Matrix announces the results of the second quarter of 2011

14/08/2011

Peak quarter in revenues and operating profits

Company revenues increased by about 16%, operating profit by about 10%, and net profit by about 6% 

Matrix closes the second quarter of 2011 showing growth in revenues, operating profit, and net profit. Moti Gutman, Matrix CEO: "Despite the Passover holiday that occurred in the quarter, we conclude it with peak revenues of about NIS 428M, operating profit of about NIS 35M, and net profit of about NIS 22M. Our core business sector, software solutions and services, showed a growth of about 13% in revenues, reaching approximately NIS 285M, whereas operating profit grew by about 8% to approximately NIS 26M. As a result of the acquisitions we've made this year, our workforce crossed the 5000 employee threshold.

Our acquisitions focus on two main directions, supporting the market changes and the challenges of our customers: on one hand, business solutions that provide significant operating savings and efficiency while maintaining service quality, such as acquisition of Babcom, which provides advanced solutions for the management of call centers; and on the other hand, advanced business solutions that address the changing market needs and offer a competitive edge to organizations, such as investment in the field of BI.

I'm glad that our cautious management in this time of economic uncertainty proved itself, as did the range of services and sectors characterizing our revenue mix and investment in solutions that provide business value to the customer. I am also proud that Matrix has been chosen by the BDI survey as a best company to be employed by in the software and integration industry, as well as one among the four most preferred high-tech companies by the AllJobs survey. Human capital is our most important asset and we invest greatly in this area.

Summary of Profit and Loss (in thousands of NIS)

 
For three months ending on
For three six ending on
 
30.06.11
30.06.10
30.06.11
30.06.10
Turnover
428,439
370,263
850,564
740,991
Cost of sales and services
350,574
297,650
695,694
596,025
Gross profit
77,865
72,613
154,870
144,966
 
R&D expenses
--
155
--
309
Sales and marketing expenses
16,540
15,533
32,487
30,496
Management and general expenses
25,945
24,780
51,944
50,439
Profit from regular activities
35,380
32,145
70,439
63,722
 
 
 
 
Net financing costs
7,854
6,687
14,711
8,653
Net financing gains
1,429
1,734
3,626
4,345
The company’s share in the losses of affiliated companies
(380)
511
484
1,411
Profit before taxes
29,335
26,681
58,870
58,003
Taxes on income
6,993
5,645
14,468
12,896
Net profit
22,342
21,036
44,402
45,107
 
In the second quarter of 2011 Matrix won new  contracts in the entire range of its sectors and services, including: transaction sites for two banking institutions in Israel and abroad; setup of a back office and interface project for clients - leaders in the financial field; setup of Web sites for several companies in the industrial, public, and security sectors; portals for several organizations in the financial, hi-tech, and industry and commerce sectors; mobile projects for public institutions; SOA projects for institutions in the public and security sectors; full computerization of an additional hospital abroad; automated warehouses and management of a distribution center belonging to a leading network in the retail sector; storage projects for large commercial companies and for an academic college; virtualization projects in the trade sector; essential software deals in a government institution and in the telecommunications sector; classified development projects in the defense sector; extensive nearshore deals in the hi-tech, pharmaceutical, and defense sectors; offshore deals for an American client, major deals in organizational BI management for financial and industrial institutions; and significant contracts for training and deployment projects for the Ministry of Finance, the public sector, financial institutions, and the police. 

ANALYSIS OF RESULTS

Company Revenues

Company Revenues in the second quarter grew by approximately 15.7% and reached approximately NIS 428.4M compared with approximately NIS 370.3M in the corresponding quarter of the previous year.

 

 

 
Operating Profit

 

Operating profit grew by approximately 10.3% and amounted to approximately NIS 35.4M, compared with NIS 32.1M in the corresponding quarter of the previous year.
 
 

 

Activity sectors

Revenues from the software solutions and services sector, the core business of the company, amounted to approximately NIS 285.4M compared with approximately NIS 252.1M in the corresponding quarter of the previous year, an increase of about 13%. Operating profit of the sector amounted to approximately NIS 25.8M compared with about NIS 23.8M in the corresponding quarter of the previous year, an increase of about 8.4%.
 
Revenues from the marketing and deployment of software products sector amounted to approximately NIS 41.5M compared with approximately NIS 46M in the corresponding quarter of the previous year. The operating profit of the sector amounted to approximately NIS 4.9M, similar to the corresponding quarter of the previous year.
 
Revenues from the training and deployment sector, amounted to approximately NIS 39.1M compared with approximately NIS 36.8M in the corresponding quarter of the previous year, an increase of about 6%. Operating profit of the sector amounted to approximately NIS 2.6M compared with about NIS 1.4M in the corresponding quarter of the previous year, an increase of about 86%.
 
In the Training Division, the activities have been merged under the new brand John Bryce-Hi-Tech, and we merged the headquarters of the training activity in the main campus situated in the Green Building in Tel Aviv. These changes can leverage the capabilities of the training division for the benefit of added value to our customers, consistent with the challenges of the period.

Net Profit

Net profit in the quarter amounted to approximately NIS 22.3M, compared with around NIS 21M in the corresponding quarter of the previous year, a growth of about 6.2%.
Cash flow and financing sources. The positive cash flow from current activity amounted to approximately NIS 25.4M.
The company has cash reserves and short-term financial assets in the amount of approximately NIS 178M.
Dividends. Total dividends distributed from the start of the period amounted to approximately NIS 33.5M.
Shareholders’ equity capital as of the date of the report amounted to about NIS 564.8 thousand compared with approximately NIS 539.6M on 30.6.2010
 
The current ratio of the company stands at 1.55.

Acquisition of Babcom Centers Inc.

​On April 13, 2011, an agreement was signed with the shareholders of Babcom Centers Ltd. ("Babcom") for the purchase of 50.1% of the equity shares of Babcom. The deal was completed on June 1, 2011. Moreover, the company and the sellers have a reciprocal option for the sale of the balance of the sellers’ Babcom shares to the company. The sellers may be entitled to additional compensation that will be calculated as a portion of the operational profit of the company in excess of the profit that was specified, and in any case no more than NIS 4M. Babcom is a private company whose main business is providing professional services for call centers, software development and testing. A substantial portion of Babcom clients is from the communication sector. Babcom employs approximately 500 employees.
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