Elbit Systems orders backlog grows to record $22b

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CEO Bezhalel Machlis: We are developing an airborne laser, and are about to inaugurate a new UAV factory.

Defense company Elbit Systems (TASE: ESLT; Nasdaq: ESLT) reported another record orders backlog at the end of the third quarter: $22.1 billion, representing growth of $1 billion during the quarter. Quarterly revenue grew 14.3% in comparison with the corresponding quarter of 2023, to $1.7 billion. In the first nine months of this year, revenue was up 12.6% in comparison with the corresponding period of 2023, at $4.9 billion.

On a non-GAAP basis, the company posted a net profit of $98.8 million (5.8% of revenue) for the third quarter, which compares with $76.5 million (5.1% of revenue) in the third quarter of 2023. On a GAAP basis, net profit in the third quarter of 2024 was $79.1 million (4.6% of revenue), which compares with $60.7 million (4.0% of revenue) in the third quarter of 2023.

Non-GAAP diluted net earnings per share attributable to the company's shareholders were $2.21 for the third quarter of 2024, which compares with $1.71 for the third quarter of 2023. On a GAAP basis, diluted earnings per share attributable to the company's shareholders in the third quarter of 2024 were $1.77, which compares with $1.36 in the third quarter of 2023.

How far is the company’s current production capacity in line with demand?

Elbit Systems CEO Bezhalel Machlis: "We have invested a great deal both in capital equipment and in stocks, in order to increase our production capacity. We shall shortly inaugurate a new UAV factory; we have introduced automation and robotics into our production lines, and in the case of some lines this has raised output tenfold. We shall continue the work at Ramat Hasharon, alongside the new factory at Ramat Beka, and we are investing in additional production lines. We have expanded the number of our suppliers in order to deal with the large orders, and our workforce is also growing, and will continue to grow over the coming year."

Is the Ministry of Defense buying from you instead of from overseas suppliers, given that there is a sort of embargo on Israel?

"No. The State of Israel and the Ministry of Defense, as a strategy, prefer to buy as much as possible in Israel. We are feeling supply chain difficulties, but we are managing to overcome them with alternatives and with stocks. The supply chain difficulties arise from suppliers that in the past supplied goods to the State of Israel, and will not do so today. There aren’t many of them, but there are some, and there are alternatives to all of them. Besides that, there are difficulties in shipping goods to Israel."

Your share price has recovered recently, with a 30% rise in the past three months. What does the market understand now that it didn’t understand before?

"I think that there is great interest in our stock, thanks to our strategy, and the fact that, despite the war, Elbit has managed to generate growth in all fields and in all geographies. There’s stability, forecasts have been brought forward, and we have gone into new fields. We are developing an airborne laser, for example. In my view, all this, together with consistent improvement in profit, is finding expression in the share price."

Elbit Systems has a market cap of $10.6 billion.

Published by Globes, Israel business news - en.globes.co.il - on November 19, 2024.

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