Elbit Systems Reports First Quarter of 2016 Results

HAIFA, Israel, May 17, 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 March 31, 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, President and CEO of Elbit Systems, commented: "We are pleased with our first quarter financial results, especially our solid growth in backlog which provides us with strong revenue visibility over the long term.  We are also encouraged by the gradual trend, over the past few years, of improving gross margins which is as a result of the efforts we have taken to operate efficiently, improve internal processes while harvesting synergies across our various business units.  The ongoing growth in the backlog coupled with an improving environment for defense spending throughout the world, positions us well to continue our long-term growth for the foreseeable future."

First quarter 2016 results:

Revenues in the first quarter of 2016 were $721.2 million, as compared to $706.6 million in the first quarter of 2015.

Non-GAAP (*) gross profit amounted to $220.1 million (30.5% of revenues) in the first quarter of 2016, as compared to $206.4 million (29.2% of revenues) in the first quarter of 2015. GAAP gross profit in the first quarter of 2016 was $212.2 million (29.4% of revenues), as compared to $201.2 million (28.5% of revenues) in the first quarter of 2015. The improvement in the gross profit rate was mainly due to mix of product sold in the quarter and overall improvement of operations.

Research and development expenses, net were $56.0 million (7.8% of revenues) in the first quarter of 2016, as compared to $55.6 million (7.9% of revenues) in the first quarter of 2015.

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Marketing and selling expenses, net were $61.0 million (8.5% of revenues) in the first quarter of 2016, as compared to $51.3 million (7.3% of revenues) in the first quarter of 2015.  The marketing and selling expenses in the first quarter of last year were unusually low as a percentage of revenues.

General and administrative expenses, net were $38.9 million (5.4% of revenues) in the first quarter of 2016, as compared to $34.4 million (4.9% of revenues) in the first quarter of 2015. The increase in the General and administrative expenses in the first quarter of 2016 was mainly due to cost of the phantom bonus retention plan associated with G&A expenses.

Other operating income, net in the first quarter of 2016 amounted to $7 million. The amount reflects a net gain related to the revaluation of investment in an Israeli subsidiary that was deconsolidated in the quarter due to third party investment.

Non-GAAP(*) operating income was $66.9 million (9.3% of revenues) in the first quarter of 2016, as compared to $69.5 million (9.8% of revenues) in the first quarter of 2015.  GAAP operating income in the first quarter of 2016 was $63.3 million (8.8% of revenues), as compared to $59.8 million (8.5% of revenues) in the first quarter of 2015.

Financial expenses, net were $1.7 million in the first quarter of 2016, as compared to $5.7 million in the first quarter of 2015.  The lower financial expenses in the first quarter of 2016 were mainly a result of gain from various currencies exchange rate differences.

Other income, net in the first quarter of 2016 is a result of a capital gain related to the sale of real estate that was acquired in prior years.

Taxes on income were $12.7 million (effective tax rate of 19.4%) in the first quarter of 2016, as compared to $8.6 million (effective tax rate of 15.9%) in the first 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 and prior years adjustments in the first quarter of 2015.

Net income attributable to non-controlling interests was $0.5 million in the first quarter of 2016, as compared to $0.9 million in the first quarter of 2015.

Non-GAAP(*) net income attributable to the Company's shareholders in the first quarter of 2016 was $51.2 million (7.1% of revenues), as compared to $52.6 million (7.4% of revenues) in the first quarter of 2015. GAAP net income in the first quarter of 2016 was $52.3 million (7.3% of revenues), as compared to $44.6 million (6.3% of revenues) in the first quarter of 2015.

Non-GAAP(*) diluted net earnings per share attributable to the Company's shareholders were $1.20 for the first quarter of 2016, as compared to $1.23 for the first quarter of 2015. GAAP diluted earnings per share in the first quarter of 2016 were $1.22, as compared to $1.04 for the first quarter of 2015.

The Company's backlog of orders for the quarter ended March 31, 2016, totaled $6,775 million, as compared to $6,270 million as of March 31, 2015. Approximately 65% of the current backlog is attributable to orders from outside Israel. Approximately 63% of the current backlog is scheduled to be performed during 2016 and 2017.

Operating cash flow for the quarter ended March 31, 2016, was $24.5 million, as compared to $83.9 million in the quarter ended March 31, 2015.

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* 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.

 

 

 

Recent Events:

On April 4, 2016, the Company announced that its subsidiary CYBERBIT Ltd. (CYBERBIT) was awarded contracts to supply intelligence and cyber analysis and research systems for a country in Asia-Pacific for an aggregate amount of approximately $22 million. The systems will be supplied over a two-year period.

On April 6, 2016, the Company announced that its subsidiary CYBERBIT was awarded a contract to supply intelligence and cyber analysis and research systems for a country in Africa. The contract, that is in an amount that is not material to Elbit Systems, will be supplied over a two-year period.

On April 19, 2016, the Company announced that its Australian subsidiary, Elbit Systems of Australia Pty Ltd. , was awarded a contract in an amount of approximately $30 million (approximately 40 million Australian dollars) by the Department of Defence of the Commonwealth of Australia for the supply of XACTth65 sights, a member of the Elbit Systems thermal weapon sight product family.

On April 26, 2016, the Company announced that it was awarded an approximately $20 million contract from a Western European country for the supply of tactical mobile radios from the new and advanced E-LynX™ Software Defined Radios (SDR) family. The contract will be performed over a three-year period.

On May 9, 2016, the Company announced that Elbit Systems of America's subsidiary, M7 Aerospace LLC (M7), was awarded a $7.5 million Firm, Fixed Price contract by the U.S. Navy to perform modifications on United States Naval Test Pilot School's (USNTPS) C-26 aircraft. The contract will be completed in 2016.

Dividend:

The Board of Directors declared a dividend of $0.40 per share for the first quarter of 2016. The dividend's record date is May 26, 2016. The dividend will be paid from income generated as Preferred Income, on June 6, 2016, net of taxes and levies, at the rate of 20%. 

Conference Call:

The Company will be hosting a conference call today, Monday, May 17, 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: 1-888-668-9141UK Dial-in Number: 0 800 917 5108ISRAEL Dial-in Number: 03 918 0610INTERNATIONAL Dial-in Number:  +972-3-918-0609at: 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) 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 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 sheetsConsolidated statements of incomeConsolidated statements of cash flowConsolidated 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)

 

 

 

 

 

 

 

 

 

 

 

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SOURCE Elbit Systems Ltd