GILAT SATELLITE NETWORKS COMPANY OVERVIEW November 2018 NASDAQ, TASE: GILT
FORWARD LOOKING STATEMENTS DISCLAIMER Certain statements made in this presentation that are not historical are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. The words "estimate", "project", "intend", "expect", "believe" and similar expressions are intended to identify forward- looking statements. These forward-looking statements involve known and unknown risks and uncertainties. Many factors could cause the actual results, performance or achievements of Gilat to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in general economic and business conditions, inability to maintain market acceptance to Gilat's products, inability to obtain financing and/or timely develop and introduce new technologies, products and applications, rapid changes in the market for Gilat's products, loss of market share and pressure on prices resulting from competition, introduction of competing products by other companies, inability to manage growth and expansion, loss of key OEM partners, inability to attract and retain qualified personnel, inability to protect the Company's proprietary technology and risks associated with Gilat's international operations and its location in Israel. Gilat undertakes no obligation to update or revise any forward- looking statements for any reason. For additional information regarding these and other risks and uncertainties associated with Gilat's business, reference is made to Gilat's reports filed from time to time with the Securities and Exchange Commission. Unaudited/Non-GAAP Financial Measures This presentation includes financial data that is not audited and financial data that was not prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). Non-GAAP financial measures appearing in this presentation consist of GAAP financial measures adjusted to exclude, non cash share-based compensation expenses, impairment of goodwill and long lived assets, amortization of acquired intangible assets, restructuring, trade secrets litigation expenses, tax expenses under amnesty program, deferred tax benefit that was recorded for the first time and other non-recurring expenses and net income or loss from discontinued operations. Gilat believes these non- GAAP financial measures provide consistent and comparable measures to help investors understand Gilat ’ s current and future operating performance. However, our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read in conjunction with Gilat ’ s consolidated financial statements prepared in accordance with GAAP. Additionally, these non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies. 2 | Proprietary and Confidential
GILAT – BOUNDLESS COMMUNICATIONS 4G/5G 2G/3G Air Sea Land Consumer Enterprise MOBILE MOBILITY RURAL BROADBAND GLOBAL PRESENCE MOST ADVANCED TECHNOLOGY END-TO-END SERVICE 20 sales offices Terrestrial-grade user experience Most stringent service levels Established 1987 NASDAQ / TASE: GILT ~1,100 employees 3 | Proprietary and Confidential
BOOMING CAPACITY – GEO + LEO/MEO Global HTS Bandwidth Supply, Demand and Price per Mbps $/Mbps/Month Gbps 1,000 1,000 20,000 10,000 900 900 18,000 9,000 ~16 times today 800 800 8,000 16,000 700 700 7,000 14,000 ABUNDANCE 600 12,000 600 6,000 OF CAPACITY 500 500 10,000 5,000 UNLOCKS 400 400 8,000 4,000 NEW MARKETS 300 6,000 300 3,000 200 200 4,000 2,000 100 100 2,000 1,000 - 0 - 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 GEO-HTS Global Demand GEO-HTS Global Supply GEO-HTS Global Demand GEO-HTS Global Supply Weighted Avarage GEO-HTS Price Non-GEO HTS Global Supply Weighted Avarage GEO-HTS Price Source: Euroconsult, NSR, 2017 4 | Proprietary and Confidential
AFFORDABLE INTERNET EVERYWHERE IS BECOMING A “ BIRTH RIGHT ” WE ALL WANT BROADBAND WE ALL WANT BROADBAND SATELLITE DELIVERS Everywhere. Anytime. Affordable. Everywhere. Anytime. Affordable. Affordable, Plentiful, Terrestrial-grade User Experience Mobile Mobility Broadband 5 | Proprietary and Confidential
ACCELERATING CONNECTIVITY – GROWTH AREAS Mobile Mobility Broadband Cellular Backhaul, Broadband to the In the Air, at Sea, on the Ground Network Resilience, Public Safety Unserved and Underserved 6 | Proprietary and Confidential
LEADING THE FAST GROWING SATELLITE BACKHAUL MARKET Satellite Backhaul Market $3,300M “ Gilat continues to unlock new opportunities and capture a bigger share of the pie …” (2027) Source: NSR, April 2018 $790M (2017) 7 | Proprietary and Confidential
MOBILE / BACKHAUL HIGHLIGHTS Focus on developed markets o North America, Japan, Australia, Europe Above average gross margin Long term deals o Providing recurring revenues 8 | Proprietary and Confidential
METRO AREA - A LIVE EXMPLE 9 | Proprietary and Confidential 9 | Proprietary and Confidential
MOBILITY – SUPERIOR PASSENGER EXPERIENCE DRIVES DEMAND Satellite Broadband Connected Aircrafts Commercial Aircrafts Business Aircrafts 27,800 8,800 (2027) (2027) 5,200 500 (2017) (2017) Source: EuroConsult, July 2018 Source: EuroConsult, July 2018 10 | Proprietary and Confidential
Expanding to IFC antennas with Leading Performance Solutions Dual Band 400Mbps Ku/Ka Antenna Modem ESA/PAA Ku and Ka Transceivers 11 | Proprietary and Confidential 11 | Proprietary and Confidential
MOBILITY / IFC HIGHLIGHTS While we continue to grow with Gogo: o Growing backlog, now >2,200 airplanes to be connected with Gilat Dual-band Ku/Ka terminal o Passed DO-160 o Commercially available ARE o Making progress with domestic airlines in China Based on Gilat ’ s dual-band Ku/Ka terminal o Business Aviation A significant opportunity – over 35,000 airplanes o Complete offering – modem, antenna and transceiver o 12 | Proprietary and Confidential
BROADBAND / HTS HIGHLIGHTS Gazprom o Providing broadband connectivity across Russia over new satellite (Yamal 601 Ka) o Current phase: ~ $18M for activating third of the satellite capacity CS-18 Extending satellite coverage throughout China with new satellite – CS-18 o Gilat is the sole solution to China ’ s HTS Ka (CS-16 & CS-18) o Hispasat o Extending agreement to include Brazil on top of Mexico o Over Amazonas 3 and 5 Ka-band HTS JSAT o Delivering wide range of mobility and fixed broadband applications in Japan NBN progress o Connecting nationwide businesses and enterprises in regional and rural Australia 13 | Proprietary and Confidential
NGSO IS MATERIALIZING O3b mPO mPOWER WER 882 LEO satellites 292 LEO satellites >10,000 LEO satellites 7 MEO satellites GEO GEO 35,786 km MEO MEO 2,000-10,000 km LEO LEO 500-2,000 km 14 | Proprietary and Confidential 14 | Proprietary and Confidential
NGSO IS MATERIALIZING Several constellations in advanced stages: SpaceX, OneWeb, Telesat, mPower Gilat involved in a number of them Opportunity is both baseband as well as ESA antennas o Telesat/GEE IFC demo 15 | Proprietary and Confidential
SECURING TECHNOLOGY LEADERSHIP IN THE LONG RUN >$30M/year R&D budget (above sector average) Over 300 engineers Over 100 Patents 5 R&D centers (Israel, USA, Bulgaria, Moldova, Singapore) Pioneering Next Generation Solutions GEO MEO LEO GEO/MEO/LEO Networks Satellite for 5G Electronically Steered Antennas 16 | Proprietary and Confidential
BROADBAND / PERU HIGHLIGHTS Reduced 2018 projections due to slower than expected progress Our main interest is not the construction but recurring maintenance revenue Plan is to complete first 4 regions in 2019 and move to operations Target is profitable recurring revenues run rate of >$50M/year from 2020 17 | Proprietary and Confidential
FINANCIAL INDICATORS AND ANALYSIS 18 | Proprietary and Confidential 18 | Proprietary and Confidential
2018 UPDATED GUIDELINES AND OUTLOOK – INCREASED PROFITABILITY US$ MILLIONS Revenues w/o Terrestrial Infrastructure Revenues $242M-$248M ($204. 5 M) 18%-21% YoY $265M-$275M ($282.8M) Mobility Solutions Revenues (3%)-(6%) YoY Mainly IFC $98M-$100M ($88.4M) 11%-13% YoY Adjusted EBITDA Operating Profit $35M-$37M ($26.2M) GAAP $22M-$24M ($10.9M) 34%-41% YoY Non GAAP $26M-$28M ($18.5M ) 19 | Proprietary and Confidential
EXECUTING PROFITABLE GROWTH STRATEGY Updated 2018 Management Objectives (US$ millions) Annual Revenues Adjusted EBITDA GAAP Operating Profit 279.6 282.8 35-37 265-275 22-24 26.2 19.2 10.9 0.8 2016 2017 2018E 2016 2017 2018E 2016 2017 2018E Revenues: $265M - $275M GAAP Operating Profit: $22M - $24M Adjusted EBITDA: $35M - $37M 20 | Proprietary and Confidential
GILAT REVENUES & TERRESTRIAL INFRASTRUCTURE BREAKDOWN US$ millions $283M $280M $265M-$275M $23M-$27M $78M $92M $242M-$248M $205M $188M 2016 2017 2018E Satellite Terrestrial Infra. 21 | Proprietary and Confidential
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