Elbit Systems Q2 2025 Earnings Call Transcript: Key Highlights and Analysis

Elbit Systems Ltd reported Q2 2025 earnings, with President and CEO Butzi Machlis and CFO Kobi Kagan participating in the call. The company provided GAAP and non-GAAP financial data, with the non-GAAP information aimed at helping to understand the ongoing business performance. Details of the financial data can be found in the company's press release issued earlier that day.

Elbit Systems Ltd, a leading international high technology defense company, reported its second quarter (Q2) 2025 earnings on July 2, 2025. The company provided both GAAP and non-GAAP financial data, offering investors a comprehensive view of its business performance. The earnings call was led by President and CEO Bezhalel (Butzi) Machlis and CFO Kobi Kagan.

The company reported revenues of $1,972.7 million in Q2 2025, an increase of 21% year-over-year (YoY) compared to the same period in 2024. Aerospace revenues grew by 12%, driven by increased sales of Precision Guided Munition (PGM) in Israel and Asia Pacific, and UAS sales in Europe. C4I and Cyber revenues increased by 21%, primarily due to sales of radio systems and command and control systems in Israel and Europe. ISTAR and EW revenues rose by 15%, with growth in Electro-Optic systems sales in Israel and Electronic Warfare systems sales in Europe. Land revenues increased by 45%, with ammunition and munition sales in Israel and Europe contributing significantly. Elbit Systems of America revenues grew by 4%, driven by the increase in Maritime and Warfighters systems sales.

Non-GAAP gross profit for Q2 2025 was $480.4 million, representing 24.4% of revenues, up from $396.2 million in the same period last year. Research and development expenses, net, were $129.7 million, accounting for 6.6% of revenues, while marketing and selling expenses, net, stood at $91.5 million, representing 4.6% of revenues. General and administrative expenses, net, were $93.9 million, up from $68.7 million in Q2 2024, mainly due to one-time expenses incurred during the quarter.

GAAP operating income for Q2 2025 was $157.8 million, up 8.0% YoY, while non-GAAP operating income was $175.1 million, representing an 8.9% increase. Financial expenses, net, were $31.2 million, and taxes on income were $7.1 million, resulting in an effective tax rate of 5.6%. GAAP net income attributable to shareholders was $125.7 million, up 52.3% YoY, while non-GAAP net income was $151.0 million, representing a 63.7% increase.

The company's order backlog as of June 30, 2025, totaled $23.8 billion, with approximately 68% of the backlog attributable to orders outside of Israel. The order backlog is expected to generate significant revenue in the remainder of 2025 and 2026.

The earnings call also discussed the impact of recent conflicts in the Middle East, with Elbit Systems experiencing a material increase in demand for its products and solutions from the Israel Ministry of Defense (IMOD) compared to pre-war levels. Despite the ongoing conflict, Elbit Systems' operations continue to operate uninterrupted, and the company remains committed to its long-term strategy and investments.

The company's strong financial performance is reflected in the positive analyst estimates. The consensus estimate for Q2 2025 revenue is $6.45 billion, and earnings are expected to come in at $8.23 per share. The full year 2025 revenue is expected to be $26.42 billion, with earnings of $34.83 per share. Over the past 90 days, revenue estimates for Elbit Systems have increased, and earnings estimates have also improved [2].

Elbit Systems' stock price has been affected by the earnings report, with the company's one-year price targets ranging from $860.61 to $1,665.14, with an average target of $1,263.12. The average target implies a downside of -18.19% from the current price of $1,544. The estimated GF Value for Elbit Systems Ltd in one year is $1,036.99, suggesting a downside of -32.84% from the current price. The consensus brokerage recommendation is an "Outperform" status [2].

References:
[1] https://www.elbitsystems.com/news/elbit-systems-reports-second-quarter-2025-results
[2] https://www.gurufocus.com/news/3055376/what-to-expect-from-elbit-systems-ltd-xtaeeslt-q2-2025-earnings