Elbit Systems Ltd (ESLT) 2022 Q3 法說會逐字稿

Ladies and gentleman, thank you for standing by. Welcome to Elbit Systems Third Quarter 2022 Results Conference Call. (Operator] 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 Mr. Rami Myerson, Elbit Systems Investor Relations Director. Rami, please go ahead.

Thank you, Michal. Good day everyone and welcome to our third quarter 2022 earnings call. On the call with me today are Butzi Machlis, our President and CEO; Yaacov Kagan, our CFO; and Yossi Gaspar, Senior EVP, 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 offers 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 debt 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 significant 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 third quarter results reflect sustained demand for our solutions and the investments we are making to realize the growing potential presented by increased geopolitical tension and growing defense budget. Third quarter revenues were similar to 2021 as growth in Europe offset lower Asia Pacific revenues. Our revenues by geography tend to fluctuate on a quarterly basis based on specific programs and projects performed as well as milestones reached in a particular quarter.

We believe the longer-term revenue trend, supported by the growth in the order backlog or more representative as we have discussed with you in the past. I would note the sale of Ashot Ashkelon industry to FIMI was completed at the end of the second quarter of 2022, and our results in the third quarter of 2022 do not include a contribution from Ashot.

The current operational environment is challenging due to supply chain disruption and labor cost inflation. Profitability in the third quarter include expenses related to employee stock price-linked compensation plans. These plans help align employee compensation with share price performance, incentivizing our employees to generate long-term value for all of Elbit Systems' stakeholders. Our GAAP and non-GAAP results have always included these expenses. But this year, they are higher than in recent years following the share price appreciation.

Our conservative balance sheet management policies have enabled us to increase inventories and partially offset the supply chain disruption to maintain deliveries to our customers on schedule. Our budget and longer-term planning assumes that the global economy trend of supply chain and wage inflation headwinds will gradually subside from the second half of 2023. We continue to invest in R&D to enhance our portfolio and maintain our competitive edge. We invest in sales and marketing to expand our customer base and also continue to invest in CapEx to improve and expand our manufacturing footprint.

The rollout of the new ERP system and the construction of the new facility in the South of Israel and progressing, are progressing, and we expect these and other efforts to support an improved operational performance. I will now highlight and discuss some of the key figures and trends in our financial results. Third quarter revenues were $1.349 billion compared to $1.364 billion in the third quarter of 2021.

In terms of revenue breakdown across our areas of operation, C4ISR at 30% of revenues increased year-over-year, mainly due to UAS and demand control system sales. Land Systems was 26% of total revenues and increased year-over-year due to artillery system sales. Airborne system accounted for 32% and declined year-over-year due to lower airborne precision-guided munition sales. Electroptics accounted for 10% and other sales accounted for 2% of revenues similar to third quarter of 2021. The geographic revenue breakdown in the third quarter reflects our divest geographic revenue base.

In the third quarter, North America contributed 29%, Europe, 26%; and Asia Pacific and Israel, which contributed 19% of revenue. European revenues increased due to growth in training and simulation sales. Asia Pacific revenues declined mainly to lower precision, guided munitions through. North America revenues were lower due to a decline in medical devices. Yes, the non-GAAP gross profit in the third quarter was 25% compared to the third quarter of 2021 at 27.2%. GAAP gross margin in the third quarter was 24.2% of revenues compared to 26.6% in the third quarter of 2021. Gross margin in the third quarter reflects a combination of unfavorable program mix, wage inflation and supply disruption.

GAAP and non-GAAP gross profit in the third quarter included approximately $3 million of expenses related to stock price linked compensation plan. Third quarter non-GAAP operating income was $84.3 million or 6.3% of revenue compared with $123 million or 9% of revenue last year. GAAP operating income for the third quarter was $73.4 million versus $110.3 million in the third quarter of 2021. Operating profit in the third quarter include 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 8.4% of revenues versus 7.4% of revenues in 2021. Marketing and selling expenses were 5.1% of revenue, down from 6.2% of revenue last year. G&A expenses were 5.9% of revenues compared to 4.9% of revenues last year due to stock price and compensation expense. Other operating income of $9.4 million included the capital gain related to the sale of the building in Israel, which was included in our GAAP and non-GAAP results.

Financial expenses were $16.4 million in the third quarter compared to $13.5 million in 2021. Other income of $4.8 million included approximately $4.6 million related to the remeasurement of an affiliate following an investment round. We recorded a tax expense of $7.9 million in the third quarter compared to $8.3 million in 2021. The effective tax rate in the second quarter was 12.8% compared to 8.6% in 2021. The non-GAAP diluted EPS was $1.40 in the third quarter compared with $2.33 last year. The GAAP diluted EPS was $1.26 compared with $2.08 last year. The stock price linked compensation expenses in the quarter were equivalent to approximately $0.45 on an EPS basis.

Our backlog of orders as of September 30, 2022, was $14.7 billion, approximately $1.1 billion higher than the backlog at the end of September 2021. Approximately 40% of the current backlog is scheduled to be performed during '22 and 2023, and the rest is scheduled for 2024 and beyond. Operating cash flow for the third quarter was a $178 million inflow compared to no inflow in the same quarter last year. The cash outflow also included an inventory build related to our efforts to mitigate supply chain challenges as we have leveraged our solid balance sheet to support deliveries to our customers.

Cash flow from investing activities includes the higher CapEx related to the new facilities in the South of Israel, Charleston, South Carolina as well as the rollout of the new ERP system. The Board of Directors declared a dividend of $0.50 per share for the third quarter of 2022.

I will now turn the call over to Mr. Bezhalel Machlis CEO. Butzi, please go ahead.

Thank you, Kobi. Firstly, I would like to thank the investors on the call and all our shareholders for their continued support. In a volatile world, we help its management team have to make hard choices and decisions as we strive to create value for all our stakeholders and ensure we find the right band between long-term value creation and short-term performance. We are fortunate that Elbit Systems shareholders understand the strategy, the potential and the long-term investment horizon that has supported the growth and the success of the company for decades.

We are also aware that you expect a better operational performance, including higher profitability than what we delivered in the third quarter. We are working to improve the short-term performance while maintaining the balance with the long-term success of Elbit Systems by investing in our people, our portfolio and our customers. This year, we increased investments in our people.

Elbit's employees are the most critical contributor to our long-term success. We invested to retain talent in a competitive labor market in Israel and around the world, including stock price linked compensation plan that had a material impact on the profitability in 2022. I would like to remind you that our executives and employees come to work at Elbit for more than just a salary. They joined Elbit because we are an attractive employer that provides them with an opportunity to work on some of the world's most advanced technologies and to support those responsible for the protection of our large ones in our country.

Our businesses is growing, and we continue to report around the world to deliver our record backlog and support our customers. We continue to invest in R&D to develop leading solutions that provide our customers with valuable competitive edge, leveraging the operational experience of our employees and the proximity and short feedback loop with our customers. We are investing in new facilities. Elbit is building new advanced facilities in Israel, the U.K., Germany and the U.S., and we continue to courteously upgrade existing facilities. These facilities will include the latest manufacturing technology and processes that should support the operational improvement.

We are also investing in creating value for our customers by providing them with advanced capabilities, investing in our multiple subsidiaries around the world and by utilizing our balance sheet to be inventories and maintain deliveries on schedule. We know that our customers appreciate our efforts and we expect these investments to deliver a good return in the future.

Elbit Systems' long-term growth has been driven by a healthy combination of both organic growth and acquisitions. This includes 9 billion in 2019 and Part 1 in 2021 that enhanced our technological portfolio and strengthen our position in the U.S. Part 1 and Elbit Night Vision reported significant milestones in recent months. In October, Sparton was one of 3 suppliers awarded a joint 5-year USD 5.1 billion IDIQ contract to supply Sonobuoys to the U.S. Navy. This follows selection of Sparton as a qualified vendor for the multiple award delivery order contract by contract or Mayo in July.

The IDIQ is significantly larger than the previous 5-year IDIQ. This illustrates the importance of anti-submarine warfare as new to tensions escalate and the growing demand for next generation symbols. U.S. naval forces, Central Command is currently conducting its 3-week digital horizon exercise in the Middle East focused on employing and integrating unmanned and artificial intelligence system. Elbit System of America, together with our Israeli-based Maritime business unit, our showcasing Elbit System schedule. Our managed surface vessel is part of this success. These events validate the investment Elbit has made to build its maritime capabilities and the growing importance of the maritime domain.

In October, Elbit Night Vision received a $107 million order to supply Night Vision systems to the U.S. home as part of the OTA contract received in 2020. In September, Elbit Night Vision received a contract to develop an advanced Night Vision sensor for the U.S. Army's IVAS system. Militaries around the world continue to invest to equip the soldiers with capabilities that enable operations at night or in [indiscernible]. Recent conflicts have highlighted the importance of these capabilities.

Elbit is a leading provider of Night Vision capabilities for soldiers, thanks to the acquisition of Elbit Night Vision and our legacy solutions. We are working to realize the synergies between our Night Vision capabilities and additional technologies in Elbit portfolio like the integration of our command and control systems that can project information on the night vision display.

At the second quarter results conference call, we discussed 5 capability areas that we identified should benefit from increased defense spending over the coming years following the lesson learned from the Russian invasion of Ukraine. These are platform protections, command and control systems, electronic warfare, unmanned systems and network precision munitions. We believe that each one has the potential to generate significant revenues over the medium term.

During the third quarter, we announced additional contracts across these 5 royalty areas. Starting with platform protection. In November, we announced a $200 million contract for military helicopter sales protection proved for an Asia Pacific customer. The conflict in Ukraine has highlighted that only the armed forces equipped with tank and APCs can maneuver and execute large scale operation. The conflict has also demonstrated the vulnerability of platforms across all domains and the critical need to protect both platform and their occupancies.

This highlights the importance of active protection system to protect maneuvering ground plus the indiscernible active protecting system development is on track for platforms in Israel, the Netherlands, Australia and the U.S.

I believe there is a significant potential for this unique solution that can protect armored personal carriers and a range of military platform. Helicopter provides critical support to maneuvering our forces and our telecom system protect helicopter and six wing aircraft from a range of threats. Another area of priority spend is autonomy and unmanned systems in the air, on the ground and the sea. The effectiveness of loitering munition on an armed UAV is limited when operated as a single platform.

Armed forces require a comprehensive solution that generates targets and close the sensor to shooter quickly and efficiently.

Elbit can supply our customer with a multilayer solution of autonomous aerial intelligence capabilities and indiscernible . We can connect these platforms with our command and control solutions and equip them with a range of electro-optical, indiscernible , all developed in-house at help.

The vertical integration of our internal supply chain, enhanced our ability to tailor unmanned and internal solutions to customer requirements, increasing effectiveness by maximizing the performance of each part of the solution and reducing costs. In September, we were awarded a $120 million contract to supply Hermes 900 Maritime UAS to the oil indiscernible . This U.S. will configurate for maritime missions and will be equipped with maritime radar, satellite communication, dopable inflatable life indiscernible and other capabilities.

In November, we received a $72 million contract for platform in IQAS to an international customer. The Hermes and IQAS has been selected by more than 15 customers around the world. The third area of priority spend are advanced radio and command and control systems. To maneuver efficiently and effectively and combine multi-domain operation, modern armies have to be equipped with advanced C2 system.

In October, we were awarded a $65 million contract to supply the first fully networked mechanized solution to an army in Latin America. This solution includes armed vehicles equipped with software defined radios, battle management system and many unmanned aerial systems. In October, we received a $25 million in the Finnish Ministry of Defense, the supplier value communication systems to the Finnish army. Our military radio communication system has been selected by several European and NATO countries including Sweden, Germany, the Netherlands, Switzerland, Spain and others. And with that, I will be happy to take your questions. Operator?

(Operator Instructions) The first question is from Pete Skibitski of Alembic Global.

I have a question about the Airborne Systems Unit. Revenue was down quite a bit this quarter. I think, Kobi, you mentioned that it was on airborne precision guy ammunition. It was also downloaded in the second quarter. I'm just wondering if there was maybe one large program that's ending that's driving that weakness and that maybe as we get into the fourth quarter or first quarter, we'll see easier comps there and a return to growth.

Thank you, Peter, for the question. This is Kobi. You're right. It is a large program that we announced early last year that we had concluded in the previous quarter. And in this quarter, we don't have any service from this large program. We announced a new airborne precision munition sales that we got this year. So we expect that next quarter, we will continue to sell on this issue.

Okay. That's helpful. And then I just wanted to switch now to maybe 2 underlying gross margin issues. In particular, pricing. I'm just wondering, as we've heard the U.S. defense contractor worked our way through the third quarter, they are also experiencing, of course, higher labor rates, and there's sort of a delay effect in terms of not being able to pass on the higher labor rates through updated pricing until they start new contracts, essentially. And so you've got this mix of current contracts with higher labor rates, but pricing reflects labor rates for maybe a year or 2 ago.

So I'm just wondering, have you -- as Elbit had success in terms of the ability to pass on the cost of higher labor rates through pricing on new contracts. And so maybe ignoring for now stock-linked compensation but just in terms of base labor rates, are you getting better pricing on new contracts as opposed to the contracts that maybe were awarded a year ago when labor rates were a bit lower?

Hi, Pete, this is Yossi. I would address it in the following way. First of all, the extraordinary costs related with our stock option plan that is something kind of a onetime, and it goes away, and it's not something called the baseline of cost of the company. So that should be neutralized. And it does impact the present year, but that is not something that will continue with us. On the baseline cost, I would say the following: some of our contracts with customers do have economic price adjustments.

And therefore, we are getting compensation because of the growth in the cost of the labor and also to some extent growth in the cost of basic materials, which is also price adjusted according to what happens in the market. However, we don't have that for all of our contracts. And therefore, we are suffering to some extent because of that. We definitely take all these changes into consideration when we bid for new contracts. And I would say that even in the recent growth of backlog that we have experienced, they already include backdrop that takes into account these economic adjustments. And we hopefully will -- these contracts will result in improved profitability in the future.

Okay. That's very helpful. Great color. I appreciate it. And I'll just ask one last one and then get out of the queue there.

On the backlog growth, it's a good transition, yes. It was very strong this quarter, year-to-date backlog growth has been strong. I'm just wondering, can you bifurcate it a little bit by region for us? Is there any one region that's been very, very strong and maybe some laggards. And I'm sure a lot of people are wondering if Europe and even Eastern Europe is driving that growth or if you see strength kind of across the board. I appreciate any color on that topic.

First, I will say the following about that. We have kind of a steady-state business flow which we were exposed to years ago, and we continue to have these are the, what we call the medium-sized contracts of tens of millions of dollars each, and that continues and [indiscernible] increases. Then we have, on top of that, some significant number of what we call 3-digit contract that has in the hundreds of millions of dollars per contract that we have seen in recent 2 years, increase of number of those contracts.

And definitely, the high-level dollar value contracts have the potential to improve future -- definitely revenues, but also the bottom line. Regarding the areas, geographic areas, you can look at our press releases of the various major contracts that we have announced. And if you analyze those, I would say that the contracts in the U.S. are more or less in the steady-state growth that we have seen in past years. Contracts in Europe and Asia Pacific are higher in the growth than what we have seen in the past, especially related with some of these 3 digit contracts that I mentioned earlier.

And the contract in Israel, of course, are more or less at the level that we have seen that in the past, maybe with some middle single-digit growth from what we have seen in the past. In total, year-over-year, our backlog has increased by EUR 1.1 billion, which is a significant number. And the spread, the global spread, as I said, the more higher level of growth is in Asia Pacific, Europe and all the others are the normal level.

Okay. That's great. Appreciate the color, guys.

Thanks, Pete.

Thank you, Pete.

The next question is from Ellen Page of Jefferies.

Thanks for the question. Just start looking at both from a cash and margin perspective, how would you describe supply chain disruption today relative to where they were in Q2? Are things improving at all, both from stability to source materials and also from an inflation perspective.

Hi, this is Butzi. With regards to supply chain, we see an improvement in shipment. The shipping costs are going -- are going down and not yet at the historical level, but they are going down. And we see also prices going down and [indiscernible] and material going down. Once again, not yet at the historical level I will call it, but going down. We don't yet see it in electronic components. There, we still see a shortage.

The main challenge we face right now is mainly around electronic components. That's also the reason why our stocks went up and inventories. We -- from what we understand and from what we estimate, we believe that improvement though will happen during the second half of next year. And we are taking all the required measures in order to overcome some of these challenges.

Helpful. And just looking at land systems, it was very strong in the quarter. And I believe that's where a shot came out. Am I -- like is that accurate? And how do we think about growth going forward as we think about what ammunition about [indiscernible]?

Are we talking about land system?

Yes. And a shot to divest.

Yes, we had -- hi Ellen, this is Kobi. We have stronger ancillary sales this quarter. And remember that [indiscernible] part was nearly $20 million. So it is not so significant, but we have stronger artillery and ammunition sales due to the situation mainly in Europe. So we have a stronger order in the land system business.

The next question is from Ella Fried of Bank Leumi.

Good afternoon thank you for taking my question. Most of them were answered, but I have just 1 or 2 left. You marked sea and the novel business as one of your strategic moves into the next year. And also, you have this conversion of products and technologies from air and from land into the sea.

So could you give us some milestones of when and how much this will be felt over the next year?

As you remember, we acquired spot-on in the U.S. around 2 years ago. And we are -- we continue to be an important part to the Navy of Sonova. And as we've mentioned, the EUR 5.1 billion IDIQ contract, which should come split between 3 suppliers will also -- is also a good indication that our revenue in sporting will continue to grow in the future.

We also made another acquisition a few years ago in Canada, a company with the name of GPI. They do Sonar and they are very successful. The company is growing as well, they have already several international sales and we see a growing potential for [indiscernible], we won a very important EW naval contract in the U.K. It was a very difficult competition against local providers. And still, we want it because of the superior technology we have securing as well. And this technology is still to the technology that we are deploying these days in the South Seas Corbett Israeli Navy.

And so based on our EW capabilities here and based on our capabilities in the U.S. and in Canada, I'm happy to say that we have positioned in the U.S. We are positioned in Canada. We have positions in the U.K. and Israel. And we -- and this is -- and we also have here a life very advanced autonomous solution by the name of Seagull, which can -- which the importance of naval autonomous vessels was demonstrated just recently in the Gulf as well as the indiscernible between Ukraine and Russia.

So we have several elements we are combining them together to deliver integrated solutions to our customers. We see a growing potential for that. And our long-term forecast is to have activity, which on every customer, which should be around $1 billion revenue view.

Okay. And I have a follow-up question unsurprisingly on the bottlenecks in the industry also what's quite a lot said about. The question is, if you could give us more -- a bit more color and a bit more specifics about where -- I mean they are on the chips, but is it mostly Asia? Or it's all over and also because there is such a ramp-up in the industry, especially in the U.S.

Is the competition between companies and you have some consistent then decide and wait for a more rational prices? How is it impacting you? Because the other -- the American companies, they were ahead of you on the supply chain disruptions and you were much better off all this time, and now it echo as well. So I would like to see how is it happening in the industry.

I would say the following. We own the whole industry, and not only the aerospace and defense. We're significantly affected by what's going on in the supply chain. However, as Butzi explained before, we already see some improvement in areas like the mechanical parts like transportation and deliveries and so on and so forth. However, the electronic parts are still with us and impacting.

The good thing that we did 2 years ago is that we have anticipated this thing that's going to happen, and we have increased our inventories significantly, which did hurt our working capital force. And you have seen that in our reports. By the end of the day -- and we continue to work along those lines during the last 1.5 years to 2 years.

However, initially, we thought that this will be -- that this will be over or significantly over by this time, and this has not happened. This explains why we were quite well organized for the initial year, 1.5 years, and it did not affect us as much as it was by the U.S. -- done by U.S. companies. However, by the end of the day, we are part of the whole global supply chain, and now it does affect us more.

We do anticipate by the second half of 2023. This will decline. And what has happened in the mechanical parts and in the transportation and other areas that will improve also in the electronic parts, and we will be back on track somewhat towards the second half of '23.

Do your competitors also still optimistic about this more or less this timing.

Just a -- these are the market estimate right now, and we are on daily contact with all the suppliers to understand exactly when can we get the missing part. You understand, in some cases, we have the entire product ready, and we are just missing one transition or one piece separate clinic in order to deliver to a customer and we can do it. So we are on a daily -- we're on a daily contact with the lean suppliers.

We start to see some improvement, but the estimation right now in the market that it will be solved or most of it will be behind us during the second half of next year.

Okay. And last question about the hedge. I know that you have now a new hedge policy and it's less sporadic than it used to be. But these recent months presented quite an opportunity for hedging. So did you stick to this structure, the hedging? Or did you take also some opportunities in this term?

Hi, Alan, this is Kobi. We are sticking to a policy, which is we are not profit and we cannot anticipate what happens with exchange rates, for instance, but anticipate the sharp decline in the British pound. So we are trying -- we are sticking to the policy. Next year, of course, we have some stronger hedges due to the improvement in the rate. And we sometimes take peaks and when we identify peaks, we actually take the opportunity and increase our hedges, but this is -- everything is around the policy.

So we maintain a strict policy, which gives us -- we want to work on a steady platform of exchange rates and sometimes it's worth a last to understand what is the neighborhood of the changes that we are working. Again, with taking advantage on spikes that were then identical.

So it will be more closer to the average and less despite, if I read you right.

Yes, this is right. At last, we are -- we think that a steady platform for the company is very advantageous to ours. And of course, we have a significant improvement for next year in terms of the platform of the changes that we're going to work with.

Okay. Thank you very much for taking my questions. Good afternoon.

Thank you.

Thank you.

The next question is from [indiscernible]

Okay. Thank you for taking my question. So most of the question was answered, but I want to ask you what's your opinion about the sales that the session would eventually lead for a lower growth in the defense budget, and how it's going to be to influence the company. And the second question, we've seen an impressive growth in the backlog. Do you have a range of guidance? When are we going to see the growth in the revenue and what's your guidance for the next 2 years?

With regards to the first question, we do not see any signs of recession in different spending on the contrary. We see growth in Europe, we see growth in Asia Pacific, and we see also -- we also expect the growth in our position in the U.S. and North America. And we also here in Israel after direction, we hope to see stability, which will enable a long-term program to be executed. So we anticipate growth in defense spending. We see growing potential for the company, we see more opportunities. We deliver more offers and the funnel of the new position is increasing. So that's with regards to the first question.

With regards to the next question will give it to Kobi.

Okay. I think that the best indicator for the future growth in revenues is the backlog. Now if you look at our press release, we always give the breakdown of the backlog for the rest of the year plus the following year and the backlog to be sold after the following year. By the end of '20 of the first quarter, we had a backlog of $14.7 billion. If you -- and we also said that 40% of that backlog is going to be performed during the first quarter of '22 and '23 million.

Just by making the simple calculation that gives you about $4.7 billion of revenues that are going to happen in 2023. We usually have a coverage of backlog for approximately 80% for the following year. So just making a simple mathematics, you can find out that we'll have very nice growth for the top line for next year.

The next question is a follow-up from Pete Skibitski of Alembic Global.

I wanted to ask on the cash flow statement, the contract liabilities line, which I think relates to customer advances. Advances were a little soft in the first half of the year, but they were very strong here in the third quarter. And historically, they've been very strong in the fourth quarter. So I just wanted to see if maybe some advances were pulled forward from the fourth quarter into the third? Or do you expect the fourth quarter to be another good quarter for advances because typically a good advance this quarter for Elbit means a good free cash flow quarter as well, so I just want to get a sense of that.

Hi, Pete, Butzi, the answer is no. We didn't change anything. What you see right now is the reflection of the third quarter only. And we -- there is a lot of -- we put a lot of emphasis on cash flow in the company these days, and this is true also for advances. And we -- that's why you see growth in advances in the component, and we expect it to continue.

Okay. Thank you. Thank you so much.

Thank you.

Thanks Pete.

(Operator Instructions) 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 ex. In the U.S., please call 1 (888) 782-4291. In Israel, please call (03) 925-5900; and internationally, please call 972-3-925-5900. A replay of the call will also be available at the company's website, www.elbitsystems.com. Mr. Maselis, would you like to make your concluding statement?

Thank you. I'd like to thank all our employees of the continued hard war and contribution to Elbit Systems success. 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 2022 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.