2014

Elbit Systems Reports First Quarter 2013 Results Backlog of orders grows to $5.8 billion; Revenues at $680 million; Net income at $41.4 million; Diluted net earnings per share of $0.98

HAIFA, Israel, May 8, 2013 /PRNewswire/ -- Elbit Systems Ltd. (the "Company") (NASDAQ: ESLT, TASE: ESLT), the international defense company, reported today its consolidated financial results for the first quarter ended March 31, 2013.

In this release, the Company is providing its usual US-GAAP results as well as additional non-GAAP financial data, which are intended to provide investors with 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: "I am pleased to be reporting a solid start to 2013 with a record backlog of orders. We have demonstrated continuous improvement in profitability, by leveraging our global intercompany synergies as well as our focus on operational efficiency. This has enabled us to reduce our operating expenses and improve our operating margins. Growth in our backlog for the past four consecutive quarters provides us with confidence that we will continue our improved performance in the future."

Mr. Machlis continued: "Yossi Ackerman, the Company's former President and CEO, left the Company with a solid foundation and on the right path to maintain its long-term growth trajectory. I look forward to continuing  to strengthen the Company, in order to be well positioned to meet future challenges and achieve continued growth".

First quarter 2013 results:

Revenues in the first quarter of 2013 were $680.2 million, as compared to $690.8 million in the first quarter of 2012. The leading contributors to the Company's revenues were the airborne systems and C4ISR systems areas of operations. The decrease in the land systems area of operations was mainly due to decline in revenues of fire control and life support systems in North America and Asia Pacific.

Gross profit amounted to $192.7 million (28.3% of revenues) in the first quarter of 2013, as compared with gross profit of $195.8 million (28.3% of revenues) in the first quarter of 2012. The non-GAAP gross profit in the first quarter of 2013 was $198.3 million (29.2% of revenues), compared to $200.9 million (29.1% of revenues) in the first quarter of 2012.

Research and development expenses, net were $51.0 million (7.5% of revenues) in the first quarter of 2013, as compared to $58.8 million (8.5% of revenues) in the first quarter of 2012.

Marketing and selling expenses were $55.8 million (8.2% of revenues) in the first quarter of 2013, as compared to $61.4 million (8.9% of revenues) in the first quarter of 2012.

General and administrative expenses were $32.2 million (4.7% of revenues) in the first quarter of 2013, as compared to $33.9 million (4.9% of revenues) in the first quarter of 2012.

Operating income was $53.7 million (7.9% of revenues) in the first quarter of 2013, as compared to $41.7 million (6.0% of revenues) in the first quarter of 2012. The non-GAAP operating income in the first quarter of 2013 was $65.3 million (9.6% of revenues), as compared to $53.9 million (7.8% of revenues) in the first quarter of 2012.

Financial expenses, net were $7.9 million in the first quarter of 2013, as compared to $7.8 million in the first quarter of 2012.

Taxes on income were of $4.6 million (effective tax rate of 10.1%) in the first quarter of 2013, as compared to $6.6 million (effective tax rate of 18.9%) in the first quarter of 2012. 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 of affiliated companies and partnerships was $1.7 million (0.2% of revenues) in the first quarter of 2013, as compared to $4.0 million (0.6% of revenues) in the first quarter of 2012. The equity in net earnings of affiliated companies and partnerships in the first quarter of 2012 included approximately $1.6 million in capital gain related to the sale of the Company's interest in an affiliated entity.

Net income attributable to non-controlling interests was $1.1 million in the first quarter of 2013, as compared to net expense of $0.8 million in the first quarter of 2012.

Net income attributable to the Company's ordinary shareholders  was $41.4 million (6.1% of revenues) in the first quarter of 2013, as compared to $32.9 million (4.8% of revenues) in the first quarter of 2012. The non-GAAP net income in the first quarter of 2013 was $51.1 million (7.5% of revenues), as compared to $40.8 million (5.9% of revenues) in the first quarter of 2012.

Diluted net earnings per share attributable to the Company's ordinary shareholders were $0.98 for the first quarter of 2013, as compared with $0.77 for the first quarter of 2012. The non-GAAP earnings per share in the first quarter of 2013 were $1.22, as compared to $0.96 in the first quarter of 2012.

The Company's backlog of orders was $5,777 million as of March 31, 2013, as compared with $5,683 million as of December 31, 2012. Approximately 77% of the backlog relates to orders outside of Israel. Approximately 63% of the Company's backlog as of March 31, 2013, is scheduled to be performed during the upcoming three quarters of 2013 and during 2014.

Operating cash flow was $13.8 million during the first quarter of 2013, as compared to $51.8 million in the first quarter of 2012.

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


2013


2012


2012







GAAP gross profit

192.7


195.8


815.9

Adjustments:






Amortization of  intangible assets

5.6


5.1


24.2

Non-GAAP  gross profit

198.3


200.9


840.1

Percent of revenues

29.2%


29.1%


29.1%







GAAP operating income

53.7


41.7


203.1

Adjustments:






Amortization of intangible assets

11.6


12.2


49.2

Non-GAAP operating income

65.3


53.9


252.3

Percent of revenues

9.6%


7.8%


8.7%







GAAP net income  attributable to Elbit Systems' shareholders

41.4


32.9


167.9

Adjustments:






Amortization of intangible assets

11.6


12.2


49.2

Gain from change in holdings

-


(2.3)


(2.3)

Adjustment of loss from discontinued operations, net

0.2


0.1


0.4

Related tax benefits

(2.1)


(2.1)


(8.9)

Non-GAAP net income attributable to Elbit Systems' shareholders

51.1


40.8


206.3

Percent of revenues

7.5%


5.9%


7.1%







Non-GAAP diluted net EPS

 

1.22


0.96


4.88

Recent Events:

On March 17, 2013, the Company announced that its wholly-owned subsidiary, Elbit Systems EW and SIGINT  Elisra Ltd., was awarded an approximately $115 million contract to supply an Asian customer with Electronic Warfare systems for multi-purpose land missions. The contract will be performed over two years.

On March 20, 2013, the Company announced that its wholly-owned subsidiary, Elbit Systems Electro-optics Elop Ltd. was awarded an approximately $80 million contract to upgrade Armored Fighting Vehicles of an Asian customer. The program will be performed over a two-year period. 

On April 24, 2013, the Company announced that it was awarded an approximately $40 million contract to supply a country in Africa with the Wise Intelligence Technology (WiTTM) System for Intelligence Analysis and Cyber Defense. The system will be supplied within two years.

On April 25, 2013, the Company announced the establishment of Sharp Elbit Systems Aerospace, Inc., a jointly owned company in South Korea, with Sharp Aviation K Inc., located in Seoul, South Korea. Elbit Systems will own 19% with an option to increase ownership to 50%.

Changes to the Board of Directors:

Further to previous announcements on August 14, 2012, and March 13, 2013, and pursuant to the recommendation of the Board's Nomination and Corporate Governance Committee, the Board of Directors appointed Joseph Ackerman as a member and Vice Chairman of the Board of Directors, effective immediately following the Board meeting on May 7, 2013.  Mr. Ackerman retired as President and CEO of the Company on March 31, 2013.  Mr. Ackerman's appointment to the Board of Directors follows the resignation of Dov Ninveh, who served as a member of the Board of Directors since 2000.  The Board expresses its appreciation to Mr. Ninveh for his many years of valuable service as a director.

Dividend:

The Board of Directors declared a dividend of $0.30 per share for the first quarter of 2013. The dividend's record date is May 21, 2013, and the dividend will be paid on June 3, 2013, net of taxes and levies, at the rate of 25%. 

Conference Call:

The Company will be hosting a conference call today, Wednesday, May 8, 2013 at 9:00 am 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 9:00am Eastern Time; 6:00am Pacific Time; 2:00pm UK Time; 4:00pm 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 the same link a few 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) or +972 3 925 5900 (Israel and International).

About Elbit Systems

Elbit Systems Ltd. is an international defense electronics company engaged in a wide range of 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 ("UAS"), advanced electro-optics, electro-optic space systems, EW suites, airborne warning systems, ELINT systems, data links and military communications systems and radios. The Company also focuses on the upgrading of existing military platforms, developing new technologies for defense, homeland security and commercial aviation applications and providing a range of support services.

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

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

CCG Investor Relations

Tel: 1-646-201-9246

elbitsystems@ccgisrael.com

 

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 1934, 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.

(FINANCIAL TABLES TO FOLLOW)

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

 


March 31,

December 31,


2013

2012


Unaudited

Audited

Assets






Current assets:



Cash and cash equivalents

$    176,368

$    199,241

Short-term bank deposits

23,562

15,444

Available-for-sale marketable securities

51,127

50,111

Trade and unbilled receivables, net

765,373

688,129

Other receivables and prepaid expenses

181,245

180,103

Inventories, net of customers advances

771,993

751,247

Total current assets

1,969,668

1,884,275




Investments in affiliated companies, partnerships and other companies

128,869

126,482

Long-term trade and unbilled receivables

224,777

229,687

Long-term bank deposits and other receivables

31,610

19,269

Deferred income taxes, net

30,674

31,465

Severance pay fund

308,779

302,680


724,709

709,583




Property, plant and equipment, net

493,459

501,286

Goodwill and other intangible assets, net

702,154

715,561

Total assets

$ 3,889,990

$ 3,810,705




Liabilities and Equity






Short-term bank credit and loans

$         49

$         181

Current maturities of long-term loans and Series A Notes

76,804

90,056

Trade payables

252,927

260,975

Other payables and accrued expenses

733,022

704,450

Customer advances in excess of costs incurred on contracts in progress

463,806

453,382


1,526,608

1,509,044




Long-term loans, net of current maturities

175,986

173,745

Series A Notes, net of current maturities

418,616

408,610

Employee benefit liabilities

414,431

407,661

Deferred income taxes and tax liabilities, net

54,879

48,787

Customer advances in excess of costs incurred on contracts in progress

162,946

156,497

Other long-term liabilities

59,657

55,735


1,286,515

1,251,035




Elbit Systems Ltd. equity

1,044,185

1,017,115

Non-controlling interests

32,682

33,511

Total equity

1,076,867

1,050,626

Total liabilities and equity

$ 3,889,990

$ 3,810,705

 

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

 


Three Months Ended

March 31,

Year Ended

December 31,


2013

2012

2012


Unaudited

Audited

Revenues

680,188

690,788

2,888,607

Cost of revenues

487,479

495,037

2,072,742

  Gross profit

192,709

195,751

815,865





Operating expenses:




Research and development, net

51,049

58,766

233,387

Marketing and selling

55,754

61,361

241,911

General and administrative

32,167

33,941

137,517


138,970

154,068

612,815





  Operating income

53,739

41,683

203,050





Financial expenses, net

(7,922)

(7,815)

(26,086)

Other income (expense), net

(9)

930

78

Income before income taxes

45,808

34,798

177,042

Taxes on income

(4,604)

(6,560)

(17,099)


41,204

28,238

159,943





Equity in net earnings of affiliated companies and partnerships

1,692

4,038

11,160

Income from continuing operations

42,896

32,276

171,103

Loss from discontinued operations, net

(341)

(156)

(616)

   Net income

42,555

32,120

170,487





Less: net loss (income) attributable to non-controlling interests

(1,148)

761

(2,608)

Net income attributable to Elbit Systems Ltd.'s shareholders

41,407

32,881

167,879





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




   Basic net earnings (losses) per share




      Continuing operations

0.99

0.77

3.99

      Discontinued operations

-

-

(0.01)

   Total

0.99

0.77

3.98

   Diluted net earnings (losses) per share




      Continuing operations

0.98

0.77

3.98

      Discontinued operations

-

-

(0.01)

   Total

0.98

0.77

3.97

Weighted average number of shares used in computation of basic

earnings per share (in thousands)

 

41,906

 

42,489

 

42,190

Weighted average number of shares used in computation of diluted earnings per share (in thousands)

 

42,057

 

42,663

 

42,277





Amounts attributable to Elbit Systems Ltd.'s shareholders




   Income from continuing operations, net of  income tax

41,610

32,974

168,245

   Discontinued operations, net of income tax

(203)

(93)

(366)

Net income attributable to Elbit Systems Ltd.'s shareholders

41,407

32,881

167,879

 

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






Nine Months Ended


Year Ended


September 30,


December 31,


2013


2012


2012


Unaudited


Audited

CASH FLOWS FROM OPERATING ACTIVITIES






Net income

42,555


32,120


170,487

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






Depreciation and amortization

32,831


35,485


138,796

Discontinued operations, net

341


156


616

Stock based compensation

190


216


3,326

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

(23)


87


153

Deferred income taxes and reserve, net

(1,042)


(738)


6,579

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

(121)


115


1,197

Loss (gain) on sale investment

179


(791)


(829)

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

(1,602)


(1,468)


(1,602)

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






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

(70,008)


14,726


(91,988)

Decrease (increase) in inventories, net

(20,746)


(58,410)


10,022

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

13,145


(3,492)


(75,724)

Severance, pension and termination indemnities, net

1,232


(2,280)


(10,612)

Increase in advances received from customers

16,873


36,108


47,962

Net cash provided by operating activities

13,804


51,834


198,383







CASH FLOWS FROM INVESTING ACTIVITIES






Purchase of property, plant and equipment

(15,611)


(19,768)


(81,637)

Investments in affiliated companies and other companies

(3,298)


(507)


(4,241)

Proceeds from sale of property, plant and equipment

1,596


1,557


7,335

Proceeds from sale of investments

-


705


705

Investment in long-term deposits

(373)


(192)


(779)

Proceed from sale of long-term deposites

86


283


2,849

Investment in short-term deposits and available for sale securities

(10,712)


(275,181)


(340,899)

Proceed from sale of short-term deposits and available-for-sale securities

1,779


14,237


299,029

Net cash used in investing activities

(26,533)


(278,866)


(117,638)







CASH FLOWS FROM FINANCING ACTIVITIES






Proceeds from exercise of options

1,817


554


1,352

Repayment of long-term loans

(21,879)


(136,638)


(319,601)

Proceeds from long-term loans

10,050


125,254


122,038

Proceeds from issuance of Series A Notes

-


217,420


246,973

Series A Notes issuance costs

-


1,889


(2,035)

Purchase of treasury shares

-


(10,004)


(26,006)

Repayment of Series A Notes and convertible debentures

-


-


(53,530)

Dividends paid

-


-


(50,616)

Tax benefit in respect of options exercised

-


-


161

 Change in short- term bank credit and loan, net

(132)


(14)


(2,817)

Net cash used in financing activities

(10,144)


198,328


(84,081)







NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

(22,873)


(28,704)


3,336

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD

199,241


202,577


202,577

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD

176,368


173,873


199,241

* Dividend received from affiliated companies and partnership

90


2,570


9,558








 

 

ELBIT SYSTEMS LTD.
DISTRIBUTION OF REVENUES

 

CONSOLIDATED REVENUES BY AREAS OF OPERATION:

 


Three Months Ended

March 31

Year Ended

December 31


2013

2012

2012


$ millions

%

$ millions

%

$ millions

%








Airborne systems

272.4

40.1

281.5

40.8

1,054.5

36.5

Land vehicle systems

58.5

8.6

91.6

13.3

374.5

13.0

C4ISR systems

237.6

34.9

218.8

31.7

1,017.6

35.2

Electro-optic systems

81.0

11.9

68.5

9.8

324.1

11.2

Other  (mainly non-defense engineering and production services)

 

30.7

 

4.5

 

30.4

 

4.4

 

117.9

 

4.1

Total

680.2

100.0

690.8

100.0

2,888.6

100.0

 

CONSOLIDATED REVENUES BY GEOGRAPHICAL REGIONS(*):

 


Three Months Ended

March 31

Year Ended

December 31


2013

2012

2012


$ millions

%

$ millions

%

$ millions

%








Israel

138.6

20.4

136.2

19.7

519.9

18.0

North America

219.1

32.2

208.9

30.2

909.4

31.5

Europe

120.0

17.6

113.1

16.4

561.1

19.4

Asia Pacific

129.8

19.1

153.4

22.2

568.4

19.7

Latin America

65.5

9.6

56.5

8.2

258.8

9.0

Other countries

7.2

1.1

22.7

3.3

71.0

2.4

Total

680.2

100.0

690.8

100.0

2,888.6

100.0

 

(*) The distribution of revenues by geographical regions has been modified in certain respects from our reports in prior years. The regions of "Israel" and "Europe" remain unchanged. The "U.S." region has been changed to "North America", which includes the U.S. and Canada. We now also include two new regions: "Latin America" and "Asia-Pacific" (east of the Caspian Sea). The remaining markets are included in "Other countries".

SOURCE Elbit Systems Ltd.



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