Elbit Systems Awarded a Group of Contracts in an Aggregate Amount of Approximately $760 Million for the Supply of Ammunitions to the Israeli Ministry of Defense

Rhea-AI Summary

On May 21, 2024, Elbit Systems (NASDAQ: ESLT, TASE: ESLT) announced that it has secured contracts totaling approximately $760 million for supplying ammunitions to the Israeli Ministry of Defense (IMOD). These contracts will be executed over a two-year period.

Elbit Systems noted a significant uptick in demand for its products since the beginning of the Swords of Iron war. This heightened demand from the IMOD may continue, potentially leading to additional substantial orders for the company.

Positive

• Elbit Systems secured contracts worth approximately $760 million.
• Contracts will be executed over two years, ensuring revenue inflow during this period.
• Increased demand for Elbit Systems' products amid the Swords of Iron war.
• Potential for additional substantial orders due to ongoing demand from the IMOD.

Negative

• Dependence on unpredictable future developments for sustained demand.
• Revenue heavily reliant on the continuation of current geopolitical conflicts.

Financial Analyst

The award of contracts worth $760 million to Elbit Systems is a significant development. Such a substantial influx of orders will likely bolster the company's revenue streams over the next two years. This figure represents a considerable boost to their financial outlook, especially given their $5.32 billion revenue in 2023. Investors should monitor this closely as it indicates a strong demand for their products. Given the context of increased demand due to the Swords of Iron war, it is essential to consider the sustainability of such orders in the long term. While the immediate financial gains are evident, the overall stability of ongoing conflict-related demand could wane, impacting future revenue streams.

Moreover, these contracts may contribute to improved profitability margins due to economies of scale. The larger order sizes typically reduce per-unit costs, benefiting the company's bottom line. Shareholders should also be aware that with larger contracts comes increased pressure to meet delivery timelines and maintain quality, which could lead to operational challenges if not managed efficiently.

Defense Industry Expert

From an industry perspective, Elbit Systems securing these contracts underscores the company's critical role within Israel's defense sector. The nature of these contracts, focused on ammunition supply, highlights the strategic importance of maintaining robust defense capabilities, especially during heightened conflict periods. This move may enhance Elbit's reputation as a reliable supplier, potentially leading to future contracts not only with the Israeli Ministry of Defense but also with other countries observing these developments. It is important to note that defense contracts often come with classified specifications, making it challenging for investors to gauge the full scope and intricacies of the products involved.

However, reliance on ongoing conflict-driven demand poses a dual-edged sword. While the current geopolitical environment favors Elbit Systems, any de-escalation in conflict could result in a sharp decline in orders. Thus, while the immediate outlook appears positive, the long-term sustainability of such high demand remains uncertain.

HAIFA, Israel, May 21, 2024 /PRNewswire/ -- Elbit Systems Ltd. (NASDAQ: ESLT) (TASE: ESLT) ("Elbit Systems" or the "Company") announced today, further to the report in its Annual Report on Form 20-F for the year ended December 31, 2023, filed on March 28, 2024, that it was awarded a group of contracts in an aggregate amount of approximately $760 million for the supply of ammunitions to the Israeli Ministry of Defense (IMOD). The contracts will be performed over a period of two years.

As previously reported by the Company, since the beginning of the Swords of Iron war, Elbit Systems has experienced a material increased demand for its products and solutions from the IMOD compared to the demand levels prior to the war. Subject to further developments, which are difficult to predict, the IMOD's increased demand for the Company's products and solutions may continue and could generate material additional orders to the Company.

About Elbit Systems

Elbit Systems is a leading global defense technology company, delivering advanced solutions for a secure and safer world. Elbit Systems develops, manufactures, integrates and sustains a range of next-generation solutions across multiple domains.

Driven by its agile, collaborative culture, and leveraging Israel's technology ecosystem, Elbit Systems enables customers to address rapidly evolving battlefield challenges and overcome threats.

Elbit Systems employs approximately 19,000 people in dozens of countries across five continents. In 2023, the Company reported approximately $6.0 billion in revenues and an order backlog of $17.8 billion.

For additional information, visit: https://elbitsystems.com, follow us on Twitter or visit our official Facebook, Youtube and LinkedIn Channels.

Company Contact:  

Dr. Yaacov (Kobi) Kagan, Executive VP - CFO
Tel:  +972-77-2946663
kobi.kagan@elbitsystems.com 

Dr. David Ravia, Investor Relations
Tel: +972-77-2947169
david.ravia@elbitsystems.com

Dalia Bodinger, VP, Communication & Brand
Tel: 972-77-2947602
dalia.bodinger@elbitsystems.com

This press release may contain forward–looking statements (within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Israeli Securities Law, 1968) regarding Elbit Systems Ltd. and/or its subsidiaries (collectively the Company), to the extent such statements do not relate to historical or current facts. Forward-looking statements are based on management's current expectations, estimates, projections and assumptions about future events. Forward–looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions about the Company, which are difficult to predict, including projections of the Company's future financial results, its anticipated growth strategies and anticipated trends in its business.  Therefore, actual future results, performance and trends may differ materially from these forward–looking statements due to a variety of factors, including, without limitation: scope and length of customer contracts; governmental regulations and approvals; changes in governmental budgeting priorities; general market, political and economic conditions in the countries in which the Company operates or sells, including Israel and the United States, among others, including the duration and scope of the current war in Israel, and the potential impact on our operations; changes in global health and macro-economic conditions; differences in anticipated and actual program performance, including the ability to perform under long-term fixed-price contracts; changes in the competitive environment; and the outcome of legal and/or regulatory proceedings. The factors listed above are not all-inclusive, and further information is contained in Elbit Systems Ltd.'s latest annual report on Form 20-F, which is on file with the U.S. Securities and Exchange Commission. All forward–looking statements speak only as of the date of this release. Although the Company believes the expectations reflected in the forward-looking statements contained herein are reasonable, it cannot guarantee future results, level of activity, performance or achievements. Moreover, neither the Company nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. The Company does not undertake to update its forward-looking statements.

Elbit Systems Ltd., its logo, brand, product, service and process names appearing in this release are the trademarks or service marks of Elbit Systems Ltd. or its affiliated companies.  All other brand, product, service and process names appearing are the trademarks of their respective holders.  Reference to or use of a product, service or process other than those of Elbit Systems Ltd. does not imply recommendation, approval, affiliation or sponsorship of that product, service or process by Elbit Systems Ltd. Nothing contained herein shall be construed as conferring by implication, estoppel or otherwise any license or right under any patent, copyright, trademark or other intellectual property right of Elbit Systems Ltd. or any third party, except as expressly granted herein.

 

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SOURCE Elbit Systems Ltd.

FAQ

What is the total value of the contracts awarded to Elbit Systems?

The total value of the contracts awarded to Elbit Systems is approximately $760 million.

Over what period will Elbit Systems execute the new contracts?

Elbit Systems will execute the new contracts over a period of two years.

What has caused the increased demand for Elbit Systems' products?

The increased demand for Elbit Systems' products is due to the Swords of Iron war.

Could Elbit Systems receive more orders from the Israeli Ministry of Defense?

Yes, the Israeli Ministry of Defense's increased demand may continue and could generate additional substantial orders for Elbit Systems.