RADA Electronic Industries sees sequentially flat Q2 revenue growth; withdraws FY22 guidance

• RADA Electronic Industries (NASDAQ:RADA) said on Wednesday that it estimates Q2 revenue guidance to be ~$22.5 million vs. consensus of $36.09M, at a similar level to that of the first quarter of this year.
• In light of the pending merger with Leonardo DRS, which is expected to be completed during the upcoming fourth quarter, RADA is withdrawing its full year 2022 guidance.
• Dov Sella, RADA’s CEO, commented, "It is taking longer for RADA to recover from the U.S. Continuing Resolution (CR) pause with orders coming slower than originally planned for and revenues from the U.S. similarly impacted."
• Shares are down 1.33% after-hours.

Comments

[PortfolioQ]

I took profits in the last week on the merger news. Was an owner in 2019 and added in March of 2020. To my eyes, The NewCo is slower growing and leveraged. RADA shareholders will be minority owners in the NewCo. So the story went from owning a decently growing debt-free drone killer to owning an indebted slowly growing newly trades in the US (?) entity. Or something like that approximately. This confirms that the merger was a signal from management that the future was more uncertain for RADA.

[Amstragram]

This is bad and wouldn’t be surprised seeing in making new lows

[Henrik Alex]

@Amstragram

But does it really matter given the pending merger with much larger Leonardo DRS?

[Amstragram]

@Henrik Alex. Well on the profit warning itself, what is listed for now (rada) deserves the downgrade. Now, RADA being a fraction of the future company, it depends how you value DRS. Still, it will be time to reassess once they come up with a guidance on the newly merged company. Look at what happened with LLNW turning into EGIO and the punishments received for giving no update nor clarity on the game-changing merger. Truly, in this market environment, anticipating for the better is risky. I’d rather buy the facts.