01—Abstract
Summary
Summary of the 10-K filed February 8, 2016. Cited figures are marked; the original filing is the authoritative source.
General Dynamics Corporation (GD) reported robust financial performance for the fiscal year ended December 30, 2015.
The company demonstrated strong operational execution, with revenue increasing by 2.0% to $31.5 billiona. Notably, operating earnings reached a record high of $4.2 billion, a 7.4% increase year-over-year, leading to an operating margin of 13.3% and a return on sales of 9.4%. Diluted earnings per share from continuing operations also saw significant growth, increasing by 16% to $9.08.
The company's diversified business segments, including Aerospace, Combat Systems, Information Systems and Technology, and Marine Systems, contributed to this strong performance. The Aerospace segment benefited from increased Gulfstream aircraft deliveries, while Marine Systems saw growth from U.S. Navy ship construction. General Dynamics also returned substantial capital to shareholders through $3.2 billionb in share repurchases and $873 million in cash dividends, underscoring a commitment to shareholder value.
02—Key points
Key Highlights
- Revenue grew 2.0% to $31.5 billion, driven by Aerospace and Marine Systems.
- Record operating earnings of $4.2 billion, a 7.4% increase, with operating margin expanding to 13.3%.
- Diluted earnings per share from continuing operations reached $9.08, a 16% increase year-over-year.
- Strong free cash flow generation of $1.9 billion allowed for significant capital return to shareholders.
- Aerospace segment benefited from increased Gulfstream G650 deliveries and new aircraft development.
- Marine Systems experienced revenue growth due to higher U.S. Navy ship construction, particularly Virginia-class submarines.
- Total backlog remained substantial at $66.1 billion, providing visibility into future revenue streams.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2015, General Dynamics kept $0.10.
- Revenue$31.78B100.0%
- Cost of revenue−$19.07B60.0%
- Gross profit$12.71B40.0%
- Operating costs−$8.41B26.5%
- Operating income$4.29B13.5%
- Interest, other & tax−$1.26B4.0%
- Net income$3.04B9.6%
Where FY2015 revenue went
$31.78B- Cost of revenue: $19.07B, 60% of revenue
- Operating costs: $8.41B, 26% of revenue
- Net income: $3.04B, 9.6% of revenue
- Interest, other & tax: $1.26B, 4.0% of revenue
Kept 9.6% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 8, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $31.78B$30.85B | +3.0% |
| Cost of Revenue | $19.07B$15.34B | +24.4% |
| Gross Profit | $12.71B$15.52B | −18.1% |
| Operating Expenses | $27.49B$26.96B | +1.9% |
| Operating Income | $4.29B$3.89B | +10.4% |
| Interest Expense | $98.00M$103.00M | −4.9% |
| Net Income | $3.04B$2.53B | +19.9% |
| EPS (Basic) | $9.45$7.56 | +25.0% |
| EPS (Diluted) | $9.29$7.42 | +25.2% |
| Shares Outstanding (Basic) | 321.31M335.19M | −4.1% |
| Shares Outstanding (Diluted) | 326.65M341.33M | −4.3% |
05—Questions
Frequently Asked Questions
What were the primary drivers of revenue growth in 2015?
Revenue growth in 2015 was primarily driven by higher ship construction and engineering activity in the Marine Systems group and increased deliveries of Gulfstream G650 aircraft in the Aerospace group. While Combat Systems and Information Systems and Technology segments saw slight revenue decreases, overall company revenue increased by 2.0%.
How did General Dynamics manage costs and profitability?
General Dynamics focused on improving operating earnings and expanding margins through effective program execution, cost-reduction efforts across its business groups, and disciplined capital deployment. The company also benefited from improved performance in certain segments and the favorable mix of higher-priced aircraft deliveries in Aerospace.
What is the company's strategy for returning capital to shareholders?
The company returned significant capital to shareholders in 2015 through substantial share repurchases, totaling $3.2 billion, and cash dividends of $873 million. This demonstrates a commitment to enhancing shareholder value through capital allocation.
What is the outlook for General Dynamics' business segments in 2016?
For 2016, the Aerospace group expects modestly higher revenue and a somewhat lower margin. Combat Systems anticipates a slight revenue increase and a stable operating margin. Information Systems and Technology expects revenue to be consistent with 2015 with operating margins approaching double digits. Marine Systems anticipates consistent revenue with an improved operating margin.
06—Continue