Elbit's Order Blitz Buoys Q4 Revenue, But Profit Margins Erode

Elbit Systems Ltd. ESLT reported fourth-quarter FY23 revenue of $1.625 billion, beating the consensus of $1.525 billion.

Segment revenues: Aerospace $503.4 million (+3% Y/Y), C4I and Cyber $188.6 million (flat Y/Y), ISTAR and EW $304.9 million (+15% Y/Y), Land $369.4 million (+30% Y/Y) and Elbit Systems of America (ESA) $409.5 million (-2% Y/Y).

ESLT’s backlog of orders, as of 2023, totaled $17.8 billion. Adjusted EPS declined to $1.56 from $1.71 a year ago, beating the consensus of $1.38.

Adjusted gross margin contracted to 25.3% from 25.8% a year ago, and adjusted operating margin declined to 6.4% from 6.9% in the last year quarter. 

The company’s operating cash flows came in at $113.7 million in 2023 vs. $240.1 million in the prior year.

Bezhalel (Butzi) Machlis, President and CEO, said, “Elbit Systems is committed to supporting the increased requirements of the Israel Ministry of Defense as well as maintaining our commitments to all our customers around the world.”

“The acceleration in revenue growth reflects the successful implementation of our operational transformation plan, as we increase capacity to convert a growing backlog into revenues,”

Dividend: ESLT declared a dividend of $0.50 per share, payable on May 6, 2024, to the shareholders of record date on April 24, 2024.

Earlier this month, the company disclosed that it expects to record non-cash expenses of approximately $52 million in the fourth quarter of 2023. 

The expenses are related to the write-off of inventory due to the closing of an underperforming subsidiary with limited synergies and contract assets related to a discontinued project managed under the subsidiary.

Price Action: ESLT shares are up 1.13% at $206.50 premarket on the last check Tuesday.