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Elbit Systems Ltd. (ESLT) reported strong financial results for Q2 2025, significantly surpassing analyst expectations. The company posted a non-GAAP EPS of $3.23, exceeding the forecast of $2.41, marking a surprise of 34.02%. Revenue also outperformed predictions, reaching $1.97 billion against the expected $1.82 billion. Following the announcement, Elbit Systems’ stock rose 4.89% in pre-market trading, reflecting positive investor sentiment. According to InvestingPro data, the company’s market capitalization now stands at $21.16 billion, with the stock showing remarkable strength, delivering a 131.77% return over the past year.
Key Takeaways
- Elbit Systems’ Q2 2025 EPS beat forecasts by 34.02%.
- Revenues increased to $1.97 billion, surpassing expectations.
- Stock price surged 4.89% in pre-market trading.
- Strong global demand for defense technologies.
- Company maintains robust growth outlook with significant backlog.
Company Performance
Elbit Systems demonstrated robust performance in Q2 2025, with revenues increasing from $1.63 billion in the same quarter last year to $1.97 billion, representing a 16.86% year-over-year growth. The company’s strategic focus on innovation and expansion within the defense sector has paid off, as evidenced by its growth across multiple regions, particularly in Israel and Europe. Elbit Systems continues to strengthen its position as a leader in defense technologies, benefiting from increased global demand. InvestingPro analysis reveals the company has maintained dividend payments for 29 consecutive years, demonstrating long-term financial stability.
Financial Highlights
- Revenue: $1.97 billion, up from $1.63 billion YoY.
- Earnings per share: $3.23, up from $2.08 YoY.
- GAAP gross margin: 24%.
- Non-GAAP operating income: $175.1 million.
Earnings vs. Forecast
Elbit Systems exceeded expectations with a non-GAAP EPS of $3.23, compared to the forecasted $2.41. This resulted in a 34.02% earnings surprise. Revenue also beat the forecast by 8.24%, reaching $1.97 billion against an expected $1.82 billion. This performance highlights the company’s ability to capitalize on strong market demand and operational efficiencies.
Market Reaction
Following the earnings announcement, Elbit Systems’ stock price increased by 4.89% in pre-market trading, reaching $466.50. This positive reaction reflects investor confidence in the company’s growth trajectory and its ability to deliver on financial targets. The stock’s performance is notable given the broader market conditions and positions it favorably within its 52-week range of $188.53 to $494.32. InvestingPro analysis indicates the stock is currently trading above its Fair Value, with analyst price targets ranging from $252 to $500. For deeper insights into Elbit Systems’ valuation and growth potential, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
Outlook & Guidance
Elbit Systems maintains a positive outlook, targeting mid-teens growth for the remainder of 2025 and double-digit growth into 2026. The company reported a backlog of $23.8 billion, a 12% increase from the previous year, with 68% of orders coming from international markets. This strong backlog supports the company’s growth projections and strategic initiatives. The company’s financial health score of GOOD (2.58) from InvestingPro underscores its solid operational performance, with a moderate debt level and strong cash flow generation. InvestingPro subscribers have access to 13 additional exclusive ProTips about Elbit Systems, offering valuable insights for investment decisions.
Executive Commentary
CEO Bouty Maklis stated, "We are in a unique position to offer very advanced solutions based on our wide portfolio, operational experience, and local jobs to support local economies." CFO Kobi Kagan added, "We are committed to continue improving the margin," highlighting the company’s focus on operational efficiency and profitability.
Risks and Challenges
- Potential supply chain disruptions affecting production timelines.
- Geopolitical tensions impacting international orders.
- Competition from emerging defense technology firms.
- Economic downturns affecting defense budgets.
- Regulatory changes impacting international trade.
Q&A
During the earnings call, analysts focused on Elbit Systems’ margin expansion strategies and the performance of its Land segment, which grew by 45%. Questions also centered around the development of counter-drone technologies and the company’s approach to potential mergers and acquisitions. Executives emphasized the company’s commitment to innovation and market leadership.
Full transcript - Elbit Systems Ltd (ESLT) Q2 2025:
Conference Operator: Ladies and gentlemen, thank you for standing by. Welcome to Elbit Hristen Second Quarter twenty twenty five Results Conference Call. All participants are in listen only mode.
Following management’s formal presentation, instructions will be given for the question and answer session. As a reminder, this conference is being recorded. I would now now like to hand over the call to Daniela Singh, Elbit Systems VP, Investor Relations. Daniela, please go ahead. Thank you, Ila.
Good day, everyone, and welcome to our second quarter twenty twenty five earnings call. On the call with me today are Bouty Maklis, president and CEO, and Kobi Kagan, CFO. 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 usual, we will provide you with both GAAP financial data as well as certain supplement non GAAP information. We believe that this non GAAP information provides additional details to help understand the performance of the ongoing business.
You can find all the detailed GAAP financial data as well as as well as the non GAAP information and the reconciliation in today’s press release. As usual, Kobi will begin by providing a discussion of the financial results, followed by Budi, who will talk about some some of the significant developments during the quarter and beyond. We will then turn the call over to question and answer session. With that, I would like to now turn the call over to Kobi. Kobi, please go ahead.
Kobi Kagan, CFO, Elbit Systems: Thank you, Daniela. Hello, everyone, and thank you for joining us today. We are very pleased to announce another set of quarterly results with strong double digit year over year growth across all parameters. We recorded growth across all business segments and geographies, especially in Europe, as well as margin expansion. Backlog increased 12% from the corresponding quarter in 2024, and free cash flow generated this quarter totaled $71,000,000.
I will now highlight and discuss some of the key figures and trends in our financial results this quarter. Second quarter twenty twenty five revenues were $1,973,000,000 compared to $1,626,000,000 in the 2024. In the 2025, Europe contributed 29%, North America 21%, Asia Pacific 13%, and Israel was 34% of revenues. Demand continued to be robust in all three geographies as evidenced in the higher sales in all geographies this quarter. GAAP gross margin in the second quarter was 24% of revenues compared to 24% in the 2024.
The non GAAP margin for the second quarter was 24.4% of revenues compared to 24.4% in the 2024. GAAP operating income for the second quarter was $157,800,000 or 8% of revenues versus $116,500,000 or 7.2% of revenues in the 2024. Non GAAP operating income was $175,100,000 or 8.9% of revenues compared with $130,500,000 or 8% of revenues in the second quarter of last year. We are very pleased with this margin expansion, which is a result of the company’s joint effort to improve profitability. The operating expense breakdown in the second quarter was as follows.
Net R and D expenses were $129,700,000 or 6.6% of revenues compared to $116,800,000 or 7.2% of revenues in the 2024. Elbit continues to invest in r and d to develop cutting edge technological product and system solutions, which will maintain Elbit’s position as a market leader. Marketing and selling expenses were 91,500,000 or 4.6% of revenues versus $87,700,000 or 5.4% in the 2024. G and A expenses were $93,900,000 or 4.8% of revenues compared to $6,068,700,000.0 dollars or 4.2% of revenues in the 2024. The increase in g and a expenses for the 2025 was mainly due to onetime expenses incurred during the current quarter.
G and a expenses during the 2024 were lower than average. Financial expenses were $31,200,000 in the second quarter compared to $29,100,000 in the 2024. Financial expenses during the quarter were impacted by the relatively sharp fluctuations of exchange rate, by the strong free cash flow from the beginning of the year, and from the offering proceeds that in the short term decreased the company’s loan portfolio. We recorded a tax expense of $7,100,000 in the second quarter compared to $11,300,000 in the 2024. The effective tax rate in the 2025 was 5.6% compared to 13.2% in the 2024.
The decrease in effective tax rate for the 2025 was mainly due to the increase in deferred tax assets and the settlement of tax assessments. GAAP diluted EPS was $2.69 for the 2025 compared to $1.76 in the 2024. Our non GAAP diluted EPS was $3.23 for the 2025 compared to $2.08 in the 2024. Quarterly segment revenue for the 2025. Aerospace revenue increased by 12% year over year, mainly due to increase in precision guided munitions sales in Israel and Asia Pacific and UAS sales in Europe.
C4I and fiber revenues increased by 21% year over year, mainly due to radio systems and command and control system sales in Israel and in Europe. IStar and EW revenues increased by 15% in the 2025, mainly due to electro optical system sales in Israel and electronic warfare system sales in Europe. Land revenues increased by 45% in the 2025 due to ammunition and munitions sales in Israel and in Europe. LV Systems of America revenues increased by 4% due to the increase in maritime and warfighter systems sales. Our order backlog as of 06/30/2025 was $23,800,000,000, $2,600,000,000 higher than the backlog at the end of the 2024, and $626,000,000 higher than the backlog in the 2025.
The increase in backlog during the quarter came mainly from new international orders. Approximately 68% of current backlog is delivered from orders outside of Israel. Approximately approximately 46% of the current backlog is scheduled to be performed during the remainder of 2025 and during 2026, and the rest is scheduled for 2027 and beyond. Cash flow provided by operating activities in the sixth quarter ended 06/30/2025 was $304,000,000 as compared to $26,000,000 in the six months ended 06/30/2024. The cash flow in the six months ended June 30 06/13/2025 was affected mainly by the strong increase in net income.
On the back of the continue continued strong financial performance of the company, the board of directors has decided to increase the dividend and declare a dividend of 75¢ per share, 50% higher than the dividend distributed last year and the second dividend raised this year. I will now turn the call over to mister Matlis, Elbit CEO. Bouty, please go ahead. Thank you, Kobi. Hello hello, everyone, and thank you again for joining us today.
As Kobi just described, there are indeed exceptional results with double digit growth in all parameters of revenue and profitability growth across all our segments and geo year ago geography. I’m very pleased with these results. During the quarter, we carried out a successful share offering raising $573,000,000 net with demand for the shares offered reaching three times the initial amount. These proceeds will help support and grow LV future business businesses, enabling us to increase our production capacity and deliver on the growing demand of our products. Additionally, these proceeds will potentially enable us to further expand by M and A activity, acquiring either new technologies or expanding our global reach.
During the quarter, the conflict between Israel and Iran has escalated and resulted in a twelve day campaign against Iran. Since October, The Middle East has gone through significant changes in many aspects aspects, thanks to the technological superiority of the idea. Elbit played a key role in supplying the idea with our advanced technologies and solutions. This included the helmet 900 drone armed with various payloads flying over the skies of Tehran as shown on social media. ICL’s ISR system provided crucial and continuous information, which were a key factor in defending our port.
EW self protection suit played a virtual role in protecting the IDF aircraft. Our trainers made sure pilots and other fighters were professionally trained for one of the most complicated missions ever carried out. I’m extremely proud of all Airbase employees who took part in this important mission and of all, who contributed to the development of solutions that supported the idea during the conflict and since October 7. For all of this, I am truly grateful. During the quarter and up until the announcement today, Elbit won additional significant new contracts.
This morning, we announced we were awarded a contract worth 1,625,000,000 $1.61625000000.000 to deliver a range of different solutions to European country over the next five years. Under the contract, Elbit will deliver a variety of its products and solutions, including a comprehensive military digitization and network combat solution as well as Torcheap, C4ISR, suite of command and control applications, advanced booking capabilities and full flunker, a range of unmanned aerial systems such as the helmet 900, pilot three, loitering munitions, and the luminous, soldier level tactical drones among others. The contracts are include also included a range of ISO capabilities, including electric electric warfare and ceiling system. This contract, among other in Europe, marks another important milestone in Elbit expanding expanding footprint in Europe, and it’s growing operational across the continent. Operation it’s growing operations across the continent.
A couple of weeks ago, Elbit was awarded a contract worth approximately $260,000,000 by Airbus to supply its JMusic direct infrared countermeasures, self protection system for installation on the German l 400 l four a 400 transport aircraft. We continue to gain traction with the point of Atlanta in Europe, winning yet another contract to European country for 130,000,000 US dollars. In May, we received a delivery order value of $110,000,000 for SBNBG on the Marine Corps as part of the multiyear IVAQ contract previously secured. This system will support the US Marine Corps’ mission in operation with low light and no light conditions worldwide. Elbit was also awarded a contract worth approximately $100,000,000 to supply the advanced UT and UT thirty hundred power system to General Dynamics Europe line system.
The system will be installed on the asphalt on pricing vehicles and supplied to a major European country. These systems will enhance the firepower and durability of the asphalt vehicles. During the quarter, we were awarded several contracts valued approximately $303,130,000,000 dollars by international customers, including NATO member countries to supply a broad range of advanced naval technological and solutions, including electrical warfare and anti submarine warfare systems, modernizing and upgrade programs, combat management systems, and more. And not and last but not least, two days ago, we announced two contracts wins for about $250,000,000 for the supply of airborne munitions to the Israeli Ministry of Defense. Despite some delays due to the ongoing conflict in our region, we are progressing well with the Ramat Pita site.
Construction is continuing, and initial production are expected towards the end of this year. This production site will be a state of the art and will include automated AI and robotic solutions and platforms to enable office facility efficiency. I’m truly inspired by our employees by our employees’ dedication and commitment to the company and would like to personally thank each and every one of our employees for contributing immensely to the success of the company. It wouldn’t be possible without you. And with that with that, we will be happy to answer your questions.
Operator?
Conference Operator: Thank you. Ladies and gentlemen, at this time, we will begin the question and answer session. If you have a question, please press 1. If you wish to cancel your request, please press 2. If you are using using speaker equipment, kindly lift the handset before pressing the number.
Your questions will be pulled in the order they are received. Please stand by while we pull for your questions. The first question is from Jordan Lammes of Bank of America. Please go ahead.
Kobi Kagan, CFO, Elbit Systems: Hey. Good morning. Thanks for taking my question. Good morning. Going good morning.
Going into the back half of the year, how should we think about the margin expansion and what’s going to drive it? Thank you, Jordan, for the question, and good morning, guys. We we are paying a lot of attention and a lot of efforts into expanding our our margins as as demonstrated in in the last three years where we enjoyed around 3% margin expansion. As we demonstrated in the past, we are committed to continue improving the margin by our new ERP one ERP system, for instance, by operational leverage that is playing an important factor in the margin expansion and by other means. Got it.
And then if I could too, could you guys give any updates on IronBeam or what you’re seeing in the supply chain specifically for SRMs? On IronBeam? Yeah, we are we are developing and delivering the high power laser high power laser source for the our bill solution. And the IronBeam solution is led by Rafael, who are the main integrator of the system. However, the laser power is coming from us.
And we are starting the delivery we are starting to deliver the first unit to our first point of vision quite soon, and we expect to deploy the system by the end of of this by the end of this year. In parallel, we are developing the prime and airborne high power solution for the Israeli airports, and there is a lot of interest for this solution for other customers, international customers as well globally. Thank you so much.
Conference Operator: Thank you, Joe. Next the next question is from Sheila Kaidu of Jefferies. Please go ahead.
Bouty Maklis, President and CEO, Elbit Systems: Good morning, guys, and thank you so much for the time. Can you hear me okay?
Kobi Kagan, CFO, Elbit Systems: Good morning, Sheila. Hi, Howard.
Bouty Maklis, President and CEO, Elbit Systems: Okay. Good. Maybe just if we could start on the top line. Year to date growth of 22% is pretty phenomenal, de risked even the mid teens growth guidance for the year. How do we think about the deceleration in the second half and outlook for ’26 as you think about capacity utilization and all these new orders coming in?
Kobi Kagan, CFO, Elbit Systems: Sheila, Kobi. As you as you know, we we mentioned that we are looking at 2025 at mid teens, and this is our internal targets. And looking looking forward, of course, to 2026, again, our internal targets are are double digit growth for for for for next year. And I believe that the announcement this morning, of course, will will support the backlog required to facilitate double digit growth. So beyond that, we we are beyond that, we as you know, our policy is not to give guidance.
So this is actually our internal targets and what we we can provide.
Bouty Maklis, President and CEO, Elbit Systems: No. Thanks, Kobe. Maybe any detail you could give on the segments, obviously, land 45% growth in q two, pretty spectacular, tracking ahead of your soft commentary on the 2,250,000,000.00 for the year. How long is that sustainable? And aerospace is also doing quite well.
And when we think about the new artillery award, it comes into just confirming it’ll would be in the land segment.
Kobi Kagan, CFO, Elbit Systems: So as as you mentioned, Sheila, all segments actually did very well, and we had growth across all segments. As you mentioned, land is especially became the biggest segment now now, and with with 45% increase year over year and almost more than $550,000,000. That that will drive additional, we believe, additional growth in in the in this segment, which enjoys a very, very high demand for the for all all the leading products. And as we mentioned, it’s not it’s not just ammunition, but also iron fist. We have the the Sigma, which is which is the the new officer, which has taught we’re starting supplying now to to the IDF.
And also the rampage missile, which was was heavily used during twelve days Iran Iran war. And that enjoys also domestic and international demand. We believe that this segment is is going to continue to grow in revenue and also expand also the margins further expand the margins.
Bouty Maklis, President and CEO, Elbit Systems: Great. And one last one, if I may. Great job on turning around ESA. How could we think about what’s left to do there, whether it’s restructuring or legacy dilutive contract?
Kobi Kagan, CFO, Elbit Systems: As as we mentioned, we have we have turn turn around ESA. ESA was recording a loss in 2023, and we see expansion in the in the margins with, as you mentioned, with flushing out, losing contracts. We this next quarter, q three, will be the last quarter of foreign maritime the maritime company with the last quarter losing losing contract. That will allow us to further increase the to further expand the margins in of the system America. This year, and always, will will secure next year continued expansion in margin.
Bouty Maklis, President and CEO, Elbit Systems: Great. Thank you so much. Appreciate the color.
Conference Operator: Thank you, Sheila. Thanks, Sheila. If there are any additional questions, please press 1. If you wish to cancel your request, please press 2. Please stand by while we pull for your questions.
Hi, Hila. It’s Dariela, and I have a couple of questions from an investor who sent it to me over email. The first question is what’s given the strong demand for UAS counter drone measures, what is the what are the company’s plans for future development? And could you also address the issue of potential exports of these solutions to Europe and to The US?
Kobi Kagan, CFO, Elbit Systems: We thank you, Daniela. We have a system by the name of RidgeOne, and this system is is actually a combination of several technologies from the company. Several technology for exceptions and several several technologies for as a sector. And talking about the captions, they they are radar technologies, the old technologies, seeking technologies, and others. And talking about the sectors, they are soft key technologies, like jamming, energy reference solutions, and how to solutions as well as well.
All of these are combined together into a coherent solution. The name of this system is red red redrawn. This system was delivered and and heavily used successfully by the IDS as well. And I’m happy to say that it was also it was also it was also exported to other countries. We have handful of customers abroad.
One of them is the Dutch army who have chosen this system, and the additional country in NATO which acquired the system from us, and there are other customers around the globe for the system as well. This is actually this system is a combination of many good technologies from the company and all fused together with AI, and we believe that this is one of the most advanced solutions that is available in the market right now.
Conference Operator: Thank you, Busty. And the second question from Henk Kerrich from Excellence. Henk, thank you very much for your questions today. It’s with regards to CapEx investments. So we saw during the quarter total amount of $72,000,000, which is lower than the figure in the corresponding quarter last year.
What can we expect in terms of the pace of capital investments during the year, and what is the total expenditure expected for 2025?
Kobi Kagan, CFO, Elbit Systems: Thank you, Daniela, and thank you, Fan. As mentioned in the first quarter, we enjoyed the governmental evacuation fund from the Israeli land authority, and that drove q one CapEx investment down. The running rate of the CapEx investment is around $250,000,000, and we’re currently looking at expanding the investment based based on the follow on offering that the money that was received during May.
Conference Operator: Thank you, Colby. And the final question from Chen regarding the Israel’s geopolitical positioning. On one hand, you are seeing a lot of demand for defense security applications. On the other hand, is always in a tough geopolitical predicament. How is the company experiencing these difficulties, obviously, apart from the big announcement that we saw this morning?
Yeah.
Kobi Kagan, CFO, Elbit Systems: So I would like to say that, Daniel, as you mentioned, there is a growing demand for defense solution right now worldwide. And is a as it is in a in a even a unique position to offer a very advanced portfolio. And like you saw this morning, you know, announcement, actually, what you are what we are able to provide is an integrated solution for customer. We are able to to fit with the customer and to help him to shape transformation in in for his purpose. And this is based on the operational experience we have and the very wide portfolio we have.
Connecting all of those together into one coherent based on solution, which enable the country to leapfrog with the operational capability. That kind of partnership that LBT is able to offer is very unique, and we are in a very unique position here. And I can say that there is a lot of interest for many, many customers worldwide to understand the breadth of the portfolio we have, the operational experience we have, and we have very good there is there are many, many discussions every day with many customers in Europe as well as in our in in other places to try to understand how we are doing what we did in Iran, for example, to understand also what is exportable and how we can help these countries to get such capabilities for themselves as well. On top of this, I would like to mention that we are working abroad mainly via our subsidiaries. We have about 40 subsidiaries worldwide, quite a lot in Europe as well, almost all over the continent.
So actually, what we are offering to our customer is not buying directly from individual. We are also we are also enabling our customer to work via the subsidiaries and which helps them to speak their own language and to do development locally, to do production locally, to create jobs, to boost their economy. And this is also a very unique position that we are in, and and that’s also a big advantage that we have. And on top of this, we are working also with many partners abroad. And just to give you an example, in Germany, as we’ve just mentioned, we are working with Airbus to promote our system of the a 400.
We are working with Bill and with can can be a to promote the policy and the rocket solution, not just for Germany, also for Europe. So, actually, we are in in unique position to offer very advanced solutions based on our wide portfolio, operational experience, and local jobs to support the local economies. Now I believe that it’s true that in some cases, in, for example, in France, which is not a customer of public in general, there are some resistance to buy from from Israeli companies. But altogether, I can say I can tell you that the potential that we are seeing is is huge. We’ve never we’ve never we never faced so many opportunities like we faced today.
And I believe that we are in unique position to continue the growth of the company in the near future.
Conference Operator: There are no further questions at this time. Before I ask Mr. Mahri 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 887824291.
In Israel, please call 039255900. And with your next only, please call 9720 97239255900. A replay of the call will also be available at the company’s website, www.lbsystems.com. Mister Marcus, would you like to make a concluding statement?
Kobi Kagan, CFO, Elbit Systems: Thank you. I’d like to thank everyone on the call for joining us today and for your con continued trust and support of us. Have a good day and goodbye.
Conference Operator: Thank you. This concludes the LD Systems Ltd. Second quarter twenty twenty five results conference call. Thank you for your participation. You may now go ahead and disconnect.
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