Elbit Systems Reports Impact on its Third Quarter 2020 Financial Results Due to COVID-19

Rhea-AI Summary

Elbit Systems Ltd. (NASDAQ: ESLT) announced a significant reduction in demand for its aviation products due to the COVID-19 pandemic, resulting in expected non-cash expenses of approximately $60 million for asset impairments and inventory write-offs in Q3 2020. The slowdown in commercial air traffic has led to lower production rates from aircraft manufacturers, and recovery to pre-pandemic levels may take years. The company will report these expenses as part of its regular financials in November 2020, although they will be excluded in non-GAAP results.

Positive

• None.

Negative

• Expected non-cash expenses of approximately $60 million due to impairment of assets and inventory write-offs.
• Reduced demand for products and services in the commercial aviation market.
• Planned reductions in production rates announced by aircraft manufacturers.

HAIFA, Israel, Oct. 26, 2020 /PRNewswire/ -- Elbit Systems Ltd. (NASDAQ: ESLT) (TASE: ESLT) ("Elbit Systems" or "the Company") announced today that, as a result of the impact of the COVID-19 pandemic, Elbit Systems experienced reduced demand for the products and services it supplies to the commercial aviation markets.

The significant slowdown in commercial air traffic, and the expectation that a commercial air traffic recovery to 2019 levels will likely take a number of years, have reduced the demand for products and services for the commercial aviation markets. Additionally, manufacturers of aircraft for these markets have announced plans to reduce production rates to adapt to the lower demand.

Following a review of the economic impact on the Company's assets overall, and those assets impacted by the commercial aviation industry in particular, the Company expects to record in the third quarter of 2020 non-cash expenses related to impairment of assets and inventory write-offs, due to COVID-19, in the amount of approximately $60 million.

These expenses will be recorded mainly in the "Cost of Revenues" line item in the Consolidated Statement of Income and will be eliminated in the non-GAAP results as a category of expenses that are not part of the Company's regular on-going business.

These expenses will be included in the financial results for the third quarter of 2020 to be reported by the Company in its press release for the quarter, which is planned to be released in November 2020. 

About Elbit Systems

Elbit Systems Ltd. is an international high technology company engaged in a wide range of defense, homeland security and commercial programs throughout the world. The Company, which includes Elbit Systems and its subsidiaries, operates in the areas of aerospace, land and naval systems, command, control, communications, computers, intelligence surveillance and reconnaissance ("C4ISR"), unmanned aircraft systems, advanced electro-optics, electro-optic space systems, EW suites, signal intelligence systems, data links and communications systems, radios, cyber-based systems and munitions. The Company also focuses on the upgrading of existing platforms, developing new technologies for defense, homeland security and commercial applications and providing a range of support services, including training and simulation systems.

For additional information, visit: https://elbitsystems.com/, follow us on Twitter or visit our official Facebook, Youtube and LinkedIn Channels.

Contacts:

Contacts:

Company Contact: 
Joseph Gaspar, Executive VP & CFO
Tel: +972-4-8316663
j.gaspar@elbitsystems.com  

Rami Myerson, Director, Investor Relations
Tel: +972-77-2948984
rami.myerson@elbitsystems.com  

David Vaaknin, VP, Head of Corporate Communications
Tel: +972-77-2946691
david.vaaknin@elbitsystems.com  

IR Contact:
Ehud Helft
Kenny Green
GK Investor Relations
Tel: +1-646-201-9246
elbitsystems@gkir.com

This press release may contain forward–looking statements (within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended and the Israeli Securities Law, 1968) regarding Elbit Systems Ltd. and/or its subsidiaries (collectively the Company), to the extent such statements do not relate to historical or current facts. Forward-looking statements are based on management's current expectations, estimates, projections and assumptions about future events. Forward–looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions about the Company, which are difficult to predict, including projections of the Company's future financial results, its anticipated growth strategies and anticipated trends in its business.  Therefore, actual future results, performance and trends may differ materially from these forward–looking statements due to a variety of factors, including, without limitation: scope and length of customer contracts; governmental regulations and approvals; changes in governmental budgeting priorities; general market, political and economic conditions in the countries in which the Company operates or sells, including Israel and the United States among others; changes in global health and macro-economic conditions; differences in anticipated and actual program performance, including the ability to perform under long-term fixed-price contracts; changes in the competitive environment; and the outcome of legal and/or regulatory proceedings.  The factors listed above are not all-inclusive, and further information is contained in Elbit Systems Ltd.'s latest annual report on Form 20-F, which is on file with the U.S. Securities and Exchange Commission. All forward–looking statements speak only as of the date of this release. Although the Company believes the expectations reflected in the forward-looking statements contained herein are reasonable, it cannot guarantee future results, level of activity, performance or achievements. Moreover, neither the Company nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. The Company does not undertake to update its forward-looking statements.

Elbit Systems Ltd., its logo, brand, product, service and process names appearing in this Press Release are the trademarks or service marks of Elbit Systems Ltd. or its affiliated companies.  All other brand, product, service and process names appearing are the trademarks of their respective holders.  Reference to or use of a product, service or process other than those of Elbit Systems Ltd. does not imply recommendation, approval, affiliation or sponsorship of that product, service or process by Elbit Systems Ltd. Nothing contained herein shall be construed as conferring by implication, estoppel or otherwise any license or right under any patent, copyright, trademark or other intellectual property right of Elbit Systems Ltd. or any third party, except as expressly granted herein.

 

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SOURCE Elbit Systems Ltd.

FAQ

What financial impact did COVID-19 have on Elbit Systems (ESLT) in Q3 2020?

Elbit Systems expects to record non-cash expenses of approximately $60 million related to asset impairments and inventory write-offs due to reduced demand from the COVID-19 pandemic.

How has Elbit Systems (ESLT) responded to reduced demand for aviation products?

Elbit Systems reported lower demand for its aviation products, leading to expected non-cash expenses and adjustments in their financial results for Q3 2020.

When will Elbit Systems (ESLT) provide its Q3 2020 financial results?

Elbit Systems plans to release its Q3 2020 financial results in November 2020, which will include the anticipated non-cash expenses.

What are the long-term expectations for commercial air traffic recovery affecting Elbit Systems (ESLT)?

Elbit Systems anticipates that recovery to 2019 commercial air traffic levels may take a number of years, impacting demand for aviation products.