Elbit Systems Ltd. (ESLT) Cash Flow Statement

The persistent premium of operating cash flow over net income suggests that non-cash charges like depreciation and amortization are significant, and that the company is effectively managing its percentage-of-completion billing cycles. This strong conversion provides a reliable foundation for funding operations and investments without relying on external financing.

The turnaround in FCF trajectory appears driven by the scaling of operating cash flow, which grew from a negative $6.4 million in 2024Q1 to $236.7 million in 2026Q2. This improvement suggests the company is now harvesting returns from its prior capital expenditures and backlog conversion, though the lumpy nature of quarterly FCF warrants monitoring.

The significant negative working capital change in the latest quarter likely reflects a build-up in inventory and receivables to support the $23.8 billion backlog, which may indicate a ramp-up in production. Investors should monitor whether this represents a temporary timing issue or a potential bottleneck in converting orders to cash.

The low capital intensity, with CapEx/Rev averaging 3.2%, indicates that Elbit's competitive advantage is not tied to massive physical infrastructure but to its engineering talent and integration capabilities. This structure allows for higher operating leverage and supports the strong cash conversion profile observed.

The steady increase in dividend payments, which have more than doubled over the period, suggests management's confidence in the sustainability of cash flows. The absence of buybacks and limited acquisition activity indicates a preference for funding growth internally and maintaining balance sheet strength, which aligns with the low debt profile.