For the First Time, IAI’s Annual Revenue Surpasses USD 4 Billion Threshold. Revenues in 2019 grew by USD 426 million to a total of about USD 4.1 billion. The Company records a 71% growth in annual EBITDA to about USD 324 million. The highest annual income in a decade totaling USD 90 million
- 12% growth in sales volumes to about USD 4,108 million compared to about USD 3,682 million in 2018. The USD 426 million growth in sales was across all of IAI’s groups
- Increase of 71% in annual EBITDA to about USD 324 million compared with about USD 189 million in 2018
- 17% growth in gross profit in 2019 to about USD 577 million (~14% of sales) compared with about USD 494 million in 2018 (~13% of sales)
- Increase in operating income in 2019 to about USD 121 million (~2.9% of sales) compared with about USD 12 million (~0.3% of sales) in 2018
- 12% increase in R&D activity (in-house and contracted) in 2019 to about USD 909 million compared to about USD 813 million in 2018
- Increase in net income in the year to about USD 90 million compared with a loss of about USD 44 million in 2018
- The Company’s order backlog approximates USD 13.4 billion, representing 3.35 years of operation
- The Company has free cash flows totaling about USD 1.2 billion
- The Company’s equity amounts to USD 929 million
- The Company is rated by S&P Maalot at AA
Harel Locker, IAI’s Chairman of the Board: “The business reversal undergone by IAI in recent years has already yielded fruit, as evident in the financial results of 2019. IAI’s groundbreaking and unparalleled capabilities and technologies, management’s strict and precise adherence to the new business strategy, the entity-wide restructuring, efficiency measures, business prioritization efforts, and above all the deployment and commitment of the company’s excellent human capital to the business restructuring, have led to the accomplishments recorded in 2019 and to a turning point in the company’s business ventures. IAI’s solid financial position, exceptionally high order backlog, and extensive technological and business diversity offer us an excellent vantage point for dealing with the challenges that lie ahead. Global events offer a variety of business opportunities for inorganic growth in the technological homeland security industry. Continuing to adhere to the strategic plan and completing the business restructuring process along with our valuable and unrivaled human capital and world leading technological foundations will allow us to fully capitalize on our business potential.”
Nimrod Sheffer, President& CEO of IAI: “2019 has been the first trial year of implementing our new business strategy and the positive results reflect the hard labor of all of IAI’s employees and key management personnel. The record revenues recognized by IAI, the largest net income since 2010, and the increase in all other business parameters are a testimony of the renewed business focus and the all-encompassing corporate efficiency measures. The challenges facing the Israeli and global economies in these difficult times are intricate and their extent cannot be currently assessed with certainty. IAI is taking all the necessary steps and measures, first and foremost to protect the health of its employees, and to retain its business strength and continuity. IAI is operating vis-a-vis its entire local and international clientele to be able to continue providing them optimal solutions for all pending and planned projects and is simultaneously preparing for the different scenarios to be able to return to routine operation as soon as possible. Throughout its years of operation, as well as in 2019, IAI has constantly proven that there is no challenge that it cannot withstand and it’s this very mindset and spirit that will accompany us during the current challenges for the benefit of Israel’s homeland security and economy.”
March 26, 2020: Israel Aerospace Industries Ltd., Israel’s largest national military and civilian security defence company, issues its consolidated financial statements for the year ended December 31, 2019
The Company’s revenues in 2019 reached a record of about USD 4,108 million compared with about USD 3,682 million in 2018, an increase of about 12%. The increase is mainly a result of the increase in the revenues of all of the Company’s divisions.
Sales for export in 2019 accounted for 74% of sales at about USD 3,033 million (about USD 1,075 million to Israel, representing 26% of sales), similarly to the figures recorded in 2018.
Sales to the military market in 2019 totaled about USD 3,006 million (about 73% of sales), compared with about USD 2,647 million (about 72% of sales) in 2018, an increase of about USD 359 million.
Sales to the civilian market in 2019 totaled about USD 1,102 million (about 27% of sales), compared with about USD 1,035 million (about 28% of sales) in 2018.
Gross profit in 2019 amounted to about USD 577 million (about 14% of sales) compared with about USD 494 million (about 13% of sales) in 2018. The growth in gross profit mainly derives from increased sales and profits in the Systems Missiles & Space Division and in the subsidiary ELTA.
EBITDA in 2019 amounted to about USD 324 million compared with about USD 189 million in 2018, an increase of 71% compared to last year.
Operating income in 2019 amounted to about USD 121 million (about 2.9% of sales) compared with operating income of about USD 12 million in 2018 (about 0.3% of sales). The increase in operating income arises from the increase in gross profit and the decrease in general and administrative and selling and marketing expenses, which were partly offset by the increase in R&D expenses.
Net income in 2019 amounted to about USD 90 million (about 2.2% of sales) compared with a net loss of about USD 44 million in 2018.
Research and development activity (in-house and contracted) in 2019 totaled about USD 909 million compared with about USD 813 million in 2018, an increase of about 12% compared to last year.
Net financial expenses in 2019 amounted to about USD 12 million compared with about USD 49 million in 2018.
The Company’s share of earnings of associates in 2019 amounted to about USD 4 million compared with about USD 8 million in 2018.
Net tax expenses – in 2019, the Company recorded net tax expenses of about USD 23 million compared with net tax expenses of about USD 15 million in 2018. The increase in tax expenses compared to last year mostly arises from the improvement in the Company’s profits. 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 miniscule rate, to a non-government party will render the Company eligible for a reduced corporate income tax rate as per said Law.
The order backlog at the end of 2019 amounted to about USD 13.4 billion, compared to about USD 13.5 billion at the end of 2018. 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 3.35 years of operation given the current sales volumes.
Negative cash flows from operating activities in 2019 amounted to USD 27 million compared with positive cash flows from operating activities of USD 313 million in 2018.
Main results of Q4 2019:
The Company’s sales in Q4 2019 amounted to USD 1,092 million, compared with USD 1,022 million in Q4 2018.
Gross profit in Q4 2019 amounted to USD 150 million (14% of sales), compared with USD 117 million (11% of sales) in Q4 2018.
Operating income in Q4 2019 amounted to USD 11 million (1% of sales), compared with operating loss of approximately USD 33 million in Q4 2018.
Research and development activity in Q4 2019 totaled approximately USD 263 million (in-house and contracted) compared with approximately USD 222 million in Q4 2018.
Net financial expenses in Q4 2019 amounted to USD 9 million compared with USD 16 million in Q4 2018.
Net tax income in Q4 2019 amounted to USD 5 million compared with net tax expenses of USD 3 million in Q4 2018.
Net income in the fourth quarter of 2019 amounted to USD 8 million (1% of sales) compared with a net loss of USD 47 million in the corresponding quarter of 2018.
Material events in Q4 2019 through the financial statement publication date:
The implications of the coronavirus spread – In keeping with the directives issued by the various Israeli government ministries to the public in the midst of the global coronavirus outbreak, effective from March 18, 2020, IAI has been taking steps to reduce its operations through adapting its manpower needs to the government’s instructions, while focusing on critical projects and urgent business ventures. IAI maintains close contact with its existing and prospective customers, with its suppliers, and with various government officials to identify solutions for the disruptions to its ongoing business activity, to allow the continued scheduled performance of its projects, and to maintain its marketing activity. IAI is also preparing for all possible scenarios and is taking measures to reduce to a minimum the effects of the outbreak on the company and the possible impairment of its financial results, including close monitoring and supervision of expenses, and their minimization, to be able to adapt to the possible changes in operating volumes.
To date, IAI is not aware of any contracts that have been cancelled or of any major delays in the supply of raw materials or in its compliance with contractual milestones. However, the prolongation of both domestic and global restrictions is likely to adversely affect IAI’s ability to meet its engagements and comply with its contractual obligations in the coming year. In view of the uncertainty involving the global continuation and spread of COVID-19 and the ensuing ramifications, IAI is unable to accurately predict the effect on its business, cash flows, and financial results in the interim and long term.
Condensed balance sheet data (USD in millions):
Condensed profit and loss data (USD in millions):
Consolidated Financial Statements for 2019 >>
