Good morning, welcome to the M.T.I Wireless Edge Ltd. full year results investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time using the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press Send. The company may not be in a position to answer every question it receives during the meeting itself, however, the company will review all questions submitted today and publish responses where appropriate to do so. Before we begin, I would like to submit the following poll. I would now like to hand you over to CEO, Moni Borovitz. Good morning, sir.
Good morning, Alex. Thank you. Thank you everybody for joining us today on the 2022 financial results. I'll start by talking about the global market trends that drive the MTI business. We all know that the summer was horrible in terms of water scarcity and drought. You can see to the left how worse it was. This means that our water management solution is required everywhere in the world, and we see more and more demand for that. Moving into 5G market, you see that the number of subscribers is growing. As the number of subscribers is growing, the data that we consume is growing, and therefore, there is a problem in the capacity of the backhaul of the network, and this is where our antenna business is lying.
During the Ukraine War increased the defense budget quite dramatically. We start now to see more and more programs in the defense market, and this has a positive effect on both our military antenna solutions and of course, the distribution, including the PSK job that we're growing. The world had changed dramatically in the last year in both in increased interest rates and high inflation. We are positioned very well to manage that because first of all, we are a debt-free company, so the interest rate doesn't really bother us at the moment. We're able to increase prices, and because we sell innovative products, we are able to pass the cost increase into the prices we quote to our customer. 2022 was a very good year for MTI. We have record results, both profits and revenues.
As you can see, the revenue grew nicely and the EBIT continue to grow. In the EBIT, we had about $200,000 one-time cost related to the PSK acquisition . Otherwise, we would've been with nearly double-figure growth, the same as the EBITDA. We have a healthy net cash position, and we were able to return to normal operation cashflow generation. I said before that we aim to generate about 80% of the EBIT as cash, and this was the case this year. Operationally, we did succeed in a few areas. The acquisition of PSK can be considered a successful one. We have already integrated them into our company. We won a very big order, as we announced.
It's over a period of seven years, it gives a very much stability to the business and we see lots of potential in this business. Due to the drought, we see a lot of requirements for our solution from the European market. We had a very good year, especially in Italy and France, we continue to see big demand from those areas.
The Indian government released the frequency for 5G backhauls. It's very important to have a local facility there because you have to be local in order to sell into this market. We have today two competitors in this market beside us, this is going quite well and I will elaborate about it later on. We introduced the Automatic Beam Steering antenna solution. It aim again to the 5G backhaul market.
The idea is that when you go high in frequency, the beam is very narrow and therefore any movement in the antenna or the mast due to weather condition, whether it's severe winds or changes in temperature, makes you lose the connectivity. We found a solution that we communicate with the radio of the customer.
We understand that it's about to lose the connectivity, and then we auto-focus the antenna. It is something that is very much required by all the cellular operators, and we know it's on the top of the list of what they need to have. Therefore, we were able to penetrate to key tier one and tier two radio manufacturer, including one very important tier one customer that did not work with us before due to this solution.
Looking a little bit about each of the division, what we do and what we did, I'll start with the water control and management that still is responsible for nearly 40% of the revenues. At the end of the day, we work with Motorola, very strong collaboration using their hardware as the key component in our solution and we bring the IP and software.
We work worldwide, very reliable, very experienced. At the end of the day, what's important is that we save 35% of water when you use us. We have a cyber safe solution, this is the compelling solution for both landscape and agriculture irrigation. If I'll talk about the highlights in 2022, the service contract with most of the municipalities that we provide service to is increased pricing.
The benefit of which we will start to see in 2023 onwards because it's scaling up prices. I remind you that about 20% of our revenue in this segment are coming from services, so it has a key influence on our revenue and profits going forward. We announced about the fountain control management solution that we do, doing one of the municipalities in Israel.
I can tell you that the program is going well. We already installed several of the fountains, and we have to finish up to nearly 40 fountains in the city. For us, it's the beginning of a smart city solution because we have sensor around the city and we control something. It can be fountain, it can be lighting, it can be anything else.
Once we complete this solution and do it end to end, we will be able to duplicate it to other areas in the world. As we mentioned, we had a very good contract in Italy. It continues to be very well. We see a lot of opportunities both there and in France. Last but not least, is the ICC Autopilot solution. It's an agronomic-based real data irrigation.
The idea is that we have a soil sensor in the ground that in real-time lets you know where to irrigate and how much. We started in the agricultural market, of course, and it is being very well accepted. We now are starting paid trials also in municipalities because they really understand that they need to keep the parks green, but at the same time, save on water.
There are a few market researches here that you can see. What's important is to see the trend. At the end of the day, everybody is looking now to save water and understand that it is a key issue no matter how you look at it. In our antenna business, which represent about 25% of our revenue, we do both military and commercial antennas.
Military, which is about 1/3 of this segment, we do from airborne all the way down to submarine antenna solution, both conformal antennas, and we see a lot of interest in this area due to the increased budget worldwide. In 2022, the military side of the antenna was quite weaker in revenues. The opportunities, as I said, are very big.
In the commercial part, we have three markets: the fixed broadband access, which is the legacy part, where we see now very good demand for access Wi-Fi solution. It means that when you go to a crowd area like stadium or concert and you have a lot of crowd, usually you cannot send data.
The providers are now putting a solution that they will move you into Wi-Fi over the cellular and allow you to share the data you want to. RFID is looking quite better after the COVID. 5G is the key growth engine that we see. Talking on 5G, I think that in the midterm, this is supposed to be the biggest opportunity for MTI. We are very well-positioned with this market, working with key OEMs, both tier one and tier two.
The ABS antenna solution, as I described, is a big benefit and allows them to see the full solution and the capabilities that we have. India opened, but it's gonna be very sporadic. They need the order, so they need it almost immediately, and then it takes some time to install, so it moves with peaks and low.
At the end of the day, if you look at the research down below, you should understand that this market has to happen. It will take some time, but it will be a big market and we are positioned very well currently, and we just need to stick with the existing customer we have. As I said, when we grow in the capacity demand, the capacity in the backbone have to support it.
In the military side of the antenna business, although it was weaker in revenue, we succeeded in the last few years to penetrate several local and international new system houses. We have a very big pipeline of opportunities that we quoted already. We know that some of our customer already have the programs, so it should be just a matter of time until we start to see more revenue coming out of this segment. Moving to the distribution and special consulting services, which is responsible for 35% of our revenues. We remain the leader one in Israel in RF and microwave solution. We continue to do very well with the design win. On top of it, we have the balloon projects that is continuing well, and the acquisition of PSK that we did early in the year.
PSK is doing very well for us and in focusing on shelter buildup. As you can see in the pictures, those shelters are required in almost any new system deployed around the world. We see a lot of demand for it, and we see bigger quotes coming out of the company for those. As the funnel is bigger, at the end of the day, revenue should be bigger. In the middle of the year, we announced about the $10 million contract for PSK. It's a service contract. I can say that it's over a seven-year period. The customer is very happy with the service we provide. It looks very well and very promising. In the legacy part of the design wins and the system, the components that we sell, we also sell testing equipment. It is moving very well for us.
We progress from one customer to the other, penetrating with more and more solution. We are very optimistic about the growth of this division as well. At the end of the day, we focus on innovation. We believe that when you bring reliable new ideas to the market that can support the business, it helps you. Of course it helps also in case of inflation, as you can pass the cost to the customer. Some of the innovation is our own when we invest in the R&D, like in the ABS antennas, and some is with collaboration with our partners that we represent. We have been working quite hard to make sure that we leave a better place here around us, and we found out that we do quite a lot.
With water, we of course support fighting the hunger around the world because we are enabling to grow more with less water and power. We of course focus on making sure there is more sweet water around the world. We also are looking into gender equality. About 24% of the employees of MTI are women. It's not enough, but we are pushing it to grow. At the same time, we put a lot of focus on the third gender. As lifetime expectancy is higher, people wanna work for longer period, and we do give a lot of possibilities for the elderly people to work with us, for us. They contribute a lot from their know-how and experience, and they gain the ability to continue and work and contribute.
Some of them are doing part-time, some are full-time. We are very open and try to accommodate that. In the antenna business, we are part of connecting the rural world, connecting the unconnected people. I think it is very important because it is known that in the rural area, the service are usually poor. When you get the ability to connect remotely, you save on pollution from one hand, but you also get them, I think, an equal rights for services. Our employees are the key assets of the company, is no doubt about it. We try to make sure that they feel safe and have an open-minded position for everything. We spend a lot, both internally and externally in educate and training them. We make sure that they feel very safe and contribute to the society as well.
We have special programs involving the employees, making them part of the supporting of the society that we operate in. Last but not least is the code of ethics and strict governance that we have. I think that the key issue here is that you saw how fast we moved away from Russia last year when we felt it was wrong. We continue to look for M&As. We did quite a lot, all of them successfully so far. We have a good experience with M&A, and we will continue to do so with my famous slogan of better safe than sorry, and it has to be a profit-enhancing one. When we have it, we will announce it. Going a little back to the numbers. As I said, a good revenue growth. It was all across the division, so we are very happy to that.
We continue to be very diverse, both in the business markets that we play and also in the global reach. If I look at Israel, I would say that at least 1/3 of the revenues we generate from Israel are ending at the indirect export that we sell to the system houses and they take it outside of Israel. As you can see, we have a very loyal customer base. They are very happy with what we do. We work with them for many years. At the end of the day, we are not confused. We are very much focused on strong EPS growth and cash generation. All the metrics of our financial are good. We grow everything. As I mentioned, Without the one-off cost of the acquisition of PSK, the operating profit would nearly be 10% growth even here.
We are very happy with the progress here as well. We have a very strong shareholder base, including my family, and of course, the support for a long time for both Premier Milton and Herald. The buyback program is still in place. We just extended it until the end of March of next year. We have the same level of fund to support the liquidity because we think it is very important. Dividend, we continue to pay the dividend. We increased the dividend this year by 7%. If you look at it, we doubled the dividend amount in the last five years, and we already passed the $10 million mark. If I may summarize, I think we are positioned very well with very exciting internal growth engine, whether it's the water management, the 5G market, or the defense market.
We have a strong balance sheet. We will continue to look for more M&As opportunities. I think that we have started the year quite well and see a very good pipeline of opportunities ahead of us. With this, I would like to thank you and be happy to take any question you may have.
That's great, Moni. Thank you very much indeed for your presentation this morning. Ladies and gentlemen, please continue to submit your questions using the Q&A tab situated on the top right corner of your screen. While the company take a few moments to review those questions submitted today, I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via investor dashboard. Moni, as you can see, we have received several questions throughout today's presentation, and thank you to all investors for submitting their questions. Moni, could I please ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end.
Yes, sure. Tom is asking, "Can you talk through the sales process and revenue model for water business? What are the driver for new clients?" First of all, the driver for new clients is us being able to support them, because initially it's not an easy system to operate. You need to learn it. We use value-added resellers wherever we do not have our own subsidiaries, and we wanna make sure that it's a success. We would not sell sporadic sale of a water management system without knowing that we have how to support it. I can give an example that during the COVID time, we found a new value-added reseller in Mexico, who spent a lot of time training him by video because we could not travel there. He made a great effort. He learned the system. We won few projects there.
After COVID, we even visited twice already to give him more training. This is how we gain new clients. When it's our subsidiaries, we get the service agreement as well and support the system. When it's with value-added sale resellers, they do the service, we sell the equipment. Jane is asking about the ABS solution and up to your existing clients, when do you expect meaningful sales and how big this can be? As I mentioned, it is a key requirement from cellular operators. It's more expensive solutions than regular antennas. The market is supposed to be significant. On trials level, we are already working with some our customers in the field. I believe that it should go full commercial in early 2024.
Peter is asking, "Is the IP that MTI owns well protected, and could this IP lead to breakthrough in earnings?" First of all, wherever we believe that IP is very important, like in the ABS solution, for instance, we write patents. We have patent on the ABS. Some is already confirmed and some are in early stages of registration. I think that the key issue here is not using the IP to get money for selling the IP, but I see that if you have a real good solution, innovative and protected one, you will be the one that gets most of the business from the tier one and tier two customer, and this is how we would make the earnings. Steve is asking, "Which division do you see more M&A taking place?
This will be funded out of cash." We are very open-minded. The last one we did was for this distribution business. Before that, we did with Mottech, for water management solutions. We are looking very broadly. We just need to see that what we buy, as I mentioned, is profit-enhancing and how it collaborates better with one of our division in order to accelerate profits for this business. Usually, when we buy a business, if it's not a very small acquisition, we will fund it 50% from our cash, 50% from the bank, making sure that the company that we buy can pay this bank loan, from its own resources and leave us the company to continue, forward. Nick is asking, "Does MTI have any exposure to Silicon Valley Bank?" No, we don't.
We do not have any money with this bank. Paul is asking, "Thank you and your team for the excellent result. Lots of positive. But do you see any impact on your operation or financial from particular turbulent political situation in Israel right now and now going forward?" It's a very complex environment right now in Israel. Our president is doing a lot in order to get, I think, more people to agree with the government because the government is rushing the legislation that most people object to. Being optimistic, I think when you are challenged and get out of your comfort zone, you usually come up with good solution, and I hope that we will have a much stronger solution with the constitute that will help us.
At the end of the day, as long as there are not crazy stuff going on, we should not be harmed at all. Peter is asking, "Just checking these two points as I've had a bad experience recently where majority shareholder bought the company..." sorry, "At a discount to normal market valuation." I'm not sure what you are talking about, but according to the Israeli companies law, as there is no shareholder holding over 45%, anyone who is trying to buy and pass the 45% holding in the company needs to offer it to everybody, at least until they get above the 45%. I hope this answer all of the questions.
Thank you, Moni, for that. I believe you have addressed all those questions you can for investors today. Of course, the company will review all questions submitted today, and we will publish those responses on the Investor Meet Company platform. Moni, before redirecting investors to provide you with their feedback, which item is particularly important to you and the company, could I please ask you for a few closing comments?
Yes. I wanna thank everybody for joining today. I think that we see exciting times ahead of MTI, with both water management, 5G market and of course, the defense increased budgets. I thank you very much.
Moni, thank you for updating investors today. Could I please ask investors not to close this session, as you will now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of M.T.I Wireless Edge Ltd., we would like to thank you for attending today's presentation. Good morning to you all.