RADA - Earnings call transcript Q4 2020 | Rada Electronic Industries

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the RADA Electronics Industries Fourth Quarter and Full Year 2020 Results Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded.

You should have all received by now the company's press release.

section received Investor contact X-XXX-XXX-XXXX & it the not team Investor or have website in GK company's at Public News you it, RADA's please Relations view at If www.rada.com. the of Relations at the like over to Mr. I would hand call now to of Helft Relations. Ehud Investor GK Mr. would Helft, like begin, to you please?

Ehud Helft

thank to hosting like Results. Quarter the Officer; call provide will the Fourth followed Chief and call. Dov today Chief Year XXXX on I quarter, are Mr. Thank all who summarize you and Financial a RADA's you, Sella, Dov summary would operator. will for to key Executive the Avi, discuss Israel, of highlights would of RADA of Mr. like With us the to I welcome Avi by this to this management conference call Full Officer. financials.

will session. the open the We call for questions-and-answer then

point I'd that, go introduce the in Mr. also Dov, ahead, press start, release like we Dov RADA's conference please. Before And that this to published harbor like Sella. the to today's would now of call. to safe pertains CEO, out content I with

Dov Sella

Thanks, Ehud, to our earnings call. full everybody, and and fourth year welcome, quarter

with Let's results the start summary.

imagine, the record with very are results, both full financial in can pleased you quarter As the we for and our year.

with line, happy the the are both revenues; bottom the We profitability. top and the line,

'XX. quarterly Our revenues XX% it compared you when grew quarter and XX% year-over-year 'XX compare of for the the XXXX full year to of to fourth

reached XX% that. XX stable before in growing consecutive QX very about XX%, QX gross Our for a XX% sustained margins after to in which from quarters

grow better sales our and capacity continue manufacturing we efficiencies. is further, as to Our operating to U.S. production high And improve now at we expect efficiency.

growth when the the down through that much into XXXX, are expect to going And growth to And significant in OpEx a we rate. much operating top revenue a expenses line. can stabilizing. of forward, in bring we it bottom the account the stable, operating and strong is at OpEx is Our our the be looking line, lower there means growth leverage Taking business. in the

this our XX% fruits of Our of shows of $X.X we million in enjoying EBITDA that quarter the our investments. are or revenues

to profitability revenue increase million coming year $XXX of the for gave quarters. guidance XXXX. over We of expect We the further in

year-over-year represents approximately XXXX. compared XX% to guidance Our and more growth

As our orders backlog had come at best that visibility new ever the than grows faster originally guidance. in and been, increasingly rate are the and is a about we this we confident expected,

manufacturing, current current the It environment. over end on million on some enables growth. We supports invest COVID edge focus maintaining level opportunities identify to continue R&D to have at our sheet of them. It cash cash and net a strong our inventory to our us allows in quarter. we us capitalize in the and as $XX plans enables balance The the of efficient under especially to

Let's the talk recent the that days. have one about actually we in of opportunities implemented identified and

are We our business. broaden starting to inorganically

we Israeli have see very whom do, makes such solutions and automated investment for or One The commercial, are system strong vehicles. vehicles investment both mobility a on relevant current we There technological synergies an RADC signed RADC taking is the the as yet Hence, markets the works we sheet. future road. future assistance of an company, current market. the focus the to as focusing and Technologies autonomous advantage on between we for the the of that way they way potential nonautonomous down opposed well radars introducing technology radar and Limited, early-stage RADC an similarities as are defense. RADA us many interesting are opportunities driver ADAS startup in term with the at

increase We while their our option further carries investment equity, our to of purchased XX% an are $X investing currently stake. million and

membership. For now, Board our be involvement will via

execution the business growth on under focused we the experiencing. of remain opportunities will significant our are current We

a with growing few attractive As as to and technology ecosystem, Israel technologies also startup the companies, markets. innovative a nicknamed addressing has interesting quite and vibrant and maybe all, nation, known relevant radar

not a access made around We end technology investment it Our to for first hub, synergetic to have cater RADC's markets. we continue we to take is technologies. that a eyes commercial RADC to and later and importantly, is we and off advantage our work an our geographies lucrative the business to current other massively do markets to initial right goals. defense want our focus radar to is goal. this have only at. to But ball, emerging broadening towards create widen towards step where the vision now Again,

summarize. Let's

are our in million a bit for revenues environment expectations. which year $XX record of high was XX% already XXXX revenues over a to difficult grew business We outperforming a everybody. the in year-over-year

gross are Our increasing. margins

OpEx Our business. the is are benefiting the increasingly and stabilizing, from in leverage we

further. solidly on the term, technology Based EBITDA become million expect our in our over reiterate we this for with improve mature to have are about continue growth to profitable potential optimistic last future. our demanding and leading our the -- visibility We current we $XXX of growing for our foreseeable our of guidance quarter XX% year. markets the for of addresses needs and and even revenue XXXX, And radar the this and near

ahead. quarterly please point, will results, this best , technology be the CFO, to our with taken Israel. better. initial the hand wide that radar become first discussion our while even promising believe broadening ever And very arena company. over step RADC in upcoming At investment vision we early-stage our like finally, quarters to the have to I'd leaders a our in We Avi, in our radar go reporting Avi

Avi Israel

everybody. Welcome, Dubi. you, Thank

revenues we XX% can a today, results short and issued will earlier of quarter fourth $XX.X I find Fourth results. full were provide million, on quarter and press our You up the year-over-year. release summary year the the

$XX.X revenues year-over-year. For XX% million, the year, up were

year, last of the year in XX%, versus of that basis margin XXX was gross quarter full -- last Our and fourth last the year. XX% over over the was points XX%

year, were and $X.X this with margins of and compared grow operating revenues in $X.X will million further XX% were in gross happy last even compared XXXX. million and QX as million to out in expenses will OpEx was are improvement in like expect our in point of improve. full year XXXX, while I a in to expenses would improvement $XX.X future of million efficiency the the was the quantities XXXX. to operating that revenues $XX QX it production We XX%

So in Operating as a already $XXX,XXX loss was mentioned, $X.X QX million OpEx stabilizing. in QX is we pretty year. income of last versus of our

net last an of versus million $X was $X.X year, operating versus attributable or of loss reported of record revenues And XXXX, a operating $X.X QX EBITDA year. year. loss RADA versus shareholders EBITDA income million income $XXX,XXX of to net is of in loss a year. of last XX% for had the QX of For in last we versus fourth of of million $XXX,XXX which $X.X income We million, the million last million we of for X% $X.X had revenues quarter $X.X of of of QX year.

balance like For revenues the or of sheet. full X% record out of some from our year, versus I EBITDA highlights year. XX% point was also of revenues summarize and to would or $X.X last a $XXX,XXX million

we at results material As debt. for pleased and sheet. of our in net $XX year, complicated financing as the the In December shall for the no questions. That in Operator, Dov call summary, financial end $XX.X mentioned summary. cash ends now We balance with and has At what of very demonstrate, year XXXX, been progress everyone. please? are our XX, million, my open financial had million equity as our the a of XX% we stood shareholders'

Operator

Instructions]. [Operator

The first Brian question of Kinstlinger is Alliance Global Partners. from

Brian Kinstlinger

programs You that share us make are sure that hundreds Are large up XX% mentioned of many the -- programs a for account or demand X X XX% customers? of Avi, or For I program you Or growth. example, see like this am broad-based driving able you maybe how majority -- do is orders? of to demand? over, with say, the that large

Avi Israel

have potentially. XX, hundreds potentially, I let's of have Well, we customers we think say, don't

spread. So yes, it is

It this like For us, spread. with a more can start sure $XX We it's XX one year. maybe this of something a providing million be bit for already I'm is revenues, significant us. a of wide be about towards additional a of of will delivered the another order some significant backlog XX them of vehicles year. order half that it, second and of we the -- -- additional expect

of the There I significant are GBAD the of and rest program, of of So customers, a is less the both the U.S. this cannot is significant. that in it the bit less that, stage Marines, but It is world, sure compared size I'm sure, disclose to few a volumes am record. program at this we in quite but but significant. a additional in

in size. is XX it -- primary and customers additional less say, around, So let's we XX spread

Brian Kinstlinger

deliver Great. in then the the there the you of expect -- push in That's there still forwards X,XXX anything really for delays is Bradley terms helpful. side, Or the Eitan expect stages? this XX And has deliveries for year are other APS or and APS radars early changed in you on and/or that do XXXX? to

Avi Israel

top only in the We said XXXX. already line and half XXXX of will APS in onwards, that affect our second mainly

Brian Kinstlinger

X this But have is small year? are and the only it will that that deliveries Bradley Eitan Is the right?

Avi Israel

Bradley Netherlands have expected will insignificant. This is year. is is CVXX XXXX. minimal On deliveries start XXXX deliveries Eitan very we to for next of in are scale, It the lower year, going also. Serial prototypes. a expected

us affecting only start in APS XXXX. So will

Brian Kinstlinger

it. Got

And you in U.S. mentioned then Okay. gross the margins

scale, high You're target in and company? Or terms for build double long-term and at expect long-term gross is capacity of or target the XX%? margin as size I'm a in I you guess curious reasonable triple revenue is what efficiencies. the

Avi Israel

it the we to well, company. line I companies us, a is is a XX%. know think especially are if you do like that -- But companies limit not saying top the to margin. cross the -- we in not software if -- we really in There you gross the product keep examine we defense,

do with very we if that. over be XX%, happy we'll So

Brian Kinstlinger

comment driving some be supplier agree. Would the being solutions? kind yes. And in the the that us I to can more bring on radars technology automotive then general? -- what autonomous vehicle these are in they And give How to if market big and RADC functionality you of used to details. Yes, lastly, do they market? a in

Dov Sella

early too to It's describe.

software what automotive better so market things, that in the and even demand but a algorithms hardware prices smart design a a pressure a the made a and is of idea and technology antenna this that or whole in -- over to taking of to point, highly the price and this share do give but at the components did we minority and are better ratio. performance with availability defense. solutions is We price-sensitive what prices. That's excellent by for they lot There market high-end give go about Today's long address can don't to them unaffordable. ago increased of compensate today was done let

is So come starting But Until X follow say, the Tier Xs, high can really can potential quarter price testing solution expensive. give a market. them the autonomous RADC to over and a as but this meet cars are will that prices stage, new meets when again, requiring. give the LiDARs and And OEMs are and They few high-performance situation with this every of the within update that on start now, something to with performance we we we that verge them of that with something with as expectations we market can point. this it. will also LiDARs early or performance market, the radar unique of that a ingenuity affordable help introduce was and have X also in consensus the closely. it's can at much is demand months

Operator

Herbert is question Canaccord. Ken of next The from

Ken Herbert

first. Avi Maybe Yes.

XX% like Is quarter. Your we assume of for there, -- the sales operating a -- 'XX. in of of in were of XX% your and as that the sales the looks it percent sounds percent comments to like expenses sales, sort stability should about

Avi Israel

way I And as will percent. for grow million. revenues That's $XX $XXX know, at to our you from definitely, smaller that, our a believe grow 'XX will guidance. million OpEx

revenues of will OpEx So go time percent of down. goes by, as the

Ken Herbert

XX% goes it it down fair Go provide that specifics range? way is, next much is will EBITDA you more XX% to the in any another Okay. of Or hold year question on to maybe down? assume ask margins the for sort can to -- how

Avi Israel

we achieved the already Look, XX%.

of see, grow we top in to can will XX%. line the percent. definitely and we area to the the grow above target definitely want see quantities we So And grow, our bring it as XX-plus ourselves this as is

Ken Herbert

from into confident And Okay. 'XX? you're that's sustainable 'XX then

Avi Israel

up is it. couple that That's "our dramatically We've idea. U.S. our this increased efforts, to OpEx Yes. U.S. dramatically our what we subsidiary We been the but them informing We've We've R&D very the our are the presence stabilizing over market, via of doing. last built we're transparent OpEx." increased years. and

Ken Herbert

to with excellent. with would follow Okay. and just wanted It likely on involves the 'XX like And APS-type I sounds the radars, contract the that That's Netherlands ship that in up your recent beyond? then then question. Elbit's

Dov Sella

Yes.

Ken Herbert

well Okay, in investments synergies okay. question final an Perfect. view this goals? becomes Or on Dubi, automotive of terms in growth? an as you the investment And strategically, we for RADC. opportunity longer-term sector, see Should initial as this expect just more one where we how area should maybe your and

Dov Sella

technology in typically Look, are for too the market defense bigger than there first, around we the many looking not because the involved opportunities are And are us. like market, are they not that synergetic around companies us.

in approach on. the So looking growth innovation we so around are synergy technology and and and technological for the

one, well. technologies are past first markets can others, find available are security prices. which because today, there the the of was and the is not what done and markets market automotive Maybe adjacent the and do radar as in some you So

You in well. them can other see places as

So around we are the core the technology. of working

Ken Herbert

Okay.

it see greater between radar your So technology are and there there? over to natural you are there fair offers RADC opportunity some some that, say time, synergies -- what is

Dov Sella

way see is did they to -- We it. Yes. similar the can even their we mean I how do very radars

well. to their because military there are the can with the are But years. the we on That's evolve are around see next the things. as market Market-wise, and autonomous You here in cars processing. market. talking frequency creative will radars the it to that relevant customers the actually, can core the are vehicles, still, ideas, be can algorithms algorithms this how in close develop ranges signal Naturally, to And there. to totally some of migrate migrate we We technology from adaptations, install unmanned vehicles when that also it the very with couple engineers we military in different.

Operator

Silverman The next Investments. AWM question of Alex is from

Alex Silverman

back asked been of you my us days? help gotten is questions Most any of process with semblance to the these Can have efficient how and they answered. review normalcy? Have

Dov Sella

I'm repeat we your sorry, Can did question? you not Alex. because get

Alex Silverman

on Has normal any past working efficient. -- So haven't to they normalcy? review been back sort any the home. very have in any military They Is to of from a of that are the people been level there of of basis? year, returned reviewing level

Dov Sella

I see.

But U.S. things will fatigue that still COVID will we think the to in I and into took it say year, coming see what a where lot can we there is don't from. happen return all over, account pace. so we the of original this do and it's a believe we happen

beyond are what up holding things continuing, on installation, it when such. yet of speaking, And generally are assumed testing, are of we into normal. we the rest account because processes the are in and and also programs we orders point past can the But not We happen world. so took production

And we through overcoming wirelessly, performances potential customers have that all world challenge. to demonstrations are, over are that. time, exhibiting and our we the in to we Sometimes, do real

the is average, creativity unfortunately. are on So But slower, things happening.

Operator

question is from Cowen. next of The Bernstein Jeff

Jeff Bernstein

on couple A the balance the stable on big inventory terrific despite growth sheet. The for questions you Congratulations guys had. are days a have of year. you pretty

the Just a wondering cetera of sustainable lot forward? receivable the interested there's collections feeling your just of come going way, And much whether how then and et how have and better. been reported going of shortages down you're semiconductors, are inventory way kind so that's about in where days

Dov Sella

a of we X a warehouses, components Yes. we ago our in what took a that's year have year supplies basically decision Inventory-wise, keep. to and of full

it probably, in in the to that but the from us. attentive market come surge affect not the a hiccups market automotive does are We

are monitoring. closely We

orders ahead putting that. collections, of inventory take if realize long-term-ish we time, level, so our not are at are look affected. And approach, well We And you Avi? a can about you

Avi Israel

Yes. is, very very, could collection seen About you news cash quarter, the was as fourth collections, from high. our good the have in

the XXXX the receivable, accounts to end receivable XXXX, the accounts at look it's at the you accounts almost despite end of same the If receivable growth. at compare figure compared of

I is doing U.S. rest very, U.S. the experience I'll world. to means of in -- well. U.S. So collection of very collection it is us mentioned cycles coming is pace compared again. the of experienced mention collection, and twice. "quicker." as it it growing, ours of different money We that -- becoming short good And to the is are is very us. we revenues for which news Israel

Operator

[ph]. Vidomlansky Isaac from is question next The

Unidentified Analyst

passive acquisition? in the Are going is be going his ties for you to new you a the the -- being? be heavily regarding time are industry to RADC Or [ph], Ben-Shalom involved automotive to Yossi investor with

Dov Sella

No.

We investor, RADA, mean not that of the mean that's Ben-Shalom RADA involved. to RADC. he's minority passive investing is I of Chairman is It's a RADA. Yossi -- are investment as going be I it's in a XX%. involved but

Unidentified Analyst

Okay. company My categories famous are and involved second Fund? noticed that in touch I like big Wellington of your in ARK ETF is other the the investors the question in ARK management you with that RADA, led by

Avi Israel

So question, what's the please?

Unidentified Analyst

Wellington far touch ARK mean going Beside involved on in -- of you release as the in the know behind them people company? you you in Do know the touch? and Are what's Fund? news, ETF I are as letting you

Dov Sella

We whenever the a the basis. is on I in why don't is touch understand all investors are relevant in unique. need general RADA with this

Operator

question next is from Canaccord. Ken The Instructions]. of [Operator Herbert

Ken Herbert

achieve exchange an that? I Dubi, you Aviv update Can your so trading Tel of on how provide gone far then goals? lot that's us -- then you And the sense. to and on how think And there. a just logic recently investors in that for it makes the started I the stock provide helps shares mean and

Dov Sella

Okay.

in ceremony. First, the trading we today opened opening the up

being the early. I rationale so last understood. say, a So started it's Tuesday, is But milestone, traded We think only very this let's it's morning. too

a included, and Israel, base quite for and easier as investor of -- the well. have In there here regarding will them -- that hours of the in and Tel technology of and be increase X, primary the for them the be going demand a in it request not Israel, index. included locations, making immediately because also which second-highest are institutional RADA institutional be and the investors. will the And there going a funds. investors probably is of benefit And the index, We for here so are then attentive. trading to significant in is we only Aviv but or we It lots is institutional do to we different hope hedge already are in we shares And our It company came of include trading. some in that indexes. will and X X, others, lot portfolios XX,

it's So in the and another company also all, investors. the should all support vehicle that

Operator

no There to this time. are Mr. at questions Sella, your statement? would further you like concluding make

Dov Sella

would I join, you, for with look you Thank speaking healthy, conference the behalf we sure you. that good in you Yes. I'm management, one-on-one some again forward like. be the all. of quarter well and next results. try, our Tomorrow, business. and have On to to to thank meetings. interest still in you'd please not Otherwise, like also Stay you day can Cowen but if operator. we'll Thank all our soon, at continuing the probably and presenting

Operator

participation. Thank Thank you you. XXXX and Industries Call. your the Conference Year RADA This Fourth concludes Full for Results Electronic Quarter

and ahead You disconnect. may go

Rada Electronic Industries (RADA) 11 Feb 212020 Q4 Earnings call transcript