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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 2017 Results Release
Conference Call Scheduled for July 15, 2017 at 09.00am ET
 
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Elbit Systems Reports First Quarter of 2017 Results
Backlog of orders at $7.1 billion; Revenues at $749 million;
Non-GAAP Net income of $52 million;
GAAP net income of $46 million;
Non-GAAP net EPS of $1.21; GAAP net EPS of $1.07

HAIFA, Israel, May 16, 2017 /PRNewswire/ -- Elbit Systems Ltd. (NASDAQ: ESLT; TASE: ESLT), (the "Company") the international high technology company, reported today its consolidated results for the quarter ended March 31, 2017.

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, President and CEO of Elbit Systems, commented: "We are pleased with the continued growth in our revenue and backlog. In today's geopolitical environment, we are seeing a trend of larger defense spending in many of our target markets, especially in the electronic defense sphere. In the first quarter our investments in marketing and R&D rose somewhat in order to be able to capitalize on the increasing opportunities. We have been able to stay consistently ahead of the curve in anticipating defense and security trends and customer needs, both in terms of our product portfolio and our geographic spread. I believe this positions us well to continue on our long-term growth path."

First quarter 2017 results:

Revenues in the first quarter of 2017 were $749.2 million, as compared to $721.2 million in the first quarter of 2016.

Non-GAAP (*) gross profit amounted to $226.8 million (30.3% of revenues) in the first quarter of 2017, as compared to $220.1 million (30.5% of revenues) in the first quarter of 2016. GAAP gross profit in the first quarter of 2017 was $221.2 million (29.5% of revenues), as compared to $212.2 million (29.4% of revenues) in the first quarter of 2016.

Research and development expenses, net were $58.4 million (7.8% of revenues) in the first quarter of 2017, as compared to $56.0 million (7.8% of revenues) in the first quarter of 2016.

_____________

* see page 3

Marketing and selling expenses, net were $65.8 million (8.8% of revenues) in the first quarter of 2017, as compared to $61.0 million (8.5% of revenues) in the first quarter of 2016. The increase in marketing and selling expenses in the first quarter of 2017 was mainly related to the mix of countries and types of marketing activities for projects in which we invest our marketing efforts.

General and administrative expenses, net were $38.7 million (5.2% of revenues) in the first quarter of 2017, as compared to $38.9 million (5.4% of revenues) in the first quarter of 2016.

Non-GAAP(*) operating income was $65.5 million (8.7% of revenues) in the first quarter of 2017, as compared to $66.9 million (9.3% of revenues) in the first quarter of 2016.  GAAP operating income in the first quarter of 2017 was $58.2 million (7.8% of revenues), as compared to $63.3 million (8.8% of revenues) in the first quarter of 2016. The GAAP operating income in the first quarter of 2016 included a gain of $7.0 million related to the revaluation of an investment in an Israeli subsidiary that was deconsolidated in the quarter due to a third party investment.

Financial expenses, net were $8.6 million in the first quarter of 2017, as compared to $1.7 million in the first quarter of 2016.  The lower financial expenses in the first quarter of 2016 were mainly a result of gain from various currencies exchange rate differences.

Taxes on income were $5.3 million (effective tax rate of 10.6%) in the first quarter of 2017, as compared to $12.7 million (effective tax rate of 19.4%) in the first quarter of 2016.  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 and the decrease of tax rates in Israel.

Equity in net earnings of affiliated companies and partnerships was $1.6 million (0.2% of revenues) in the first quarter of 2017, as compared to $0 in the first quarter of 2016.

Net income attributable to non-controlling interests was $0.3 million in the first quarter of 2017, as compared to $0.5 million in the first quarter of 2016.

Non-GAAP(*) net income attributable to the Company's shareholders in the first quarter of 2017 was $51.7 million (6.9% of revenues), as compared to $51.2 million (7.1% of revenues) in the first quarter of 2016. GAAP net income in the first quarter of 2017 was $45.6 million (6.1% of revenues), as compared to $52.3 million (7.3% of revenues) in the first quarter of 2016. GAAP net income in the first quarter of 2016 included a gain of $7 million related to the revaluation of an investment and a capital gain of $3.9 million related to the sale of real estate.

Non-GAAP(*) diluted net earnings per share attributable to the Company's shareholders were $1.21 for the first quarter of 2017, as compared to $1.20 for the first quarter of 2016. GAAP diluted earnings per share in the first quarter of 2017 were $1.07, as compared to $1.22 for the first quarter of 2016, which included earnings per share of $0.26 related to the gain from revaluation of an investment and sale of real estate.

The Company's backlog of orders for the quarter ended March 31, 2017 totaled $7,067 million, as compared to $6,775 million as of March 31, 2016. Approximately 70% of the current backlog is attributable to orders from outside Israel. Approximately 64% of the current backlog is scheduled to be performed during 2017 and 2018.

Operating cash flow used in the quarter ended March 31, 2017 was $51.3 million, as compared to $24.5 million provided in the quarter ended March 31, 2016.

___________

* see page 3

* 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)



Three Months Ended

March 31,


Year Ended

December 31,


2017


2016


2016







GAAP gross profit

$

221.2



$

212.2



$

959.6


Adjustments:






Amortization of purchased intangible assets

5.6



7.9



31.2


Non-GAAP  gross profit

$

226.8



$

220.1



$

990.8


Percent of revenues

30.3

%


30.5

%


30.4

%







GAAP operating income

$

58.2



$

63.3



$

299.0


Adjustments:






Amortization of  purchased intangible assets

7.3



10.6



41.2


Gain from changes in holdings



(7.0)



(17.6)


Non-GAAP operating income

$

65.5



$

66.9



$

322.6


Percent of revenues

8.7

%


9.3

%


9.9

%







GAAP net income attributable to Elbit Systems' shareholders

$

45.6



$

52.3



$

236.9


Adjustments:






Amortization of purchased  intangible assets

7.3



10.6



41.2


Capital Gain



(3.9)



(3.9)


Impairment of investments





2.5


Gain from changes in holdings



(7.0)



(16.4)


Related tax benefits

(1.2)



(0.8)



(6.1)


Non-GAAP  net income attributable to Elbit Systems' shareholders

$

51.7



$

51.2



$

254.2


Percent of revenues

6.9

%


7.1

%


7.8

%







GAAP diluted net EPS

$

1.07



$

1.22



$

5.54


Adjustments, net

0.14



(0.02)



0.41


Non-GAAP diluted net EPS

$

1.21



$

1.20



$

5.95


 

Recent Events:

On March 22, 2017, the Company announced that it was awarded an approximately $100 million contract by the Israeli Ministry of Defense (IMOD) for the supply of advanced radio systems. According to the contract, the Company will manufacture and provide hundreds of radio systems over the course of five years. In addition, the Company is expected to receive an additional order to provide repair and maintenance services for 15 years. The Company will expand its manufacturing and maintenance site in Arad to include 100 employees, making it a center of excellence for manufacturing and maintenance of advanced radio systems for the Israel Defense Forces.

On March 29, 2017, the Company announced that it was awarded an approximately $82 million contract to provide an Asia-Pacific country with a comprehensive electro-optic airborne solution, Condor 2, for use in intelligence, surveillance, target acquisition and reconnaissance (ISTAR) missions. The contract, which is a follow-on order from the same customer, will be performed over a four-year period by Elbit Systems' ISTAR Division. This Elbit Systems program is being performed in cooperation with ELTA Systems Ltd., who is supplying additional content to the same customer.

On April 2, 2017, the Company announced that its subsidiary, Elbit Systems of America LLC., was awarded an Indefinite Delivery/Indefinite Quantity contract of approximately $50 million by the U.S. Navy to provide the Helmet Display and Tracker System with the Continuously Computed Impact Point (CCIP) algorithm for the MH-60S. The work will be performed in Fort Worth Texas, and completed by June 2021. An initial order of approximately $14.2 million was received.

On May 8, 2017, the Company announced that it was awarded a contract to provide the IMOD with dozens of satellite-on-the-move systems. The contract is in an amount that is not material to the Company and will be performed over a two-year period.

On May 10, 2017, the Company announced that it was awarded a contract from the Brazilian Marine Corps for the supply of advanced C4ISR, electronic warfare, radio and communication systems. The contract, in an amount of approximately $40 million, will be performed over a two-year period.

Dividend:

The Board of Directors declared a dividend of $0.44 per share for the first quarter of 2017. The dividend's record date is May 26, 2017. The dividend will be paid from income generated as Preferred Income (as defined under Israel tax laws), on June 6, 2017, net of taxes and levies, at the rate of 20%. 

Conference Call:

The Company will be hosting a conference call today, Tuesday, May 16, 2017 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
Canada Dial-in Numbers: +1-866-485-2399
UK Dial-in Number: 0-00-917-5108
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:

1 888 326 9310 (US and Canada) or +972 3 925 5904 (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 airborne, 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 and radios. The Company also focuses on the upgrading of existing platforms, developing new technologies for defense, homeland security and commercial aviation applications and providing a range of support services, including training and simulation systems.

For additional information, visit: www.elbitsystems.com  or follow us on Twitter.

Attachments:

Consolidated balance sheets

Consolidated statements of income

Consolidated statements of cash flow

Consolidated revenue distribution by areas of operation and by geographical regionsThis 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)



March 31,


December 31,


2017


2016


Unaudited


Audited

Assets




Current assets:




Cash and cash equivalents

$

136,245



$

222,810


Short-term bank deposits and marketable securities

29,966



22,252


Trade and unbilled receivables, net

1,276,807



1,232,591


Other receivables and prepaid expenses

163,228



102,979


Inventories, net of customers advances

891,603



840,266


Total current assets

2,497,849



2,420,898






Investments in affiliated companies and partnerships

180,781



180,962


Long-term trade and unbilled receivables

183,967



189,688


Long-term bank deposits and other receivables

32,648



15,917


Deferred income taxes, net

78,990



79,639


Severance pay fund

278,390



264,253



754,776



730,459






Property, plant and equipment, net

485,451



474,109


Goodwill and other intangible assets, net

722,809



726,398


Total assets

$

4,460,885



$

4,351,864










Liabilities and Equity




Short-term bank credit and loans

$

39,764



$

5,027


Current maturities of long-term loans and Series A Notes

210,592



228,956


Trade payables

473,847



514,106


Other payables and accrued expenses

845,945



828,716


Customer advances in excess of costs incurred on contracts in progress

384,063



347,393



1,954,211



1,924,198






Long-term loans, net of current maturities

503



475


Series A Notes, net of current maturities

181,693



171,066


Employee benefit liabilities

392,694



376,115


Deferred income taxes and tax liabilities, net

60,900



60,098


Customer advances in excess of costs incurred on contracts in progress

181,814



174,529


Other long-term liabilities

79,052



78,142



896,656



860,425






Elbit Systems Ltd.'s equity

1,602,217



1,559,840


Non-controlling interests

7,801



7,401


Total equity

1,610,018



1,567,241


Total liabilities and equity

$

4,460,885



$

4,351,864



 

 

ELBIT SYSTEMS LTD.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands of US Dollars, except for share and per share amount)



Three Months Ended

March 31,


Year Ended
December 31,


2017


2016


2016


Unaudited


Audited

Revenues

$

749,188



$

721,211



$

3,260,219


Cost of revenues

528,037



508,971



2,300,636


Gross profit

221,151



212,240



959,583








Operating expenses:






Research and development, net

58,437



56,047



255,792


Marketing and selling, net

65,778



60,997



271,037


General and administrative, net

38,723



38,944



151,353


Other operating income, net



(7,032)



(17,575)


Total operating expenses

162,938



148,956



660,607


Operating income

58,213



63,284



298,976








Financial expenses, net

(8,645)



(1,721)



(23,742)


Other income, net

32



3,896



3,967


Income before income taxes

49,600



65,459



279,201








Taxes on income

(5,251)



(12,670)



(45,617)



44,349



52,789



233,584








Equity in net earnings of affiliated companies and partnerships

1,595



20



5,224


Net income

$

45,944



$

52,809



$

238,808


Less: net income attributable to non-controlling interests

(304)



(488)



(1,899)


Net income attributable to Elbit Systems Ltd.'s shareholders

$

45,640



$

52,321



$

236,909




















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



Basic net earnings per share

$

1.07



$

1.22



$

5.54


Diluted net earnings per share

$

1.07



$

1.22



$

5.54














Weighted average number of shares (in thousands)






Shares used in computation of basic earnings per share

42,748



42,734



42,742


Shares used in computation of diluted earnings per share

42,751



42,748



42,752



 

 

ELBIT SYSTEMS LTD.

CONSOLIDATED STATEMENTS OF CASH FLOW

(In thousands of US dollars)



Three Months Ended
 March 31,


Year Ended
December 31,


2017


2016


2016


Unaudited


Audited

CASH FLOWS FROM OPERATING ACTIVITIES






Net income

$

45,944



$

52,809



$

238,808


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






Depreciation and amortization

27,716



29,241



122,888


Write-off of  impairment and discontinued operations, net





86


Stock-based compensation

11



25



70


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

(23)



(23)



(92)


Deferred income taxes and reserve, net

894



6,241



2,683


Gain on sale of property, plant and equipment

(1,859)



(3,788)



(3,347)


 Loss (gain) on sale and revaluation of investments

20



(7,019)



(16,734)


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

(800)



(20)



(1,728)


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






Increase in short and long-term trade receivables and prepaid expenses

(95,280)



(91,043)



(297,439)


Increase in inventories, net

(51,336)



(24,762)



(8,040)


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

(23,999)



112,344



253,413


Severance, pension and termination indemnities, net

3,476



3,445



315


Increase (decrease) in advances received from customers

43,954



(52,989)



(82,881)


Net cash provided by (used in) operating activities

(51,282)



24,461



208,002


CASH FLOWS FROM INVESTING ACTIVITIES






Purchase of property, plant and equipment and other assets

(31,554)



(21,671)



(124,221)


Advance payment on acquisition account

(6,586)






Acquisition of subsidiaries and business operations

(2,579)






Investments in affiliated companies and other companies

(173)



(14,490)



(19,277)


Deconsolidation of subsidiary



(1,538)



(1,538)


Proceeds from sale of property, plant and equipment

2,725



8,134



15,745


Investment in long-term deposits

(446)



(23)



(417)


Proceeds from sale of long-term deposits

133



88



894


Investment in short-term deposits and marketable securities

(22,268)



(19,982)



(25,622)


Proceeds from sale of short-term deposits and marketable securities

14,542



14,760



36,619


Net cash used in investing activities

(46,206)



(34,722)



(117,817)


CASH FLOWS FROM FINANCING ACTIVITIES






Proceeds from exercise of options

55



419



505


Repayment of long-term loans

(23,869)



(23,869)



(48,250)


Repayment of Series A Notes





(55,532)


Dividends paid





(68,447)


Change in short-term bank credit and loans, net

34,737



3



5,027


Net cash provided by (used in) financing activities

10,923



(23,447)



(166,697)


Net decrease in cash and cash equivalents

(86,565)



(33,708)



(76,512)


Cash and cash equivalents at the beginning of the year

222,810



299,322



299,322


Cash and cash equivalents at the end of the period

$

136,245



$

265,614



$

222,810


* Dividend received from affiliated companies and partnerships

$

795



$



$

3,496



 

ELBIT SYSTEMS LTD.
DISTRIBUTION OF REVENUES

 

Consolidated Revenues by Areas of Operation:


Three Months Ended


Year Ended


March 31,


December 31,


2017


2016


2016


$ millions


%


$ millions


%


$ millions


%

Airborne systems

290.3



38.7



283.9



39.4



1,242.3



38.1


C4ISR systems

279.0



37.2



221.4



30.7



1,220.9



37.4


Land systems

79.0



10.5



138.5



19.2



408.0



12.5


Electro-optic systems

76.4



10.2



53.4



7.4



276.0



8.5


Other (mainly non-defense engineering and production services)

24.5



3.4



24.0



3.3



113.0



3.5


Total

749.2



100.0



721.2



100.0



3,260.2



100.0


 

 

Consolidated Revenues by Geographical Regions:


Three Months Ended


Year Ended


March 31,


December 31,


2017


2016


2016


$ millions


%


$ millions


%


$ millions


%

Israel

167.4



22.3



143.1



19.8



709.5



21.8


North America

192.9



25.8



178.1



24.7



825.7



25.3


Europe

161.8



21.6



114.3



15.8



640.8



19.7


Asia-Pacific

166.2



22.2



212.7



29.5



801.6



24.6


Latin America

34.4



4.6



63.1



8.8



212.8



6.5


Other countries

26.5



3.5



9.9



1.4



69.8



2.1


Total

749.2



100.0



721.2



100.0



3,260.2



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

 


To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/elbit-systems-reports-first-quarter-of-2017-results-300458334.html

SOURCE Elbit Systems Ltd.


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