This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Elbit Systems Reports Fourth Quarter And Full Year 2012 Results

Stocks in this article: ESLT

HAIFA, Israel, March 13, 2013 /PRNewswire/ --

Improvement in key business parameters:

  Revenues at $2.9 billion; Backlog of orders at $5.7 billion;

Net income of $168 million; EPS of $3.97

Elbit Systems Ltd. (the "Company") (NASDAQ and TASE: ESLT), the international defense electronics company, reported today its consolidated results for the fourth quarter and full year ended December 31, 2012.

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 :

Joseph Ackerman, President and CEO of Elbit Systems, commented: "I am pleased by our 2012 results, in which we reached a record in full year revenues and backlog, and I am encouraged by our improvement in margins compared with last year. We are leveraging our global intercompany synergies, which enable us to reduce operating expenses, to be more efficient and to continue to improve profitability. We witnessed growth in the Latin-America and Asia-Pacific regions, two markets characterized with growing defense budgets, and this trend, as well as the global markets' recognition of our innovative solutions, have enabled us to resume our growth in 2012."

Ackerman continued: "2012 was my last full year with Elbit Systems, and I believe the Company is very well positioned strategically, operationally and financially to face the challenges ahead. At the end of March, after almost two decades at the helm, I will be passing the baton to Bezhalel (Butzi) Machlis, who will succeed me as President and CEO. Butzi is a highly regarded executive, and I believe the Company has a solid foundation with a very capable management team, which will enable it to move ahead in 2013 and continue on the path that Elbit Systems has forged in recent years."

Michael Federmann, Chairman of Elbit Systems' Board of Directors, added: "On behalf of the Board of Directors and the entire Company, I would like to express our deep appreciation for Yossi Ackerman's remarkable contribution over his 31 years in the Company. In his upcoming role as Vice Chairman of the Board, we look forward to continuing to benefit from his experience and wisdom in the years to come. We welcome as his successor Butzi Machlis, a talented manager with a well founded international reputation, and I am confident that he will continue Yossi Ackerman's legacy and lead the Company to new achievements."

Fourth quarter 2012 results :

Revenues in the fourth quarter of 2012 were $843.9 million, compared to $841.9 million in the fourth quarter of 2011.

Gross profit amounted to $239.0 million (28.3% of revenues) in the fourth quarter of 2012, as compared to $141.7 million (16.8% of revenues) in the fourth quarter of 2011. The gross profit in the fourth quarter of 2011 included an expense of $72.8 million, as a result of the cessation of a program with a foreign customer. The non-GAAP gross profit in the fourth quarter of 2012 was $247.6 million (29.3% of revenues), compared to $222.3 million (26.4% of revenues) in the fourth quarter of 2011.

Research and development expenses, net were $68.3 million (8.1% of revenues) in the fourth quarter of 2012, as compared to $76.0 million (9.0% of revenues) in the fourth quarter of 2011.

Marketing and selling expenses were $61.6 million (7.3% of revenues) in the fourth quarter of 2012, as compared to $65.1 million (7.7% of revenues) in the fourth quarter of 2011.

General and administrative expenses were $38.9 million (4.6% of revenues) in the fourth quarter of 2012, as compared to $34.8 million (4.1% of revenues) in the fourth quarter of 2011.

Operating income was $70.2 million (8.3% of revenues) in the fourth quarter of 2012, as compared to an operating loss of $34.1 million in the fourth quarter of 2011. The operating loss in the fourth quarter of 2011 included the $72.8 million expense mentioned above.  The non-GAAP operating income in the fourth quarter of 2012 was $83.3 million (9.9% of revenues), as compared to $53.2 million (6.3% of revenues) in the fourth quarter of 2011.

Financial expenses, net were $10.6 million in the fourth quarter of 2012, as compared to financial income, net, of $9.6 million in the fourth quarter of 2011. Financial income, net, in the fourth quarter of 2011 was high due to income from currency hedging activities and interest on the settlement of the ImageSat debt transaction.

Taxes on income were $2.9 million in the fourth quarter of 2012, as compared to a tax benefit of $6.9 million in the fourth quarter of 2011.  Taxes on income in the fourth quarter of 2011 were impacted by a net loss before tax of $24.0 in the fourth quarter of 2011.

Equity in net earnings of affiliated companies and partnerships was $2.3 million (0.3% of revenues) in the fourth quarter of 2012, as compared to $4.8 million (0.6 % of revenues) in the fourth quarter of 2011.

Net income attributable to non-controlling interests was $1.8 million in the fourth quarter of 2012, as compared to $0.4 million in the fourth quarter of 2011.

Loss from discontinued operations, net was $0.1 million. The amount reflects a net loss related to a held-for-sale business acquired during 2010, as part of the acquisition of the Mikal group of companies.  

Net income attributable to the Company's shareholders in the fourth quarter of 2012 was $57.2 million (6.8% of revenues), as compared with a net loss of $13.0 million (1.5% of revenues) in the fourth quarter of 2011. The non-GAAP net income in the fourth quarter of 2012 was $67.9 million (8.0% of revenues), as compared to $60.6 million (7.2% of revenues) in the fourth quarter of 2011.

Diluted net earnings per share attributable to the Company's shareholders were $1.36 for the fourth quarter of 2012, as compared with a diluted net loss per share of $0.31 for the fourth quarter of 2011. The non-GAAP diluted earnings per share in the fourth quarter of 2012 were $1.62, as compared to $1.42 in the fourth quarter of 2011.

Full year 2012 results :

Revenues for the year ended December 31, 2012 were $2,888.6 million, as compared to $2,817.5 million in the year ended December 31, 2011. The leading contributors to the Company's revenues were the airborne systems and C4ISR systems areas of operations. The major increase was in the airborne systems area of operations, primarily due to the increased revenues from North American customers of avionic system, aerostructures and maintenance services. The decrease in the land systems area of operations was mainly due to a decline in revenues of fire control and life support systems in Israel and North America.

In our reporting of distributions of revenues by geographic regions we have updated the definition of our geographic regions as shown in the attached table of Distribution of Revenues. This update was made to enhance the visibility of distribution of revenues by geographic regions in light of the growing importance of our business in the Latin American and Asia-Pacific regions.

Cost of revenues for the year ended December 31, 2012 was $2,072.7 million, as compared to $2,085.5 million in the year ended December 31, 2011. Cost of revenues in 2011 included an expense of $72.8 million related to the cessation of a program with a foreign customer as mentioned above.

Gross profit for the year ended December 31, 2012 was $815.9 million (28.2% of revenues), as compared with gross profit of $732.0 million (26.0% of revenues) in the year ended December 31, 2011. The gross profit margin in 2012 increased mainly as a result of the mix of programs sold in the year. The gross profit in 2011 was reduced by the expense of $72.8 million related to the cessation of the program mentioned above. The non-GAAP gross profit in 2012 was $840.1 million (29.1% of revenues), as compared to $835.7 million (29.7% of revenues) in 2011.

Research and development expenses, net for the year ended December 31, 2012 were $233.4 million (8.1% of revenues), as compared to $241.1 million (8.6% of revenues) in the year ended December 31, 2011.

Marketing and selling expenses for the year ended December 31, 2012 were $241.9 million (8.4% of revenues), as compared to $235.9 million (8.4% of revenues) in the year ended December 31, 2011.

General and administrative expenses for the year ended December 31, 2012 were $137.5 million (4.8% of revenues), as compared to $139.3 million (4.9% of revenues) in the year ended December 31, 2011.

Operating income for the year ended December 31, 2012 was $203.1 million (7.0% of revenues), as compared with operating income of $115.7 million (4.1% of revenues), in the year ended December 31, 2011. In 2011, excluding the above mentioned expenses of $72.8 million, operating income was $188.5 million (6.7% of revenues). The non-GAAP operating income in 2012 was $252.3 million (8.7% of revenues) compared with $245.8 million (8.7% of revenues) in 2011.

Financial expenses, net for the year ended December 31, 2012 were $26.1 million, as compared to $13.6 million in the year ended December 31, 2011. The financial expenses in 2011 were lower primarily as a result of income from currency hedging activities, a gain from exchange rate differences and the settlement of the ImageSat debt transaction.

Taxes on income for the year ended December 31, 2012 were $17.1 million (effective tax rate of 9.7%), as compared to taxes on income of $13.6 million (effective tax rate of 13.1%) in the year ended December 31, 2011. The effective tax rate is affected by the mix of the tax rates in the various jurisdictions in which the Company's entities generate taxable income, and the settlement of tax audits including adjustments for prior years.

Equity in net earnings of affiliated companies and partnerships for the year ended December 31, 2012 was $11.2 million (0.4% of revenues), as compared to $15.4 million (0.5% of revenues) in the year ended December 31, 2011.

Loss from discontinued operations, net for the year ended December 31, 2012 amounted to $0.6 million as compared to a loss of $16.0 million in 2011. The amount in 2011 reflects a net loss related to an impairment of a held-for-sale investment acquired during 2010, as part of the acquisition of the Mikal group of companies. The net loss from discontinued operations in 2011 (after deducting the minority interest and tax) amounted to $9.5 million.  

Net income attributable to non-controlling interests for the year ended December 31, 2012 was $2.6 million, as compared to a net loss of $0.5 million in the year ended December 31, 2011. Excluding the loss related to impairment of an asset held-for-sale, the net income attributable to non-controlling interests in the year ended December 31, 2011 was $6.0 million (0.2% of revenues).

Net income attributable to the Company's shareholders for the year ended December 31, 2012 was $167.9 million (5.8% of revenues), as compared with $90.3 million (3.2% of revenues) in the year ended December 31, 2011. The net income in 2011 included the net effect of the cessation of a project with a foreign customer mentioned above, which amounted to $62 million. The non-GAAP net income in the year ended December 31, 2012 was $206.3 million (7.1% of revenues), as compared to $206.6 million (7.3% of revenues) in the year ended December 31, 2011.

Diluted net earnings per share attributable to the Company's shareholders for the year ended December 31, 2012 were $3.97, as compared with $2.09 for the year ended December 31, 2011. The non-GAAP diluted net earnings per share in the year ended December 31, 2012 were $4.88, as compared to $4.79 in the year ended December 31, 2011.

The Company ' s backlog of orders for the year ended December 31, 2012 totaled $5,683 million, as compared with $5,528 million as of December 31, 2011. Approximately 67% of the current backlog is attributable to orders from outside Israel. Approximately 68% of the current backlog is scheduled to be performed during 2013 and 2014.

Operating cash flow for the year ended December 31, 2012 was $198.4 million, as compared to $190.9 million in the year ended December 31, 2011.

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.    

1 of 7

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,614.81 +215.14 1.31%
S&P 500 1,941.28 +37.27 1.96%
NASDAQ 4,419.4780 +103.4040 2.40%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs