Ladies and gentlemen, thank you for standing by. Welcome to Elbit Systems' third quarter 2023 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. You should have all received by now the company's press release that is available in the news section of the company's website, www.elbitsystems.com. I would now like to hand over the call to Rami Myerson, Elbit Systems, VP, Investor Relations. Rami, please go ahead. Thank you, Yoni. Good day, everyone, and welcome to our third quarter 2023 earnings call. On the call with me today are Butzi Machlis, our President and CEO, Kobi Kagan, our CFO, and Yossi Gaspar, Senior Executive Vice President, Business Management. 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. As we do every quarter, we will provide you with both our regular GAAP financial data, as well as certain supplemental non-GAAP information. We believe that this non-GAAP information provides additional detail to help 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. Kobi will begin by providing a discussion of the financial results, followed by Butzi, who will talk about some of the main events during the quarter and beyond. We will then turn the call over to a question-and-answer session. With that, I would like now to turn the call over to Kobi. Kobi, please. Thank you, Rami. Hello, everyone, and thank you for joining us today. The financial results of the third quarter of 2023 reflect the sustained demand for our solutions and progress in the implementation of our operational improvement plans. Butzi will discuss the implications of the war in Israel in his remarks. The extent of the impact of the war on our financial results will depend on future developments that are difficult to predict, including the duration and scope of the war. We continue to monitor the situation closely. Turning now to results of the third quarter. Third quarter revenues increased by 11% to $1.502 billion, compared to $1.349 billion in the third quarter of 2022. In terms of quarterly revenues by segment, aerospace revenues increased by 24% in the third quarter of 2023, compared to the third quarter of 2022, mainly due to training and simulation sales in Europe and UAS sales in Asia Pacific. C4I and Cyber revenues increased by 9% year-over-year, mainly due to radio system sales in Europe. ISTAR and EW revenues were similar to the revenues in the third quarter of 2022. Land revenues increased by 7%, mainly due to artillery and weapon station sales in Europe. Elbit Systems of America revenues declined 2% in the third quarter due to lower precision-guided ammunition sales. Elbit Systems diverse geographic revenue base helps to reduce revenue volatility and supports the long-term sustainability of our business. In the third quarter, Europe was our largest market, contributing 33% of group revenues. North America was 24%, Asia Pacific, 21%, and Israel contributed 15% of our revenues. European revenues increased due to growth in sales of radio systems, artillery, weapon station, and training and simulation solutions. Asia Pacific revenues increased mainly due to growth in UAS sales. Israel revenues declined mainly due to lower ammunition sales in the quarter. The non-GAAP gross margin for the third quarter was 24.9%, compared to the third quarter of 2022 at 25%. GAAP gross margin in the third quarter was 24.5% of revenues, compared to 24.2% in the third quarter of 2022. GAAP and non-GAAP gross profit in the third quarter of 2022 included approximately $13 million of expenses related to stock price linked compensation plans. Third quarter non-GAAP operating income was $117 million or 7.8% of revenues, compared to $84.3 million or 6.3% of revenues last year. GAAP operating income for the third quarter was $106.1 million or 7.1% of revenues, versus $73.4 million, or 5.4% of revenues in the third quarter of 2022. GAAP and non-GAAP operating profit in the third quarter of 2022 included expenses of approximately $22 million related to the stock price linked compensation plan. The operating expense breakdown in the third quarter was as follows: Net R&D expenses were 6.9% of revenues, versus 8.4% in 2022. The year-on-year reduction in R&D expenses in the third quarter reflects the phasing of projects. Marketing and selling expenses were 5.7% of revenues, versus 5.1% last year. The positive inflection in global defense budget growth has created multiple opportunities. The increase in marketing and sales spend will help to realize the potential created by these opportunities. G&A expenses were 4.8% of revenues, compared to 5.9% last year. Other operating income in the third quarter of 2022, of $9.4 million, included a capital gain related to the sale of a building in Israel. Financial expenses were $36 million in the third quarter, compared to $16 million in 2022. Financial expenses in the third quarter were higher as a result of the significant increase in interest rates and higher debt. We recorded the tax expense of $10 million in the third quarter, compared to $8 million in 2022. The effective tax rate in the third quarter was 15%, compared to 13% in 2022. Our non-GAAP diluted EPS was $1.65 in the third quarter, compared with $1.40 in 2022. GAAP diluted EPS was $1.236 for the third quarter, compared with $1.26 in 2022. Our backlog of orders as of September 30, 2023, was $16.6 billion, approximately $1.9 billion higher than the backlog at the end of the third quarter of 2022. Approximately 39% of the current backlog is scheduled to be performed during the remainder of 2023 and 2024, and the rest is scheduled for 2025 and beyond. Operating cash flow in the third quarter was an $11 million inflow, compared to the $178 million inflow in the same quarter last year. The board of directors has declared a dividend of $0.50 per share. I will now turn the call over to Mr. Machlis, Elbit CEO. Butzi, please go ahead. Thank you, Kobi. I would like to begin by thanking all Elbit employees and their families around the world for their hard work and dedication in these challenging times. Since the seventh of October, I have visited Elbit operations around Israel, and our employees deployed in the field supporting the IDF. I'm proud of their commitment to all our customers around the world, and their dedication provides me with confidence that Elbit Systems will be able to overcome the challenges we face today and may face in the future. I also want to send my sincere condolences to the families of our employees that have lost their loved ones during this conflict. The financial results in the third quarter include double-digit revenue growth, a record backlog of $16.6 billion, and improved profitability. Combined with the significant contracts from customers around the world we received in recent months, reflect the strong demand for our solutions. They also increase confidence in our ability to overcome the short-term challenges and deliver on our potential in the longer term. I would like to discuss the impact of the war so far in Israel that presents both challenges and opportunities. Elbit Systems is Israel's largest defense company, and we supply a range of solutions to the Israeli Defense Forces. These include the Digital Army Program, or DAP 750 command and control solution, Electronic Warfare system, UAVs, artillery and mortars, systems for main battle tanks and armed vehicles, night vision systems, as well as a range of training and simulation solutions for the single soldier to the squadron and battalion level across all domains and more. Our solutions are currently being used extensively by the IDF. We have also accelerated the development of some of our solutions that were still in development and were scheduled to be fielded in the medium or longer term. They have already been sent to the field in days or weeks. We did this thanks to the dedication of our employees and our culture of innovation and creativity. We have ramped up production to support the IDF and maintain deliveries to our international customers at the same time. We have increased production capacity at our factories by adding shifts, and we have rapidly recruited several hundred additional temporary employees to support the surge. We have implemented all of this at the same time as approximately 15% of our Israeli workforce of 14,000 employees has been called up to serve as reservists in the IDF. We pray for a safe and speedy return of all the hostages and soldiers to their homes and families. I would like to share some of my initial observations and lessons learned from the regular meetings we conduct with the end users in the IDF, and discuss some of the relevant contracts we received in recent months that demonstrate that our international businesses remain solid and continue to grow. The conflict has highlighted the importance of multi-domain warfare that connects all forces operating in the air, on the ground, and at sea, and enables the transfer of information between them to close the sensor-to-shooter cycle rapidly and effectively. Elbit Systems is a market-leading supplier of a range of solutions across the sensor-to-shooter cycle that is made up of three major elements: the sensor that collects information, the infrastructure that enables the transfer of information, and the effectors that engage the threat based on information, on the information gathered. Some examples of our capabilities include our ISTAR and EW division provide a range of advanced sensors that operate across the electromagnetic spectrum. These sensors collect valuable and actionable mission-critical intelligence and can identify, exploit, and gain enemy activity and capabilities. The division also provides advanced targeting, target acquisition, and laser targeting solutions. In August, we were awarded a $55 million contract to supply multilayer ReDrone counter unmanned aerial system to the Netherlands. The ReDrone system is comprised of advanced radar, signal sensors, and electro-optical sensor, attack capabilities, and the command and control system to protect against the growing drone threats. We continue to see healthy demand for our night vision solutions from customers around the world, including yesterday's announcement from the U.S. DoD for a large night vision goggle contract for ESA's night vision business. The information collected by these sensors, that are installed on a range of manned and unmanned platforms, is distributed around the battlefield by Elbit Systems C4I and Cyber advanced communication and command and control solutions, that create a real-time, multi-domain network warfare environment from headquarters to the frontline. The current generation of the digital army program that we supply to the IDF, the Torch-X DAP 750, enables advanced digital capabilities in the battlefield from the IDF operating on thousands of our E-LynX advanced software-defined radios that enable the flow of data. DAP 750 connects the forces across multi-domains, enabling the rapid and effective transfer of information, including voice, video, and text, around the battlefield to be used by decision makers at all levels of the command chain. In October, Elbit Systems Sweden was awarded a $170 million ten-year contract to become the integration partner for the Swedish Army digitization program, LSS Mark. This contract is an important validation of our command and control and military digitization capabilities. Elbit Systems Land provides a range of effectors to the IDF, including precision-guided munition launchers or relayed from platforms on the ground, in the air, and at sea. We also supply a range of artillery, tank, or mortar ammunition. These effectors enable engagement of the threats identified by the sensor. In October, we received a $135 million, two-year contract from an international customer to establish an artillery ammunition factory. The contract reflects the strong demand for ammunition from countries around the world and the decade of Elbit experience producing a range of artillery, mortars, and tank munition. In September, we were awarded two contracts from a European country, worth approximately $200 million, to supply a C4I solution to an artillery battalion and Hostile Fire Counter Attack solution. This solution provides a good example of Elbit's comprehensive sensor-to-shooter capabilities that help accelerate the cycle to identify and engage the enemy quickly and effectively with limited collateral damage. We initiated, and we are implementing our operational improvement plan to support our transformation into a larger, more profitable company. The war in Israel has not changed our long-term plans. It also increases the focus on the portfolio and should help us identify capability or technology gap, as well as those businesses that are less relevant to our strategy. In summary, I'm encouraged by the progress in the third quarter as well as the resilience we have demonstrated, overcoming multiple challenges in recent years. I'm confident in our ability to overcome the current challenges and deliver on our potential to all our stakeholders, our customers, our employees, and of course, to you, our shareholders. Before I conclude, I would like to thank our customers and partners from around the world for the numerous expressions of support over the last two months. With that, I will be happy to take your questions. Thank you. Ladies and gentlemen, at this time, we will begin the question-and-answer session. If you have a question, please press star one. If you wish to cancel your request, please press star two. If you are using speaker equipment, kindly lift the handset before pressing the numbers. Your questions will be polled in the order they are received. Please stand by while we poll for your questions.... The first question is from Pete Skibitski of Alembic Global Advisors. Please go ahead. Yes, thank you. Gentlemen, good afternoon, and I hope you and your families are safe and you're all doing reasonably well during what I'm sure is a very difficult time, to start out. Thank you, Pete. Thank you. Yes. Maybe to start with Kobi. Kobi, can you talk more about the third quarter gross margin in particular? I know, I know last year you had the stock comp expense that impacted gross margin. This year, I think you expected second half margins to be better. So maybe you could just walk us through what impacted the third quarter gross margin, and if you expect fourth quarter to see a higher gross margin. Yeah. Thank you, Keith. I'll, I'll talk about, I think there are four layers here in to the answer. The first one is that we're still in the implementation phase of our operational improvement, our plan to support our transformation. That plan includes the ERP effort and multiple, multiple investments that are still going on, and we will see the continuation of the improvement of our profitability at GP and OP level. The second part is, of course, project mix that you have each quarter. The third issue is that we think that it's more relevant to look at three quarters and not just on one specific quarter. If you look at the first three quarters from the beginning of 2023, you see that if we deduct the stock price-linked compensation plans, we keep the same GP level and even a bit better. The last issue is that when we are discussing prices of products and systems, of course, there are a variety. We are very diverse company with a lot of projects and systems and products, and that creates, of course, different pricing environments that we can get from the market. So, we think that we are on plan. We see, with the GP, we see, an improvement, significant improvement on the operational expenses level. So we keep the trend of, of improved, profitability altogether. Okay. And just to follow up financially, do you expect to be free cash flow positive in the fourth quarter? As Butzi discussed previously, and as we disclosed, we are expecting the Government of Israel, the Israel Ministry of Defense, to pay fully their due payments in all of our receivables in the fourth quarter. So certainly we are expecting a positive Q4 cash flow-wise, and we are sure expecting to be fully paid from the Government of Israel. Okay. Okay, then maybe one last one for me, and I'll get back in queue. For Butzi. Butzi, I don't know if you've had a chance to examine this potential supplemental funding request for Israel that's passed through the US House of Representatives. It's about $14.5 billion, and I don't know a lot of the line items, but I have heard there's funding for Iron Beam, for instance, in there, amongst other items. So I'm just wondering, I guess, have you had a chance to gain some view of what's in there? And would you expect that to be, you know, meaningful to Elbit, if that passes? Yes, we have an intimate dialogue with our government, with the IMOD, on our share in this package. And certainly I will not go into all the details right now, but I can tell you that we expect to get part of it. As you know, we have Elbit Systems of America, which produce different systems and products to the IDF using FMF funds. So it's a big opportunity for us, and we expect to enjoy from this package as well. Okay. Yeah, I mean, your backlog, I guess, year-to-date backlog is up 9.5%, and that is really before, of course, this potential supplemental impact and, and any increased Israel, you know, IMOD funding. So it, Yes. It sounds like maybe all the extra capacity that you've been building is. Well, it was good foresight, I guess, is the way to say it, to build all that extra capacity. So, thanks, guys. I'll get back in queue. Thank you. Thank you very much. Thank you. The next question is from Ella Fried of Bank Leumi. Please go ahead. Good afternoon. Thank you for taking the questions. First, I would like to congratulate you on the growth, on the revenue in this quarter, and mostly on the way the company is functioning at this time. And I think, as citizens, we are all very impressed by it, and it was good to hear how you cope with the reality creatively and efficiently. I have a few questions. The first question is about the focus that you mentioned on the portfolio, that you are evaluating, maybe from the M&A perspective, potential either buying or selling of capabilities, which makes lots of sense when the company is growing at this pace. Could you give some more details about this process? You know, Ella, it's first good afternoon, Ella, good to hear from you. It's an ongoing process that we have in the company to explore the portfolio we have, to make sure that we have the right portfolio, to add more capabilities based on M&A opportunities, and to get out on some businesses which are less relevant. And of course, that this war focus us, focus us even more. So we see many opportunities for the company in the near future and in the medium future, and not just in Israel, also in many other places. We have a process, and this process is taking place. We made very good acquisitions in the U.S. a few years back, and was very happy to hear yesterday, as I mentioned earlier, that the system night vision were awarded a very nice contract in the U.S. to provide night vision equipment to the forces. And that's a very good example of an acquisition we made. So we continue to look for opportunities to make additional acquisition, and maybe to get out from some of the businesses we have, which are less relevant. IMI is another very good example. As you all remember, we acquired IMI in 2018. Mm-hmm. Today it's a complete different company, and we combined all, many elements from Elbit into the land division. IMI is just one of them. We combined the artillery piece from Soltam, and we combined the Ordnance, the fuzes, center of excellence into that division as well, and warhead and the guidance capabilities, which came from another part of the organization. So together, we have a very vertical, strong organization, which provides many type of guided ammunition, not just to Israel, also to many other customers, and we see huge potential for that. So that's another example of a good acquisition we made in the past. So we continue to explore the portfolio, we continue to look for opportunities, and we adjust the company accordingly. Okay. Are you mainly looking outside Israel, or it's you seem to have bought everything that is interesting locally? We, you know, when we are talking about acquisition, when we are talking about acquisition, we usually look for two elements. One, one is new, new technologies, which we still miss. Rokar, which we acquired from BAE, is a very good example for that. It was a relatively small acquisition, but this acquisition brought us technology we didn't have, which is related to immune GPS technology. And so this is one type of this is one type of, of acquisition we are looking for. Another one is new is positions. Mm-hmm ... in new markets, like, the acquisition we made of night vision in the U.S., which brought us into a new technology as well as to a new market, which, we didn't have before. So this is with regards to acquisitions, but we also continuously looking also to make sure that we have the right portfolio. The company has grown a lot recently, and we need to also to look inside and to see whether we have some capabilities which are less relevant for us today. Okay, well, and I have another question, which is more, I think, related to Kobi. Is the high percentage of mobilization among the workforce is going to have a positive impact on the profitability of the quarter from where you can see it now? First, Ella. Hi, Ella. Hi. First, thank you for your kind words in the beginning. We really appreciate your kind words. Regarding the mobilization, we have currently 15% of our workforce in Israel, which is approximately 2,000 employees, which we are very proud that they are serving our country in these difficult times. And of course, that level creates some kind of a disruption, which Butzi addressed in the previous remarks as we are hiring temporary employees, even referred to some retired employees that came back- Okay ... very happily to support the effort. So we don't think this is, of course, it's not a financial contribution. Mm-hmm. If you miss, we, of course, we didn't decide who—who are the 2,000 employees that were mobilized. So, part of those are from the production, part of engineering. So, so we don't- Okay, so overall, it is not contributing financially? It would not be a contribution, for of course, it's not a contribution. We try to support this mobilization by actually recruiting the hundreds of employees. But of course, this would not be a supportive or financially positive event in this quarter. Okay, thank you very much for answering my questions. Thank you. Thank you. The next question is from Shahar Cohen of Psagot. Please go ahead. Yeah, hi, guys. Did you get any more clarity about long-term projects within Israel? And B, sales that are going to the Israel Defense Forces are registered within the Israeli segment, or those could be, if it goes through the American subsidiary, that goes to the U.S. in your report. And C, if you can speak about the potential of Tzayad, you know, in other markets, given the successful implementation and proven battlefield results we see with that, that would be great. Hi, Shahar, it's Butzi. Of course, the IDF is a very important customer of us, and we support, we heavily support the forces when we get the orders from the IMOD, and we expect additional orders from the IMOD, and Israel continue to be a very more, a very important market to Elbit, and certainly we expect to get additional orders. With regards to Tzayad, I would just say that we have already several international customers, and to the system derivative, derivatives of the systems are being used in Europe, as well as in North America. To the best of my knowledge, that's the most comprehensive solution which is available right now in the market. We see a lot of potential for that. This system includes radios, networks, application, training packages, and hardware, and many more. So certainly there's a lot of interest for this solution. We are a world leader with that, and we have already many customers. Just a month and a half ago, we reported a nice win in Sweden to be the partner for the digitization after we won the radios in this country. And we expect to get additional orders as well from our customers. Okay, one- That question, Shahar. Yeah. Regarding geographical distribution, when we have FMF sales, geographically, it's being recorded under Israel. Got you. One follow-up question. Have you seen or what's the most practical yet exciting thing, and tangible, that you can say about the interest of order of non-Israeli customer with, you know, platform solutions you, you built, which basically being deployed now in Israel? Have you seen any, I would say, inflection point in some of the solution? If, if yes, which of your solution experience inflection point in demand, you know, outside of Israel as a result of the Gaza war? I think it's too, too early to speak about the result of the war and about lessons learned from the war. We are not still there. We are still very much involved in supporting the forces. And, of course, when this war will be over, we'll be in a better position to learn from it and to understand, and to learn more. And of course, when we have the data, we'll share it with our customers around the world. I can tell you that, we have... Our solutions and systems are heavily used by the forces. That to the best of my understanding, the operators are recognize the importance of the solutions that we are providing. After the war, we will understand. We will be able to—and this is related to all domains. This is, it is related to C4I, it is related to ammunition, it is related to optics, to radars, to UAVs, to training system, AW solution, and many others. And this will also force us to accelerate development processes in the company and to bring solutions quickly to the field. So at the end of the war, I think we'll be able to sit together with our customers to understand what else needs to be done, and we'll share this data with our customers. Got you. And one last, if I may squeeze. The margin of your... the rush order you get currently from Israel, are they below, at, on, on par or above, you know, your usual margins? I'm talking about gross margins. We don't see any different level of margins in the rush orders. So we don't see any difference there. All right. Thanks. Thank you, Shahar. If there are any additional questions, please press star one. If you wish to cancel your request, please press star two. Please stand by while we poll for more questions. There are no further questions at this time. Before I ask Mr. Machlis to go ahead with his closing statement, I would like to remind participants that a replay of this call will be available 2 hours after the conference ends. In the US, please call 1-888-782-4291. In Israel, please call 03-925-5900. And internationally, please call 972-3-925-5900. A replay of this call will also be available on the company's website, www.elbitsystems.com. Mr. Machlis, would you like to make your concluding statement? the conference ends. In the US, please call 1-888-782-4291. In Israel, please call 03-925-5900. And internationally, please call 972-3-925-5900. A replay of this call will also be available on the company's website, www.elbitsystems.com. Mr. Machlis, would you like to make your concluding statement? the conference ends. In the US, please call 1-888-782-4291. In Israel, please call 03-925-5900. And internationally, please call 972-3-925-5900. A replay of this call will also be available on the company's website, www.elbitsystems.com. Mr. Machlis, would you like to make your concluding statement? the conference ends. In the US, please call 1-888-782-4291. In Israel, please call 03-925-5900. And internationally, please call 972-3-925-5900. A replay of this call will also be available on the company's website, www.elbitsystems.com. Mr. Machlis, would you like to make your concluding statement? the conference ends. In the US, please call 1-888-782-4291. In Israel, please call 03-925-5900. And internationally, please call 972-3-925-5900. A replay of this call will also be available on the company's website, www.elbitsystems.com. Mr. Machlis, would you like to make your concluding statement? the conference ends. In the US, please call 1-888-782-4291. In Israel, please call 03-925-5900. And internationally, please call 972-3-925-5900. A replay of this call will also be available on the company's website, www.elbitsystems.com. Mr. Machlis, would you like to make your concluding statement? I would like to thank our employees again for their hard work and dedication. To everyone on the call, thank you for joining us today and for your continued support and interest in our company. Have a good day, and goodbye. Thank you. This concludes the Elbit Systems Ltd. third quarter 2023 results conference call. Thank you for your participation. You may go ahead and disconne ct. the Elbit Systems Ltd. third quarter 2023 results conference call. Thank you for your participation. You may go ahead and disconne ct. the Elbit Systems Ltd. third quarter 2023 results conference call. Thank you for your participation. You may go ahead and disconne ct.