Elbit Systems (ESLT) Q3 2024 earnings summary

Executive summary

• Achieved record order backlog of $22.1 billion as of Q3 2024, with 66% from outside Israel and 37% scheduled for delivery by end of 2025, supporting sustained revenue growth and business visibility.

• Q3 2024 revenue grew 14% year-over-year to $1.72 billion, with LTM Q3 2024 revenues at $6.5 billion, up from $6.0 billion in 2023.

• Non-GAAP EPS was $2.21 and GAAP EPS $1.77 in Q3 2024, both up from Q3 2023, marking the second consecutive quarter of double-digit EPS growth.

• Major contract wins included a $335 million European defense contract, a $200 million Iron Beam laser system order, and a $127 million Iron Fist system contract for the US Army.

• Expanded production facilities and workforce to meet elevated demand and address supply chain challenges, with a global workforce of around 20,000.

Financial highlights

• Q3 2024 non-GAAP gross margin was 24.4%, slightly down from 24.9% in Q3 2023; GAAP gross margin was 24% versus 24.5%.

• Non-GAAP operating income rose to $140.7 million (8.2% margin) from $120 million (8%) year-over-year; GAAP operating income was $125.8 million (7.3%) versus $106 million (7.1%).

• Non-GAAP EPS for LTM Q3 2024 was $7.66; GAAP EPS was $5.85.

• Operating cash flow for the nine months ended September 30, 2024, was an $83 million inflow, compared to a $200 million outflow in the prior year; LTM Q3 2024 operating cash flow was $397 million.

• Dividend declared at $0.50 per share, payable January 6, 2025.

Outlook and guidance

• Internal revenue target advanced to exceed $7 billion by 2025, with a 2026 non-GAAP operating margin goal of around 10%.

• Backlog coverage extends into 2026 and beyond, supporting expectations for continued double-digit growth and a 20% CAGR in backlog from 2020-2024.

• Internal EPS goals set at $9 for 2025 and $12 for 2026, effectively doubling EPS from 2023 to 2026.

• Book-to-bill ratio has shown a 10% CAGR over the last four years, indicating strong demand and future revenue visibility.

• Growth expected to be sustained beyond 2026, with further expansion possible through acquisitions.