*

Q1 adjusted EPS $2.57 vs $1.81

*

Revenue gains 22% to $1.9 billion, aerospace sales rise

20%

*

Gaza war, higher global defence spending boost revenue

*

Order backlog tops $23 billion, 66% is from outside Israel

(Adds CEO comments throughout, shares in paragraph 4)

By Steven Scheer

TEL AVIV, May 20 (Reuters) - Israel's largest defence

firm Elbit Systems reported higher first-quarter

profit on Tuesday, and said it expects a laser system to knock

out incoming missiles to be operational by year end.

Elbit said it earned $2.57 per diluted share excluding

one-time items in the first quarter of 2025, up from $1.81 a

year earlier.

The results were boosted by a 20% increase in aerospace

sales, largely of precision-guided munitions from which revenue

rose 22% to $1.9 billion.

Shares in the company were up 2.4% in Tel Aviv.

More than 32% of Elbit's revenue came from Israel, where

the country has been fighting Palestinian militant group Hamas

in Gaza since October 7, 2023. The company has supplied

munitions, drones, guided rocket systems, reconnaissance

capabilities and other systems.

As numerous global conflicts boosted national defence

budgets, Elbit's backlog of orders reached $23.1 billion. Some

66% of the backlog is from outside Israel, while 51% of the

orders are scheduled to be fulfilled during 2025 and 2026.

"The company is growing rapidly," CEO Bezhalel Machlis told

Reuters. "I see still a growing demand in the Israeli market,

and hopefully this war will end soon. Israel's (military) needs

are very big ... but strategically, growth should come from

abroad."

Machlis noted that higher defence spending in the U.S.

and Europe will bolster Elbit, which makes drones, avionics,

munition-guided missiles, electro-optics and electronic warfare

systems and has numerous subsidiaries around the world.

Elbit has also been co-developing Iron Beam that will

complement Israel's Iron Dome anti-missile system which has been

used to intercept thousands of rockets fired by Hamas militants

in Gaza, Hezbollah from Lebanon and the Houthis in Yemen.

Machlis believes this ground-based system will be ready

for deployment in 2025 and be "an operational breakthrough."

Another "game-changer", he added, will be a similar

laser system that can be used airborne. "It's still under

development and will take time," Machlis said. "Laser is just

one example for different types of energy weapons that we are

developing."

"I see growth coming for energy weapons this year and

next year. There is huge interest in these solutions."

Elbit said it would pay a quarterly dividend of 60 cents

a share, the same as in the fourth quarter.