Core Insights - Elbit Systems experienced a significant share price increase of nearly 12% over the trading week following a strong earnings release [1] Financial Performance - For the fourth quarter and full year, Elbit reported revenues exceeding $1.93 billion, up from $1.63 billion in the same period of 2023 [2] - The company's non-GAAP adjusted net income surged 71% year over year to over $119 million, translating to $2.66 per share [2][3] - Both revenue and profit figures surpassed consensus analyst estimates, which were $1.75 billion in revenue and an adjusted profit of $1.85 per share [3] Operational Highlights - Elbit noted that this quarter marked its fourth consecutive quarter of double-digit revenue growth [3] - CEO Butzi Machlis highlighted the company's success in securing significant contracts globally and emphasized the importance of investments in R&D and production infrastructure [4] Order Backlog - Elbit's order backlog at the end of December stood at $22.6 billion, significantly higher than the $17.8 billion reported at the end of 2023 [5] - Approximately 57% of the backlog is scheduled for shipment within this year and the next [5] Industry Context - The increasing reliance on drone technology in global conflicts positions Elbit favorably for future growth [6]

Company Overview - Elbit Systems is a leading global defense technology company that develops, manufactures, integrates, and sustains advanced solutions across multiple domains [3] - The company employs approximately 20,000 people in dozens of countries across five continents [4] Financial Performance - For the fiscal year ended December 31, 2024, Elbit Systems reported revenues of $6.8 billion [4] - The company has an order backlog of $22.6 billion as of the same date [4] Reporting and Accessibility - On March 20, 2025, Elbit Systems filed its annual report on Form 20-F for the fiscal year ended December 31, 2024, with the U.S. Securities and Exchange Commission, the Israel Securities Authority, and the Tel Aviv Stock Exchange [1] - The 2024 Annual Report is available for viewing or downloading on the company's website, and hard copies can be requested by shareholders free of charge [2]

Currency and Financial Risks - The company faces significant currency exchange risks due to substantial revenues generated in currencies other than the U.S. dollar, primarily New Israeli Shekels (NIS), Great Britain Pounds (GBP), and Euros, which could adversely affect costs and financial performance[57]. - Increased levels of inflation and interest rates have raised borrowing costs and operational expenses, with central banks tightening monetary policies since 2021, impacting the company's financial condition[58]. - Revenue and profit margins may fluctuate significantly due to changes in pricing, sales volume, and project mix, complicating financial forecasting[61]. - The effective tax rate may fluctuate due to changes in revenue mix, tax laws, and audits, potentially affecting income tax expenses[69]. - Changes in tax laws, including the OECD's BEPS project and the U.S. Inflation Reduction Act, could materially affect the company's financial position and tax obligations[70]. Contractual and Operational Risks - The company is exposed to cost overruns in fixed-price contracts, which could lead to reduced profits or losses due to unexpected costs, particularly in design, engineering, and material procurement[59]. - Pre-contract costs incurred for anticipated contracts may not be recoverable if contracts are not awarded, posing a risk to financial performance[60]. - The backlog of projects is subject to unexpected adjustments, delays, and cancellations, which can adversely affect future revenue and cash flow[63]. - The company faces risks related to debt obligations, including compliance with covenants that may limit operational flexibility and financing opportunities[64]. - Internal control systems may have inherent limitations, potentially leading to financial reporting errors or fraud, which could adversely impact the company's reputation and financial condition[65]. Supply Chain and Production Challenges - Supply chain disruptions have occurred due to temporary evacuations of employees, significant call-ups for military reserve duty, and increased transportation costs[92]. - The ongoing conflict has led to delays in receiving materials and components, impacting the company's ability to meet customer obligations[92]. - The company has relocated certain production lines and increased monitoring of global supply chains to address delays and shortages caused by the war[93]. - As of March 6, 2025, most relocated production lines have returned to their original locations, and the percentage of employees called up for reserve duty has decreased but remains above historical levels[93]. Regulatory and Compliance Risks - The company is subject to various legal and regulatory requirements, including compliance with government procurement and anti-bribery regulations, which increase performance and compliance costs[77]. - The company faces risks related to obtaining governmental approvals for international sales and procurement, which have become more stringent since the outbreak of the war[78]. - The company may face increased costs and liabilities due to environmental protection, health, and safety regulations, which have become more stringent[80]. Geopolitical and Economic Factors - The geopolitical environment, including military activities and conflicts, could materially and adversely affect the company's financial condition and results of operations[89]. - The Israeli government may reduce its expenditures for defense items or change its defense priorities, which could adversely affect earnings[97]. - Between 2019 and 2023, Israel underwent five elections, leading to delays in adopting the defense budget, negatively impacting operations[99]. - In October 2024, S&P Global downgraded Israel's long-term credit rating from A+ to A with a negative outlook, reflecting heightened security risk[100]. - Changes in the Israeli economy, including inflation and budgetary constraints, could adversely impact business operations and financial results[100]. Workforce and Employment Issues - The company has incurred costs related to employees on reserve duty that are not fully indemnified by the government, potentially affecting financial condition and cash flow[95]. - As of March 6, 2025, approximately 4% of the workforce in Israel was called for military reserve duty, down from 5% as of December 31, 2024[95]. Strategic and Market Risks - The Israeli Defense Entities Law may impose restrictions on acquisitions of controlling interests in defense companies, affecting potential mergers and acquisitions[102]. - The company may face difficulties in international trade due to political relations and boycotts against Israeli firms, which have increased since the "Swords of Iron" war[96]. - Israeli government programs and tax benefits may be reduced or eliminated in the future, impacting funding for technology and product development[101]. Miscellaneous - The war has resulted in physical damage to facilities and may adversely affect business activities with third parties[94]. - The company is exempt from certain SEC requirements as a foreign private issuer, which may result in less information being available to shareholders[106].

Financial Data and Key Metrics Changes - Fourth quarter revenues increased by 19% to $1,930 million compared to $1,626 million in Q4 2023 [8] - Full-year 2024 revenues increased by 14% to $6,828 million compared to $5,975 million in 2023 [8] - Non-GAAP diluted EPS was $2.66 in Q4 2024, compared to $1.56 in Q4 2023 [17] - GAAP diluted EPS was $2 for Q4 2024 compared to $0.67 in Q4 2023 [17] - Free cash flow for 2024 was $320 million, significantly better than previous years [20] Business Line Data and Key Metrics Changes - Aerospace revenues increased by 27% in Q4 2024, mainly due to increased UAS sales in Israel and Europe [9] - C4I and Cyber revenues increased by 7% year-over-year, driven by radio systems and command and control system sales [9] - ISTAR and EW revenues increased by 8%, mainly due to Electronic Warfare and Electro-Optic system sales [9] - Land revenue increased by 29%, attributed to increased ammunition and munition sales [9] - Elbit Systems of America revenues increased by 6%, mainly due to night-vision systems and medical instrumentation sales [9] Market Data and Key Metrics Changes - Europe contributed 27% of revenues, North America 22%, Asia Pacific 17%, and Israel 29% for the full year 2024 [11] - The backlog of orders as of December 31, 2024, was $22.6 billion, approximately $4.8 billion higher than the backlog at the end of 2023 [18] - Approximately 65% of the current backlog was generated from outside of Israel [19] Company Strategy and Development Direction - The company continues to invest in developing agile solutions for the modern battlefield, with a focus on high-power laser solutions and autonomous systems [30] - Elbit is expanding its production capacity to meet growing demand, with new facilities in the U.K. and Germany [51] - The company is enhancing operational efficiency through a new ERP system and integrating AI into various processes [29][30] - Elbit's diverse geographic revenue base and product portfolio help reduce revenue volatility and support long-term sustainability [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth due to elevated defense budgets globally, especially in Europe [25][54] - The company sees significant potential for growth in export activities, with a record year for exports outside of Israel [44] - Management highlighted the resilience of the company, supported by a global workforce and numerous subsidiaries [41][42] Other Important Information - The effective tax rate in 2024 was 11.4%, compared to 10.1% in 2023 [16] - The Board of Directors declared a dividend of $0.60 per share [20] Q&A Session Summary Question: Inquiry about free cash flow and contract liability inflow - Management confirmed operational cash flow of $535 million, significantly better than previous years, driven by contract liabilities and inventory expansion [35] Question: Clarification on export revenues - Management confirmed that export revenue was $4.8 billion, with a record high for Elbit, and expressed optimism for future growth [40][46] Question: Operational capacity in southern Israel - Management stated that they are expanding production capacity and have inaugurated new facilities in the U.K. and Germany [51] Question: Expectations for growth across regions - Management anticipates strong growth in Europe due to increased defense budgets and continued growth in Israel and Asia Pacific [54]

Core Insights - Elbit Systems reported strong financial results for the fourth quarter and full year of 2024, with a backlog of orders totaling $22.6 billion and revenues of $6.8 billion, reflecting a 14% increase from 2023 [1][15][31]. Financial Performance - Fourth quarter revenues reached $1,930.2 million, up from $1,625.8 million in the same quarter of 2023, marking a significant year-over-year growth [4][15]. - Non-GAAP net income for the fourth quarter was $119.3 million (6.2% of revenues), compared to $69.7 million (4.3% of revenues) in the fourth quarter of 2023 [13][31]. - GAAP net income for the fourth quarter was $90.0 million (4.7% of revenues), up from $30.0 million (1.8% of revenues) in the fourth quarter of 2023 [13][31]. - For the full year 2024, non-GAAP net income attributable to shareholders was $391.5 million (5.7% of revenues), compared to $298.8 million (5.0% of revenues) in 2023 [31]. - GAAP net income for the full year was $321.1 million (4.7% of revenues), an increase from $215.1 million (3.6% of revenues) in 2023 [31]. Revenue Segmentation - Aerospace revenues increased by 27% in Q4 2024, driven by higher UAS revenues in Israel and Europe, and increased Precision Guided Munition (PGM) revenues [5]. - C4I and Cyber revenues rose by 7%, primarily due to sales of radio systems and command and control systems [5]. - Land revenues surged by 29%, mainly due to increased sales of ammunition and munitions in Israel [5][16]. - Elbit Systems of America revenues increased by 6%, attributed to higher sales of night-vision systems and medical instrumentation [5]. Operational Highlights - The company generated $320 million in free cash flow during the fourth quarter [3]. - Research and development expenses for Q4 2024 were $131.2 million (6.8% of revenues), compared to $117.4 million (7.2% of revenues) in Q4 2023 [7][19]. - Marketing and selling expenses for Q4 2024 were $107.2 million (5.6% of revenues), up from $91.3 million (5.6% of revenues) in Q4 2023 [7][20]. - General and administrative expenses decreased to $85.4 million (4.4% of revenues) in Q4 2024, down from $105.9 million (6.5% of revenues) in Q4 2023 [8][20]. Backlog and Future Outlook - The order backlog as of December 31, 2024, was $22.6 billion, an increase from $17.8 billion at the end of 2023, with approximately 65% of the backlog from international orders [33]. - About 57% of the current backlog is scheduled for execution in 2025 and 2026 [33]. - The company has experienced increased demand for its products from the Israel Ministry of Defense due to the ongoing conflict, with contracts awarded totaling over $5 billion during 2024 [34][35].

Company Overview - Elbit Systems Ltd. is a leading global defense technology company, providing advanced solutions for a secure and safer world [6] - The company employs over 20,000 people across five continents and reported approximately $1.7 billion in revenues as of September 30, 2024, with an order backlog of approximately $22.1 billion [7] Upcoming Events - Elbit Systems will publish its fourth quarter and full year 2024 financial results on March 18, 2025 [1] - An investor conference will be held on March 18, 2025, at 10:00 am Israel time (4:00 am Eastern Time), which will be streamed live in Hebrew [4] - A conference call to discuss the financial results will take place on the same day at 10:00 am Eastern Time, with management available for questions [2][5] Participation Details - Investors can participate in the conference call by dialing specific numbers for the US, Canada, Israel, and international participants [2] - A replay of the conference call will be available for two days following the event [3]

Group 1 - The article emphasizes the importance of taking profits in investments and not being overly greedy, particularly in relation to Elbit Systems [1] - The focus is on Israel-based stocks that are part of various ETFs, including iShares MSCI Israel ETF (EIS), VanEck Israel ETF (ISRA), Amplify Bluestar Israel Technology ETF (ITEQ), and ARK Israel Innovative Technology ETF (IZRL) [1] - The author has a background in equity research and has previously worked as an editor for Bloomberg and other financial platforms, indicating a strong expertise in the field [1]

Financial Data and Key Metrics Changes - Third quarter revenue increased by 14% to $1.718 billion compared to $1.502 billion in the third quarter of 2023 [7] - Non-GAAP diluted EPS was $2.21 in the third quarter of 2024 compared to $1.71 in the third quarter of 2023, marking a second consecutive quarter of double-digit EPS growth [12] - GAAP diluted EPS was $1.77 for the third quarter of 2024 compared to $1.36 in the third quarter of 2023 [12] - Non-GAAP gross margin for the third quarter was 24.4% compared to 24.9% in the same period last year [10] Business Line Data and Key Metrics Changes - Aerospace revenues increased by 7% year over year, mainly due to increased UAS sales in Israel [7] - C4I and Cyber revenues increased by 13% year over year, driven by radio system and command and control system sales [7] - Land revenues increased by 24% due to increased ammunition and munition sales in Israel [8] - Elbit Systems of America revenues increased by 17%, primarily due to higher night vision systems and medical instrumentation sales [8] Market Data and Key Metrics Changes - In the third quarter of 2024, revenue contributions were as follows: Europe 25%, North America 23%, Asia-Pacific 18%, and Israel 29% [9] - Israel revenues continued to grow, particularly in the land segment, due to the prolonged conflict in the region [10] Company Strategy and Development Direction - The company aims to reach over $7 billion in revenue by 2025 and targets a non-GAAP operating margin of around 10% by 2026 [17] - The company is expanding production facilities and increasing inventory levels to address growing backlog and supply chain challenges [16] - The company continues to seek acquisitions to enhance its technological portfolio and market position [40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth due to strong global demand for their solutions across various markets [34] - The backlog of orders as of September 30, 2024, was $22.1 billion, indicating potential for sustained growth [13] - Management noted that the main bottleneck to converting backlog to revenue is production capacity, which is being enhanced [38] Other Important Information - The company recorded new orders of $2.7 billion in the third quarter, with approximately 66% generated from outside Israel [13] - Operating cash flow for the nine months ending September 30, 2024, was $83 million inflow compared to $200 million outflow for the same period last year [14] Q&A Session Summary Question: About the Iron Beam contract and its future revenue contribution - Management believes high-power lasers are a growth engine and sees significant potential for these systems both domestically and internationally [24][25] Question: Regarding European sales decline and future demand - Management noted a 17% increase in Elbit Systems of America sales and expects higher demand in Europe due to increased defense expenditure [27] Question: Growth targets beyond 2025 - Management anticipates continued growth based on current backlog and demand, with expectations for double-digit growth in the coming quarters [34][36] Question: Operational income and gross margin expectations - Management expects increased profitability primarily through operational efficiency rather than significant improvements in gross margin [44] Question: Capex needs in light of backlog increase - Management indicated that capex levels are expected to remain consistent, with significant investments in the ERP system now behind them [58] Question: Details on the laser contract - The laser contract received is for the ground system, with ongoing development for the airborne version [65][68] Question: Significance of the decline in European sales - Management explained that while sales in Europe have not significantly declined, production limitations have affected sales, but backlog in Europe is increasing [76]

Financial Performance - Revenues for Q3 2024 were $1.7175 billion, up from $1.5016 billion in Q3 2023, representing a growth of 14.4%[5] - Non-GAAP net income was $98.8 million (5.8% of revenues) for Q3 2024, compared to $76.5 million (5.1% of revenues) in Q3 2023, reflecting a 29.1% increase[13] - GAAP net income for Q3 2024 was $79.1 million (4.6% of revenues), up from $60.7 million (4.0% of revenues) in Q3 2023, marking a 30.5% increase[13] - Non-GAAP diluted earnings per share were $2.21 for Q3 2024, compared to $1.71 for Q3 2023, an increase of 29.2%[13] - For the nine months ended September 30, 2024, GAAP gross profit was $1,176.6 million, an increase from $1,100.8 million for the same period in 2023, representing a growth of 6.9%[28] - Non-GAAP net income attributable to Elbit Systems' shareholders for the nine months ended September 30, 2024, was $272.2 million, compared to $229.0 million for the same period in 2023, reflecting an increase of 18.9%[28] - GAAP diluted net EPS for the nine months ended September 30, 2024, was $5.18, compared to $4.15 for the same period in 2023, an increase of 24.9%[28] - Total revenues for the nine months ended September 30, 2024, increased to $4,897.7 million, up 12.6% from $4,349.0 million in the same period of 2023[46] - Operating income for the nine months ended September 30, 2024, rose to $347.7 million, a 15.3% increase from $301.5 million in the same period of 2023[46] - Net income attributable to Elbit Systems Ltd.'s shareholders for the nine months ended September 30, 2024, was $231.1 million, compared to $185.1 million in the same period of 2023, reflecting a growth of 24.9%[46] Revenue Breakdown - Revenue from Israel increased to $1,395.1 million, accounting for 28.5% of total revenue, compared to $730.0 million and 16.8% in the previous year[49] - North America revenue rose to $1,082.4 million, representing 22.1% of total revenue, slightly up from $1,049.6 million and 24.1% in the prior year[49] - Europe generated $1,287.2 million in revenue, making up 26.3% of total revenue, down from $1,329.7 million and 30.6% in the previous year[49] - Asia-Pacific revenue decreased to $858.4 million, representing 17.5% of total revenue, compared to $968.1 million and 22.3% in the previous year[49] Segment Performance - Aerospace revenues increased by 7%, C4I and Cyber revenues by 13%, ISTAR and EW revenues by 13%, and Land revenues by 24% in Q3 2024 compared to Q3 2023[6] - The Aerospace segment reported external customer revenue of $1,216.2 million for the nine months ended September 30, 2024, up from $1,188.1 million in the same period last year[50] - C4I and Cyber segment external customer revenue increased to $558.4 million, compared to $490.7 million in the previous year[50] - ISTAR and EW segment external customer revenue rose to $832.8 million, up from $735.6 million in the prior year[50] - Land segment external customer revenue increased significantly to $1,144.0 million, compared to $884.7 million in the previous year[50] - Total revenues from reportable segments for the nine months ended September 30, 2024, were $5,340.4 million, up from $4,769.2 million in the previous year[50] Cash Flow and Investments - Cash flow from operating activities was $82.5 million for the nine months ended September 30, 2024, compared to cash flow used of $200.0 million in the same period of 2023[14] - The company reported a net cash provided by operating activities of $82.5 million for the nine months ended September 30, 2024, compared to a net cash used of $200.0 million in the same period of 2023[48] - The company invested approximately $87 million in new manufacturing facilities during the nine months ended September 30, 2024[48] Order Backlog and Contracts - The order backlog reached a record high of $22.1 billion, with approximately 66% of it from international orders[13] - The company was awarded a contract worth approximately $200 million by the Israeli Ministry of Defense for high-power laser systems for the "Iron Beam" air defense system[30] - A follow-on contract of approximately $127 million was awarded for the supply of Iron Fist Active Protection Systems to General Dynamics, to be performed over 34 months[31] - Contracts totaling approximately $335 million were awarded to supply defense systems to a European country, including PULS™ rocket launchers and Hermes™ 900 Unmanned Aircraft Systems[32] Research and Development - Research and development expenses were $119.9 million (7.0% of revenues) in Q3 2024, up from $103.3 million (6.9% of revenues) in Q3 2023[9] - Research and development expenses for the nine months ended September 30, 2024, were $335.2 million, representing an increase of 9.2% from $307.1 million in the same period of 2023[46] Operational Challenges - Approximately 8% of employees were recruited for reserve duty as of September 30, 2024, impacting operations and supply chains[18] Dividends - The Board of Directors declared a dividend of $0.50 per share, with a record date of December 23, 2024[33]

Core Viewpoint - Elbit Systems Ltd. has been awarded contracts totaling approximately $335 million to supply defense systems to a European country, which includes PULS rocket launchers and Hermes 900 Unmanned Aircraft Systems [1] Group 1: Contracts and Financials - The contracts will be executed over a period of three years and six months [1] - Elbit Systems reported approximately $1.6 billion in revenues as of June 30, 2024, with an order backlog of approximately $21.1 billion [6] Group 2: Product Details - The PULS system offers a versatile solution for launching unguided rockets, precision-guided munitions, and missiles, adaptable to various platforms, which reduces maintenance and training costs [2] - The Hermes 900 is Elbit Systems' largest unmanned aerial vehicle, designed for a variety of missions including intelligence, surveillance, and reconnaissance, and has been selected by over 20 customers globally since its introduction in 2011 [3] Group 3: Leadership Perspective - Bezhalel Machlis, President and CEO, emphasized the company's commitment to providing advanced defense solutions that enhance operational effectiveness and adaptability, reflecting global trust in their innovative systems [4]