Record Revenue Milestones
Q4 2025 revenues increased 11% to $2.149 billion (first quarterly result > $2.0B). Full year 2025 revenues rose 16% to $7.939 billion from $6.828 billion in 2024.
Elbit Systems
· ESLT
March 17th, 2026
Summary
- Earnings Call Date:
- 2026-03-17
- Change Since:
- -25.79%
- Next Earnings Date:
- 2026-08-18
Earnings Call Sentiment
PositiveThe call presented a strongly positive operating and financial performance: double-digit revenue growth, record backlog and free cash flow, expanding margins, sizable contract wins (including advanced directed-energy programs), and a planned CapEx ramp to address capacity. Challenges include a Q4 aerospace revenue decline, near-term capacity and supply-chain pressures, working capital build, and timing uncertainty for some large international opportunities. Overall, the positives (broad-based growth, margin expansion, record backlog and cash generation, and large strategic contract awards) outweigh the lowlights.
Company Guidance
Management's guidance focused on capacity and investment to convert a record $28.1 billion backlog (up ~$5.5 billion year‑over‑year; ~72% from outside Israel; ~54% scheduled for 2026–27) into continued double‑digit growth rather than specific revenue targets: they plan to increase CapEx to ~ $300 million in 2026 (up from $225 million in 2025 and ~ $200 million average over the past five years) to expand factories (including Ramat Beka, with deliveries expected to begin soon) and ammunition and electronics production (some capacity co‑funded by customers); this build‑out is supported by strong cash generation (operating cash flow $778 million in 2025, free cash flow $553 million, +73% YoY) and sustained R&D investment (> $0.5 billion total; net R&D $517 million or 6.5% of revenues), with Europe (27% of 2025 revenues) flagged as a primary growth engine and a $1.00 per‑share dividend declared.
Strong Segment Growth
Q4 segment performance: C4I & Cyber +19% (driven by radios and C2 systems), ISTAR & EW +39% (maritime and electro-optic, EW and counter-UAS), Land +22% (ammunition/munitions sales), Elbit Systems of America +9%; Aerospace declined -14%.
Expanded Profitability and Margins
GAAP operating income Q4 $192M (9.0% of revenues) vs $141M (7.3% prior year). Non-GAAP operating income Q4 $210M (9.8%) vs $157M (8.2%). Full year non-GAAP operating income $737M (9.3%) vs $550M (8.1%). Gross margins improved: GAAP Q4 24.7% vs 24.1%; non-GAAP Q4 25.0% vs 24.5%.
Significant EPS Expansion
GAAP diluted EPS Q4 $3.52 vs $2.00 prior-year quarter; non-GAAP diluted EPS Q4 $3.56 vs $2.66. Full year GAAP EPS $11.39 vs $7.18 and non-GAAP EPS $12.75 vs $8.76.
Record Backlog and International Diversification
Backlog grew to $28.1 billion, up ~$5.5 billion year-over-year (~24% YoY backlog growth). Approximately 72% of backlog from outside Israel; 54% of backlog scheduled for 2026-2027.
Material Free Cash Flow and Operating Cash Generation
Net cash from operating activities $778M in 2025 vs $535M in 2024. Free cash flow delivered $553M, up 73% from $320M in 2024.
Major Contract Wins and Technology Milestones
Secured IMOD contracts for airborne high-power laser fighter pod and helicopter solutions; won largest-ever international strategic contract (~$2.3B) and an earlier $1.6B European award. PULS launcher backlog exceeded $2B; multiple EW, DIRCM and Active Protection (Iron Fist) wins including NATO CV90 and U.S. Army Bradley follow-ons.
Capital Allocation and Dividend Increase
Board declared a $1.00 per share dividend (increase). Company invested $225M CapEx in 2025 and plans ~ $300M CapEx in 2026 to expand capacity; sustained R&D investment with net R&D expenses $517M (6.5% of revenues).
Improving Financial Efficiency
Financial expenses decreased to $138M in 2025 from $151M in 2024 (lower interest and debt). Effective tax rate declined to 9.9% from 11.4% due to valuation allowance releases and tax settlements.
Operator
Ladies and gentlemen, thank you for standing by. Welcome to Elbit Systems Fourth Quarter 2025 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to hand over the call to Daniella Finn, Elbit Systems VP, Investor Relations. Daniella, please go ahead.
Daniella Finn
Thank you, operator. Hello, everyone, and welcome to our fourth quarter 2025 earnings call. On the call with me today are Butzi Machlis, President and CEO; Kobi Kagan, CFO; and myself, Daniella Finn, VP, Investor Relations. Earlier today, we held an investor conference at Tel-Aviv Stock Exchange. A full recording of the event is available in the Investor Relations section of our website at www.elbitsystems.com. Before I 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. I would like to remind our listeners that the conference call today may contain forward-looking statements regarding the company and its subsidiaries business. Actual future results may differ materially from those forward-looking statements.
As usual, we will provide you with both GAAP financial data as well as certain supplemental non-GAAP information. We believe that this non-GAAP information provides additional transparency to better understand the performance of the ongoing business. You can find all the detailed GAAP financial data as well as the non-GAAP information and the reconciliation in today's press release. Kobi will begin by discussing the financial results, followed b...
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