Elbit Systems (ESLT) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenues reached $1.63 billion, up 12% year-over-year, with a record order backlog of $21.1 billion, driven by strong demand in Israel and internationally.

• International revenues accounted for 69–73% of total revenue, with significant growth in Israel due to increased defense needs.

• The company is executing a transformation plan targeting $7 billion in revenues and a 10% operating margin ahead of schedule.

• Global presence with ~19,000 employees, subsidiaries in multiple countries, and headquarters in Haifa, Israel.

• Largest defense company in Israel, primary supplier to IDF across multiple domains, and diversified client base.

Financial highlights

• Q2 2024 revenues: $1,626 million, up from $1,454 million in Q2 2023 (12% growth).

• Non-GAAP gross margin was 24.4% (down from 26.1%); GAAP gross margin was 24% (down from 25.6%).

• Non-GAAP operating income was $130.5 million (8% margin); GAAP operating income was $116.5 million (7.2% margin).

• Non-GAAP diluted EPS was $2.08 (up 26%); GAAP diluted EPS was $1.76 (up 26%).

• Operating cash flow for H1 2024 was $26 million inflow, compared to a $210.7 million outflow in H1 2023.

Outlook and guidance

• Management reiterated the internal target of 10% non-GAAP operating margin by 2026, supported by increased product mix and operational efficiency.

• Positive free cash flow is expected for 2024, contingent on continued timely payments and inventory management.

• Significant portion of backlog to be executed in the next 18 months, supporting near-term revenue visibility.

• Backlog and revenue growth accelerated, with backlog CAGR of 20% and revenue CAGR of 9% from 2020–2024.

• Management highlights sustained R&D investment (7% of sales) and focus on technology leadership.