RADA Electronic Industries AnnouncesSecond Quarter 2019 Results

Continued strong revenue growth: Q2 revenues of $10 million, up 52% year-over-year;Expects full year revenues of over $43 million   Netanya, Israel, August 21, 2019 – RADA Electronic Industries Ltd. (NASDAQ: RADA) announced today its financial results for the period ended June 30, 2019.

Highlights of the second quarter of 2019· 

 Revenues surpass $10 million, up 52% year-over-year;·      

 Expects full year 2019 revenue to surpass $43 million, representing over 54% year-over-year growth;·        

Stable gross margin at 36%;·

RADA’s ongoing investments in R&D and in its US presence bearing significant fruits; · 

Q2-end net cash of $15 million.

 Management Comments

 

Dov Sella, RADA's Chief Executive Officer commented, “The market for our tactical radars is converting from the initial stage to the growth stage and is trending towards an inflection point, as demonstrated by our substantial revenue growth. We continue to invest in R&D to strengthen our leading position in this market and to capitalize on the significant growth opportunities ahead of us. We are building up our US entity with the goal of production readiness by the end of this year. Alongside the US market, we see very strong momentum coming from additional markets such as Israel, Europe and others. Accordingly, we recently increased our revenue guidance to over $43 million for the year, up over 54% versus last year.” 

2019 Second Quarter Summary 

Revenues totaled $10 million in the quarter, compared with revenues of $6.6 million in the second quarter of 2018, an increase of 52%.

Gross profit totaled $3.6 million in the quarter (36% of revenues), an increase of 51% compared to gross profit of $2.4 million in the second quarter of 2018 (36% of revenues).Operating loss was $0.8 million in the quarter compared to operating income of $0.1 million in the second quarter of 2018. Net loss attributable to RADA’s shareholders in the quarter was $0.6 million, or $0.01 per share, compared to a net profit of $0.05 million, or $0.00 per share, in the second quarter of 2018.

As of June 30, 2019, RADA had net cash and cash equivalents of $15 million compared to $21 million as of year-end 2018, reflecting ongoing investments and higher inventory levels to support increased expected revenues in upcoming quarters.

 2019 First Half Summary 

Revenues totaled $18.7 million in the first half, compared with revenues of $12.6 million in the first half of 2018, an increase of 49%.

Gross profit totaled $6.7 million in the first half (or 36% of revenues), an increase of 48% compared to gross profit of $4.6 million in the first half of 2018 (or 36% of revenues).

 Operating loss was $1.4 million in the first half compared to operating income of $0.3 million in the first half of 2018. 

Net loss attributable to RADA’s shareholders in the first half was $1.0 million, or $0.03 per share, compared to a net profit of $0.3 million, or $0.01 per share, in the first half 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 1-888-281-1167; UK 0-800-051-8913; Israel 03-918-0685 and International +972-3-918-0685. 

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 Electronic Industries Ltd. is an Israel-based defense electronics contractor. The Company specializes in the development, production, and sales of tactical land radar for force and border protection, inertial navigation systems for air and land applications and avionics systems and upgrades.

Contact Information

Company Contact:                                                                                                                                                                                  

Avi Israel (CFO)

Tel: +972-9-892-1111

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www.rada.com

Investor Relations Contact:

Ehud Helft/Gavriel Frohwein

GK Investor & Public Relations

Tel: +1 646 688 3559

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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.

 

 

CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands, except share and per share data

ASSETS

 

June 30, 2019

 

December 31, 2018

   

Unaudited

 

Audited

CURRENT ASSETS:

       

Cash and cash equivalents

 

$    14,949

 

$     20,814

Restricted cash

 

380

 

     422

Trade receivables (net of allowance for doubtful accounts of $1.5 at June 30, 2019 and December 31, 2018)

 

14,263

 

 13,382

Contract assets

 

1,396

 

     899

Other receivables and prepaid expenses

 

1,554

 

     506

Inventories

 

16,065

 

11,244

Current assets related to discontinued operations

 

-

 

 1,524

         

Total current assets

 

48,607

 

48,791

         

LONG-TERM ASSETS:

       

Long-term receivables and other deposits

 

77

 

79

Property, plant and equipment, net

 

5,188

 

4,632

Operating lease right-of-use asset

 

1,904

 

-

Total long-term assets

 

7,169

 

4,711

         

Total assets

 

$   55,776

 

$     53,502

         

LIABILITIES AND SHAREHOLDERS' EQUITY

       

 

       

CURRENT LIABILITIES:

       

Trade payables

 

$     5,685

 

$      5,650

Other accounts payable and accrued expenses

 

3,685

 

3,842

Advances from customers, net

 

867

 

727

Contract liabilities

 

554

 

366

Operating lease short-term liabilities

 

882

 

-

Current liabilities related to discontinued operations

 

-

 

366

         

Total current liabilities

 

11,673

 

10,951

         

LONG-TERM LIABILITIES:

       

Accrued severance pay and other long-term liabilities

 

740

 

690

Operating lease long-term liabilities

 

1,022

 

-

 Total long-term liabilities

 

1,762

 

690

 

 

 

 

 

 

 

 

 

 

       

RADA SHAREHOLDERS' EQUITY

       

Share capital -

       

Ordinary shares of NIS 0.03 par value - Authorized: 100,000,000 shares at June 30, 2019 and December 31, 2018; Issued and outstanding: 38,067,024 at June 30, 2019 and 37,516,891 at December 31, 2018.

 

390

 

386

Additional paid-in capital

 

120,622

 

118,568

Accumulated other comprehensive income

 

-

 

220

Accumulated deficit

 

(78,010)

 

(76,961)

 

       

Total RADA shareholders’ equity

 

43,002

 

42,213

Non-controlling interest

 

(661)

 

(352)

 

Total equity

 

42,341

 

41,861

 

Total liabilities and equity

 

$     55,776

 

$     53,502

CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands, except share and per share data

 

 

Six months ended
June 30,

 

 

Three months ended
June 30,

 

 

Year ended

December 31,

 

2019

2018

 

2019

2018

 

2018

 

(Unaudited)

Audited

               

Revenues

 $  18,714

$  12,596

 

$   10,027

 $  6,576

 

$  28,032

               

Cost of revenues

  11,975

  8,037

 

     6,441

 4,196

 

    17,914

               

Gross profit

   6,739

 4,559

 

    3,586

 2,380

 

    10,118

               

Operating expenses:

             

Research and development

    3,040

 1,284

 

    1,674

   692

 

      3,092

Marketing and selling

    1,870

 1,284

 

       988

   650

 

      2,860

General and administrative

    3,230

 1,682

 

    1,767

   934

 

      4,001

Net loss from sale of fixed assets

          -

       -

 

         -

-

 

        103

Total operating expenses:

    8,140

 4,250

 

    4,429

2,276

 

    10,056

Operating income (loss)

  (1,401)

    309

 

     (843)

   104

 

          62

Other financial (expenses) income, net

       43

       3

 

         1

    (4)

 

        119

Net income (loss) from continuing operations

 (1,358)

    312

 

      (842)

  100

 

        181

Net loss from discontinued operations

        -

     97

 

          -

   88

 

        404

Net income (loss)

  (1,358)

   215

 

       (842)

   12

 

(223)

Net loss attributable to non-controlling interest

       309

      55

 

       278

   39

 

        386

Net income (loss) attributable to RADA Electronic Industries' shareholders

  $ (1,049)

   $   270

 

  $    (564)

  $    51

 

$      163

Basic net income (loss) from continuing operations per ordinary shares

  $   (0.03)

$  0.01

 

  $   (0.01)

$ 0.00

 

$     0.02

Diluted net income (loss) from continuing operations per Ordinary share

  $   (0.03)

$  0.01

 

 $   (0.01)

$ 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 net income (loss) per ordinary share

  $   (0.03)

$  0.01

 

 $   (0.01)

$ 0.00

 

$     0.01

Diluted net income (loss) per ordinary share

  $   (0.03)

$  0.01

 

 $   (0.01)

$ 0.00

 

$     0.01

Weighted average number of ordinary shares used for computing basic net income per share

38,017,281

32,745,620

 

38,067,024

32,885,141

 

33,184,570

Weighted average number of ordinary shares used for computing diluted net income per share

38,570,290

33,269,376

 

38,680,072

33,314,361

 

 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 June 30, 2019.