For the third year in a row, an increase in IAI’s sales and profits, and no less importantly, a real increase in EBITDA, a figure that will help estimate a higher company value ahead of the IPO, which IAI hopes will be launched later this year.
The data published this morning (Wednesday) for the summary of 2021 shows that IAI’s annual sales amounted to about $ 4.5 billion – the highest since the company’s inception and an increase of 7% compared to 2020. Net profit reached a peak of $ 148 million – 11% more than a year Earlier, and the corresponding increase of 10% in EBITDA to about $ 436 million – the highest in the company’s history.
The near future also heralds a continuation of a trend thanks to an increase in the order backlog to about $ 13.4 billion, compared to $ 12.6 billion in 2020. And more from the earnings data – the gross profit increased from 665 million to $ 966 million, and the operating profit increased from 195 million in 2020 to 217 million in 2021, 4.8% of sales.
Expect a jump in sales in the wake of the war in Ukraine
Three divisions stand out for the positive, and one stands out for the negative. The Military Aircraft Division, the Missile and Space Division and the Elta Division recorded a real increase in profits. These three divisions have greatly increased their sales in the military fields, and the expectation, against the background of the war in Ukraine, is that a real jump in sales is expected here this year and in the years to come.
The aviation division, on the other hand, did increase sales by one percent, but recorded an operating loss of $ 15 million compared to a loss of about $ 10 million in 2020. However, the division’s net loss decreased and amounted to about $ 27 million, compared to a loss of about $ 32 million in 2020.
Another important statistic: R&D spending increased by 5% to almost $ 1.1 billion, and the company’s cash balances totaled $ 905 million at the end of 2021.
In 2021, the company recorded net expenses for income taxes in the amount of approximately $ 46 million, similar to the corresponding period last year. It should be noted that the company is taxed at regular corporate tax at a rate of 23% and does not receive the benefits of the law to encourage capital investments due to being a wholly state-owned company. The sale of a share, even minimal, owned by the company to a non-governmental entity, will provide the company with a reduced tax payment under the Capital Investment Encouragement Act.
IAI is one of the largest export companies in Israel, and most of its sales (72%) are to countries and especially to armies abroad.
With these figures and the expected increase in sales in light of the war in Ukraine, if IAI’s share had been traded, it would probably have soared.
Ganz will promote the company’s offering
What does this say about the chances of an IPO? Globes has learned that during Defense Minister Bnei Gantz’s tour of IAI yesterday (Tuesday), he addressed this explicitly and said that he would promote the IPO and assist in places where barriers were created.
IAI CEO Boaz Levy tells Globes that, among other things, in light of the increase in profitability, the IPO process will be promoted, and the IPO will be launched in his estimation in the second half of the year. Legal advice to the government, which is supposed to complete the legal process.
Boaz Levy, CEO of IAI / Photo: IAI
According to Levy, “We are showing record performance in both profit and sales, three years of real growth – going hand in hand towards a successful IPO. And the Companies Authority.It’s a win-win process for everyone, and I appreciate that we will reach the right agreement for the company and the employees.
“The IPO process is taking longer than we thought, and it is impossible not to think about the increase in the share value in light of the situation if we were already on the stock exchange, but the IPO will probably take place this year in one of the last two quarters.”
In relation to the aviation division which is still recording losses, Levy estimated that 2022 will be a turning point year and the transition from loss to profit. The CEO also said that the division serves as the only Israeli knowledge center for the development of aircraft and aeronautical systems, and these are also used for the other divisions such as aerospace missiles, military aircraft, etc. and contribute to their rapid growth.
Levy estimated that also due to the war in Ukraine, sales of military aircraft will increase this year, and the UAVs – which IAI was the world pioneer in this field – will continue to be an attractive product, especially the UAV that takes off and lands vertically as well as the advanced closet UAVs.
Peretz: The next task – the IPO
We wrote in Globes that in internal discussions at the company, Chairman Amir Peretz said that he is committed to the IPO and will do everything to promote it.
Peretz congratulated the reports and thanked his predecessor, outgoing chairman Harel Locker, and the company’s management. Peretz, as usual, emphasized the contribution of all employees and also referred to the IPO: These are exactly the hands and minds that make up the numbers. And the hands and minds here, in the aerospace industry, are commendable.
“Despite the positive results, we have a long way to go, and we will strive to reach results that will put us in line with the profit results of other defense companies in Israel and around the world.”
He said, “The other task before us is the issuance, and as is well known, the approval of the confidentiality is waiting on the deputy table for the ombudsman and his signature. “Until that happens, we will be prepared so that as soon as we receive the approval we can go ahead and carry out the IPO as quickly as possible, while ensuring the interests of IAI – building long-term industrial quiet and increasing the scope of research and development.”