Strong quarter for IAI: Continued growth in sales – surpassing USD 1 billion sales in the quarter. Continued growth in all financial parameters – net income, operating income, gross profit and EBITDA – all increased by double-digit percentages
- Growth in sales volumes to about USD 1,018 million compared to about USD 1,001 million in Q1 2019
- First quarter with record sales volumes in IAI history
- Increase of 48% in EBITDA to about USD 102 million compared with about USD 69 million in Q1 2019
- 39% growth in gross profit in the current quarter to about USD 170 million (about 16.7% of sales) compared with about USD 122 million in the corresponding quarter of 2019 (about 12.2% of sales)
- 205% increase in operating income to about USD 61 million (about 6% of sales) compared with operating income of about USD 20 million (about 2% of sales) in Q1 2019
- 15% increase in R&D expenses in Q1 2020 to about USD 39 million compared to about USD 34 million in Q1 2019
- 143% growth in net income in the current quarter to about USD 34 million compared with net income of about USD 14 million in the corresponding quarter of last year
- The Company’s order backlog approximates USD 13.2 billion, representing about 3.2 years of operation
- The Company has free cash flows totaling about USD 1.2 billion
- The Company’s equity amounts to about USD 955 million
- The Company is rated by S&P Maalot at AA
Nimrod Sheffer, President& CEO of IAI: “The results of the first quarter of 2020 are the continuation of the business transformation and the implementation of the Company’s new strategy which have already been reflected in the record-breaking results for 2019. In the first quarter of 2020 we surpassed the corresponding quarter of 2019 in most business parameters. To date, the Company is not aware of any cancelations of contracts or any major delays resulting from the Covid-19 pandemic and the Company continues to collaborate with its customers to find solutions for any disruptions (such as in the supply chain) caused by the outbreak. The Company is also analyzing its own forecasts regarding future commitments, mainly in the commercial aviation segment, in view of the impact on global activity in this segment. As a business-oriented company, IAI is constantly monitoring the developments in its business climate and is benefitting from its strong vantage point that allows it to better meet the challenges of the pandemic, all owing to the corporate efficiency measures adopted, the strict and careful adherence to the new business strategy, the Company’s solid financial position, its technological and business diversity and its commitment to the best human capital both in Israel and worldwide. Our business success is also reflected in the ability to recruit new quality personnel as evidenced by the fact that IAI has been ranked second in the list of Israel’s 100 employers of choice, even before considering the Coronavirus effects. We will pursue our enhanced sales and marketing efforts and continue implementing cost-efficiency measures while maintaining investments in research and development that will yield innovative and groundbreaking systems and technologies in the future.”
Israel Aerospace Industries Ltd., Israel’s largest national military and civilian security defence company, issues its consolidated financial statements for the quarter ended March 31, 2020
The Company’s sales in Q1 2020 totaled about USD 1,018 million compared with about USD 1,001 million in Q1 2019.
Sales for export in Q1 2020 accounted for 71% of sales at about USD 724 million (about USD 294 million to Israel, representing 29% of sales), compared with 73% in Q1 2019, totaling about USD 733 million (about USD 268 million to Israel, representing 27% of sales).
Sales to the military market in Q1 2020 totaled about USD 782 million (about 77% of sales), compared with about USD 736 million (about 74% of sales) in Q1 2019, an increase of about USD 46 million.
Sales to the civilian market in Q1 2020 totaled about USD 236 million (about 23% of sales), compared with about USD 265 million (about 26% of sales) in Q1 2019.
Gross profit in Q1 2020 amounted to about USD 170 million (about 16.7% of sales) compared with about USD 122 million (about 12.2% of sales) in Q1 2019. The growth in gross profit derives from increased sales in the Systems Missiles & Space Segment and the increase in sales and the gross profit of the subsidiary ELTA.
Operating income in Q1 2020 amounted to about USD 61 million (about 6% of sales) compared with operating income of about USD 20 million in Q1 2019 (about 2% of sales). The increase in operating income arises from the increase in gross profit, which was partly offset by the increase in R&D expenses.
Net income in Q1 2020 amounted to about USD 34 million (about 3.3% of sales) compared with net income of about USD 14 million (about 1.4% of sales) in Q1 2019.
EBITDA in Q1 2020 amounted to about USD 102 million (about 10% of sales), compared with about USD 69 million (about 6.9% of sales) in Q1 2019.
Net financial expenses in Q1 2020 amounted to about USD 14 million compared with about USD 1 million in Q1 2019.
Research and development expenses in Q1 2020 totaled about USD 39 million compared with about USD 34 million in Q1 2019 (accounting for about 3.8% and 3.4% of sales, respectively).
Net tax expenses – in Q1 2020, the Company recorded net tax expenses of about USD 11 million compared with net tax expenses of about USD 6 million in Q1 2019. The increase in tax expenses compared to the corresponding quarter of 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 in the first quarter of 2020 amounted to about USD 13.2 billion, compared to about USD 13.4 billion at the end of 2019. 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 3.2 years of operation given the current sales volumes.
Positive cash flows from operating activities in Q1 2020 amounted to USD 5 million compared with negative cash flows from operating activities of USD 91 million in Q1 2019.
Material events in Q1 2020 through the financial statement publication date
The implications of the Coronavirus spread – the Company updates that it is continuing to collaborate with its existing and prospective customers, suppliers, government authorities and other factors in an aim to find solutions for any disruptions to its business activity caused by the Coronavirus pandemic. To date, the Company is not aware of any contracts that have been cancelled or of any major delays in supplies by its various vendors or of any effect on its compliance with contractual milestones. However, there is no guarantee that negative implications such as contract cancellations, delays etc. will not occur in the future. The Company is also analyzing the potential ramifications of the Covid-19 pandemic on its business ventures, operating results and cash flows as well as on the general environment and trends in its operating segments, particularly in global markets that have been strongly affected by the pandemic. The Company is currently pursuing the efforts of adapting its expense structure to the changes in the scope of its operations. Simultaneously, the Company continues to strictly adhere to all emergency regulations, decrees and guidelines issued on a frequent basis to employers in the public sector and to the general public for dealing with the pandemic. Effective from early May, the Company has been complying with the “purple badge” standards that allow it to expand the scope of employees who physically attend its facilities to be able to perform its various activities while protecting its employees’ safety and health.
Condensed balance sheet data (USD in millions):
Condensed profit and loss data (USD in millions):
Condensed Consolidated Financial Statements for Q1 2020 >>
