Telsys (TLSY) Q2 2024 earnings summary

Executive summary

• Revenue for H1 2024 was ₪207 million, down from ₪277 million in H1 2023, mainly due to lower SOM and distribution sales as customers used excess inventory accumulated during the component crisis and delayed purchases due to high interest rates.

• No material impact from the ongoing Israel war as of report approval, but future sales and profit could be affected by negative sentiment.

• The group completed a share swap, now holding 100% of Variscite, and appointed a new CEO in May 2024.

Financial highlights

• Net income attributable to shareholders for H1 2024 was ₪49.4 million, down from ₪67.1 million in H1 2023.

• Gross profit for H1 2024 was ₪73.3 million (35.4% margin), compared to ₪129.1 million (46.7%) in H1 2023.

• EPS for H1 2024 was ₪5.87, compared to ₪10.35 in H1 2023.

• Cash and cash equivalents at June 30, 2024, were ₪97 million, up from ₪62 million a year earlier.

• Dividend payments in H1 2024 totaled ₪60 million, with an additional ₪30 million approved for payment in September 2024.

Outlook and guidance

• Management expects continued impact from high customer inventories and interest rates, with no immediate recovery in SOM and distribution sales.

• Conservative assumptions for Variscite's future growth were used in impairment testing, with no growth projected in revenue for valuation purposes.