Israel-Based Rafael Advanced Defense Systems Ltd. Affirmed At 'A-/A-2'; Outlook Stable

Aerospace and defense company Rafael Advanced Defense Systems Ltd. continues to exhibit strong operating performance, with its order backlog having grown to more than Israeli shekel (ILS) 35 billion. In our base-case scenario, we expect revenue will rise to well above ILS12 billion (€3 billion) in 2023 and approach ILS13 billion in 2024, and that S&P Global Ratings-adjusted margins will be at least 10% for both years. There could still be some large working capital swings, due to the timing of advance payments and receipts from customers, specifically the Israeli government. Despite this, free operating cash flow (FOCF) should remain robust. We affirmed our 'A-/A-2' long- and short-term issuer credit ratings on Rafael. The stable outlook signifies that we expect

...July 31, 2023 - Aerospace and defense company Rafael Advanced Defense Systems Ltd. continues to exhibit strong operating performance, with its order backlog having grown to more than Israeli shekel (ILS) 35 billion. - In our base-case scenario, we expect revenue will rise to well above ILS12 billion (3 billion) in 2023 and approach ILS13 billion in 2024, and that S&P Global Ratings-adjusted margins will be at least 10% for both years. - There could still be some large working capital swings, due to the timing of advance payments and receipts from customers, specifically the Israeli government. Despite this, free operating cash flow (FOCF) should remain robust. - We affirmed our 'A-/A-2' long- and short-term issuer credit ratings on Rafael. - The stable outlook signifies that we expect rising government budgets for defense spending to translate into good demand for the company's products and services in the next 12 months, supporting at least the current backlog. PARIS (S&P Global Ratings)...

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