This article first appeared on GuruFocus .
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Revenue:Increased by 15.5% to $2.189 billion compared to $1.896 billion in Q1 2025.
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Backlog:Surpassed $30 billion for the first time, with approximately 71% generated from outside of Israel.
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GAAP Gross Margin:25.2% of revenues, up from 24% in Q1 2025.
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Non-GAAP Gross Margin:25.5%, compared to 24.3% in Q1 2025.
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GAAP Operating Income:$205.1 million or 9.4% of revenues, up from $149.7 million or 7.9% in Q1 2025.
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Non-GAAP Operating Income:$222 million or 10.1% of revenues, compared to $165.1 million or 8.7% in Q1 2025.
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Net R&D Expenses:$150.4 million or 6.9% of revenues, up from $114.3 million or 6.1% in Q1 2025.
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GAAP Diluted EPS:$3.34, up 42% from $2.35 in Q1 2025.
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Non-GAAP Diluted EPS:$3.87, up 51% from $2.57 in Q1 2025.
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Net Cash Provided by Operating Activities:$281 million, compared to $184 million in Q1 2025.
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Free Cash Flow:$210 million, up 30% from $161 million in Q1 2025.
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Dividend:$1 per share to be paid on July 6, 2026.
Release Date: May 26, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Elbit Systems Ltd ( NASDAQ:ESLT ) reported a strong quarter with double-digit growth in revenues, operating profit, and EPS.
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The company's backlog reached a record $30.2 billion, with significant contributions from international markets.
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Revenues increased by 15.5% year-over-year, driven by strong demand across key markets, particularly in Europe and Israel.
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Elbit Systems Ltd ( NASDAQ:ESLT ) achieved a non-GAAP operating margin exceeding 10%, reflecting strong execution and performance.
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The company is investing in advanced R&D initiatives, including AI capabilities, to support sustainable growth and maintain its leadership position.
Negative Points
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Despite strong financial performance, Elbit Systems Ltd ( NASDAQ:ESLT ) faces increased R&D expenses, which rose to 6.9% of revenues.
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The company experienced a decrease in sales of medical devices, partially offsetting growth in other segments.
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Financial expenses, although reduced, still amounted to $32.2 million in the first quarter.
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The effective tax rate increased slightly to 13% compared to the previous year.
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Elbit Systems Ltd ( NASDAQ:ESLT ) is facing challenges in maintaining cost competitiveness and effectiveness amid rising demand.
Q & A Highlights
Q: How have your expectations for orders changed for the year, especially with the current conflict and growth out of Israel? A: Bezhalel Machlis, President and CEO, stated that the funnel of orders is stronger than ever, with growing potential in the US, Europe, Israel, Gulf countries, and the Far East. The company has a wide portfolio and local presence in many countries, which supports their strategy and growth potential.
Q: How are you thinking about capital deployment given your strong net cash position? A: Yaacov Kagan, CFO, mentioned that Elbit prioritizes R&D, with 7% of revenue allocated to self-funded R&D. They are also increasing CapEx investments to meet high demand and have doubled the dividend payout. The company is actively looking for acquisitions to enhance its portfolio.
Q: Can you discuss your anti-UAS portfolio and its relevance in the current conflict? A: Bezhalel Machlis highlighted investments in energy weapons, including High Power Laser systems, which are progressing well. The company is developing airborne High Power Laser systems and deploying counter-drone solutions in Israel and Europe. The segment is expected to grow in the future.
Q: With significant orders and a record backlog, what is the growth outlook for Elbit over the next three to five years? A: Yaacov Kagan stated that while they don't provide specific guidance, the company aims for mid-single-digit revenue growth this year and next. Bezhalel Machlis added that there is a huge funnel of new opportunities, and the company will continue to grow its revenues and improve margins.
Q: How is the demand environment evolving for the rest of the year, particularly for Land, ISTAR & EW segments? A: Yaacov Kagan expects Land to lead revenue expansion due to strong demand for land projects. ISTAR and C4I demand is also strong, and Elbit Systems America is performing well on both top and bottom lines.
Q: Can you elaborate on capacity investments and the medium-term outlook for CapEx? A: Yaacov Kagan explained that Elbit has invested in ERP systems and AI solutions. They are increasing investments in Land domain facilities and robotics to improve efficiency. The company aims for around 3% of revenues in CapEx investment in the near future.
Q: How is the supply chain and labor situation as you ramp up production? A: Bezhalel Machlis stated that supply chain issues have been resolved, with no current bottlenecks. The company is very vertical and has multiple suppliers for each element. On the labor front, Elbit recruited 2,000 people last year and plans to do the same this year, with no major recruitment issues.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
