Elbit Systems Ltd.

Ladies and gentlemen, thank you for standing by. Welcome to LB Systems' second quarter 2026 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. I would now like to hand over the call to Daniella Finn, LB Systems' VP, Investor Relations. Daniella, please go ahead.

Thank you, operator. Hello, everyone, and welcome to our second quarter 2026 earnings call. On the call with me today are Butzi Machlis, President and CEO, Kobi Kagan, CFO, and myself, Daniella Finn. 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. I would like to remind all listeners that the conference call today may contain forward-looking statements regarding the company and its subsidiary's business. Actual future results may differ materially from those forward-looking statements. 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 transparency to better 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. Toby will begin by discussing the financial results, followed by Budsi, who will elaborate on the main events during quarter and beyond. We will then turn the call over to a Q&A session. With that, I would like to now turn the call over to Koby. Koby, please go ahead.

Thank you, Daniella. Hello, everyone, and thank you for joining us today. We're pleased to report another strong quarter delivering double-digit growth in revenues, backlog, operating profits, and EPS. Our profitability margins, growth operating the net, continue to expand, surpassing our internal targets. Building on the strong momentum we have established over the past several quarters, we continue to win important new business and expand our backlog to a record of $32 billion. Taking a closer look into the second quarter results, second quarter revenues increased by 15.9% to $2,287,000,000 compared to $1,973,000,000 in the second quarter of 2025. We note the sequential revenue growth continues. For the second quarter of 2026, Europe contributed 25% of revenues, North America 20%, Asia Pacific 14%, and Israel contributed 37% of revenues following inventory replenishments on the back of the recent conflict with Iran that ended at the beginning of April. Europe and Asia continue to be meaningful growth engines. In terms of quarterly revenues by segment, C4I and cyber revenues increased by 11% in the second quarter of 2026, as compared to the second quarter of 2025, mainly due to sales of radio systems and command and control systems sales in Europe. ISTAR and EW revenues increased by 22%, mainly due to increased sales of airborne and land high-power laser, electronic warfare, and maritime systems in Asia-Pacific. Land revenues increased by 32%, mainly to ammunition and munition sales in Israel. Army systems of America revenues increased by 17%, mainly due to one-time favorable project mix during the quarter, and the increase in sales of night vision systems Maritim Systems and Electronic Systems. Aerospace revenues decreased by 8% in the second quarter of 2026, mainly due to a one-time unfavorable project mix and lower sales of training and simulation systems in Europe, partially offset by the increase in UAV sales in Israel. Gap gross margin in the second quarter of 2026 was 25.3% of revenues, compared to 24% in the second quarter of 2025. Non-GAAP gross margin for the second quarter was 25.6% compared to the second quarter of 2025 at 24.4%. We are pleased with the continued expansion of gross margins. GAAP operating income in the second quarter was $218.8 million or 9.6% of revenues as compared to $157.8 million or 8% of revenues in the second quarter of 2025, a 1.6% increase. Non-GAAP operating income was $237.5 million or 10.4% of revenues in the second quarter of 2026 as compared to $175.1 million or 8.9% of revenues in the second quarter of 2025, a 1.5% increase. With this margin expansion, we have surpassed our internal targets for operating margins. On March 31, 2026, the Knesset enacted the law for the encouragement of research and development. This newly introduced R&D law applies to qualifying R&D expenditures incurred at the beginning of the tax year starting January 1, 2026. This law is meant to encourage R&D efforts in Israel. We increased our R&D spent in the first half of the year by about $70 million, of which about half was funded by the new incentive law and the other half from company resources to support the future growth of the company, at the same time maintaining the margin expansion. The operating expense breakdown for the second quarter of 2026 was as follows. Net R&D expenses were $159.1 million or 7% of revenues as compared to $129.7 million or 6.6% of revenues in 2025. We remain committed to investing in new next-generation technologies and advanced AI capabilities that expand our solutions portfolio, support our customers' evolving mission requirements, and reinforced Elbit leadership position in key markets for years to come. Marketing and selling expenses were $103.2 million or 4.5% of revenues in the second quarter of 2026 as compared to $91.5 million or 4.6% of revenues in 2025. G&A expenses were $97.9 million or 4.3% of revenues in the second quarter of 2026 as compared to $93.9 million or 4.8% of revenues in the same period last year. Financial expenses were $22 million in the second quarter of 2026 as compared to $31.2 million in the second quarter of 2025. The decrease in financial expenses net in the second quarter of 2026 was mainly due to the reduction in the average debt during the quarter. Taxes on income were $32.7 million in the second quarter of 2026 as compared to $7.1 million in the second quarter of 2025. The higher tax expense in the second quarter of 2026 was mainly driven by the implementation of the OECD Pillar 2 Global Minimum Tax Rules. The effective tax rate in the second quarter of 2026 was 16.4% compared to 5.6% in the second quarter of 2025. Gap diluted EPS for the second quarter of 2026 was $3.61, up 34% as compared to $2.69 in the second quarter of 2025. Our non-gap diluted EPS was $4.14 in the second quarter of 2026, up 28% as compared to $3.23 in the second quarter of 2025. Our backlog of June 30, 2026 stood at $32 billion, with the increase during the quarter driven predominantly by orders from international customers, mainly from Europe. Approximately 73% of the current backlog was generated from outside of Israel. Approximately 42% of the backlog at the end of June is scheduled to be performed during the remainder of 2026 and in 2027, while the rest is scheduled to be performed during 2028 and beyond. New business and the quarterly backlog increase provide us with good visibility into future sales growth. The cash flow in the second quarter of 2026 was affected by the increase in net income and a strong increase in contract liabilities. At the end of the second quarter of 2026, we delivered $150 million of free cash flow, as compared to the $71 million free cash flow generated at the end of the second quarter of 2025. Cash conversion remained strong at 86% for the quarter, reflecting the quality of our earning and disciplined working capital management. I will now turn the call over to Mr. Machlis, Albitz, President and CEO, Buzi, please go ahead.