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Elbit Systems Ltd (NASDAQ:ESLT)
Q1 2021 Earnings Call
May 25, 2021, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by. Welcome to Elbit Systems' First Quarter 2021 Results Conference Call. [Operator Instructions] 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 at www.elbitsystems.com.

I would now like to hand over the call to Rami Myerson, Elbit Systems Investor Relations Director. Rami, please go ahead.

Rami Myerson -- Director, Investor Relations

Thank you, Braka. Good day, everyone, and welcome to our first quarter 2021 earnings call. On the call with me today are Butzi Machlis, our President and CEO; and Yossi Gaspar, our Chief Financial Officer. 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. Yossi 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 Yossi.

Joseph Gaspar -- Executive Vice President, Chief Financial Officer

Thank you, Rami. Hello, everyone, and thank you for joining us today. The results of our first quarter reflect the sustained demand for Elbit Systems solutions and services from our customers around the world as reflected in the growth in revenues and the backlog. The results also reflect the impact of COVID-19 in the quarter that led to lower commercial aerospace sales as well as lower sales and marketing expenses in the quarter. Countries around the world are gradually opening up following the rollout of COVID-19 vaccines. We continue to monitor the situation closely, while adhering to the instructions of the governments of the various countries in which we operate.

I will now highlight and discuss some of the key figures and trends in our financial results. First quarter revenues of $1.118 billion increased 4.4% year-over-year. In terms of annual revenue breakdown across the areas of operation, airborne systems accounted for 37% of total annual sales and increased year-over-year mainly due to precision-guided munitions sales. Land system sales accounted for 27% of total revenues, a similar level to 2021. C4ISR at 23% of sales increased year-over-year primarily due to UAS sales to Asia-Pacific. Electro-optics accounted for 9% of total sales and declined year-over-year mainly due to the phasing of Elbit Night Vision programs in the U.S.

Other sales were 4.5% of revenues and increased significantly year-over-year due to growth at our U.S. medical device subsidiary. Our diverse geographic revenue base is important to the long-term sustainability of our business. In the first quarter North America was the largest contributing 31% of our revenues, Israel was 25%, Asia-Pacific 21% and Europe 17%. The growth in Israel was due primarily to UAS and security systems and Asia-Pacific sales increased mainly due to sales of UAS and precision-guided munitions. The decline in North America was primarily due to lower commercial aerospace and night vision sales.

The non-GAAP gross margin for the first quarter was 25.6% compared to the first quarter of 2020 at 27.6%. GAAP gross margin in the first quarter of 2021 was 25.2% of revenues compared with 27% in the first quarter of 2020. Lower gross margin in the first quarter reflect the impact of a stronger shekel versus the U.S. dollar relative to the first quarter of 2020 and the less favorable program mix of revenues. We continue with our long-term plan of cost control measures to help mitigate the financial impact of the stronger shekel. The first quarter non-GAAP operating income was $92.9 million or 8.3% of revenues compared with $90.4 million or 8.4% of revenues last year.

GAAP operating income for the first quarter was $83.8 million versus $80.4 million in the first quarter of last year. Operating margins in the quarter were similar to the first quarter of 2020 as lower marketing and sales expenses helped offset lower gross margins. The operating expenses breakdown in the first quarter was as follows: Net R&D expenses were 7.5% of revenues similar to the first quarter of 2020, marketing and selling expenses declined to 4.6% of revenues versus 6.6% last year due to the reduced level of travel, marketing support and trade exhibition expenses. G&A expenses were 5.5% of revenues similar to last year. Financial expenses were $200,000 in the first quarter compared with $4.5 million in 2020.

The lower level of financial expenses was mainly a result of weakening of the Israeli shekel versus the U.S. dollar between December 2020 and March 2021. The recorded tax expense of $10.8 million in the first quarter compared with $8.8 million in 2020. The effective tax rate in the first quarter was 13.4% compared with 12.6% in 2020. Our non-GAAP diluted earnings per share was $1.72 in the first quarter compared with $1.62 last year. The GAAP diluted EPS was $1.64 compared with $1.44 last year. Our backlog of orders as of March 31, 2021 was approximately $11.8 billion, $1 billion higher than the backlog at the end of March 2020 and $770 million higher than that at the end of 2020.

Approximately 59% of the current backlog is scheduled to be performed during 2021 and 2022, and the rest is scheduled for 2023 and beyond. This ratio is similar to that at the first quarter last year. The order backlog is equivalent to more than two years of revenues and provides good visibility for future revenues. Cash flow from operating activities for the first quarter was $13 million outflow compared with $10 million outflow in the same quarter last year. Cash flow from investing activities included a $61 million deferred payment for the IMI acquired in 2018. The Board of Directors declared a dividend of $0.44 per share for the first quarter of 2021.

I will now turn the call over to Mr. Machlis. Butzi, please.

Bezhalel Machlis -- President and Chief Executive Officer,

Thank you, Yossi. Before I begin a review of the results, I would like to thank the thousands of employees of Elbit Systems and all the suppliers in Israel that have worked tirelessly to support our customers in Israel and around the world during an extremely challenging period. Turning back to the first quarter, I am pleased with the growth in the order backlog that includes many of the contracts we discussed at our fourth quarter results and our Investor Day in April. Revenue and backlog growth in the quarter provide a good indication of the strong demand from our customers around the world. Elevated geopolitical tensions in Europe and Asia-Pacific have contributed to this demand.

Many governments around the world are increasing defense spending to mitigate the impact of the COVID-19 pandemic and prefer to spend the increased defense budgets domestically. Elbit Systems is well-positioned to benefit from this trend due our multi-domestic strategy and subsidiaries in dozens of countries. In April, we were awarded a $1.65 billion, 20-year contract from the Hellenic Ministry of National Defense to establish and operate the International Flight Training Center of the Hellenic Air Force. This follows the selection announced in January after an international competitive tender. The contract is part of an agreement between the Defense Ministries of Israel and Greece.

Under the contract, Elbit Systems will supply new Leonardo M-346 aircrafts and will maintain the International Training fleets comprised of dozens of M-346 and T-6 aircrafts. We will also provide our Embedded Virtual Avionics or EVA onboard the training aircraft, networked flight simulators and ground-based training stations as well as a command and control system to enable efficient management of the flight training operation. We believe that militaries around the world are keen to expand the simulator and training capabilities to provide more realistic training that better prepare the soldiers for a wide range of scenarios at a lower cost.

Elbit Systems has developed a broad portfolio of market-leading training and simulations solutions and over the last year we have been awarded 20 contracts in Israel, the UK and in Asia-Pacific. In April, Elbit Night Vision in the U.S. received a $40 million -- $41 million contract from the U.S. Marine Corp for Squad Binocular Night Vision Goggle or SBNVG systems. This was part of the $249 million IDIQ contract from September 2019. SB's Night Vision acquired in 2019 is the single sole supplier of SBNVG systems to the U.S. Marine Corp. In March Elbit Systems Deutschland was selected to provide XACT nv33 Night Vision Goggles for the Special Forces and special operation units of the German Federal Police.

This kind of night vision goggles are already in service with the German Armed Forces. I am optimistic about the potential to generate synergies between our legacy Thermal Imaging Night Vision portfolio and the Image Intensifier Night Vision business over the coming years. This is clearly the future of advanced systems for night operations and Elbit Systems is well-positioned to benefit from the demand for integrated night vision systems. In April, we completed two acquisitions, Sparton Corporation and Rokar. Our U.S. subsidiary Elbit Systems of America completed the acquisition of Sparton Corporation from Cerberus Capital Management for $380 million.

Sparton develops and supplies electronic sensors that support undersea warfare for the U.S. Navy and allied military forces. Sparton is one of two suppliers for Sonobuoys to the US Navy. Sparton will expand and enhance Elbit Systems portfolio of maritime capabilities and integrated solution that includes maritime unmanned systems, communication, combat management and weapon system as well as sonars and maritime electronic warfare solutions. In April we also completed the acquisition of Rokar International from BEA Systems for $31 million.

Rokar is based in Jerusalem and develops and manufactures high-end GPS receivers and guidance systems for advanced defense applications. I would like to welcome the hundreds Sparton and Rokar employees to Elbit Systems. I look forward to getting to know you and your contribution to the long-term success of Elbit Systems. In summary, our backlog continues to provide us with good visibility and we continue to see significant potential around the world for our leading high technology solution.

And with that, I will be happy to take your questions. Operator?

Questions and Answers:

Operator

Thank you. [Operator Instructions] The first question is from Ellen Page of Jefferies. Please go ahead.

Ellen Page -- Jefferies -- Analyst

Good morning. Thanks for the question. Just wanted to ask about the organic decline in electro-optics. It was weak in H2 '20 as well and I just wanted to get a sense of when growth might return in that business and how to think about the conversion of the recent $41 million Night Vision contract with the U.S. Marine Corps?

Joseph Gaspar -- Executive Vice President, Chief Financial Officer

Well, we have seen a temporary delay in some of the development processes at Elbit Night Vision. This has been already solved and we expect to see the results of that in the revenues of the second quarter and on. So that is regarding your first question. The second question is just an ongoing multi-year program with over $250 million potential and we are getting sequential purchase orders. We record in our backlog only the firm funded purchase orders, although in the IDIQ program, we are quite certain that all of that will be -- will come through during the future.

Ellen Page -- Jefferies -- Analyst

Okay, thank you. That's it for me.

Joseph Gaspar -- Executive Vice President, Chief Financial Officer

Thanks Ellen.

Operator

The next question is from Pete Skibitski of Alembic Global. Please go ahead.

Pete Skibitski -- Alembic Global Advisors LLC -- Analyst

Yes, hello Butzi, and Yossi and Rami and good afternoon. I hope everyone is doing well.

Joseph Gaspar -- Executive Vice President, Chief Financial Officer

Thank you Pete.

Pete Skibitski -- Alembic Global Advisors LLC -- Analyst

Butzi, it sounds like the global demand environment is very strong right now. You mentioned Europe and Asia-Pacific, was just wondering if COVID is still sort of slowing things down at all particularly with India being sort of a COVID hotspot? Are you seeing any problems closing deals because of COVID still?

Bezhalel Machlis -- President and Chief Executive Officer,

We see an improvement in the overall situation, which is related to COVID all around the world. We are starting to travel and to meet customers. However, in some countries like in India and in Brazil, for example, it is still difficult to meet customers. And because of that, there are still some delays to deliver programs and to conclude contracts. However, I believe that the situation is improving and in the coming quarters we will continue to do business as we used to do in the past. And the situation in these countries will improve as well. So we are not yet -- it is not -- it is impacting us, but we certainly see an improvement and I believe and I hope that it will improve in the coming quarters.

Pete Skibitski -- Alembic Global Advisors LLC -- Analyst

Okay. Understood, understood. And then any color on what drove the sequential improvement in backlog, it looked to be up nicely. I wasn't sure if the Greek deal got booked in the first quarter or if that won't get booked into the second quarter?

Bezhalel Machlis -- President and Chief Executive Officer,

The Greek -- the $1.6 billion contract we got from the Greece Ministry of Defense is not yet in the backlog of the first quarter. We got it only in April, so you will see it as part of the result of the second quarter. It is -- the same answer is also relevant for the two acquisitions we made, the Sparton as well as the Rokar acquisition. The results of these subsidiaries are not yet included as well in the first -- in the results of the first quarter, you will see them embedded in the results of the second quarter.

Pete Skibitski -- Alembic Global Advisors LLC -- Analyst

Okay. So first quarter, which is pure organic backlog growth, OK.

Bezhalel Machlis -- President and Chief Executive Officer,

Right, right.

Pete Skibitski -- Alembic Global Advisors LLC -- Analyst

Okay. And then, on the headwinds to gross margin from the shekel strength, should we expect maybe another one or two quarters of headwind there before things kind of level out, what's the right way to think about that?

Joseph Gaspar -- Executive Vice President, Chief Financial Officer

Hi Pete. We expect this over the year, over the rest of the year to improve our gross margins gradually. We expect to have an improved number in the second quarter. As you know, we do not give guidance, so we'll not say anything about the specific number, but the improvement will come.

Pete Skibitski -- Alembic Global Advisors LLC -- Analyst

Okay, got it. I guess Yossi, just a couple more for you. The decline in marketing expenses this quarter was fairly substantial for that particular line. Was that just kind of a one-off spending save there or do you expect that spend to return to kind of that $70 million or so per quarter level or is that more of a permanent kind of a step down in expense for the marketing line?

Joseph Gaspar -- Executive Vice President, Chief Financial Officer

No, this quarter it was an extraordinarily low number, low travel, low marketing expenses, essentially no meetings face-to-face and no shows and so on and so forth. So, looking forward we see that we will catch up on this in the second, third and fourth quarter, gradually grow over the year. And essentially I would not be surprised if we come back to the average levels of the 2019 numbers that we have seen in marketing and sales.

Pete Skibitski -- Alembic Global Advisors LLC -- Analyst

Okay, OK. Got it. And then just last one from me on the IMI payment that you mentioned in the quarter, is that the last payment for IMI? I had actually modeled a payment in 2022, so I wasn't sure if you had one more left or not?

Joseph Gaspar -- Executive Vice President, Chief Financial Officer

Yes. This payment that you see that we did it in January, we paid it on January. Initially it was planned to be paid in December. So it moved a couple of days into this year and the next payment will be toward the end of 2022. It may move also into 2023 but right now it's planned for the end of 2022.

Pete Skibitski -- Alembic Global Advisors LLC -- Analyst

Okay. And that's the last one.?

Joseph Gaspar -- Executive Vice President, Chief Financial Officer

And that is -- yes, it is the last one.

Pete Skibitski -- Alembic Global Advisors LLC -- Analyst

Okay.

Joseph Gaspar -- Executive Vice President, Chief Financial Officer

There is one item there in our agreement with them that if we have an extraordinary business performance by IMI due until the period of 2026, we might need to do another small payment to the government. Right now we hope we'll be doing it in the future, but right now it is in the out years.

Pete Skibitski -- Alembic Global Advisors LLC -- Analyst

Okay. Okay, understood. Thanks so much for the help guys.

Joseph Gaspar -- Executive Vice President, Chief Financial Officer

Thank you.

Operator

The next question is from Dina Korshunov of Leader Capital Markets. Please go ahead.

Dina Korshunov -- Leader Capital Markets -- Analyst

Hey guys. Good afternoon. How are you?

Bezhalel Machlis -- President and Chief Executive Officer,

Good afternoon Dina.

Dina Korshunov -- Leader Capital Markets -- Analyst

I have two questions. My first question is, if you can tell us a bit about the civil aviation regarding the COVID-19, do you see any recovery in this field?

Joseph Gaspar -- Executive Vice President, Chief Financial Officer

Yeah, well, the worldwide expectations and plan right now is that the recovery will be gradual and will come back to the levels of 2019, somewhere in 2024. And that is overall opinion of most of the analysts of that business area. In our operation in the U.S. we do see some recovery. It is not yet at the rate that shows us significant growth. However, we do see positive numbers compared with what happened during 2020. But we are still planning, our multi-year plan is to be like what the overall expectations are to come back or maybe even grow more than 2019 levels by 2023 or 2024.

Dina Korshunov -- Leader Capital Markets -- Analyst

I understand. Thank you. And then the second question can you tell a bit about IMI implementation, what about it, where does it stand?

Bezhalel Machlis -- President and Chief Executive Officer,

Organization. Hi Dina. We combined -- as you know we combined IMI with the land division in Elbit. So in this division we are producing platforms like howitzers and mortars and upgrading tanks. And we are also developing and delivering guided munitions. Recently we announced reorganization in Elbit and under this reorganization actually we are combining all our guidance capabilities under this new land division. So I'm quite convinced that this new division will be a world leader to provide fire support solutions and platform upgrades for many customers around the globe. When we acquired IMI, most of their activities were in Israel.

And I'm happy to say that last year more than 50% of the new business came from the international market, and we did it via the Elbit marketing capabilities and via our subsidiaries. And we have and I'm also happy to say that we have [Indecipherable] nice contracts for active protection systems here in Israel as well as in the Netherlands. And we are also progressing in the U.S. and the Australia market as well with this system. And we see a growing demand for the new portfolio, which we have and we're also working hard on the margins, to improve the margins of IMI and we are progressing accordingly and we are even ahead of the plan we had when we did the acquisition. And we're also progressing in the new facilities for IMI that we're establishing in the south part of the country. And right now we are planning to move IMI to -- a big part of IMI to these facilities around 2024.

Dina Korshunov -- Leader Capital Markets -- Analyst

All right. I understand. Thank you very much guys.

Bezhalel Machlis -- President and Chief Executive Officer,

Thank you.

Joseph Gaspar -- Executive Vice President, Chief Financial Officer

Thank you Dina.

Operator

The next question is from Ella Fried of Bank Leumi. Please go ahead.

Ella Fried -- Bank Leumi -- Analyst

Hey, good afternoon. I have also a couple of questions. The first is what immediate or long-term impact if any are you seeing from the recent operation in Gaza and the results on the local scene and maybe results concerning potential exports and will it affect in some way to think when bookings from local and foreign customers?

Bezhalel Machlis -- President and Chief Executive Officer,

As you know, Israel customers' IDF is a very important customer to Elbit and we are working with IDF to develop and to deliver new systems for many years. And of course we supported our troops during the [Indecipherable] in Gaza. I'm happy to say that the solution that we provided was relevant and effective. And we continue to develop new technologies and new systems to the Israeli customer and based on the experience we gathered here to deliver these solutions also to other customers. If I -- just to touch one area, which is very relevant and even more relevant than ever is the high power laser that we are developing for the Israeli MOD.

High power laser, we are the world leader in this technology. There is a breakthrough in the technology. So we believe that we can provide a solution to protect Israel as well as our other customers against missiles and rockets or via a high power laser. We have been -- the Israeli MOD have chosen us to develop this system and we are working hard to do so, and it will for sure will be a growth engine for Elbit in the future. And I believe it will change also the way Israel defends itself, as well as it can be relevant also for other customers as well. But this is only just one example.

Ella Fried -- Bank Leumi -- Analyst

I have a question if you don't mind. I know that the army is very much waiting for this high-power laser. When do you think, I mean, roughly it will become operational, is it about two years, three years, or is there any deadline?

Bezhalel Machlis -- President and Chief Executive Officer,

No, this is more or less the timeline. We are actually waiting for the defense budget, for the Israel defense budget to continue the development and the production. I hope that this budget will be formed soon. And I believe that everyone is convinced right now that there is a need to find a way to finance this program and to bring this to the field as soon as possible. To answer your question, it will take few years until the development will be completed.

Ella Fried -- Bank Leumi -- Analyst

In a few years you mean more than two? There is no besides the deadline. Okay. And I have another question, actually more on price surroundings and I really would like to learn from your experience, because as we all know here locally in Israel, the Israeli shekel strength is hurting most exporters in Israel. But not only in Israel the weakening of dollar is actually affecting many other exporters in dollar. So from your experience and also there's some inflation expected in the next two years, quite prominent inflation whereas what we had in U.S. In your experience, can the prices in such surroundings be adjusted for all these currency exchange influences or you think that they very much remain steady dollar dominated because I think it's very important for forecasting many companies who are not operating in the U.S.?

Joseph Gaspar -- Executive Vice President, Chief Financial Officer

Hi, Ella this is Yossi.

Ella Fried -- Bank Leumi -- Analyst

Hi Yossi, good to hear you.

Joseph Gaspar -- Executive Vice President, Chief Financial Officer

Yeah. I would give you two aspects of that answer. One is on contracts that we have. In quite a lot of them we have elements of indexing so that they do protect us, maybe not a 100% but quite significantly material protection against inflation.

Ella Fried -- Bank Leumi -- Analyst

Relating dollar index or specific inflation?

Joseph Gaspar -- Executive Vice President, Chief Financial Officer

It depends on the customer and on the currency.

Ella Fried -- Bank Leumi -- Analyst

Okay.

Joseph Gaspar -- Executive Vice President, Chief Financial Officer

So it varies, of course. So that is regarding what we call the backlog of orders.

Ella Fried -- Bank Leumi -- Analyst

Okay.

Joseph Gaspar -- Executive Vice President, Chief Financial Officer

Regarding future contracts, we do take into consideration when we price our proposals. We do take into consideration expected inflation rates and expected internal labor rates which are dependent on the expected local currency versus the dollar value. So to some extent we do mitigate through that future, medium and longer term impact. In parallel with that, of course we do every effort possible in order to reduce our cost base and in order to improve our competitiveness on one hand and our profitability on the other hand.

These processes take some time. I did mention in the past the implementation of the one ERP system that we do implement worldwide in our subsidiaries. We do look at additional aspects that we have initiated in order to move some of the production activities and even some of the engineering activities to low cost countries. So in that way we do mitigate our costs -- the increase in the cost basis of the company. So all this is going on. These are multi-year plans. The company executes them, and we are optimistic that we will be able to mitigate the impact of the currency exchange rate.

Ella Fried -- Bank Leumi -- Analyst

Well, first it's good to hear that many aspects are protected because the exchange rate changes were quite dramatic as we know here. And on the other hand, do think we'll see also the time you're collecting payments from your customers becoming shorter or because you mentioned as far as one of the companies with the longer collecting time so -- or you will still use it as a marketing tool?

Joseph Gaspar -- Executive Vice President, Chief Financial Officer

No, I think we did complete -- that's the strategic cycle that you referred to about using the payment terms as marketing tool. We stopped that actually or significantly reduced that last year already.

Ella Fried -- Bank Leumi -- Analyst

And then came corona?

Joseph Gaspar -- Executive Vice President, Chief Financial Officer

And then came corona, that's right. But one of our major customers, the Ministry of Defense here in Israel did pay nicely toward the end of last year. They continue to pay, although there is still a material debt that they have not completed yet the payment of. Looking for the upcoming budget that is going to be approved somewhere this year, hopefully, and then this will be resolved as well. In other places worldwide, we are in a process of reducing as we just said, reducing the terms of that we -- what we give our customers of payment. And actually, if you have looked at our recent two or three quarters, we -- and you look at the number of the customer advances in our contracts, you can see a constant increase in the advances. And that is part as a result of the change of policy that we have here in putting more emphasis on cash flow and getting more initial down payments and progress payments from our customers. So this is an ongoing process which focuses on cash flow.

Ella Fried -- Bank Leumi -- Analyst

Okay. Thank you very much for taking my questions. It was nice to talk to you.

Joseph Gaspar -- Executive Vice President, Chief Financial Officer

Thank you, Ella.

Bezhalel Machlis -- President and Chief Executive Officer,

Thank you, Ella.

Rami Myerson -- Director, Investor Relations

Thank you, Ella.

Operator

[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 two hours after the conference ends. In the U.S. please call 1-888-782-4291, in Israel please call 03-925-5900, and internationally please call 9723-925-5900. A replay of this call will also be available on the company's website at www.elbitsystems.com. I'd now like to let Ella ask another question. Please go ahead.

Ella Fried -- Bank Leumi -- Analyst

Oh, OK. Thank you. It's not that important. I just was late in reacting on the call. So, I would like to ask you about factoring as we spoke about cash flow actually, how -- are you still using it and is it still a -- is it a higher rate now than you used to use it or it's the same level more or less?

Joseph Gaspar -- Executive Vice President, Chief Financial Officer

Occasionally we use it. In the first quarter we had a relatively low level of factoring. And if you look at the trend, compared to last year we have lower level in overall, and we plan to have a lower level during the year as well. In assessing -- in our assessment, the payments from the customer will come in time and will not need that element or reduce it significantly.

Ella Fried -- Bank Leumi -- Analyst

Okay. Thank you, again.

Operator

Mr. Machlis, would you like to make your concluding statement?

Bezhalel Machlis -- President and Chief Executive Officer,

I would like to thank all our employees again for the continued hard work particularly in these challenging times. 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.

Operator

[Operator Closing Remarks]

Duration: 40 minutes

Call participants:

Rami Myerson -- Director, Investor Relations

Joseph Gaspar -- Executive Vice President, Chief Financial Officer

Bezhalel Machlis -- President and Chief Executive Officer,

Ellen Page -- Jefferies -- Analyst

Pete Skibitski -- Alembic Global Advisors LLC -- Analyst

Dina Korshunov -- Leader Capital Markets -- Analyst

Ella Fried -- Bank Leumi -- Analyst

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