By B.C. Kessner
Israel’s Elbit Systems [ESLT] Wednesday reported a 6.6 percent gain in year-on-year quarterly consolidated revenues, driven largely by C4ISR and unmanned aerial vehicle (UAV) activity, and a new record backlog of orders standing at $5.1 billion.
“The growth in the C4ISR area of operations is encouraging and a good example of our ability to successfully foresee our customers’ needs,” Joseph Ackerman, Elbit’s president and CEO, said. “We have also witnessed continued demand in other areas of our activity. Based on all these factors, we expect a double digit growth in revenues in 2009, as compared to 2008.”
Consolidated revenues for the first quarter ending March 31, 2009 increased to $656.9 million, as compared to $616.1 million for the quarter a year ago.
Gross profit was up 22 percent to $208.3 million. According to Elbit, the strong gross profit margin was primarily the result of a mix of projects performed with higher gross profit, and in part due to the strength of the U.S. dollar versus the Israeli shekel during the first quarter of 2009, which affected the labor costs incurred in shekels.
Quarterly net research and development (R&D) expenses totaled $45.9 million (7.0 percent of revenues), as compared to $38.0 million (6.2 percent of revenues) last year, in accordance with Elbit’s long-term plans to maintain and further advance its technologies, the company said.
Net financial expenses for the quarter were $19 million, about four times higher than last year. Elbit attributed the increase in net financial expenses mainly to the strengthening of the dollar against the shekel, which affected the value of the company’s currency hedge derivatives in Israeli Shekels.
Diluted net earnings per share attributable to Elbit for the first quarter of 2009 was $1.02, up about 36 percent as compared with 75 cents for the first quarter of 2008.
Elbit’s backlog was up $61 million compared to a year ago, with about 67 percent relating to orders outside Israel. About 72 percent of the company’s backlog is slated for delivery during the upcoming three quarters of 2009 and during 2010.
Operating cash flow was $5.4 million during the first quarter of 2009, as compared to $66.3 million in the first quarter of 2008. The sharp decrease in the operating cash flow was mainly a result of a reduction in the overall amount of advanced payments from customers, the company said.
Elbit in the second quarter has already achieved several noteworthy successes.
On April 7, it completed the purchase of the minority shares of its previously 51 percent-owned subsidiary Kinetics.
On May 7, Lockheed Martin [LMT] Canada awarded the company’s Elisra Electronic Systems subsidiary a $55 million deal to supply Electronic Warfare (EW) equipment for the Canadian Navy’s Halifax Frigate Modernization program (Defense Daily, May 12).
On May 14 Elbit’s wholly-owned subsidiary in the United States, Elbit Systems of America, received a contract from the U.S. Army for the Mortar Fire Control (MFC) Systems Integration program. The contract is a hybrid Indefinite Delivery /Indefinite Quantity-Time and Materials (ID/IQ-T&M) type contract, which provides for orders up to $197.5 million amount over a five-year period.
Earlier this week, Elbit Systems of America, and General Dynamics [GD] Armament and Technical Products announced the formation of a new joint venture named UAS Dynamics, LLC, to provide unmanned aerial systems (UAS) to the Department of Defense and other potential U.S. government customers through programs such as the recently announced Marine Corps’ Small Tactical Unmanned Aircraft Systems (STUAS)/Tier II program.
On Monday, the company received a $34.2 million contract to supply the Austrian army with Elbit’s new 12.7mm unmanned Electrically Remote Controlled Weapon Stations.
The Board of Directors declared a dividend of 30 cents per share for the first quarter of 2009. The dividend’s record date is June 2, 2009, and the dividend will be paid on June 15, 2009, net of taxes and levies, at the rate of 16.61 percent.