Israeli company Elbit Systems Ltd. (Nasdaq: ESLT; TASE:ESLT) has since a rise in demand for its solutions since the outbreak of the war on October 7. The company has increased its production efforts and hired hundreds of new employees, while at the same time 2,000 of its employees (15% of employees in Israel and 10% of its overall workforce) have been called up for army reserve duty.
Elbit today published its third quarter financial results. Revenue in the third quarter of 2023 was $1.5 billion, up 11.3% from $1.35 billion in the third quarter of 2022. Revenue in the first nine months of the year was $4.3 billion, up 8.6% from the corresponding period of 2022.
GAAP net profit in the third quarter of 2023 was $60.9 million, up 8.2% from the corresponding quarter of 2022. GAAP net profit in the first nine months of the year was $185 million, down 2.4% from the corresponding period of last year. Non-GAAP net profit in the third quarter was $73.5 million, up 6.3% the third quarter of 2022. Non-GAAP net profit in the first nine months of the year was $219 million, up 7.8% from the corresponding period of 2022.
Elbit Systems ended the third quarter with an increase of $500 million in its backlog of orders to $16.6 billion. It can be assumed that orders have been growing in the fourth quarter from Israel's Ministry of Defense but no details have been provided.
"15% of employees have been called up to the army reserves"
Elbit Systems president and CEO Bezhalel Machlis said, "The third quarter was a good quarter in which we saw an increase of nearly $2 billion in the backlog of orders compared with last year and there was 11% growth in sales and an improvement in operational profitability while we streamlined management and general expenditure. We are continuing to improve gradually. We have a strategic target to reach $6.5 - $7 billion revenue in the medium term, and as it looks at the moment, we will exceed this target and reach the target of 10% operational profitability."
He added, "During the fighting we have provided many systems to the IDF. We are integrated into the combat efforts of all branches of the armed forces and work around the clock. Although 15% of our employees in Israel have been called into the reserves, we moved employees to focus the effort, we taken in hundreds of new employees for production lines and brought back more than 100 retirees. People are working much longer hours today than before. However, we remember that 80% of our sales are around the world, and we have dozens of subsidiaries worldwide that are a tremendous strength. We continue to maintain contact with customers around the world, providing them with products. We have received hundreds of letters of support from customers around the world. We see great opportunities ahead of us in the world, which will ensure the continued growth of the company."
In addition to increasing production efforts, Machlis says that Elbit employees have also volunteered to help in agriculture, have been giving out laptops to people in the Gaza border region and Elbit has provided communication apps to over 300 emergency security teams throughout the country.
Do you see an influence in increased demand from abroad due to the war in Israel as perhaps there was after the war in Ukraine broke out?
"At the moment no. Procedures for sales abroad take a long time. It is not connected to the war but we see an opportunity here. The beauty at Elbit is that we have a very broad portfolio in the naval, land, intelligence and armaments fields and more. The portfolio is dispersed so the risk is low."
In the past there have been delays in payments from the Ministry of Defense. Is there not a concern here today when you are providing more solutions to it because of the war?
"The Ministry of Defense has not paid its full debt but there is an absolute commitment to settle all debts in the fourth quarter, so that concern does not exist."
Elbit Systems is traded on Nasdaq and TASE at a market cap of $9.44 billion. The share price has risen 30.5% since the beginning of 2023 and 2% since the start of the war.
Published by Globes, Israel business news - en.globes.co.il - on November 28, 2023.
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