Release Date: March 18, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Elbit Systems Ltd (ESLT, Financial) reported a 19% increase in fourth-quarter revenues, reaching $1.930 billion compared to $1.626 billion in the same quarter of 2023.
- The company's backlog of orders reached a record $22.6 billion, with 65% generated from outside Israel, indicating strong international demand.
- Elbit Systems Ltd (ESLT) achieved a non-GAAP diluted EPS of $2.66 in Q4 2024, a significant increase from $1.56 in Q4 2023.
- Free cash flow generation was strong at $320 million for 2024, supported by $535 million in net cash flow from operating activities.
- The company continues to expand its production capacity, with new facilities in Israel and Europe, to meet growing demand for its products and solutions.
Negative Points
- The non-GAAP gross margin for the fourth quarter decreased to 24.5% from 25.3% in Q4 2023, indicating a slight decline in profitability.
- GAAP gross margin for the full year 2024 was 24%, down from 24.8% in 2023, reflecting ongoing margin pressures.
- Financial expenses increased to $151 million in 2024 from $137 million in 2023, primarily due to factoring expenses.
- The effective tax rate rose to 11.4% in 2024 from 10.1% in 2023, impacting net income.
- Marketing and selling expenses increased to $375 million in 2024, up from $359 million in 2023, which could pressure operating margins.
Q & A Highlights
Q: Congrats on the quarter. Can you explain the drivers behind the strong free cash flow performance?
A: Yaacov Kagan, CFO, explained that the company achieved $535 million in operational cash flow, significantly better than previous years, with $320 million in free cash flow. This was driven by contract liabilities, alongside an expansion in inventories and receivables.
Q: Can you confirm the export revenue figures and explain how Elbit managed high exports during a time of conflict?
A: Yaacov Kagan, CFO, confirmed export revenues were $4.8 billion, with Israeli revenues close to $2 billion. Bezhalel Machlis, CEO, highlighted Elbit's global subsidiaries and workforce, which allowed them to support both local and international customers, demonstrating the company's resilience and strategic advantage.
Q: Is the $4.8 billion export revenue a record high for Elbit, and do you see potential for future growth?
A: Bezhalel Machlis, CEO, confirmed it is a record high and expressed confidence in continued growth potential, driven by innovative solutions and a strong global presence.
Q: Is the new facility in the south of Israel fully operational, and what is the capacity for additional ammunition volumes?
A: Yaacov Kagan, CFO, stated that the company is expanding capacity with investments in the Ramat Beka site and other locations, both in Israel and abroad, to meet growing demand.
Q: What are your expectations for growth across regions and end markets in the coming years?
A: Yaacov Kagan, CFO, anticipates strong growth in Europe due to increased defense budgets, continued growth in Israel with a $3 billion backlog increase, and sustained demand in Asia Pacific.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
