Elbit Systems(ESLT)2023-11-28 17:22Financial Data and Key Metrics Changes - Third quarter revenues increased by 11% to 1.34 billion in the third quarter of 2022 [4] - Non-GAAP diluted EPS was 1.40 in 2022, while GAAP diluted EPS was 1.26 in 2022 [7] - Non-GAAP operating income was 84.3 million or 6.3% of revenues last year [62] - GAAP operating income for the third quarter was 73.4 million or 5.4% of revenues in the third quarter of 2022 [62] - The backlog of orders as of September 30, 2023, was 1.9 billion higher than the backlog at the end of the third quarter of 2022 [88] Business Line Data and Key Metrics Changes - Aerospace revenues increased by 24% in the third quarter of 2023 compared to the third quarter of 2022, mainly due to training and simulation sales in Europe and UAS sales in Asia Pacific [4] - C4I and Cyber revenues increased by 9% year-over-year, mainly due to radio system sales in Europe [4] - Land revenues increased by 7%, mainly due to artillery and weapon station sales [4] - Elbit Systems of America revenues declined 2% in the third quarter due to lower precision guided munition sales [85] Market Data and Key Metrics Changes - Europe was the largest market, contributing 33% of group revenues; North America contributed 24%; Asia Pacific contributed 21%; and Israel contributed 15% of revenues [5] - European revenues increased due to growth in sales of radio systems, artillery, weapon station, and training and simulation solutions [85] - Israel revenues declined mainly due to lower ammunition sales in the quarter [86] Company Strategy and Development Direction - The company is implementing an operational improvement plan to support transformation into a larger, more profitable entity [15] - The war in Israel has not changed long-term plans but has increased focus on the portfolio to identify capability or technology gaps [15] - The company is exploring M&A opportunities to enhance capabilities and divest less relevant businesses [22][104] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in overcoming short-term challenges and delivering on long-term potential [9] - The impact of the war on financial results is uncertain and will depend on future developments [60] - The company has ramped up production to support the IDF while maintaining deliveries to international customers [66] Other Important Information - The effective tax rate in the third quarter was 15% compared to 13% in 2022 [7] - Operating cash flow in the third quarter was an 178 million inflow in the same quarter last year [64] - The company has increased production capacity by adding shifts and hiring temporary employees to support operations [66] Q&A Session Summary Question: Will the mobilization of employees have a financial impact? - Management indicated that the mobilization of approximately 15% of the workforce would not contribute financially in the quarter, but temporary employees are being recruited to mitigate disruptions [25][80] Question: What is the status of the supplemental funding request from the US? - Management expects to receive part of the supplemental funding package, which could present significant opportunities for the company [77] Question: Are there any differences in margins for rush orders from Israel? - Management stated that there is no difference in margins for rush orders compared to usual margins [34] Question: What is the potential for the Sayyad system in other markets? - Management noted that there is significant interest in the Sayyad system, with several international customers already engaged [47]