RADA Electronic Industries Ltd. (Nasdaq: RADA) March 2018
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COMPANY OVERVIEW RADA MARKET CAP $75m as of March 7, 2018 120 EMPLOYEES SHAREHOLDERS Defense Electronics company headquartered in Israel DBSI 26% Design, sell & manufacture: Ground-based tactical radars Avionics & Inertial Navigation Systems (INS) Free Float 74% Turnaroundin the business as focus moves from legacy Avionics & INS to GEOGRAPHIC SALES BREAKDOWN (2017) Asia Israel Growth Engine of Tactical Radars for the Maneuver Force: TAM of $5bn Other USA 3
PRODUCTS & TECHNOLOGIES Growth Engine TACTICAL RADARS 2016 30% 60% Mini-Tactical Multi-Mission AESA Radars for the Maneuver Force Applications Counter-drone system of systems; Active protection of combat vehicles; Short-Range hostile fire locators; All-threat air surveillance; 3-D Border surveillance; SALES IN 2017 ($M) 16.2 10.0 Digital recorders, Avionics Systems and Inertial Navigation Systems for Aircraft Applications Mission video & data recordings; Weapon management systems; Avionics for manned platforms & UAVs; AVIONICS 2017 2017 2016 70% 40% Legacy Leadership 4
RADARS: OPERATIONAL MISSIONS https://www.youtube.com/watch?v=s-t6az6aeds 5
COUNTER-DRONE SYSTEM-OF-SYSTEMS Segment expected to proliferate Conducted numerous successful demonstrations in last 2 years Part of the RAFAEL Drone-Dome solution 6
COMPETITIVE POSITIONING RADA Positioning for Growth: Exceptional tactical-grade capabilities at significantly lower prices in Radar markets Strong partnerships and customer relationships: tailor products to customer requirements Customers procure equivalent-capability systems from RADA versus competitors at dramatically lower prices Technology development targeting a higher price/performance class Compact technology, providing high performance and adaptable to multiple applications 7
US DEFENCE PRIORITIES At this year s Association of the US Army (AUSA) annual conference, US Army chief of staff, Gen Mark Milley, outlined a list of defense modernization priorities Outlined six key areas for modernization focus: long-range fires, mobility, networking, protection, sustainment and soldier lethality Short-range air defense (SHORAD), lower-tier air defenses, and active protection systems (APS) were seen as protection priorities against threats from newgeneration anti-tank munitions and drones https://quillorcapture.com/2017/10/27/adapt-or-die-us-army-looks-to-modernise/ 8
FOCUS ON THE US MARKET First radar sales were made to US customers as part of HEL R&D programs: US NAVY MARINE CORPS HEL-MD, Silent Strike ADAM, Athena, LLD GBAD DE OTM, MCWL 20 On-the-Move C-UAS systems to USMC over 100 radars, towards fielding Active Protection (APS) market is emerging est. at over 15,000 combat vehicles Potential market size for mini tactical radars estimated at ~$3B over next 10 years RADA Technologies LLC US Subsidiary JV with SAZE, will achieve SSA, Americanization Cooperation agreement with DRS Technologies focused on C-UAS and M-VSHORAD markets Performed numerous demonstrations & tests orders received have very significant potential 9
SELECTED CUSTOMERS & PARTNERS IDF FACH US NAVY FAP IAF Indian Security Forces 10
TURNAROUND AND STRONG REVENUE GROWTH 30 $26.2m revenue achieved in 2017 Driven by significant growth in the radar business 25 10 20 100% 9 8 15 Radars 7 6 5 10 4 3 5 2 0 Revenue in US$ millions Avionics 2015 2016 2017 11 1 0 Revenue in US millions Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417
FINANCIAL STATEMENT SUMMARY US$ thousands Q116 Q216 Q316 Q416 FY 2016 Q117 Q217 Q317 Q417 FY 2017 Total Revenue 2,454 2,734 3,330 4,303 12,821 4,675 5,317 7,071 9,119 26,182 Gross Profit 6 202 414 820 1,442 1,669 1,664 2,755 2,175 8,263 R&D expenses, net 165 150 218 225 758 198 208 480 689 1,575 S&M 476 584 594 615 2,269 436 419 629 653 2,137 G&A 398 437 458 521 1,814 686 526 627 729 2,568 Operating Income (1,033) (969) (856) (541) (3,399) 349 511 1,019 104 1,983 Financial Expenses 780 620 119 2 1,521-29 38 188 (41) 156 Net Income ($1,848) ($1,577) ($996) ($486) ($4,907) $390 501 794 657 2,342 EPS ($0.23) ($0.13) ($0.12) ($0.03) ($0.35) $0.02 $0.02 $0.05 $0.02 $0.09 EBITDA (non-gaap) (897) (829) (663) (171) (2,560) 748 838 1382 536 3,504 12
KEY INVESTMENT HIGHLIGHTS Turnaround Towards Growth Growth Engine Radar Stable Legacy Avionics Business Driven by a stable legacy Avionics business combined with Radar growth engine Reached profitability and $26.2m revenue in 2017 from $12.8m in 2016 Strong growth combined with improved margins will bring business back to profitability Competitive pricing points underpinned by superior technology, addressing huge markets Radar is emerging with TAM of $5bn+ Initial orders already delivered to key customers which are expected to expand strongly Profitable avionics product line Discontinuing less profitable products Provides ongoing stable, cash-generating business 13
Thank You 14