Most profitable period in IAI’s history: order backlog of about USD 25 billion – the highest in the company’s history.
Net income leaped by 74% to USD 416 million; record high EBITDA and gross profit in Q3 2024; in the nine months ending September 30, 2024.
- 74% increase in net income in the period of nine months ending September 30, 2024 (“the Reporting Period”) to about USD 416 million compared with about USD 239 million in the corresponding period of 2023, the most profitable nine-month period in Company history. Increase in net income to about USD 122 million in Q3 2024 compared with about USD 74 million in Q3 2023.
- 33% growth in EBITDA in the Reporting Period to about USD 646 million compared with about USD 487 million in the corresponding period of last year. EBITDA in Q3 2024 amounted to about USD 195 million (about 12.7% of sales) compared with about USD 158 million (about 11.9% of sales) in Q3 2023.
- Operating income grew in the Reporting Period to about USD 431 million (about 9.8% of sales) compared with operating income of about USD 292 million (about 7.5% of sales) in the corresponding period of last year. Operating income in Q3 2024 was about USD 121 million (about 7.9% of sales) compared with operating income of about USD 87 million (about 6.5% of sales) in Q3 2023.
- Gross profit growth in the Reporting Period to about USD 836 million (about 19% of sales) compared with about USD 682 million (about 18% of sales) in the corresponding period of last year. Increase of about 25% in gross profit in Q3 2024, amounting to about USD 282 million (about 18% of sales) compared with about USD 226 million (about 17% of sales) in Q3 2023.
- 13% growth in sales to about USD 4,393 million in the Reporting Period, compared with about USD 3,873 million in the nine months ending September 30, 2023. Increase of about 16% in sales in Q3 2024 to about USD 1,541 million compared with about USD 1,333 million in Q3 2023.
- 21.8% increase in inhouse R&D expenses in the Reporting Period to about USD 212 million, compared with about USD 174 million in the corresponding period of 2023. Inhouse R&D expenses in Q3 2024 amounted to about USD 81 million compared with about USD 65 million in Q3 2023.
- The Company’s free cash flow is approximately USD 3.1 billion.
Amir Peretz, Chairman of the Board of Directors of IAI: “It is with great satisfaction that I report on the three best years at Israel Aerospace Industries since company’s establishment. Building on outstanding performance in 2022 and 2023, today we conclude another three quarters of exceptional business activity. I am also proud to reflect upon my three years in office, years in which we strengthened IAI’s position as a national and international leader in defence technology and civilian aviation. During this period, IAI achieved an unprecedented order pipeline valued at some $25 billion, with breakthrough projects in strategic markets worldwide.
Throughout this journey, we not only partnered with Israel’s defence establishment – supplying innovative systems that ensure Israel’s technological superiority – but also deepened our commitment to Israeli society. We launched innovation centers in the periphery, strengthened partnerships with local communities, and invested in technological education for the next generation, while expanding collaborations with leading academic and research institutions.
At the same time, we stood by our customers worldwide, expanded our range of markets, and broadened the portfolio of solutions we offer in over a hundred countries. In so doing, we established IAI as a leading player in the global defence market, and provided vital diplomatic support for the State of Israel at a time when it is under attack and contending with boycott activities around the world.
As I conclude my tenure, I see a company that is growing, breaking new ground, and deepening its contribution – not only as a first-rate provider of technological and security solutions but also as an engine of economic growth and social development, embodying the values of partnership, innovation, and a commitment to Israel and the world. IAI is not just a successful business enterprise; it is also a national symbol representing the best capabilities and values of the State of Israel”.
Boaz Levy, IAI’s President and CEO: We are proud to present our third quarter financial results, performance that reflects the growth and expansion of Israel Aerospace Industries, serving both Israel’s defence establishment and our diverse customers worldwide.
The unprecedented scope of our order book tangibly expresses IAI’s current capabilities and, equally important, our future potential.
At this challenging time, as the State of Israel faces a war on multiple fronts and IAI systems play a critical role defending the country, these business results reflect an additional layer of the state’s economy.
The large-scale contracts we have signed with our overseas customers illustrate the deep business relations we have cultivated and a recognition of Israel’s technological superiority. We have achieved this despite this period of national crisis, maintaining supply chain continuity and expanding our international relations.
Alongside the company’s extensive business activity, we continue to pursue technological innovation, while promoting the welfare of the public at large as an expression of social involvement and responsibility. In line with these values, we established a new plant in Ofakim, inaugurated a Land Division factory in Be’er Sheva and pursued a range of innovative projects in southern Israel, all of which will strengthen the resilience of underserved communities around Israel.”
Israel Aerospace Industries Ltd., a leader in the Israeli military and commercial homeland defence and aerospace markets, issues its consolidated financial statements for the periods of nine and three months ending September 30, 2024 (“the Reporting Period” and “Q3 2024”, respectively).
Main data for the Reporting Period and Q3 2024
The Company’s sales in the Reporting Period grew to about USD 4,393 million compared with about USD 3,873 million in the corresponding period of 2023, an increase of about 13%, deriving from increased sales in all the Company’s Groups and Divisions.
The sales of the Military Groups(*) in the Reporting Period increased by about 14% to about USD 3,720 million compared with about USD 3,249 million in the corresponding period of 2023, an increase of USD 471 million. The sales of the Aviation Group(*) in the Reporting Period increased to about USD 1,089 million compared with about USD 1,026 million in the corresponding period of last year.
The Company’s sales in Q3 2024 amounted to about USD 1,541 million compared with about USD 1,333 million in Q3 2023, an increase of about 16%, deriving from the increased sales in the Systems Missiles & Space Group and the ELTA Group.
The sales of the Military Groups(*) in Q3 2024 increased by about 17% to about USD 1,307 million compared with about USD 1,113 million in the corresponding quarter of last year. The sales of the Aviation Group(*) in Q3 2024 amounted to about USD 378 million compared with about USD 351 million in the corresponding quarter of last year.
Sales for export in the Reporting Period accounted for about 65% of sales, totaling about USD 2,870 million (about USD 1,523 million, representing 35% of sales, to Israel), compared with about USD 2,772 million (about USD 1,101 million, representing 28% of sales, to Israel) in the corresponding period of 2023.
Sales for export in Q3 2024 accounted for about 62% of sales totaling about USD 958 million (about USD 583 million, representing 38% of sales, to Israel), compared with about 69%, totaling USD 922 million (about USD 411 million, representing 31% of sales, to Israel) in Q3 2023.
Gross profit in the Reporting Period amounted to about USD 836 million (about 19% of sales), compared with about USD 682 million (about 18% of sales) in the corresponding period of 2023. Gross profit in Q3 2024 amounted to about USD 282 million (about 18% of sales), compared with about USD 226 million (about 17% of sales) in Q3 2023.
The gross profit of the Military Groups(*) in the Reporting Period increased by about 17% to about USD 707 million compared with about USD 605 million in the corresponding period of 2023. The gross profit of the Aviation Group(*) in the Reporting Period increased to about USD 108 million compared with about USD 90 million in the corresponding period of last year. The gross profit of the Military Groups(*) in Q3 2024 increased by about 23% to USD 248 million compared with about USD 201 million in the corresponding quarter of last year. The gross profit of the Aviation Group(*) in Q3 2024 increased to about USD 41 million compared with about USD 30 million in the corresponding quarter of last year.
Operating income in the Reporting Period amounted to about USD 431 million (about 9.8% of sales), compared with operating income of about USD 292 million in the corresponding period of 2023 (about 7.5% of sales). Operating income in Q3 2024 amounted to about USD 121 million (about 7.9% of sales), compared with operating income of about USD 87 million in Q3 2023 (about 6.5% of sales).
The operating income of the Military Groups(*) in the Reporting Period was about USD 367 million compared with about USD 272 million in the corresponding period of last year. The operating income of the Aviation Group(*) in the Reporting Period amounted to about USD 49 million compared with operating income of about USD 32 million in the corresponding period of last year. The operating income of the Military Groups(*) in Q3 2024 amounted to about USD 110 million compared with operating income of about USD 87 million in the corresponding quarter of last year. The operating income of the Aviation Group(*) in Q3 2024 amounted to about USD 21 million compared with an operating income of about USD 11 million in the corresponding quarter of last year.
Net income in the Reporting Period grew by 74% to about USD 416 million (about 9.5% of sales), compared with net income of about USD 239 million (about 6.2% of sales) in the corresponding period of 2023, the highest grossing nine-month period in the Company’s history. Net income in Q3 2024 amounted to about USD 122 million (about 7.9% of sales), compared with net income of about USD 74 million (about 5.6% of sales) in Q3 2023.
The net income of the Military Groups(*) in the Reporting Period increased to about USD 414 million compared with net income of about USD 263 million in the corresponding period of last year. The net income of the Aviation Group(*) in the Reporting Period amounted to about USD 36 million, compared with net income of about USD 27 million in the corresponding period of last year. The net income of the Military Groups(*) in Q3 2024 amounted to about USD 131 million compared with about USD 83 million in the corresponding quarter of last year. The net income of the Aviation Group(*) in Q3 2024 amounted to about USD 16 million, compared with net income of about USD 7 million in the corresponding quarter of last year.
EBITDA in the Reporting Period amounted to about USD 646 million (about 14.7% of sales), compared with about USD 487 million (about 12.6% of sales) in the corresponding period of 2023. EBITDA in Q3 2024 amounted to about USD 195 million (about 12.7% of sales), compared with about USD 158 million (about 11.9% of sales) in Q3 2023.
In the Reporting Period, the Company recorded net financial income of about USD 94 million, compared with net financial income of about USD 22 million in the corresponding nine months of 2023. In Q3 2024, the Company recorded a net financial income of about USD 40 million, compared with net financial income of about USD 11 million in Q3 2023.
Inhouse R&D expenses in the Reporting Period amounted to about USD 212 million, compared with USD 174 million in the corresponding period of 2023 (accounting for about 4.8% and about 4.5% of sales, respectively), an increase of USD 38 million. Inhouse R&D expenses in Q3 2024 amounted to about USD 81 million, compared with about USD 65 million in Q3 2023 (accounting for about 5.3% and about 4.9% of sales, respectively).
In the Reporting Period, the Company recorded net tax expenses of about USD 110 million compared with tax expenses of about USD 80 million in the nine months ending September 30, 2023. In Q3 2024, the Company recorded net tax expenses of about USD 40 million compared with tax expenses of about USD 26 million in Q3 2023. 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. The sale of any interests in the Company, even at a miniscule 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, 2024, amounted to about USD 25 billion, compared to about USD 18 billion at the end of 2023, an increase of about USD 7,220 million. The order backlog is comprised of a large variety of projects and secures 3.5 years of operation given the current sales volumes.
Positive cash flows from operating activities in the Reporting Period amounted to about USD 1,828 million compared with positive cash flows from operating activities of about USD 461 million in the corresponding period of 2023. The positive cash flows from operating activities in Q3 2024 amounted to about USD 61 million compared with positive cash flows from operating activities of about USD 6 million in Q3 2023.
(*) 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.
Boaz Levy, IAI CEO & Amir Peretz, Chairman of the Board of Directors of IAI
