Q2 2026 Elbit Systems Ltd Earnings Call Transcript
Key Points
- Record backlog of $32 billion, up 34% year-over-year, providing strong revenue visibility.
- Double-digit growth in revenues (15.9%), operating income, and EPS, with margins expanding beyond internal targets.
- Strong cash generation with operating cash flow of $237 million and free cash flow of $150 million in Q2 2026.
- Major contract wins, including $1.4 billion European program, $760 million PULS in Greece, and $370 million US border protection awards.
- Customers increasingly fund capacity expansion, reducing Elbit's capital burden and accelerating growth.
- Aerospace segment revenues declined 8% due to unfavorable project mix and lower training and simulation sales in Europe.
- Effective tax rate jumped to 16.4% from 5.6% due to OECD Pillar II rules, impacting net income.
- Increased R&D spending of $70 million in H1 2026, partially funded by company resources, pressures near-term profitability.
- Revenue growth (16%) lags backlog growth (34%), indicating potential delays in converting orders to sales.
- Dependence on Israel for 37% of revenues exposes the company to regional geopolitical risks.
Ladies and gentlemen, thank you for standing by. Welcome to Elbit Systems' second quarter 2026 results conference call. (Operator Instructions) As a reminder, this conference is being recorded.
I would now like to hand over the call to Daniella Finn, Elbit Systems' VP, Investor Relations. Daniella, please go ahead.
Thank you, operator. Hello, everyone, and welcome to our second quarter 2026 earnings call. On the call with me today are Butzi Machlis, President and CEO; Kobi Kagan, CFO; and myself, Daniella Finn.
Before we begin, I would like to point out that the Safe Harbor statement in the company's press release issued earlier today also refers to the contents of this conference call. I would like to remind all listeners that the conference call today may contain forward-looking statements regarding the company and its subsidiaries' business. Actual future results may differ materially from those forward-looking statements.
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