10-KPeriod: FY2015

GENERAL DYNAMICS CORP Annual Report, Year Ended Dec 31, 2015

Filed February 8, 2016For Securities:GD

Summary

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 billion. 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 billion in share repurchases and $873 million in cash dividends, underscoring a commitment to shareholder value.

Financial Highlights

56 data points
Beta

Revenue

$31.78B

40.0% Gross Margin

Net Income

$3.04B

9.6% Net Margin

EPS (Diluted)

$9.29

Total Assets

$32.54B

Cash & Equivalents

$2.79B

Free Cash Flow

$2.04B

Financial Statements
Beta
Revenue$31.78B
Cost of Revenue$19.07B
Gross Profit$12.71B
Operating Expenses$27.49B
Operating Income$4.29B
Interest Expense$98.00M
Net Income$3.04B
EPS (Basic)$9.45
EPS (Diluted)$9.29
Shares Outstanding (Basic)321.31M
Shares Outstanding (Diluted)326.65M

Key Highlights

  • 1Revenue grew 2.0% to $31.5 billion, driven by Aerospace and Marine Systems.
  • 2Record operating earnings of $4.2 billion, a 7.4% increase, with operating margin expanding to 13.3%.
  • 3Diluted earnings per share from continuing operations reached $9.08, a 16% increase year-over-year.
  • 4Strong free cash flow generation of $1.9 billion allowed for significant capital return to shareholders.
  • 5Aerospace segment benefited from increased Gulfstream G650 deliveries and new aircraft development.
  • 6Marine Systems experienced revenue growth due to higher U.S. Navy ship construction, particularly Virginia-class submarines.
  • 7Total backlog remained substantial at $66.1 billion, providing visibility into future revenue streams.

Frequently Asked Questions

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%.

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.

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.

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.