Elbit Systems Ltd.

Ladies and gentlemen, thank you for standing by. Welcome to Elbit Systems' first quarter 2023 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 new 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, Yoni. Good day, everyone, and welcome to our first quarter 2023 earnings call. On the call with me today are Boti Machlis, our President and CEO, Kobi Kagan, our CFO, and Yossi Gaspar, Senior EVP, Business Management. 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. Kobi will begin by providing a discussion of the financial results, followed by Buti, 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 Corby. Corby, please.

Thank you, Rami. Hello, everyone, and thank you for joining us today. The financial results of the first quarter of 2023 reflect the sustained demand for our leading technological solutions that supported the growth in the order backlog to $15.8 billion, up 15% relative to the first quarter of 2022. I'm encouraged that our operational activities and the cost base are gradually returning to normal following the supply chain and labor challenges in 2022. We continue to invest in the operational transformation to realize the potential presented by the large funnel of opportunities around the world, and we are on track to deliver and improve performance. We started to report segment information in five segments from the year ended December 31st, 2022. In our press releases for the first, second, and third quarter, we will provide revenues by segment, and we report revenues and operating income of each segment in our annual report. Revenues by segment in our press releases for the first, second, and third quarter replace revenues by areas of operation, that were previously provided. The five reportable segments are aerospace, C4I and cyber, ISOR and EW, land and Albit Systems of America or ESA. I will now discuss some of the key figures and trends in our financial results. I would note that the sale of Ashot Ashkelon to FIMI Opportunity Funds was completed at the end of the second quarter of 2022. in our results in the first quarter of 2023 do not include a contribution from Ashot Ashkelon. First quarter revenues were $1,393,000,000 compared to $1,353,000,000 in the first quarter of 2022. In terms of quarterly revenue by segment, aerospace revenues decreased by 10%, in the first quarter of 2023 compared to the first quarter of 2022, mainly due to lower airborne precision guided munition sales, partially offset by growth of training and simulation sales. C4I and cyber revenues increased by 19% year over year, mainly due to growth in command and control system sales. ISTAR and EW revenues increased by 17%, mainly due to electronic warfare system sales. Land revenues increased by 8%, mainly due to armored vehicle upgrade sales. Elbit Systems of America's revenues in the first quarter were similar to the first quarter of 2022. Our diverse geographic revenue base is important to the long-term sustainability of our business. In the first quarter, Europe contributed 27%, North America 24%, Asia-Pacific 24%, and Israel contributed 18% of revenues. European revenues increased mainly due to the growth in UAS munitions and training and simulation sales. Asia-Pacific revenues declined mainly due to lower precision guided munition sales. Latin America sales increased due to C4I sales. The non-GAAP gross margin for the first quarter was 26.4% compared to the first quarter of 2022 at 24.6%. Gap gross margin in the first quarter was 25.9% of revenues compared to 24.2% in the first quarter of 2022. Gap and non-gap gross margin in the first quarter of 2022 included approximately $20 million of expenses related to stock price link compensation plans. First quarter non-GAAP operating income was $105 million or 7.5% of revenues compared with $66 million or 4.9% of revenues last year. GAAP operating income for the first quarter was $94 million or 6.7% of revenues versus $59 million or 4.3% of revenues in the first quarter of 2022. The operating expense breakdown in the first quarter was as follows. Net R&D expenses were 7.9% of revenues versus 7.4% in 2022. Marketing and selling expenses were 5.8% of revenues versus 6.4% last year. G&A expenses were 5.5% of revenues compared to 6.2% last year. GAAP and non-GAAP operating profit in the first quarter of 2022 included expenses of approximately $35 million related to the stock price link compensation plans, which in the first quarter of 2023 were not material. Financial expenses were $24 million in the first quarter compared to financial income of $1 million in 2022. Financial expenses in first quarter reflect the higher interest rate environment. Financial expenses in the first quarter of 2022 included gains from changes in fair value of financial assets and exchange rate differences. We recorded a tax expense of $9 million in the first quarter compared to tax expense of $8 million in 2022. The effective tax rate in the first quarter was 12.8% compared to 13.8% in 2022. Our non-GAAP diluted EPS was $1.70 in the first quarter compared with $1.22 in 2022. GAAP diluted EPS was $1.40 for the first quarter compared with $1.19 in 2022. Our backlog of orders as of March 31st, 2023 was $15.8 billion, $2.1 billion higher than the backlog at the end of the first quarter of 2022. Approximately 54% of the current backlog is scheduled to be performed during 2023 and 2024, and the rest is scheduled for 2025 and beyond. Operating cash flow for the first quarter was $73 million outflow, compared to $35 million inflow in the same quarter last year. The Board of Directors has declared a dividend of 50 cents per share, I will now turn the call over to Mr. Mahlis Elbit, CEO. Butzi, please go ahead.