Elbit Systems Reports Robust Q1 Earnings and Growth

Elbit Systems ((IL:ESLT)) has held its Q1 earnings call. Read on for the main highlights of the call.

Elbit Systems’ recent earnings call conveyed a generally positive sentiment, underscored by significant revenue growth, a record order backlog, and strong free cash flow. Despite minor increases in financial expenses and slight decreases in gross margins, the company’s robust performance across various segments and geographies was the focal point, reflecting a strong operational and financial standing.

Strong Revenue Growth

Elbit Systems reported first-quarter revenues of $1.896 billion, a notable increase from $1.554 billion in the first quarter of 2024. This marks the fourth consecutive quarter of double-digit growth, highlighting the company’s continued expansion and market strength.

Record Order Backlog

The company’s order backlog reached an impressive $23.1 billion, $2.7 billion higher than the previous year. Notably, 66% of these orders are from outside Israel, demonstrating Elbit Systems’ expanding international footprint.

Free Cash Flow and Operating Cash Flow

Elbit Systems showcased strong financial health with a free cash flow of $161 million and net cash provided by operating activities at $184 million, a significant improvement from the $6 million cash used in the first quarter of 2024.

Segment Revenue Increases

Revenue growth was observed across all segments, with aerospace revenue increasing by 20%, C4I and Cyber by 12%, ISTAR and EW by 4%, and Land by 48%. Additionally, Elbit Systems of America saw an 18% increase in revenues, reflecting broad-based growth.

Positive EPS Growth

The company reported a GAAP diluted EPS of $2.35 and a non-GAAP diluted EPS of $2.57, both showing significant improvements from the previous year’s figures of $1.65 and $1.81, respectively.

Major Contracts and Technological Advances

Elbit Systems secured several major contracts, including a $200 million Iron Beam contract and a $100 million digital command center contract. The Iron Beam high-power laser is anticipated to be operational by the end of 2025, showcasing the company’s technological advancements.

Increased Financial Expenses

Financial expenses rose to $39 million from $31.2 million in the first quarter of 2024, primarily due to hedging transactions and changes in exchange rates, which slightly impacted the overall financial performance.

Slight Decrease in Gross Margins

There was a slight decrease in gross margins, with GAAP gross margin dropping to 24% from 24.1% and non-GAAP gross margin declining to 24.3% from 24.7%, reflecting minor cost pressures.

Forward-Looking Guidance

Elbit Systems provided a strong forward-looking guidance, emphasizing continued double-digit growth across key metrics. The company expects sustained revenue increases, with a focus on expanding its land and aerospace divisions. The declaration of a $0.60 per share dividend further underscores its robust financial performance and strategic positioning in the defense sector.

In summary, Elbit Systems’ earnings call highlighted a positive outlook, driven by strong revenue growth, a record order backlog, and significant cash flow improvements. Despite minor financial challenges, the company’s strategic advancements and international expansion position it well for future success.