Could you provide updates on R&D for IRON BEAM and supply chain for Solid Rocket Motors (SRM)?

Elbit is developing and delivering the high-power laser source for Rafael's IRON BEAM solution, with first units expected for integration soon and system deployment by year-end. They are also developing prime and airborne high-power solutions for the Israeli Air Force, noting international interest. No specific update on SRM supply chain was provided. “And we are starting the delivery -- we are starting to deliver the first unit to Rafael for integration quite soon, and we expect to deploy the system by the end of this year.”

Given the strong year-to-date growth, how should we think about potential deceleration in H2 2025 and the outlook for 2026, considering capacity and new orders?

Management reiterated internal targets of mid-teens growth for FY25 and double-digit growth for FY26, noting that recent contract announcements support the backlog needed for continued growth. They declined to provide formal guidance beyond these internal targets. “As you know, we mentioned that we are looking at 2025 at mid-teens. And this is our internal targets. And looking forward, of course, to 2026, again, our internal targets are double-digit growth also for next year.”

Can you provide more detail on segment performance, especially the 45% growth in Land, its sustainability, and where the new artillery award would be classified?

All segments performed well, with Land becoming the largest segment due to 45% YoY growth, driven by high demand for products like ammunition, Iron Fist, SIGMA Howitzer, and Rampage missile. Management expects this segment to continue growing in revenue and expand margins. The artillery award would be classified under the Land segment. “As you mentioned, land is especially became the biggest segment now on Elbit and with 45% increase year-over-year and almost more than $550 million. That will drive additional -- we believe, additional growth in this segment, which enjoys a very, very high demand for all the leading products.”

ESLT

Elbit Systems (ESLT) Q2 FY25 earnings call: guidance and Q&A

Earnings call· Jun 2025 (Q2 FY25)· Industrials· Aug 13, 2025

Source: earnings call transcript

Executive summary

Elbit Systems Ltd. Q2 FY25 — Strong Double-Digit Growth Across All Segments and Geographies

Elbit Systems delivered a robust second quarter, marked by strong double-digit growth across all financial parameters and business segments, driven by high demand in Europe and Israel. The company successfully completed a share offering to support future growth and capacity expansion, while also securing significant new contracts globally. Management highlighted continued margin expansion efforts and strategic investments in R&D and production capabilities, despite some geopolitical challenges and one-time expenses.

Highlights

Second quarter revenues increased by 21.3% year-over-year to $1.973 billion.
Non-GAAP operating income expanded to 8.9% of revenues, up from 8.0% in Q2 FY24.
Non-GAAP diluted EPS grew by 55.3% year-over-year to $3.23.
Order backlog reached $23.8 billion as of June 30, 2025, a 12% increase year-over-year.
Operating cash flow for the first six months of 2025 was $304 million, significantly up from $26 million in the prior year period.

Concerns

G&A expenses increased to 4.8% of revenues in Q2 FY25, up from 4.2% in Q2 FY24, mainly due to one-time expenses.
Financial expenses increased to $31.2 million in Q2 FY25, up from $29.1 million in Q2 FY24, impacted by exchange rate fluctuations.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year 2025 Revenue Growth	mid-teens high materiality	FY25	Medium
Full-year 2026 Revenue Growth	double-digit growth high materiality	FY26	Medium
ESA Margin Expansion	continued expansion medium materiality	FY26	High
IRON BEAM System Deployment	deploy the system by the end of this year medium materiality	Q4	High
Ramat Beka Site Initial Production	expected towards the end of this year medium materiality	Q4	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Europe Contributed 29% of total revenues in Q2 FY25, with robust demand and higher sales.	29%	—	—	—
North America Contributed 21% of total revenues in Q2 FY25, with robust demand and higher sales.	21%	—	—	—
Asia Pacific Contributed 13% of total revenues in Q2 FY25, with robust demand and higher sales.	13%	—	—	—
Israel Contributed 34% of total revenues in Q2 FY25, with robust demand and higher sales.	34%	—	—	—
Aerospace Aerospace revenue increased by 12% year-over-year in Q2 FY25. Mainly due to increase in Precision Guided Munition sales in Israel and Asia PacificUAS sales in Europe	—	12%	—	—
C4I and Cyber C4I and Cyber revenues increased by 21% year-over-year in Q2 FY25. Mainly due to radio systems and command and control system sales in Israel and in Europe	—	21%	—	—
ISTAR and EW ISTAR and EW revenues increased by 15% in Q2 FY25. Mainly due to electro-optical system sales in Israel and electronic warfare system sales in Europe	—	15%	—	—
Land Land revenues increased by 45% in Q2 FY25, becoming the biggest segment for Elbit. Expected to continue growing in revenue and expand margins. Due to ammunition and munition sales in Israel and in EuropeLeading products: Ammunition, Iron Fist, SIGMA Howitzer, Rampage missile	$550M+	45%	—	—
Elbit Systems of America Elbit Systems of America revenues increased by 4% in Q2 FY25. The segment has turned around from a loss in 2023, with continued margin expansion expected after flushing out losing contracts. Due to the increase in maritime and warfighters systems salesTurned around from a loss in 2023Q3 FY25 will be the last quarter of Sparton (losing contracts)	—	4%	—	expansion in margins

ESLT operating KPIs by quarter

ESLT operating KPIs stated on its earnings calls, by fiscal quarter
KPI	This call Jun 2025 Q2 FY25	Sep 2025 Q3 FY25	Change vs prior quarter
Backlog	$23.8B Our order backlog as of June 30, 2025, was $23.8 billion, $2.6 billion higher than the backlog at the end of the second quarter of 2024 and $626 million higher than the backlog in the first quarter of 2025. Source: earnings call transcript	$25.2B The order backlog as of September 30, 2025, was $25.2 billion, $3.1 billion higher than the backlog at the end of the third quarter of 2024, and $1.4 billion higher than the backlog in the second quarter of 2025. Source: earnings call transcript	+5.9%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Total Order Backlog $23.8B June 30, 2025

up 12% YoY; up $626M QoQ

68% from orders outside of Israel; 46% scheduled for remainder of 2025 and 2026; rest for 2027 and beyond.

Product announcements

Product	Type	Timeline	Details
IRON BEAM high-power laser source	milestone	first unit delivery soon, system deployment by end of 2025
ReDrone counter-drone system	expansion	—

Deals & partnerships

European country Deliver a range of defense solutions, including military digitization, network combat solution, Torch-X C4ISR, advanced working capabilities, Hermes 900, Skylark 3, loitering munitions, luminous soldier level tactical drones, ISTAR capabilities, EW, and SIGINT systems. $1.625B 5 years

Contract awarded to deliver a comprehensive suite of defense solutions, marking a significant milestone in Elbit's European expansion.

Airbus Supply J-MUSIC Directed Infrared Counter Measures (DIRCM) self-protection system for installation on German A400 transport aircraft. $260M

Contract awarded for DIRCM systems for the German A400 transport aircraft.

European country Supply PULS rocket launcher. $130M

Another contract win for the PULS rocket launcher in Europe.

U.S. Marine Corps Delivery order for SBNVG (Squad Binocular Night Vision Goggle) as part of a multiyear ID/IQ contract. $110M multiyear (ID/IQ)

Delivery order received for SBNVG systems.

General Dynamics European Land Systems Supply advanced UT30 unmanned turret system for installation on ASCOD armored fighting vehicles for a NATO European country. $100M

Contract awarded for UT30 unmanned turret systems.

International customers (including NATO member countries) Supply a broad range of advanced naval technological solutions, including electrical warfare and anti-submarine warfare systems, modernizing and upgrade programs, combat management systems. $330M

Several contracts awarded for naval technology solutions.

Israeli Ministry of Defense Supply airborne munitions. $250M

Two contract wins for airborne munitions.

Capital programs

Ramat Beka Production Site underway

Benefit:state-of-the-art facility with automated AI and robotic solutions for utmost facility efficiencies

Construction is continuing, with initial production expected towards the end of this year, despite some delays due to the ongoing conflict in the region.

Risks & headwinds

Geopolitical difficulties and conflict in the region Current

Some delays due to the ongoing conflict

Mitigation:Leveraging unique integrated solutions, operational experience, and local presence through 40 worldwide subsidiaries and partnerships to navigate challenges and expand market reach. Focus on exportable solutions.

One-time G&A expenses Q2 FY25

$93.9M G&A (4.8% of revenues) in Q2 FY25, up from $68.7M (4.2%) in Q2 FY24

Mitigation:Implied to be non-recurring, not a structural issue.

Losing contracts in Elbit Systems of America (ESA) Historically, with Q3 FY25 being the last quarter for Sparton's losing contracts

ESA was recording a loss in 2023

Mitigation:Flushing out losing contracts; Q3 FY25 will be the last quarter for Sparton, which is expected to lead to further margin expansion in ESA.

Exchange rate fluctuations impacting financial expenses Q2 FY25

$31.2M financial expenses in Q2 FY25 vs $29.1M in Q2 FY24

Mitigation:Not explicitly stated, but impact noted as due to 'relatively sharp fluctuations'.

What to watch in Q3 FY25

ESA Margin Expansion

Q3 FY25 and beyond

Current 4% revenue growth in Q2 FY25, turned around from loss in 2023

Target Continued expansion, especially after Q3 FY25

Why it matters

Indicates successful turnaround and improved profitability for the North American segment.

This next quarter, Q3 will be the last quarter of Sparton, the maritime company with the last quarter losing contracts. That will allow us to further increase -- to further expand the margins in Elbit Systems America this year and always will secure next year continued expansion in margin.

Find out whether ESLT delivers this. Inve re-checks your case every morning.

Q&A highlights

What will drive margin expansion in the second half of the year and beyond?

Management stated a commitment to continue improving margins, citing the new ERP system, operational leverage, and other means, having already achieved approximately 3% margin expansion over the last three years.

“As we demonstrated in the past, we are committed to continue improving the margin by our new ERP -- one ERP system, for instance, by operational leverage that is playing an important factor in the margin expansion and by other means.”

asked by Jordan Lyonnais · answered by Yaacov Kagan

2 min read 5 chapters

Detailed narrative

Strong Financial Performance and Margin Expansion

Elbit Systems reported strong double-digit year-over-year growth across all financial parameters, with revenues reaching $1.973 billion in Q2 FY25, up 21.3% from Q2 FY24. The company achieved non-GAAP operating income of $175.1 million, representing an 8.9% margin, an expansion from 8.0% in the prior year.

This margin improvement is attributed to company-wide efforts, including the implementation of a new ERP system and operational leverage, with management committed to further enhancing profitability.

Robust Backlog and Order Intake

The company's order backlog grew to $23.8 billion as of June 30, 2025, marking a 12% increase from Q2 FY24 and a sequential increase of $626 million from Q1 FY25. This growth was primarily driven by new international orders, with approximately 68% of the current backlog originating from outside Israel.

Management noted that 46% of the backlog is scheduled for performance during the remainder of 2025 and 2026, with the rest extending into 2027 and beyond, providing strong revenue visibility.

Strategic Investments and Capacity Expansion

Elbit continues to invest significantly in R&D, with expenses at $129.7 million or 6.6% of revenues in Q2 FY25, to develop cutting-edge technologies. The company also raised $573 million net from a successful share offering, which will be used to increase production capacity, meet growing demand, and potentially fund M&A activities for technology acquisition or global reach expansion.

The Ramat Beka production site, featuring automated AI and robotic solutions, is progressing with initial production expected by year-end.

Key Contract Wins and Product Traction

During and after the quarter, Elbit secured several significant contracts, including a $1.625 billion deal with a European country for military digitization and C4ISR solutions, a $260 million contract with Airbus for DIRCM systems for German A400 aircraft, and a $130 million order for PULS rocket launchers.

Other notable wins include a $110 million order for SBNVG from the U.S. Marine Corps, a $100 million contract for UT30 unmanned turrets for NATO, and $330 million in naval technology contracts. These wins highlight the company's broad portfolio and growing international footprint.

Geopolitical Context and Operational Experience

The CEO emphasized Elbit's unique position to offer advanced, integrated defense solutions, leveraging its operational experience, particularly from the recent conflict between Israel and Iran. The company's technologies, such as Hermes 900 drones and ISR systems, played a crucial role in supporting the IDF.

Elbit's strategy involves working through its 40 worldwide subsidiaries and partnerships, enabling local development, production, and job creation, which helps mitigate geopolitical sensitivities and expands market reach.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.