Rada Electronic Industries Limited (RADA) Q2 2019 Earnings Conference Call August 21, 2019 9:00 AM ET Company Participants Dov Sella - Chief Executive Officer Avi Israel - Chief Financial Officer Ehud Helft - GK Investor Relations Conference Call Participants Brian Kinstlinger - Alliance Global Partners Isaac Videmlansky - private investor Michael Brcic - National Securities Jeff Bernstein - Cowen Scott Huntington - Bodell, Overcash, Anderson & Co. Nahum Moschitz - private investor Austin Moeller - Canaccor ...

RADA Electronic Industries Ltd. (RADA) Q1 2019 Earnings Conference Call May 21, 2019 9:00 AM ET Company Participants Ehud Helft - IR Dov Sella - CEO Avi Israel - CFO Conference Call Participants Michael Brcic - National Securities Kevin Dede - H.C. Wainwright Jeff Bernstein - Cowen Operator Ladies and gentlemen, thank you for standing by. Welcome to the RADA Electronic Industries First Quarter 2019 Results Conference Call. All participants are at present in a listen-only mode. Following management's formal ...

Financial Data and Key Metrics Changes - In 2018, the company achieved revenues of $28 million, an increase from $26 million in 2017, marking the highest revenue in about 25 years [6][13] - The gross margin for 2018 was stable at 36%, compared to 32% in 2017, which showed more volatility [16] - The company reported a net loss attributed to shareholders of $0.2 million for the year, a significant improvement from a profit of $2.3 million in the previous year [17] Business Line Data and Key Metrics Changes - The revenue growth in 2018 was primarily driven by diversified orders in both avionics and radar segments, with a focus on tactical radars [6][8] - R&D expenses increased to $3.1 million in 2018 from $1.6 million in 2017, reflecting the company's commitment to innovation [16] - Sales and marketing expenses rose to $2.9 million in 2018 from $2.1 million in 2017, indicating increased efforts in market penetration [16] Market Data and Key Metrics Changes - The U.S. market is identified as the most promising for future orders, with expectations of growth in traditional allies like NATO and some Far East countries [22][11] - The company has a strong pipeline of potential orders, particularly in the U.S., which is expected to lead to significant follow-on orders [11][12] Company Strategy and Development Direction - The company is positioning itself for significant growth in 2019 and beyond, with a revenue growth expectation of 43% in 2019, targeting approximately $40 million [9][13] - Investments in R&D and sales and marketing are prioritized to support future growth and maintain gross margins [8][9] - The company is focused on active protection and mobile short-range air defense markets, with a strong emphasis on counter-drone solutions [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing a strong cash position of over $20 million and no financial debt, which allows for continued investment in growth [12][18] - The company anticipates that 2019 will be a record year, with significant revenue growth and a strong balance sheet to capitalize on opportunities [13][18] Other Important Information - The company is in the process of obtaining a Special Security Agreement (SSA) for engagement with U.S. military programs, with expectations for completion by the end of 2019 [39] - The company is developing new radar technologies, with several products expected to mature by the end of 2019 or early 2020 [36][40] Q&A Session Summary Question: Breakdown of increased demand for 2019 - The growth is mainly from radars, particularly in short-range defense and counter-drone solutions, while avionics remains stable [20] Question: Contribution of backlog to $40 million revenue guidance - Specific numbers on backlog contributions were not disclosed [21] Question: Success in other regions outside the U.S. - Growth is expected in NATO countries and some Far East nations, driven by drone protection needs [22] Question: Update on ATP testing and radar deliveries - Deliveries will include a few dozen radars, with testing expected to start in fall 2019 [23] Question: Status of U.S. government programs of record - Three main programs are anticipated to be included in the 2020 budget [24][25] Question: CapEx costs for U.S. production line - Estimated CapEx costs for 2019 are expected to be a few million dollars [26] Question: Timeline for U.S. production line build-out - The new production line is located in Germantown, Maryland, with production expected to start in Q4 2019 [27] Question: Current diluted share count - As of December 31, 2018, the diluted share count was approximately 37.5 million [28] Question: Infrastructure build-out and profitability expectations - The company is focused on growth investments, with expectations to be breakeven or better [30] Question: Visibility into deal stages with federal government - The company relies on integrators for monitoring deal stages and has general visibility through them [32] Question: Geographic and commercial performance mix expectations - Detailed geographical revenue spread will be included in the upcoming financial statements [33] Question: Timeline for new product development - New products are expected to mature by the end of 2019 or early 2020 [36]