Elbit Systems Ltd (ESLT) Q2 2025 Earnings Call Highlights: Robust Growth and Strategic Advances

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Revenue: $1.973 billion in Q2 2025, up from $1.626 billion in Q2 2024.
Gross Margin: GAAP gross margin at 24% of revenues; non-GAAP gross margin at 24.4% of revenues.
Operating Income: GAAP operating income of $157.8 million (8% of revenues); non-GAAP operating income of $175.1 million (8.9% of revenues).
Net R&D Expenses: $129.7 million or 6.6% of revenues.
Marketing and Selling Expenses: $91.5 million or 4.6% of revenues.
G&A Expenses: $93.9 million or 4.8% of revenues.
Financial Expenses: $31.2 million.
Tax Expense: $7.1 million with an effective tax rate of 5.6%.
Diluted EPS: GAAP diluted EPS of $2.69; non-GAAP diluted EPS of $3.23.
Free Cash Flow: $71 million generated in the quarter.
Order Backlog: $23.8 billion as of June 30, 2025.
Cash Flow from Operating Activities: $304 million for the six months ended June 30, 2025.
Dividend: Increased to $0.75 per share, a 50% increase from last year.
Segment Revenue Growth: Aerospace up 12%, C4I and Cyber up 21%, ISTAR and EW up 15%, Land up 45%, Elbit Systems of America up 4%.
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Release Date: August 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Elbit Systems Ltd (NASDAQ:ESLT) reported strong double-digit year-over-year growth across all business segments and geographies, particularly in Europe.
The company's backlog increased by 12% from the corresponding quarter in 2024, reaching $23.8 billion.
Free cash flow generated in the quarter totaled $71 million, indicating strong cash management.
Elbit Systems Ltd (NASDAQ:ESLT) successfully raised $573 million through a share offering, with demand reaching three times the initial amount.
The company announced a significant contract worth $1.625 billion to deliver a range of defense solutions to a European country over the next five years.
Negative Points
General and administrative expenses increased to $93.9 million, up from $68.7 million in the second quarter of 2024, due to one-time expenses.
Financial expenses rose to $31.2 million, impacted by exchange rate fluctuations.
The effective tax rate decreased to 5.6% from 13.2% in the second quarter of 2024, which may not be sustainable long-term.
Despite strong performance, the company faces geopolitical challenges, particularly in regions like France where there is resistance to buying from Israeli companies.
There are ongoing supply chain challenges, particularly in the development and delivery of high-power laser solutions.
Q & A Highlights
Q: Going into the back half of the year, how should we think about the margin expansion and what's going to drive that? A: We are focusing on expanding our margins through various efforts, including the implementation of our new ERP system and operational leverage. Over the past three years, we've achieved around 3% margin expansion, and we are committed to continuing this trend.
Q: Could you provide updates on R&D or what you're seeing in the supply chain, specifically for FRM? A: We are developing high-power laser sources for a solution led by Rafael, with deliveries starting soon. We expect to deploy the system by the end of this year. Additionally, we are working on prime and airborne high-power solutions for the Israeli Air Force, with significant international interest.
Q: How do we think about the deceleration in the second half and outlook for 2026 as you think about capacity utilization and new orders? A: Our internal target for 2025 is mid-teens growth, and we aim for double-digit growth in 2026. The recent contract announcements will support the backlog needed for this growth, although we do not provide formal guidance.
Q: Can you give details on the segments, particularly the land segment's 45% growth in Q2? A: All segments performed well, with the land segment showing 45% year-over-year growth. This segment benefits from high demand for products like munitions, Iron Fist, Sigma, and Rampage missiles. We expect continued revenue growth and margin expansion in this segment.
Q: What are the company's plans for future development of UAS counter-drone measures, and potential exports to Europe and the US? A: We have a system called Wigan, which integrates various detection and counter technologies. It has been successfully used by the IDF and exported to countries like the Netherlands and other NATO members. We believe it is one of the most advanced solutions available.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.