Elbit Systems Ltd.

Ladies and gentlemen, thank you for standing by. Welcome to Elbit Systems' third 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 now received 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, Shemtov. Good day, everyone, and welcome to our third quarter 2021 earnings call. On the call with me today are Buti Mahlis, our President and CEO, Yossi Gaspar, our Chief Financial Officer, and Kobi Kargan, who will take over from Yossi on April 1st next year. Before we begin, I would like to point out that the safe harbor statement in the company's press release issued earlier today also referred to the contents of this conference call. As we do every quarter, we will provide you with both a regular GAAP financial data as well as certain supplementary 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 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. Please.

Thank you, Rami. Hello, everyone, and thank you for joining us today. I would like to begin by welcoming Kobi Kagan to this call. I have worked closely with Kobi since he joined Elbit in 2008. We are currently conducting a handover process before he takes over the role of LBIT system CFO from April next year. The results of our third quarter reflect the successful execution of our global diversification strategy that is delivering strong revenue growth and an improved operational performance, which is a result of efficiency measures we discussed in the past. We continue to implement mitigation plans to limit the impact of the strengthening of the Israeli shekel. In the short term, these include the adoption of a rolling hedge policy and efficiency measures. Over the longer term, we plan to expand our manufacturing footprint in high-quality, lower-cost countries to better balance our currency exposure and reduce risk. I will now highlight and discuss some of the key figures and trends of our financial results. Third quarter revenues were $1,363,000,000 and increased by over 20% year over year. A major part of the growth was organic in addition to the contribution from Spartan, which we acquired in the second quarter of 2021. In terms of revenue breakdown across our areas of operation, airborne systems accounted for 37% of the total quarterly revenues and and increased year-over-year mainly due to airborne precision-guided munition sales. Land systems accounted for 23% of total revenues, a similar level to the revenues of the third quarter of 2020. C4ISR at 27% of revenues increased year-over-year primarily due to the acquisition of Sparta. Electro-optics accounted for 10% of total sales and increased year-over-year due to the ramp of LBIT night vision programs. Other sales were 3% of revenues and increased year-over-year due to the growth of our U.S. medical device subsidiary. Our diverse geographic revenue base is important to the long-term sustainability of our business. In the third quarter, Asia-Pacific contributed 31% of revenues North America 30%, Israel was 18%, and Europe 17%. The growth in US was mainly due to the Spartan acquisition and sales of non-defense medical devices. Asia Pacific revenues increased mainly due to sales of precision guided munitions and UAS. The growth in European revenues was due primarily to C4ISR sales to the UK. The non-GAAP gross margin for the third quarter was 27.2% compared with 26.7% in the third quarter of 2020. GAAP gross margin in the third quarter of 2021 was 26.6% of revenues compared with 20.9% of revenues in the third quarter of 2020. The GAAP gross profit in the third quarter of 2020 included a $60 million non-cash expense from asset impairments and inventory write-offs due to the impact of COVID-19. The gross margin improvement during the second quarter and third quarters of 2021 is encouraging and reflects the benefits of the cost control measures we adopted. The third quarter non-GAAP operating income was $123 million, or 9% of revenues, compared with 93.1 million or 8.2% of revenues last year. Gap operating income for the third quarter was $110 million versus $24 million last year following the inventory write-offs and impairments. The operating expense breakdown in the third quarter was as follows. Net R&D expenses were 7.4% of revenues versus 8% in the third quarter of last year. Marketing and selling expenses were 6.2% of revenues versus 6.3% last year. G&A expenses were 4.9% of revenues compared with 4.5% last year. Financial expenses were $13.5 million in the third quarter compared with $9.7 million in 2020. We recorded a tax expense of 8.3 million in the third quarter compared with 2.2 million in 2020. Defective tax rate in the third quarter was 8.6% compared with 15.4% in 2020. Our non-GAAP diluted EPS was $2.33 in the third quarter compared with $1.64 last year. The GAAP diluted EPS was $2.08 compared with $0.38 last year. Our backlog orders as of September 30, 2021, was approximately $13.6 billion, $2.7 billion higher than the backlog at the end of September 2020, and at a similar level to the backlog at the end of June 2021. Approximately 40% of the current backlog is scheduled to be performed during 2021 and 2022, and the remainder is scheduled for 2023 and beyond. The percentage of the backlog for the remainder of the year and the following year is lower than the third quarter 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 the future. Cash flow from operating activities for the third quarter was 150,000 outflow compared with 63 million outflow in the same quarter of last year. During the third quarter, we successfully completed the tender of three series of nodes raising approximately $575 million. The notes will be traded on the Tel Aviv Stock Exchange and provide us with good long-term source of funding for ongoing business operations as well as potential acquisitions. The Board of Directors declared a dividend of 46 cents per share for the third quarter of 2021. I will now turn the call over to Mr. Mahlis, Elbit's CEO. Butzi, please.