17 March 2025

MTI Wireless Edge Ltd

("MTI" or the "Group")

Final Results

Record Order Backlog and Expected Defence Spending Increases Underpin Strong Outlook

MTI Wireless Edge Ltd (AIM: MWE), the technology group focused on comprehensive communication and radio frequency solutions across multiple sectors, is pleased to announce its audited results for the year ended 31 December 2024.

Moni Borovitz, Chief Executive Officer of MTI Wireless Edge, said: "We are proud of these results which show good progress during a period of extremely difficult conditions in Israel. The business again proved its resilience, operating largely as normal and our target end-markets remain buoyant. In particular, the increase in defence budgets worldwide and the opening of the Indian market for E-Band 5G backhaul present substantial opportunities for us over the medium term.

Fundamentally, our core business remains strong, with three well established and well-led divisions focused on three substantial growth markets, all of which leverage the Group's core expertise in radio frequency communications technology.

Looking ahead, the business is in an excellent financial position with net cash of US$6m at the year end, even after investing approximately US$1.3m in our own shares under the buyback programme. Furthermore, we believe we are well placed for 2025, given the size of our record order backlog which stands at over US$25m and the anticipated global increase in defence spending."

Forecasted European Defence Spending

Financial Highlights

·    Revenues held up well at US$45.6m (2023: US$45.6m) in a very challenging environment

·    Profit from operations decreased 3% to US$4.51m (2023: US$4.65m)

·    Profit before tax similar to last year at US$4.81m (2023: US$4.84m)

·    Net Profit increased 3% to US$4.2m (2023: US$4.1m)

·    Earnings per share increased by 9% to 4.99 US cents (2023: 4.58 US cents)

·    Net cash of US$6.0m at 31 December 2024 (31 December 2023: US$8.1m) following purchase of 2.3m shares in the Company under the buyback programme

·    Increased final dividend by 6% to 3.3 US cents per share (2023: 3.1 US cents per share)

Divisional Highlights

·    Antennas - an excellent year for this division with 16% revenue growth in 2024 and the prospect of increasing revenues in 2025. Sales of 5G backhaul solutions and the ABS® antenna solution doubled in 2024 while revenue from military antennas increased due to demand from both local and international markets, leading to a 56% rise in the division's operating profits.

·    Water management - revenue reduced by 2% due to slower activity in some international markets, however, increased revenue from higher margin services together with the impact of price increases led to a 16% rise in the division's operating profit.  Water scarcity continues to be a critical issue, driving demand for Mottech's expanding product range, from both existing clients and new customers in new markets.

·    Distribution - revenue was 11% lower compared to 2023. Primarily due to a weak performance by PSK which led to a significant reduction in the division's operating profits.  However, this division, including PSK, began 2025 with a very healthy order backlog and a long pipeline of opportunities driven by Governments seeking to increase their investment in defence. The issues with PSK are being resolved, making the prospects for this division quite promising.

Shareholder presentation

Moni Borovitz, Chief Executive Officer, will provide an investor presentation relating to the Company's financial results for the year ended 31 December 2024 via the Investor Meet Company ("IMC") platform on 19 March 2025 at 13:30 GMT.

Investors can sign up for free via: https://www.investormeetcompany.com/mti-wireless-edge-ltd/register-investor

Investors who have already registered on IMC and added to meet the Company, will be automatically invited to the meeting.

Annual Report

Shareholders should note that the Company will not post hard copies of its audited annual report and accounts for the year ended 31 December 2024 (the "Annual Report") to its shareholders.  Shareholders who require a hard copy of the Annual Report may write to the Company at MTI Wireless Edge Ltd Headquarters, 11 Hamelacha St. Afek Industrial Park, Rosh-Ha'Ayin, Israel requesting a hard copy.  An electronic version of the Annual Report will shortly be available on the Company's website at the following address: www.mtiwirelessedge.com

For further information please contact:

About MTI Wireless Edge Ltd. ("MTI")

Headquartered in Israel, MTI is a technology group focused on comprehensive communication and radio frequency solutions across multiple sectors through three core divisions:

Antenna division

MTI is a world leader in the design, development and production of high quality, state-of-the-art, and cost-effective antenna solutions including Smart Antennas, MIMO Antennas and Dual Polarity Antennas for wireless applications. MTI supplies antennas for both military and commercial markets from 100 KHz to 174 GHz.

Internationally recognized as a producer of commercial off-the-shelf and custom-developed antenna solutions in a broad frequency range, MTI addresses both commercial and military applications.

MTI supplies directional and omnidirectional antennas for outdoor and indoor deployments, including smart antennas for 5G backhaul, Broadband access, public safety, RFID, base station and terminals for the utility market.

Military applications include a wide range of broadband, tactical and specialized communication antennas, antenna systems and DF arrays installed on numerous airborne, ground and naval, including submarine, platforms worldwide.

Water Control & Management division

Via its subsidiary, Mottech Water Solutions Ltd ("Mottech"), MTI provides high-end remote control and monitoring solutions for water and irrigation applications based on Motorola's IRRInet state-of-the-art control, monitoring and communication technologies.

As Motorola's global prime-distributor Mottech serves its customers worldwide through its international subsidiaries and a global network of local distributors and representatives. With over 25 years of experience in providing customers with irrigation remote control and management, Mottech's solutions ensure constant, reliable and accurate water usage, increase crops quality and yield while reducing operational and maintenance costs providing fast ROI while helping sustain the environment. Mottech's activities are focused in the market segments of agriculture, water distribution, municipal and commercial landscape as well as wastewater and storm-water reuse.

Distribution & Professional Consulting Services division

Via its subsidiary, MTI Summit Electronics Ltd., MTI offers consulting, representation and marketing services to foreign companies in the field of RF and Microwave solutions and applications including engineering services (including design and integration) in the field of aerostat systems and the ongoing operation of Platform subsystems, SIGINT, RADAR, communication and observation systems which is performed by the Company. It also specializes in the development, manufacture and integration of communication systems and advanced monitoring and control systems for the Government and defence industry market.

Chairman's statement

2024 was a challenging year, given the ongoing conflict and unsettled markets but despite this, the business performed resiliently and finished the period in a strong position. We secured a number of new contracts throughout the year with both new and existing customers and as a result we have a larger backlog of orders than we have ever had before.

Furthermore, demand across our three core markets remains high and is expected to grow. The defence sector is showing very positive momentum, and when coupled with the global adoption of 5G and the continuing need for water management solutions, this creates a solid foundation for future demand for the Group's services.

Trading overview

Unsurprisingly, the dominant market driver in 2024 was defence spending and this is likely to be true in 2025 too. The defence market, which was already expanding, is now poised for even greater growth due to actions taken by the new US government. In response, European governments have unveiled plans for significantly increased defence spending, and MTI is well-positioned to benefit. Enquiries for military related orders (both for military antennas and distribution of components, including PSK's solution offerings) have increased to support expanded budgets and our pipeline of potential orders is higher than we have ever seen.

Dividend

Reflecting the strength of the Company's operational performance and order backlog and pipeline the Board is pleased to declare a final dividend of US$0.033 per share representing a 6% increase on the previous year (2024: US$0.031). The dividend will be paid on 11 April 2025 to shareholders on the register at the close of trading on 28 March 2025 (ex-dividend on 27 March 2025). The currency translation into British Pounds will be made on 2 April 2025 and there will not be a scrip dividend alternative.

We have also decided to maintain the Company's share buyback programme and continue holding the shares purchased for a longer period. The Board has agreed to use the existing funding committed to the buyback programme, along with the dividends received from the shares in treasury, to continue the programme until the end of March 2026, reflecting our strong confidence in the business' prospects.

People

The MTI teams worldwide performed exceptionally well throughout the year, maintaining high operational performance levels and delivering margin progression in the the antenna division and Mottech. I would like to extend a special thank you to our teams in Israel for their excellent work during what has undoubtedly been the most challenging year in the country's history. Their dedication, solidarity and unwavering focus was crucial in helping us navigate this very difficult period.

Outlook

MTI is a growth business operating in growth markets. Our products and services are in demand across all three divisions. We continue to invest in innovation, product development and acquisitions when the opportunities arise, whilst always remaining focused on radio frequency communications which lies at the heart of our success.

2025 has undoubtedly started well for the Company with an increased backlog and pipeline of opportunities across all of our three divisions. We are therefore looking forward to delivering a year of growth and increased returns for our shareholders.

Zvi Borovitz

Chairman

Chief Executive's review

Introduction

2024 was a challenging, yet successful year for the Company. Despite the conflict, the Company continued to operate smoothly, achieving many of its commercial targets. As a result, the business maintained revenue levels and achieved an increase in net profits. Mottech and the Antenna division both contributed strongly to the profitability of the business, while the Distribution division was held back by a weak performance from PSK. The issues at PSK are being resolved which once completed, together with the record Group order backlog, will put the Company in a prime position for a good year in 2025.

Financial results

Revenues for the twelve months to 31 December 2024 were maintained at US$45.6m (2023: US$45.6m) with the key 5G backhaul and military markets driving growth in the Antenna division, offsetting the decline in revenues from PSK.

Gross margin was 1% below last year reflecting the mix of products sold in different markets and the costs incurred in PSK. Gross margin in both the antenna division and Mottech improved in 2024 demonstrating the scalability of our business. 

Operating profit in 2024, was 3% lower at US$4.51m (2023: US$4.65m), as a result of the losses in PSK while both the Antenna division and Mottech showed significant increases in operating profits.

Profit before tax was US$4.8m (2023: US$4.8m) reflecting the strength of our balance sheet's financial income gained from deposits as well as a result of writing off part of the contingent liability relating to the potential deferred consideration for the PSK acquisition which was based on PSK's 2024 target results which were not achieved.

Net Profit to shareholders increased 8% led by lower tax rates and helped by the share repurchase programme, while earnings per share grew 9% to US4.99 cents (2023: US4.58 cents).  

Cash flow generated from operations for 2024 was US$3.1m, similar to 2023 (US$3.6m) reflecting some minor delays in collections, which moved into January 2025, and was generally in line with our business model to convert the majority of operating profits into operating cash flow. This resulted in a net cash balance of approximately US$6m (31 December 2023: US$8.1m), following the spending of US$1.3m to purchase the Company's shares under the Share Repurchase Programme.

The Board has agreed to continue with the Share Repurchase Programme (on similar terms and conditions originally announced by the Company on 13 April 2022) and extend it until 31 March 2026.

Operational review

Over the last 54 years MTI has established its reputation as a global provider of comprehensive radio frequency solutions across multiple sectors through three core divisions.

Antennas

This division is a one stop shop for the sale of 'off the shelf' flat and parabolic antennas, combined with the provision of custom-developed antenna solutions to a range of commercial and military customers, with a growing focus on providing 5G backhaul antenna solutions to support mobile phone operators as they roll-out their 5G networks.

In 2024, revenues from this division increased by 16%, which is considered a good result, reflecting a sharp increase in demand for 5G backhaul antenna solutions and increases in military antennas, combined with a moderate decrease in legacy antennas for fixed wireless access and slower Radio Frequency Identification (RFID) sales. Overall, this combined to produce a 56% rise in divisional operating profit.

E-Band 5G backhaul antenna sales doubled in 2024 compared to 2023 as a result of better installation rates in key markets, which bodes well for future sales of our 5G solutions.

Our investment in expanding our physical presence in India is paying off, serving as a key driver of 5G sales. The quality and reliability of MTI's products and solutions, which are core strengths, further differentiated us from competitors. As a result, we have earned, and continue to build, trust with India's leading mobile operators and OEM suppliers. This reinforces our belief that our solutions are well-positioned to generate significant long-term revenues as 5G networks are rolled out both in India and globally by major mobile operators.

Military antenna sales increased moderately in 2024 following a significant increase in 2023, reflecting very high enquiry levels and a significant rise in global military spending. Demand came from multiple international and local projects, including sales to defence companies in Europe. In many cases MTI's solutions are sold globally via Israeli defence companies exporting larger-scale solutions. Moreover, in 2024 there was a growing trend amongst Israel's defence companies to outsource military antenna manufacturing - creating new revenue opportunities for MTI, the benefit of which will come through in future years.

The conflicts in the Middle East have triggered a need to restock antennas used during these conflicts, and a requirement to maintain higher stock levels, which will change the overall volume of antennas needed.

Critically, the E-Band 5G backhaul antenna and military antenna segments together accounted for 70% of our antenna revenues in 2024, which is promising for the future as we expect these areas to experience the strongest growth moving forward.

Water Control & Management

This division provides wireless control systems to manage irrigation and water distribution for agriculture, municipal authorities and commercial entities. It operates under the Mottech brand and utilises part of the hardware technology from Motorola, integrated with the Company's own proprietary solutions, including management software. Our solutions reduce water and power usage, whilst providing higher revenue from accurate irrigation, leading to an increased number and improved quality of crops being cultivated.

Mottech had another good year, although revenue declined by 2% primarily due to some projects and orders in Europe being delayed, together with some planned installations being slow to occur in Israel due to the conflict. Nevertheless, the increased revenue from higher margin services, and new pricing initiated in 2023 helped improve profit margins, resulting in operating profit improving by 16%. Recurring revenues continued to improve and represented over 25% of the division's income in 2024.

Mottech always continues to seek to innovate and expand its services to existing and new clients. For over 30 years, Mottech has been providing irrigation services to a number of municipalities in Israel, ensuring efficient water usage across public parkland and green open spaces. Despite the conflict, the division continued to secure new mandates, including for comprehensive encrypted fountain management solutions, such as winning the contract to manage Jerusalem's fountains in 2024.  Implementation of this solution began last year with further installations to be completed in 2025.

Mottech also introduced new hardware solutions, increasing its offering to existing, new and potential customers. These solutions, including the Elite controller, are also aimed at opening fresh market opportunities which we anticipate will become part of future growth drivers. 

Droughts fuelled by human destruction of the environment are projected to affect 3 in 4 people by 2050, highlighting how investing in sustainable land and water management is essential to mitigate the issue, which currently incurs over US$307billion per year in global costs, according to a new report launched at the Conference of the Parties of the United Nations Convention to Combat Desertification (UNCCD)*.

This level of challenge underlines the importance of water conservation and how solutions like Mottech's can make a substantial difference - often able to save a farmer or a city up to 30% in water usage, while helping the farmer to grow more crops at a better level of quality.

*UN economics of drought - December 2024

Distribution & Professional Consulting Services

Operating under the MTI Summit Electronics brand ("MTI Summit"), this division exclusively represents approximately 40 international suppliers of radio frequency/microwave components and sells these products to Israeli customers. Expert knowledge of both the international suppliers and customers enables MTI to act as a consultant to all parties and assist with devising complete radio frequency/microwave solutions.

2024 was a mixed year for MTI Summit, after nine years of delivering uninterrupted growth, revenues were lower by 11% compared to 2023 mainly due to a weak performance by PSK.

During the second half of 2024, changes were implemented at PSK to seek to avoid such losses being repeated. A larger part of PSK's work is now subcontracted, rather than performed in-house, providing more flexibility when project levels are lower. Given the existing order backlog and robust pipeline of opportunities for both PSK and MTI Summit, the Company believes in the division's prospects.  

For MTI Summit and PSK, the increased defence spending by governments globally creates a very positive market environment in which to operate. A key factor behind the order backlog for 2025 as well as the future pipeline of opportunities, is the mix of direct domestic demand and international demand via Israeli defence companies.

Outlook

Global conflicts have led to a significant increase in defence budgets which began impacting MTI's results in 2023 and continued into 2024 with over 40% of the Group's sales now being defence related. We expect this trend to continue in the medium term, supported by the current high backlog of orders, and a significant pipeline of opportunities. 

Overall, MTI is well positioned across all three divisions, each benefitting from strong macro trends underpinning future prosperity. The first two months of 2025 have been in line with internal expectations and judging from the pipeline of potential opportunities, the Group is well placed, to continue to seek to expand through a mix of organic and acquisition-led growth, supported by a strong financial foundation.

Moni Borovitz

Chief Executive Officer

M.T.I Wireless Edge Ltd.

Consolidated Statements of Comprehensive Income

The accompanying notes form an integral part of these financial statements.