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RADA Electronic Industries Announces First Quarter 2019 Results

Continued strong revenue growth: Q1 revenues of $8.7 million, up 44% year-over-year

NETANYA, Israel, May 21, 2019 (GLOBE NEWSWIRE) -- RADA Electronic Industries Ltd. (RADA) announced today its financial results for the quarter ended March 31, 2019.

Highlights of the first quarter of 2019

  • Past and ongoing investments promoting growth;
  • Revenues of $8.7 million, up 44% year-over-year;
  • Net loss of $0.5 million;
  • Q1-end net cash position of $21.5 million.

Management Comments

Dov Sella, RADA's Chief Executive Officer commented, “We are very pleased with our continued top line growth, based on revenues from our software-defined tactical radars. These are early fruits from the significant and ongoing investments we are making in R&D, and sales and marketing. Anticipating growth in the US, we are establishing an additional radar production line, to become active this year. As 2019 progresses, we anticipate that the radar market will transform from its current emerging phase to a programs-of-record phase, where we will start to see the generation of significant backlog, primarily from the US.”

Continued Mr. Sella, “Our strategy very much remains on track. Considering the strong growth this quarter and looking forward over the remainder of 2019, we continue to expect revenues in excess of $40 million for the year. This represents year-over-year growth of at least 43%, driven primarily by accelerating sales of tactical radars.”

2019 First Quarter Summary

Revenues totaled $8.7 million in the quarter, compared with revenues of $6.0 million in the first quarter of 2018, an increase of 44%.

Gross profit totaled $3.2 million in the quarter (or 36% of revenues), an increase of 45% compared to gross profit of $2.2 million in the first quarter of 2018 (or 36% of revenues).

Operating loss was $0.6 million in the quarter compared to operating income of $0.2 million in the first quarter of 2018.

Net loss attributable to RADA’s shareholders in the quarter was $0.5 million, or $0.01 per share, compared to a net profit of $0.2 million, or $0.01 per share, in the first quarter of 2018.

As of March 31, 2019, RADA had net cash and cash equivalents of $21.5 million compared to $20.8 million as of year-end 2018.

Investor Conference Call

The Company will host a conference call later today, starting at 9:00 am ET (4pm Israel time). Management will host the call and will be available to answer questions after presenting the results.

Dial in numbers are: US 1-888-668-9141; UK 0800-917-5108; Israel 03-918-0610 and International +972-3-918-0610.

For those unable to participate, the teleconference will be available for replay on RADA’s website at http://www.rada.com beginning 48 hours after the call.

About RADA Electronic Industries Ltd.

RADA Electronic Industries Ltd. is an Israel-based defense electronics contractor. The Company specializes in the development, production, and sales of tactical land radar for force and border protection, inertial navigation systems for air and land applications and avionics systems and upgrades.

Contact Information  
   
Company Contact: Investor Relations Contact:
   
Avi Israel (CFO) Ehud Helft/Gavriel Frohwein
Tel: +972-9-892-1111 GK Investor & Public Relations
mrkt@rada.com  Tel: +1 646 688 3559
www.rada.com  rada@gkir.com 

Forward Looking Statements

Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. Such risk uncertainties and other factors include, but are not limited to, changes in general economic conditions, risks in product and technology developments, market acceptance of new products and continuing product demand, level of competition and other factors described in the Company's Annual Report on Form 20-F and other filings with the Securities and Exchange Commission.

 
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands, except share and per share data
       
  March 31,   December 31,
ASSETS 2019   2018
  Unaudited   Audited
CURRENT ASSETS:      
Cash and cash equivalents $  21,499     $    20,814  
Restricted cash     422          422  
Trade receivables (net of allowance for doubtful accounts of $1.5 at March 31, 2019 and December 31, 2018)   11,439        13,382  
Contract assets     1,185         899  
Other receivables and prepaid expenses     2,156         506  
Inventories   15,459       11,244  
Current assets related to discontinued operations     -        1,524  
       
Total current assets   52,160       48,791  
       
LONG-TERM ASSETS:      
               
Long-term receivables and other deposits     85       79  
Property, plant and equipment, net     4,588       4,632  
Operating lease right-of-use asset     1,894       -  
Total long-term assets     6,567       4,711  
       
Total assets $ 58,727     $ 53,502  
       
LIABILITIES AND SHAREHOLDERS' EQUITY      
       
CURRENT LIABILITIES:      
Trade payables $  7,665      $   5,650  
Other accounts payable and accrued expenses     4,166       3,842  
Advances from customers, net   866       727  
Contract liabilities   515       366  
Operating lease short-term liabilities     837       -  
Current liabilities related to discontinued operations     -       366  
       
Total current liabilities     14,049       10,951  
       
LONG-TERM LIABILITIES:      
Accrued severance pay and other long-term liabilities     722       690  
Operating lease long-term liabilities   1,057       -  
 Total long-term liabilities     1,779       690  
       
RADA SHAREHOLDERS' EQUITY      
Share capital -      
Ordinary shares of NIS 0.03 par value - Authorized: 100,000,000 shares at March 31, 2019 and December 31, 2018; Issued and outstanding: 38,067,024 at March 31, 2019 and 37,516,891 at December 31, 2018.     390       386  
               
Additional paid-in capital   120,338       118,568  
Accumulated other comprehensive income     -       220  
Accumulated deficit   (77,446 )     (76,961 )
       
Total RADA shareholders’ equity   43,282       42,213  
Non-controlling interest     (383 )     (352 )
               
Total equity   42,899       41,861  
               
Total liabilities and equity $ 58,727     $ 53,502  
               


CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands, except share and per share data
  Three months ended   Year ended
  March 31,   December 31,
  2019   2018   2018
  Unaudited   Audited
           
           
Revenues $    8,687     $     6,020      $     28,032   
           
Cost of revenues    5,534       3,841         17,914  
           
Gross profit     3,153       2,179         10,118  
           
Operating expenses:          
           
Research and development     1,366       592       3,092  
Marketing and selling      882       634       2,860  
General and administrative   1,463       748       4,001  
Net loss from sale of fixed assets   -       -       103  
           
Total operating expenses   3,711       1,974       10,056  
           
Operating income (loss)   (558 )     205       62  
                       
Financial income, net   42       8       119  
           
Net income (loss) from continuing operations   (516 )     213       181  
Net income (loss) from discontinued operations   -       (9 )     (404 )
           
Net income (Loss) $ (516 )   $  204     $ (223 )
Net income (loss) attributable to non-controlling interest   (31 )     (16 )     (386 )
                       
Net income (loss) attributable to RADA Electronic Industries' shareholders $ (485 )   $ 220     $ 163  
Basic net income (loss) from continuing operations per Ordinary share $ (0.01 )   $ 0.01     $ 0.02  
Diluted net income (loss) from continuing operations per Ordinary share $ (0.01 )   $ 0.01     $ 0.02  
Basic and diluted net income (loss) from discontinued operations per Ordinary share $ -     $ 0.00     $ (0.01 )
Basic and diluted net income (loss) per Ordinary share $ (0.01 )   $ 0.01     $ 0.01  
Weighted average number of Ordinary shares used for computing basic net income (loss) per share   37,966,987       32,604,550       33,184,570  
Weighted average number of Ordinary shares used for computing diluted net income (loss) per share   38,454,861       33,202,955       33,716,931  
                       

In February 2016, the FASB established Topic 842, Leases, by issuing ASU 2016-02, which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU 2018-10, Codification Improvements to Topic 842, Leases; and ASU 2018-11, Targeted Improvements. The new standard establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The Company adopted the new standard on the first day of fiscal 2019. The Company used the modified retrospective transition approach with the effective date as the date of initial application. Consequently, financial information will not be updated, and the disclosures required under the new standard will not be provided for dates and periods before January 2019. The new standard provides several optional practical expedients in transition. The Company elected the ‘package of practical expedients’, which permits us not to reassess under the new standard the prior conclusions about lease identification, lease classification and initial direct costs. The adoption of the standard resulted in a material effect on the Company’s financial statements with a balance sheet recognition of additional lease assets and lease liabilities of approximately $1.9 million as of March 31, 2019.