Matrix IT (MTRX) Q4 2024 earnings summary

Executive summary

• FY24 revenue, gross profit, operating profit, net profit and operating cash flow reached records; net profit rose 16.8% and operating cash flow 24.8% YoY.

• Organic growth and profitability improved despite the prolonged impact of the war; Q4 profit and cash-flow measures reached records despite 5.2% fewer working hours from holiday timing.

• Signed an MoU for a share-based merger with Magic; the proposed combination would have generated FY24 revenue of NIS 7.6B and net profit of NIS 448M pro forma.

Financial highlights

• FY sales rose 6.6% to NIS 5.58bn; adjusted for increased net-basis revenue recognition, sales were NIS 5.76bn, up 10%.

• FY gross profit increased 9% to NIS 833m; operating profit rose 14.4% to NIS 450.1m and net income grew 16.8% to NIS 288.2m.

• FY shareholder earnings rose 19.8% to NIS 272.4m; EBITDA increased 6.7% to NIS 636.9m.

• Q4 sales rose 4.1% to NIS 1.374bn, or 10.2% to NIS 1.455bn adjusted for net-presented sales; operating profit rose 18.8% to NIS 120m.

• Q4 net income grew 19.5% to NIS 74m, shareholder earnings rose 23.6% to NIS 69.9m, and EBITDA increased 9% to NIS 168.9m.

Outlook and guidance

• Continued 2025 growth is expected, supported by organic growth in Israel, mega-project visibility and technological leadership; financial, security, high-tech, transportation and health sectors are expected to strengthen.

• New US projects secured in H2 2024 are expected to support a return to growth in 2025 and provide visibility for the year.

• Combined operations with Magic are expected to span ~50 countries, serve ~6,000 active customers and employ more than 15,000 people; management cited synergies, expanded US reach and proprietary IP as opportunities.

• A future US dual listing of the merged entity may be explored after Magic is delisted from Nasdaq.

• Year-end backlog was NIS 7.443bn, up 8.1% reported and 2.1% adjusted; coming-year backlog was NIS 5.078bn, up 11.5% reported and 9.1% adjusted.