RADA Electronic Industries Ltd. (NASDAQ: RADA)
announced today its financial results for the period ended
September 30, 2019.
2019 Third Quarter Highlights
- Revenues were a record $11.3 million, up 60%
year-over-year;
- Full year revenues are expected to surpass $43 million,
representing another record;
- Gross margins remained stable at 36% in the third quarter;
- RADA’s ongoing investments in R&D and in its US presence
are bearing significant fruits;
- Net cash of $16.7 million as of September 30.
Management Comments
Dov Sella, RADA's Chief Executive
Officer, commented, “We are very pleased with our strong
performance in the third quarter, as revenues set at an all-time
high with a significant 60% increase over the third quarter of last
year. This represents the continued fruits of our long-term
investments in our radar technology as well as the more recent
investments in our US presence. Looking ahead, the market for
tactical radars is showing tremendous growth and we are seeing
significant interest and orders, not just from the US, but
throughout the world. We believe this will continue to accelerate
and power our growth in the quarters ahead. We maintain our
expectation of full year revenues exceeding $43 million, as our
high growth rate continues, bringing another record quarter and
record year for RADA. We also expect our operating expenses to
stabilize in the near-term, and along with the anticipated revenue
growth, we expect to reach profitability during 2020.”
2019 Third Quarter Summary
Revenues totaled $11.3 million
in the quarter, compared with revenues of $7.0 million in the third
quarter of 2018, an increase of 60% year-over-year and 12%
sequentially.
Gross profit totaled $4.1 million (36% of
revenues) in the quarter, an increase of 60% compared to gross
profit of $2.5 million (36% of revenues) in the third quarter of
2018.
Operating expenses in the quarter were $4.6
million compared with $2.7 million in the third quarter of last
year. The increase was primarily in R&D expenses and G&A
expenses, and due to the investment in RADA’s presence and
manufacturing facility in the United States.
Operating loss was $0.5 million in the quarter
compared to operating loss of $0.1 million in the third quarter of
2018.
Net loss attributable to RADA’s shareholders in
the quarter was $0.7 million, or $0.02 per share, compared to a net
loss of $0.02 million, or $0.00 per share, in the third quarter of
2018.
As of September 30, 2019, RADA had net cash and cash
equivalents of $16.7 million compared to $20.8 million as
of year-end 2018. The decline reflects ongoing investments and
higher inventory levels to meet the expected increase in customer
demand.
2019 First Nine months Summary
Revenues totaled $30.0 million
in the first nine months, compared with revenues of $19.6 million
in the first nine months of 2018, an increase of 53%.
Gross profit totaled $10.8 million (36% of
revenues) in the first nine months, an increase of 53% compared to
gross profit of $7.1 million (36% of revenues) in the first nine
months of 2018.
Operating Expenses in the period totaled $12.7
million compared with $6.9 million in the comparable period last
year.
Operating loss was $1.9 million in the first
nine months compared to operating income of $0.2 million in the
first nine months of 2018.
Net loss attributable to RADA’s shareholders in
the first nine months was $1.7 million, or $0.05 per share,
compared to a net profit of $0.3 million, or $0.01 per share, in
the first nine months of 2018.
Investor Conference Call
The Company will host a conference call later today, starting at
9:00 am ET (4pm Israel time). Management will host the call and
will be available to answer questions after presenting the
results.
Dial in numbers are: US 1-888-407-2553; UK 0-800-917-5108;
Israel 03-918-0610 and International +972-3-918-0610.
For those unable to participate, the teleconference will be
available for replay on RADA’s website at www.rada.com
beginning 48 hours after the call.
About RADA Electronic Industries
Ltd.
RADA is a global defense technology company
focused on proprietary radar solutions and legacy avionics systems.
The Company is a leader in mini-tactical radars, serving
attractive, high-growth markets, including critical infrastructure
protection, border surveillance, active military protection and
counter-drone applications.
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Contact Information |
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Company Contact: Avi Israel (CFO)Tel:
+972-9-892-1111mrkt@rada.com www.rada.com |
Investor Relations Contact:Ehud Helft/Gavriel
FrohweinGK Investor & Public RelationsTel: +1 646 688
3559rada@gkir.com |
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Forward Looking Statements
Certain statements in this press release are
"forward-looking statements" within the meaning of the Private
Securities Litigation Act of 1995. Such statements involve known
and unknown risks, uncertainties and other factors that may cause
actual results to differ materially. Such risk uncertainties and
other factors include, but are not limited to, changes in general
economic conditions, risks in product and technology developments,
market acceptance of new products and continuing product demand,
level of competition and other factors described in the Company's
Annual Report on Form 20-F and other filings with the Securities
and Exchange Commission.
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CONSOLIDATED BALANCE SHEETS |
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U.S. dollars in thousands, except share and per share
data |
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|
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ASSETS |
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September 30, 2019 |
|
December 31, 2018 |
|
|
|
Unaudited |
|
Audited |
|
CURRENT ASSETS: |
|
|
|
|
|
|
|
|
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Cash and cash equivalents |
|
$ |
16,695 |
|
|
$ |
20,814 |
|
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Restricted cash |
|
|
380 |
|
|
|
422 |
|
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Trade receivables (net of allowance for doubtful accounts of $1.5
at September 30, |
|
|
|
|
|
|
|
|
|
2019 and December 31, 2018) |
|
|
11,699 |
|
|
|
13,382 |
|
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Contract assets |
|
|
1,194 |
|
|
|
899 |
|
|
Other receivables and prepaid expenses |
|
|
1,826 |
|
|
|
506 |
|
|
Inventories |
|
|
17,273 |
|
|
|
11,244 |
|
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Current assets related to discontinued operations |
|
|
- |
|
|
|
1,524 |
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
49,067 |
|
|
|
48,791 |
|
|
|
|
|
|
|
|
|
|
|
|
LONG-TERM ASSETS: |
|
|
|
|
|
|
|
|
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Long-term receivables and other deposits |
|
|
90 |
|
|
|
79 |
|
|
Property, plant and equipment, net |
|
|
6,728 |
|
|
|
4,632 |
|
|
Operating lease right-of-use asset |
|
|
1,854 |
|
|
|
- |
|
|
Total long-term assets |
|
|
8,672 |
|
|
|
4,711 |
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
57,739 |
|
|
$ |
53,502 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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|
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CURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
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Trade payables |
|
$ |
7,062 |
|
|
$ |
5,650 |
|
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Other accounts payable and accrued expenses |
|
|
4,251 |
|
|
|
3,842 |
|
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Advances from customers, net |
|
|
1,775 |
|
|
|
727 |
|
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Contract liabilities |
|
|
541 |
|
|
|
366 |
|
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Operating lease short-term liabilities |
|
|
937 |
|
|
|
- |
|
|
Current liabilities related to discontinued operations |
|
|
- |
|
|
|
366 |
|
|
|
|
|
|
|
|
|
|
|
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Total current liabilities |
|
|
14,566 |
|
|
|
10,951 |
|
|
|
|
|
|
|
|
|
|
|
|
LONG-TERM LIABILITIES: |
|
|
|
|
|
|
|
|
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Accrued severance pay and other long-term liabilities |
|
|
762 |
|
|
|
690 |
|
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Operating lease long-term liabilities |
|
|
1,009 |
|
|
|
- |
|
|
Total long-term liabilities |
|
|
1,771 |
|
|
|
690 |
|
|
|
|
|
|
|
|
|
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RADA SHAREHOLDERS' EQUITY |
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Share capital - |
|
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Ordinary shares of NIS 0.03 par value - Authorized: 100,000,000
shares at |
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September 30, 2019 and December 31, 2018; Issued and
outstanding: 38,407,913 at September 30, 2019 and 37,516,891
at December 31, 2018. |
|
|
393 |
|
|
|
386 |
|
|
Additional paid-in capital |
|
|
120,900 |
|
|
|
118,568 |
|
|
Accumulated other comprehensive income (loss) |
|
|
(1,195 |
) |
|
|
220 |
|
|
Accumulated deficit |
|
|
(78,696 |
) |
|
|
(76,961 |
) |
|
|
|
|
|
|
|
|
|
|
|
Total RADA shareholders’ equity |
|
|
41,402 |
|
|
|
42,213 |
|
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Non-controlling interest |
|
|
- |
|
|
|
(352 |
) |
|
Total equity |
|
|
41,402 |
|
|
|
41,861 |
|
|
Total liabilities and equity |
|
$ |
57,739 |
|
|
$ |
53,502 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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CONSOLIDATED STATEMENTS OF OPERATIONS |
|
U.S. dollars in thousands, except share and per share
data |
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Nine months ended September 30, |
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Three months ended September
30, |
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Year endedDecember 31, |
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2019 |
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2018 |
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2019 |
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2018 |
|
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2018 |
|
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(Unaudited) |
|
Audited |
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Revenues |
$ |
29,974 |
|
$ |
19,641 |
|
|
$ |
11,260 |
|
$ |
7,045 |
|
|
$ |
28,032 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Cost of revenues |
|
19,144 |
|
|
12,571 |
|
|
|
7,169 |
|
|
4,535 |
|
|
|
17,914 |
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|
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|
|
|
|
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|
|
|
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|
|
|
|
|
|
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Gross profit |
|
10,830 |
|
|
7,070 |
|
|
|
4,091 |
|
|
2,510 |
|
|
|
10,118 |
|
|
|
|
|
|
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Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Research and development |
|
4,924 |
|
|
2,075 |
|
|
|
1,884 |
|
|
791 |
|
|
|
3,092 |
|
|
Marketing and selling |
|
2,791 |
|
|
2,013 |
|
|
|
921 |
|
|
728 |
|
|
|
2,860 |
|
|
General and administrative |
|
5,010 |
|
|
2,817 |
|
|
|
1,780 |
|
|
1,136 |
|
|
|
4,001 |
|
|
Net loss from sale of fixed assets |
|
- |
|
|
- |
|
|
|
- |
|
|
- |
|
|
|
103 |
|
|
Total operating expenses: |
|
12,725 |
|
|
6,905 |
|
|
|
4,585 |
|
|
2,655 |
|
|
|
10,056 |
|
|
Operating income (loss) |
|
(1,895 |
) |
|
165 |
|
|
|
(494 |
) |
|
(145 |
) |
|
|
62 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other financial (expenses) income, net |
|
(149 |
) |
|
48 |
|
|
|
(192 |
) |
|
45 |
|
|
|
119 |
|
|
Net income (loss) from continuing operations |
|
(2,044 |
) |
|
213 |
|
|
|
(686 |
) |
|
(100 |
) |
|
|
181 |
|
|
Net loss from discontinued operations |
|
- |
|
|
172 |
|
|
|
- |
|
|
75 |
|
|
|
404 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
(2,044 |
) |
|
41 |
|
|
|
(686 |
) |
|
(175 |
) |
|
|
(223 |
) |
|
Net income (loss) attributable to non-controlling interest |
|
309 |
|
|
(209 |
) |
|
|
- |
|
|
(154 |
) |
|
|
386 |
|
|
Net income (loss) attributable to RADA Electronic Industries'
shareholders |
$ |
(1,735 |
) |
$ |
250 |
|
|
$ |
(686 |
) |
$ |
(21 |
) |
|
$ |
163 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) from continuing operations per ordinary
shares |
$ |
(0.05 |
) |
$ |
0.01 |
|
|
$ |
(0.02 |
) |
$ |
0.00 |
|
|
$ |
0.02 |
|
|
Diluted net income (loss) from continuing operations per Ordinary
share |
$ |
(0.05 |
) |
$ |
0.01 |
|
|
$ |
(0.02 |
) |
$ |
0.00 |
|
|
$ |
0.02 |
|
|
Basic and diluted net loss from discontinued operations per
ordinary share |
$ |
0.00 |
|
$ |
0.00 |
|
|
$ |
0.00 |
|
$ |
0.00 |
|
|
$ |
(0.01 |
) |
|
Basic and diluted net income (loss) per ordinary share |
$ |
(0.05 |
) |
$ |
0.01 |
|
|
$ |
(0.02 |
) |
$ |
0.00 |
|
|
$ |
0.01 |
|
|
Weighted average number of ordinary shares used for computing basic
net income (loss) per share |
|
38,050,446 |
|
|
32,800,284 |
|
|
|
38,115,517 |
|
|
32,907,828 |
|
|
|
33,184,570 |
|
|
Weighted average number of ordinary shares used for computing
diluted net income (loss) per share |
|
38,678,430 |
|
|
33,327,108 |
|
|
|
38,969,469 |
|
|
33,396,519 |
|
|
|
33,716,931 |
|
In February 2016, the FASB established Topic
842, Leases, by issuing ASU 2016-02, which requires lessees to
recognize leases on-balance sheet and disclose key information
about leasing arrangements. Topic 842 was subsequently amended by
ASU 2018-01, Land Easement Practical Expedient for Transition to
Topic 842; ASU 2018-10, Codification Improvements to Topic 842,
Leases; and ASU 2018-11, Targeted Improvements. The new standard
establishes a right-of-use model (ROU) that requires a lessee to
recognize a ROU asset and lease liability on the balance sheet for
all leases with a term longer than 12 months. Leases are classified
as finance or operating, with classification affecting the pattern
and classification of expense recognition in the income statement.
The Company adopted the new standard on the first day of fiscal
2019. The Company used the modified retrospective transition
approach with the effective date as the date of initial
application. Consequently, financial information will not be
updated, and the disclosures required under the new standard will
not be provided for dates and periods before January 2019. The new
standard provides several optional practical expedients in
transition. The Company elected the ‘package of practical
expedients’, which permits us not to reassess under the new
standard the prior conclusions about lease identification, lease
classification and initial direct costs. The adoption of the
standard resulted in a material effect on the Company’s financial
statements with a balance sheet recognition of additional lease
assets and lease liabilities of approximately $1.9 million as of
September 30, 2019.
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