elbit-systems-awarded-a-framework-contract-with-a-maximum-value-of-$410-million-to-supply-watchkeeper-x-tactical-uas-for-the-romanian-ministry-of-national-defense

Elbit Systems Awarded a Framework Contract With a Maximum Value of $410 Million to Supply Watchkeeper X Tactical UAS for the Romanian Ministry of National Defense

 

Elbit Systems Ltd. (NASDAQ: ESLT) (TASE: ESLT) (“Elbit Systems”) announced today that it was awarded a framework contract with a maximum value of approximately $410 million (approximately 1.89 billion Lei) to supply up to seven “Watchkeeper X” tactical unmanned aircraft systems (UAS) for the Romanian Ministry of National Defense, with a validity of five years. No specific purchase order under the contract was awarded yet.

The Watchkeeper X UAS is the UK export variant of the British army made by UAV Tactical Systems Limited (“U-TacS”), Elbit Systems’ UK subsidiary, and is a derivative of the Hermes UAS family. The Watchkeeper X’ compatibility with NATO standards enables essential interoperability with NATO and other allied forces.

Bezalel (Butzi) Machlis, President and CEO of Elbit Systems, commented: “This contract demonstrates the sustained demand for Elbit Systems’ UAS. We look forward to further strengthening Elbit Systems’ relationship with the Romanian Government. As part of the contract execution, Elbit Systems plans to establish infrastructure and industrial cooperation with U-TacS, Aerostar and Elbit Systems’ subsidiaries in Romania to produce the UAS in Romania. We also appreciate the continued support and collaboration with the Israeli and UK governments and our business partners on the Watchkeeper program. “

elbit-systems-uk-awarded-a-follow-on-$19-million-contract-to-supply-night-vision-goggles-to-the-british-army

Elbit Systems UK Awarded a Follow-on $19 Million Contract to Supply Night Vision Goggles to the British Army

 

Elbit Systems Ltd. (NASDAQ: ESLT) (TASE: ESLT) (“Elbit Systems”) announced today that its subsidiary Elbit Systems UK Ltd. (“Elbit Systems UK”) was awarded a follow-on contract valued at approximately $19 million (approximately £17 million) to supply Night Vision Goggles (NVG) and through-life support to the British Army. The contract will be executed over a 18-month period.

Under the contract, Elbit Systems UK will supply the lightweight micro binocular XACT nv33 NVGs in a helmet-mounted configuration. XACT nv33 NVG are designed to enable troops to operate effectively in low-light conditions at a tactical level, maximizing their mission efficiency in both dismounted and mounted roles. Products from the XACT family are already in operational use with a number of NATO members including the Netherlands and Germany.

Martin Fausset, CEO of Elbit Systems UK, said: “This contract award follows the successful and rapid delivery of our night vision goggles to the British military, and builds on our track record of efficiency, our domestic manufacturing capabilities and our proven and cutting-edge equipment.”

elbit-systems-awarded-a-$65-million-contract-to-supply-a-modernization-solution-to-a-latin-american-army

Elbit Systems Awarded a $65 Million Contract to Supply a Modernization Solution to a Latin American Army

 

Elbit Systems Ltd. (NASDAQ: ESLT) (TASE: ESLT) (“Elbit Systems”) announced today that it was awarded a contract valued at approximately $65 million to supply a modernization solution to a Latin American Army. The contract will be executed over a period of two and a half years.

Under the contract, Elbit Systems will supply the first fully networked mechanized brigade solution to a Latin American Army, as part of its planned army-wide modernization program. The digitally networked mechanized brigade solution will comprise of Shaldot’s 4X4 and Paramount’s 6X6 armored vehicles equipped with an E-LynX™ Software Defined Radio mobile network solution, a battle management suite of applications as well as MAGNI mini-Vertical Take-Off and Landing Unmanned Aerial Systems.

Haim Delmar, General Manager of Elbit Systems C4I & Cyber, said: “We witness a growing recognition by Armed Forces of the necessity of acquiring the capability to conduct interoperable operations. This contract award further validates the leading position we hold in the growing area of combat networked warfare.”

universal-avionics,-an-elbit-systems-subsidiary,-awarded-$33-million-contract-to-supply-enhanced-flight-vision-systems-for-boeing-737ng

Universal Avionics, an Elbit Systems Subsidiary, Awarded $33 Million Contract to Supply Enhanced Flight Vision Systems for Boeing 737NG

 

Elbit Systems Ltd. (NASDAQ: ESLT) (TASE: ESLT) (“Elbit Systems”) announced today that its subsidiary, Universal Avionics Systems Corporation (“Universal Avionics”) was awarded a contract valued at approximately $33 million from AerSale Corporation (NASDAQ: ASLE), to supply Enhanced Flight Vision Systems (EFVS) for Boeing 737NG aircraft. The contract will be executed through 2023.

Under the contract, Universal Avionics will supply the ClearVision™  EFVS systems featuring the SkyLens™ 360-degree field of view Head Wearable Display and the EVS-5000 cameras. ClearVision is a certified combined vision system that is designed to enable commercial aircraft pilots to overcome degraded visibility situations at day and night, allowing them to move in and out of airports faster, saving time and increasing operational efficiency and safety. SkyLens enables pilots to continuously operate head-up and monitor flight information while retaining 3D situational awareness of terrain and aircraft traffic.

Yoram Shmuely, General Manager of Elbit Systems Aerospace, commented: “We see a renewed demand in the commercial aviation market for innovative yet certified vision capabilities that enable efficient and safe flights during degraded visibility situations.”

elbit-systems-awarded-$548-million-contract-to-supply-multi-domain-combat-networked-warfare-capabilities-to-a-country-in-asia-pacific

Elbit Systems Awarded $548 Million Contract to Supply Multi-Domain Combat Networked Warfare Capabilities to a Country in Asia-Pacific

 

Elbit Systems Ltd. (NASDAQ:ESLT) and (TASE: ESLT) (“Elbit Systems” or “the Company”) announced today that it was awarded a contract valued at $548 million to supply military-wide multi-domain combat networked warfare capabilities to the Armed Forces of a country in Asia-Pacific. The contract will be performed over a four-year period.

Under the contract, Elbit Systems will provide an integrated solution comprising of the ELBIT TIGER-X™ networking middleware; a TORCH-X™ based suite of airborne, land and ship-borne Command and Control applications; as well as advanced waveforms and a wide range of E-LynX™ Software Defined Radio (SDR) systems including airborne, vehicular, handheld, and shipborne configurations. The program will include extensive co-development efforts and transfer of know-how. These comprehensive combat networked capabilities are intended to improve operational effectiveness, decision making and interoperability across all domains of operation, platforms and systems.

Elbit Systems is engaged in networked warfare programs in several countries, among them SwitzerlandIsrael, the UK, SwedenCanada and others.

Bezhalel (Butzi) Machlis, Elbit Systems President & CEO, commented: “We witness a growing recognition by Armed Forces of the essentiality of digitization and the capability to conduct interoperable multi-domain operations, especially in light of the lessons learned from recent conflicts. This significant contract award to execute a military-wide networked warfare program further validates the leading position we hold in the growing areas of C4ISR and multi-domain networked warfare.”

elbit-systems-awarded-$69-million-contract-to-provide-ew-systems-to-a-country-in-asia-pacific

Elbit Systems Awarded $69 Million Contract to Provide EW Systems to a Country in Asia-Pacific

 

Elbit Systems Ltd. (NASDAQ:ESLT) (TASE: ESLT) (“Elbit Systems”) announced today that it was awarded a $69 million contract to supply Electronic Warfare (EW) capabilities to a country in Asia-Pacific. The contract will be delivered over a period of three years.

Oren Sabag, General Manager of Elbit Systems ISTAR & EW, said: “We witness a growing demand for our EW capabilities as militaries around the world increasingly recognize the importance of dominating the electromagnetic spectrum.”

elbit-systems-reports-first-quarter-2022-results

ELBIT SYSTEMS REPORTS FIRST QUARTER 2022 RESULTS

 

Elbit Systems Ltd. (” Elbit Systems” or the “Company”) (NASDAQ: ESLT) (TASE: ESLT)the international high technology company, reported today its consolidated results for the quarter ended March 31, 2022.

In this release, the Company is providing US-GAAP results as well as additional non-GAAP financial data, which are intended to provide investors a more comprehensive view of the Company’s business results and trends. For a description of the Company’s non-GAAP definitions see page 4 below, “Non-GAAP financial data”. Unless otherwise stated, all financial data presented is US-GAAP financial data.

Management Comment:

Bezhalel (Butzi) Machlis, President and CEO of Elbit Systems, commented: “Elbit Systems is well positioned to benefit from acceleration in defense budget growth, due to its portfolio of leading technological capabilities and positions in key global defense markets. Growth in the first quarter reflects strong demand for our solutions from customers around the world.

Elbit Systems’ employee retention plans include stock price linked compensation, enhancing our ability to realize the long-term growth potential. The stock price appreciation during the first quarter resulted in a sharp increase in compensation costs related to stock price linked compensation plans for employees.

We believe the growing demand for our solutions coupled with a capable and motivated workforce will be the primary drivers of future growth and the long term success of Elbit Systems.”

First quarter 2022 results:

Revenues in the first quarter of 2022 were $1,352.8 million, as compared to $1,118.3 million in the first quarter of 2021. A major part of the growth was organic, in addition to the contribution of Sparton, which was acquired in the second quarter of 2021.

Non-GAAP(*) gross profit amounted to $333.3 million (24.6% of revenues) in the first quarter of 2022, as compared to $286.2 million (25.6% of revenues) in the first quarter of 2021. GAAP gross profit in the first quarter of 2022 was $326.9 million (24.2% of revenues), as compared to $281.3 million (25.2% of revenues) in the first quarter of 2021. The GAAP and Non-GAAP gross profit in the first quarter of 2022 includes expenses of approximately $20 million related to the effect of the significant increase in the Company’s share price on employees stock price linked compensation plans.

__________                    

* see page 4

Research and development expenses, net were $100.7 million (7.4% of revenues) in the first quarter of 2022, as compared to $84.3 million (7.5% of revenues) in the first quarter of 2021.

Marketing and selling expenses, net were $87.0 million (6.4% of revenues) in the first quarter of 2022, as compared to $51.5 million (4.6% of revenues) in the first quarter of 2021.

General and administrative expenses, net were $84.3 million (6.2% of revenues) in the first quarter of 2022, as compared to $61.8 million (5.5% of revenues) in the first quarter of 2021.

Other operating income, net was $3.7 million in the first quarter of 2022, as a result of capital gain from sale of part of the activities of a subsidiary in the UK.

Non-GAAP(*) operating income was $65.8 million (4.9% of revenues) in the first quarter of 2022, as compared to $92.9 million (8.3% of revenues) in the first quarter of 2021. GAAP operating income in the first quarter of 2022 was $58.6 million (4.3% of revenues), as compared to $83.8 million (7.5% of revenues) in the first quarter of 2021. GAAP and Non-GAAP(*) operating income in the first quarter of 2022 was reduced by expenses of approximately $35 million related to the Company’s stock price linked compensation plans.

Financial income, net were $1.1 million in the first quarter of 2022, as compared to financial expenses, net of $0.2 million in the first quarter of 2021.

Other expenses, net were $1.8 million in the first quarter of 2022, as compared to $3.2 million in the first quarter of 2021. Other expenses, net in 2022 and 2021 were mainly related to non-service costs of pension plans.

Taxes on income were $8.0 million in the first quarter of 2022, as compared to $10.8 million in the first quarter of 2021.

Equity in net earnings of affiliated companies and partnerships was $3.0 million in the first quarter of 2022 and 2021.

Non-GAAP(*) net income attributable to the Company’s shareholders in the first quarter of 2022 was $54.3 million (4.0% of revenues), as compared to $76.2 million (6.8% of revenues) in the first quarter of 2021. GAAP net income attributable to the Company’s shareholders in the first quarter of 2022 was $52.8 million (3.9% of revenues), as compared to $72.5 million (6.5% of revenues) in the first quarter of 2021. Net income in the first quarter of 2022 was reduced by expenses of approximately $32 million related to the Company’s stock price linked compensation plans.

Non-GAAP(*) diluted net earnings per share attributable to the Company’s shareholders were $1.22 for the first quarter of 2022, as compared to $1.72 for the first quarter of 2021. GAAP diluted earnings per share attributable to the Company’s shareholders in the first quarter of 2022 were $1.19, as compared to $1.64 in the first quarter of 2021. Diluted net earnings per share in the first quarter of 2022, were reduced by $0.72 as a result of the expenses related to the Company’s stock price linked compensation plans.

The Company’s backlog of orders as of March 31, 2022 totaled $13.7 billion, similar to the backlog as of December 31, 2021. Approximately 72% of the current backlog is attributable to orders from outside Israel. Approximately 55% of the backlog is scheduled to be performed during the remainder of 2022 and 2023.

Cash flows provided by operating activities in the three months ended March 31, 2022 were $35.5 million, as compared to cash flows used in operating activities in the three months ended March 31, 2021 of $13.1 million.

__________                    

* see page 4

Impact of the COVID-19 Pandemic on the Company:

The Coronavirus disease 2019 (COVID-19) was declared a pandemic by the World Health Organization in March 2020. COVID-19 has had significant negative impacts on the worldwide economy, resulting in disruptions to supply chains and financial markets, significant travel restrictions, facility closures and shelter-in place orders in various locations. Such disruptions also led to global shortages of electronics and other components, increased costs and extended lead times. Elbit Systems is closely monitoring the evolution of the COVID-19 pandemic and its impacts on the Company’s employees, customers and suppliers, as well as on the global economy.

As we last reported on March 29, 2022, we have been taking a number of actions to protect the safety of our employees as well as maintain business continuity and secure our supply chain. We also reported on a number of activities where we are leveraging our technological capabilities to assist hospital staffs and other first responders protecting our communities from the impact of the pandemic. All of these actions remain ongoing.

We have implemented a series of cost control measures to help limit the financial impact of the pandemic on the Company, in parallel to the measures we are taking to maintain business continuity and deliveries to our customers. We also are working on efficiency initiatives with a number of our suppliers. We continue to evaluate our operations on an ongoing basis in order to adapt to the evolving business environment.

During 2021 and the first three months of 2022 our defense activities, which account for most of our business, were not materially impacted by the pandemic, although some of our businesses experienced certain disruptions due to government directed safety measures, travel restrictions and supply chain delays.

We believe that as of March 31, 2022, Elbit Systems had a healthy balance sheet, adequate levels of cash and access to credit facilities that provide liquidity when necessary. We have given high priority to cash management and adequate cash reserves to run the business.

The extent of the impact of COVID-19 on the Company’s performance depends on future developments including the duration and spread of the pandemic, the measures adopted by governments to limit the spread of the pandemic, including implementation of vaccinations, and resulting actions that may be taken by our customers and our supply chain, all of which contain uncertainties. As noted in our annual report on Form 20-F, the preparation of financial reports requires us to make judgments, assumptions and estimates that affect the amounts reported. For our financial results for  the quarter ended March 31, 2022, we considered the economic impact of the COVID-19 pandemic on our critical and significant accounting estimates. The expected impact of the COVID-19 pandemic did not have a material effect on our judgments, assumptions and estimates reflected in the results. However, our future results may differ materially from our estimates. As events continue to evolve in connection with the COVID-19 pandemic, the estimates we use in future periods may change materially.

__________                    

* see page 4

* Non-GAAP financial data:

The following non-GAAP financial data is presented to enable investors to have additional information on the Company’s business performance as well as a further basis for periodical comparisons and trends relating to the Company’s financial results. The Company believes such data provides useful information to investors by facilitating more meaningful comparisons of the Company’s financial results over time. Such non-GAAP information is used by the Company’s management to make strategic decisions, forecast future results and evaluate the Company’s current performance. However, investors are cautioned that, unlike financial measures prepared in accordance with GAAP, non-GAAP measures may not be comparable with the calculation of similar measures for other companies.

The non-GAAP financial data includes reconciliation adjustments regarding non-GAAP gross profit, operating income, net income and diluted EPS. In arriving at non-GAAP presentations, companies generally factor out items such as those that have a non-recurring impact on the income statements, various non-cash items including significant exchange rate differences, significant effects of retroactive tax legislation, changes in accounting guidance, financial transactions  and other items not considered to be part of regular ongoing business, which, in management’s judgment, are items that are considered to be outside of the review of core operating results.

In the Company’s non-GAAP presentation, the Company made certain adjustments, as indicated in the table below.

These non-GAAP measures are not based on any comprehensive set of accounting rules or principles. The Company believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the Company’s results of operations, as determined in accordance with GAAP, and that these measures should only be used to evaluate the Company’s results of operations in conjunction with the corresponding GAAP measures.  Investors should consider non-GAAP financial measures in addition to, and not as replacements for or superior to, measures of financial performance prepared in accordance with GAAP.

Reconciliation of GAAP to Non-GAAP (Unaudited) Supplemental Financial Data:

(US Dollars in millions, except for per share amounts)

Three Months Ended
March 31, 2022

Three Months Ended
March 31, 2021

Year Ended
December 31, 2021

GAAP gross profit

$                      326.9

$                      281.3

$               1,358.0

Adjustments:

Amortization of purchased intangible assets

6.4

4.9

26.7

Non-GAAP gross profit

$                      333.3

$                      286.2

$               1,384.7

Percent of revenues

24.6 %

25.6 %

26.2 %

GAAP operating income

$                        58.6

$                        83.8

$                   418.5

Adjustments:

Amortization of purchased intangible assets

10.9

9.1

47.0

Capital gains

(3.7)

(14.7)

Non-GAAP operating income

$                        65.8

$                        92.9

$                   450.8

Percent of revenues

4.9     %

8.3     %

8.5     %

GAAP net income attributable to Elbit Systems’ shareholders

$                        52.8

$                        72.5

$                   274.4

Adjustments:

Amortization of purchased intangible assets

10.9

9.1

47.0

Capital gains

(3.7)

(24.9)

Revaluation of investments measured under fair value method

(17.3)

Non-operating foreign exchange losses

(4.8)

(4.2)

10.6

Tax effect and other tax items, net

(0.9)

(1.2)

77.8

Non-GAAP net income attributable to Elbit Systems’ shareholders

$                        54.3

$                        76.2

$                   367.6

Percent of revenues

4.0 %

6.8 %

7.0 %

GAAP diluted net EPS

$                        1.19

$                        1.64

$                     6.20

Adjustments, net

0.03

0.08

2.10

Non-GAAP diluted net EPS

$                        1.22

$                        1.72

$                     8.30

Recent Events:

On May 16, 2022, the Company announced that its U.S. subsidiary, Elbit Systems of America LLC, (“Elbit Systems of America”), was awarded a delivery order valued at $49 million for the supply of Squad Binocular Night Vision Goggle (“SBNVG”) systems to the U.S. Marines Corps. The order will be executed in Roanoke, Virginia and will be supplied through September 2023.

This additional order is part of a $249 million five-year Indefinite Delivery Indefinite Quantity (IDIQ) contract from September 6, 2019.

Dividend:

The Board of Directors declared a dividend of $0.50 per share for the first quarter of 2022. The dividend’s record date is June 27, 2022. The dividend will be paid on July 11, 2022, after deduction of taxes at the source, at the rate of 16.8%.

Conference Call:

The Company will be hosting a conference call on Tuesday, May 24, 2022, at 9:00 a.m. Eastern Time. On the call, the Company’s management will review and discuss the results and will be available to answer questions.

To participate, please call one of the teleconferencing numbers that follow. If you are unable to connect using the toll-free numbers, please try the international dial-in number.

US Dial-in Number: 1-866-744-5399
CANADA Dial-in Number: 1-866-485-2399 
ISRAEL Dial-in Number: +972-3-918-0644 
INTERNATIONAL Dial-in Number:  +972-3-918-0644

at 9:00am Eastern Time6:00am Pacific Time4:00pm Israel Time

The conference call will also be broadcast live on Elbit Systems’ website at http://www.elbitsystems.com. An online replay will be available from 24 hours after the call ends.

Alternatively, for two days following the call, investors will be able to dial a replay number to listen to the call. The dial-in numbers are:

1-888-782-4291 (US and Canada) or +972-3-925-5900 (Israel and International).

elbit-systems-awarded-a-$16-million-contract-to-supply-a-space-telescope-to-the-weizmann-institute-of-science

Elbit Systems Awarded a $16 Million Contract to Supply a Space Telescope to the Weizmann Institute of Science

 

Elbit Systems Ltd. (NASDAQ: ESLT) (TASE: ESLT) (“Elbit Systems”) announced today that it was awarded a contract valued at approximately $16 million to supply a space telescope to the Weizmann Institute of Science under Israel’s Ultraviolet Transient Astronomy Satellite (“ULTRASAT”) program to observe and research deep space. The ULTRASAT program is jointly managed and funded by the Weizmann Institute of Science and the Israeli Space Agency and is carried out in association with the German DESY research center. The contract will be performed over a period of two years.

Elbit Systems will develop, manufacture and integrate a highly sensitive, wide field of view (200 square degrees) ultraviolet space telescope that is intended to help scientists in understanding the creation of heavy elements, black holes and gravitational waves and discover astronomical phenomena such as supernovas (star explosions). Elbit Systems has a record of providing space cameras, satellites and other electronic instruments of its production to space programs in Israel, the U.S., EuropeSouth Korea and Brazil.

Oren Sabag, General Manager of Elbit Systems ISTAR & EW, commented: “We are proud to take part in this scientific endeavor lending our capabilities and experience to the effort to better understand nature. We are pleased with the opportunity to cooperate with the Israel Space Agency and with the scientific community led by the Weizmann Institute of Science and the German DESY research center.”

elbit-systems-reports-second-quarter-2021-results

Elbit Systems Reports Second Quarter 2021 Results

 

Elbit Systems Ltd. (the “Company”) (NASDAQ: ESLT) (TASE: ESLT), the international high technology company, reported today its consolidated results for the quarter ended June 30, 2021.

In this release, the Company is providing US-GAAP results as well as additional non-GAAP financial data, which are intended to provide investors a more comprehensive view of the Company’s business results and trends. For a description of the Company’s non-GAAP definitions see page 4 below, “Non-GAAP financial data”. Unless otherwise stated, all financial data presented is US-GAAP financial data.

Management Comment:

Bezhalel (Butzi) Machlis, President and CEO of Elbit Systems, commented: “Our second quarter results included a 21% growth in revenues, underscoring our diversified portfolio of technologies and broad global footprint. I am also pleased by the improvement in profitability and cash generation. Demand for our systems and services from customers around the world supported the 26% growth in our backlog to $13.6 billion. The diversification of our growth across areas of operation and geographies reflects successful implementation of our strategy and provides us with confidence in the Company’s future”.

Acquisition of Sparton

On April 6, 2021, we completed the acquisition of Sparton Corporation (“Sparton”) for a purchase price of approximately $380 million. Headquartered in De Leon Springs, Florida, Sparton is a premier developer, producer and supplier of systems supporting Undersea Warfare for the U.S. Navy and allied military forces. The financial results of Sparton were included in our consolidated reports commencing the date of the acquisition.

Second quarter 2021 results:

Revenues in the second quarter of 2021 were $1,302.4 million, as compared to $1,079.4 million in the second quarter of 2020. A major part of the growth was organic, in addition to the contribution of Sparton.

Non-GAAP(*) gross profit amounted to $346.6 million (26.6% of revenues) in the second quarter of 2021, as compared to $286.4 million (26.5% of revenues) in the second quarter of 2020. GAAP gross profit in the second quarter of 2021 was $339.2 million (26.0% of revenues), as compared to $280.5 million (26.0% of revenues) in the second quarter of 2020.

Research and development expenses, net were $95.4 million (7.3% of revenues) in the second quarter of 2021, as compared to $79.0 million (7.3% of revenues) in the second quarter of 2020.

Marketing and selling expenses, net were $75.4 million (5.8% of revenues) in the second quarter of 2021, as compared to $67.4 million (6.2% of revenues) in the second quarter of 2020.

General and administrative expenses, net were $65.9 million (5.1% of revenues) in the second quarter of 2021, as compared to $52.0 million (4.8% of revenues) in the second quarter of 2020.

Other operating income, net was $14.7 million in the second quarter of 2021, as compared to $35.0 million in the second quarter of 2020. Other operating income was mainly a result of gains from sale of buildings.

Non-GAAP(*) operating income was $114.9 million (8.8% of revenues) in the second quarter of 2021, as compared to $92.7 million (8.6% of revenues) in the second quarter of 2020. GAAP operating income in the second quarter of 2021 was $117.1 million (9.0%of revenues), as compared to $117.1 million (10.9% of revenues) in the second quarter of 2020.

Financial expenses, net were $7.1 million in the second quarter of 2021, as compared to $16.6 million in the second quarter of 2020. The lower level of financial expenses in the second quarter of 2021 was mainly a result of gains from changes in fair value of financial assets and liabilities.

Other expenses, net were $1.4 million in the second quarter of 2021, as compared to other income, net of $13.0 million in the second quarter of 2020. Other income, net in the second quarter of 2020 included income of approximately $15.4 million as a result of revaluation and capital gain related to the sale of shares in a subsidiary in Israel.

Taxes on income were $20.1 million in the second quarter of 2021, as compared to $23.6 million in the second quarter of 2020.

Equity in net earnings of affiliated companies and partnerships was $13.5 million in the second quarter of 2021, as compared to equity in net losses of $0.4 million in the second quarter of 2020. Equity in net earnings of affiliated companies and partnerships in the second quarter of 2021 included a gain of approximately $10 million, which resulted from the sale of the Company’s share in an affiliated company.

Non-GAAP(*) net income attributable to the Company’s shareholders in the second quarter of 2021 was $93.4 million (7.2% of revenues), as compared to $68.9 million (6.4% of revenues) in the second quarter of 2020. GAAP net income attributable to the Company’s shareholders in the second quarter of 2021 was $101.7 million (7.8% of revenues), as compared to $89.3 million (8.3% of revenues) in the second quarter of 2020.

___________                    
* see page 4

Non-GAAP(*) diluted net earnings per share attributable to the Company’s shareholders were $2.11 for the second quarter of 2021, as compared to $1.56 for the second quarter of 2020. GAAP diluted earnings per share attributable to the Company’s shareholders in the second quarter of 2021 were $2.30, as compared to $2.02 in the second quarter of 2020.

The Company’s backlog of orders as of June 30, 2021 totaled $13.6 billion, as compared to $11.8 billion as of March 31, 2021. Approximately 72% of the current backlog is attributable to orders from outside Israel. Approximately 51% of the backlog is scheduled to be performed during the remainder of 2021 and 2022.

Cash flows provided by operating activities in the six months ended June 30, 2021 were $157.1 million, as compared to $169.3 million for the six months ended June 30, 2020.

Impact of the COVID-19 Pandemic on the Company:

The Coronavirus disease 2019 (COVID-19) was declared a pandemic by the World Health Organization in March 2020. COVID-19 has had significant negative impacts on the worldwide economy, resulting in disruptions to supply chains and financial markets, significant travel restrictions, facility closures and shelter-in place orders in various locations. Elbit Systems is closely monitoring the evolution of the COVID-19 pandemic and its impacts on the Company’s employees, customers and suppliers, as well as on the global economy.

As we last reported on May 25, 2021, we have been taking a number of actions to protect the safety of our employees as well as maintain business continuity and secure our supply chain. We also reported on a number of activities where we are leveraging our technological capabilities to assist hospital staffs and other first responders protecting our communities from the impact of the pandemic. All of these actions remain ongoing.

We have implemented a series of cost control measures to help limit the financial impact of the pandemic on the Company, in parallel to the measures we are taking to maintain business continuity and deliveries to our customers. We also are working on efficiency initiatives with a number of our suppliers. We continue to evaluate our operations on an ongoing basis in order to adapt to the evolving business environment.

During 2020 and the first half of 2021 our defense activities, which account for most of our business, were not materially impacted by the pandemic, although some of our businesses experienced certain disruptions due to government directed safety measures, travel restrictions and supply chain delays.

We believe that as of June 30, 2021, Elbit Systems had a healthy balance sheet, adequate levels of cash and access to credit facilities that provide liquidity when necessary. We have given high priority to cash management and adequate cash reserves to run the business.

___________                   
* see page 4

The extent of the impact of COVID-19 on the Company’s performance depends on future developments including the duration and spread of the pandemic, the measures adopted by governments to limit the spread of the pandemic, including implementation of vaccinations, and resulting actions that may be taken by our customers and our supply chain, all of which contain uncertainties. As noted in our annual report on Form 20-F, the preparation of financial reports requires us to make judgments, assumptions and estimates that affect the amounts reported. For our financial results for the quarter ended June 30, 2021, we considered the economic impact of the COVID-19 pandemic on our critical and significant accounting estimates. The expected impact of the COVID-19 pandemic did not have a material effect on our judgments, assumptions and estimates reflected in the results. However, our future results may differ materially from our estimates. As events continue to evolve in connection with the COVID-19 pandemic, the estimates we use in future periods may change materially.

Non-GAAP financial data:

The following non-GAAP financial data is presented to enable investors to have additional information on the Company’s business performance as well as a further basis for periodical comparisons and trends relating to the Company’s financial results. The Company believes such data provides useful information to investors by facilitating more meaningful comparisons of the Company’s financial results over time. Such non-GAAP information is used by the Company’s management to make strategic decisions, forecast future results and evaluate the Company’s current performance. However, investors are cautioned that, unlike financial measures prepared in accordance with GAAP, non-GAAP measures may not be comparable with the calculation of similar measures for other companies.

The non-GAAP financial data includes reconciliation adjustments regarding non-GAAP gross profit, operating income, net income and diluted EPS. In arriving at non-GAAP presentations, companies generally factor out items such as those that have a non-recurring impact on the income statements, various non-cash items including significant exchange rate differences, significant effects of retroactive tax legislation, changes in accounting guidance, financial transactions  and other items not considered to be part of regular ongoing business, which, in management’s judgment, are items that are considered to be outside of the review of core operating results.

In the Company’s non-GAAP presentation, the Company made certain adjustments, as indicated in the table below.

These non-GAAP measures are not based on any comprehensive set of accounting rules or principles. The Company believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the Company’s results of operations, as determined in accordance with GAAP, and that these measures should only be used to evaluate the Company’s results of operations in conjunction with the corresponding GAAP measures.  Investors should consider non-GAAP financial measures in addition to, and not as replacements for or superior to, measures of financial performance prepared in accordance with GAAP.

Reconciliation of GAAP to Non-GAAP (Unaudited) Supplemental Financial Data:

(US Dollars in millions, except for per share amounts)

Six Months Ended

June 30,

Three Months Ended June
30,

Year ended
December 31,

2021

2020

2021

2020

2020

GAAP gross profit

$

620.5

$

569.9

$

339.2

$

280.5

$

1,165.1

Adjustments:

Amortization of purchased intangible
assets

12.3

11.9

7.4

5.9

22.7

Covid-19 related expenses and write-offs

56.0

Impairment of long-lived assets

3.4

Non-GAAP gross profit

$

632.8

$

581.8

$

346.6

$

286.4

$

1,247.2

Percent of revenues

26.1%

27.1%

26.6%

26.5%

26.7%

GAAP operating income

$

201.0

$

197.5

$

117.1

$

117.1

$

325.7

Adjustments:

Amortization of purchased intangible
assets

21.6

20.6

12.5

10.6

39.4

Covid-19 related expenses and write-offs

56.6

Impairment of long-lived assets

3.4

Capital gains

(14.7)

(35.0)

(14.7)

(35.0)

(35.0)

Non-GAAP operating income

$

207.9

$

183.1

$

114.9

$

92.7

$

390.1

Percent of revenues

8.6%

8.5%

8.8%

8.6%

8.4%

GAAP net income attributable to Elbit
Systems’ shareholders

$

174.3

$

152.9

$

101.7

$

89.3

$

237.7

Adjustments:

Amortization of purchased intangible
assets

21.6

20.6

12.5

10.6

39.4

Covid-19 related expenses and write-offs

56.6

Capital gains

(24.9)

(35.0)

(24.9)

(35.0)

(35.0)

Impairment of investments and long-
lived assets

4.4

4.4

7.9

Revaluation of investments measured
under fair value method

(1.5)

(18.6)

(1.5)

(15.4)

(20.8)

Non-operating foreign exchange losses

6.8

4.2

4.0

33.4

Tax effect and other tax items, net

0.2

9.7

1.4

11.0

(0.7)

Non-GAAP net income attributable to
Elbit Systems’ shareholders

$

169.7

$

140.8

$

93.4

$

68.9

$

318.5

Percent of revenues

7.0%

6.5%

7.2%

6.4%

6.8%

GAAP diluted net EPS

$

3.94

$

3.46

$

2.30

$

2.02

$

5.38

Adjustments, net

(0.11)

(0.28)

(0.19)

(0.46)

1.82

Non-GAAP diluted net EPS

$

3.83

$

3.18

$

2.11

$

1.56

$

7.20

Recent Events:

On June 2, 2021, the Company announced that following competitive technical evaluations it was awarded an approximately $80 million contract by a country in Asia-Pacific to supply SPECTRO™ XR multi-spectral electro-optic systems for maritime forces. The contract will be performed over a period of four years.

On June 8, 2021, the Company announced that its UK subsidiary, Elbit Systems UK Limited., was awarded an approximately $16 million (approximately £11.5 million) initial contract by the UK Ministry of Defence to provide the UK Armed Forces with XACT Night Vision Goggles. The initial contract will be performed over an 18-month period with the potential for additional follow-on orders over a period of five years.

On June 10, 2021, the Company announced that it was considering a note offering in Israel under the Company’s shelf prospectus dated September 30, 2020 (the “Offering”), following which the Company made several announcements in the process of the Offering. On July 5, 2021, the Company announced, further to its announcements of June 15, 2021 of the issuance by S&P Global Ratings Maalot Ltd. of an “ilAA” (on local scaling) rating with a stable outlook (the “Rating”) for the potential new notes that may be issued by the Company, that the Rating applies to the potential new notes that may be issued by the Company in an aggregate amount of approximately NIS 2 billion (approximately $613 million) nominal value. On July 6, 2021, the Company announced in Israel that three tenders for classified investors were held on July 5, 2021 for the issuance of three new series of notes – Series B, C and D, of the Company, with details of the prior undertakings made by the classified investors. On July 7, 2021, the Company announced, following the issuance of a shelf offering report in Israel, of the conclusion and results of the Company’s public notes offering in Israel.

The principle amount of the Notes that were issued in the Offering amounted to NIS 1.9 billion ($581 million), as follow:

Series B Notes – NIS 1.5 billion (approximately $459 million) that will be paid in eight equal annual installments on June 30 of each of the years 2022 through 2029 (inclusive) they will bear a fixed interest rate of 1.08% per annum and will not be adjusted to any currency or index changes.

Series C Notes – NIS 200 million (approximately $61 million) that will be paid in eight equal annual installments on June 30 of each of the years 2022 through 2029 (inclusive), will bear a fixed interest rate of 2.12% per annum and will be adjusted to changes in the NIS/ U.S. Dollar currency exchange rate.

Series D Notes – NIS 200 million (approximately $61 million) that will be paid in fourteen annual installments as follows: thirteen equal annual installments in an amount equal to 7.14% of the nominal value of the principal on June 30 of each of the years 2022 through 2034 (inclusive) and the final annual installment in an amount equal to 7.18% of the nominal value of the principal on June 30, 2035. They will bear a fixed interest rate of 2.67% per annum and will be adjusted to changes in the NIS/ U.S. Dollar currency exchange rate.

On June 17, 2021, the Company announced that its U.S. subsidiary, Elbit Systems of America, LLC (“Elbit Systems of America”), recently was awarded two orders with an aggregate value of approximately $29 million by the U.S. Army’s Program Executive Office (PEO) Soldier under an Indefinite Delivery/Indefinite-Quantity (ID/IQ) contract issued in 2020. The orders will be executed from the Elbit Systems of America facility in Roanoke, Virginia with deliveries through September 2021.

On June 17, 2021, the Company announced that its German subsidiary, Elbit Systems Deutschland GmbH & Co. KG, was awarded an approximately $23 million follow-on contract by the Swedish Defence Material Administration for the supply of additional Software Defined Radios for the Swedish Armed Forces. The contract will be performed over a period of 30 months.

Dividend:

The Board of Directors declared a dividend of $0.46 per share for the second quarter of 2021. The dividend’s record date is August 30, 2021. The dividend will be paid from income generated as Preferred Income (as defined under Israeli tax laws), on September 13, 2021, net of taxes.

Conference Call:

The Company will be hosting a conference call on Thursday, August 12, 2021 at 9:00 a.m. Eastern Time. On the call, the Company’s management will review and discuss the results and will be available to answer questions.

To participate, please call one of the teleconferencing numbers that follow. If you are unable to connect using the toll-free numbers, please try the international dial-in number.

US Dial-in Number: 1-866-744-5399
CANADA Dial-in Number: 1-866-485-2399
ISRAEL Dial-in Number: 03-918-0644
INTERNATIONAL Dial-in Number:  +972-3-918-0644

at 9:00am Eastern Time6:00am Pacific Time4:00pm Israel Time

The conference call will also be broadcast live on Elbit Systems’ website at https://www.elbitsystems.com/investor-relations/. An online replay will be available from 24 hours after the call ends.

Alternatively, for two days following the call, investors will be able to dial a replay number to listen to the call. The dial-in numbers are:

1-888-782-4291 (US and Canada) or +972-3-925-5900 (Israel and International).

elbit-systems-announces-rating-of-“ilaa”-(local-scale),-with-a-stable-outlook,-by-s&p-global-ratings-maalot-ltd.,-for-potential-notes-offering-by-elbit-systems

Elbit Systems Announces Rating of “ilAA” (Local Scale), With a Stable Outlook, by S&P Global Ratings Maalot Ltd., for Potential Notes Offering by Elbit Systems

 

Elbit Systems Ltd. (NASDAQ: ESLT) (TASE: ESLT) (“Elbit Systems” or the “Company”) announced today, following its announcement from June 10, 2021 of a potential notes offering in Israel (the “Offering”), that S&P Global Ratings Maalot Ltd., an Israeli rating agency (“Maalot”), announced today that it had assigned an “ilAA” (on local scaling) issuer rating to the Company, and an “ilAA” rating with a stable outlook, to the potential new notes that may be issued by the Company, in an aggregate amount of approximately NIS 1.2 billion (approximately $370 million) nominal value.

Maalot’s official rating report in Hebrew will be submitted to the Israel Securities Authority and the Tel Aviv Stock Exchange (the “TASE”). An unofficial English translation of Maalot’s rating report will be submitted by the Company on Form 6-K to the U.S. Securities and Exchange Commission.

The execution, timing, terms and amount to be raised in the contemplated Offering have not been finally determined and are subject to further approval of the Company’s Board of Directors and the approval of the TASE. There is no assurance that the Offering will be completed.

Any securities, if offered, will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold in the United States or to U.S. Persons (as defined in Regulation “S” promulgated under the Securities Act) without registration under the Securities Act or an exemption from the registration requirements of the Securities Act. Any offering of securities pursuant to the Company’s shelf prospectus dated September 30, 2020 and any shelf offering report, if made, will be made only in Israel. This announcement shall not constitute a solicitation or an offer to buy any securities.