Elbit Systems Reports First Quarter 2012 Results
Revenues at $691 million; Net income at $32.9 million; Diluted net earnings per share of $0.77
HAIFA, Israel, May 15, 2012 /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, 2012.
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.
Joseph Ackerman, President and CEO of Elbit Systems, commented: "In the first quarter, we recorded revenue growth as compared to the corresponding quarter last year. Much of this growth came from markets such as Latin America and Asia-Pacific, geographic regions with many emerging economies and diverse defense markets, supported by growing defense budgets. I foresee that in 2012 we will begin to see the impact of our ongoing efforts, enabling the company to address the industry's competitive challenges, both for the benefit of our employees and for the Company's long-term success."
First quarter 2012 results:
Revenues in the first quarter of 2012 were $690.8 million, as compared to $620.3 million in the first quarter of 2011. The leading contributor to the Company's revenues was the airborne systems area of operations.
Gross profit amounted to $195.8 million (28.3% of revenues) for the first quarter of 2012, as compared with gross profit of $185.6 million (29.9% of revenues) in the first quarter of 2011. The non-GAAP gross profit in the first quarter of 2012 was $200.9 million (29.1% of revenues), compared to $193.2 million (31.1% of revenues) in the first quarter of 2011.
Research and development expenses, net were $58.8 million (8.5% of revenues) in the first quarter of 2012, as compared to $54.2 million (8.7% of revenues) in the first quarter of 2011.
Marketing and selling expenses were $61.4 million (8.9% of revenues) in the first quarter of 2012, as compared to $55.0 million (8.9% of revenues) in the first quarter of 2011.
General and administrative expenses were $33.9 million (4.9% of revenues) in the first quarter of 2012, as compared to $35.5 million (5.7% of revenues) in the first quarter of 2011.
Operating income was $41.7 million (6.0% of revenues) in the first quarter of 2012, as compared to $40.9 million (6.6% of revenues) in the first quarter of 2011. The non-GAAP operating income in the first quarter of 2012 was $53.9 million (7.8% of revenues), as compared to $54.9 million (8.9% of revenues) in the first quarter of 2011.
Financial expenses, net were $7.8 million in the first quarter of 2012, as compared to $10.7 million in the first quarter of 2011. Financial expenses in the first quarter of 2011 were comparatively high due to expenses related to currency hedging activities.
Taxes on income showed a tax expense of $6.6 million (effective tax rate of 18.9%) in the first quarter of 2012, as compared to a tax expense of $5.3 million (effective tax rate of 17.4%) in the first quarter of 2011.
Equity in net earnings of affiliated companies and partnership was $4.0 million (0.6% of revenues) in the first quarter of 2012, as compared to $3.8 million (0.6% of revenues) in the first quarter of 2011. The equity in net earnings of affiliated companies and partnership 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 loss attributable to non-controlling interests was $0.8 million in the first quarter of 2012, as compared to net income of $1.0 million in the first quarter of 2011.
Net income attributable to the Company's ordinary shareholders was $32.9 million (4.8% of revenues) in the first quarter of 2012, as compared to $27.9 million (4.5% of revenues) in the first quarter of 2011. The non-GAAP net income in the first quarter of 2012 was $40.8 million (5.9% of revenues), as compared to $38.6 million (6.2% of revenues) in the first quarter of 2011.
Diluted net earnings per shareattributable to the Company'sordinary shareholders were $0.77 for the first quarter of 2012, as compared with $0.65 for the first quarter of 2011. The non-GAAP earnings per share in the first quarter of 2012 were $0.96, as compared to $0.90 in the first quarter of 2011.
The Company's backlog of orders was $5,450 million as of March 31, 2012, as compared with $5,528 million as of December 31, 2011. Approximately 76% of the backlog relates to orders outside of Israel. Approximately 71% of the Company's backlog as of March 31, 2012, is scheduled to be performed during the upcoming three quarters of 2012 and during 2013.
Operating cash flow was $51.8 million during the first quarter of 2012, as compared to $40.1 million in the first quarter of 2011.
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 the following adjustments, in each or some of the applicable periods: (1) added back amortization of purchased intangible assets, (2) added back significant reorganization, restructuring and other related expenses, (3) added back impairment of investments, including impairment of auction rate securities, (4) subtracted gain from changes in holdings, including revaluation of the previously held shares at the acquisition date when a business combination is achieved in stages (step-up), (5) added back impairment loss from discontinued operations, (6) excluded the impact of the cessation of a program with a foreign customer and (7) excluded the income tax effects of the foregoing.
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 Year Ended March 31 December 31 2012 2011 2011 GAAP gross profit 195.8 185.6 732.0 Adjustments: Amortization of intangible assets 5.1 7.6 30.9 Cessation of program [(*)] - - 72.8 Non-GAAP gross profit 200.9 193.2 835.7 Percent of revenues 29.1% 31.1% 29.7% GAAP operating income 41.7 40.9 115.7 Adjustments: Amortization of intangible assets 12.2 14.0 57.3 Cessation of program - - 72.8 Non-GAAP operating income 53.9 54.9 245.8 Percent of revenues 7.8% 8.9% 8.7% GAAP net income attributable to Elbit Systems' shareholders 32.9 27.9 90.3 Adjustments: Amortization of intangible assets 12.2 14.0 57.3 Cessation of program - - 72.8 Impairment of investment - - 0.5 Gain from change in holdings (2.3) - - Loss from discontiued operations 0.1 - 9.4 Related tax benefits (2.1) (3.3) (23.7) Non-GAAP net income attributable to Elbit Systems' shareholders 40.8 38.6 206.6 Percent of revenues 5.9% 6.2% 7.3% Non-GAAP diluted net EPS 0.96 0.90 4.79
(*) Adjustment of expenses related to cessation of program, which resulted in write-off of inventories and other related costs.
On March 19, 2012, the Company announced that Midroog Ltd., an Israeli rating agency ("Midroog"), announced that it had reaffirmed the "Aa1" rating (on a local scale) to the Series "A" Notes issued by the Company in 2010 and to any new Series "A" Notes up to NIS 900 million par value which may be issued by the Company.
On March 29, 2012, the Company announced that following the filing of the Shelf Offering Report dated March 27, 2012 (the "Offering Report"), pursuant to the Shelf Prospectus dated May 18, 2010, the public tender was concluded in connection with the public offering in Israel of the Company's new Series A Notes (the "New Series A Notes") through an expansion of the Company's Series A Notes which were currently outstanding and registered for trading on the Tel Aviv Stock Exchange Ltd. ("TASE"). Following the results of the concluded public offering, the Company issued 807,717 units of New Series A Notes, bearing a fixed interest rate of 4.84% per annum, with a price per unit of 1,029 NIS (approximately $276), (each unit in the principal amount of NIS 1,000 par value). The immediate gross proceeds received by the Company for the issuance of the New Series A Notes was approximately NIS 831 million (approximately $223 million). The terms of the New Series A notes issued are similar to the terms of the Company's outstanding unsecured and non-convertible Series A Notes which were initially issued by the Company pursuant to the shelf offering report dated June 6, 2010. The New Series A Notes form a single series together with the currently outstanding Series A Notes and are not linked (principal and interest) to any currency or index. The Series A Notes, including the New Series A Notes contain standard terms and conditions and do not restrict the Company's ability to issue additional notes of any class or distribute dividends in the future.
On May 8, 2012, the Company announced that it concluded the private placement to Israeli institutional investors (the "Private Placement") of NIS 92,283,000 par value (approximately $24.3 million) additional Series A Notes (the "Additional Series A Notes") in consideration for an aggregate sum of approximately NIS 94.7 million (approximately $24.9 million). The terms of the issued Additional Series A Notes are similar to the terms of the Series A Notes and the Additional Series A Notes from a single series together with the currently outstanding Series A Notes. The New Series A Notes and Additional Series A Notes have been approved for listing on the TASE. The sale and/or transfer of Additional Series A Notes are subject to the limitations on re-sale of securities set forth in the Israeli Securities Law of 1968 and the regulations promulgated there under applicable to private placements. The New Series A Notes and Additional Series A Notes are not and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States or to U.S. Persons (as defined in Regulation "S" promulgated under the Securities Act) without registration under the Securities Act or an exemption from the registration requirements of the Securities Act.
On May 10, 2012, the Company announced that its joint venture with Rockwell Collins, Vision Systems International, LLC (VSI), a leader in advanced Helmet Mounted Display (HMD) technology, has received a new contract with a total value of more than $32 million for the delivery of the Joint Helmet Mounted Cueing System (JHMCS) to The Boeing Company, for the U.S. Navy and Air Force and Foreign Military Sales (FMS) to include: Finland, Australia, Belgium, Canada, and Switzerland. Deliveries will commence this year and continue through 2013.
The Board of Directors declared a dividend of $0.30 per share for the first quarter of 2012. The dividend's record date is May 29, 2012, and the dividend will be paid on June 11, 2012, net of taxes and levies, at the rate of 25%.
The Company will be hosting a conference call today, Tuesday, May 15, 2012 at 9:00am 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: http://www.elbitsystems.com.
Consolidated balance sheet
Consolidated statements of income
Condense 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 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.
ELBIT SYSTEMS LTD. CONSOLIDATED BALANCE SHEETS (In thousands of US Dollars) March 31, December 31, 2012 2011 Audited Audited Assets Current assets: Cash and cash equivalents $ 173,873 $ 202,577 Short-term bank deposits 284,103 21,693 Trade and unbilled receivables, net 652,877 669,524 Other receivables and prepaid expenses 143,591 180,024 Inventories, net of customers advances 819,679 761,269 Total current assets 2,074,123 1,835,087 Investments in affiliated companies, partnership and other companies 113,078 110,159 Long-term trade and unbilled receivables 197,376 162,762 Long-term bank deposits and other receivables 13,908 12,215 Deferred income taxes, net 34,478 36,130 Severance pay fund 293,969 283,477 652,809 604,743 Property, plant and equipment, net 513,037 517,608 Goodwill and other intangible assets, net 752,420 763,072 Total assets $ 3,992,389 $ 3,720,510 Liabilities and Equity Short-term bank credit and loans $ 2,851 $ 2,998 Current maturities of long-term loans and Series A Notes 138,270 127,627 Trade payables 272,110 316,264 Other payables and accrued expenses 772,961 743,866 Customer advances in excess of costs incurred on contracts in progress 436,419 407,222 1,622,611 1,597,977 Long-term loans, net of current maturities 306,303 302,255 Series A Notes, net of current maturities 431,037 235,319 Employee benefit liabilities 403,535 394,115 Deferred income taxes and tax liabilities, net 50,150 48,467 Customer advances in excess of costs incurred on contracts in progress 161.605 154,696 Other long-term liabilities 64,852 59,961 1,417,482 1,194,813 Elbit Systems Ltd.'s equity 922,444 898,337 Non-controlling interests 29,852 29,383 Total equity 952,296 927,720 Total liabilities and equity $ 3,992,389 $ 3,720,510
ELBIT SYSTEMS LTD. CONSOLIDATED STATEMENTS OF INCOME (In thousands of US Dollars, except for share and per share amounts) Three Months Ended Year Ended March 31, December 31, 2012 2011 2011 Unaudited Audited Revenues 690,788 620,258 2,817,465 Cost of revenues 495,037 434,613 2,085,451 Gross profit 195,751 185,645 732,014 Operating expenses: Research and development, net 58,766 54,214 241,092 Marketing and selling 61,361 54,987 235,909 General and administrative 33,941 35,510 139,349 154,068 144,711 616,350 Operating income 41,683 40,934 115,664 Financial expenses, net (7,815) (10,662) (13,569) Other income, net 930 194 1,909 Income before income taxes 34,798 30,466 104,004 Taxes on income (6,560) (5,300) (13,624) 28,238 25,166 90,380 Equity in net earnings of affiliated companies and partnership 4,038 3,751 15,377 Income from continuing operations 32,276 28,917 105,757 Loss from discontinued operations, net (156) - (15,977) Net income 32,120 28,917 89,780 Less: net loss (income) attributable to non-controlling interests 761 (988) 508 Net income attributable to Elbit Systems Ltd.'s shareholders 32,881 27,929 90,288 Earnings per share attributable to Elbit Systems Ltd.'s shareholders: Basic net earnings (losses) per share Continuing operations 0.77 0.65 2.33 Discontinued operations - - (0.22) Total 0.77 0.65 2.11 Diluted net earnings (losses) per share Continuing operations 0.77 0.65 2.31 Discontinued operations - - (0.22) Total 0.77 0.65 2.09 Weighted average number of shares used in computation of basic earnings per share (in thousands) 42,489 42,732 42,764 Weighted average number of shares used in computation of diluted earnings per share (in thousands) 42,663 43,223 43,131 Amounts attributable to Elbit Systems Ltd.'s common shareholders Income from continuing operations, net of income tax 32,974 27,929 99,778 Discontinued operations, net of income tax (93) - (9,490) Net income attributable to Elbit Systems Ltd.'s shareholders 32,881 27,929 90,288
ELBIT SYSTEMS LTD. CONSOLIDATED STATEMENTS OF CASH FLOW (In thousands of US Dollars) Three Months Ended Year Ended December March 31, 31, 2012 2011 2011 Unaudited Audited CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 32,120 $ 28,917 $ 89,780 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 35,485 37,155 150,618 Write-off impairment and discontinued operations, net 156 - 15,977 Stock based compensation 216 356 1,996 Amortization of Series A Notes discount and related issuance costs 87 (152) 422 Deferred income taxes and reserve, net (738) 622 (8,777) Loss (gain) on sale of property, plant and equipment 115 (502) (1,645) Loss (gain) on sale of investment (791) 67 2,189 Equity in net loss (earnings) of affiliated companies and partnership, net of dividend received(*) (1,468) 7,812 (270) Changes in operating assets and liabilities, net of amounts acquired: Increase (decrease) in short and long-term trade receivables, and prepaid expenses 14,726 29,328 (65,062) Increase in inventories, net (58,410) (58,248) (95,363) Decrease (increase) in trade payables, other payables and accrued expenses (3,492) (27,386) 17,225 Severance, pension and termination indemnities, net (2,280) 3,145 1,879 Increase in advances received from customers 36,107 18,949 81,946 Net cash provided by operating activities $ 51,834 $ 40,063 $ 190,915 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment (19,768) (37,830) (121,977) Acquisition of subsidiaries and business operations - - (12,173) Investments in affiliated companies and other companies (507) (6,786) (13,555) Proceeds from sale of property, plant and equipment 1,557 2,417 15,059 Proceeds from sale of investments 705 - 329 Investment in long-term deposits (192) 1,616 (609) Proceeds from sale of long-term deposits 283 - 40,396 Investment in short-term deposits and available for sale securities (275,181) - (88,842) Proceeds from sale of short-term deposits and available for sale securities 14,237 (37,104) 126,306 Net cash used in investing activities $ (278,866) $ (77,687) $ (55,066) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from exercise of options 554 1,496 3,833 Purchase of non-controlling interests - (73,455) (71,000) Repayment of long-term bank loans (136,638) (2,680) (73,666) Proceeds from long-term bank loans 125,254 24,252 172,303 Proceeds from issuance of Series A Notes 217,420 - - Series A Notes issuance costs 1,889 - - Purchase of treasury shares (10,004) - (10,101) Repayment of Series A Notes and convertible debentures - (2,121) (29,998) Purchase of convertible debentures of a subsidiary - - (2,121) Dividends paid - - (61,633) Tax benefit in respect of options exercised - - 169 Change in short-term bank credit and loans, net (147) 77,714 (12,117) Net cash provided by (used in) financing activities $ 198,328 $ 25,206 $ (84,331) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (28,704) (12,418) 51,518 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 202,577 151,059 151,059 CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 173,873 138,641 202,577 * Dividend received from affiliated companies and partnership $ 2,570 $ 11,563 $ 15,107
ELBIT SYSTEMS LTD. DISTRIBUTION OF REVENUES CONSOLIDATED REVENUE BY AREAS OF OPERATION: Three Months Ended Year Ended March 31 December 31 2012 2011 2011 $ millions % $ millions % $ millions % Airborne systems 281.5 40.8 251.1 40.5 969.4 34.4 Land systems 91.6 13.3 83.4 13.4 405.3 14.3 C4ISR systems 218.8 31.7 193.7 31.2 996.4 35.4 Electro-optics 68.5 9.8 64.8 10.5 300.2 10.7 Other (mainly non-defense engineering and production services) 30.4 4.4 27.3 4.4 146.2 5.2 Total 690.8 100.0 620.3 100.0 2,817.5 100.0
CONSOLIDATED REVENUES BY GEOGRAPHICAL REGIONS: Three Months Ended Year Ended March 31 December 31 2012 2011 2011 $ millions % $ millions % $ millions % Israel 139.8 20.2 170.1 27.4 697.8 24.8 United States 213.3 30.9 209.1 33.7 890.4 31.6 Europe 114.1 16.5 111.2 17.9 545.5 19.3 Other countries 223.6 32.4 129.9 21.0 683.8 24.3 Total 690.8 100.0 620.3 100.0 2,817.5 100.0
Joseph Gaspar, Executive VP & CFO
Dalia Rosen, VP, Head of Corporate Communications
Elbit Systems Ltd.
CCG Investor Relations
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