ELBIT : SCHEDULES FOURTH QUARTER AND FULL YEAR 2020 RESULTS RELEASE FOR MARCH 24, 2021

ELBIT SYSTEMS REPORTS

FOURTH QUARTER AND FULL YEAR 2020 RESULTS

Backlog of orders at $11.0 billion; Revenues of $4.7 billion; Non-GAAP net income of $318.5 million; GAAP net income of $237.7 million;

Non-GAAP net EPS of $7.20; GAAP net EPS of $5.38

Haifa, Israel, March 24, 2021 - Elbit Systems Ltd. (the "Company") (NASDAQ and TASE: ESLT), the international high technology company, reported today its consolidated results for the fourth quarter and full year ended December 31, 2020.

In this release, the Company is providing US-GAAP results as well as additional non-GAAP financial data, which are intended to provide investors a more comprehensive view of the Company's business results and trends. For a description of the Company's non-GAAP definitions see page 6 below, "Non-GAAP financial data". Unless otherwise stated, all financial data presented is US-GAAP financial data.

Management Comment:

Bezhalel (Butzi) Machlis, President and CEO of Elbit Systems, commented:

"2020 saw our employees around the world successfully address the challenges presented by the global Covid-19 pandemic and enabled Elbit Systems to achieve positive results for both the fourth quarter and the year.

Our year-end backlog increased by 10% relative to the end of 2019 demonstrating sustained demand for our systems and services from our customers around the world. I am pleased with our operational performance in a challenging year, particularly the improved cash generation.

Our solid backlog, combined with ongoing worldwide demand for our broad portfolio of technologies and solutions, provides us with confidence in the Company's future prospects".

Fourth quarter 2020 results:

Revenues in the fourth quarter of 2020 were $1,377.7 million, as compared to $1,321.5 million in the fourth quarter of 2019.

Non-GAAP(*) gross profit amounted to $363.0 million (26.3% of revenues) in the fourth quarter of 2020, as compared to $345.8 million (26.2% of revenues) in the fourth quarter of 2019. GAAP gross profit in the fourth quarter of 2020 was $357.8 million (26.0% of revenues), as compared to $284.3 million (21.5% of revenues) in the fourth quarter of 2019. The gross profit in the fourth quarter of 2019 included expenses of $55.0, related to the acquisition of a U.S. subsidiary, Elbit Night Vision ("ENV").

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Research and development expenses, net were $109.1 million (7.9% of revenues) in the fourth quarter of 2020, as compared to $97.6 million (7.4% of revenues) in the fourth quarter of 2019.

Marketing and selling expenses, net were $81.2 million (5.9% of revenues) in the fourth quarter of 2020, as compared to $80.5 million (6.1% of revenues) in the fourth quarter of 2019.

General and administrative expenses, net were $62.9 million (4.6% of revenues) in the fourth quarter of 2020, as compared to $46.4 million (3.5% of revenues) in the fourth quarter of 2019. The lower level of general and administrative expenses in the fourth quarter of 2019 resulted mainly from income related to settlement of litigation in the U.S.

Non-GAAP(*) operating income was $113.8 million (8.3% of revenues) in the fourth quarter of 2020, as compared to $125.4 million (9.5% of revenues) in the fourth quarter of 2019. GAAP operating income in the fourth quarter of 2020 was $104.6 million (7.6% of revenues), as compared to $63.6 million (4.8% of revenues) in the fourth quarter of 2019. GAAP operation income in the fourth quarter of 2019 were reduced by $55.0 million due to expenses related to the acquisition of ENV.

Financial expenses, net were $32.5 million in the fourth quarter of 2020, as compared to $16.4 million in the fourth quarter of 2019. The increase in financial expenses in the fourth quarter of 2020 was mainly a result of the revaluation of lease liabilities due to the strengthening of the New Israeli Shekel versus the U.S. Dollar.

Other expenses net were $7.3 million in the fourth quarter of 2020, as compared to $1.6 million in the fourth quarter of 2019. Other expenses in the fourth quarter of 2020 were mainly due to the non-service cost components of pension plans.

Taxes on income were a tax expense of $1.9 million in the fourth quarter of 2020, as compared to a tax benefit of $9.1 million in the fourth quarter of 2019. The tax benefit in the fourth quarter of 2019 was related mainly to adjustments for prior years following tax assessments in some of the Company's subsidiaries in Israel.

Equity in net earnings of affiliated companies and partnerships was $5.0 million in the fourth quarter of 2020, as compared to a net loss of $3.5 million the fourth quarter of 2019. The loss in the fourth quarter of 2019 was mainly a result of a fair value re-evaluation of holdings in an affiliated company.

Net income attributable to non-controlling interests was $0.1 million in the fourth quarter of 2020, as compared to a loss of $0.3 million in the fourth quarter of 2019.

Non-GAAP(*) net income attributable to the Company's shareholders in the fourth quarter of 2020 was $105.0 million (7.6% of revenues), as compared to $109.3 million (8.3% of revenues) in the fourth quarter of 2019. GAAP net income attributable to the Company's shareholders in the fourth quarter of 2020 was $67.8 million (4.9% of revenues), as compared to $51.5 million (3.9% of revenues) in the fourth quarter of 2019.

Non GAAP(*) diluted net earnings per share attributable to the Company's shareholders were $2.38 for the fourth quarter of 2020, as compared to $2.47 for the fourth quarter of 2019. GAAP diluted earnings per share attributable to the Company's shareholders in the fourth quarter of 2020 were $1.53, as compared to $1.16 in the fourth quarter of 2019.

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Full year 2020 results:

Revenues for the year ended December 31, 2020 were $4,662.6 million, as compared to $4,508.4 million in the year ended December 31, 2019.

For distribution of revenues by areas of operation and by geographic regions see the tables on page 16.

The majority of the revenues in 2020 were in the airborne systems and land systems areas of operation. The strength in the electro-optics area of operation was mainly due to the revenues of ENV, a U.S. subsidiary acquired during 2019.

On a geographic basis, the increase in North America was mainly a result of higher sales of airborne systems and revenues of ENV products. The increase in Israel was mainly a result of revenues of IMI Systems Ltd. (IMI), that was acquired at the end of 2018. The decrease in Asia-Pacific was mainly a result of lower sales of radios and airborne systems.

Cost of revenues for the year ended December 31, 2020 was $3,497.5 million (75.0% of revenues), as compared to $3,371.9 million (74.8% of revenues) in the year ended December 31, 2019. Cost of revenues in 2020 included non-cash expenses of approximately $60.0 million, related to impairment of assets and inventory write-offs due to the impact of COVID-19. Cost of revenues in 2019 included expenses of $55.0 million, related to the acquisition of ENV.

Non-GAAP(*) gross profit for the year ended December 31, 2020 was $1,247.2 million (26.7% of revenues), as compared to $1,213.5 million (26.9% of revenues) in the year ended December 31, 2019. GAAP gross profit in 2020 was $1,165.1 million (25.0% of revenues), as compared to $1,136.5 million (25.2% of revenues) in 2019.

Research and development expenses, net for the year ended December 31, 2020 were $359.7 million (7.7% of revenues), as compared to $331.8 million (7.4% of revenues) in the year ended December 31, 2019.

Marketing and selling expenses, net for the year ended December 31, 2020 were $290.7 million (6.2% of revenues), as compared to $301.4 million (6.7% of revenues) in the year ended December 31, 2019.

General and administrative expenses, net for the year ended December 31, 2020 were $223.9 million (4.8% of revenues), as compared to $214.7 million (4.8% of revenues) in the year ended December 31, 2019.

Other operating income, net for the year ended December 31, 2020 amounted to $35.0 million, as compared to $33.0 million for the year ended December 31, 2019. Other operating income in 2020 resulted mainly from capital gains related to sale and lease back of buildings by a subsidiary in the U.S. Other operating income in 2019 was mainly a result of a capital gain related to the sale and lease back of buildings by a subsidiary in Israel.

Non-GAAP(*) operating income for the year ended December 31, 2020 was $390.1 million (8.4% of revenues), as compared to $379.7 million (8.4% of revenues) in the year ended December 31, 2019. GAAP operating income in 2020 was $325.7 million (7.0% of revenues), as compared to $321.6 million (7.1% of revenues) in 2019.

Financial expenses, net for the year ended December 31, 2020 were $71.3 million, as compared to $69.1 million in the year ended December 31, 2019. Financial expenses, net in 2020 and 2019 included exchange rate differences of approximately $21.0 and $23.1 million, respectively, related to lease liabilities denominated in foreign currencies (mainly in New Israeli Shekels).

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Other income, net was $7.4 million in 2020, as compared to other expenses of $6.2 million in 2019. Other income in 2020 was a result of revaluation and capital gain related to the sale of shares in a subsidiary in Israel, net of expenses related to non-service costs of pension plans. Other expenses in 2019 were mainly due to the non-service cost components of pension plans.

Taxes on income for the year ended December 31, 2020 were $36.4 million (effective tax rate of 13.9%), as compared to $19.4 million (effective tax rate of 7.9%) in the year ended December 31, 2019. The effective tax rate was affected by the mix of the tax rates in the various jurisdictions in which the Company's entities generate taxable income and other income that is not part of the taxable income mainly related to non-cash items such as impairment of assets. Taxes on income in 2020 and 2019 were reduced by a tax benefit related to adjustments for prior years following a tax settlement of the Company and some of its subsidiaries in Israel with Israeli tax authorities.

Equity in net earnings (losses) of affiliated companies and partnerships for the year ended December 31, 2020 was $12.6 million, as compared $1.8 million in the year ended December 31, 2019.

Net income attributable to non-controlling interests for the year ended December 31, 2020 was $0.3 million, as compared to $0.8 million in the year ended December 31, 2019.

Non-GAAP(*) net income attributable to the Company's shareholders for the year ended December 31, 2020 was $318.5 million (6.8% of revenues), as compared to $297.8 million (6.6% of revenues) in the year ended December 31, 2019. GAAP net income attributable to the Company's shareholders in the year ended December 31, 2020 was $237.7 million (5.1% of revenues), as compared to $227.9 million (5.1% of revenues) in the year ended December 31, 2019.

Non-GAAP(*) diluted net earnings per share attributable to the Company's shareholders for the year ended December 31, 2020 were $7.20, as compared to $6.79 for the year ended December 31, 2019. GAAP diluted net earnings per share attributable to the Company's shareholders in the year ended December 31, 2020 were $5.38, as compared to $5.20 in the year ended December 31, 2019.

Backlog of orders for the year ended December 31, 2020 totaled $11,024 million, as compared to $10,029 million as of December 31, 2019. Approximately 65% of the current backlog is attributable to orders from outside Israel. Approximately 65% of the current backlog is scheduled to be performed during 2021 and 2022.

Net cash provided by operating activities in the year ended December 31, 2020 was $278.8 million, as compared to $53.3 million net cash used for operating activities in the year ended December 31, 2019. The lower level of operating cash flow in 2019 was mainly a result of lower collection of receipts and advances received from customers, mainly in Israel.

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