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Elbit Systems Ltd.
Advanced Technology Center
P.O.B 539, Haifa 31053
Israel

Tel: 972-4-8316663
Fax: 972-4-8316944
Listen to Elbit Systems Ltd. Second Quarter 2018 Results Release
Conference Call Scheduled for August 16th, 2018 at 09.00am ET
 
Press Releases
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Elbit Systems Reports Second Quarter of 2016 Results
Backlog of orders at $6.8 billion; Revenues at $804.5 million;
Non-GAAP net income of $63 million; GAAP net income of $54 million;
Non-GAAP net EPS of 1.47; GAAP net EPS of $1.27

HAIFA, Israel, Aug. 16, 2016 /PRNewswire/ --Elbit Systems Ltd. (NASDAQ and TASE: ESLT), (the "Company") the international high technology company, reported today its consolidated results for the quarter ended June 30, 2016.

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 understanding of the Company's business results and trends. Unless otherwise stated, all financial data presented is GAAP financial data.

Management Comment:

Bezhalel (Butzi) Machlis, Elbit Systems' President and CEO, commented: "We are encouraged by our second quarter financial results, demonstrating a strong, growing and diverse business. Our positive performance is built on our steady growth in backlog, which continued to increase in the quarter, enhancing visibility into revenues over the long term. Our sales are distributed across many regions and across a broad spectrum of products and technologies. This year in particular, we have seen strong performance in Europe and Israel. Our diversified market presence and portfolio has enabled us to continue to grow in an evolving global defense and homeland security environment. In recent months we have launched a number of new systems and solutions for which our customers worldwide have expressed interest. Based on our backlog of orders and market position, we have the potential to continue this trend for the foreseeable future."

Second quarter 2016 results:

Revenues in the second quarter of 2016 were $804.5 million, as compared to $749.6 million in the second quarter of 2015.

Non-GAAP(*) gross profit amounted to $244.0 million (30.3% of revenues) in the second quarter of 2016, as compared to $224.7 million (30.0% of revenues) in the second quarter of 2015. GAAP gross profit in the second quarter of 2016 was $236.1 million (29.4% of revenues), as compared to $219.3 million (29.2% of revenues) in the second quarter of 2015.

Research and development expenses, net were $67.2 million (8.4% of revenues) in the second quarter of 2016, as compared to $57.5 million (7.7% of revenues) in the second quarter of 2015.

Marketing and selling expenses, net were $60.3 million (7.5% of revenues) in the second quarter of 2016, as compared to $60.6 million (8.1% of revenues) in the second quarter of 2015.

General and administrative expenses, net were $38.7 million (4.8% of revenues) in the second quarter of 2016, as compared to $35.7 million (4.8% of revenues) in the second quarter of 2015.

Non-GAAP(*) operating income was $80.5 million (10.0% of revenues) in the second quarter of 2016, as compared to $75.4 million (10.1% of revenues) in the second quarter of 2015.  GAAP operating income in the second quarter of 2016 was $69.9 million (8.7% of revenues), as compared to $65.5 million (8.7% of revenues) in the second quarter of 2015.

Financial expenses, net were $5.5 million in the second quarter of 2016, as compared to $6.2 million in the second quarter of 2015.

Taxes on income were $14.3 million (effective tax rate of 22.2%) in the second quarter of 2016, as compared to $12.0 million (effective tax rate of 20.2%) in the second quarter of 2015.  The effective tax rate is affected by the mix of the tax rates in the various jurisdictions in which the Company's entities generate taxable income.

Equity in net earnings (loss) of affiliated companies and partnerships was $4.4 million in the second quarter of 2016, as compared to a net loss of $0.4 million in the second quarter of 2015. The relatively higher amount in the second quarter of 2016 reflects a gain from a Company affiliate in the UK that began operations in 2016.

Net income attributable to non-controlling interests was $0.5 million in the second quarter of 2016, as compared to $1.7 million in the second quarter of 2015.

Non-GAAP(*) net income attributable to the Company's shareholders in the second quarter of 2016 was $62.9 million (7.8% of revenues), as compared to $53.5 million (7.1% of revenues) in the second quarter of 2015. GAAP net income in the second quarter of 2016 was $54.1 million (6.7% of revenues), as compared to $45.3 million (6.0% of revenues) in the second quarter of 2015.

Non-GAAP(*) diluted net earnings per share attributable to the Company's shareholders were $1.47 for the second quarter of 2016, as compared to $1.25 for the second quarter of 2015. GAAP diluted earnings per share in the second quarter of 2016 were $1.27, as compared to $1.06 for the second quarter of 2015.

The Company's backlog of orders for the quarter ended June 30, 2016, totaled $6,818 million, as compared to $6,305 million as of June 30, 2015. Approximately 66% of the current backlog is attributable to orders from outside Israel. Approximately 59% of the current backlog is scheduled to be performed during 2016 and 2017.

Operating cash flow used in the six months ended June 30, 2016 was $15.1 million, as compared to $116.5 million provided in the six months ended June 30, 2015.

* 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, significant effects of retroactive tax legislation and changes in accounting guidance and other items, 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)

 


Six months ended June 30,


Three months ended June 30,


Year Ended
December 31,


2016


2015


2016


2015


2015











GAAP gross profit

448.4



420.4



236.1



219.3



897.1


Adjustments:










Amortization of purchased intangible assets

15.8



10.6



7.9



5.4



29.9


Non-GAAP  gross profit

464.2



431.0



244.0



224.7



927.0


Percent of revenues

30.4

%


29.6

%


30.3

%


30.0

%


29.8

%











GAAP operating income

133.2



125.3



69.9



65.5



268.6


Adjustments:










Amortization of  purchased intangible assets

21.2



19.6



10.6



9.9



48.1


Gain from changes in holdings

(7.0)










Non-GAAP operating income

147.4



144.9



80.5



75.4



316.7


Percent of revenues

9.7

%


10.0

%


10.0

%


10.1

%


10.2

%











GAAP net income attributable to Elbit Systems' shareholders

106.4



89.9



54.1



45.3



202.5


Adjustments:










Amortization of purchased  intangible assets

21.2



19.6



10.6



9.9



48.1


Capital Gain

(3.9)










Gain from changes in holdings

(7.0)










Related tax benefits

(2.7)



(3.3)



(1.8)



(1.7)



(8.2)


Non-GAAP  net income attributable to Elbit Systems' shareholders

114.0



106.2



62.9



53.5



242.4


Percent of revenues

7.5

%


7.3

%


7.8

%


7.1

%


7.8

%











GAAP diluted net EPS

2.49



2.10



1.27



1.06



4.74


Adjustments, net

0.18



0.38



0.20



0.19



0.93


Non-GAAP diluted net EPS

2.67



2.48



1.47



1.25



5.67


 

Recent Events:

On May 24, 2016, the Company announced that it was awarded contracts from a European country for the supply of advanced tactical communications systems, for a total amount of an approximately $40 million. The contracts will be performed over a one-year period.

On July 7, 2016, the Company announced that it is establishing a new company (the New Company), based on its in-house developed energy technology for transportation. The New Company will develop energy solutions for civilian transportation applications.

On July 10, 2016, the Company announced it was awarded an approximately $19 million contract from the Maldonado District Administration in Uruguay to provide a Safe District project. The project will span across six municipal authorities, including the well-known Punta Del Este tourist resort, over a total of 2000 km. The contract will be performed by the Company's subsidiary, Elbit Security Systems Ltd. (ELSEC), over a two-year period.

On July 20, 2016, the Company announced that it was awarded contracts, in a total amount of approximately $30 million, to supply advanced thermal-imaging observation systems to a country in Europe. The systems will serve all army command levels, from the dismounted soldier to the headquarters command and will be supplied over a one-year period.

Dividend:

The Board of Directors declared a dividend of $0.40 per share for the second quarter of 2016. The dividend's record date is August 26, 2016. The dividend will be paid from income generated as Preferred Income (as defined under Israeli tax laws), on September 5, 2016, net of taxes and levies, at the rate of 20%.

Conference Call:

The Company will be hosting a conference call today, Tuesday, August 16, 2016 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 Numbers: 1 888 668 9141
UK Dial-in Number: 0 800 917 5108
ISRAEL Dial-in Number: 03 918 0609
INTERNATIONAL Dial-in Number:  +972 3 918 0609

at: 9:00 am Eastern Time; 6:00 am Pacific Time; 2:00 pm UK Time; 4:00 pm Israel Time

This call will also be broadcast live on Elbit Systems' web-site 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:

1 888 295 2634 (US) 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 and cyber-based systems. 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: www.elbitsystems.com.

Attachments:

Consolidated balance sheets
Consolidated statements of income
Consolidated statements of cash flow
Consolidated revenue distribution by areas of operation and by geographical regions

This press release contains forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1943, as amended) regarding Elbit Systems Ltd. and/or its subsidiaries (collectively the Company), to the extent such statements do not relate to historical or current fact. Forward-looking statements are based on management's expectations, estimates, projections and assumptions. 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 and uncertainties, which are difficult to predict. 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; differences in anticipated and actual program performance, including the ability to perform under long-term fixed-price contracts; 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. 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)


ELBIT SYSTEMS LTD.
CONSOLIDATED BALANCE SHEETS
(In thousands of US Dollars)



June 30,


December 31,


2016


2015


Unaudited


Audited

Assets




Current assets:




Cash and cash equivalents

$

155,681



$

299,322


Short-term bank deposits and marketable securities

30,774



33,102


Trade and unbilled receivables, net

1,158,155



941,913


Other receivables and prepaid expenses

150,954



171,359


Inventories, net of customers advances

865,015



837,111


Total current assets

2,360,579



2,282,807






Investments in affiliated companies and partnerships

163,595



129,758


Long-term trade and unbilled receivables

136,696



152,463


Long-term bank deposits and other receivables

19,052



15,765


Deferred income taxes, net

45,751



52,619


Severance pay fund

267,400



270,151



632,494



620,756






Property, plant and equipment, net

474,177



449,759


Goodwill and other intangible assets, net

750,418



770,276


Total assets

$

4,217,668



$

4,123,598










Liabilities and Equity




Short-term bank credit and loans

$

60,003



$


Current maturities of long-term loans and Series A Notes

112,134



113,359


Trade payables

372,941



347,366


Other payables and accrued expenses

807,826



739,867


Customer advances in excess of costs incurred on contracts in progress

373,967



437,202



1,726,871



1,637,794






Long-term loans, net of current maturities

142,270



165,971


Series A Notes, net of current maturities

174,629



226,758


Employee benefit liabilities

380,484



381,641


Deferred income taxes and tax liabilities, net

44,225



44,738


Customer advances in excess of costs incurred on contracts in progress

169,629



167,601


Other long-term liabilities

99,892



99,668



1,011,129



1,086,377






Elbit Systems Ltd.'s equity

1,471,196



1,391,374


Non-controlling interests

8,472



8,053


Total equity

1,479,668



1,399,427


Total liabilities and equity

$

4,217,668



$

4,123,598


 

 

ELBIT SYSTEMS LTD.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands of US Dollars, except for share and per share amount)



Six months ended June 30,


Three months ended June 30,


Year Ended
December 31,


2016


2015


2016


2015


2015


Unaudited


Unaudited


Audited

Revenues

$

1,525,721



$

1,456,226



$

804,510



$

749,603



$

3,107,581


Cost of revenues

1,077,344



1,035,778



568,375



530,351



2,210,528


Gross profit

448,377



420,448



236,135



219,252



897,053












Operating expenses:










Research and development, net

123,236



113,117



67,189



57,505



243,416


Marketing and selling, net

121,326



111,897



60,330



60,569



239,366


General and administrative, net

77,616



70,097



38,672



35,685



145,693


Other operating income, net

(7,032)










Total operating expenses

315,146



295,111



166,191



153,759



628,475


Operating income

133,231



125,337



69,944



65,493



268,578












Financial expenses, net

(7,194)



(11,865)



(5,475)



(6,192)



(20,240)


Other income , net

3,910



77



13



10



216


Income before income taxes

129,947



113,549



64,482



59,311



248,554












Taxes on income

(26,956)



(20,625)



(14,286)



(11,976)



(46,235)



102,991



92,924



50,196



47,335



202,319












Equity in net earnings (loss) of affiliated companies and partnerships

4,429



(491)



4,409



(363)



4,542


Net income

$

107,420



$

92,433



54,605



46,972



$

206,861


Less: net income attributable to non-controlling interests

(1,002)



(2,574)



(514)



(1,678)



(4,352)


Net income attributable to Elbit Systems Ltd.'s shareholders

$

106,418



$

89,859



$

54,091



$

45,294



$

202,509
































Earnings per share attributable to Elbit Systems Ltd.'s shareholders:





Basic net earnings per share

$

2.49



$

2.10



$

1.27



$

1.06



$

4.74


Diluted net earnings per share

$

2.49



$

2.10



$

1.27



$

1.06



$

4.74






















Weighted average number of shares (in thousands)







Shares used in computation of basic earnings per share

42,739



42,698



42,743



42,706



42,711


Shares used in computation of diluted earnings per share

42,750



42,724



42,752



42,734



42,733


 

 

ELBIT SYSTEMS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands of US Dollars)






Six months ended June 30,


Year Ended
December 31,






2016


2015


2015






Unaudited


Audited

CASH FLOWS FROM OPERATING ACTIVITIES






Net income

$

107,420



$

92,433



$

206,861


Adjustments to reconcile net income to net cash provided by operating activities:






Depreciation and amortization

59,038



56,296



122,354


Stock-based compensation

43



88



139


Amortization of Series A Notes premium and related issuance costs, net

(46)



(46)



(92)


Deferred income taxes and reserve, net

7,693



7,653



15,928


Loss (gain) on sale of property, plant and equipment

(3,810)



939



1,742


Loss (gain) on sale and revaluation of investments

(6,617)



(195)



33


Equity in net earnings (loss) of affiliated companies and partnerships, net of dividend received (*)

(4,429)



21,991



19,999


Changes in operating assets and liabilities, net of amounts acquired:






Decrease (increase) in short and long-term trade receivables and prepaid expenses

(178,535)



39,856



31,860


Decrease (Increase) in inventories, net

(32,789)



(5,064)



39,801


Increase (decrease) in trade payables, other payables and accrued expenses

94,766



(24,211)



(74,280)


Severance, pension and termination indemnities, net

3,372



623



(799)


Increase (decrease) in advances received from customers

(61,208)



(73,856)



71,282


Net cash provided by (used in) operating activities

(15,102)



116,507



434,828


CASH FLOWS FROM INVESTING ACTIVITIES






Purchase of property, plant and equipment and other assets

(68,131)



(50,102)



(99,175)


Acquisition of subsidiaries and business operations



(24,386)



(141,436)


Investments in affiliated companies and other companies

(17,483)





(23,852)


Deconsolidation of subsidiary

(1,538)






Proceeds from sale of property, plant and equipment

8,908



7,130



11,563


Investment in long-term deposits

(109)



(43)



(396)


Proceeds from sale of long-term deposits

268



119



721


Investment in short-term deposits and marketable securities

(23,417)



(40,328)



(57,175)


Proceeds from sale of short-term deposits and marketable securities

26,106



80,441



128,187


Net cash used in investing activities

(75,396)



(27,169)



(181,563)


CASH FLOWS FROM FINANCING ACTIVITIES






Proceeds from exercise of options

470



997



1,616


Repayment of long-term loans

(24,790)



(126,002)



(226,635)


Proceeds from long-term loans



78,000



196,550


Repayment of Series A Notes

(54,602)



(55,532)



(55,532)


Dividends paid (**)

(34,224)



(34,422)



(69,792)


Change in short-term bank credit and loans, net

60,003



(298)



(557)


Net cash used in financing activities

(53,143)



(137,257)



(154,350)


Net increase (decrease) in cash and cash equivalents

(143,641)



(47,919)



98,915


Cash and cash equivalents at the beginning of the year

299,322



200,407



200,407


Cash and cash equivalents at the end of the period

$

155,681



$

152,488



$

299,322


* Dividend received from affiliated companies and partnerships

$



$

21,500



$

24,541


** Dividends paid in 2015 include dividends to minority shareholders in a subsidiary.












 


 

ELBIT SYSTEMS LTD.
DISTRIBUTION OF REVENUES

 

Consolidated Revenues by Areas of Operation:




Six months ended June 30,


Three months ended June 30,




2016


2015


2016


2015




$ millions


%


$ millions


%


$ millions


%


$ millions


%

Airborne systems

594.7



39.0



601.6



41.3



310.8



38.6



316.2



42.2


Land systems

226.2



14.8



267.7



18.4



87.8



10.9



137.5



18.3


C4ISR systems

528.4



34.6



436.1



29.9



307.0



38.2



216.2



28.8


Electro-optic systems

123.3



8.1



95.9



6.6



69.9



8.7



49.2



6.6


Other (mainly non-defense engineering and production services)

53.1



3.5



54.9



3.8



29.0



3.6



30.5



4.1


Total

1,525.7



100.0



1,456.2



100.0



804.5



100.0



749.6



100.0


 

 

Consolidated Revenues by Geographical Regions:


Six months ended June 30,


Three months ended June 30,


2016


2015


2016


2015


$ millions


%


$ millions


%


$ millions


%


$ millions


%

Israel

323.4



21.2



284.7



19.5



180.3



22.4



148.9



19.8


North America

396.3



26.0



406.7



27.9



218.1



27.1



203.8



27.2


Europe

260.9



17.1



199.3



13.7



146.6



18.2



97.4



13.0


Asia-Pacific

418.8



27.4



389.8



26.8



206.1



25.6



214.8



28.7


Latin America

96.7



6.3



161.4



11.1



33.6



4.2



73.8



9.8


Other countries

29.6



2.0



14.3



1.0



19.8



2.5



10.9



1.5


Total

1,525.7



100.0



1,456.2



100.0



804.5



100.0



749.6



100.0


 

Company Contact:

Joseph Gaspar, Executive VP & CFO

Tel: +972-4-8316663

j.gaspar@elbitsystems.com

Dalia Rosen, VP, Head of Corporate Communications

Tel: +972-4-8316784

dalia.rosen@elbitsystems.com

Elbit Systems Ltd.

IR Contact:

Ehud Helft

Kenny Green

GK Investor Relations

Tel: 1-646-201-9246

elbitsystems@gkir.com

___________
* see "Non-GAAP financial data" section

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/elbit-systems-reports-second-quarter-of-2016-results-300313969.html

SOURCE Elbit Systems Ltd


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