Operating income for the first quarter increased 22% year-over-year to a record breaking
OR YEHUDA,
Financial Highlights for the First Quarter Ended
- Consolidated revenues for the first quarter increased by 19.1% to a record breaking
$466.3 million , with growth recorded across Formula’s entire investment portfolio. Revenues for the first quarter endedMarch 31, 2019 amounted to$391.4 million . - Consolidated operating income for the first quarter increased by 22.5% to a record breaking
$38.8 million , with growth recorded across Formula’s entire investment portfolio. Consolidated operating income for the first quarter endedMarch 31, 2019 amounted to$31.7 million . - Consolidated net income attributable to Formula’s shareholders for the first quarter increased by 9.8% to a record breaking
$11.0 million , or$0.71 per fully diluted share, compared to$10.0 million , or$0.58 per fully diluted share, for the first quarter endedMarch 31, 2019 . - As of
March 31, 2020 Formula held 49.02%, 47.84%, 45.52%, 100%, 50% 90.09%, and 80% of the outstanding ordinary shares of Matrix IT Ltd., Sapiens International Corporation N.V, Magic Software Enterprises Ltd., Michpal Micro Computers (1983) Ltd.,TSG IT Advanced Systems Ltd. andInsync Staffing Solutions, Inc. andOfek Aerial Photography Ltd. , respectively. - Consolidated cash and cash equivalents, bank deposits and investments in marketable securities totaled approximately
$448.8 million as ofMarch 31, 2020 , compared to$405.5 million as ofDecember 31, 2019 . - Total equity as of
March 31, 2020 was$889.8 million (representing 41.7% of the total consolidated balance sheet), compared to$896.3 million (representing 42.9% of the total consolidated balance sheet) as ofDecember 31, 2019
Debentures Covenants
As of
Covenant 1
- Target equity attributable to Formula’s shareholders (excluding non-controlling interests): above
$215 million . - Actual equity attributable to Formula’s shareholders is equal to
$418.1 million .
Covenant 2
- Target ratio of net financial indebtedness to net capitalization (in each case, as defined under the indenture for the Formula’s Series A and C Secured Debentures): below 65%.
- Actual ratio of net financial indebtedness to net capitalization is equal to 10.8%.
Covenant 3
- Target ratio of net financial indebtedness to EBITDA (based on the accumulated calculation for the four recent quarters): below 5.
- Actual ratio of net financial indebtedness to EBITDA (based on the accumulated calculation for the four recent quarters) is equal to 0.47.
Comments of Management
Commenting on the results,
“Matrix delivered record-breaking first quarter results across all its key indicators (revenues, gross profit, operating income, net income and EBITDA), overcoming the most challenging period of the last decade and maintaining its outstanding ranking by Midroog (Aa3) and STKI (IT and Technology market leader). While as of this point Matrix did not encounter any material negative impact on its global and Israeli activities, it is constantly performing risk assessments and is taking precautionary steps in order to successfully overcome the global crises.”
“Sapiens’ results for the first quarter of 2020 demonstrate its pursuit of key objectives in this challenging environment, such as focusing on its proven strategy, supporting existing customers, closing new deals, controlling expenses while maintaining productivity. Such steps, together with a strong demand for its digital products, high recurring revenue and solid balance sheet, position it for success despite the global COVID-19 crisis. Sapiens reported a 17.9% revenue growth and increased operating margins (on a non-GAAP basis) to 16.1%, with both its P&C and L&A contributing to growth in the quarter. While its business remains strong, due to macro events there could be delays in closing new deals, which could slightly impact Sapiens’ revenue. Therefore, Sapiens slightly revised its annual revenue guidance for 2020 to the range of
“Magic’s first-quarter strong performance reflects its continued focus on supporting its existing customers and closing new deals in addition to taking all necessary steps facing this challenging period. In addition, as part of Magic's continued efforts to improve its financial position and as a testimony of its confidence in its existing operations, during the first quarter Magic increased its equity interest in
During the first quarter, Michpal promoted the execution of its long-term strategy to become a leading provider in
Michpal is well positioned to help its customers to adjust to the ever-changing governmental instructions for employers, while complying with laws and regulation, especially in light of COVID-19.”
“During the first quarter, Formula completed the acquisition of 80% of the share capital of
“I am confident that the steps taken across all our portfolio companies will ensure that all companies will emerge stronger and well positioned for continued growth when the global economy recovers, allowing us to continue returning value to our shareholders.”.”
Stand-Alone Financial Measures
This press release presents, further below, certain stand-alone financial measures to reflect Formula’s stand-alone financial position in reference to its assets and liabilities as the parent company of the group. These financial measures are prepared consistent with the accounting principles applied in the consolidated financial statements of the group. Such measures include investments in subsidiaries and a jointly controlled entity measured at cost adjusted by Formula’s share in the investees’ accumulated undistributed earnings and other comprehensive income or loss.
Formula believes that these financial measures provide useful information to management and investors regarding Formula’s stand-alone financial position. Formula’s management uses these measures to compare the Company’s performance to that of prior periods for trend analyses. These measures are also used in financial reports prepared for management and in quarterly financial reports presented to the Company’s board of directors. The Company believes that the use of these stand-alone financial measures provides an additional tool for investors to use in evaluating Formula’s financial position.
Management of the Company does not consider these stand-alone measures in isolation or as an alternative to financial measures determined in accordance with GAAP. Formula urges investors to review the consolidated financial statements which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company’s business or financial position.
About Formula
For more information, visit www.formulasystems.com.
Press Contact:
+972-3-5389487
ir@formula.co.il
Except for any historical information contained herein, matters discussed in this press release might include forward-looking statements that involve a number of risks and uncertainties. Regarding any financial statements, actual results might vary significantly based upon a number of factors including, but not limited to, risks in product and technology development, market acceptance of new products and continuing product conditions, both locally and abroad, release and sales of new products by strategic resellers and customers, and other risk factors detailed in Formula’s most recent annual report and other filings with the
CONSOLIDATED CONDENSED STATEMENTS OF PROFIT OR LOSS | ||||
Three months ended | ||||
2020 | 2019 | |||
Unaudited | ||||
Revenues | 466,270 | 391,354 | ||
Cost of revenues | 363,131 | 303,494 | ||
Gross profit | 103,139 | 87,860 | ||
Research and development costs, net | 12,963 | 10,584 | ||
Selling, marketing and general and administrative expenses | 51,373 | 45,596 | ||
Operating income | 38,803 | 31,680 | ||
Financial expenses, net | 4,644 | 3,596 | ||
Income before taxes on income | 34,159 | 28,084 | ||
Taxes on income | 7,723 | 6,261 | ||
Income after taxes | 26,436 | 21,823 | ||
Share of profit (loss) of companies accounted for at equity, net | 129 | 726 | ||
Net income | 26,565 | 22,549 | ||
Net income attributable to non-controlling interests | 15,544 | 12,513 | ||
Net income attributable to | 11,021 | 10,036 | ||
Earnings per share (basic) | 0.72 | 0.68 | ||
Earnings per share (diluted) | 0.71 | 0.58 | ||
Number of shares used in computing earnings per share (basic) | 15,284,684 | 14,855,794 | ||
Number of shares used in computing earnings per share (diluted) | 15,291,806 | 15,587,689 | ||
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | |||||
2020 | 2019 | ||||
(Unaudited) | |||||
ASSETS | |||||
CURRENT ASSETS: | |||||
Cash and cash equivalents | 438,410 | 369,042 | |||
Short-term deposits | 7,026 | 29,886 | |||
Marketable securities | 3,387 | 6,600 | |||
Trade receivables | 479,473 | 485,824 | |||
Other accounts receivable and prepaid expenses | 68,847 | 67,273 | |||
Inventories | 7,623 | 7,156 | |||
Total current assets | 1,004,766 | 965,781 | |||
LONG-TERM ASSETS: | |||||
Deferred taxes | 37,350 | 35,445 | |||
Other long-term accounts receivable and prepaid expenses | 22,131 | 21,493 | |||
Total long-term assets | 59,481 | 56,938 | |||
INVESTMENTS IN COMPANIES ACCOUNTED | |||||
FOR AT EQUITY METHOD | 27,315 | 26,350 | |||
PROPERTY, PLANTS AND EQUIPMENT, NET | 47,952 | 43,059 | |||
OPERATING LEASE RIGHT-OF-USE ASSETS | 99,783 | 104,130 | |||
NET INTANGIBLE ASSETS AND GOODWILL | 894,177 | 892,349 | (*) | ||
TOTAL ASSETS | 2,133,474 | 2,088,607 | |||
CURRENT LIABILITIES: | |||||
Loans and credit from banks and others | 173,889 | 125,299 | |||
Debentures | 30,210 | 31,362 | |||
Current maturities of operating lease liabilities | 30,538 | 35,673 | |||
Trade payables | 125,071 | 125,163 | |||
Deferred revenues | 103,700 | 93,512 | |||
Other accounts payable | 195,917 | 205,106 | |||
Dividend payable | - | 7,081 | |||
Liabilities in respect of business combinations | 12,158 | 8,431 | |||
Put options of non-controlling interests | 25,318 | 39,668 | |||
Total current liabilities | 696,801 | 671,295 | |||
LONG-TERM LIABILITIES: | |||||
Loans and credit from banks and others | 190,900 | 162,058 | |||
Debentures | 161,975 | 175,411 | |||
Long term operating lease liabilities | 75,898 | 73,686 | |||
Other long-term liabilities | 8,744 | 8,313 | |||
Deferred taxes | 51,393 | 50,877 | (*) | ||
Deferred revenues | 10,840 | 6,491 | |||
Liabilities in respect of business combinations | 14,451 | 17,321 | (*) | ||
Put options of non-controlling interests | 19,789 | 15,182 | |||
Employees benefit liabilities | 12,898 | 11,639 | |||
Total long-term liabilities | 546,888 | 520,978 | |||
EQUITY | |||||
Equity attributable to | 418,094 | 421,640 | |||
Non-controlling interests | 471,691 | 474,694 | |||
Total equity | 889,785 | 896,334 | |||
TOTAL LIABILITIES AND EQUITY | 2,133,474 | 2,088,607 | |||
*) Immaterial adjustment to comparative data | |||||
STAND-ALONE STATEMENTS OF FINANCIAL POSITION | |||||
2020 | 2019 | ||||
(Unaudited) | |||||
ASSETS | |||||
CURRENT ASSETS: | |||||
Cash and cash equivalents | 54,282 | 82,725 | |||
Other accounts receivable and prepaid expenses | 7,225 | 6,803 | |||
Total current assets | 61,507 | 89,528 | |||
INVESTMENTS IN SUBSIDIARIES AND A JOINTLY | |||||
CONTROLLED ENTITY (*) | |||||
Matrix IT Ltd. | 124,494 | 125,809 | |||
Sapiens International Corporation N.V. | 176,851 | 176,832 | |||
Magic Software Enterprises Ltd. | 112,823 | 114,019 | |||
Other | 80,931 | 72,322 | |||
Total Investments in subsidiaries and a jointly controlled entity | 495,099 | 488,982 | |||
OTHER LONG TERM RECEIVABLES | 1,539 | 1,539 | |||
PROPERTY, PLANTS AND EQUIPMENT, NET | 2 | 2 | |||
TOTAL ASSETS | 558,147 | 580,051 | |||
CURRENT LIABILITIES: | |||||
Loans from banks and others | - | 13,130 | |||
Debentures | 19,819 | 20,296 | |||
Trade payables | 36 | 69 | |||
Other accounts payable | 1,370 | 1,274 | |||
Dividends payable | - | 7,081 | |||
Total current liabilities | 21,225 | 41,850 | |||
LONG-TERM LIABILITIES: | |||||
Debentures | 112,990 | 116,561 | |||
Put options of non-controlling interests | 5,838 | - | |||
Total long-term liabilities | 118,828 | 116,561 | |||
EQUITY | 418,094 | 421,640 | |||
TOTAL LIABILITIES AND EQUITY | 558,147 | 580,051 | |||
(*) The investments' carrying amounts are measured consistent with the accounting principles applied in the | |||||
consolidated financial statements of the group and representing the investments’ cost adjusted by Formula's | |||||
share in the investees' accumulated undistributed earnings and other comprehensive income or loss. | |||||
Source:
2020 GlobeNewswire, Inc., source