Elbit Systems (TASE: ESLT; Nasdaq: ESLT) beat market forecasts with its first quarter revenue, but missed on net profit because of a large expense for stock based employee compensation. Elbit's share price is down nearly 7% this morning, at NIS 680.90.
The Israeli defense company reported reported quarterly revenue of $1.35 billion, 21% more than in the corresponding quarter of 2021. Most of the growth is organic, but part is thanks to the acquisition of Sparton Corporation last year.
Non-GAAP operating profit was $65.8 million (4.9% of revenue) in the first quarter of 2022, down from $92.9 million (8.3% of revenue) in the first quarter of 2021. GAAP and Non-GAAP operating profit in first quarter of 2022 were reduced by expenses of approximately $35 million related to the company's stock price linked compensation plans.
Non-GAAP net profit attributable to shareholders in the first quarter of 2022 was $54.3 million (4.0% of revenue), which compares with $76.2 million (6.8% of revenue) in the first quarter of 2021. Non-GAAP earnings per share were $1.22, which is lower than analysts had estimated.
GAAP net profit was $52.8 million (3.9% of revenue), which compares with $72.5 million (6.5% of revenue) in the first quarter of 2021.
Elbit Systems president and CEO Bezhalel (Butzi) Machlis said: "Elbit Systems is well positioned to benefit from acceleration in defense budget growth, due to its portfolio of leading technological capabilities and positions in key global defense markets. Growth in the first quarter reflects strong demand for our solutions from customers around the world. Elbit Systems' employee retention plans include stock price linked compensation, enhancing our ability to realize the long-term growth potential. The stock price appreciation during the first quarter resulted in a sharp increase in compensation costs related to stock price linked compensation plans for employees.
"We believe the growing demand for our solutions coupled with a capable and motivated workforce will be the primary drivers of future growth and the long term success of Elbit Systems."
Published by Globes, Israel business news - en.globes.co.il - on May 24, 2022.
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