Elbit Systems Ltd. Q4 FY2025 earnings call

Kobi mentioned that 2025 saw double - digit growth in revenues, operating profit, EPS, and backlog, with record free cash flow. He detailed the fourth - quarter and full - year revenue growth and the growth of each segment. Bootsy acknowledged the dedication of the global workforce, mentioned significant milestones like securing contracts from IMD for directed energy weapons, large - scale contracts won, production expansions globally, especially in Europe, and heavy investment in disruptive R&D including AI capabilities, and support for the IDF during wartime, with Europe expected to be a main growth engine.

Fourth - quarter revenues increased by 11% to $2,149,000,000 compared to $1,930,000,000 in the fourth quarter of 2024. Full - year 2025 revenues increased by 16% to $7,939,000,000 compared to $6,828,000,000 in 2024. C4I and cyber revenues increased by 19% in the fourth quarter of 2025. ISTAR and EW revenues increased by 39%. Land revenues increased by 22%. Elbit systems of America revenues increased by 9%. Aerospace revenue decreased by 14%. For the full year of 2025, Europe contributed 27% of revenues, North America 21%, Asia - Pacific 16%, and Israel contributed 32% of revenues. Gap gross margin in the fourth quarter was 24.7% of revenues compared to 24.1% in the fourth quarter of 2024. Gap gross margin for the full year 2025 was 24.4% compared to 24% in 2024. Non - gap gross margin for the fourth quarter was 25% compared to 24.5% in the fourth quarter of 2024. Non - GAAP gross margin for the full year 2025 was 24.7% compared to 24.5% in the fourth quarter of 2024. GAAP operating income in the fourth quarter was $192 million, or 9% of revenues. Non - GAAP operating income was $210 million, or 9.8% of revenues in the fourth quarter of 2025. GAAP operating income for the full year 2025 was $671 million or 8.5% of revenues. Non - GAAP operating income for 2025 was $737 million or 9.3% of revenues. Net R&D expenses were $517 million or 6.5% of revenues in 2025. Marketing and selling expenses were $399 million, or 5% of revenues in 2025. G&A expenses were $347 million or 4.4% of revenues in 2025. Financial expenses were $138 million in 2025. The effective tax rate in 2025 was 9.9% compared to 11.4% in 2024. Diluted EPS for the fourth quarter of 2025 was $3.52 compared to $2 in the fourth quarter of 2024. GAAP diluted EPS for 2025 was $11.39 compared to $7.18 in 2024. Non - GAAP diluted EPS was $12.75 in the full year of 2025, compared to $8.76 in 2024. Backlog of orders as of December 31st, 2025 was $28.1 billion. Natcash provided by operating activities in the year ended December 31st, 2025 was $778 million. Operating cash flows in 2025 were $553 million of free cash flow.

The company plans to increase CapEx in 2026 to around $300 million, investing in factories in Israel and outside to meet high demand. There is expectation of continued growth in revenues, with directed energy weapons expected to bring new revenues and profits, and Europe remaining a key growth market with ongoing R&D and investment to support future growth.

Mentioned the ongoing conflict in the Middle East which could impact supply and demand, risk of dependence on external suppliers in the supply chain, and technical challenges in the development of directed energy weapons.

Q: Christine Lewag asked about capacity, CapEx, and supply in relation to high demand and Red Sea issues.

A: Kobi and Bootsy responded about CapEx investment of $225 million in 2025 and plan to increase to $300 million in 2026, investment in Israeli and overseas factories, including tripling the ammunition and munition factory in Israel, and efforts to reduce supply chain dependencies.

Q: Christine Lewag asked about directed energy technology breakthroughs and role in fighting drone swarms.

A: They explained that high - power lasers in the air offer a more sustainable solution to fighting drones and swarms, overcame technical challenges, and see huge market demand.

Q: Another question about Europe market opportunity and what differentiates the product.

A: They talked about the EUOPUS solution, its generic launcher, open architecture, joint venture partnerships in Europe, and its adoption by multiple European countries.

Q: Question about margins and future pressure.

A: Kobi said margins have expanded for four consecutive years and expect continued expansion with operational leverage from revenue growth and R&D investment.