Elbit Systems(ESLT) - 2024 Q4 - Earnings Call Transcript

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]