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01/11 03:18
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights strong financial performance with significant revenue growth and margin expansion, despite some segment declines. The company's strategic plans, including a $1.625 billion European contract and new orders, indicate robust future growth potential. The Q&A reveals optimism in international expansion and emerging technologies, boosting sentiment. While guidance was not specific, internal targets remain positive. Overall, the combination of strong past performance and strategic growth initiatives suggests a positive outlook for the stock price over the next two weeks.
Quarterly Free Cash Flow $101 million, underscoring healthy cash generation.
Third Quarter 2025 Revenues $1.922 billion, compared to $1.718 billion in the third quarter of 2024, a solid 12% growth year-over-year. Reasons: Strong demand in Europe and Israel.
GAAP Gross Margin 24.9% of revenues compared to 24% in the third quarter of 2024. Reasons: Improved operational efficiencies.
Non-GAAP Gross Margin 25.2% of revenues, compared to 24.4% in the third quarter of 2024. Reasons: Improved operational efficiencies.
GAAP Operating Income $171.4 million or 8.9% of revenues versus $125.8 million or 7.3% of revenues in the third quarter of 2024. Reasons: Margin expansion trajectory.
Non-GAAP Operating Income $186.7 million or 9.7% of revenues, compared with $140.7 million or 8.2% of revenues in the third quarter of 2024. Reasons: Margin expansion trajectory.
Net R&D Expense $129.1 million or 6.7% of revenues, compared to $119.9 million or 7% of revenues in the third quarter of 2024. Reasons: Continued investment in R&D for future growth.
Marketing and Selling Expenses $91 million or 4.7% of revenues versus $91.3 million or 5.3% in the third quarter of 2024. Reasons: Slight reduction in percentage of revenues.
G&A Expenses $86.7 million or 4.5% of revenues, compared to $75.7 million or 4.4% of revenues in the third quarter of 2024. Reasons: Increase in administrative costs.
Financial Expenses $34.5 million in the third quarter, compared to $45 million in the third quarter of 2024. Reasons: Reduction in average net debt.
Tax Expense $11.4 million in the third quarter compared to $12.8 million in the third quarter of 2024. Reasons: Increase in deferred tax assets.
Effective Tax Rate 8.2% compared to 14.6% in the third quarter of 2024. Reasons: Increase in deferred tax assets.
GAAP Diluted EPS $2.80 for the third quarter of 2025 compared to $1.77 in the third quarter of 2024. Reasons: Strong revenue growth and margin expansion.
Non-GAAP Diluted EPS $3.35 for the third quarter of 2025, compared to $2.21 in the third quarter of 2024. Reasons: Strong revenue growth and margin expansion.
Aerospace Segment Revenue Decreased by 3% year-over-year. Reasons: Decrease in Precision Guided Munition sales in Asia Pacific, partially offset by increases in Israel and Europe.
C4I and Cyber Segment Revenue Increased by 14% year-over-year. Reasons: Radio systems and command and control system sales in Europe.
ISTAR and EW Segment Revenue Increased by 5% year-over-year. Reasons: Electro-Optic systems and Electronic Warfare systems sales in Israel and high-power laser sales in Israel.
Land Segment Revenue Increased by 41% year-over-year. Reasons: Ammunition and munition sales in Israel and Europe.
Elbit Systems of America Revenue Decreased by 2%. Reasons: Decrease in Electronic systems and medical instrument sales, partially offset by increases in Maritime and Warfighter system sales.
Order Backlog $25.2 billion, $3.1 billion higher than the backlog at the end of the third quarter of 2024. Reasons: New European orders.
Cash Flow from Operating Activities (9 months ended September 30, 2025) $461 million, compared to $82.5 million in the 9 months ended September 30, 2024. Reasons: Strong increase in net income.
JUPITER space camera: Launched successfully, supporting military operations, environmental monitoring, and scientific research. It is one of the world's most advanced space cameras with a large aperture and lightweight design.
PAWS 2: Next-generation infrared missile warning system for fighter aircraft, enhancing survivability and operational effectiveness in high-threat environments.
Frontier: Wide-area persistent surveillance system for border protection, leveraging AI for optimized intelligence gathering and decision-making across land, air, and maritime domains.
European market expansion: Opened new facilities in Sweden and Germany to enhance local delivery capabilities and provide faster support to customers.
Revenue growth: Achieved 12% year-over-year growth in quarterly revenues, with strong contributions from Europe and Israel.
Cash flow: Generated $101 million in quarterly free cash flow and $461 million in cash flow for the first 9 months of 2025.
Backlog: Increased to $25.2 billion, with 69% derived from orders outside Israel.
Largest contract in company history: Signed a $2.3 billion international contract for a strategic solution to be performed over 8 years.
European contract: Secured a $1.635 billion contract for long-range precision strike artillery-rocket systems, unmanned reconnaissance systems, and other advanced technologies.
Aerospace Revenue Decline: Third quarter revenues in the Aerospace segment decreased by 3% year-over-year, mainly due to a decrease in Precision Guided Munition sales in Asia Pacific. This decline could impact the company's overall revenue growth and profitability in this segment.
Elbit Systems of America Revenue Decline: Revenues decreased by 2% due to a decrease in Electronic systems and medical instrument sales. This decline could affect the company's performance in the U.S. market.
Supply Chain and Delivery Challenges: The company emphasized the importance of enhancing local delivery capabilities in Europe by opening new facilities in Sweden and Germany. This suggests potential challenges in meeting delivery timelines and customer expectations in Europe.
Economic and Geopolitical Risks: The company operates in multiple regions, including Europe, North America, and Asia Pacific, which exposes it to economic and geopolitical uncertainties that could impact operations and financial performance.
High R&D Investment: Net R&D expenses were $129.1 million or 6.7% of revenues. While this investment secures future growth, it represents a significant cost that could pressure margins if not offset by revenue growth.
Dependence on Defense Budgets: The company's growth is tied to rising global defense budgets. Any reduction or reallocation of these budgets could adversely affect demand for its products and services.
Concentration of Backlog: Approximately 69% of the backlog is derived from orders outside of Israel, and 38% is scheduled for completion by 2026. Delays or cancellations in these orders could impact future revenue.
Revenue Growth: The company expects continued growth in revenues, supported by strong demand for its solutions, particularly in Europe and Israel. Defense budgets are rising globally, which is expected to drive further demand for Elbit's advanced systems.
Order Backlog: The order backlog as of September 30, 2025, stands at $25.2 billion, with 38% scheduled for completion in 2025 and 2026, and the remainder for 2027 and beyond. This backlog includes significant new contracts, such as a $2.3 billion international contract to be performed over 8 years and a $1.635 billion European contract over 5 years.
Product Development and Launches: Elbit plans to continue investing in R&D to maintain its market leadership. Recent product launches include the JUPITER space camera, PAWS 2 infrared missile warning system, and the Frontier wide-area persistent surveillance system, which are expected to drive future growth.
Geographic Expansion: The company is expanding its operations in Europe with new facilities in Sweden and Germany to enhance local delivery capabilities and customer support.
Market Trends: Elbit anticipates growing interest in its solutions, particularly Hermes drones, electronic warfare systems, and training platforms, following recent geopolitical events. The company also sees opportunities in border protection and advanced surveillance systems.
Dividend Declaration: The Board of Directors declared a dividend of $0.75 per share to be paid on January 5, 2026.
The earnings call highlights strong financial performance with significant revenue growth and margin expansion, despite some segment declines. The company's strategic plans, including a $1.625 billion European contract and new orders, indicate robust future growth potential. The Q&A reveals optimism in international expansion and emerging technologies, boosting sentiment. While guidance was not specific, internal targets remain positive. Overall, the combination of strong past performance and strategic growth initiatives suggests a positive outlook for the stock price over the next two weeks.
The earnings call reveals strong financial performance, with significant revenue growth across segments, improved margins, and increased cash flow. The Q&A section highlighted strategic developments like the IronBeam and UAS systems, and margin expansion efforts. Despite management's reluctance to provide formal guidance, the robust backlog and growth projections, alongside a successful turnaround of ESA, suggest a positive outlook. The overall sentiment is positive, driven by strong earnings, optimistic growth targets, and strategic advancements, likely leading to a stock price increase in the short term.
Elbit Systems reported strong revenue and EPS growth, robust demand, and a significant backlog increase. The share buyback program further supports a positive outlook. While gross margins slightly decreased, the company's strategic initiatives, including AI integration and new product development, are promising. The Q&A highlighted management's confidence in future demand and operational improvements. Despite competitive pressures and regulatory challenges, the overall sentiment is positive, likely leading to a stock price increase of 2% to 8% over the next two weeks.
Elbit's earnings call highlights strong financial performance with significant revenue growth and improved EPS. The backlog increase and positive defense budget outlook in key regions further support a positive sentiment. Despite slight margin compression, the company's strategic investments in AI and production capacity, along with a declared dividend, enhance shareholder confidence. The Q&A session did not reveal any major concerns, and management's optimism about future demand and growth opportunities reinforces a positive outlook for the stock price over the next two weeks.
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