Elbit Systems Ltd.

Ladies and gentlemen, thank you for standing by. Welcome to Elbit Systems' second quarter 2021 results conference call. All participants are at present in listen-only mode. Following management's formal presentation, instructions will be given for the question and answer session. 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 website, www.elbitsystems.com. I would now like to hand over the call to Rami Meyerson, Elbit Systems Investor Relations Director. Rami, please go ahead.

Thank you, Michal. Good day, everyone, and welcome to our second quarter 2021 earnings call. On the call with me today are Butzi Machlis, our President and CEO, and Yossi Gaspar, our Chief Financial Officer. Before we begin, I would like to point out that the safe harbor statement in the company's press release issued earlier today also refers to the contents of this conference call. As we do every quarter, we will provide you with both our regular GAAP financial data as well as certain supplemental non-GAAP information. We believe that this non-GAAP information provides additional detail to help understand the performance of the ongoing business. You can find all the detailed GAAP financial data as well as the non-GAAP financial information and the reconciliation in today's press release. Yossi will begin by providing a discussion of the financial results, followed by Butsy, who will talk about some of the significant events during the quarter and beyond. We will then turn the call over to a question and answer session. With that, I would like now to turn the call over to Yossi. Yossi, please.

Thank you, Rami. Hello, everyone, and thank you for joining us today. The result of our second quarter reflects sustained demand for Elbit system solutions and services from our customers around the world, as reflected in the growth in revenues, the backlog, and an encouraging operational improvement. Second quarter results include the results of Spartan and Rocar acquired in the beginning of April. At the beginning of July, we completed public tenders for three series of notes, raising approximately $600 million. S&P Global Ratings, Maalot, an Israeli rating agency, assigned its Israeli AA rating with a stable outlook to the notes, which are traded on the Tel Aviv Stock Exchange. The significant participation by investors in the tenders provides a strong vote of confidence in the company. I will now highlight and discuss some of the key figures and trends in our financial results. Second quarter revenues were $1,302,000,000, increased 21% year over year. A major part of the growth was organic in addition to the contribution from Spartan. In terms of annual revenue breakdown across our areas of operation, airborne systems accounted for 40% of total quarterly revenues and increased year-over-year mainly due to the airborne precision-guided munitions sales. Land systems accounted for 22% of total revenues, a similar level of revenues to the second quarter of 2020. C4ISR at 26% of revenues increased year over year, primarily due to the acquisition of Spartan. Electro-optics accounted for 8% of total revenue and declined year over year, mainly due to the phasing of Elbit night vision recent programs in the U.S. I would like to note that significant volumes of electro-optic equipment are included on solutions that we report as part of our airborne, land, and C4ISR systems areas of operation. Other sales were 4% of revenues and increased significantly year-over-year due to growth at the U.S. medical device subsidiary. Our diverse geographic revenue base is important to the long-term sustainability of our business. In the second quarter, North America was the largest, contributing 34% of our revenues, Israel was 21%, Asia-Pacific 26%, and Europe 16%. The growth in the U.S. was mainly due to the Spartan acquisition and the revenues from non-defense medical device sales. Asia-Pacific revenues increased mainly due to the sales of precision-guided munitions. The non-GAAP growth margin for the second quarter was 26.6%, compared with 26.5% in the second quarter of 2020. Gap growth margin in the second quarter of 2021 was 26% of revenues in line with the second quarter of 2020. The sequential improvement in growth margin compared to the first quarter of 2021 is encouraging and reflects the initial benefits of cost control measures we adopted to help mitigate the financial impact of the stronger shekel and the COVID-19 that we discussed with you previously. The second quarter non-GAAP operating income was $114.9 million or 8.8% of revenues compared with $92.7 million or 8.6% of revenues last year. GAAP operating income for the second quarter was $117 million, similar to the second quarter last year. Gap operating income in the quarter included the profit from the sale of a building in Israel recorded under the other operating income. Gap operating income in the second quarter of 2020 included the profit from the sale and easeback of two of Elbit Systems of America's facilities. The operating expense breakdown in the second quarter was as follows. Net R&D expenses were 7.3% of revenues, similar to the second quarter of 2020. Marketing and selling expenses were 5.8% of revenue versus 6.2% last year. G&A expenses were 5.1% of revenues compared with 4.8% last year due to the acquisition-related expenses in the quarter. Financial expenses were 7.1 million in the second quarter compared with 16.5 million in 2020. The lower level of financial expenses was mainly a result of gains from changes in fair value of financial assets and liabilities. We recorded a tax expense of 20.1 million in the second quarter compared with 23.6 million in 2020. The effective tax rate in the second quarter was 18.5% compared with 20.8% in 2020. Our non-GAAP diluted earnings per share was $2.11 in the second quarter compared with $1.56 in last year. The GAAP diluted EPS was $2.30 compared with $2.02 last year. Our backlog of orders as of June 30, 2021, was approximately 13.6 billion, at 2.8 billion higher than the backlog at the end of June 2020, and 1.8 billion higher than that at the end of March 2021. Approximately 51% of the current backlog is scheduled to be performed during 2021 and 2022. and the rest is scheduled for 2023 and beyond. This ratio is lower than at the second quarter of last year, following a number of multi-year contracts awarded recently. The order backlog is equivalent to more than two and a half years of revenues and provides good visibility for future revenues. Cash flow from operating activities for the second quarter was 170 million inflow, compared with 179 million inflow in the same quarter last year. The net proceeds from the recent bond offering will be included in our third quarter results. Following a review of capital structure and cash requirements, the Board of Directors declared a dividend of 46 cents per share for the second quarter of 2021. I will now turn over the call to Mr. Machles. Please, Buzi.