Announcement PDF RNS Number : 4185N MTI Wireless Edge Limited 25 November 2024 25 November 2024 MTI Wireless Edge Ltd ("MTI", the "Company" or the "Group") Q3 2024 Financial Results and Directorate Change Well-positioned for the full-year and beyond, with a valuable and growing pipeline of opportunities across the business divisions particularly driven by defence and 5G MTI Wireless Edge Ltd (AIM: MWE), the technology group focused on comprehensive communication and radio frequency solutions across multiple sectors, is pleased to announce its financial results for the nine-month period ended 30 September 2024 (the "Period"). Financial highlights · Revenues for the Period were stable at $33.7m (nine months to 30 September 2023: $33.7m) · 10% improvement in net profit to $3.1m (nine months to 30 September 2023: $2.8m), helped by increases in financial income and lower tax rates · 11% increase inearnings per share to 3.60 US cents (nine months to 30 September 2023: 3.25 US cents) · Strong balance sheet with net cash of $4.9m as at 30 September 2024 (30 September 2023: $6.4m) after using $1.1m to repurchase shares of the Company under its buyback programme · Final dividend anticipated to be declared alongside MTI's full year results which will be announced during the first quarter of 2025 Operational highlights · The Group continues to operate successfully and deliver a stable level of sales combined with growing profitability · Antenna division performed well, driven by 5G and defence led sales o Significant pick-up in sales of the Company's 5G backhaul solution in India during the second half of 2024, driven by new orders from a leading cellular service provider o Increased demand for military antennas globally expected to continue to be strong into 2025 o Overall, the division is well placed for both the remainder of 2024 and beyond, with a healthy backlog of orders and a number of submitted tenders awaiting responses · Mottech delivered a good third quarter o Positive performance in North America, South Africa and Israel, which has remained stable despite the unrest in the Middle East o Sales into Europe were behind last year, however, a valuableand growingpipeline of opportunities is in place o Growing awareness amongst European countries of the need to manage and conserve water as an important resource o China office closed as market demand remains unstable - all related costs were incurred in Q3 2024 o Sales in the quarter were 6% ahead of Q3 2023 but for the nine months they were slightly behind the prior year, but with good prospects for growth in 2025 · MTI Summit experienced a relatively slow third quarter o Sales were held back due to shipping delays from vendors o With shipments now expected to be back on track, sales in Q4 2024 are expected to benefit, together with a significant backlog in orders o Strategic agreement for the distribution business is operating well and has been extended until mid-2026 o PSK's performance continued to be slow, but is expected to improve following the cost saving initiatives taken over the Summer combined with new business prospects Directorate change The Company today also announces that Dov Feiner, Executive Board Director and General Manager of the Antenna Division will become a Non-Executive Director of the Company and step down from his role as General Manager at the end of April 2025. Dov, who is aged 68 has worked in the Company for over 35 years, will be retiring from full-time employment. Eran Shmulinson, currently Vice President of Sales and Marketing for the Antenna Division will succeed Dov as General Manager of the Antenna Division, in a non-Board role. Moni Borovitz, Chief Executive Officer of MTI Wireless Edge, said: "We have completed a successful third quarter and we are well placed for the full-year and beyond. This was a good achievement, especially given the current regional conflicts and the associated uncertainty this creates. As shown in these results, the business has not been significantly affected, our partners and customers are focused on continuing as normal and I am proud to report that our internal teams have remained positive, determined and highly adaptable to managing any necessary changes. This has allowed us to move our ABS antenna solution, which has been granted a patent, into pre-production stage and introduce our own Elite Pro wireless irrigation controller to offer to Mottech's customers. Both products have superior technology and are key for our future growth. "Defence is one of our three key sectors and global demand has been high, reflecting the concerns of many Governments regarding the more unstable world we now live in, a trend which is expected to continue. 5G is another key sector where we have received significant demand for our products from India and elsewhere, and there is substantial further potential from this market and others. Due to climate change, managing water as a key resource is becoming a higher priority for European countries who previously have taken water for granted. We believe this will open up new opportunities for Mottech. "This, together with our strong net cash position, means the Company is well placed. Q4 has begun well and we anticipate continuing to grow the business and delivering an attractive return to our shareholders. "Finally, on behalf of the Board I would like to express our heartfelt thanks to Dov Feiner who has successfully led the Antenna Division for many years, been a significant presence across the whole business and provided valuable counsel at Board level. We are grateful for the work he has done and are delighted that he has agreed to continue to work with us in a Non-Executive role when he steps down as the General manager of the Antenna Division in April next year." For further information please contact: MTI Wireless Edge Ltd +972 3 900 8900 Moni Borovitz, CEO http://www.mtiwirelessedge.com Allenby Capital Limited(Nomad and Joint Broker) +44 20 3328 5656 Nick Naylor/Alex Finance) Brearley/Piers Shimwell (Corporate Guy McDougall/Amrit Nahal (Sales and Corporate Broking) Shore Capital(Joint Broker) +44 20 7408 4090 Toby Gibbs/ Rachel Goldstein (Corporate Advisory) Fiona Conroy (Corporate Broking) Novella(Financial PR) Tim Robertson/Safia Colebrook +44 20 3151 7008 About MTI Wireless Edge Ltd. ("MTI") Headquartered in Israel, MTI is a technology group focused on comprehensive communication and radio frequency solutions across multiple sectors through three core divisions: Antenna division MTI is internationally recognised as a producer of commercial off-the-Shelf and custom-developed antenna solutions in a broad frequency range of HF to 170 GHz for commercial, RFID and military applications. MTI continuously invests in ground breaking technologies, explores new frequencies, and devises innovative solutions which empower our wireless communication customers with cutting-edge off-the-shelf and custom-made antennas. We are at the forefront of technology and innovation, being the first to introduce Dual Band parabolic antennas, E Band Automatic Beam Steering antennas, E Band FCC compliant flat antennas, and more. MTI supplies directional and omnidirectional antennas for outdoor and indoor deployments, including smart antennas for 5G backhaul, Broadband access, public safety, RFID, base station and terminals for the utility market. Military applications include a wide range of broadband, tactical and specialized communication antennas, antenna systems and DF arrays installed on numerous airborne, ground and naval, including submarine, platforms worldwide. Water Control & Management division Via its subsidiary, Mottech Water Solutions Ltd ("Mottech"), MTI provides high-end remote control and monitoring solutions for water and irrigation applications based on Motorola's IRRInet state-of-the-art control, monitoring and communication technologies. As Motorola's global prime-distributor Mottech serves its customers worldwide through its international subsidiaries and a global network of local distributors and representatives. With over 25 years of experience in providing customers with irrigation remote control and management, Mottech's solutions ensure constant, reliable and accurate water usage, increase crops quality and yield while reducing operational and maintenance costs providing fast ROI while helping sustain the environment. Mottech's activities are focused in the market segments of agriculture, water distribution, municipal and commercial landscape as well as wastewater and storm-water reuse. Distribution & Professional Consulting Services division Via its subsidiary, MTI Summit Electronics Ltd., MTI offers consulting, representation and marketing services to foreign companies in the field of RF and Microwave solutions and applications including engineering services (including design and integration) in the field of aerostat systems and the ongoing operation of Platform subsystems, SIGINT, RADAR, communication and observation systems which is performed by the Company. It also specializes in the development, manufacture and integration of communication systems and advanced monitoring and control systems for the Government and defence industry market. MTI WIRELESS EDGE LTD. (An Israeli Corporation) INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Nine month period ended September 30, 2024 2023 Year ended December 31, 2023 U.S. $ in thousands )Except per share data( Unaudited Revenues 33,743 33,724 45,634 Cost of sales 23,122 22,815 30,963 10,621 10,909 14,671 Research and development expenses 731 794 1,047 Distribution expenses 2,518 2,814 3,709 General and administrative expenses Loss (profit) from sale of property, plant and equipment 3,954 3,757 5,278 )58( )8( 13 3,476 3,552 4,650 Gross profit Profit from operations Finance expenses 210 245 342 Finance income )305( )116( )527( 3,571 3,423 4,835 Profit before income tax Income tax expenses 500 569 759 Profit Other comprehensive income (loss) net of tax: Items that will not be reclassified to profit or loss: 3,071 2,854 4,076 Re-measurement of defined benefit plans - - 62 Items that may be reclassified to profit or loss: Adjustment arising from translation of financial statements of foreign operations )26( )288( )216( Total other comprehensive loss )26( )288( )154( 3,045 2,566 3,922 3,151 )80( 2,868 )14( 4,045 31 3,071 2,854 4,076 Owners of the parent 3,125 2,580 Non-controlling interests )80( )14( 3,891 31 3,045 2,566 3,922 0.0360 0325 .0 0.0458 87,472,764 88,332,198 88,283,490 87,511,080 88,332,198 88,283,490 Total comprehensive income Profit (loss)attributable to: Owners of the parent Non-controlling interests Total comprehensive attributable to: income (loss) Earningsper share (dollars) Basic and Diluted (dollars per share) Weighted average number of shares outstanding Basic (dollars per share) Diluted (dollars per share) The accompanying notes form an integral part of the financial statements. INTERIM CONSOLIDATEDSTATEMENTS OF CHANGES IN EQUITY For the nine month period endedSeptember 30, 2024(Unaudited): Attributable to owners of the parent Share capital Additional paid-in capital Translation differences Retained earnings Total attributab to owners the pare U.S. $ in thousands Balance at January 1, 2024 209 23,061 )466( 5,226 28,030 - - - 3,151 3,151 - - (26) - (26) Changes during the nine month period ended September 30, 2024: Comprehensive income Profit (loss) for the period Other comprehensive loss Translation differences Total comprehensive income (loss)for the - - (26) 3,151 3,125 Acquisition and disposal of treasury shares * (1,024) - 79 - - - Share based payment (1,024 79 209 22,116 period Dividend Balance at September 30, 2024 - (2,745) (492) 5,632 (2,745) 27,465 ( *) Less than US$ 1 thousand The accompanying notes form an integral part of the financial statements. INTERIM CONSOLIDATEDSTATEMENTS OF CHANGES IN EQUITY (CONT.) For the nine month period endedSeptember 30, 2023(Unaudited): Attributable to owners of the parent Share capital Additional paid-in capital Translation differences Retained earnings Total attributab to owners the pare U.S. $ in thousands Balance at January 1, 2023 209 23,078 )250( 3,775 26,812 - - - 2,868 2,868 Translation differences - - (288) - (288) Total comprehensive incomefor the period - - 2,868 Acquisition and disposal of treasury shares * (27) - - (288) - 2,580 (27) (2,656 209 23,051 Changes during the nine month period ended September 30, 2023: Comprehensive income Profit for the period Other comprehensive income Dividend Acquisition subsidiary of a non-controlling interest Balance at September 30, 2023 in - - (2,656) - (538) 3,987 - 26,709 ( *) Less than US$ 1 thousand The accompanying notes form an integral part of the financial statements. INTERIM CONSOLIDATEDSTATEMENTS OF CHANGES IN EQUITY (CONT.) For the year ended December 31, 2023 : Attributable to owners of the pa Additional paid-in Translation capital differences Share capital Retaine earnin U.S. $ in tho Balance as at January 1, 2023 209 23,078 (250) 3,775 Changes during 2023: Comprehensive income Profit for the year Other comprehensive income (loss) Re measurements on defined benefit plans - - - 4,045 Translation differences - - )216( 62 - Total comprehensive income(loss)for the year - - )216( 4,107 Dividend - - - )2,656( Acquisition of minority holdings in subsidiary - )17( - - 209 23,061 )466( 5,226 Acquisition and disposal, net of treasury shares Balance as at December 31,2023 The accompanying notes form an integral part of the financial statements. MTI WIRELESS EDGE LTD. (An Israeli Corporation) INTERIM CONSOLIDATED STATEMENTS OF FINANCIALPOSITION 30.09.2024 30.09.2023 31.12.2023 U.S. $ in thousands Unaudited ASSETS CURRENT ASSETS: Cash and cash equivalents 5,144 6,655 8,454 Trade and other receivables 13,850 11,697 14,284 Unbilled revenue 4,874 4,407 4,190 Currenttax receivables 291 8,122 409 7,365 381 7,484 32,281 30,533 34,793 Inventories NON-CURRENT ASSETS: Long term prepaid expenses Property, plant and equipment 31 39 37 5,339 4,987 5,398 Deferred tax assets Intangible assets 1,020 3,388 1,072 3,739 968 3,507 9,778 9,837 9,910 42,059 Total assets 40,370 44,703 The accompanying notes form an integral part of the financial statements. MTI WIRELESS EDGE LTD. (An Israeli Corporation) INTERIM CONSOLIDATED STATEMENTS OF FINANCIALPOSITION 30.09.2024 30.09.2023 31.12.2023 U.S. $ In thousands Unaudited LIABILITIES AND EQUITY CURRENT LIABILITIES: Current maturities and short term bank credit and loans Trade payables Other accounts payable Current tax payables NON- CURRENTLIABILITIES: Contingent consideration Lease liabilities Loans from banks, net of current maturities Employee benefits, net Total liabilities EQUITY Equity attributable to owners of the parent Share capital 250 198 314 6,163 5,684 7,882 4,261 289 3,817 422 4,558 283 10,963 10,121 13,037 1,117 1,432 1,117 509 150 514 75 788 52 739 64 719 2,489 2,373 2,414 13,452 12,494 15,451 209 209 209 Additional paid-in capital 22,116 23,051 23,061 Translation differences (492) 5,632 (538) 3,987 (466) 5,226 27,465 26,709 28,030 1,142 1,167 1,222 28,607 27,876 29,252 Retained earnings Non-controlling interest Total equity 42,059 Total equity and liabilities 40,370 44,703 November 24, 2024 Date of approval of financial statements Moshe Borovitz Chief Executive Officer Elhanan Zeira Controller Zvi Borovitz Non-executive Chairman of the Board The accompanying notes form an integral part of the financial statements. INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS Nine month period ended September 30, 2024 2023 Year ended December 31, 2023 U.S. $ in thousands Unaudited Cash Flows from Operating Activities: Profitfor theperiod 3,071 2,854 4,076 1,291 956 1,511 equipment (56) (6) (13) Finance (income), net Adjustments for: Depreciation and amortization (Gain) from sale of property, plant and (469) (86) (5) Changes in Contingent consideration - - (315) Tax expenses 500 569 759 Changes in operating assets and liabilities: Decrease (increase) in inventories (626) 258 158 Decrease (increase)in trade receivables (7) (830) (2,477) Decrease (increase) in other accounts receivables 361 (191) (897) Increasein unbilled revenues (684) (2,129) (1,986) (1,870) 517 3,228 69 (13) 29 1,580 1,899 4,068 Interest received 69 46 69 Interest paid (61) (453) (23) (344) (59) (540) 1,135 1,578 3,538 Increase(decrease) in trade and other accounts payables Increase (decrease) in employee benefits, net Cash from operations Income tax paid (received) Net cash provided by operating activities The accompanying notes form an integral part of the financial statements. INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (cont.) Nine month period ended September 30, 2024 2023 Year ended December 31, 2023 U.S. $ in thousands Unaudited Cash Flows From Investing Activities: Proceeds from sale of property, plant and equipment Purchase of property, plant and equipment 56 (486) 39 (229) 62 (426) (430) (190) (364) Dividend (2,745) (2,656) (2,656) Payments of leaseliabilities (485) (328) (485) Treasury shares acquired (1,024) (362) (516) Treasury shares sold - 335 499 Employee options issuance 79 - - - (45) (35) 168 136 460 (9) (10) (247) (4,016) (2,930) (2,980) (3,311) (1,542) 194 8,454 8,279 8,279 1 (82) (19) 5,144 6,655 8,454 Net cashused activities in investing Cash Flows From Financing Activities: Acquisition of non-controlling interest in subsidiary Short-term loans and credit line received from banks Repayment of long-term loans from banks Net cashused activities in financing (Decrease) Increase in cash and cash equivalents during the period Cash and cash equivalents at the beginning of the period Exchange differences on balances of cash and cash equivalents Cash and cash equivalents at the end of the period The accompanying notes form an integral part of the financial statements. MTI WIRELESS EDGE LTD. (An Israeli Corporation) NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - GENERAL: Corporate information: M.T.I Wireless Edge Ltd. (hereafter - the "Company", or collectively with its subsidiaries, the "Group") is an Israeli corporation. The Company was incorporated under the Companies Act in Israel on December 30, 1998 and commenced operations on July 1, 2000. Since March 2006, the Company's shares have been traded on the AIM market of the London Stock Exchange. The formal address of the Company is 11 Hamelacha Street, Afek industrial Park, Rosh-Ha'Ayin, Israel. The Company and its subsidiaries are engaged in the following areas: - Development, design, manufacture and marketing of antennas for the military and civilian sectors. - A leading provider of remote control solutions for water and irrigation applications based on Motorola's IRRInet state of the art control, monitoring and communication technologies. - Providing consulting, representation and marketing services to foreign companies in the field of RF (radio frequency) and Microwave, including engineering services in the field of aerostat systems and system engineering services. - Development, manufacture and integration of communication systems and advanced monitoring and control systems for the Government and defence industry market. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES: The interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles for the preparation of financial statements for interim periods, as prescribed in InternationalAccountingStandard No. 34 ("Interim Financial Reporting"). The interim consolidated financial information set out above does not constitute full year-end accounts within the meaning of Israeli Companies Law. It has been prepared on the going concern basis in accordance with the recognition and measurement criteria of the International Financial Reporting Standards (IFRS). Statutory financial information for the financial year ended December 31, 2023 was approved by the board on March 10, 2024. The report of the auditors on those financial statements was unqualified. The interim consolidated financial statements as ofSeptember 30, 2024 have not been audited. The interim consolidated financial information should be read in conjunction with the annual financial statements as of December 31, 2023 and for the year then ended and with the notes thereto. The significant accounting policies applied in the annual financial statements of the Company as of December 31, 2023 are applied consistently in these interim consolidated financial statements. On April 9, 2024, the IASB published IFRS 18 'Presentation and Disclosure in Financial Statements' which replaces IAS 1 Presentation of Financial Statements and is mandatorily effective for annual reporting periods beginning on or after January 1st, 2027. The main changes are as follows: NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES - (CONT.): 1. Mandatory sub totals to be presented in the profit and loss account. 2. Aggregation and disaggregation of information including the introduction of overall principles for how information should be aggregated and disaggregated in financial statements. 3. Disclosures related to management defined performance measures (MPMs). The Company is currently assessing the impact of this new accounting standard and amendment. NOTE 3 -REVENUES: Year ended December 31, Nine month period ended September 30, 2024 2023 2023 U.S. $ in thousands Unaudited Revenues arise from: Sale of goods* 23,774 23,630 32,525 Rendering of services** 6,027 5,189 Projects** 3,942 33,743 4,905 33,724 7,178 5,931 45,634 (*) at the point in time (**) over time NOTE 4 - OPERATING SEGMENTS: The following tables present revenue and profit information regarding the Group's operating segments for the nine month period ended September 30, 2024 and 2023 respectively and for the year ended December 31, 2023. Nine month periodended September 30, 2024 (Unaudited): Antennas Distribution & Consultation Services Water Solutions Adjustment & Elimination Total U.S. $ in thousands Revenues External Internal 10,225 - 12,345 - 11,173 227 (227) 33,743 - Total 10,225 12,345 11,400 (227) 33,743 Segment profit 1,010 1,804 285 377 3,476 Finance(income),net Taxexpenses )94( 500 Profit 3,070 NOTE 4 - OPERATING SEGMENTS (CONT.): September30, 2024(Unaudited): Antennas Water Solutions Distribution & Consultation Services Adjustment & Elimination Total U.S. $ in thousands Segment assets 15,719 12,695 11,325 Unallocated assets Segment liabilities 39,739 2,320 4,562 4,184 Unallocated liabilities Nine month periodended September 30, 2023 (Unaudited): 4,248 12,994 778 Antennas Distribution & Consultation Services Water Solutions Adjustment & Elimination Total U.S. $ in thousands Revenues External 8,917 - 13,006 - 11,801 201 (201) 33,274 - Total 8,917 13,006 12,002 (201) 33,724 Segment profit 560 1,457 1,230 305 3,552 Internal Financeexpense,net Taxexpenses 129 569 Profit 2,854 September30, 2023(Unaudited): Antennas Water Solutions Distribution & Consultation Services Adjustment & Elimination Total U.S. $ in thousands Segment assets 15,136 11,263 11,532 - Unallocated assets Segment liabilities 37,931 2,439 3,834 3,707 4,460 - Unallocated liabilities 12,001 493 NOTE 4 - OPERATING SEGMENTS (CONT.): Year ended December 31, 2023 Antennas Water Solutions Distribution & Consultation Eliminations Total U.S. $ in thousands Revenues External Inter-segment Total Segment profit 12,237 - 17,164 - 16,233 344 (344) 45,634 - 12,237 17,164 16,577 (344) 45,634 841 1,986 1,552 271 4,650 Financeincome,net Taxexpenses (185) 759 Profit 4,076 December 31, 2023: Antennas Water Solutions Distribution & Consultation Eliminations Total U.S. $ in thousands Segment assets 17,124 12,468 12,711 - Unallocated assets Segment liabilities 42,303 2,400 4,952 4,326 5,293 - 14,571 Unallocated liabilities 880 NOTE 5 - SIGNIFICANT EVENTS: A. On January 5, 2024, following approval at an extraordinary shareholders' meeting, the Company granted 600,000 share options to Mr. Moshe (Moni) Borovitz, the Chief Executive Officer, and 100,000 share options to Mr. Dov Feiner, the General Manager of the Company's Antenna Division. The expense for share-based payments (such as stock options) typically appears on the income statement as part of the Company's operating expenses. B. The Board of directors declared a cash dividend of 3.1 US cents per share, being approximately $2,745,000. This dividend was paid on 11 April 2024 to shareholders on the register at the close of trading on 22 March 2024. C. On 24 January 2019, the Company announced a share repurchase program to conduct market purchases of ordinary shares of par value 0.01 Israeli Shekels each ("Ordinary Shares") in the Company up to a maximum value of £150,000 (the "Programme") and on 10 March 2024 the Board of directors of the Company and the board of directors of MTI Engineering decided to extend the Programme effective from NOTE 5 - SIGNIFICANT EVENTS (CONT.): 12 March 2024 until 31 March 2025 and to increase the maximum value of the Programme to up to £700,000, with the intention to hold the Ordinary Shares purchased for a longer period of time. On 20 August 2024 the Board of directors of the Company and the board of directors of MTI Engineering decided to increase the maximum value of the Programme to up to £1,000,000, repeating the intention to hold the Ordinary Shares purchased for a longer period of time. As at 30 September 2024, 2,108,000 Ordinary Shares were held in treasury under the Programme. As of the date of this report, 2,243,000 Ordinary Shares were held in treasury under the Programme. D. On 20 March 2024 at the Company's extraordinary meeting, Mrs. Hani Lerman was elected as an external non-executive director. E. On 7 October 2023 Israel was attacked by the Hamas terror organization leading to war in the Gaza region and Israel followed by Hezbollah attacking Israel leading to war in the area. The war has led to a slowdown in the Israeli economy and if this war continues for a prolonged period, then it may begin to impact the Company. The wide usage of military reserve personnel, adverse foreign currency exchange rates and restrictions on access to certain areas in Israel are risks which may affect the Company if there is a prolonged period of war. As of the date of this report, and to the best of the Company's knowledge, the war has not had a significant effect on the Company. The Company continues to review the effects of the war on its trading as it believes that if the war continues for a long period of time, then the overall Israeli economy will be effected, and factors including the lack of available manpower, interest rates and foreign currency exchange rates may have an impact on its trading. This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com. RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. 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