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RADA Reports Adjusted EBITDA growth of 162% YoY Reaching $8.2 million in its Record Q3/2021 Results

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RADA Electronic Industries reported robust financial results for Q3 2021, posting revenues of $32 million, a 57% YoY increase. Net income reached $6 million, reflecting a 184% YoY growth. The company reported a gross margin improvement to 41% and an operating profit that more than tripled to $6.3 million. Adjusted EBITDA surged 162% to $8.2 million, with a margin of 26%. With a solid cash position of $86.6 million, RADA expects to surpass $120 million in revenue for 2021, supported by a strengthened pipeline and inventory strategy.

Positive
  • Revenues increased 57% YoY to $32 million.
  • Net income grew 184% YoY to $6 million.
  • Gross margin improved to 41% from 38% YoY.
  • Adjusted EBITDA rose 162% to $8.2 million.
  • Cash position increased to $86.6 million.
Negative
  • US budget delays may impact short-term revenue certainty.

Revenues of $32 million, up 57% YoY and net income of $6 million, up 184% YoY

NETANYA, Israel, Nov. 03, 2021 (GLOBE NEWSWIRE) -- RADA Electronic Industries Ltd. (NASDAQ: RADA, TASE: RADA) announced today its financial results for the three-month and nine-month periods ended September 30, 2021.

Highlights of the third quarter of 2021

  • Quarterly revenues up 57% year-over-year and a sequential 13% increase to $32 million
  • Strong gross margin improvement to 41% compared with 38% in the year-ago quarter
  • Operating profit more than tripled to $6.3 million compared with $2.0 million in the year-ago quarter
  • Net income of $6.0 million, up 184% compared with $2.1 million in the year-ago quarter
  • Adjusted EBITDA of $8.2 million, an increase of 162% compared to $3.1 million in the year ago quarter and $6.3 million in the prior quarter
  • Adjusted EBITDA margin improved to 26% compared with 15% in the year-ago quarter and 22% in the prior quarter
  • Quarter-end net cash position of $86.6 million

Management Comments

Dov Sella, RADA's Chief Executive Officer commented, “We are very happy with our record financial performance and strong growth this quarter. The 57% year-over-year growth in revenue as well as the consistent improvement in our gross and operating margins, led to a 162% year-over-year growth in our Adjusted EBITDA and demonstrates the solid operating leverage within our business model.”

Continued Mr. Sella, “Our pipeline continues to strengthen, becoming deeper and broader. As the world starts to adjust to working under the Covid situation, we expect to be able to penetrate more quickly into new accounts globally. In the US, as has been widely reported, the new federal government has not been able yet to pass the budget and is operating under a continuing resolution of last year’s budget, leading to delays and lack of certainty in the short-term. While this phase of US budget adjustment is making it more challenging, at RADA, we are accustomed and well positioned to work under short timelines and urgent-need book-and-ship deliveries. Over the past year, we have strategically increased our inventory quite substantially to ensure we can maintain this significant competitive edge. All in all, we reiterate our expectations to surpass $120 million in revenue for 2021, representing a substantial 57% year-over-year revenue growth and with strong operating leverage supporting our ability to grow our EBITDA profitability beyond the current level.”

2021 Third Quarter Summary

Revenues totaled $32.0 million in the quarter compared with revenues of $20.4 million in the third quarter of 2020, an increase of 57%.

Gross profit totaled $13.2 million in the quarter (41% of revenues), an increase of 71% compared to gross profit of $7.8 million in the third quarter of 2020 (38% of revenues).

Operating income was $6.3 million in the quarter compared to operating income of $2.0 million in the third quarter of 2020.

Net income was $6.0 million, or $0.12 per share, compared to net income of $2.1 million, or $0.05 per share, in the third quarter of 2020.

Adjusted EBITDA was $8.2 million in the quarter compared to adjusted EBITDA of $3.1 million in the third quarter of 2020.

2021 First nine months Summary

Revenues totaled $85.5 million in the first nine months of 2021 compared with revenues of $52.9 million in the first nine months of 2020, an increase of 61%.

Gross profit totaled $34.5 million in the first nine months (40% of revenues), an increase of 78% compared to gross profit of $19.4 million in the first nine months of 2020 (37% of revenues).

Operating income was $14.3 million in the first nine months of 2021 compared to operating income of $2.7 million in the first nine months of 2020.

Net income in the first nine months was $20.3 million, or $0.42 per share, compared to net income of $3.0 million, or $0.07 per share, in the first nine months of 2020.

Adjusted EBITDA was $19.3 million in the first nine months of 2021 compared to adjusted EBITDA of $5.7 million in the first nine months of 2020.
As of September 30, 2021, RADA had net cash and cash equivalents of $86.6 million compared to $35.8 million as of year-end 2020.  In line with the Company’s previously started strategy, inventory levels were increased significantly reaching $38.1 million as of September 30, 2021 compared with $28.8 million as of year-end 2020. 

Investor Conference Call

The Company will host a conference call later today, starting at 9:00 am ET (3pm Israel time). Management will host the call and will be available to answer questions after presenting the results.

Dial in numbers are: US 1-888-723-3164; 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 www.rada.com beginning 48 hours after the call.

A live webcast of the conference call will be available. Please register for the webcast a 5-10 minutes prior to the call at RADA’s website: https://www.rada.com/investors following which a link to the live webcast will be sent to you within a short period.

About RADA Electronic Industries Ltd.

RADA is a global defense technology company focused on proprietary radar solutions and legacy avionics systems. The Company is a leader in mini-tactical radars, serving attractive, high-growth markets, including critical infrastructure protection, border surveillance, active military protection and counter-drones applications.

Contact Information

Company Contact:                                                                                                                                 
Avi Israel (CFO)
Tel: +972-76-538-6200
mrkt@rada.com
www.rada.com
Investor Relations Contact:
Ehud Helft
GK Investor & Public Relations
Tel: +1 212 378 8040
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.

Information with Regard to non-GAAP Financial Measures
The Company presents its financial statements in accordance with U.S. GAAP. RADA’s management uses supplemental non-GAAP financial measures internally to understand, manage and evaluate its business and make operating decisions. Adjusted EBITDA is provided in this press release and the accompanying supplemental information because management believes this non-GAAP measure is useful for investors and financial institutions as it facilitates operating performance comparisons from period to period. As presented in this release, the term Adjusted EBITDA consists of net profit (loss) according to U.S. GAAP, excluding net financing expenses, taxes, depreciation and amortization and non-cash stock-based compensation expenses. Other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure. Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including net income and our other GAAP results. Reconciliation between the Company's results on a GAAP and non-GAAP basis is provided in the table below.

RECONCILIATION FROM OPERATING INCOME TO ADJUSTED EBITDA
U.S. dollars in thousands

      
 Nine months ended Three months ended  Year ended
 September 30,  September 30,  December 31,
  2021  2020   2021  2020   2020 
               (Unaudited) Audited
        
Income from operations before tax$14,487 $3,002  $6,310 $2,126  $5,640 
Financial expenses (income), net (140) (311)  (18) (116)  (167)
Depreciation 2,600  1,612   1,001  598   2,289 
Employees non-cash option compensation 2,212  1,022   885  340   1,436 
Other non-cash amortization 135  409               -  178   476 
        
Adjusted EBITDA$19,294 $5,734  $8,178 $3,126  $9,674 
        
        

CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands, except share and per share data

ASSETS September 30, 2021 December 31, 2020 
  Unaudited Audited 
CURRENT ASSETS:     
Cash and cash equivalents $86,641  $36,289  
Restricted cash  492   567  
Trade receivables  28,944   14,095  
Contract assets  349   756  
Other receivables and prepaid expenses  2,311   1,637  
Inventories  38,108   28,783  
      
Total current assets  156,845   82,127  
      
LONG-TERM ASSETS:     
Investment in affiliated company  3,000   -  
Long-term receivables and other deposits  251   230  
Property, plant and equipment, net  16,898   13,968  
Deferred tax assets  5,767   -  
Operating lease right-of-use assets  12,108   10,581  
Total long-term assets  38,024   24,779  
      
Total assets $194,869  $106,906  
CURRENT LIABILITIES:     
Short term loan $-  $454  
Trade payables  19,070   10,603  
Other accounts payable and accrued expenses  11,012   9,855  
Advances from customers  817   2,323  
Contract liabilities  620   232  
Operating lease short-term liabilities  2,294   1,885  
      
Total current liabilities  33,813   25,352  
      
LONG-TERM LIABILITIES:     
Accrued severance-pay and other long-term liabilities  787   789  
Operating lease long-term liabilities  9,834   8,732  
Total long-term liabilities  10,621   9,521  
      
RADA SHAREHOLDERS' EQUITY    
Share capital -     
Ordinary shares of NIS 0.03 par value - Authorized: 100,000,000 shares on September 30, 2021 and December 31, 2020; Issued and outstanding: 49,365,136 on September 30, 2021 and 43,724,446 at December 31, 2020 respectively  488   440  
Additional paid-in capital  203,044   144,944  
Accumulated deficit  (53,097)  (73,351) 
      
Total equity  150,435   72,033  
      
Total liabilities and equity $194,869  $106,906  
          

CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands, except share and per share data

        
 Nine months ended  Three months ended  Year ended
 September 30,   September 30,   December 31,
  2021  2020  2021   2020  2020
  (Unaudited)  Audited
        
Revenues$85,476 $52,936 $32,004  $20,359 $76,217
        
Cost of revenues 50,992  33,580  18,749   12,598  47,882
        
Gross profit 34,484  19,356  13,255   7,761  28,335
        
Operating expenses:       
Research and development 7,478  6,468  2,485   2,230  8,846
Marketing and selling 4,609  3,671  1,653   1,286  5,017
General and administrative 8,050  6,526  2,825   2,235  8,972
Net loss from sale of fixed asset               -               -              -               -  27
Total operating expenses: 20,137  16,665  6,963   5,751  22,862
Operating income 14,347  2,691  6,292   2,010  5,473
        
Other financial income (expenses), net 140  311  18   116  167
        
Income before taxes 14,487  3,002  6,310   2,126  5,640
        
Tax income / (expense) 5,767            -  (271)              -                 -
        
Net income 20,254  3,002  6,039   2,126  5,640
        
Basic net income per ordinary share$0.42 $0.07 $0.12  $0.05 $0.13
        
Diluted net income per Ordinary share$0.41 $0.07 $0.12  $0.05 $0.13
        
Weighted average number of Ordinary shares used for computing basic net income per share 47,874,320  43,209,153  49,307,039   43,541,002  43,321,058
        
Weighted average number of Ordinary shares used for computing diluted net income per share 49,778,631  44,297,058  51,025,170   44,849,311  44,565,379

FAQ

What were RADA's revenues in Q3 2021?

RADA's revenues in Q3 2021 were $32 million, up 57% YoY.

What was RADA's net income in Q3 2021?

RADA's net income in Q3 2021 was $6 million, an increase of 184% YoY.

How much did RADA's adjusted EBITDA grow in Q3 2021?

RADA's adjusted EBITDA grew by 162% to $8.2 million in Q3 2021.

What was RADA's gross margin in Q3 2021?

RADA's gross margin in Q3 2021 improved to 41%.

What challenges is RADA facing due to the US budget?

RADA is facing uncertainty and potential delays in revenue due to the US federal budget not being passed.

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