Formula Systems (1985) Ltd. (NASDAQ: FORTY), a global information
technology holding company engaged, through its subsidiaries and
affiliates, in providing software consulting services and
computer-based business solutions and developing proprietary
software products, today announced its results for the fourth
quarter and full year ended December 31, 2020.
Financial Highlights for the Fourth Quarter Ended
December 31, 2020
- Consolidated revenues for the fourth quarter increased by 21.2%
to a record breaking $543.2 million. Revenues for the fourth
quarter ended December 31, 2019 amounted to $448.2 million.
- Consolidated operating income for the fourth quarter increased
by 23.4% to a record breaking $45.8 million, with growth recorded
across Formula’s entire investment portfolio. Consolidated
operating income for the fourth quarter ended December 31, 2019
amounted to $37.1 million.
- Consolidated net income attributable to Formula’s shareholders
for the fourth quarter increased by 19.1% to $11.9 million, or
$0.76 per fully diluted share, compared to $10.0 million, or $0.64
per fully diluted share, for the fourth quarter ended December 31,
2019.
Financial Highlights for the Year Ended December 31,
2020
- Consolidated revenues for the year increased by 13.7% to a
record breaking $1,933.9 million, with growth recorded across
Formula’s entire investment portfolio. Revenues for the year ended
December 31, 2019 amounted to $1,701.1 million.
- Consolidated operating income for the year increased by 23.2%
to a record breaking $170.6 million, with growth recorded across
Formula’s entire investment portfolio. Consolidated operating
income for the year ended December 31, 2019 amounted to $138.5
million.
- Consolidated net income attributable to Formula’s shareholders
for the year was $46.8 million, or $3.01 per fully diluted share,
compared to $38.8 million, or $2.44 per fully diluted share in the
year ended December 31, 2019, reflecting an increase of 20.5% year
over year.
- As of December 31, 2020, Formula held 49.3%, 44.0%, 45.5%,
100%, 50%, 90.09% and 80% of the outstanding ordinary shares of
Matrix IT Ltd., Sapiens International Corporation N.V, Magic
Software Enterprises Ltd., Michpal Micro Computers (1983) Ltd., TSG
IT Advanced Systems Ltd., Insync Staffing Solutions, Inc., and Ofek
Aerial Photography Ltd., respectively.
- Consolidated cash and cash equivalents, bank deposits and
investments in marketable securities totaled approximately $533.2
million as of December 31, 2020, compared to $405.2 million as of
December 31, 2019.
- Total equity as of December 31, 2020 was $ 1,107.5 million
(representing 43.9% of the total consolidated balance sheet),
compared to $896.3 million (representing 42.9% of the total
consolidated balance sheet) as of December 31, 2019.
Debentures Covenants
As of December 31, 2020, Formula was in compliance with all of
its financial covenants under the debenture series issued by
Formula, based on the following achievements:
Covenant 1
- Target equity attributable to Formula’s shareholders (excluding
non-controlling interests): above $215 million.
- Actual equity attributable to Formula’s shareholders is equal
to $502.7 million.
Covenant 2
- Target ratio of net financial indebtedness to net
capitalization (in each case, as defined under the indenture for
Formula’s Series A and C Secured Debentures): below 65%.
- Actual ratio of net financial indebtedness to net
capitalization is equal to 1.1%.
Covenant 3
- Target ratio of net financial indebtedness to EBITDA (based on
the accumulated calculation for the four recent quarters): below
5.
- Actual ratio of net financial indebtedness to EBITDA (based on
the accumulated calculation for the four recent quarters) is equal
to 0.046.
Comments of Management
Commenting on the results, Guy Bernstein, CEO of
Formula Systems, said: “We are very pleased to conclude 2020 on a
high note across our entire investment portfolio reaching an
all-time record across all of our key indices (revenues, operating
income, EBITDA and net income), overcoming multiple challenges
introduced by COVID-19 pandemic and quickly and productively
adjusting to the new work environment. We enter into 2021 with a
strong momentum and plan to continue our efforts across our entire
portfolio to adhere our core values of innovation, professionalism,
agility and transparency which allow us to continue our growth and
preserve our leading position.”
“Matrix managed to quickly overcome the
challenges and adjust to the “New Normal” introduced by the
COVID-19 global pandemic and managed to finish 2020 as a
record-breaking year across all financial indices. Among the
adjustments were the transition to a hybrid work model and
significantly increase the company’s scope of operations in all
high-demand technology sectors. We are pleased with Matrix
continued recognition as a market leader in the implementation of
fastest-growing technologies, such as: cloud, cyber, digital, data,
AI and machine learning, which enables the company to create
significant value for its customers in managing, streamlining,
accelerating, and making their businesses thrive. Matrix is
positioned as the preferred technology partner in the Israeli
market for 15 years in a row. Looking forward and witnessing the
increasing demand for digital services, cloud services,
infrastructure, computing, and data analytics, Matrix intends to
expand and recruit more quality personnel to fill the many
positions required in these areas in order to continue to lead the
innovation in Israel’s IT industry and maintain the position of a
market leader.”
“Sapiens finished 2020 on a strong note, despite
the multiple challenges introduced by the COVID-19 pandemic, with
record fourth quarter Non-GAAP revenues crossing the $100
million-dollar-mark, coming in at $103 million, 19% higher than
last year and strong Non-GAAP operating margin of 18.1%, improving
by 164 basis points, compared to the same period last year. For the
full year of 2020 Non-GAAP revenue increased by 18% to $384 million
and Non-GAAP operating margin of 17.7%. The results demonstrate how
well Sapiens is executing its proven “Land and Expand” strategy,
which enables it to grow in the highly regulated and regionally
diverse global insurance markets and validate its operating
leverage. In addition, Sapiens continues to preserve its position
as a one-stop-shop in P&C and Life with its hundreds of
customers, along with offering complimentary and digital solutions.
Sapiens enters into 2021 with a strong momentum, a solid balance
sheet and plans to leverage its recent acquisitions.”
“Magic also finished 2020 on a strong note with
record breaking revenues of $104.6 million for the fourth quarter,
reflecting 15% increase from the same period last year and
exceeding the 100 million-dollar-mark for the first time. For the
full year of 2020, Magic’s revenues increased 14% year over year to
$371 million and non-GAAP operating income increased 20% year over
year to $53 million. The company’s results of operations for the
year demonstrate its ability to manage the business and execute on
its strategy during uncertain times introduced by the COVID-19
global pandemic while keeping its employees safe and
productive.”
“Michpal group continues to realize synergies
and monetize on its business model with its revenues also fueled by
the acquisition of Unique Software Enterprises Ltd. concluded in
November 2019 and Liram Financial Software Ltd., concluded in May
2020. Michpal Group is well positioned to continue helping its
customers to adjust to the ever-changing governmental labor
guidelines which are introduced in light of the COVID-19
pandemic.”
“TSG (held jointly by Formula and Israel
Aerospace Industries) also finished the year on a high note,
signing a new multi-million-dollar G2G agreement with a law
enforcement agency in South East Asia. TSG will deliver a
multi-sensory and multidisciplinary system which would include and
integrate a Command & Control system, for the use of the entire
organization. In addition, during 2020 TSG had the opportunity to
put to good use its proven AI development capabilities developed
for the defense sector in order to predict Hospital respiratory
deterioration of Covid-19 infected patients. The system was
integrated in the Beilinson Hospital in Israel and generated
impressive results. This is another perfect example of TSG’s
capability to monetize on long term capabilities dedicated to the
defense sector in the private sector.”
Stand-Alone Financial
Measures
This press release presents, further below,
certain stand-alone financial measures to reflect Formula’s
stand-alone financial position in reference to its assets and
liabilities as the parent company of the group. These financial
measures are prepared consistent with the accounting principles
applied in the consolidated financial statements of the group. Such
measures include investments in subsidiaries and a jointly
controlled entity measured at cost adjusted by Formula’s share in
the investees’ accumulated undistributed earnings and other
comprehensive income or loss.
Formula believes that these financial measures
provide useful information to management and investors regarding
Formula’s stand-alone financial position. Formula’s management uses
these measures to compare the Company’s performance to that of
prior periods for trend analyses. These measures are also used in
financial reports prepared for management and in quarterly
financial reports presented to the Company’s board of directors.
The Company believes that the use of these stand-alone financial
measures provides an additional tool for investors to use in
evaluating Formula’s financial position.
Management of the Company does not consider
these stand-alone measures in isolation or as an alternative to
financial measures determined in accordance with GAAP. Formula
urges investors to review the consolidated financial statements
which it includes in press releases announcing quarterly financial
results, including this press release, and not to rely on any
single financial measure to evaluate the Company’s business or
financial position.
About Formula
Formula Systems, whose ordinary shares are
traded on the Tel-Aviv Stock Exchange and ADSs are traded on the
NASDAQ Global Select Market, is a global information technology
holding company engaged, through its subsidiaries and affiliates,
in providing software consulting services and computer-based
business solutions and developing proprietary software
products.
For more information, visit
www.formulasystems.com.
Press Contact:
Formula Systems (1985)
Ltd.+972-3-5389487ir@formula.co.il
Except for any historical information contained
herein, matters discussed in this press release might include
forward-looking statements that involve a number of risks and
uncertainties. Regarding any financial statements, actual results
might vary significantly based upon a number of factors including,
but not limited to, risks in product and technology development,
market acceptance of new products and continuing product
conditions, both locally and abroad, release and sales of new
products by strategic resellers and customers, and other risk
factors detailed in Formula’s most recent annual report and other
filings with the Securities and Exchange Commission. These
forward-looking statements are made only as of the date hereof, and
the Company undertakes no obligation to update or revise the
forward-looking statements, whether as a result of new information,
future events or otherwise. In addition, there is uncertainty about
the spread of the COVID19 pandemic virus and the impact
it will have on the Company’s operations, the demand for Company’s
products, global supply chains and economic activity in general.
These and other risks and uncertainties are detailed in the
Company’s Securities and Exchange Commission
filings.
FORMULA SYSTEMS (1985) LTD.CONSOLIDATED
CONDENSED STATEMENTS OF PROFIT OR LOSSU.S. dollars
in thousands (except per share data)
|
|
Three months ended |
|
|
Year ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited |
|
|
Unaudited |
|
|
|
|
Revenues |
|
|
543,240 |
|
|
|
448,205 |
|
|
|
1,933,918 |
|
|
|
1,701,115 |
|
Cost of revenues |
|
|
418,264 |
|
|
|
344,224 |
|
|
|
1,486,485 |
|
|
|
1,315,066 |
|
Gross
profit |
|
|
124,976 |
|
|
|
103,981 |
|
|
|
447,433 |
|
|
|
386,049 |
|
Research and development
costs, net |
|
|
14,220 |
|
|
|
12,439 |
|
|
|
52,604 |
|
|
|
46,690 |
|
Selling, marketing and general
and administrative expenses |
|
|
64,989 |
|
|
|
54,468 |
|
|
|
224,188 |
|
|
|
200,870 |
|
Operating
income |
|
|
45,767 |
|
|
|
37,074 |
|
|
|
170,641 |
|
|
|
138,489 |
|
Financial expenses, net |
|
|
10,723 |
|
|
|
6,147 |
|
|
|
26,885 |
|
|
|
18,652 |
|
Income before taxes on
income |
|
|
35,044 |
|
|
|
30,927 |
|
|
|
143,756 |
|
|
|
119,837 |
|
Taxes on income |
|
|
6,754 |
|
|
|
6,726 |
|
|
|
31,268 |
|
|
|
27,201 |
|
Income after
taxes |
|
|
28,290 |
|
|
|
24,201 |
|
|
|
112,488 |
|
|
|
92,636 |
|
Share of profit of companies
accounted for at equity, net |
|
|
1,200 |
|
|
|
272 |
|
|
|
1,535 |
|
|
|
1,787 |
|
Net
income |
|
|
29,490 |
|
|
|
24,473 |
|
|
|
114,023 |
|
|
|
94,423 |
|
Net income attributable to
non-controlling interests |
|
|
17,597 |
|
|
|
14,489 |
|
|
|
67,247 |
|
|
|
55,603 |
|
Net income
attributable to Formula Systems’ shareholders |
|
|
11,893 |
|
|
|
9,984 |
|
|
|
46,776 |
|
|
|
38,820 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
(basic) |
|
|
0.77 |
|
|
|
0.65 |
|
|
|
3.05 |
|
|
|
2.56 |
|
Earnings per share
(diluted) |
|
|
0.76 |
|
|
|
0.64 |
|
|
|
3.01 |
|
|
|
2.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares used in computing earnings per share (basic) |
|
|
15,288,017 |
|
|
|
15,282,600 |
|
|
|
15,286,142 |
|
|
|
15,189,758 |
|
Number of shares used in computing earnings per share
(diluted) |
|
|
15,293,138 |
|
|
|
15,291,360 |
|
|
|
15,292,450 |
|
|
|
15,340,867 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FORMULA SYSTEMS (1985) LTD.CONSOLIDATED
STATEMENTS OF FINANCIAL POSITIONU.S. dollars in
thousands
|
|
December 31, |
|
|
December 31, |
|
|
|
2020 |
|
|
2019 |
|
|
|
(Unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
CURRENT
ASSETS: |
|
|
|
|
|
|
Cash and cash equivalents |
|
|
501,626 |
|
|
|
368,666 |
|
Short-term deposits |
|
|
30,289 |
|
|
|
29,886 |
|
Marketable securities |
|
|
1,238 |
|
|
|
6,600 |
|
Trade receivables |
|
|
520,144 |
|
|
|
486,007 |
|
Other accounts receivable and prepaid expenses |
|
|
83,610 |
|
|
|
65,709 |
|
Inventories |
|
|
23,988 |
|
|
|
8,636 |
|
Total current
assets |
|
|
1,160,895 |
|
|
|
965,504 |
|
|
|
|
|
|
|
|
|
|
LONG-TERM
ASSETS: |
|
|
|
|
|
|
|
|
Deferred taxes |
|
|
39,890 |
|
|
|
38,865 |
|
Other long-term accounts receivable and prepaid expenses |
|
|
22,703 |
|
|
|
22,205 |
|
Total long-term
assets |
|
|
62,593 |
|
|
|
61,070 |
|
|
|
|
|
|
|
|
|
|
INVESTMENTS IN COMPANIES ACCOUNTED FOR AT EQUITY
METHOD |
|
|
28,478 |
|
|
|
26,021 |
|
|
|
|
|
|
|
|
|
|
PROPERTY, PLANTS AND
EQUIPMENT, NET |
|
|
59,559 |
|
|
|
43,059 |
|
|
|
|
|
|
|
|
|
|
OPERATING LEASE
RIGHT-OF-USE ASSETS |
|
|
114,414 |
|
|
|
104,130 |
|
|
|
|
|
|
|
|
|
|
NET INTANGIBLE ASSETS
AND GOODWILL |
|
|
1,094,073 |
|
|
|
889,473 |
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS |
|
|
2,520,012 |
|
|
|
2,089,257 |
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES: |
|
|
|
|
|
|
|
|
Loans and credit from banks and others |
|
|
120,444 |
|
|
|
125,297 |
|
Debentures |
|
|
41,454 |
|
|
|
31,362 |
|
Current maturities of operating lease liabilities |
|
|
32,065 |
|
|
|
35,673 |
|
Trade payables |
|
|
153,259 |
|
|
|
125,163 |
|
Deferred revenues |
|
|
128,898 |
|
|
|
93,512 |
|
Other accounts payable |
|
|
258,717 |
|
|
|
205,205 |
|
Dividend payable |
|
|
- |
|
|
|
7,081 |
|
Liabilities in respect of business combinations |
|
|
9,121 |
|
|
|
8,431 |
|
Put options of non-controlling interests |
|
|
35,843 |
|
|
|
39,668 |
|
Total current
liabilities |
|
|
779,801 |
|
|
|
671,392 |
|
|
|
|
|
|
|
|
|
|
LONG-TERM
LIABILITIES: |
|
|
|
|
|
|
|
|
Loans and credit from banks and others |
|
|
180,316 |
|
|
|
162,062 |
|
Debentures |
|
|
203,070 |
|
|
|
175,411 |
|
Long term operating lease liabilities |
|
|
91,188 |
|
|
|
73,686 |
|
Other long-term liabilities |
|
|
12,191 |
|
|
|
8,311 |
|
Deferred taxes |
|
|
68,368 |
|
|
|
53,854 |
|
Deferred revenues |
|
|
16,626 |
|
|
|
6,491 |
|
Liabilities in respect of business combinations |
|
|
16,582 |
|
|
|
14,895 |
|
Put options of non-controlling interests |
|
|
29,257 |
|
|
|
15,182 |
|
Employees benefit liabilities |
|
|
15,119 |
|
|
|
11,639 |
|
Total long-term
liabilities |
|
|
632,717 |
|
|
|
521,531 |
|
|
|
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
|
|
|
Equity attributable to Formula Systems’ shareholders |
|
|
502,728 |
|
|
|
421,640 |
|
Non-controlling interests |
|
|
604,766 |
|
|
|
474,694 |
|
Total
equity |
|
|
1,107,494 |
|
|
|
896,334 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
EQUITY |
|
|
2,520,012 |
|
|
|
2,089,257 |
|
|
|
|
|
|
|
|
|
|
FORMULA SYSTEMS (1985) LTD.STAND-ALONE
STATEMENTS OF FINANCIAL POSITIONU.S. dollars in
thousands
|
|
December 31, |
|
|
December 31, |
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
(Unaudited) |
|
ASSETS |
|
|
|
|
|
|
CURRENT
ASSETS: |
|
|
|
|
|
|
Cash and cash equivalents |
|
|
47,852 |
|
|
|
82,725 |
|
Other accounts receivable and prepaid expenses |
|
|
4,977 |
|
|
|
6,803 |
|
Total current
assets |
|
|
52,829 |
|
|
|
89,528 |
|
|
|
|
|
|
|
|
|
|
INVESTMENTS IN
SUBSIDIARIES AND A JOINTLY |
|
|
|
|
|
|
|
|
CONTROLLED ENTITY
(*) |
|
|
|
|
|
|
|
|
Matrix IT Ltd. |
|
|
142,194 |
|
|
|
125,809 |
|
Sapiens International Corporation N.V. |
|
|
227,771 |
|
|
|
176,832 |
|
Magic Software Enterprises Ltd. |
|
|
117,624 |
|
|
|
114,019 |
|
Other |
|
|
90,395 |
|
|
|
72,322 |
|
Total Investments in
subsidiaries and a jointly controlled entity |
|
|
577,984 |
|
|
|
488,982 |
|
|
|
|
|
|
|
|
|
|
OTHER LONG TERM
RECEIVABLES |
|
|
1,707 |
|
|
|
1,539 |
|
|
|
|
|
|
|
|
|
|
PROPERTY, PLANTS AND
EQUIPMENT, NET |
|
|
2 |
|
|
|
2 |
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS |
|
|
632,522 |
|
|
|
580,051 |
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES: |
|
|
|
|
|
|
|
|
Loans from banks and others |
|
|
- |
|
|
|
13,130 |
|
Debentures |
|
|
21,652 |
|
|
|
20,296 |
|
Trade payables |
|
|
349 |
|
|
|
69 |
|
Other accounts payable |
|
|
2,328 |
|
|
|
1,274 |
|
Dividends payable |
|
|
- |
|
|
|
7,081 |
|
Total current
liabilities |
|
|
24,329 |
|
|
|
41,850 |
|
|
|
|
|
|
|
|
|
|
LONG-TERM
LIABILITIES: |
|
|
|
|
|
|
|
|
Debentures |
|
|
104,394 |
|
|
|
116,561 |
|
Put options of non-controlling interests |
|
|
1,071 |
|
|
|
- |
|
Total long-term
liabilities |
|
|
105,465 |
|
|
|
116,561 |
|
|
|
|
|
|
|
|
|
|
EQUITY |
|
|
502,728 |
|
|
|
421,640 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
EQUITY |
|
|
632,522 |
|
|
|
580,051 |
|
|
|
|
|
|
|
|
|
|
(*)The investments’ carrying amounts are measured consistent
with the accounting principles applied in the consolidated
financial statements of the group and representing the investments’
cost adjusted by Formula’s share in the investees’ accumulated
undistributed earnings and other comprehensive income or loss.
Formula Systems 1985 (NASDAQ:FORTY)
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From Dec 2024 to Jan 2025
Formula Systems 1985 (NASDAQ:FORTY)
Historical Stock Chart
From Jan 2024 to Jan 2025