth, achieving high double-digit growth targets. Another key driver for this acquisition is to strengthen Gilat's LEO presence with Stellar Blu Sidewinder family of ESA terminals. As LEO and multi-orbit are the future strategies of the key commercial IFC service providers, including Intelsat, Panasonic, Viasat, Hughes, and others, the timing of this acquisition is extremely advantageous. Stellar Blu Sidewinder solution is an open architecture, full ESA antenna terminal optimized to enable the performance and cost advantages of multi-orbit strategies. Stellar Blu technology has already been selected by Intelsat, Panasonic, and OneWeb to provide next generation SatCom commercial aviation solution, offering due to its low profile, attractive SWaP, radome-free design, and flexible open architecture, all with the lowest total cost of ownership. Gilat will pay an initial cash payment of $98 million, payable at closing, subject to customary adjustments, and up to an additional $147 million, payable in cash, subject to achieving of post-closing financial and business objectives. Gilat intends to finance the acquisition, which is existing cash reserves and an external credit facility leveraging its strong balance sheet. The IFC industry is at inflection point. Seamless broadband connectivity is expected on every airplane, everywhere on the planet, operating in multi-orbit GEO, MEO, and LEO. In addition, IFC service providers are looking for future-proof technology for complex, evolving SatCom ecosystems. As such, service offering will need new ESA technology. We estimate that this revolution represents the market of between $700 million-$1 billion per year over the next 10 years. The average installation of 2,000 aircraft per year are estimated for the commercial aviation market alone. The IFC market is based on GEO and NGSO service providers, some of whom are already Gilat customers, including Intelsat, Satcom Direct, SES, Anuvu, and Eutelsat OneWeb. The large LEO players, Starlink and Kuiper, also target this market. Well, we have a technical problem. Give me just a second. Sorry for that. Stellar Blu... Stellar Blu Solutions is a leading U.S.-based avionics solution provider of next-generation SatCom terminal solutions, primarily targeting commercial in-flight connectivity aero markets. Stellar Blu Solutions is headquartered in San Diego, California, and has location in Fort Worth, Texas, Seattle, and a development center in Poland.... Stellar Blu's go-to-market strategy targets commercial and business aviation, IFC service providers, and aircraft manufacturers, with a significant relationship with the aircraft manufacturers. Its secondary market include military and homeland security. Stellar Blu's Aero SATCOM Sidewinder terminals utilize an open architecture, fuselage-mounted, electronically steered array antenna, compatible with most Ku-band modems, providing hardware-agnostic solution for internet service providers, network service providers, or satellite orbit. Stellar Blu's approximate projected revenues will range between $100 million-$150 million, beginning in 2025, covered by existing backlog. Stellar Blu's current primary channel partners are Intelsat and Panasonic. Through these service providers, the company has secured a backlog of close to 800 terminals, with significant deployments planned at leading airlines during 2025. Stellar Blu is the first to market with a multi-orbit, multi-network ESA terminal. The Sidewinder's low profile, radome-free design, and multi-orbit GEO, MEO, and LEO open architecture network capability is a unique offering designed with the airline needs in mind. The acquisition is creating a strong IFC market leader with the richest product offering in the market under one roof. Gilat is an established technology and product provider to the IFC industry, having thousands of aircraft operating today with Gilat Ku- and Ka-band RF units and Gilat SkyEdge II-c and SkyEdge IV, Capricorn, and Taurus Aero modems. We also have a line of ESA terminals for Satcom Direct for business and government aviation. The merger enriched our portfolio offering to include ESA terminal that supports multi-network and multi-orbit to commercial aviation using an open architecture system. In addition, Stellar Blu's competencies in qualification and certification of Aero SATCOM terminals is a unique value proposition from which our IFC customers could benefit. We expect a potential of between 500- 1,000 installations per year for Sidewinder ESA antenna. The acquisition creates an opportunity to deepen the relationship with key strategic customers such as Intelsat, Panasonic, Satcom Direct, Eutelsat OneWeb, and Boeing. It is also positioned Gilat to acquire new customers, including additional aircraft manufacturers, Ka service providers, and very large LEO operators. Gilat activities in homeland security, defense, and land mobility, as well as its global sales and technical support presence, would leverage future business opportunities. Numerous additional synergies exist with this acquisition, including the Gilat sales and marketing organization operating across a wide variety of segments. This will provide additional opportunities to cross-sell and up-sell ESA technology. For example, we can leverage our presence in the defense and land mobility segments. Economies of scales will be enjoyed by leveraging Gilat R&D software and antenna capabilities, Wavestream in-cabin LRU solutions, operations, and post-sale support. In the longer term, we intend to leverage Stellar Blu's high-volume antenna production experience. Stellar Blu aircraft engineering, certification, integration know-how, and support will provide a significant step up to Gilat processes, documentation, and aero program management. Let's move to some financial highlights. As I mentioned earlier, Gilat will pay an initial cash payment of $98 million at closing, subject to customary adjustments. In addition, Gilat will pay up to an additional $147 million, payable in cash, subject to achieving of financial and business objectives during the coming 24 months. Gilat intend to finance the acquisition with its existing cash reserves and external credit facility, leveraging its strong balance sheet. The acquisition is expected to close during the fourth quarter of this year. Stellar Blu is expected to become profitable during 2025. This will lead to accelerated profitable growth. Based on Stellar Blu's current firm backlog, revenues from the acquisition is expected to range between $100 million-$150 million in 2025. The acquisition is expected to be accretive on a non-GAAP basis during the second half of 2025. In summary, this acquisition welcomes a new era in in-flight connectivity, where two market leaders are joining forces to provide the industry's most comprehensive and complete IFC product suite. The acquisition allows Gilat to take a leadership position in the multi-orbit and emerging LEO markets with a state-of-the-art ESA terminal, best suited for the commercial and business aviation markets. We see strong synergies between the companies and are looking forward to achieving our profitable growth... Thank you for your attention. Now we can move to questions and answer sessions. Thank you, Adi. At this time, we'll, we will begin the question and answer session. If you have a question, please raise your hand via the Zoom platform. You can also type your question in the Q&A box, and we will endeavor to go through them at the end of the Q&A session. I will introduce you and ask you to unmute, after which you may ask your question. And as we have some questions waiting, we'll poll a few seconds. Okay, we'll just poll for questions. Our first question will be from Chris Quilty of Quilty Space. Chris, you may go ahead and ask your question. Great. Can you guys hear me? Yes, Chris. How are you? Yeah. Who let Adi run the slides this morning? Just kidding. So, first question, I know that the SBS antenna uses a Ball, now BAE, antenna array. Do you have sort of unencumbered rights to use that for other form factors and other markets? Because it seems you seem to imply that, you know, beyond the initial commercial aviation market, you see derivatives of this product. You know, we have the rights to promote the antenna in other business segments. We don't have exclusivity, and of course, it's something that we'll need to discuss with Ball on a case-by-case basis. But no doubt that we intend to take it to other segments other than IFC. Gotcha. And did I hear correctly that, I guess your, your customers have orders for 800 terminals at this point? Yeah. Right now, Stellar Blu has close to 800 units in backlog. It's a firm backlog, covered by agreement, PO, and down payments. Great. Obviously, revenue is next year. Do you have a target for first shipment? First shipments are starting as we speak, today. We expect manufacturing to ramp up during the next few months from several units a month to several tens, and later on, several hundreds of more than hundreds unit per month. We estimate revenue from Stellar Blu to range between $100 million-$150 million in 2025. Great. Can you confirm for me, is this going to be the first multi-orbit IFC antenna on the market? Based on our knowledge, indeed, this is the first multi-orbit antenna available in the market. I know that others are developing antenna, but I don't see them bringing their antenna before the end of 2025, at the earliest, probably later in 2026 or even later than that. Yeah, I think most of the antennas coming to orbit are single... or coming to market are single orbit in the near term. Is that correct? Yeah. Based on the knowledge we have, yeah, correct. Okay. Can you talk about the price of the company? And maybe just as an aside, with the earn-out, how is that structured? Is that cash or stock, and over what time frame, and the sort of performance metrics that, you know, hopefully result in a large payout? Yeah. So in general, the earn-out, the earn-out will be paid in cash, and it's over 24 months, and it's the earn-out objectives are achieving delivery and revenue ratios, additional significant new orders, and some strategic orders, which will include both commitment and increased profitability. Gotcha. And was this the transaction, was this an auction? Was this a, did you reach out to the company, or they reach out to you? How did that transaction come about? No, it wasn't an auction. We reached out to them. Great, and I mean, you have your own internal ESA development. How does this impact your own internal development efforts? For start, it's not going to affect. We have an agreement with Satcom Direct. Development is already in progress, and we hope to demonstrate the antenna soon. We will have several sets of ESA antenna that the customers will be able to pick and choose. In the longer term, we are- we will focus on probably on one set of antennas. Gotcha. And, Gil, presumably, this falls in the satellite network segment, once the acquisition closes? We believe so, yes. Of course, we'll have to finalize it, finish the acquisition. ... Great. Thank you, gentlemen, and congratulations. Thank you. Bold, bold move. Thank you. Thanks. Thanks, Chris. Our next question will be from Noam Nakash of IMA Funds. Noam, you may go ahead and ask your question. Yes, good evening, and congratulations for the acquisition. Thank you, Noam. Yep. One question is about the, if you can supply the Adjusted EBITDA of the, of the Stellar Blu for 2023, and, and for 2024, if you can supply this data. And, what, what is your estimation for the total IFC market share for Gilat and Stellar Blu together, combined? All right, so let me start with the EBITDA question. So this is something that we are not disclosed, but what I can say that they lost on a EBITDA basis, both in 2023, and are expected to lose in 2024. We need to remember that 2023 and most of 2024 are development stage. So revenues were limited to NRE development from customers. First shipments are expected, as we speak, of production units, and production ramp-up is from today, probably until the end of the year. So we expect them to show some revenues this year, but it's depend on production ramp-up. The production line is ready, a very impressive production in line, but it takes time to produce the first unit, to test them before you move to mass production. I can tell you that customers wants the products yesterday, so if the company could deliver the product sooner than later, they would they would do that. As for the IFC market share, so let's start with Gilat for a second. We are working with Intelsat on the networking and the modem side, and Intelsat is give or take slightly below 25% of the market. So that gives that Gilat is around 25% of the modem market. In addition, we deliver to Honeywell, Anuvu, and some others, RF units and amplifiers, that's give or take another 25% of the market from this specific niche. Stellar Blu are working both with Intelsat and Panasonic. Both of them are Ku-band IFC service providers, and together they own close to 50% of the market. So assuming they will deploy Stellar Blu antenna in all of their aircrafts, which it's something that we expect, that means that Stellar Blu will own the majority of the Ku-band IFC ESA terminal market, which is around, I would say, between 40%-50% of the overall IFC market. Okay. Thank you. Thank you, Noam. Thanks, Noam. Our next question is gonna be from Gunther Karger of Discovery Group. Gunther, you may go ahead and ask your question. Gunther, you're muted. Okay. Can you hear me now? Yeah, we can hear you. Hey. Hi, Gunther. How are you? Thank you, and good morning, and congratulations to all of you and the company. The question is defense. This acquisition, will that have any implication for your defense areas? So, it's a good question. For starters, Stellar Blu focus is to deliver their commitment to customers with existing backlog, so all the focus is on the two versions of units right now for Intelsat and Panasonic. But defense and homeland security is a primary market, both for Stellar Blu and for Gilat, and we have the intention to present a version that will fit to the defense needs. And also, the way Stellar Blu antenna is built from tiles, it's really easy to present new versions, smaller or bigger versions of the antenna, so it can fit to a variety of defense applications. So this is no doubt one of our motivations when buying Stellar Blu. Gilat, with its capabilities, together with our global presence and DataPath in the U.S. and Wavestream in the U.S., we have the intention to drive ESA sales also into the defense. ... Thank you. I should have amplified my question to say specifically in the aviation area, military aviation, but particularly on the operational side, operational communications and navigation and command and control, aviation-wise. Yeah, again, as I said, you know, the primary business is the in-flight connectivity, but later on, we will drive it to a additional application, as you mentioned, can be also a nice growth engines. Thank you, Adi, and everyone, best wishes. Thank you, Gunther. Thanks, Gunther. Again, if you have a question, please raise your hand on the platform. We'll poll again, and in a few seconds, we'll also ask some of the questions that have been written in. We have a question from Tal Yaacobi. Tal, go ahead. Hi, thank you, guys, and congratulations for the transaction. My question is, if you can provide an indication for the gross margin, of Stellar Blu? Indication that at the beginning, Stellar Blu gross margin will be slightly lower than Gilat average. We need to remember that, those are initial units. We expect on the longer term to have higher margins, maybe slightly lower than what we see today in Gilat, but very close to Gilat average. Thank you. Thanks, Tal. I'll now read some of the questions that people have written in. Does the acquired company have debt in sight? This is Gil. No, the company has no debt, and we're acquiring it, debt-free. Okay, so next question is, can you provide some more details on Stellar Blu, Stellar Blu? How old is the company? How many terminals have been installed to date? ASP range. Yeah, Stellar Blu is relatively a new company, 2.5 years in the market. It's a spin-off of a larger company. They have already one unit that is flying with Intelsat test aircraft for more than 1.5 years, and initial production units are shipped as we speak. Okay, another question is, is the 800 unit backlog expected for 2024 as well as 2025? Is the company only now starting manufacturing? Yeah, the 800 units or so is the existing backlog. You know, both Intelsat and Panasonic has an overall potential of each close to 2,500, if not more. This company, as I said earlier, has a very impressive manufacturing line at the full turnkey manufacturer in the U.S., and production is ramping up as we speak. Initial units are being shipped as we speak, and we expect a production ramp-up from today until the end of the year. Okay, so, a couple of questions about multi-orbit. What does multi-orbit antenna actually mean? What are its advantages? Is it really required, and do operators plan on offering an in-flight service that actually require multi-orbit capability? Okay. So let me try to explain. Electronically steered antenna is best fitted to a low earth orbit constellation because when working with the geostationary orbit satellites at the poles with a very low elevation, the electronic antenna is not very efficient. What drive the ESA antenna business is a low earth orbit constellation, especially in our case, OneWeb, which allows IFC service providers to buy also capacity from OneWeb and not only from GEO players. Multi-orbit antenna, it's antenna that can work both with LEO satellites and with the MEO and GEO satellites, and can seamlessly shift between those satellites. Electronic antenna is an excellent fit for LEO, and has less issues with the mechanics that you see in mechanical antenna. Less need for RMA, less need for broken components. So again, the driver for ESA is mainly a LEO antenna, and the flexibility that where the antenna allows to service providers is to have the ability to negotiate better prices and utilize both LEO and GEO satellites. Okay, thanks, Adi. Question, Gilat's ESA terminal, ESA terminal, will it be available for Satcom Direct? What is Satcom Direct's demand? How many units a year does it install? And is Satcom Direct also a customer of Stellar Blu? So Gilat existing ESA development for Satcom Direct, we received a minimum commitment of close to 200 antennas, and we are planning to ship them during next year. Stellar Blu is also a potential customer for, sorry, Satcom Direct is also a potential customer to Stellar Blu. But nothing specific to report right now. Okay, we have a follow-up question from Gunther Karger of Discovery Group. Gunther, you may go ahead and ask your question. And you need to unmute. Gunther, you're still muted. Okay, we'll come back to Gunther in a minute. Okay, next question. How many Stellar Blu antennas are currently flying on commercial aircraft today? Today, there are no antennas that are flying on commercial aircraft. Initial units are delivered, and I think that during the third quarter, we expect the first installation. Okay. Question, a financial question about Gilat's IFC revenues today. What were they in Q1? What were they in 2023 and 2022? What are the current IFC products? Are they limited to ground stations for Intelsat's, et cetera? Just provide some information about Gilat's IFC division today. Yes, so, well, we don't present the actual numbers of the IFC vertical. It's included in the satellite networks results, segment results. But, you know, we say that we have about 20% market share today, as Adi mentioned before, so you can do some math. Currently, we're selling ground stations and modems, mainly to Intelsat. We have the ESA development with Satcom Direct that will go into production next year, and we have our SSPA products with Wavestream, with Honeywell and others. So, these are the suite of products that we currently sell. Yeah, and I would like to add that, we announced several very important wins on the IFC segment, for RF units and unique power supplies, for several new customers. One of them is Safran, which is an avionics integrator, and another customer that we are not allowed to name by name, but is one of the largest antenna manufacturer today in the world. So all in all, we see a lot of a lot of business from IFC, and I think that the Stellar Blu will be a significant addition to our IFC revenues. And as Gil said, you know, it's not, we are not disclosing the number, the amount of revenues, but it's several tens of millions dollar a year. Okay. Does the FCC give you a pre-ruling for the transaction? Again, can you please repeat? Do you need... Will the FCC give you a pre-ruling for the transaction, a pre-approval for the transaction? So, the antenna already passed the STC certifications, so we, you know, it's not an obstacle to the transaction. Okay, so we'll try and go back to Gunther Karger from Discovery Group, who wants to ask a question. Gunther, please unmute yourself and ask the question. Thank you. Can you hear me okay now? Yes, Gunther. The question has to do with organizational. How are you going to integrate the sales aspect of this with the new company and the DataPath and the other divisions that you have when there is cross-relationship activities and sales to get the synergies that I think you're looking to get. How are you gonna do that? Today, Gilat has two, or I would say three groups of sales and marketing activity. One is for the satellite networks, one is for the integrated solution, and another one is for DataPath, because it's a SSA, which is a special security agreement company, and needs to work as a standalone. We expect Stellar Blu to continue to work as a standalone company. The main focus right now is to ramp up production and to meet our commitment to customers. There are a lot of synergies between Stellar Blu and the satellite network, and also integrated solution customers, and we are going to review that and take a decision what will be the right way to integrate. But there is no doubt that we need to leverage the relationship that we have with the customers and other customers to cross-sell and up-sell Gilat and Stellar Blu Solutions. Thank you. Thank you, Gunther. Thanks, Gunther. Okay, some more writing questions. Where is the production line? Where is the capacity, or what is the capacity? The production line is in a Flex, Flextronics facility in the US. It's an avionic production line, and the capacity is more than 100 units per month, and they can be increased to more than that if needed. As I said, right now, first units are being shipped from the mass production line, with ramping up production during the next few months. We expect production to be in full force during next year. Okay, what are the conditions that are precedent to closing the transaction? There are some standard customary closing condition and two main regulatory condition. One of them is the foreign ownership in the U.S., what called the CFIUS. And the other one is the antitrust or what called HSR, also in the U.S. It's a process, but we don't think that it's going to be obstacle. I remind everyone that we already received CFIUS approval when we acquired DataPath a few months ago, and then same goes with antitrust. We don't see any issue with that. Okay, a question: Why did you use your cash position instead of splitting the deal between cash and shares? It's mainly negotiation with the sellers. We have today close to $100 billion in net cash. We have a very strong balance sheet that we can leverage. You know, the agreement was to pay in cash based on the payment milestone that I described, $98 million at closing, and another $147 million based on achieving business and financial objectives. Okay. A number of people actually asked about the ASPs of the Stellar Blu terminals. So can you provide more information on that? More information on? Sorry, the average selling price of the terminals. It's a terminal, it's several hundreds of thousands of dollars per terminal. And you can do a quick math, and you can reach to above $200,000 per terminal. It's very attractive, compared to other terminals available today in the market, that their price is more than double than this. This one? What? Okay, just a reminder, if you have a question, you may raise your hand. Just going through the rest of the questions. Okay, we have a question: For the existing IFC revenues, would Intelsat still buy your modem if Sidewinder was installed? Does the Stellar Blu terminal include a modem? So, first, yes, Intelsat will continue to buy modems from Gilat. Actually, today, they are replacing their existing Capricorn Aero modems with a Taurus modem, and we already received the orders for close to 2,000 modems in the last year or two. In order to work with OneWeb, Intelsat will need OneWeb modem. And on each and every aircraft, they will have dual modem, and there will be a software that will know how to switch between the modems based on the relevant satellite. Okay, I think that- Stellar Blu doesn't develop modems. They just sell the terminal itself, the antenna. And Intelsat will need to buy from OneWeb modems. By the way, if I can add, it's becoming an approach with more and more service providers to have dual and sometimes more than two modem approach in order to allow them flexibility to work with several vendors and several satellites. Okay, so we have a last question about competition. Can you tell us who provides competitive terminals today? Are they higher price or lower price than Stellar Blu, Stellar Blu? What is the market share of the existing players? So, you know, let me give a brief on the terminal market competition environment. I would say that we can divide the market into three main technologies. There is the panel antenna, the antennas like JetWave of Honeywell, which is a Ka terminal, which is a single panel antenna, Ku-band terminal by Panasonic. Viasat has the same terminal in Ka. They also have a mechanical antenna that can do Ka and Ku. The second line is VICTS, V-I-C-T-S antennas, mainly by ThinKom. So the ThinKom Ku3030 and the other Ka version. And the third is the ESA antennas, which becoming more and more in the focus today. The leading providers beside the Stellar Blu and Gilat, you can find the GetSAT, you can find, Hughes. SpaceX has their own antenna, and a company like, CesiumAstro and other, small vendors. As for the market share, as I said, the Stellar Blu antenna today is, Ku-band, and the two main, ISPs is Intelsat and Panasonic. Today, they own close to 100% or, let's say, 80%-90% of the Ku market, and their plan is to shift their, antennas into a Stellar Blu Sidewinder solution. Okay, so we have another question. Is the acquisition going to help you win the big LEO contracts? That's a good question. Time will tell. It's definitely it can support and will open us new markets with several other LEO opportunities in the future. LEO is requiring electronic antenna because the fast switches between the satellites. Okay, we have a few more questions have come in. How unique is Stellar Blu in Ku? Well, Stellar Blu only operates in Ku, and why? Stellar Blu today operates in Ku only, mainly because the main customers require Ku solution. There are in the roadmaps additional versions, both on Ka and Ku, and acceleration of those development is dependent on getting such agreements, which also tied with the analog. How much of Panasonic and Intelsat's existing business is Ku- bands? Again, can you repeat? It's how much of Panasonic's business and Intelsat's business is Ku- bands? Panasonic and Intelsat is almost 100% Ku. Okay, and... All right, let's see, okay, another question: Will the Stellar Blu organization be wholly absorbed into Gilat or continue to operate as a separate business unit? Going to continue and work as a standalone company, under probably the satellite network, the business unit. Okay, I think that brings us to the end of the question and answer session. So before I hand over back to Adi, I just wanna let everybody know that in the coming hours, we will upload the recording of this conference call to the Investor Relations section of Gilat's website at www.gilat.com. I wanna thank everybody for joining this call, and, Adi, you may give your concluding statements. Yes, so I want to thank you all for joining us today, on this call on a short notice, and for your time and attention, and, very important questions. We hope to see you soon or speak to you in our next, next call. Thank you very much, and have a great day. Thank you.