Elbit Systems Ltd.

Welcome to Elbit Systems' first quarter 2025 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. I would now like to hand the call over to Ms. Daniella Finn, Elbit Systems' Vice President of Investor Relations. Daniella, please go ahead.

Thank you, Nathan. Good day, everyone, and welcome to our first quarter 2025 earnings call. On the call with me today are Butzi Mutlis, President and CEO of Elder Systems, and Kobi Kagan, CFO. Before we begin, I would like to point out that the safe harbor statement in the company's patch release issued earlier today also refers to the content of this conference call. As usual, we will provide you with both GAAP financial data as well as certain supplemental non-GAAP information. We believe that this non-GAAP information provides additional details to help understand the performance of the ongoing business. You can find the detailed GAAP financial data as well as the non-GAAP information and the reconsolidation in today's press week. We will begin by providing a discussion of the financial results. Followed by Goodzi, who will talk about some of the significant developments during the quarter and beyond. We will then turn the call over to question and answer session. With that, I would like to now turn the call over to Kobi. Kobi, please go ahead.

Thank you, Daniela. Hello, everyone, and thank you for joining us today. The strong set of results published earlier today continues the trend we've seen over the past few quarters of strong revenue growth and margin expansion. This quarter is the fourth consecutive quarter in which we publish double-digit growth for revenues, backlog, operating income, net income, and DPS. We are very pleased with these results. We continue to make a concerted effort to improve our free cash flow, and I am happy to announce that in this quarter we presented strong pre-cash flow totaling $161 million. I will now highlight and discuss some of the key figures and trends in our financial results. First quarter revenues were $1,896,000,000 compared to $1,554,000,000 in the first quarter of 2024. In the first quarter of 2025, Europe contributed 24%, North America 21%, Asia Pacific 18%, and Israel contributed 32% of revenues. Demand continues to be robust in all key geographies. Gap gross margin in the first quarter was 24% of revenues compared to 24.1% in the first quarter of 2024. The non-GAAP gross margin for the first quarter was 24.3% compared to 24.7% in the first quarter of 2024. The first quarter GAAP operating income for the first quarter was $149.7 million or 7.9% of revenues versus $105.4 million or 6.8% of revenues in the first quarter of 2024. Non-GAAP operating income was $165.1 million or 8.7% of revenues compared with $121.6 million or 7.8% of revenues in the first quarter of last year. The operating expense breakdown in the first quarter was as follows. Net R&D expenses were $114.3 million or 6.1% of revenues compared to $98.5 million or 6.3% of revenues in the first quarter of 2024. Marketing and selling expenses were $100.9 million or 5.3% of revenues versus $89.1 million or 5.7% in the first quarter of 2024. G&A expenses were $89.4 million or 4.7% of revenues compared to $81.2 million or 5.2% of revenues in the first quarter of 2024. Financial expenses were $39 million in the first quarter compared to $31.2 million in the first quarter of 2024. The increase in financial expenses in the first quarter of 2025 was mainly due to the hedging transaction and the net effect of changes in the exchange rates of different currencies in which the company operates. We recorded a tax expense of $16.1 million in the first quarter compared to $11.6 million in the first quarter of 2024. The effective tax rate in the first quarter of 2025 was 13.9% compared to 14.6% in the first quarter of 2024. Gap diluted EPS was $2.35 for the first quarter of 2025 compared to $1.65 in the first quarter of 2024. Our non-gap diluted DPS was $2.57 for the first quarter of 2025, compared to $1.81 in the first quarter of 2024. Portally segment revenue for the first quarter of 2025. Aerospace revenue increased by 20% year over year, mainly due to increase in precision guided munition sales in Israel and Asia Pacific. C4I and cyber revenues increased by 12% year-over-year, mainly due to increase in radio systems and command and control system sales in Israel and in Europe. R-Star and EW revenue increased by 4% in the first quarter of 2025, mainly due to electro-optic system sales. Land revenue increased by 48% in the first quarter of 2025, mainly due to increased ammunition and munition sales in Israel and in Europe. Albi Systems of America revenues increased by 18% due to the increase in warfighter systems and medical information sales. Our order backlog as of March 31, 2025 was $23.1 billion, $2.7 billion higher than the backlog at the end of the first quarter of 2024. Approximately 66% of the current backlog is attributable to orders from outside of Israel. Approximately 51% of the current backlog is scheduled to be performed during the remainder of 2025 and during 2026, and the rest is scheduled for 2027 and beyond. Net cash provided by operating activities at the end of the first quarter 2025 was $184 million as compared to $6 million cash used in the first quarter of 2024. Operating cash flow during the quarter were affected mainly by the increase in net income and an increase in contract liabilities. which were offset by the increase in inventories and trade receivables. During the first quarter of 2025, we also delivered $161 million of free cash flow. The Board of Directors has declared a dividend of $0.60 per share. I will now turn the call over to Mr. Maklis, Albis CEO. Buzi, please go ahead. Thank you, Kobi.