Elbit Systems(US:ESLT)2025-11-18 15:02Financial Data and Key Metrics Changes - Third Quarter 2025 revenues were $1,922 million, a 12% increase from $1,718 million in the Third Quarter of 2024, with 18% growth for the nine months ended September 30 [4][10] - GAAP gross margin improved to 24.9% in the Third Quarter from 24% in the same quarter last year, while non-GAAP gross margin rose to 25.2% from 24.4% [5][8] - GAAP diluted EPS increased to $2.80 from $1.77 year-over-year, and non-GAAP diluted EPS rose to $3.35 from $2.21 [8] Business Line Data and Key Metrics Changes - Aerospace segment revenues decreased by 3% year-over-year, primarily due to lower precision-guided munitions sales in Asia-Pacific, offset by increases in Israel and Europe [8] - SIFRAE and CYBER revenues increased by 14% year-over-year, driven by sales in Europe [9] - Land segment revenues surged by 41% in the third quarter, attributed to ammunition and munitions sales in Israel and Europe [9] Market Data and Key Metrics Changes - Revenue contributions for the Third Quarter 2025 were as follows: Europe 28%, North America 21%, Asia-Pacific 14%, and Israel 33% [4] - The order backlog as of September 30, 2025, was $25.2 billion, an increase of $3.1 billion from the previous year [10] Company Strategy and Development Direction - The company aims to focus on growth outside of Israel, particularly in Europe, as indicated by a $1.4 billion increase in backlog, with $1.2 billion from international orders [22] - The company is expanding operations in Europe, opening new facilities in Sweden and Germany to enhance local delivery capabilities [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth driven by strong demand for solutions, particularly in Europe and Israel, amidst rising global defense budgets [11] - The recent ceasefire is seen as an opportunity to regroup and focus on international business, which constitutes about 70% of the company's operations [36] Other Important Information - The company declared a dividend of $0.75 per share to be paid on January 5, 2026, reflecting strong cash generation with quarterly free cash flow of $101 million [10] - A significant international contract worth approximately $2.3 billion was signed, marking the largest contract in the company's history [12] Q&A Session Summary Question: How enduring is domestic demand with the ceasefire? - Management noted a $1.4 billion increase in backlog, with growth expected predominantly outside of Israel, especially in Europe [22] Question: What is the outlook for the air and aerospace business? - Management anticipates continued growth in the aerospace segment, driven by international sales and demand for UAVs [25][26] Question: What are the opportunities in directed energy? - Management confirmed strong interest in high-powered laser systems, with potential for significant orders following successful deployments in Israel [28][30] Question: What are the drivers behind the strong margin performance? - The margin expansion is attributed to improved backlog profitability and operational excellence initiatives, including AI utilization [34] Question: How does the company plan to leverage the US DOD's budget expansion? - Management highlighted ongoing success in the US market and plans for further acquisitions and investments to enhance their position [41][42]