Release Date: February 12, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Gilat Satellite Networks Ltd (NASDAQ:GILT) achieved a strong fourth quarter with Q4 revenue reaching $78.1 million, driving full-year revenues to $305.4 million, a 15% increase year over year.
• The company completed the acquisition of Stellar Blue, enhancing its capabilities in the in-flight connectivity (IFC) market and strengthening its position as a market leader.
• Gilat Satellite Networks Ltd (NASDAQ:GILT) has reorganized into three divisions: Gilat Defense, Gilat Commercial, and Gilat Peru, allowing for more focused growth strategies.
• The company secured significant orders, including approximately $19 million for network equipment from IFC partners and $9 million from the US Department of Defense and international defense organizations.
• Gilat Satellite Networks Ltd (NASDAQ:GILT) expects 2025 revenues between $415 million and $455 million, with adjusted EBITDA projected to range between $47 million and $53 million, indicating continued growth.

Negative Points

• The termination of activities in Russia led to a decline in revenue for the satellite network segment.
• Stellar Blue's lower gross profit compared to Gilat's usual gross profit is expected to affect EBITDA margins in 2025.
• There are anticipated delays in the renewal of some recurring contracts in Peru, which might push revenues down slightly in 2025.
• The defense segment's growth is not expected to be linear due to its project and program-based nature, which could lead to variability in revenue.
• The integration and ramp-up of Stellar Blue's production are still in early stages, with potential challenges in achieving cost efficiencies and meeting contingent payment milestones.

Q & A Highlights

• Warning! GuruFocus has detected 4 Warning Sign with GILT.

Q: Is the previous guidance for Stellar Blue's revenue of $120 to $150 million for 2025 still relevant? A: Yes, this guidance is still relevant and is included in the overall guidance. (Respondent: Unidentified_4)

Q: Will Stellar Blue be a separate segment in the new organizational structure? A: Stellar Blue is not a reportable segment. It is managed out of the commercial division with synergies between Gilat's IFC sub-segment and Stellar Blue. The results will be consolidated under the Gilat commercial division. (Respondent: Unidentified_3)

Q: What are the expected costs related to the new organizational structure? A: A presentation on the segment change is available on our website, providing high-level financial results for 2023 and 2024 to assist analysts and investors. (Respondent: Unidentified_3)

Q: Why is there a slight decrease in EBITDA margin in the 2025 guidance compared to 2024? A: Stellar Blue has a lower gross profit, affecting EBITDA. Stellar Blue is in its production ramp-up phase and is expected to be EBITDA positive by the second half of the year. Additionally, significant investments in the defense division, especially in R&D and sales and marketing, contribute to the lower EBITDA ratio for 2025. (Respondent: Unidentified_3)

Q: What is the expected timeline for contracts associated with the Iris Square Consortium? A: Initial discussions are positive. The consortium is expected to issue additional RFIs or RFPs by mid-2025, with awards anticipated before the end of the year and agreements signed in early 2026. However, this timeline may be aggressive, and delays are possible. (Respondent: Unidentified_3)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.