Record-breaking Profits in the First Half and Second Quarter of 2024;
Order Backlog of USD 22.2 Billion, Sales of USD 2.85 Billion
The Company increased its investment in R&D and supplies advanced technological solutions to Israel’s security establishment and its customers worldwide
- 78% increase in net income in H1 2024 to about USD 294 million compared with about USD 165 million in H1 2023, the most profitable half-year in the Company’s history. An increase of about 115% in net income to about USD 159 million in Q2 2024 compared with about USD 74 million in Q2 2023.
- 37% growth in EBITDA in H1 2024 to about USD 451 million compared with about USD 329 million in the corresponding period of last year, an increase of 60%. EBITDA in Q2 2024 amounted to about USD 234 million compared with about USD 146 million in Q2 2023.
- Operating income grew in H1 2024 to about USD 310 million (about 11% of sales) compared with an operating income of about USD 205 million (about 8% of sales) in the corresponding period of last year. Operating income in Q2 2024 grew to about USD 163 million (about 11% of sales) compared with an operating income of about USD 88 million (about 7% of sales) in Q2 2023.
- Gross profit increased in H1 2024 to about USD 554 million (about 19% of sales) compared with about USD 456 million (about 18% of sales) in the corresponding period of last year. Increase in gross profit in Q2 2024, amounting to about USD 281 million (about 20% of sales) compared with about USD 215 million (about 17% of sales) in Q2 2023.
- 12% growth in sales to about USD 2,852 million in H1 2024, compared with about USD 2,540 million in the corresponding half of 2023. Increase of about 13% in sales in Q2 2024 to about USD 1,420 million compared with about USD 1,261 million in Q2 2023.
- The Company’s free cash flow is about USD 3 billion.
- The S&P Maalot agency raised the Company’s credit rating to the maximum rating of ilAAA, and its international rating to A-, both are expected to be stable.
IAI’s Chairman of the Board: “IAI’s business results are not only a reason for pride for our employees, but for all Israel’s citizens. We are religiously fulfilling our national mission, the most important there is, for the country’s security – on a daily basis and hour-by-hour – while at the same time ensuring that our business continuity is unaffected and our relationships with our customers are preserved, thereby strengthening Israel’s position in the world. The results emerging from the latest half-year reports tell an Israeli story of uncompromising excellence – the reason that some one hundred and fifty countries worldwide select IAI’s systems – because they are simply the best. Israel Aerospace Industries with all of its employees and managers are tirelessly investing their individual and combined efforts – 24/7, and our message to each and every citizen is that IAI can be relied on and trusted to deliver.”IAI’s President and CEO, Boaz Levy: “The company’s financial results have been constantly rising in recent years and reflect significant and wide-ranging activities both with Israel’s defence establishment and with our customers abroad, and seen in the signing of large-scale contracts that have greatly increased the company’s backlog of orders. IAI sees supreme value in maintaining the State of Israel’s technological leadership; in light of this necessity, we have, in the current quarter, increased investment in the research and development of advanced technologies to provide a response to the demands of combat warriors on the ground, and the development of the company’s future products. Since the outbreak of the current war, the company’s systems are playing a significant role in operations in all arenas: in the air, at sea, on land, and in space; this is thanks to IAI’s men and women employees who are currently working ever harder. It is precisely in these challenging times that we are proud of maintain our ranking with the maximum ilAAA rating awarded us by Maalot S&P.”
Israel Aerospace Industries Ltd., a leader in the defence and aviation markets, issues its consolidated financial statements for the first half and second quarter ended June 30, 2024.
Main data for H1 and Q2 2024
The Company’s sales in H1 2024 grew to about USD 2,852 million compared with about USD 2,540 million in H1 2023, an increase of about 12%, mainly deriving from the Systems Missiles & Space Group and the ELTA Group.
The sales of the Military Groups (*) in H1 2024 increased by about 13% to about USD 2,413 million compared with about USD 2,136 million in H1 2023, an increase of about USD 277 million. The sales of the Aviation Group (*) in H1 2024 increased to about USD 711 million compared with about USD 675 million in the corresponding half of last year.
The Company’s sales in Q2 2024 amounted to about USD 1,420 million compared with about USD 1,261 million in Q2 2023, an increase of about 13%, deriving from the increased sales in most of the Company’s Groups.
The sales of the Military Groups (*) in Q2 2024 increased by about 11% to about USD 1,196 million compared with about USD 1,079 million in the corresponding quarter of last year. The sales of the Aviation Group (*) in Q2 2024 amounted to about USD 358 million compared with about USD 319 million in the corresponding quarter of last year.
Sales for export in H1 2024 accounted for about 67% of sales, totaling about USD 1,912 million (about USD 940 million, representing 33% of sales, in Israel), compared with about 73%, totaling USD 1,850 million (about USD 690 million, representing 27% of sales, in Israel) in the corresponding half of 2023.
Sales for export in Q2 2024 accounted for 69% of sales totaling about USD 973 million (about USD 447 million, representing 31% of sales, in Israel), compared with about 73%, totaling USD 923 million (about USD 338 million, representing 27% of sales, in Israel) in Q2 2023.
Gross profit in H1 2024 amounted to about USD 554 million (about 19% of sales), compared with about USD 456 million (about 18% of sales) in H1 2023. Gross profit in Q2 2024 amounted to about USD 281 million (about 20% of sales), compared with about USD 215 million (about 17% of sales) in Q2 2023.
The gross profit of the Military Groups (*) in H1 2024 increased by about 14% to about USD 459 million compared with about USD 404 million in H1 2023. The gross profit of the Aviation Group (*) in H1 2024 increased to about USD 67 million compared with about USD 60 million in the corresponding period of last year. The gross profit of the Military Groups (*) in Q2 2024 increased by about 19% to USD 229 million compared with about USD 192 million in the corresponding quarter of last year. The gross profit of the Aviation Group (*) in Q2 2024 increased to about USD 38 million compared with about USD 29 million in the corresponding quarter of last year.
Operating income in H1 2024 amounted to about USD 310 million (about 11% of sales), compared with operating income of about USD 205 million in the corresponding period of 2023 (about 8% of sales). Operating income in Q2 2024 amounted to about USD 163 million (about 11% of sales), compared with operating income of about USD 88 million in Q2 2023 (about 7% of sales).
The operating income of the Military Groups (*) in H1 2024 was about USD 256 million compared with about USD 185 million in the corresponding period of last year. The operating income of the Aviation Group (*) in H1 2024 amounted to about USD 28 million compared with operating income of about USD 21 million in the corresponding period of last year. The operating income of the Military Groups (*) in Q2 2024 amounted to about USD 139 million compared with about USD 83 million in the corresponding quarter of last year. The operating income of the Aviation Group (*) in Q2 2024 amounted to about USD 17 million compared with operating income of about USD 9 million in the corresponding quarter of last year.
The increase in operating income in H1 and Q2 2024 stems from the increase in gross profit, as explained above, and from the increase in other income which was mainly offset by an increase in R&D expenses.
Net income in H1 2024 grew by 78% to about USD 294 million (about 10% of sales), compared with net income of about USD 165 million (about 6% of sales) in the corresponding period of 2023, the highest grossing half-year in Company history. Net income in Q2 2024 amounted to about USD 159 million (about 11% of sales), compared with net income of about USD 74 million (about 6% of sales) in Q2 2023.
The net income of the Military Groups (*) in H1 2024 grew to about USD 283 million compared with about USD 180 million in the corresponding period of last year. The net income of the Aviation Group (*) in H1 2024 amounted to about USD 20 million, similarly to the corresponding period of last year. The net income of the Military Groups (*) in Q2 2024 amounted to about USD 159 million compared with about USD 81 million in the corresponding quarter of last year. The net income of the Aviation Group (*) in Q2 2024 amounted to about USD 14 million, compared with net income of about USD 10 million in the corresponding quarter of last year.
(*) The data of the Groups’ sales, gross profit, operating income and net income (loss) consist of inter-Group and are identical to the data included in the note on business segments in the consolidated financial statements.
In-house research and development expenses in H1 2024 increased to about USD 131 million, compared with about USD 109 million in the corresponding period of 2023 (accounting for about 4.6% and about 4.3% of sales, respectively). In-house research and development expenses in Q2 2024 amounted to about USD 68 million, compared with about USD 57 million in Q2 2023 (accounting for about 4.8% and about 4.5% of sales, respectively).
Other income, net in H1 2024 amounted to about USD 44 million, compared with other income, net of about USD 1 million in the corresponding period of 2023. Other income, net in Q2 2024 amounted to about USD 31 million, compared with other income, net of about USD 1 million in the corresponding quarter of 2023. The increase is a result of recording other income from loss of control in a business and from sale of property and equipment held for lease.
In H1 2024, the Company recorded a net financial income of about USD 54 million, compared with net financial income of about USD 11 million in the corresponding half of 2023. In Q2 2024, the Company recorded a net financial income of about USD 29 million, compared with net financial income of about USD 5 million in Q2 2023. The increase derives from the Group’s enhanced free cash flow.
EBITDA in H1 2024 amounted to about USD 451 million (about 16% of sales), compared with about USD 329 million (about 13% of sales) in the corresponding period of 2023. EBITDA in Q2 2024 amounted to about USD 234 million (about 16% of sales), compared with about USD 146 million (about 12% of sales) in Q2 2023.
In H1 2024, the Company recorded net tax expenses of about USD 70 million compared with tax expenses of about USD 54 million in H1 2023. In Q2 2024, the Company recorded net tax expenses of about USD 32 million compared with tax expenses of about USD 23 million in Q2 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 June 30, 2024 amounted to about USD 22.2 billion, compared to about USD 17.7 billion at the end of 2023. USD 15.9 billion 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 4 years of operation given the current sales volumes.
Positive cash flows from operating activities in H1 2024 amounted to about USD 1,767 million compared with positive cash flows from operating activities of about USD 455 million in the corresponding period of 2023. The negative cash flows from operating activities in Q2 2024 amounted to about USD 13 million compared with negative cash flows from operating activities of about USD 186 million in Q2 2023.
