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Matrix publishes its 2015 financials with all-time high record results in annual revenues, gross profit, operating profit and net profit

20/03/2016

8.5% growth in annual revenues to NIS 2.3B Operating profit increased by 12% to NIS 160M Net profit grew by 11.6% to NIS 102M

Net income for the quarter increased by 14% to a total of NIS 34M
 
A sharp increase of 40% in US sales and of 54% in US EBIT
 
 
Matrix published its 2015 annual financial statements, showing all time record high revenues and profits of the company.
 
The annual revenues of Matrix in 2015 reached NIS 2.28B, as compared with NIS 2.1B in 2014, an increase of 8.5%. The operating profit of the company reached NIS 160.1M, as compared with NIS 143M in 2014, an increase of 12%. Net profit reached NIS 101.8M as compared with NIS 91.2M in 2014, an increase of 11.6%. EBITDA reached NIS 184M as compared with NIS 169.8M in 2014, an increase of 8.6%.
 
For the fourth quarter of 2015, Matrix published revenues of NIS 586.5M, as compared with NIS 591.1M in the fourth quarter of 2014. Operating profit grew to NIS 47.6M, 8.1% of revenues, as compared with NIS 42.1M in the corresponding quarter of 2014 (which constituted 7.1% of revenues), an increase of 13%. Quarterly net income grew to NIS 33.8M, as compared with NIS 29.5M in the corresponding quarter of 2014, an increase of 14%.
 
Matrix's revenues in 2015 reached record high. All profit figures (gross profit, operating profit and net profit) for 2015 and for the fourth quarter of 2015 constitute record results for the company.
 
Matrix's CEO, Moti Gutman: "We conclude a record year for Matrix, with continuous growth and focus on the areas of high demand. Matrix emphasizes bottom line growth and focuses on solutions with higher profit margin. Accordingly, last year the operating profit and net profit of the company grew by 12%, and net income in the fourth quarter grew by 14%. We regularly examine our solutions portfolio and reduce efforts, when necessary, in business areas showing a slowdown while going full steam ahead in the areas of sharp growth and adequate profitability".
 
"Matrix continues to grow its US business; accordingly we and posted a sharp increase in sales and profits in US. In 2015, sales in the US increased by 40%, constituting 11.6% of global sales. We recently rebranded our operations in US vis-à-vis the leading financial institutions, and consequently changed our name to Matrix IFS (Matrix International Financial Services), a name more accurately representing the focus of products, technology and services offered by our company for the US financial sector. Our customers include banks and major financial institutions worldwide, such as: Barclays, HSBC, Deutsche Bank, Nomura Bank, JP Morgan Chase and many others. We are positioning Matrix IFS as a leading international player in the area of GRC, fraud prevention, risk management, anti-money laundering, solutions for the wide variety of financial regulatory compliance and in consulting services and projects to defend vs cyber-crime”.
 
Gutman adds: "In the past year, the interest of companies intensified considerably in the areas of digital media and Internet, mobile, cloud, information security, Fintech, analytics and big data, fraud prevention and regulatory compliance. In some of these areas we started working several years ago; in others we significantly expanded our activities and are now reaping the benefits. We have a close, productive and synergistic cooperation with Israeli startup community and high-tech companies, with whom we are working through 8300, a new operating arm of Matrix which we established about a year ago to provide them with services based on models suitable for young and growing companies. The success of 8300 coincided with a sharp increase in financing and record amounts of investment in Israeli startups in 2015."
 
"Matrix has been recognized as the leader in the Israeli IT service market for ten consecutive years, as ranked by the research firm STKI, and for eight consecutive years, as ranked by IDC. Matrix is ranked by BDI as the best company to work for in the IT sector and for several years has consistently received an Aa3 ranking from Midrug financial ranking company, the highest ranking in the industry.”
 
Summary of Profit and Loss for the year ending Dec 31, 2015 and Dec 31, 2014 (in thousands of NIS)
 
For three months ending on
For the year ending on
Change
(%)
 
31.12.15
31.12.14
31.12.15
31.12.14
Turnover
586,549
591,106
2,280,150
2,101,515
8.5%+
Cost of sales and services
482,259
498,594
1,915,509
1,766,161
 
Gross profit
104,290
92,512
364,641
335,354
8.7%+
% of sales
17.8%
15.7%
16%
16%
 
 
 
 
 
 
 
Sales and marketing expenses
23,634
23,437
80,208
78,431
 
Management and general expenses
33,097
26,954
124,327
113,931
 
Operational profit
47,559
42,121
160,106
142,992
12%+
% of sales
8.1%
7.1%
7%
6.8%
 
 
 
 
 
 
 
Net financing costs
4,275
1,530
21,569
19,680
 
Net financing gains
656
546
478
3,380
 
The company’s share in the losses of affiliated companies
--
194
--
(1,051)
 
Profit before taxes
43,940
40,941
139,015
125,641
 
Taxes on income
10,177
11,413
37,193
34,421
 
Net profit
33,763
29,528
101,822
91,220
11.6%+
 
 
 
 
 
 
EBITDA
54,571
50,358
183,989
183,989
8.6%+
 
 
Review of operations
Revenues
In 2015, company revenues reached NIS 2.28M as compared with NIS 2.1M in 2014, growth of 8.5%. Revenues for the fourth quarter of 2015 amounted to NIS 586.5M, as compared with NIS 591.1M in the corresponding quarter of 2014, a decrease of approximately 1%. Annual sales growth is due to increase in activity in all sectors, except the software distribution sector, where Matrix withdrew from activities with low profitability In 2015. Sales in the US increased by 40%, constituting 11.8% of total company sales.
 


 
 
Operating Profit
In 2015, operating profit grew to NIS 160.1M, as compared with NIS 143 in 2014, a growth of 12%. Operating profit in the fourth quarter of 2015 reached NIS 47.6M, representing 8.1% of revenues, as compared with NIS 42.1M in the corresponding quarter of 2014, a growth of 13%.
27.3% of Matrix's Operating Profit for 2015 derives from the activity in US, as compared with 20% last year. The increase in operating profit in the last quarter and the entire year is due mainly to an increase in gross profit offset by a more moderate rate of increase in sales, general, and administrative expenses.
Net Profit
In 2015, annual net profit reached NIS 101.8M, as compared with a net profit of NIS 91.2M in 2014, a growth of 11.6%. The growth in net profit in the fourth quarter is mainly the result of growth in the operating profit offset by an increase in financing and tax expenses.
Analysis by Business Lines
By the date of this report, the company reported four Business Lines, attributing the operation of software solutions and services in the US as an integral part of the software solutions and services BL.
In light f the significant growth of Matrix's business in US and its growing potential, designating it a target market for Matrix (in addition to the Israeli market), starting from this report the company reports the US Business Line separately.
In 2015, the revenues from the software services BL grew by 5.7% and amounted to NIS 1.45B. Operating profit in the software services BL amounted to NIS 73.1M and accounted to 5% of the revenues for this sector. Revenues from software solutions and services in Israel accounted for 62.1% of total Matrix revenues in 2015. The increase in revenues was driven by organic growth, combined with acquisitions; the decrease in operating profit and its margin stems from reduced margins, especially in the Israeli public sector and from the continuing increase in salaries of software engineers in Israel.
In 2015, revenues from software solutions and services in US grew by 40% to a total of NIS 270M. Operating profit increased by 53.3% and reached NIS 43.7M. Revenues from software solutions and services in US accounted for 11.6% of total revenues of the company in 2015. The increase in revenues and profits is due to growing demand for solutions and services of the company in the areas of GRC, anti-money laundering, regulatory compliance and fraud prevention in American financial institutions.
Revenues from the software distribution and support BL decreased in 2015 by 12% and amounted to NIS 138.3M. Operating profit amounted to approximately NIS 19.8M and constituted 14.3% of revenues. The software products distribution accounted for 6% of total revenues of the company in 2015. The decrease in revenues stems from Matrix retracting from activities with lower profit margins; the preservation of profit and increase of its rate is due to the focus on business with higher profit margins.
Revenues from the integration and infrastructure BL increased by 21.7% in 2015 and amounted to NIS 333M, representing 12.8% of revenues. Operating profit increased by 20% and amounted to NIS 13.8M, representing about 4.1% of revenues. The integration and infrastructure BL accounted for 14.2% of Matrix revenues in 2015. The increase in revenues is due mainly to the increase in activities in the field of cloud computing solutions.
In 2015, total revenues in the training and deployment BL decreased by 0.4% and amounted to NIS 144.6M, whilw operating profit increased from about NIS 3.4M to NIS 9.9M. Revenues in the training and deployment BL represented about 6% of total Matrix revenues in 2015. The increase in the amount and the rate of operating profit stems primarily from the organizational and managerial changes appliedin this sector and from retracting from activities with lower profit margins.
 Analysis by geographic region
Matrix posted an increase in revenues and profits in its two major geographical areas of operation: Israel and United States.
In 2015, Matrix revenues in Israel reached NIS 2B as compared with NIS 1.9B in 2014, an increase of 5.4%. Revenues of Matrix in US reached NIS 270M, as compared with NIS 193M in 2014, an increase of 40%.
Operating profit in Israel amounted to NIS 114.3M, an increase of 3%. Operating profit in US reached NIS 43.7M, an increase of 53.5%.
Cash flow
The cash flow from operations in 2015 amounted to NIS 100.7M as compared with NIS 82.6 in 2014. Cash flow was affected by NIS 23.5M increase in working capital as compared with an increase of NIS 13.6M in 2014, due mainly to growing activity.
Current ratio
The current ratio of Matrix at the end of 2015 is 1.33, as compared to 1.36 at the end of 2014.
Dividends distribution
The dividends policy of Matrix is distribution of dividends on a quarterly basis in the amount of up to 75% of net profit. In 2015 Matrix distributed dividends to its shareholders accumulating to NIS 72.6M. The company's dividend yield is 5.8%.
On March 14, 2016, Matrix declared a dividend distribution of 0.40 NIS per share, a total of NIS 24.2M. 2015 has been the tenth consecutive year that Matrix pays dividends. Since 2005, the company distributed over NIS 600M in dividends, and its cash flow reached about NIS 1B.
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