IAI publishes its financial statements for the third quarter of 2022: The most profitable period in Company history: 54% growth in net income to about USD 202 million
Highest order backlog in Company history of about USD 15.8 billion;
Record-breaking EBITDA and gross profit in Q3 2022;
Positive cash flows from operating activities of about USD 675 million in the reporting period
- 54% increase in net income in the first nine months of 2022 to about USD 202 million compared with about USD 131 million in the corresponding period of 2021. Net income grew by about 135% to about USD 73 million in Q3 2022 compared with about USD 31 million in Q3 2021.
- 31% growth in EBITDA in the first nine months of 2022 to about USD 473 million compared with about USD 361 million in the corresponding period of last year. EBITDA in Q3 2022 grew to about USD 163 million (about 13.1% of sales) compared with about USD 109 million (about 10.5% of sales) in Q3 2021.
- Operating income grew in the first nine months of 2022 to about USD 304 million (about 8.4% of sales) compared with operating income of about USD 190 million (about 5.9% of sales) in the corresponding period of last year. Operating income in Q3 2022 grew to about USD 100 million (about 8.1% of sales) compared with operating income of about USD 52 million (about 5% of sales) in Q3 2021.
- Gross profit increased in the first nine months of 2022 to about USD 647 million (about 18% of sales) compared with about USD 500 million (about 16% of sales) in the corresponding period of last year. 48% growth in gross profit in Q3 2022 to about USD 220 million (about 18% of sales) compared with about USD 149 million (about 14% of sales) in Q3 2021.
- 12% increase in sales to about USD 3,601 million in the first nine months of 2022, compared with about USD 3,205 million in the corresponding period of 2021. Increase of about 19% in the Company’s sales in Q3 2022 to about USD 1,242 million compared with about USD 1,041 million in Q3 2021.
- 8.7% increase in inhouse R&D expenses in the first nine months of 2022 to about USD 138 million compared with about USD 127 million in the corresponding nine months of 2021. Inhouse R&D expenses in Q3 2022 amounted to about USD 48 million compared with about USD 42 million in Q3 2021.
- Cash flows from operating activities in the first nine months of 2022 were positive at about USD 675 million compared with negative cash flows from operating activities of about USD 86 million in the corresponding period of 2021. Cash flows from operating activities in Q3 2022 were positive at about USD 28 million compared with negative cash flows from operating activities of about USD 159 million in Q3 2021.
- The Company’s order backlog as of September 30, 2022 totaled about USD 15.8 billion, compared with about USD 13.4 billion at the end of 2021, a growth of about USD 2.4 billion.
The Company’s rating is ilAA+ according to S&P Maalot. Its credit rating was raised in July 2022 from stable to positive. - In July 2022, the Company declared the distribution of a dividend of about NIS 571.4 million, which translates into about USD 164 million.
- The Company’s free cash flow approximates USD 1.2 billion.
Amir Peretz, Chairman of the Board of Directors of IAI: “The financial report results that Israel Aerospace Industries is presenting today, the best in the company’s history, are evidence of the significant breakthroughs made by the company into new markets, and our continued success in existing markets around the world. These results show we have no intention of resting on the laurels of previous quarter’s results, and we continue our efforts to increase the backlog of orders which are the basis for the company’s stability in the coming years. The prevailing unstable security situation around the world creates a need for our systems which continue to prove themselves over and above the competition. We therefore continue to attend exhibitions worldwide, where we both strengthen our existing markets and build the basis for the coming challenges. Thus, only last week, we participated in the International Air Show in Bahrain, where we displayed IAI’s capabilities to existing and potential customers from around the world, capabilities which we have constantly developed, expanded, and improved during the last seventy years.”
Boaz Levy, IAI’s President and CEO: “Israel Aerospace Industries is pleased to present announce the company’s best-ever results in all parameters in the last three quarters. This is the most profitable period in the company’s history, with a net profit of USD 202 million, representing a 54% jump in performance. The significant rise in the company’s profitability arises from the company’s impressive ongoing activities both in Israel and abroad, together with many successful business and cooperation activities around the world. The company continues to work aggressively in all its areas of activity. IAI’s performance in the first nine months of the year has led to an increase in the company’s credit rating in the third quarter, thus contributing to strengthening its activities in the capital market. In recent months, IAI has won a number of strategic projects involving technological and operational breakthroughs, which are an expression of the company’s strength as a world pathbreaker.
Israel Aerospace Industries Ltd., a leader in the Israeli military and commercial homeland defence and aerospace markets, issues its consolidated financial statements for the nine and three months ended September 30, 2022 (“the reporting period” and “Q3 2022”, respectively).
Main data for the reporting period and Q3 2022
The Company’s sales in the reporting period grew by about 12% to about USD 3,601 million compared with about USD 3,205 million in the corresponding period of 2021, an increase of USD 396 million The increase in sales mainly derives from increased sales in all the Company’s Groups.
The sales of the Military Groups (*) in the reporting period increased to about USD 3,006 million compared with about USD 2,745 million in the corresponding period of 2021, an increase of about USD 261 million. The sales of the Aviation Groups (*) in the reporting period increased to about USD 996 million compared with about USD 872 million in the corresponding period of 2021, an increase of about USD 124 million.
(*) The data of the divisions’ sales, gross profit, operating income and net income (loss) consist of inter-divisionary activities and are identical to the data included in the note on business segments in the consolidated financial statements.
The Company’s sales in Q3 2022 amounted to about USD 1,242 million compared with about USD 1,041 million in Q3 2021, an increase of about 19%. The increase in sales mainly derives from increased sales in all the Company’s Groups.
The sales of the Military Groups (*) in Q3 2022 increased by about 19% to about USD 1,017 million compared with about USD 858 million in the corresponding quarter of last year. The sales of the Aviation Group (*) in Q3 2022 increased by about 15% to about USD 351 million compared with about USD 306 million in the corresponding quarter of last year.
Sales for export in the reporting period accounted for about 72% of sales, totaling about USD 2,607 million (about USD 994 million, representing 28% of sales, to Israel), compared with about 73%, totaling USD 2,352 million (about USD 853 million, representing 27% of sales, to Israel) in the corresponding period of 2021.
Sales for export in Q3 2022 accounted for 74% of sales totaling about USD 923 million (about USD 319 million, representing 26% of sales, to Israel), compared with about 76%, amounting to USD 790 million (about USD 251 million, representing 24% of sales, to Israel) in Q3 2021.
Gross profit in the reporting period amounted to about USD 647 million (about 18% of sales), compared with about USD 500 million (about 16% of sales) in the corresponding period of 2021. Gross profit in Q3 2022 amounted to about USD 220 million (about 18% of sales), compared with about USD 149 million (about 14% of sales) in Q3 2021.
The gross profit of the Military Groups (*) in the reporting period increased by about 17% to about USD 537 million compared with about USD 460 million in the corresponding period of 2021. The gross profit of the Aviation Group (*) in the reporting period increased to about USD 87 million compared with about USD 44 million in the corresponding period of last year. The gross profit of the Military Groups (*) in Q3 2022 increased by about 31% to about USD 191 million compared with about USD 146 million in the corresponding quarter of last year. The gross profit of the Aviation Group (*) in Q3 2022 increased to about USD 29 million compared with about USD 14 million in the corresponding quarter of last year.
Operating income in the reporting period amounted to about USD 304 million (about 8.4% of sales), compared with operating income of about USD 190 million (about 5.9% of sales) in the corresponding period of 2021. Operating income in Q3 2022 amounted to about USD 100 million (about 8.1% of sales), compared with operating income of about USD 52 million in Q3 2021 (about 5% of sales).
The operating income of the Military Groups (*) in the reporting period was about USD 264 million compared with about USD 223 million in the corresponding period of last year. The operating income of the Aviation Group (*) in the reporting period amounted to about USD 28 million compared with operating loss of about USD 7 million in the corresponding period of last year. The operating income of the Military Groups (*) in Q3 2022 amounted to about USD 93 million compared with operating income of about USD 65 million in the corresponding quarter of last year. The operating income of the Aviation Group (*) in Q3 2022 amounted to about USD 11 million compared with operating income of about USD 1 million in the corresponding quarter of last year.
Net income in the reporting period increased by 54% to about USD 202 million (about 5.6% of sales), compared with net income of about USD 131 million (about 4.1% of sales) in the corresponding period of 2021. Net income in Q3 2022 amounted to about USD 73 million (about 5.9% of sales), compared with net income of about USD 31 million (about 3% of sales) in Q3 2021.
The net income of the Military Groups (*) in the reporting period increased to about USD 263 million compared with about USD 194 million in the corresponding period of last year. The net income of the Aviation Group (*) in the reporting period amounted to about USD 41 million compared with a net loss of about USD 18 million in the corresponding period of last year. The net income of the Military Groups (*) in Q3 2022 amounted to about USD 93 million compared with about USD 56 million in the corresponding quarter of last year. The net income of the Aviation Group (*) in Q3 2022 amounted to about USD 12 million, compared with a net loss of about USD 4 million in the corresponding quarter of last year.
EBITDA in the reporting period amounted to about USD 473 million (about 13.1% of sales), compared with about USD 361 million (about 11.3% of sales) in the corresponding period of 2021. EBITDA in Q3 2022 amounted to about USD 163 million (about 13.1% of sales), compared with about USD 109 million (about 10.5% of sales) in Q3 2021.
In the reporting period, the Company recorded net financial expenses of about USD 29 million, compared with net financial expenses of about USD 22 million in the corresponding period of 2021. In Q3 2022, the Company recorded net financial expenses of about USD 4 million, compared with net financial expenses of about USD 6 million in Q3 2021.
(*) The data of the divisions’ sales, gross profit, operating income and net income (loss) consist of inter-divisionary activities and are identical to the data included in the note on business segments in the consolidated financial statements.
Inhouse research and development expenses in the reporting period increased to about USD 138 million, compared with about USD 127 million in the corresponding period of 2021 (accounting for about 3.8% and about 4% of sales, respectively) – an increase of USD 11 million. Inhouse research and development expenses in Q3 2022 amounted to about USD 48 million compared with about USD 42 million in Q3 2021 (accounting for about 3.9% and about 4% of sales, respectively).
In the reporting period, the Company recorded net tax expenses of about USD 76 million compared with net tax expenses of about USD 39 million in the corresponding period of 2021. In Q3 2022, the Company recorded net tax expenses of about USD 23 million compared with net tax expenses of about USD 13 million in Q3 2021. The Company’s income is subject to the ordinary corporate tax rate in Israel – 23%, and it is not entitled to any tax benefits pursuant to the Israeli Law for the Encouragement of Capital Investments, 1959 as it is a wholly-owned government company. They sale of any interests in the Company, even at a minuscule rate, to a non-government party will render the Company eligible for a reduced corporate income tax rate ranging between 6% and 15%, as per said Law.
The order backlog as of September 30, 2022 amounted to about USD 15.8 billion, compared to about USD 13.4 billion at the end of 2021. 79% of the order backlog is held for sale to foreign customers that are widely geographically dispersed, based on a large variety of projects, and secures about 3.4 years of operation given the current sales volumes.
Positive cash flows from operating activities in the reporting period amounted to about USD 675 million compared with negative cash flows from operating activities of about USD 86 million in the corresponding period of 2021. Positive cash flows from operating activities in Q3 2022 amounted to about USD 28 million compared with negative cash flows from operating activities of about USD 159 million in Q3 2021.
