Results for the nine months to 30 September 2021

15 November 2021

MTI Wireless Edge Ltd

("MTI", the "Company" or the "Group")

Financial Results for the nine months ended 30 September 2021

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 2021 (the "Period").

Financial highlights - nine months to 30 September 2021

· Demand across all three divisions led to revenue growth of 8% to $32.1m (nine months to 30 September 2020: $29.7m)

· Leading to increased profitability with profit from operations up 11% to $3.33m (nine months to 30 September 2020: $2.99m)

· Earnings per share increased by 11% to 2.95 US cents (nine months to 30 September 2020: 2.65 US cents)

· Cash flow from operations improved by 15% to $3.2m (nine months to 30 September 2020:$2.8m)

· Group remains ungeared with net cash of $9.3m as at 30 September 2021 (30 September 2020: $8.4m)

· Final dividend to be confirmed in Full Year 2021 results announcement (expected to be announced in March 2022)

Operational highlights

· Demand continued to grow for 5G backhaul antenna solutions and antennas for RFID, resulting in revenue growth in the antenna division, leading to all three divisions of the business growing year on year in the Period.

· Although it is still in early stages of adoption of the technology, the Group saw over 30% revenue growth from 5G antennas year on year, which is testimony to the positioning of MTI's solutions with leading radio manufacturers.

· This trend, coupled with the recovery in the RFID sub-segment, led to a change in the Group's commercial antenna revenue breakdown. For the first time the RFID and 5G sub-segments combined accounted for the majority of the Group's commercial antenna revenue. This is viewed as an important step for the Group's future potential growth.

· Mottech continued to perform well, recording steady growth across its main markets of agricultural irrigation, landscape irrigation and water distribution, with a good response from the customers of its newly opened office in Canada.

· MTI Summit has had a strong Period and is well positioned going forward, especially following a new strategic agreement signed in September, where a long-term defence client made MTI Summit its primary supplier and it is expected that this will increase the client's order levels above the $4m per annum level of recent years.

· After a short pause MTI Summit's tethered balloon project recommenced in October and should generate growing revenues going forward.

Moni Borovitz, Chief Executive Officer of MTI Wireless Edge, said:

"This was another positive quarter for the Group, leading to an 11% increase in profitability for the first nine months, and I believe that we are well placed to achieve a good result for the full year. Operationally we are close to normal now, with nearly all of our markets functioning as they did pre-pandemic, but travel limitations and the availability and cost of shipment continue to be part of our challenges as part of the "new normal". In the third quarter we saw a lower gross margin rate due to our product mix, shipment costs and strengthening of the Israeli currency against the USD and the Euro, but these factors were offset due to the economies of scale achieved from the additional revenues in the Period, enabling us to increase our operational profitability. The financial base of the Company remains strong with a high level of cash generation, no debt and cash balances of $9.3 million."

"Sales of 5G and RFID antenna solutions, being our key growth engines in the antenna division, have overtaken, for the first time, our Fixed Broadband Wireless Application (FBWA) antenna sales. By far the majority of industry's investment in 5G is still to come and so the opportunity remains significant for us and we continue to be well placed with the antenna division being a key supplier to the major mobile network radio manufacturers."

"In September, MTI Summit announced a new strategic agreement with a large, long-term defence customer. Reflecting the trust built up over time, the agreement enables the client to place orders without the need for individual quotations, thus significantly speeding up all interaction and making the whole ordering process substantially more efficient."

"One fifth of the world's population live under conditions of water scarcity and the issue is getting worse. Governments globally are responding and solutions like Mottech's, which typically save 35% of the volume of water previously used, are gaining traction across all of our target markets."

"Looking ahead, we believe that the Company's clear focus on providing radio frequency solutions coupled to being diversified across several markets positions us well to continue to grow and expand through a mix of acquisition-led and organic growth."

Moni Borovitz, Chief Executive Officer, will provide a live investor presentation relating to the financial results for the nine-month period ended 30 September 2021 via the Investor Meet Company ("IMC") platform today at 10.00 am UK time.

Investors can sign up for free via: https://www.investormeetcompany.com/mti-wireless-edge-ltd/register-investor 

For further information please contact:

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 a world leader in the design, development and production of high quality, state-of-the-art, and cost-effective antenna solutions including Smart Antennas, MIMO Antennas and Dual Polarity Antennas for wireless applications. MTI supplies antennas for both military and commercial markets from 100 KHz to 90 GHz.

Internationally recognized as a producer of commercial off-the-Shelf and custom-developed antenna solutions in a broad frequency range, MTI addresses both commercial and military applications.

MTI supplies directional and omnidirectional antennas for outdoor and indoor deployments, including smart antennas for WiMAX, Broadband access, public safety, RFID, base stations 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 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, while reducing operational and maintenance costs. 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.

MTI WIRELESS EDGE LTD.

(An Israeli Corporation)

INTERIM CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME

The accompanying notes form an integral part of the financial statements.

MTI WIRELESS EDGE LTD.

(An Israeli Corporation)

INTERIM CONSOLIDATED STATEMENTS OF

CHANGES IN EQUITY

For the nine month period ended September 30, 2021 (Unaudited):

The accompanying notes form an integral part of the financial statements.

MTI WIRELESS EDGE LTD.

(An Israeli Corporation)

INTERIM CONSOLIDATED STATEMENTS OF

CHANGES IN EQUITY (CONT.)

For the nine month period ended September 30, 2020 (Unaudited):

The accompanying notes form an integral part of the financial statements.

INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONT.)

For the year ended December 31, 2020 :

The accompanying notes form an integral part of the financial statements.

MTI WIRELESS EDGE LTD.

(An Israeli Corporation)

INTERIM CONSOLIDATED STATEMENTS OF

FINANCIAL POSITION

The accompanying notes form an integral part of the financial statements.

MTI WIRELESS EDGE LTD.

(An Israeli Corporation)

INTERIM CONSOLIDATED STATEMENTS OF

FINANCIAL POSITION

The accompanying notes form an integral part of the financial statements.

MTI WIRELESS EDGE LTD.

(An Israeli Corporation)

INTERIM CONSOLIDATED STATEMENTS OF

CASH FLOWS

The accompanying notes form an integral part of the financial statements.

MTI WIRELESS EDGE LTD.

(An Israeli Corporation)

INTERIM CONSOLIDATED STATEMENTS OF

CASH FLOWS (cont.)

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 trading 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 and Microwave, including engineering services in the field of aerostat systems and system engineering services.

In these financial statements, the Company included the results of its aerostat system division in its representation and consulting services division, as it deems this appropriate given the nature of the consulting services provided in both segments and the respective size of these segments.

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 International Accounting Standard 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, 2020 was approved by the board on February 28, 2021. The report of the auditors on those financial statements was unqualified.

The interim consolidated financial statements as of September 30, 2021 have not been audited.

The interim consolidated financial information should be read in conjunction with the annual financial statements as of December 31, 2020 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, 2020 are applied consistently in these interim consolidated financial statements.

Note 3 - REVENUES:

(*) at the point of 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, 2021 and 2020 respectively and for the year ended December 31, 2020.

Nine month period ended September 30, 2021 (Unaudited)

As of September 30, 2021

Note 4- operating SEGMENTS (CONT.):

Nine month period ended September 30, 2020 (Unaudited)

As of September 30, 2020

Year ended December 31, 2020

Note 4- operating SEGMENTS (CONT.):

Year ended December 31, 2020

Note 5 - SIGNIFICANT EVENTS:

A. On 28 February 2021, the Board of directors declared a cash dividend of 2.5 US cents per share, representing approximately $2,213,000, in total. This dividend was paid on 31 March 2021 to shareholders on the register at the close of trading on 19 March 2021.

B. 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"). On 15 August 2021, the Company's board of directors and the board of directors of MTI Engineering decided to continue with the Programme until end of August 2022. As at 30 September 2021, 50,000 Ordinary Shares were held in treasury under the Programme.

C. On 4 February 2021, the Company's subsidiary Mottech Water Solutions Ltd registered and opened a wholly-owned subsidiary in Canada and is working on establishing its activities in Canada.

D. The effects of the COVID-19 outbreak on the Company and Business Continuity in 2020 was disclosed in the 2020 annual report in note 26c. Since the beginning of 2021 and until the date of this report the Company was able to maintain good levels of operation using remote work procedures and a sufficient level of production in its production facilities while assuring the health of its employees.

All aspects of the Group's supply chain are working slower, and the Company's industry has been affected on the operational level, along with the rest of the world economy as it faces the risk of a global recession where the ability to predict the timing of a recovery is uncertain.

The introduction of vaccines, and their fast adoption in Israel and consequences, does provide hope that a worldwide recovery will start in the near term, but there is still uncertainty regarding the duration for which vaccines will be efficacious and the level of protection they provide against new variants of COVID-19. This, together with the uncertainty of the level of the global economic slowdown, its duration and its medium to long term effects creates challenges, but the Company believes that if there is no further deterioration in the situation, its financial strength and business stability will allow it to navigate through this.

E. On 19 April 2021 at an extraordinary shareholders meeting, Mrs. Lihi Elimelech Bechor was re-elected as an external director for another three year term.