Q2 2026 Gilat Satellite Networks Ltd Earnings Call

August 5, 2026

Speaker #1: Ladies and gentlemen, thank you for standing by. Welcome to GILAT's second quarter 2026 results conference call. All participants are at present in listen-only mode.

Speaker #1: Following the management's formal presentation, instructions will be given for the question-and-answer session. For operator assistance during the conference, please press star zero. As a reminder, this conference is being recorded.

Speaker #1: August 5th, 2026. By now, you should have all received the company's press release. If you have not received it, please view it in the news section of the company's website: www.gilat.com.

Speaker #1: I would now like to hand over the call to Mr. Sanjay Harry, of Alliance Advisors IR. Mr. Hurry, would you like to begin please?

Speaker #2: Thank you, Hila, and good morning, everyone. Thank you for joining us for GILAT Satellite Networks' earnings conference call, the second quarter of 2026. With us on the call today are Mr. Adi Sfadia, GILAT CEO, and Mr. Gail Benyamini, GILAT's Chief Financial Officer.

Speaker #2: Before turning the call over to management, I would like to remind everyone that some statements made during this conference call contain forward-looking statements based on current expectations.

Speaker #2: Actual results could differ materially from those projected, as a result of various risks and uncertainties. The potential risks and uncertainties that could cause actual results to differ materially include uncertain global economic conditions, reductions in revenue from key customers, delays or reductions in U.S.

Speaker #2: and foreign military spending, acceptance of the company's new products on a global basis, and disruptions or delays in the company's supply of raw materials and components due to business conditions, global conflicts, weather, and other factors not under their control.

Speaker #2: The company cautions investors not to place undue reliance on forward-looking statements, which reflect the company's analysis only as of today's date. The company undertakes no obligation to publicly update forward-looking statements to reflect subsequent events or circumstances.

Speaker #2: Further information on these factors and other factors that could affect GILAT's financial results is included in the company's filings with the Securities and Exchange Commission, including the latest reports.

Speaker #2: In addition, on today's call, management will refer to certain non-GAAP financial measures that management considers to be useful and that differ from GAAP. These non-GAAP measures should be considered supplemental to the corresponding GAAP figures.

Speaker #2: With that, I'd like to turn the call over now to Gilat's CEO, Adi Sfadia. Please go ahead, Adi.

Speaker #3: Thank you, Sanjay, and good day, everyone. Thank you for joining us today to discuss Gilat's second quarter 2026 results. I am pleased to report that Gilat delivered a strong quarter. During the second quarter, we continued to strengthen our position, advance important strategic initiatives, and execute successfully across our defense, commercial, and Peru businesses.

Speaker #3: Second quarter revenues reached $122.7 million, representing 17% year-over-year growth, and adjusted EBITDA reached $15.4 million, compared with $11.8 million in the same quarter last year.

Speaker #3: For the first half of 2026, revenue reached $233.1 million, and adjusted EBITDA reached $30.5 million. Overall, the first half of the year demonstrates continued progress across our strategic growth engines, defense, and IFC.

Speaker #3: During the quarter, we announced a significant strategic milestone, with the signing of a definite agreement to acquire most of COMTEX satellite and space communication segment.

Speaker #3: The transaction is expected to expand our position in mission-critical defense and satellite communications, strengthen our U.S. presence, broaden our technology portfolio, and more than double GILAT defense revenues.

Speaker #3: The closing of the transaction is expected towards the end of the year, and is subject to several regulatory approvals such as HSR and Cepheus, and other customary closing conditions.

Speaker #3: Now on to the business review. I will start with the defense. GILAT defense continues to build momentum, supported by increasing global demand for mission-critical SATCOM solutions, that can operate reliably in dynamic mobile and contested environments.

Speaker #3: Recent conflicts have highlighted the importance of communication systems that provide mobility, rapid deployment, and operation continuity across land, sea, air, and space domains, driving increased demand for resilient and deployable SATCOM capabilities.

Speaker #3: This evolving operational requirements align well with our defense portfolio and the operational and sales capabilities we have built. During the quarter, we received important awards that demonstrate our growing defense activity in both the United States and Europe.

Speaker #3: In the United States, GILAT defense received orders totaling $11 million to supply SATCOM terminals and field services to the U.S. Department of War, this award highlighting continued demand for GILAT defense's resilient multi-orbit connectivity solutions and services, and reinforced GILAT defense's role as a trusted provider in the U.S.

Speaker #3: market. In Europe, GILAT defense received multi-million-dollar orders to supply custom SATCOM terminals to a European Ministry of Defense. This terminals are designed to meet unique operational requirements combining ruggedized hardware with advanced multi-orbit operability to deliver resilient communications in challenging environments.

Speaker #3: This award reflects the continued recognition of GILAT's field-proven technologies and reinforces our expanding role in the European defense market. During the quarter, we made important progress in product innovation for unmanned platforms.

Speaker #3: During EUROSATURI, we introduced the VIPER-KA, our UAV-KA band ESA terminal, designed to support unmanned ISR and tactical UAVs applications. The VIPER-KA ESA terminal is designed for resilient multi-orbit connectivity supporting operations across multi-orbit satellite constellations and delivering secure, low-latency communications with low swap for mission-critical unmanned operations.

Speaker #3: Overall, our defense business continues to gain momentum, supported by growing demand in both the U.S. and Europe, and continued investment in technologies that address evolving defense requirements.

Speaker #3: With the closing of the acquisition of COMTEX satellite and space communications in parallel, we believe GILAT defense will be equipped to pursue even larger opportunities and support the growing demand for secure, resilient mission-critical connectivity.

Speaker #3: Turning to our commercial business, our commercial business continues to show strong progress during the second quarter, particularly around our SKYEDGE platforms and IFC portfolio.

Speaker #3: Satellite operators and IFC service providers are moving towards more flexible, scalable, and multi-orbit architectures, and Gilat has ground segment expertise as well as an established ESA portfolio and customer relationships needed to support this transition.

Speaker #3: Our SKYEDGE platforms remain a key foundation for next-generation satellite networks. During the quarter, we received more than $20 million in orders from a leading global satellite operator, awarded mainly for our SKYEDGE platforms and services.

Speaker #3: We expect to see additional demand for our SKYEDGE platforms as operators continue to deploy next-generation constellations and upgrade their grounded infrastructure. In IFC, the SIDEWINDER ESA terminal is progressing into large-scale deployment.

Speaker #3: During the quarter, we received $43 million of orders from a leading IFC service provider for SIDEWINDER ESA terminals, with deliveries for both line-fit and retrofit.

Speaker #3: This awards support continued growth in our mobility business and further validate SIDEWINDER's role in next-generation multi-orbit IFC architectures. The Boeing line feet program and certification activities continue to advance during the quarter.

Speaker #3: Through integration partners, Boeing will offer line feet installation capability helping accelerate deployment timelines and reduce the costs and operational disruption associated with retrofit programs.

Speaker #3: We are progressing well towards full certification, an important step in making the SIDEWINDER ESA terminal commercially available as line-fit options. Deliveries of the first units are expected in Q4 this year.

Speaker #3: In parallel, we have begun the process toward line feet availability with Airbus and received an order as part of this effort, further expanding the long-term opportunity for SIDEWINDER across the commercial aviation market.

Speaker #3: Overall, our commercial business continues to benefit from growing demand for multi-orbit connectivity across both network infrastructure and mobility applications. With continued traction for our SKYEDGE platforms, strong momentum for SIDEWINDER, and progress on both Boeing and Airbus line feet programs, we believe we have strong foundation for additional growth opportunities as market continues to evolve.

Speaker #3: Our PORIB business continues to execute well, with solid operational progress across our social inclusion programs. We completed work in the first three regions of our infrastructure upgrade program, and we moved to the operational phase in parallel with the supervision activity.

Speaker #3: In Cusco, the project is expected to be completed during the third quarter. This milestone continues to demonstrate GILAT's pervasive ability to deliver large-scale communication projects efficiently and reliably.

Speaker #3: We continue to advance discussion on several significant project expansions while actively pursuing additional large-scale opportunities that support PORIB's ongoing investment in social inclusion and nationwide connectivity.

Speaker #3: I am pleased to say that we continue to have a strong backlog and a healthy pipeline. Therefore, we are reiterating our 2026 annual guidance.

Speaker #3: We expect 2026 revenues of between $500 and $520 million and adjusted EBITDA of between $61 and $66 million. The satellite communications market continues to benefit from growing demand for resilient connectivity, mobility applications, and multi-orbit networks.

Speaker #3: We continue to see favorable market dynamics across our defense and IFC growth engines, supporting our long-term growth strategy. GILAT defense continues to be one of our primary growth engines.

Speaker #3: We are seeing increasing investment in defense communication across the U.S., Europe, and other allied markets, supported by ongoing demand for advanced SATCOM solutions. We believe our portfolio and continued focus on innovation provide a strong foundation for future growth.

Speaker #3: Our commercial business continues to benefit from the next from the industry transition towards multi-orbit networks and next-generation mobility services. We see continued opportunities for our SKYEDGE platforms as operators expand network capacity and capabilities, while SIDEWINDER remains a strong contributor to the growing demand for advanced IFC solutions.

Speaker #3: Our second quarter result reflects continued execution across the business and reinforces our confidence in the opportunities ahead. Backlog and pipeline entering the second half of the year support our full-year outlook and reinforce our confidence in the long-term growth opportunities across the business.

Speaker #3: And with that, I will hand over the call to Gil Benyamini, our CFO. Gil, please go ahead.

Speaker #2: Thank you, Adi. Good morning and good afternoon to everyone. Before I dive into the numbers, I would like to remind everyone that our financial results are presented both on a GAAP and non-GAAP basis.

Speaker #2: I will now walk through our financial highlights for the second quarter of 2026. As Adi mentioned, we delivered a strong second quarter with 17% year-over-year revenue growth and 31% year-over-year growth in adjusted EBITDA.

Speaker #2: Growth was broad-based across all three segments, and adjusted EBITDA grew faster than revenues, demonstrating solid operating leverage. In terms of our financial results, revenues for the second quarter were $122.7 million, representing 17% growth compared with $105 million in Q2 '25.

Speaker #2: The revenues for the commercial segment in Q2 '26 were $83 million, compared with $69.1 million in the same quarter last year. The 20% growth year-over-year was primarily driven by revenues from the in-flight connectivity vertical.

Speaker #2: Revenues for the Defense segment in the second quarter of '26 were $22.5 million, 12% higher than $20 million in the same quarter last year.

Speaker #2: Q2 '26 revenues for the PORIB segment were $17.2 million, 8% higher than $15.9 million in Q2 '25. Our GAAP gross margin in Q2 '26 was 30%, in line with the same quarter last year.

Speaker #2: The decrease in the gross margin compared to Q1 '26 is mainly attributed to less favorable deal mix in the commercial segment, partially offset by higher gross margin in PORIB segment.

Speaker #2: Gap operating expenses in Q2 '26 were $32.6 million, compared with '26.2 million in Q2 '25. The increase was primarily attributable to an earn-out provision related to the acquisition of DataPath, which was recorded in gap GNA expenses.

Speaker #2: As a result, gap operating income was $4.7 million compared to $5.7 million in Q2 '25. Gap net income in Q2 '26 was $8.1 million, rediluted income per share of $0.10, compared with gap net income of $9.8 million or a rediluted income per share of $0.17 in Q2 '25.

Speaker #2: Turning to non-GAAP results, our non-GAAP gross margin in Q2 2026 was 32%, compared with 33% in Q2 2025. The decrease is primarily attributable to a less favorable deal mix in Defense and the PORIB segment, partially offset by improved margins in the Commercial segment.

Speaker #2: Non-gap operating expenses for the quarter were $26.3 million, compared with $25.2 million in Q2 '25. Non-gap operating income in Q2 '26 was $12.6 million, 35% higher than $9.3 million in Q2 '25.

Speaker #2: The non-gap net income in Q2 '26 was $15.6 million, or a diluted income per share of $0.20, compared with the non-gap net income of $12 million or income per share of $21 cents in Q2 '25.

Speaker #2: The difference between the growth in the net income and the diluted earning per share reflects the higher diluted share count due to $166 million raised in the last trimester of 2025.

Speaker #2: Adjusted EBITDA reached $15.4 million, 31% higher than Q2 '25, reflecting strong operating leverage on higher revenues. Adjusted EBITDA margin expanded to approximately 12.6%, compared with approximately 11.2% in Q2 '25, an improvement of 1.4%.

Speaker #2: Moving to the balance sheet and cash flow. During the quarter, we used approximately $1.9 million in operating cash, primarily reflecting working capital timing. We ended the quarter with strong liquidity position of $159 million, comprised of cash, cash equivalents, restricted cash, and short-term deposits.

Speaker #2: VSOs were $110 days, excluding PORIB construction activity and remain within our expected range. Our shareholders' equity as of June 30, 2026, totaled $545 million, compared with $536 million on March 31, 2026.

Speaker #2: Looking ahead, based on our backlog, pipeline, and expected delivery plan, we are reiterating our full-year '26 guidance. Revenues are expected to be between $500 to $520 million, representing 13% growth year-over-year at the midpoint.

Speaker #2: We expect an adjusted EBITDA of between $61 million and $66 million—representing 19% growth at the midpoint—and continued margin expansion. Importantly, we are maintaining this outlook despite unfavorable movements in the Israeli shekel versus the US dollar, which are expected to increase our operating expenses in the second half of 2026.

Speaker #2: That concludes my financial review. We would now like to open the call for questions. Operator, please go ahead.

Speaker #1: Thank you. Ladies and gentlemen, at this time we will begin the question and answer session. If you have a question, please press star one.

Speaker #1: If you wish to cancel your request, please press star two. If you are using speaker equipment, kindly lift the handset before pressing the numbers.

Speaker #1: Your questions will be taken in the order they are received. Please stand by while we collect your questions. The first question is from Louis De Palma of William Blair.

Speaker #1: Please go ahead.

Speaker #3: Hey, and Gil, good afternoon.

Speaker #4: Hi, Louis.

Speaker #2: Louis.

Speaker #3: Over the years, Hughes has been referenced as one of your larger competitors. Do you see any impact from the bankruptcy, in terms of potential opportunities or strategic activity?

Speaker #3: Thanks.

Speaker #4: So, in deed, used over the years, were a significant competitor of Gilat, mainly on the geo side, but also the sole provider of OneWeb modems. Hughes is also a customer of Gilat.

Speaker #4: We sell them SSPAs. We also buy from them modems to integrate with our side window multi-orbit ESA antenna. We do have a small debt from them, a few hundred thousand really insignificant, based on the indication we got from them that they said that they have intention to pay all their debt and continue business as usual.

Speaker #4: I suspect that some of the customers will have uncertainty about working with a company under Chapter 11, especially customers that require long-term development efforts and long-term service needs.

Speaker #4: And over there, we see an opportunity to penetrate.

Speaker #3: Great. That is helpful. And at the recent defense industry conference you announced, the KA band, VIPER antenna, as part of your RAYSAT subsidiary, what KA band constellations should that antenna support?

Speaker #3: And what are the major applications that you envision seeing the greatest demand for the antenna? Thanks.

Speaker #4: So generally speaking, it's going to support all the KA constellations, from geo satellites through telesat LEO and MPOWER KA. It can be installed on several types of and also Amazon, by the way.

Speaker #4: It can be installed in several types of UAVs and supports all the relevant applications that those UAVs are required to perform.

Speaker #3: Great. And how, I guess, how small of unmanned aerial vehicles can the antenna support? Does it go as small as Group 3 drones, or are the drones needed to be much larger?

Speaker #4: No, it's from small to medium UAVs.

Speaker #3: Excellent. And another topic I was wondering: can you provide an update on the Stellar Blue milestone payments such that I think there were different milestones perhaps related to line fit or strategic partnerships for this year, but can you provide an update?

Speaker #4: Definitely. So the last milestone of Stellar Blue was to sign a strategic agreement. The milestone was until June 2026. We didn't meet it, although we signed an important agreement during the quarter with the Airbus line fit. It didn't mean we met the qualification in the agreement to meet the air and out requirement.

Speaker #4: So basically, we paid $99 million for the Stellar Blue, $98 million for the Stellar Blue acquisition. And now we are free from Air and Out obligations and working on cost reductions and large deployments with our customers.

Speaker #3: Great. And what was the—are you able to share—what was the revenue for Stellar Blue in the quarter, or just the growth for Stellar Blue relative to last year?

Speaker #4: I can share that this quarter was a record quarter in terms of the number of terminals that we delivered—more than 200 terminals we delivered this quarter.

Speaker #4: A nice growth over the previous quarter. The Stellar Blue revenues are part of the commercial revenues and it's since the commercial revenues is integrated segment, it's hard to break the information.

Speaker #4: This quarter, we have a book-to-revenue ratio on the terminal side that was higher than one.

Speaker #3: Excellent. Thanks. That's it for me.

Speaker #4: Thank you, Louis.

Speaker #2: Thank you, Louis.

Speaker #1: The next question is from Chris Quilty of Quilty Space. Please go ahead.

Speaker #5: Thanks. Just as a follow-up on that, do you know how many terminals are actually installed and operating now?

Speaker #4: I don't remember the exact number. I think it's around 600 units; slightly more than 600 units are installed and operating.

Speaker #5: Gotcha.

Speaker #4: But Chris, I think it's important to emphasize that the installation is up to our customers and not up to us. We delivered significantly more units than that, and the installation is depend on their timeline and their agreement with the airlines.

Speaker #5: Gotcha. And do you know if the installation times are compressing? Because typically, these would take a long period of time, and I think Starlink is doing these in a matter of hours nowadays.

Speaker #4: I know that they are working hard to run the install. It really depends on the aircraft availability and maintenance windows. I think that they are about to finish the second large order in the next few months.

Speaker #5: Understood. Are you moving closer, or are you still in negotiations with any other airline customers that you think are likely before the end of the year?

Speaker #4: We are not engaged directly with the airlines. Most of the engagement is done through our partners, the SCS and Panasonic. We know that they got several awards that we are not allowed to expose.

Speaker #4: And in some cases, they don't share with us all the opportunities upfront. We know that they are bidding on some very large opportunities that can drive significant revenue growth in the future.

Speaker #5: Great. Gil, just a question on the segment growth here. If I look at your prior forecast for the defense segment, I think it's got to grow about 40% in the second half over the first half.

Speaker #5: Is that still a good trajectory for the defense segment? And I guess the same for the other two segments—are they still tracking on the beginning-of-the-year forecast, or has that shifted?

Speaker #2: Yes, so our forecast is based on firm backlog, delivery schedule, and pipeline. The forecast for Defense is as we presented, and we definitely see a much higher H2 in Defense compared to H1.

Speaker #2: And this is, again, aligned with the backlog and expected book-to-ships in the second half of the year. The same is relevant.

Speaker #5: So, the commercial segment was—yeah. And the commercial segment was better than I had forecast in Q2, but I assume that's primarily hardware shipments related, with that the large number of terminals shipped.

Speaker #2: Yeah, it's a combination of the deliveries of the Sidewinders that ID mentioned, the record delivery, and yeah, and hubs and other network equipment that might shift a bit to the right or to the left.

Speaker #2: And yeah, it was better than expected.

Speaker #5: Understand. And on the sky edge for platform, are you yet seeing any early pull from your customers have a lot of software-defined satellites on orbit?

Speaker #5: I think we're looking toward next year for the delivery of those systems. Or do you not expect to see firm orders until satellites are on orbit?

Speaker #4: No, the way we work with our customers is that, in some cases, they advance orders. They want to be ready when the satellite is in orbit.

Speaker #4: We do expect to get some large orders. From our existing customers and new customers, we there are several satellites that are planned to be launched next year, and in some cases, we are in competition process, and in some cases, we expect to get the orders.

Speaker #5: Gotcha. And on the broader commercial landscape, you've kind of seen verticals like cellular backhaul, cycle up and cycle down. Are you seeing any trends on the commercial side of the market worth noting?

Speaker #4: Nothing new. The focus today on the commercial side is mainly on the IFC and the maritime on the mobility. We do see a lot of traction around small and micro geo satellites.

Speaker #4: Especially on the sovereign satellites. We do see a lot of traction around sovereign networks or sovereign or countries that want to launch sovereign Leo constellations, small constellation to support their needs.

Speaker #4: A lot of countries understand that they need solution both on the geo side and on the Leo side. No doubt that geo in terms of sovereign network is much cheaper, but some of the countries would like to have a full-blown Leo constellation.

Speaker #5: Got it. Just to circle back to the UAV opportunity. Is that product priced for more longer duration strategic platforms, or is this something that you can price more in the expendable category, which is then primarily the trend?

Speaker #4: I think at the end, the product will be customized per customer and per platform. And the pricing will be based on the customer-specific configuration.

Speaker #4: So, I think at the end, we will cover both of the models. Generally speaking, we want to be attractive in terms of swap and cost.

Speaker #5: Gotcha. Gil, just to real quick, the working capital, some of the accounts seem larger this quarter. Were there any sort of unusual moves and fair to assume we'll see that turn into more cash flow in the back half of the year?

Speaker #2: Yeah. So this is mainly needs for deliveries in the second half of the second year. So you can see it, for instance, in the inventory and so on.

Speaker #2: And of course, it also affected cash, as I said. We had some working capital needs. And we do expect to see stabilization during the second half of the year.

Speaker #4: Chris, we revenue grew significantly this quarter over the same quarter last year. And at the end, when you grow revenue, you need to invest in working capital.

Speaker #4: And as Gil said, we do expect to see continued growth, and this is one of the reasons we increased our inventory—to shorten lead time.

Speaker #4: Everything is against backlog, and we expect to consume it in the next two to three quarters.

Speaker #5: Gotcha. And finally, just on the amplifier product line, I know it's kind of buried within defense now, but you had a bunch of new products come out last year.

Speaker #5: Are you seeing any traction there? If we were tracking that business in the old way, are we looking for sort of double-digit growth there this year?

Speaker #4: We expect to see a decent growth. It's both on the commercial side and the defense side. To be honest, these days, the commercial side is bigger than the defense side.

Speaker #4: In Defense, we received some very nice orders, including development of new products. We expect to see growth in the future. On the commercial side, the focus used to be IFC, and today it is mainly SSPA to LEO gateways.

Speaker #4: And we work with two out of the three that are available today.

Speaker #5: So are these KA or KU?

Speaker #4: KA.

Speaker #5: Okay.

Speaker #4: Right now it's KA.

Speaker #5: Got it. All right. Thank you, gentlemen.

Speaker #4: Thank you.

Speaker #2: Thank you, Chris.

Speaker #1: The next question is from Ryan Koontz of Minimum Company. Please go ahead.

Speaker #2: Great. Thanks. Most of my questions have been answered here. Maybe in terms of the defense side, just another angle here. Is there much of a product makeshift going on compared to what you've seen in past years?

Speaker #2: Any trends you'd point out on the defense side of the business?

Speaker #4: I think what we can say is that we see much more business around the decades, the fact that the Middle Eastern situation, the fact that the Iranians took out of operation several fixed US gateways around the Middle East.

Speaker #4: Increased the need for mobile gateways deployment. So we see a lot of traction around this. And based on data past history, it's after such operations, they see a lot of business growth on the deckets.

Speaker #4: We do see a lot of loitering munition and small ESA need for loitering munition. We don't have a solution for that right now, but it's something that we are considering carefully and in discussion with several customer to customize our solutions to comply with the needs of loitering munition.

Speaker #4: We believe this is a significantly growing segment in the near future.

Speaker #2: That's great, Eddie. And then maybe on the Peru side, what's that mix been like on recurring versus one-time build revenues there? This year versus, say, last year?

Speaker #2: For Peru?

Speaker #3: So last year, if you remember, Ryan, we signed the round Q3 at the expansion project. Of about 85 million dollars, which about half of it is one-time, over about a year.

Speaker #3: So it's almost done. By now, and the rest of revenues are kind of recurring revenues not in the term of subscription, but it's a long-term service contract that we have over there, to operate the networks and for some other long-term projects.

Speaker #3: So I can say that this quarter and going forward, the majority of the revenues in Peru are in kind of recurring revenues.

Speaker #2: Great. Thanks. And maybe one last question on IFC. You talked about working through your partners today. Are there particular geographies or types of planes you think that they're seeing or types of aircraft that they're seeing the most traction with for your Stellar Blue Solution, your Sidewinder?

Speaker #4: I think that today they are tackling this globally. I think that there are several countries where IFC penetration is relatively low, and I think that over there, it represents the biggest opportunity.

Speaker #4: I think Asia Pacific is a big opportunity. And of course, Latin America.

Speaker #2: Super helpful. Thanks, gentlemen.

Speaker #4: Thank you, Ryan.

Speaker #3: Thank you, Ryan.

Speaker #1: The next question is from Sergei Glinianov of Freedom Brokers. Please go ahead.

Speaker #5: Good day, Eddie. Gil.

Speaker #4: Hi.

Speaker #5: So one question. How should we think about the margin in second half? Because according to your guidance range, the positive scenario is 12.3% EBITDA margin for second half versus first half margin at 13.1%.

Speaker #5: What are more the factors that could impact adversely and what could you optimize to reach highest number in second half? Thank you.

Speaker #2: Okay. Hi, Sergei. So, I would say that there are probably two trends. One, we expect to see higher revenues in the second half of the year.

Speaker #2: And to have some leverage, which will positively affect the EBITDA margins. This is one side. Of course, mix and deliveries can shift a little bit to the right or left, but in general, this is the trend.

Speaker #2: On the other hand, we do expect to see some additional three to five million dollars of operating expenses in the second half due to the exchange rate between the US dollar and the Israeli shekel and its effect on our expenses.

Speaker #2: So, all in all, when we combine both, we are maintaining the same EBITDA margins that we had at the beginning of the year in the guidance throughout the whole year.

Speaker #5: Okay. Thank you.

Speaker #1: The next question is from Gunther Karger of Discover Group. Please go ahead.

Speaker #4: Yeah. Thank you. I have a question and a comment. The question is, where in GILAT do you expect the contact and acquisition of the satellite business to be placed?

Speaker #4: The contract is going to be placed mainly on the defense side. The revenues are 70 to 80 percent defense and 20 to 30 percent commercial.

Speaker #4: So, the defense will go with the defense, and the commercial will go with the commercial. What we are requiring is a set of six different business units, and we will allocate the business units between the relevant segments.

Speaker #4: So, the modem, for example, will be mainly under the defense business. Yes, thank you. And the comment is that the founders—the eleven sons and brothers—would be very proud of what you have done with the company.

Speaker #4: Thank you very much.

Speaker #2: Thank you.

Speaker #3: Thank you.

Speaker #1: Is there any additional questions? Please press that one. If you wish to cancel your request, please press start two. Please stand by while we pull for more questions.

Speaker #1: There are no further questions at this time. Mr. Benjamin, would you like to make a concluding statement?

Speaker #3: I want to thank you all for joining us on this call and for your time and attention. We look forward to speaking with you again next quarter.

Speaker #3: Thank you very much and have a great day.