RADA Electronic Ind. Ltd. (NASDAQ: RADA) didn’t report great results for 1Q2016, but management expressed hope that the company is kicking its challenges faster and the drought of new orders is about to end. During 1Q, CEO, Zvika Alon, said they were able to deliver radar units to a number of customers so that they can evaluate them and hopefully place orders for the units.
RADA Electronic Ind. Ltd. (NASDAQ: RADA) also said that a sign that its marketing efforts would pay off in the future was recently demonstrated by production orders from a customer based in Asia. The company said it hoped to see more new orders for its radar systems and solutions flowing in from the Asian region.
RADA Electronic Ind. Ltd. (NASDAQ: RADA): What transpired in Q1?
RADA’s 1Q2016 was characterized by deeper losses than in a similar period a year ago. The losses were caused by soaring expenses and a decline in revenue.
RADA generated total revenue of $2.6 million in the latest quarter, indicating a 28% pullback from the like quarter a year ago. But as revenue went south relative to a year ago, operating expenses remained steady at $1.1 million. RADA’s financial expenses also spiked 134% in the latest quarter.
At the end of the day, the company could not help but print EPS loss of $0.12, wider than EPS loss of $0.09 in the comparable quarter last year.
As RADA Electronic Ind. Ltd. (NASDAQ: RADA) loses money, there is a risk of the company running into a cash shortage problem. But the management can be seen taking measures to avert a potential cash crunch challenge. Alongside the release of the 1Q results, RADA updated on its borrowing plans and said that it had reached an agreement with a firm called DBSI Investments (DBSI) to lend it $3.2 million. The point that the management sought to emphasize on the issue of DBSI loan is that it will replace the existing loan agreement that RADA signed with its previously major shareholder. The new loan is said to carry more favorable terms than the one being replaced. As such, the company should be in a better position to address its cash needs without the risk of accumulating toxic interest expenses.