Thank you, operator. Hello, everyone, and welcome to our fourth quarter 2025 earnings call.

On the call with me today are Butzi Machlis, President and CEO; Kobi Kagan, CFO; and myself, Daniella Finn, VP Investor Relations. Earlier today, we held an investor conference at the Tel Aviv Stock Exchange.

A full recording of the event is available in the Investor Relations section of our website at www.elbitsystems.com. Before I begin, I would like to point out to 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.

As usual, we will provide you with both GAAP financial data as well as certain supplemental non-GAAP information. We believe that this non-GAAP information provides additional transparency to better understand the performance of the ongoing business.

You can find all the detailed GAAP financial data as well as the non-GAAP information and the reconciliation in today's press release. Kobi will begin by discussing the financial results, followed by Butzi, who will elaborate on the main events during the quarter and beyond.

We will then turn the call over to a Q&A session. With that, I'd like to now turn the call over to Kobi.

Kobi, please go ahead.

Thank you, Daniella. Hello, everyone, and thank you for joining us today.

We are closing another strong year and quarter, delivering double-digit growth in revenues, operating profit, EPS, and backlog, which grew by $5.5 billion. In 2025, we also generated record free cash flow, surpassing the half billion dollar mark.

We are extremely proud of these results and the outstanding execution by our global teams. Taking a closer look into the fourth quarter results: Fourth quarter revenues increased by 11% to $2 billion 149 million compared to $1 billion 930 million in the fourth quarter of 2024.

This is the first time our quarterly revenues surpassing the $2 billion mark. Full-year 2025 revenues increased by 16% to $7 billion 939 million compared to $6 billion 828 million in 2024.

In terms of quarterly revenues by segments: C4I and Cyber revenues increased by 19% in the fourth quarter of 2025 as compared to the fourth quarter of 2024, mainly due to sales of radio and command and control systems in Europe and in Israel. ISTAR and EW revenues increased by 39%, mainly due to increased sales of maritime and electro-optic systems, which include electronic warfare and counter-UAS solutions.

Land revenues increased by 22%, mainly due to ammunition and munition sales in Israel and Europe. Elbit Systems of America revenues increased by 9%, mainly due to the increase in the sales of night vision and maritime systems, partially offset by the decrease in the sales of medical devices.

Aerospace revenue decreased by 14%, mainly due to training and simulation in Europe and higher sales of PGM in fourth quarter of 2024. We take great pride in our diverse global customer base, which is a key differentiator for Elbit and ensures we are not reliant on any single country's defense budget.

For the full year of 2025, Europe contributed 27% of revenues, North America 21%, Asia-Pacific 16%, and Israel contributed 32% of revenues. We expect Europe to be a meaningful growth engine going forward, following by Asia-Pacific.

GAAP gross margin in the fourth quarter was 24.7% of revenues compared to 24.1% in the fourth quarter 2024. GAAP gross margin for the full year 2025 was 24.4% compared to 24% at 2024.

Non-GAAP gross margin for the fourth quarter was 25% compared to the fourth quarter of 2024 at 24.5%. Non-GAAP gross margin for the full year 2025 was 24.7% compared to fourth quarter of 2024 at 24.5%.

GAAP operating income in the fourth quarter was $192 million, or 9% of revenues, as compared to $141 million, or 7.3% of revenues, in the fourth quarter of 2024. Non-GAAP operating income was $210 million, or 9.8% of revenues, in the fourth quarter of 2025 as compared to $157 million, or 8.2% of revenues, in the fourth quarter of 2024.

GAAP operating income for the full year 2025 was $671 million, or 8.5% of revenues, as compared to $489 million, or 7.2% of revenues, in 2024. Non-GAAP operating income for 2025 was $737 million, or 9.3% of revenues, as compared to $550 million, or 8.1% of revenues, in 2024.

I'm happy we have reached our internal targets for operating profit margins. The operating expense breakdown for the full year was as follows: Net R&D expenses were $517 million, or 6.5% of revenues, as compared to $466 million, or 6.8% of revenues, in 2024.

This increase is mainly due to investment in expanding our portfolio of precision-guided munitions, as well as increased investment in night vision solutions. Elbit continues to invest heavily in disruptive R&D initiatives, including advanced AI capabilities, to drive future profitable growth and reinforce the company's position as a market leader in the years ahead.

Our strategy focuses on development of advanced solutions funded both internally and in some cases partially supported by the Israeli Ministry of Defense, ensuring sustainable growth today and well into the future. Marketing and selling expenses were $399 million, or 5% of revenues, in 2025 as compared to $375 million, or 5.5% of revenues, in 2024.

G&A expenses were $347 million, or 4.4% of revenues, in 2025 as compared to $311 million, or 4.6% of revenues, in the same period last year. Financial expenses were $138 million in 2025 as compared to $151 million in 2024.

The decrease in financial expenses net in 2025 is mainly due to lower interest expenses and lower levels of debt. We recorded a tax expense of $55 million in 2025 compared to $39 million in 2024.

The effective tax rate in 2025 was 9.9% compared to 11.4% in 2024. The decrease in the tax rate in 2025 was as a result of the valuation allowance releases and adjustments to deferred taxes related to prior years, following tax settlements in some of the company's subsidiaries in Israel.

GAAP diluted EPS for the fourth quarter of 2025 was $3.52 compared to $2 in the fourth quarter of 2024. Once again, a significant double-digit EPS growth in the quarter.

Our non-GAAP diluted EPS was $3.56 in the fourth quarter of 2025 compared to $2.66 in the fourth quarter of 2024. GAAP diluted EPS for 2025 was $11.39 compared to $7.18 in 2024.

Non-GAAP diluted EPS was $12.75 in the full year of 2025 compared to $8.76 in 2024, well ahead of our internal targets. Our backlog of orders as of December 31st, 2025 was $28.1 billion, approximately $5.5 billion higher than the backlog at the end of 2024.

Approximately 72% of the current backlog was generated from outside of Israel. Approximately 54% of the backlog at the end of December is scheduled to be performed during 2026 and 2027, while the rest is scheduled to be performed during 2028 and beyond.

Backlog growth was driven by international customer demand. Net cash provided by operating activities in the year ended December 31st, 2025 was $778 million as compared to $535 million in the year ended December 31st, 2024.

Operating cash flows in 2025 were affected mainly by the increase in contract liabilities, offset by the increase in inventories and trade receivables. During 2025, we also delivered $553 million of free cash flow, up 73% from the $320 million free cash flow generated in 2024.

The Board of Directors has declared a dividend of $1 per share, yet another dividend increase for 2025 on the back of our strong results. I will now turn the call over to Mr.

Machlis, Elbit's President and CEO. Butzi, please go ahead.

Thank you, Kobi. I want to begin by acknowledging the remarkable dedication of our global workforce.

Despite the challenging reality of wartime here at home, our teams around the world continue to demonstrate exceptional focus and professionalism. Their consistent efforts, especially during this period of intensified demand for our advanced systems, are a testament to their resilience and commitment to our mission.

As Kobi just outlined, our Q4 and full year 2025 results are very strong. We achieved double-digit growth across all key metrics: sales, operating profit, earnings per share, and backlog.

In addition, during 2025, we generated a record free cash flow, surpassing the half billion dollar mark. During 2025, Elbit Systems achieved significant milestones, most notably securing contract from the IMOD for an airborne high-power laser combat jet fighter pod and for high-power laser solution for helicopters.

These contracts further strengthen Elbit's position as a world-leading supplier of next-generation directed energy weapons, including state-of-the-art military-grade high-power laser solutions. This has been a remarkable year for Elbit winning large-scale contracts.

We received our largest-ever contract from an international customer for a strategic solution worth approximately $2.3 billion. Earlier in the year, we won another large contract worth $1.6 billion to deliver a range of defense solutions to European countries.

Our PULS rocket artillery system continues to be a high runner for Elbit, especially in Europe. Our backlog for this product surpassed the $2 billion mark as more countries selected our agile and technologically advanced system.

In December, we reported that the Hellenic Parliament had approved a budget for the purchase of these systems for the Hellenic Armed Forces. Numerous contracts have been secured for our leading electric warfare, EW, system and our DIRCM self-protection solutions.

We continued winning contracts for our active protection system, the Iron Fist, for major European CV90 fleets, as well as follow-on contract for the US Army Bradley IFV upgrades. I am very proud with all these contract wins, which are translated into the exceptional financial performance we presented today.

The Iron Swords war continued for the most part of 2025. As in the Middle East, as one conflict ends, another begins.

In the past two weeks, Israel has played a major role in the Roaring Lion operation. As always, Elbit continues to support the IDF during these times, scaling up production to meet elevated demands.

Last week, the Israeli government approved a further addition to the defense budget of 39 billion Israeli shekels, about $13 billion US dollars. As we told you in the previous call at the end of Q3, we continued to expand our production facilities globally, and especially in Europe.

We are making significant strategic capex investments to address growing global capacity constraints, recognizing that capacity is a critical element of our long-term strategy. These include, among others, the continued investment in the Ramat Beka facility here in Israel, as well as expanding our production facilities in Germany, Sweden, Romania, in Europe, and in the US.

Europe accounted for 27% of Elbit's sales in 2025, surpassing the $2 billion mark. We believe Europe will remain our primary growth engine going forward, with Germany playing a central role.

This momentum was evident through the year, reflected the numerous contracts awarded across a wide range of systems, including our PULS rocket launchers, Iron Fist active protection solution, and multiple DIRCM programs, among others. We expect strong revenue growth from Europe as countries continue to rearm, supported by Elbit's well-established presence on the continent through our subsidiaries and joint ventures with leading local partners.

During 2025, Elbit continued to invest heavily in disruptive R&D programs, including AI enhancement across multiple platforms. As part of its strategy to develop advanced solutions self-funded or partially funded by the Israeli MOD, ensuring both current and future growth.

Dedicated cross-function AI teams are integrated intelligent capabilities across defense systems and core operations, strengthening decision-making, operational agility, and scalability as global demand continued to grow. In closing, Elbit enters 2026 stronger, more resilient, and better positioned than ever.

With a record backlog, breakthrough technology achievement, expanding capacity, and global team that delivers under the most demanding conditions, we are confident in our ability to sustain our growth and continue to create long-term value for our stakeholders. With that, I will be happy to take your questions.

Operator?

Hi, good afternoon, Butzi, Kobi, and Daniella. Maybe you guys called out the record backlog that the company has today.

Then we see the conflict, and Butzi, you mentioned it in your prepared remarks, that one conflict ends and another starts in the Middle East. With this global demand growing, can you talk about what your capacity or capex investments could mean in terms of potential maximum revenue that you could generate off of the incremental capacity increases?

Also as you increase your capex, when do we see this capacity opening up new revenue? How do we think about that with the supply issue that's coming out of the Red Sea?

Any context for the ability to meet this unprecedented high demand would be really helpful.

Hi, Kristine. Thank you for the question.

It's a combination of questions. I'll talk first to the capex investment.

The company increased capex investment this year to $225 million. We are consistently investing in capex nearly $200 million for the past 5 years.

We are planning to increase the spend this year in 2026 to around $300 million. This additional investment comes with stronger free cash flow.

We both increased the free cash flow and increasing capex, we are very happy with this result. Investing around $300 million will go specifically to invest in Israel and out of Israel.

We're not just investing in Israel, we are investing also outside of Israel in mostly factories for land capacity. We tripled the size of the factory in the southern part of Israel, the new ammunition and munition factory.

It was tripled. Additional investment are planned to meet the high demand, especially to munition demand.

We're also increasing investment in electronic assemblies factories in Israel and outside of Israel. By that, we feel comfortable with meeting the high demand, as you mentioned, the record backlog, and the very strong pipeline that we see ahead.

Butzi?

I would like to add, thank you, Kobi. I'd like to add that on top of our own investment, some customers of ours are investing with us here in Israel as well as abroad in order to create additional capacity, mainly around production.

Actually, every dollar that we invest, there is an additional investment by our customer. That's number one.

Number two, this year we believe that we will start delivering equipment from the Ramat Beka facility. Actually, it should happen quite soon.

It will be, and the Israel government has approved to continue working in the current facility we have in the central part of the country, in the current infrastructure we have. In parallel, we'll have two active production lines, which enable us to deliver the growing demand.

I also want to emphasize that our new facilities are all equipped with robotics and with a lot of AI in them in order to increase effectiveness and productivity. With the most advanced technology which is available in the market, we are working in some cases in three shifts in order to meet the demand.

With the new factories that we will start, some of them are active already and some we will start will be effective quite soon, I believe we'll be able to meet the current demand and the future demand. With regards to supply chain, Elbit, as part of its strategy, is a very vertical company.

We are trying to reduce dependencies from external suppliers, as part of our strategy. We develop our own diodes and our own detectors and many other examples.

Through this war, we have invested with the Israeli IMOD even more funds to be more vertical and to control our destiny. In areas where we are lacking material, we were able to create enough inventories to support the current and the future demand that we see.

Kobi, you want to add?

On top of what Butzi mentioned, we are also streamlining the Ramat Beka, this is the southern part of Israel factory, we are streamlining the factory processes, which will bring additional yields, additional effectiveness of this factory. Another more financial point, we saw 24% growth in our backlog during 2025 and 16% growth of revenue.

As Kristine, there should be convergence between those two numbers. That means that the potential of growth is very significant, a double-digit potential of growth also in the future.

Wonderful. Super helpful.

Thank you. If I could have a second question, you've called out the contract wins that you've had on directed energy, specifically on high-power lasers.

I was wondering, can you talk more about what's the breakthrough in technology that you were able to achieve here? Then also, when we think about fighting low-cost drone swarms, what's the role for this kind of equipment, and how is Elbit positioned?

I will say the following. First, currently, many countries are fighting against drones and against cruise missiles with air-to-air missiles.

That's a very expensive fight, and not sustainable. Because of that, we thought that bring high-power laser to the air will create a new situation where, actually, we are becoming the asymmetric player.

Putting high-power laser in the air enable us, at first, to overcome some of the challenges of the ground, as like weather, and dust, and turbulence. Flying above clouds will enable us to gain more ranges and to be more effective, and also to eliminate the threat far away from our borders.

Now, from a technical point of view, it's not an easy task. You need to miniaturize the element, and you need to, while moving, you need to lock yourself on a target in a very precise way.

We were able to overcome all these challenges, and we are very advanced in the development. When this solution will be mature and will be operational, I believe it will be a breakthrough in the way countries are defeating swarm and other type of threat.

There is a huge demand for such solutions in the market. We are a leading player in this domain.

We are controlling the entire technology in-house. We see currently a very big demand for such solutions worldwide, and I believe that it will bring Elbit a new stream of revenues and profit in the near future.

I also want to add that high-power laser is not just a defensive weapon, and as you can understand, it has more applications. That's an example, one example, of unique technologies that we are developing with our IR&D funds.

Actually, the company is investing more than half a billion dollar in R&D. On top of that, we get more R&D from our customers.

6.5% of our revenues we invest in R&D. We do it in order we are able to predict what will be the demand in the market in the future.

We understand the operational needs, we understand very well the technological opportunities we have, we are combining them both, and we are coming with new technology to the market. It is just one example.

As we speak, we develop more unique solutions that we'll present to you in the future.

Great. Thank you very much.

Hi, guys. Thanks for the question.

Just on your recent media reports about your PULS system in Europe, and you also received budget approval for an order from Greece. How do we think about the opportunity set there, and what differentiates that solution relative to peers?

What makes you win?

First, I want to say that with regard to the Greek opportunity, it's not a contract yet. We didn't receive it yet.

It was approved by the parliament, and we hope to get the contract soon, but it's not yet in our backlog. It's a big contract that we hope to get soon.

The same is true also in Germany. We got an initial contract in Germany for small quantity, and which is not yet a full production in Germany.

That's a potential that we believe that will mature in the future, but it's not yet in our backlog. We have a very unique solution.

First, it's a generic launcher which is able to fire different types of missiles for different ranges with different capabilities, which includes loitering munition as well, from short ranges to very long ranges, with different kinds of guidance solutions, all coming from Elbit. It's an open architecture, other solutions which are available with our customers can be implemented as well on top of the same launcher.

Not only that, we have a joint venture, partnership agreements with KNDS and with Diehl in Germany and with other partners in Europe to continue to develop and to produce fully this solution, the launcher and the rockets, in Europe. We call it EuroPULS.

It's a European solution that was tailored for the unique requirement of the modern battlefield, to the conclusions from the war in between Russia and Ukraine. It's operational already by many countries in Europe.

It was acquired by the Danish forces, by the Dutch, and by many other countries, not just in Europe, and we believe that the leading solution which is available currently in the market. We continue to develop it.

You will hear more about this product and about this system in the future.

Great, thank you. If I can just sneak in one more, profitability was very strong at 9.8% in the quarter and expanded across most segments, except for C4I and SR.

How are you thinking about the moving pieces to margins from here and across the different segments? Where is there more room for expansion, and where could there be pressure?

Hi, Alan. This is Kobi.

Thank you for the question. We see an expansion in margins now for the fourth consecutive year.

We are very happy with this result. It's an expansion of nearly a percent annually.

This is a trend that we see now, and we believe the expansion in margins will continue as we have the operational leverage with the very strong growth of revenues and with the stronger pipeline and backlog profitability, which turns into stronger profitability. We believe this will continue to the future.

As Butzi mentioned earlier, additional self-funded R&D that we're going to invest and we're going to continue increasing the self-funded R&D in the future, will not harm the bottom line. We will still maintain growth also in the OP level and also on the EPS level.

Great, thank you.

Thank you, Alan.

To everyone on the call, thank you for joining us today and for your continued support and interest in our company. Have a good day and goodbye.