HAIFA, Israel - Elbit Systems Ltd.(NASDAQ: ESLT) (TASE: ESLT), (the 'Company') the international high technology company, reported today, its consolidated results for the quarter ended March 31, 2020.

In this release, the Company is providing US-GAAP results as well as additional non-GAAP financial data, which are intended to provide investors a more comprehensive understanding of the Company's business results and trends. Unless otherwise stated, all financial data presented is GAAP financial data.

Management Comment:

Bezhalel (Butzi) Machlis, President and CEO of Elbit Systems, commented: 'In the first quarter we witnessed positive momentum across our markets, receiving more than $1.8 billion in orders from customers around the world. These orders contributed to a record backlog of $10.8 billion, growing by 8% over the last quarter of 2019, and providing Elbit Systems with good revenue visibility.

As a result of the COVID-19 pandemic, since March we have made significant changes to the way we work in order to protect the health and safety of our employees around the world, while at the same time maintaining business continuity in order to deliver our products and services to our customers as planned. This includes utilizing our healthy balance sheet to secure our supply channels and maintaining adequate levels of inventory to enable us to continue deliveries to customers.'

First Quarter 2020 Results:

Revenues in the first quarter of 2020 were $1,071.2 million, as compared to $1,021.7 million in the first quarter of 2019.

Non-GAAP (*) gross profit amounted to $295.4 million (27.6% of revenues) in the first quarter of 2020, as compared to $283.4 million (27.7% of revenues) in the first quarter of 2019. GAAP gross profit in the first quarter of 2020 was $289.4 million (27.0% of revenues), as compared to $277.6 million (27.2% of revenues) in the first quarter of 2019.

Research and development expenses, net were $80.4 million (7.5% of revenues) in the first quarter of 2020, as compared to $77.4 million (7.6% of revenues) in the first quarter of 2019.

Marketing and selling expenses, net were $70.5 million (6.6% of revenues) in the first quarter of 2020, as compared to $71.8 million (7.0% of revenues) in the first quarter of 2019.

General and administrative expenses, net were $58.0 million (5.4% of revenues) in the first quarter of 2020, as compared to $53.6 million (5.2% of revenues) in the first quarter of 2019.

Other operating income, net in the first quarter of 2019 was $1.2 million, due to a gain resulting from an investment and remeasurement of the Company in a subsidiary.

Non-GAAP(*) operating income was $90.4 million (8.4% of revenues) in the first quarter of 2020, as compared to $84.0 million (8.2% of revenues) in the first quarter of 2019. GAAP operating income in the first quarter of 2020 was $80.4 million (7.5% of revenues), as compared to $76.0 million (7.4% of revenues) in the first quarter of 2019.

Financial expenses, net were $12.5 million in the first quarter of 2020, as compared to $13.9 million in the first quarter of 2019.

Other income, net in the first quarter of 2020 was $1.2 million , as compared to other expenses of $3.4 million in the first quarter of 2019. Other income in the first quarter of 2020 includes income of approximately $3.2 million as a result of revaluation of an investment in a subsidiary accounted for under the fair value method.

Taxes on income were $8.7 million (effective tax rate of 12.6%) in the first quarter of 2020, as compared to $10.1 million (effective tax rate of 17.2%) in the first quarter of 2019.

Equity in net earnings of affiliated companies and partnerships was $3.1 million (0.3% of revenues) in the first quarter of 2020, as compared to $2.2 million (0.2% of revenues) in the first quarter of 2019.

Net income attributable to non-controlling interests in the first quarter of 2019 was $0.4 million.

Non-GAAP(*) net income attributable to the Company's shareholders in the first quarter of 2020 was $72.0 million (6.7% of revenues), as compared to $65.8 million (6.4% of revenues) in the first quarter of 2019. GAAP net income attributable to the Company's shareholders in the first quarter of 2020 was $63.6 million (5.9% of revenues), as compared to $50.5 million (4.9% of revenues) in the first quarter of 2019.

Non-GAAP(*) diluted net earnings per share attributable to the Company's shareholders were $1.63 for the first quarter of 2020, as compared to $1.54 for the first quarter of 2019. GAAP diluted earnings per share in the first quarter of 2020 were $1.44, as compared to $1.18 for the first quarter of 2019.

The Company's backlog of orders as of March 31, 2020 totaled $10,790 million, as compared to $9,658 million as of March 31, 2019. Approximately 63% of the current backlog is attributable to orders from outside Israel. Approximately 59% of the current backlog is scheduled to be performed during 2020 and 2021.

Operating cash flow used in the three months ended March 31, 2020 was $9.9 million, as compared to operating cash flow generated in the three months ended March 31, 2019 in the amount of $46.5 million.

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Impact of the COVID-19 Pandemic on the Company:

The Coronavirus disease 2019 (COVID-19) was declared a pandemic by the World Health Organization in March 2020. COVID-19 has had significant negative impacts on the worldwide economy, resulting in disruptions to supply chains and financial markets, significant travel restrictions, facility closures and shelter-in-place orders in various locations. Elbit Systems is closely monitoring the evolution of the COVID-19 pandemic and its impacts on the Company's employees, customers and suppliers, as well as on the global economy.

As we reported on April 13, 2020, we have been taking a number of actions to protect the safety of our employees and maintain business continuity and our supply chain. We also reported on a number of activities where we are leveraging our technological capabilities to assist hospital staffs and other first responders protecting our communities from the impact of the pandemic. All of these actions remain ongoing.

The safety measures implemented across all our sites include increasing the number of manufacturing line shifts to enhance social distancing and encouraging employees to work from home where feasible.

We have initiated business continuity plans to meet our commitments to our customers. Where necessary we are working on finding alternative solutions for delivering our products to our customers on time, including chartering dedicated freighter aircraft.

During the first quarter of 2020 our business was not materially impacted by the pandemic. Subsequently, some of our businesses have begun to experience certain disruptions due to government directed safety measures, travel restrictions and supply chain delays. To date, the financial impact to us of these disruptions has not been material.

We have implemented a series of cost control measures to help limit the financial impact of the pandemic on the Company, in parallel to the measures we are taking to maintain business continuity and deliveries to our customers. Examples of such cost control measures include temporary reductions of salaries for certain employees, senior managers and executives, as well as directors' fees, reductions in discretionary spending and capital expenditures and the furlough of a small number of employees who have been unable to fulfill their tasks due to travel and other pandemic-related restrictions. We also are working on efficiency initiatives with a number of our suppliers. We are evaluating our operations on an ongoing basis in order to adapt to the evolving business environment.

We believe that as of March 31, 2020, Elbit Systems had a healthy balance sheet, adequate levels of cash and access to credit facilities that provide liquidity when necessary. We have given high priority to cash management and adequate cash reserves to run the business. During the first quarter we drew additional cash from our existing credit facilities to increase our financial flexibility. We have used part of our financial resources to secure our supply chain and build buffer stocks of inventory where required.

The extent of the impact of COVID-19 on the Company's performance will depend on future developments including the duration and spread of the pandemic, the measures adopted by governments to limit the spread of the pandemic and resulting actions that may be taken by our customers and our supply chain, all of which are uncertain. As noted in our annual report on Form 20-F, the preparation of financial reports such as our quarterly financial reports requires us to make judgments, assumptions, and estimates that affect the amounts reported in such reports. For our quarterly financial report for the quarter ended March 31, 2020, we considered the economic impact of the COVID-19 pandemic on our critical and significant accounting estimates. The expected impact of the COVID-19 pandemic did not have a material effect on our significant judgments, assumptions and estimates reflected in the report. However, our future results may differ materially from our estimates; and as events continue to evolve in connection with the COVID-19 pandemic, the estimates we use in future periods may change materially.

Non-GAAP financial data:

The following non-GAAP financial data is presented to enable investors to have additional information on the Company's business performance as well as a further basis for periodical comparisons and trends relating to the Company's financial results. The Company believes such data provides useful information to investors by facilitating more meaningful comparisons of the Company's financial results over time. Such non-GAAP information is used by the Company's management to make strategic decisions, forecast future results and evaluate the Company's current performance. However, investors are cautioned that, unlike financial measures prepared in accordance with GAAP, non-GAAP measures may not be comparable with the calculation of similar measures for other companies.

The non-GAAP financial data includes reconciliation adjustments regarding non-GAAP gross profit, operating income, net income and diluted EPS. In arriving at non-GAAP presentations, companies generally factor out items such as those that have a non-recurring impact on the income statements, various non-cash items including significant exchange rate differences, significant effects of retroactive tax legislation, changes in accounting guidance, financial transactions and other items not considered to be part of regular ongoing business, which, in management's judgment, are items that are considered to be outside of the review of core operating results.

In the Company's non-GAAP presentation, the Company made certain adjustments, as indicated in the table below.

These non-GAAP measures are not based on any comprehensive set of accounting rules or principles. The Company believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the Company's results of operations, as determined in accordance with GAAP, and that these measures should only be used to evaluate the Company's results of operations in conjunction with the corresponding GAAP measures. Investors should consider non-GAAP financial measures in addition to, and not as replacements for or superior to, measures of financial performance prepared in accordance with GAAP.

Reconciliation of GAAP to Non-GAAP (Unaudited) Supplemental Financial Data:

See details at: http://ir.elbitsystems.com/news-releases/news-release-details/elbit-systems-reports-first-quarter-2020-results

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