Arotech (Nasdaq: ARTX) announced last night that its armor division has recently entered into a $22 million supply agreement for providing "David" combat vehicles to the Israel Defense Force (IDF).
The "David" is an ultra-light armored personnel carrier for combat missions designed for the urban low intensity conflict. With a small footprint (considerably shorter, lighter and narrower than the up-armored High Mobility Multipurpose Wheeled Vehicles (HMMWV / Humvee)) it is used for operating in urban and other densely populated areas. Its flexible design allows for several armor options, seating arrangements and equipment installations, all designed to meet specific operational tasks. It can carry 4, 5 or 6 soldiers in full battle gear. Gun ports (in all 4 directions) allow for accurate return fire as soldiers have full view of gun sites and surrounding area through the armored windows.
The "David" was designed in Israel by Arotech's MDT Protective Industries in collaboration with the IDF and will be built in MDT Armor's Alabama facility.
Arotech stated that with this supply agreement, its backlog now stands at $39 million.
The new supply agreement follows the successful completion of a recently received pilot order from the IDF for MDT's "David" armored vehicles, most of which were delivered in the first quarter. The "David" is specifically designed as an urban combat vehicle, a result of years of MDT experience in designing armored vehicles.
Arotech chairman and CEO Robert S. Ehrlich said, "We are proud that the IDF has decided to equip its soldiers with our armored vehicles. We believe the "David" can be appropriate to many urban warfare situations, and we are planning on presentations of the David to other militaries facing similar urban warfare situations.
"The demand for MDT's "David" indicates that there is a clear need for a new armored solution for urban military applications. The 'one-size-fits-all' concept that was well demonstrated with the non-armored HMMWV cannot be applied to armored vehicles in today's urban warfare scenarios. Constraints caused by the added weight of armor need to be addressed with the vehicle's mission in mind."
In addition to armoring vehicles for military and commercial customers, Arotech manufactures armor kits for helicopters and fixed wing aircraft, for marine applications, personnel armor and fragmentation blankets.
The Armor Division consists of MDT Protective Industries Ltd in Israel and MDT Armor Corporation and Armor of America in the US. In addition, the Armor Division is a partner in Concord Safety Systems, a vehicle armoring joint venture in India.
Arotech's current market cap is $40 million market. The company announced its financial results for 2005 on March 30.
The net loss for the fourth quarter of 2005 was $3.3 million, on revenue of $15.2 million. Arotech's results for the fourth quarter included a charge to operating income of $1.2 million for the impairment of goodwill in respect of the company's Armour of America's (AoA) subsidiary.
Net loss (including impairment of goodwill and other intangible assets charges in relation to AoA of $12.3 million) for all of 2005 was $24 million, compared with a net loss of $12.4 million for the corresponding period in 2004.
Revenue for the 2005 was $49 million, compared with $50 million in 2004.
This week, the Nasdaq warned Arotech that believes the company's annual report for 2005 was deficient. Arotech stated that it will appeal.
Published by Globes [online], Israel business news - www.globes.co.il - on April 11, 2006
© Copyright of Globes Publisher Itonut (1983) Ltd. 2006