Continued double-digit growth in the first half-year of 2017/2018 – good start into the second half of the year confirms full year guidance – further acquisitions planned.
Isra Vision AG, one of the world’s top companies for industrial image processing (Machine Vision) as well as globally leading in surface inspection of web materials and 3D machine vision applications, concludes the first half of the 2017 / 2018 financial year with double-digit growth rates in revenue and profit, thus creating optimum conditions for achieving the annual guidance. Year-on-year revenues increase by 10% to EUR 64.7 million (Q2-YTD-16/17: EUR 58.9 million), while EBT grows by 11% to EUR 12.7 million (Q2-YTD-16/17: EUR 11.5 million). The EBT margin to revenues thus increases by one percentage point, amounting to 20% (Q2-YTD-16/17: 19%), and 18% to total output respectively (Q2-YTD-16/17: 18%). After ISRA completely eliminated net debt (current and non-current financial liabilities minus cash and equivalents) in the previous quarter, the company records a positive net liquidity (current and non-current financial liabilities minus cash and equivalents) of EUR 3.9 million (30 September 2017: EUR -1.3 million). With the equity ratio improved by approx. 3 percentage points to 65% (30 September 2017: 62%) and the available credit lines, ISRA has solid capital resources for future growth. With a high gross order backlog of over EUR 95 million (PY: EUR 90 million gross) the company is starting off successfully into the second half of the year.
The development in earnings of the last six months underlines ISRA’s sustained profitability: The high margin level of the first quarter was confirmed and extended. Compared to the same period of the previous year, EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) increases by 11% to EUR 20.4 million (Q2-YTD-16/17: EUR 18.4 million), thus reaching an EBITDA margin of 31% to revenues (Q2-YTD-16/17: 31%) and 29% to total output (Q2-YTD-16/17: 28%). By rising to EUR 12.9 million, EBIT (Earnings Before Interest and Taxes) is 10% higher compared to the figure of the previous year (Q2-YTD-16/17: EUR 11.7 million). Thus, the EBIT margin amounts to 20% of revenues (Q2-YTD-16/17: 20%) and 18% of total output (Q2-YTD-16/17: 18%). EBT (Earnings Before Taxes) improves by 11% to EUR 12.7 million (Q2-YTD-16/17: EUR 11.5 million), corresponding to a slightly increased EBT margin of 20% to revenues (Q2-YTD-16/17: 19%) and 18% to total output (Q2-YTD-16/17: 18%). At 57% to revenues and 61% to total output, the gross margin (revenues/ total output minus cost of materials and costs of labour in production and engineering) remains at the high level of the previous year (Q2-YTD-16/17: 57% / 61%).
After the successful first half of the current financial year, inventories increase to EUR 36.4 million in preparation for the second half of the year and considering the high order backlog (30 September 2017: EUR 32.7 million). Trade receivables reduce to EUR 89.4 million (30 September 2017: EUR 98.0 million), including receivables from delivered and invoiced systems of EUR 37.3 million (30 September 2017: EUR 50.6 million) and receivables according to the percentage of completion method of EUR 52.1 million (30 September 2017: EUR 47.4 million). In the first six months, operational cash flow reached EUR 12.6 million (Q2-YTD-16/17: EUR 15.0 million), while net cash flow totals EUR 5.2 million (Q2-YTD-16/17: EUR 1.4 million) Earnings per share (EPS) after taxes improved by 15% to EUR 2.05 (Q2-YTD-16/17: EUR 1.79). Since 23 May 2018, the ISRA shares are traded with a split ratio of 1:5, which was based on a capital increase from corporate funds, leaving the company’s equity unchanged. The conversion of shareholders’ accounts was performed on 25 May 2018; all shares are fully entitled to dividends for the 2017/2018 financial year.
With more than 25 locations worldwide, ISRA is one of the globally most broadly positioned machine vision providers. A strong international presence is a central element of the long-term corporate strategy to continuously leverage new market potential and generate future growth. In the second quarter of 2017/2018, the dynamic business development in the regions continues. In the first six months of the financial year, demand in the Asian markets experiences strong year-on-year growth. In the Americas, particularly in North America, business again develops significantly positive. In Europe, revenues reach the high level of the comparable period. In addition to its existing locations, the management is currently examining new opportunities for increased expansion in South East Asia and Eastern Europe.
A high level of diversification across different industries and markets – the so-called multi-branch strategy – creates a robust foundation for ISRA’s continuous and sustainable growth. In the Industrial Automation segment, the company counts a broad base of international premium car manufacturers and global industry leading providers from other sectors to its customers. The revenues here amount to EUR 15.9 million in the first half-year of 2017/2018, an increase of 15% compared to the same period of the previous year (Q2-YTD-16/17: 13.8 million). EBIT grows by 16% to EUR 3.1 million (Q2-YTD-16/17: EUR 2.6 million). The segment result is driven by an increasing demand for ISRA’s quick and easy to install Robot Vision solutions and the completion of a major order for 3D precision measurement technology for quality assurance of smartphones. During the first six months, the company also launched numerous innovative products following the INDUSTRIE 4.0 philosophy. Part of these sensors designed to meet the demands of networked production are the first synergies created in development projects together with Polymetric GmbH. Especially an innovative 3D high performance inline measurement sensor which features fast measurement and an extra-large field of view combines the expertise of both companies. With these product innovations, ISRA follows its internal innovation roadmap which also takes latest progress in the utilized technologies as well as impulses from customer industries into account.
Revenues in the Surface Vision segment amount to EUR 48.8 million in the first six months of 2017/2018 (Q2-YTD-16/17: EUR 45.1 million). EBIT is EUR 9.8 million (Q2-YTD-16/17: EUR 9.0 million), again corresponding to an EBIT margin of 18% (Q2-YTD-16/17: 18%) to total output. One of the growth areas is the business unit metal inspection in which the international success of the complete portfolio for surface inspection and 3D measurement across the entire process chain is again confirmed. In the glass industry, the positive order situation continues; as already communicated, ISRA records rising demand regarding inspection solutions for display and touchscreen glass. Initial orders for new systems to inspect state-of-the-art cover glass designs with rounded edges are anticipated already for the current financial year. In the plastics industry, further revenue impulses are indicated on the basis of colour camera technology and the targeted address of equipment providers in the production of non-woven materials. In the Solar unit, a large order is currently at an advanced stage of negotiation. In this area, management expects growth of 10% for the whole financial year. Revenues in the printing industry increase significantly, driven by the combined film and print inspection for packaging printing. In the paper industry, the company is optimizing its current portfolio on an ongoing basis in respect to functionality as well as cost and intensifies addressing customers on an international basis. Embedded architectures for high-security printing are aiming to access new potential in the niche market of special (security) paper, additionally new business impulses are generated by participating in leading industry fairs. In the semiconductors unit which is currently being developed, ISRA is focusing on launching the products in Asia after orders from important initial customers in Europe. The service offers contribute to the positive revenue development with a double-digit share of revenues in the second quarter. The company is systematically continuing the internationalization of its service strategy to improve the profit contribution of the service range more strongly in the medium term.
ISRA is accompanying its ongoing growth path with successive structural expansion of all corporate areas.
With various management extensions in business development, operations and marketing – digital as well as regional, mainly in Asia and North America – the company is focusing on strategic organizational development. Furthermore, alongside expanded infrastructure capacities at the Berlin, Herten, Seoul and Shanghai subsidiaries, construction of a new headquarters in Darmstadt is planned.
In addition to consistent organic growth, acquisitions remain a key element in ISRA’s expansion strategy.
The activities are mainly targeting companies whose technical expertise will sustainably advance ISRA’s products, strengthen the market position of the company and open up new markets. Several acquisition projects are already in the stage of intensive analysis, one of them in an advanced stage of negotiating. If the results of the examination are positive, it is planned to conclude one of these projects in the current financial year.
The profitable result of the first six months of the 2017/2018 financial year again demonstrates ISRA’s planning consistency and confirms the full-year guidance to achieve low double digit growth with increased or at least stable earnings margins. With the high gross order backlog of currently EUR 95 million (PY: EUR 90 million gross), the company has a solid basis for a successful second half of the year. The expansion of the international presence, the optimization of operating productivity and cash flow as well as a strong market position remain the primary strategic targets of management in order to reach the next revenue dimension of more than EUR 200 million in the medium term.
Isra Vision AG, together with its subsidiaries, is worldwide leading in surface inspection of web materials. Furthermore, it is one of the globally leading providers of machine vision programs, specialising in the area of 3D machine vision, in particular for “3D robot vision”.
The core competence of the company is the ISRA-BrainWARE®, an innovative software for intelligent machine vision systems. Here, the scientific know-how from the fields of optics, lighting technology, surveying technology, physics, image processing and classification algorithms and a complex system design are combined. Machine vision is a key technology for visualising systems that imitate the human eye. Today’s ISRA applications focus primarily on the automation of production and quality assurance of goods and products supplied to large, future-oriented markets such as energy, healthcare, food, mobility and information. The customers mainly include renowned global players from the respective sectors. With more than 25 locations worldwide, ISRA offers customer proximity everywhere and ensures optimum service and support.
In the past 17 years, ISRA has shown profitable growth with an annual average increase in sales of approx. 25%. Currently the company employs approx. 800 people worldwide.