Backlog of orders at $16.1 billion; Revenues of $1.5 billion;

Non-GAAP net income of $70.2; GAAP net income of $62.4 million;

Non-GAAP net EPS of $1.57; GAAP net EPS of $1.40

HAIFA, Israel, Aug. 15, 2023 /PRNewswire/ -- Elbit Systems Ltd. ("Elbit Systems" or the "Company") (NASDAQ: ESLT) (TASE: ESLT), the international high technology defense company, reported today its consolidated results for the second quarter ended June 30, 2023.

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 3 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:

"Double digit revenue growth in the second quarter reflects the conversion of the order backlog, increased capacity and sustained demand for our solutions from customers around the world.

We have started to deliver the initial benefits of our operational improvement program with an increase in operating profitability in recent quarters, that also benefited from the easing of supply chain and labor market pressures, as anticipated. Our financial expenses in the first half mainly reflect increased interest rates.

Elbit Systems' portfolio of market leading technological solutions and growing global presence combined with an innovative culture and the resilience demonstrated by our employees in recent years should support the long term outlook." 

Second quarter 2023 results:

Revenues in the second quarter of 2023 were $1,453.9 million, as compared to $1,303.4 million in the second quarter of 2022.

Aerospace revenues increased by 19%, to $487.0 million in the second quarter of 2023 from $408.9 million in the second quarter of 2022, mainly due to growth in Training & Simulation sales in Europe.

C4I and Cyber revenues increased by 1%, to $168.7 million in the second quarter of 2023 from $167.3 million in the second quarter of 2022.

ISTAR and EW revenues increased by 21%, to $292.7 million in the second quarter of 2023 from $241.5 million in the second quarter of 2022, mainly due to European Electronic Warfare sales.

Land revenues increased by 3%, to $294.1 million in the second quarter of 2023 from $284.9 million in the second quarter of 2022, mainly due to armored vehicle upgrades and ammunition sales.

Elbit Systems of America revenues increased by 7% to $355.3 million in the second quarter of 2023 compared to $330.6 million in the second quarter of 2022 due to growth in night vision sales.

For distribution of revenues by segments and geographic regions see the tables on page 11.

Non-GAAP(*) gross profit amounted to $378.8 million (26.1% of revenues) in the second quarter of 2023, as compared to $345.9 million (26.5% of revenues) in the second quarter of 2022. GAAP gross profit in the second quarter of 2023 was $372.2 million (25.6% of revenues), as compared to $339.7 million (26.1% of revenues) in the second quarter of 2022.

Research and development expenses, net were $93.4 million (6.4% of revenues) in the second quarter of 2023, as compared to $96.4 million (7.4% of revenues) in the second quarter of 2022.

Marketing and selling expenses, net were $101.7 million (7.0% of revenues) in the second quarter of 2023, as compared to $82.8 million (6.4% of revenues) in the second quarter of 2022.

General and administrative expenses, net were $75.4 million (5.2% of revenues) in the second quarter of 2023, as compared to $72.7 million (5.6% of revenues) in the second quarter of 2022.

Non-GAAP(*) operating income was $112.2 million (7.7% of revenues) in the second quarter of 2023, as compared to $103.3 million (7.9% of revenues) in the second quarter of 2022. GAAP operating income in the second quarter of 2023 was $101.6 million (7.0% of revenues), as compared to $115.1 million (8.8% of revenues) in the second quarter of 2022.

Financial expenses, net were $32.1 million in the second quarter of 2023, as compared to $9.3 million in the second quarter of 2022. The financial expenses in 2023 were higher as a result of the significant increase in interest rates.

Taxes on income were $9.2 million in the second quarter of 2023, as compared to $12.8 million in the second quarter of 2022.

Non-GAAP(*) net income attributable to the Company's shareholders in the second quarter of 2023 was $70.2 million (4.8% of revenues), as compared to $76.9 million (5.9% of revenues) in the second quarter of 2022. GAAP net incomeattributable to the Company's shareholders in the second quarter of 2023 was $62.4 million (4.3% of revenues), as compared to $81.2 million (6.2% of revenues) in the second quarter of 2022. Net income in the second quarter of 2022 included capital gains from sale of our shares in a subsidiary in Israel and sale of a building in Israel.

Non-GAAP(*) diluted net earnings per share attributable to the Company's shareholders were $1.57 for the second quarter of 2023, as compared to $1.73 for the second quarter of 2022. GAAP diluted earnings per share attributable to the Company's shareholders in the second quarter of 2023 were $1.40, as compared to $1.82 in the second quarter of 2022.                

* see page 3

The Company's backlog of orders as of June 30, 2023 totaled $16.1 billion. Approximately 75% of the current backlog is attributable to orders from outside Israel. Approximately 49% of the backlog is scheduled to be performed during the remainder of 2023 and 2024. 

Cash flows used in operating activities in the six months ended June 30, 2023 were $210.7 million, as compared to $133.5 million in the six months ended June 30, 2022. The cash flows in the first half of 2023 was affected by the increase in inventories and trade receivables.

* Non-GAAP financial data:

The following non-GAAP financial data, including Adjusted gross profit, Adjusted operating income, Adjusted net income, and Adjusted diluted earnings per share, is presented to enable investors to have additional information on our business performance as well as a further basis for periodical comparisons and trends relating to our financial results. We believe such data provides useful information to investors and analysts by facilitating more meaningful comparisons of our financial results over time. The non-GAAP adjustments exclude amortization expenses of intangible assets related to acquisitions that occurred mainly in prior periods, capital gains related primarily to the sale of investments, revaluations of investments in affiliated companies, non-operating foreign exchange gains or losses, one-time tax expenses, and the effect of tax on each of these items. We present these non-GAAP financial measures because management believes they supplement and/or enhance management's, analysts' and investors' overall understanding of the Company's underlying financial performance and trends and facilitate comparisons among current, past, and future periods.

Specifically, management uses Adjusted gross profit, Adjusted operating income, and Adjusted net income attributable to the Company's shareholders to measure the ongoing gross profit, operating profit and net income performance of the Company because the measure adjusts for more significant non-recurring items, amortization expenses of intangible assets relating to prior acquisitions, and non-cash expense which can fluctuate year to year.

We believe Adjusted gross profit, Adjusted operating income, and Adjusted net income attributable to the Company's shareholders are useful to existing shareholders, potential shareholders and other users of our financial information because they provide measures of the Company's ongoing performance that enable these users to perform trend analysis using comparable data.

Management uses Adjusted diluted earnings per share to evaluate further adjusted net income attributable to the Company's shareholders while considering changes in the number of diluted shares over comparable periods.

We believe adjusted diluted earnings per share is useful to existing shareholders, potential shareholders and other users of our financial information because it also enables these users to evaluate adjusted net income attributable to Company's shareholders on a per-share basis.

The non-GAAP measures used by the Company are not based on any comprehensive set of accounting rules or principles. We believe that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations, as determined in accordance with GAAP, and that these measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures.

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. They 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.

(*)     While amortization of acquired intangible assets is excluded from the measures, the revenue of the acquired companies is reflected in the measures and the acquired assets contribute to revenue generation.

Recent Events:

On June 12, 2023, the Company announced that S&P Global Ratings Maalot Ltd., an Israeli rating agency, issued its rating report regarding the Series B, C and D Notes, issued by the Company in 2021 and reaffirmed the Notes' "ilAA" (on local scaling) rating with a stable outlook.

On June 20, 2023, the Company announced that pursuant to Article 23(d) of its Articles of Association, the Company's Board of Directors resolved to appoint Mr. Ehud (Udi) Adam as a member of the board, effective as of June 25, 2023, and until the next annual meeting of the Company's shareholders. As of June 25, 2023, Mr. Yoram Ben-Zeev will no longer serve as a director of Elbit Systems, having completed nine years of service as an Independent Director provided by the Israeli Companies Law.

On June 21, 2023, the Company announced, further to its announcement of December 21, 2022, that it received a first purchase order worth approximately $180 million to supply the first three out of a maximum seven Watchkeeper X tactical Unmanned Aerial Systems (UAS) as part of a framework contract with the Romanian Ministry of National Defense with a maximum value of approximately $410 million (1.89 billion Lei). The purchase order will be performed over a period of two years.

On July 10, 2023, the Company announced that it was awarded a contract worth approximately $114 million with an Asian-Pacific country to supply two long-range patrol aircraft (LRPA) equipped with an advanced and comprehensive mission suite. The contract will be carried out over a period of five years.

On July 18, 2023, the Company announced that it was awarded a $150 million contract to supply PULS™ (Precise and Universal Launching Systems) rocket launchers and a package of precision-guided long-range rockets to an international customer. The contract will be performed over a period of three years.

On 31 July, 2023, the Company announced that it was awarded a contract worth approximately $60 million to supply thousands of 155mm artillery shells to the Israel Defense Forces' Artillery Corps. The contract will be performed over a period of one year.

On 9 August, 2023, the Company announced that at its Annual General Meeting of Shareholders held on August 8, 2023 at the Company's offices in Haifa (the "Meeting"), the proposed resolutions described in the Proxy Statement to the Shareholders dated June 27, 2023 and detailed hereunder, were approved by the respective required majority: 

1. "to elect to the board the following seven members who are not "External Directors" as defined in the Israeli Companies Law 5759-1999, to serve until the close of the next Annual General Meeting of Shareholders: Mr. Michael Federmann, Mr. Ehud (Udi) Adam, Mrs. Rina Baum, Mr. David Federmann, Mrs. Tzipi Livni, Mr. Dov Ninveh and Prof. Ehood (Udi) Nisan;
2. to re-elect Mr. Noaz Bar-Nir to an additional three-year term as an External Director;
3. to approve the extension of the indemnification letters of Mr. Michael Federmann and Mr. David Federmann, for an additional three years commencing on December 1, 2023;
4. to approve the extension of the exemption letters of Mr. Michael Federmann and Mr. David Federmann, for an additional three years commencing on April 7, 2024; and
5. to re-appoint Kost, Forer, Gabbay & Kasierer, a member of Ernst & Young Global, as the Company's independent auditor for the fiscal year ending December 31, 2023, and until the close of the next Annual General Meeting of Shareholders."

Mr. David Federmann was appointed Chair of the Company's board of directors as of the close of the Meeting.

Dividend:

The Board of Directors declared a dividend of $0.50 per share. The dividend's record date is October 10, 2023. The dividend will be paid on October 23, 2023, after deduction of withholding tax, at the rate of 16.8%. 

Conference Call:

The Company will be hosting a conference call today, Tuesday, August 15, 2023, at 9:00 a.m. Eastern Time. On the call, 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: 1-866-744-5399Canada Dial-in Number: 1-866-485-2399Israel Dial-in Number: 03-918-0644INTERNATIONAL Dial-in Number: 972-3-918-0644

at 9:00am Eastern Time; 6:00am Pacific Time; 4:00pmIsrael Time

The conference call will also be broadcast live on Elbit Systems' website at https://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).

About Elbit Systems

Elbit Systems Ltd. is an international high technology company engaged in a wide range of defense, homeland security and commercial programs throughout the world. The Company, which includes Elbit Systems and its subsidiaries, operates in the areas of aerospace, land and naval systems, command, control, communications, computers, intelligence surveillance and reconnaissance ("C4ISR"), unmanned aircraft systems, advanced electro-optics, electro-optic space systems, EW suites, signal intelligence systems, data links and communications systems, radios, cyber-based systems and munitions. The Company also focuses on the upgrading of existing platforms, developing new technologies for defense, homeland security and commercial applications and providing a range of support services, including training and simulation systems.

For additional information, visit: https://elbitsystems.com/, follow us on Twitter or visit our official Facebook, YouTube and LinkedIn Channels. 

Attachments:

Consolidated balance sheetsConsolidated statements of incomeConsolidated statements of cash flowsConsolidated revenue distribution by geographical regions and by segments

This press release may contain forward–looking statements (within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended and the Israeli Securities Law, 1968) regarding Elbit Systems Ltd. and/or its subsidiaries (collectively the Company), to the extent such statements do not relate to historical or current facts. Forward-looking statements are based on management's current expectations, estimates, projections and assumptions about future events. Forward–looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions about the Company, which are difficult to predict, including projections of the Company's future financial results, its anticipated growth strategies and anticipated trends in its business. Therefore, actual future results, performance and trends may differ materially from these forward–looking statements due to a variety of factors, including, without limitation: scope and length of customer contracts; governmental regulations and approvals; changes in governmental budgeting priorities; general market, political and economic conditions in the countries in which the Company operates or sells, including Israel and the United States among others; changes in global health and macro-economic conditions; differences in anticipated and actual program performance, including the ability to perform under long-term fixed-price contracts; changes in the competitive environment; and the outcome of legal and/or regulatory proceedings. The factors listed above are not all-inclusive, and further information is contained in Elbit Systems Ltd.'s latest annual report on Form 20-F, which is on file with the U.S. Securities and Exchange Commission. All forward–looking statements speak only as of the date of this release.

Although the Company believes the expectations reflected in the forward-looking statements contained herein are reasonable, it cannot guarantee future results, level of activity, performance or achievements. Moreover, neither the Company nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. The Company does not undertake to update its forward-looking statements.

Elbit Systems Ltd., its logo, brand, product, service and process names appearing in this Press Release are the trademarks or service marks of Elbit Systems Ltd. or its affiliated companies.  All other brand, product, service and process names appearing are the trademarks of their respective holders.  Reference to or use of a product, service or process other than those of Elbit Systems Ltd. does not imply recommendation, approval, affiliation or sponsorship of that product, service or process by Elbit Systems Ltd. Nothing contained herein shall be construed as conferring by implication, estoppel or otherwise any license or right under any patent, copyright, trademark or other intellectual property right of Elbit Systems Ltd. or any third party, except as expressly granted herein.

(FINANCIAL TABLES TO FOLLOW)

(**) Dividends paid during 2023 included approximately $500 dividends paid by subsidiaries to non-controlling interests.

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SOURCE Elbit Systems Ltd.