Elbit Systems (ESLT) 24 May 222022 Q1 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to Elbit Systems First Quarter 2022 Results Conference Call [Operator Instructions].

As a reminder, this conference is being recorded.

You should have all received by now the company's press release that is available in the News section of the company's Web site, www.elbitsystems.com. I would now like to hand the call to Rami Myerson, Elbit Systems Investor Relations Director. ahead. go please Rami,

Good earnings and call. operator. first to quarter XXXX day, you, welcome everyone, our Thank

CFO; Senior On Butzi and our Machlis, call our Yossi the with President CEO; me Kobi Business Management. EVP, today are and Gaspar, Kagan,

point content I statement safe call. of company's release this to the also today that issued the conference Before we earlier like refers out begin, press would harbor in to the

provide as you financial As supplemental with of our understand we we do believe GAAP well every the business. regular information detail We data, information. will as non-GAAP provides certain quarter, non-GAAP and performance this to ongoing both that the additional help

release. find non-GAAP talk by during beyond. providing Kobi well the all financial the financial GAAP a as discussion can of and information data followed will reconciliation the the significant who the by Butzi, as the events quarter press will You and results, about begin detailed today's of some in

session. to We will over Kobi, then question-and-answer the please? turn now to turn I over Kobi. call the a like to would With call that,

thank would and results investors Yossi analysts investor for Rami. to capital over relations. Yossi for coming thank markets for in first you, results Systems' Systems present has and today. a is the Gaspar you honor everyone, Hello, and It and Elbit joining us privilege you meeting to I months. to recent quarter retained months. Elbit like responsibility both an look to Thank I weeks today. and forward

Revenue the our price-linked The compensation have February for to in of related Systems' and was last in plans from a plans. customers includes quarter. received and stock previous fulfillment market growth didn't for term of in to in world. with Systems solutions employee demand in Russian employees stakeholders. reflect sharp orders incentivizing compensation expenses increase years to sustained for on revenues healthy all a order or share help The Ukraine the the quarter generate align the our material intake acquisition. Elbit the employee budget a and primarily in impact long proposed performance, of the increases results Profitability Sparton invasion environment first quarter quarter These price due around value Elbit

year non-GAAP profitability always Our release have in share GAAP these the published appreciation XXXX. first than our invasion and press following on were In compensation in and results significantly as expenses. quarter, expenses price the results included the noted Russian full Ukraine, fourth XXXX after normal reducing March the XX, of in the quarter, larger quarter

Assuming a and decline will in financial we share key return figures to some historic I of highlight expect price-linked that in stock to expenses discuss results. the levels. price and trends volatility, these our compensation now

XX% the increase Sparton, of acquired which year-over-year. billion, quarter by revenues was the in quarter to addition were growth was major XXXX. in second $X.XXX of part First organic an A contribution from the

sales system XXXX. terms system unmanned due sales CXISR Sparton of X% for Land and sales. revenues revenues Electrooptics of operations, for level for for the precision areas year-over-year revenues, across mainly airborne to of other makes of to due a acquisition of X% similar primarily year-over-year, and revenues. revenues accounted increased XX% total of accounted revenue of XX% XX% total airborne munition accounted guided of systems and to In our breakdown increased sales. accounted

was Europe XX% term to of first sustainability and Our the business. geographic XX%, of Israel Asia our revenue In contributed North America base the is XX%. revenues, Pacific long our diverse important quarter, XX%

of XX.X% of The margin GAAP training was to $XX million XX.X% compared simulation of first the to to first approximately the compared increased XX.X%. revenues at and XX.X% revenues include mainly Pacific to was Asia for plan. XXXX. phase. quarter European GAAP gross non-GAAP of to price-linked of revenues quarter precision growth first due primarily munitions guided sales quarter related and quarter due in in non-GAAP in The in first and UAS. to was the XXXX gross profit first expenses margin quarter the stock the compensation

was million million The GAAP of non-GAAP income income profit year disposal due the operating quarter gain revenue the million acquisition $X tax to XXXX. the revenues of of compared first related year and last of recorded or million in non-GAAP million XXXX. to XXXX. The related were in the linked in noncore first last quarter $XX.X million effective $XX.X million for business; compared expenses X.X% the and the first X.X% operating operating first capital price compensation first $X.X quarter price-linked The XX.X% compared the to income XX.X% expenses from net quarter quarter includes million XXXX; was revenues million expense G&A expenses was with XXXX. expenses compensation last or the to financial expense; versus X.X% $XX.X revenue stock R&D as X.X% revenues X.X% $XXX,XXX versus was marketing the Sparton to year. in GAAP stock of $X.X of We plans. to a first expenses compared compared selling operating $XX.X quarter in of in quarter in tax in quarter rate the $XX.X financial of the compensation due X.X% first of income and X.X% in of expenses; other included first approximately to expense were of $XX operating a breakdown was to stock follows: X.X% in a to increased price-linked

$X.XX year. compared $X.XX with stock price-linked the year. was quarter The last with in approximately $X.XX $X.XX compared compensation the quarter was in expenses on equivalent were EPS to EPS diluted last $X.XX diluted non-GAAP EPS basis. The GAAP Our an first

to XXXX beyond. last more of the year. Elbit's long please the improving declared first quarter compared Board in inflow Butzi, of Mr. The scheduled higher flow and percentage The our end Directors performed million XXXX. scheduled as a backlog similar future backlog backlog $XX.X for the the XXXX, backlog revenues. Machlis, was end the shorter of March $X.XX orders visibility backlog the at over to recent XXXX. billion of receipt the during of for to $XX following a Our XXXX the years inflow will of dividend is Operating turn quarter for $XX quarter XXXX decline the to a than of is ahead. and current March cash CEO. approximately first go XXXX, billion, of -- be of and at the Approximately outflow for was the in and $X.X of level same XX, share contracts, rest now per at I XX% million call term

you, the good for around the our strong Thank solutions first world. luck. Kobi, in and customers the Growth quarter from reflects demand

will in countries. recent does witnessed like the and of over invasion we look capabilities. profitability of defense and the important these momentum not themselves on over growth support mentioned, by to In increase growing Elbit the the a of company's time. asset. As as the months, in our the to the tensions proposed equip or expect elevated compensation and geopolitical I spending with employees coming quarter include I impact of are businesses revenues have a Kobi the will would improved range the Elbit's of to budget expenses defense the Ukraine NATO increase most years. my many peers militaries in quarter. the convert share Systems' in and perspective We orders Russian noticeable inquiries XX,XXX in incoming believe

Systems. the We and Elbit incentives long employee to believe I to encourage invest motivating workforce creation important term the all is price potential to share of continue in realize long to align and recruiting, value for to retaining term quality a high it stakeholders. compensation

you past improve we part and our as the range a continue the effort profitability efficiency on with discussed generation. in plans cash work We to as of of have

positioned of multiple I benefit defense Elbit the chains. in wake-up in that the integral increased support in operational The will and local by Systems benefit from supply other employ invested of Turning invest many hundreds global to subsidiaries global part in and the growth of broad to look in employees Systems in point parts ecosystem well expect domestic defense portfolio that defense Ukraine for governments our spending. the as turning of footprint They domestic footprint countries and I has countries. budget of domestic subsidiaries was a and recent the increase a had to the it for home geopolitical a are base. be supporting faster European from world. home proposed invasion budgets development. expect call investor in funding the Elbit defense the to defense an is countries. and Europe governments global Russian

systems. Elbit like has platforms a a cost engineers, system experience protection advanced of significant current for of peers MRTT the few Systems we of electric of that to R&D or that serve as the and We systems Air ground effective conflict lab. than a customers. many warfare Air were leverage and portfolio. systems experience, a the and short higher our by Air to many The AXXX systems. portfolio operational May, systems Elbit's percentage broad for they’re J-MUSIC loop Guard aircraft in to can I provide can highlighted of aerial, provide of Systems This field most investment European products to using from would Airbus like sales has our them provides military with our provide the of we air naval technologically In them of a ensure our supply Our warning examples. US significant solutions the range demonstrated range available it veterans and for the threats. platform provides Elbit of National of feedback relevance Force. DIRCM enable provides is missile Force continue are between selected often of to

ground missiles. system commercial DIRCM aircraft from and military to Our air defend

vehicles MoD The all Systems the We and a selected protect Israel, systems Protection year, has US, to armed incoming chaffs Active also Navy the Elbit warfare navy of Australia will range help Iron selected Netherlands, been for to ships. UK flares by strikes. of Fist aircrafts. that from supply the a UK provide Last protect range System and electric

over unveiled to the designate in forces few Elbit the Starliner command conflict level. connecting incorporate attack need enable of unmanned the intelligence, We companies has expect and months combined Hermes that advanced highlighted drones IDF a Systems explore aircraft space. will as logistics air final at recently for ago, demand of increase certified forces a systems multiple targets that control new first unmanned portfolio its and Systems conflict. an and by commercial domains. aircraft. systems across for A and operations identify The for Elbit the unmanned The the result with broad maneuvering

to sensor a -- helping system connect the and sensors, by incorporate to and gathering shooter AI targets to our and utilize quickly range gathered loop defector, intelligence engage the customers Our relevant targets identify of to efficiently. CX shortening

world conflict footprint. our like Our recent are the I and highlighted -- command as in militaries Day, demand there UK Investor believe learnt social including we around investments our systems that Israel, US. Netherlands, to from the Elbit and and commitment examples are reiterate control best with Systems' and benefit environmental, apply lesson in two to customers, These are and Sweden, I in systems Ukraine. will reduce portfolio environmental the many just products At the and making other increased would Systems are to the governance Elbit we the the from purposes. service

few vehicles very are introducing after a years vehicles employees We our successful for also ago. a of rollout electric hybrid

at field the We buildings of PV new the and are Israel roof solar of the out on facility world. around rolling our panels south in

are natural to gas reduce emissions. also sites connecting We to

thousands Systems this simulation fuel and Operator? our employees Elbit and solutions to reduce our in leveraged help week, investing I the R&D, a was children violence world will employee the tools see One R&D Hack-a-thon visited flying over to protect communities. systems employees interconnection required to are to am media. from hosted will of emissions. Elbit and example children and that, to proud take involvement to that tools I online. Elbit's questions. see consumption that more of the happy to the develop their that train how pilot. be Last reduce I innovative help than activities training organized, benefit with culture to social and develop We impressed protect on your XX in develop that And hours our of monitored Hack-a-thon

[Operator is from Jefferies. Scott of Forbes Instructions] question first The

areas as of to see How geographical? be do we seeing are opportunities you largest mean you the of through Eastern more kind happening stemming that what's come what the in signals perspective or opportunity, a on whether as really demand Europe, get as clarity NATO really particularly about we product I think some I budgets? from from started mean

solutions would system growing solution, sites, I And active demand platform DIRCM chaffs combination. includes Europe, and to and which see, we more. system, and in flare a and EW for protect protect that to say the It's protection

see growing not see also also UAVs the in protection cyber growing guided We for demand here Europe. solutions, munition is We and East And again to growing in themselves to for also our forces also in just in to Europe. command control for actually, for support demand intelligence order this munition, growing demand for US, But demand the against stocks systems, for the systems guided in also and Israel. see we build Far protect and in China.

new also here budget, have programs and five we in planning contracts country. and getting are a have a We our year we

us see see And growing have demand almost US, of over these we many portfolio be the and especially, the budgets Romania, we fact local chain the in growing wide interest others, and of most in in course, and India, and for Austria, all help part -- many to Australia also subsidiaries our we so have also such the countries. portfolio a in in of in of world. we in in So all Germany, supply the Canada, UK, altogether, in

we large the seeing continue are for to contracts a strong taking and of also And expect momentum are to So of the the many the now. we of in we portfolio, it the coming company see is and footprint many benefits quarters. to wide more company combination strategy years,

in lines to priorities you've just on your those I a mean up take year. this then chance how got specifically. to feel fit out at And and look were detailed a US the FY to portfolio got budget? the budget, being do that initial you go What takeaways more product 'XX shown your and up we

now we the activities, we in us us participate fact of have would see started to I for as naval airborne Talking demand say about growing helps Elbit effort. family that to lot right a the and activity part this a a just every all on course, have V-XX, the and of like part that the Apache, systems F-XX, of T-X avionics on the part of F-XX, Boeing. certified have like T-X, remind each of we F-XX major helmets, and each we

vision support And systems on includes munition, many a are platforms the airborne the which required we many night ground target have acquisition guided troops support systems, designator, equipment have Europe. in we soldier, also position in which US. laser for So strong to to which solution, the the forces, includes active protection all

So more altogether, believe we of need strong have U.S. on market the to are based System advantage under the we employees also Elbit in X,XXX America, position our U.S. of the I growing that has than positioned take which with well it. in

Leumi. question next Ella Bank The is Fried from of

quarters? you hope wish even a ask When this it lot. like I was -- feeling line And these I year. quarter, there of spoke I time that the a are is going is of in off-line, the think real much you orders things the of I keen translated presently, expect, the is But though we'll in a into as before Because that would fast that it. the the will not some but of, on, a that to slowly orders their near year I they we very to into congratulated spoke possible. it much be the defense next countries expect translated stronger But usually moving that of the are Because growth is is end actually do year? you are it opportunities industry it of the will and that necessarily this lot representative visible of of. you you about indicates that in you see do feeling obviously, see as How time, on this get lot word, that how a

can the revenue. in OP is you see of is Phantom February out we end the a this revenue, GP of all impressive And take at -- intervention from that us which place to took numbers the what -- see believe, Ukraine to talking the if to XXX from invasion can the $XXX in for what see a in XX% the I want the you to auction, to can year-over-year the increase prior and for XX. I’m you in also to year. million numbers, the growth growth and onetime remind actually I you you had First, number number in XX an expense growth minute from $XXX in -- And guess million Ukraine

product in in lot a inquiries year before have. and of to growth hopefully, believe some we growth Ukraine. -- that see relatively the to So course, be part And And demand yield question, your I which to a which -- the yield time, also year. significant growing lot of to we and budget numbers is And I see it in revenues will system a funnel invasion as urgent of coming requirements, a see with and can believe we see that's year. quarters contract but in on of period seen see that the you in well part regards of see a also for we the this it and profit a next programs will of opportunities and will tell our of short we that I also And part this we we growing.

the rates other and inflation currency in of are lot -- also and more know I year, are were to that can careful a we there? and the chains level but many doing be bit lots still throughout hope of expect there that above your that we that we solid you of have quarter. we financial best margins know it's And a I it, it can or were this -- to do But are XX% And have is something gross see pressures reasons. the a supply to question. or this The

not previous that we are from know discussions guidance. You providing

of extraordinary gross But expenses X.X% However, due we by profit. operating quarter that improved quarter And of stock incur have we amount we excluding to from the was transmitted our a view opportunities, that previous the one I'm earlier, have to you look marketing that of significant the earlier, funnel -- the improved not our thing in mentioned if the that to wanted by the you see… this the increase discussed out I price In Butzi point properly. just also it sure will results, what at profit. we

the I actually opportunity… I [Multiple Speakers] the was it and thought that noticed

You expenses. increase seen of have marketing an

Now money. catch growing this by is that definitely in business. we is not another. these spending things the order then efforts two -- marketing this have marketing just one is When related to are opportunities the new with This spending are company

a to have So there extraordinary correlation is our operating definitely marketing, and the some expenses they affected in these extent. profit

we want that environment very to to in possible order happening everything which which is We Now from experiencing positive, business. to business the we now, do benefit are what's want in positive. the catch very is

and line, bottom that the the line have will a drag of bit well in top in maybe this a shown everything no But backlog up the growing doubt operating as and operating of our profit show So increasing because profit element. will be little and future. our we on

add to are which want important. I topics, two also I And believe

new south invest that efficiencies facilities. We to know the on facility in we in Mi. continue new building to a for are We work

sure help the more And from I course, the ERP future which currency as first We deploy as more is to new than was profit favorable system well. level hope near benefit it now also it in in the the which will create continue I'm future. us in quarter, in it is of the to we'll company, the

no are further There time. at Instructions] this [Operator questions

call this I please US, will statement, participants Mr. a his hours to two call ends. Machlis Before ask remind after available site, X closing will replay XXX-X-XXX-XXXX. (XXX) ahead like www.elbitsystems.com. the be like to to And go In internationally, concluding on call Mr. please that Machlis, XXX-XX-XXXX. the replay you would call also conference the of XXX-XXXX. with I of be In your company's available would make Web this please statement? A Israel, call

on all for Have your would our I for joining to their and thank and Elbit's like support continued everyone To company. Thank hardwork to our us employees contribution you. you good goodbye. in call, for a the success. interest and today thank day continued and

Thank you. Ltd. This concludes the Systems Elbit

you First Quarter Conference XXXX Call. for Results Thank your participation.

disconnect. and You may ahead go