Elbit Systems Ltd.

Ladies and gentlemen, thank you for standing by. Welcome to Elbit Systems' fourth quarter 2021 results conference call. All participants are 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 Ms. to Rami Meyerson, Albert Systems Investor Relations Director. Rami, please go ahead.

Thank you, operator. Good day, everyone, and welcome to our fourth quarter and year-end 2021 earnings call. On the call with me today are Butsi Machlis, our president and CEO, Yossi Gaspar, our chief financial officer, and Kobi Kagan, who will take over from Yossi on April 1st. 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 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. Earlier today, we hosted an investor conference at the Tel Aviv Stock Exchange. A recording of the event will be available in the investor relations section of our website, www.elvetsystems.com. Investors and analysts who wish to ask questions related to topics discussed at the investor conference are welcome to present their questions during the Q&A session of the call. With that, I would like now to turn the call over to Yossi. Yossi, please.

Thank you, Rami. Hello, everyone. Thank you for joining us today. As Rami mentioned, on April 1st, Kobi Kagan will take over as Chief Financial Officer. I will continue as Senior Executive Vice President, Business Management, and will retain, among other corporate-wide duties, the responsibility for capital markets and investor relations, working together with Rami. I look forward to introducing Kobi to investors and analysts over the coming weeks and months. I would like to take this opportunity to wish Kobi good luck and success in his new role. The 2021 annual results reflect the very positive transformation of LBIT over the last few years, during which we successfully moved up the value chain from a provider of products and systems to a provider of comprehensive solutions. The Hellenic Flight School contract is a good example of a comprehensive contract as a result of this transformation, as well as supports the growth in order backlog and revenues that indicate the strong demand for our systems and solutions. We continue to implement mitigation plans to limit the impact of the strengthening Israeli shekel and the competition for talent. In the short term, These include the adoption of rolling currency hedge policy and efficiency measures. Over the longer term, we plan to expand our engineering and manufacturing footprint in high-quality, low-cost countries to better balance our currency exposure and reduce risk. The introduction of a company-wide ERP system will support these efforts. I will now highlight and discuss some of the key figures and trends in our financial results. First quarter revenues were $1,494,000,000 and increased by 8.5% year-over-year. For 2021 as a whole, our revenues were $5.3 billion versus $4.7 billion last year, representing a growth of 13%. 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 annual revenue breakdown across our areas of operation, airborne systems accounted for 38% of total annual revenues and increased year-over-year mainly due to airborne precision-guided munition sales. Land system sales accounted for 24% of total revenues, a similar level of revenues to 2020. C4ISR at 26% of revenues increased year-over-year primarily due to the acquisition of Spartan and unmanned systems sales. Electroptics accounted for 9% of total sales, and other sales were 4% of revenues, and increased year over year mainly due to the growth of our U.S. medical instrumentation subsidiary. Our diverse geographic revenue base is important to the long-term sustainability of our business. In 2021, North America contributed to 31% of our revenues, Asia Pacific 27%, Israel was 21%, and Europe 17%. The growth in the U.S. was mainly due to the Spartan acquisition and sales of commercial medical instrumentation. Asia Pacific revenues increased mainly due to the sales of precision-guided munition and unmanned airborne systems. The growth in European revenues was primarily through training and simulation sales. Erbit has always viewed Europe as a strategically important market with significant potential. We have made significant investments to expand our positions across the continent. Since 2014, our European revenues increased by more than 90%, significantly faster than the growth of the European NATO members' defense budgets in the same period. Almost all of this growth was organic. Following many years of investment, we believe LBIT is well positioned to benefit from the planned increase in the European defense spending. Compared with the fourth quarter last year, we saw strong growth in Asia Pacific that more than offset lower sales in certain other markets. This reflects the phasing of programs and trends to fluctuate from quarter to quarter. We believe the longer-term trends are more representative of our business. The non-GAAP gross margin for the fourth quarter was 25.5% compared with the fourth quarter of 2020 at 26.3%. For the fourth year of 2021, non-GAAP gross margin was 26.2% compared with 26.7% last year. Non-GAAP gross margin in 2021 reflect an unfavorable program mix as well as the impact of the strong shackle versus the U.S. dollar compared to 2020. GAAP gross margin in the fourth quarter of 2021 was 25.1% of revenues compared with 26% in the fourth quarter of 2020. Gap gross margin in 2021 was 25.7% compared with 25% in 2020. Gap gross profit in 2020 included expenses of approximately $60 million as a result of a non-cash expense related to inventory write-offs and asset impairment, mainly in our commercial aviation activities due to the impact of COVID-19. The first quarter non-GAAP operating income was $120 million, or 8% of revenues, compared with $113.8 million, or 8.3% of revenues last year. Margin has declined slightly year over year due to lower gross margins and higher G&A expenses in the quarter. GAAP operating income in the first quarter was $107.3 million versus $104.6 million in the first quarter of 2020. Non-GAAP operating income in 2021 was $451 million, or 8.5% of revenues, compared with $390 million, or 8.4% of revenues last year. GAAP operating income was $490 million versus $326 million last year. The operating expense breakdown in 2021 was as follows. Net R&D expenses were 7.5% of revenues versus 7.7% in 2020. Marketing and selling expenses declined to 5.5% of revenues versus 6.2% last year. G&A expenses were 5.1% of revenues compared with 4.8% last year. The increase in the G&A expenses was mainly related to the Spartan acquisition. While we do not provide forward guidance I would note that the recent rise in the share price could lead to an increase in expenses in 2021 and on, related to employee share price-linked compensation plans. Financial expenses were $20 million in the first quarter, compared with $33 million in 2020. The lower level of financial expenses were mainly due to exchange rate differences related to the re-evaluation of lease liabilities in the quarter. Financial expenses in 2021 were $40 million compared to $71 million last year. We recorded a tax expense of $92.2 million in the fourth quarter compared with $1.9 million in 2020. Taxes on income in the fourth quarter included a one-time expense of approximately $80 million related to the release of exempt earnings. Please see our press release published on 22nd of February this year. We have excluded this expense from our non-GAAP net income due to the non-recurring nature of this expense. Including this extraordinary expense, the effective tax rate in 2021 was 34.3% compared with 13.9% in 2020. Our non-GAAP diluted earnings per share was $2.14 in the fourth quarter and $8.30 for the full year of 2021. GAAP diluted EPS was $0.18 for the fourth quarter and $6.20 for the full year of 2021. Our backlog of orders as of December 31st, 2021 was $13.7 billion 2.6 billion higher than the backlog at the end of 2020. Approximately 60% of the current backlog is scheduled to be performed during 2022 and 2023, and the rest is scheduled for 2024 and beyond. The percentage of the short-term backlog declined in recent years, following the receipt of long-term contracts, improving our visibility for the future revenue. Operating cash flow for the fourth quarter was 260 million compared with 172 million in the same quarter last year. For 2021 as a whole, we reported 417 million operating cash versus 279 million in 2020. Operating cash flow benefited from receipts of delayed payments from the Israeli Ministry of Defense in the fourth quarter as well as growth in advance payments on contract by customers. The Board of Directors declared a dividend of $0.50 per share for the fourth quarter of 2021. I will now turn the call over to Mr. Mahlis. Bootsy, please.