Matrix IT (MTRX) Q3 2023 earnings summary

Executive summary

• Q3 revenue rose 18.0% YoY to NIS 1,333.5m; operating profit increased 16.4% to NIS 93.3m and net profit rose 12.5% to NIS 56.8m.

• 9M revenue increased 13.2% to NIS 3,911.4m; operating profit before the investment-sale gain rose 14.0% to NIS 292.4m, while adjusted net profit grew 2.9% to NIS 184.9m.

Financial highlights

• Q3 gross profit rose 15.9% to NIS 187.1m; gross margin was 14.0% versus 14.3%. 9M gross profit increased 14.7% to NIS 560.8m.

• Q3 EBITDA increased 13.8% to NIS 145.4m, with a 10.9% margin versus 11.3%; 9M EBITDA rose 17.7% to NIS 442.0m, with an 11.3% margin versus 10.9%.

• 9M reported net profit was NIS 184.9m versus NIS 301.2m, down 38.6%; excluding the prior-year investment-sale gain, net profit grew 2.9%.

• 9M financing expenses rose to NIS 49.3m from NIS 21.9m, mainly due to higher interest rates and accounting charges from lease and put-liability revaluations.

Outlook and guidance

• Services and products continued in a hybrid format, with delivery maintained; no unpaid leave or layoffs were reported, and management expected no severe business impact.

• Overseas operations contributed ~20% of operating profit; customer and activity diversification were cited as mitigants to war-related disruption.

• As of Nov. 2, cash was NIS 700m and unused credit facilities were NIS 940m; liquidity and operating cash flow were expected to support obligations if the war continued long term.