Arotech Corporation (NASDAQ:ARTX) Q1 2019 Earnings Conference Call Transcript

May 09, 2019 • 09:00 am ET

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Arotech Corporation (NASDAQ:ARTX) Q1 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and welcome to the Arotech Corporation First Quarter 2019 Earnings Result Conference Call. All lines have been placed on a listen-only mode, and the floor will be opened for your questions and comments following the presentation. (Operator Instructions)

At this time, it is my pleasure to turn the floor over to your host for today, Mr. Yaakov Har-Oz. Sir, the floor is yours.

Executive
Yaakov Har-Oz

Thank you, Jess. Good morning, everyone. I'd like to welcome everyone to Arotech's first quarter 2019 earnings call. Hosting the call today are Dean Krutty, our Chief Executive Officer; and Kelli Kellar, our Chief Financial Officer.

Before I turn the call over to Dean and Kelli, I'd like to remind everyone that this conference call may contain projections or other forward-looking statements regarding future events or the future performance of the company. These statements are only predictions and there can be no assurance that they will in fact occur. Arotech does not assume any obligation to update that information. Actual events and results may differ materially from those projected, including as a result of changing market trends, reduced demand and the competitive nature of Arotech's industry as well as other risks identified in the documents filed by the company with the Securities and Exchange Commission.

In addition, certain non-GAAP financial measures will be discussed during this call. These non-GAAP measures are used by management to make strategic decisions, forecast future results and evaluate the company's current performance. Management believe the presentation of these non-GAAP financial measures is useful to investors' understanding and assessment of the company's ongoing core operations and prospects for the future. Unless it is otherwise stated, it should be assumed that any financials discussed in this conference call will be provided on a non-GAAP basis. Full reconciliations of non-GAAP to GAAP financial measures are included in the earnings release.

And with that, I'd like to now introduce Arotech's CEO, Dean Krutty. Dean, the call is yours.

Executive
Dean M. Krutty

Thank you, Yaakov. Good morning, everyone, and thank you for joining us today.

For the first quarter of 2019, we reported $20.8 million in revenue and $52,000 in adjusted EBITDA. Our Training and Simulation Division reported $14 million in first quarter revenue, while our Power Systems Division reported just $6.8 million of revenue last quarter. Our first quarter 2019 results continue to reflect some challenges we are facing at our Power Systems Division.

Last September, the U.S. Marine Corps terminated for convenience its Amphibious Assault Vehicle Survivability Upgrade effort with SAIC, who in turn canceled the contract that we held to replace the electrical system on those vehicles. We announced then that we expected that our new contract with the Navy Information Warfare Center, or NIWC, which was previously known as the Space and Naval Warfare Center would make up for the lost revenue beginning in 2019. The contract is for Cyber Mission Systems kitting and supplies and carries a $950 million ceiling.

Our U.S. power company, UEC, is one of five recipients. NIWC