01—Abstract
Summary
Summary of the 10-K filed February 6, 2017. Cited figures are marked; the original filing is the authoritative source.
General Dynamics Corporation's 2016 Form 10-K highlights a robust year characterized by strong operating performance and strategic capital deployment.
The company, a global aerospace and defense leader, reported stable revenue of $31.4 billiona, coupled with record operating earnings of $4.3 billion and an improved operating margin of 13.7%. This financial strength was supported by growth in its defense segments, particularly Marine Systems and Information Systems and Technology, which offset a planned decrease in aircraft deliveries within the Aerospace group. The company demonstrated a strong commitment to shareholder returns, repurchasing $2 billion in stock and increasing its dividend.
General Dynamics also maintained a significant backlog of $59.8 billionb, providing visibility into future revenue streams. The report underscores the company's focus on innovation, operational efficiency, and disciplined execution across its diverse portfolio, positioning it well for continued success in the aerospace and defense sectors.
02—Key points
Key Highlights
- Revenue remained stable at $31.4 billion in 2016, with operating earnings reaching a record $4.3 billion.
- Operating margin improved to 13.7%, driven by strong performance in defense segments and cost management.
- The company returned approximately $2.9 billion to shareholders through share repurchases ($2 billion) and dividends ($0.9 billion).
- Total backlog stood strong at $59.8 billion at year-end 2016, indicating robust future business.
- The Marine Systems segment saw revenue growth, primarily due to increased U.S. Navy ship construction and engineering work.
- The Information Systems and Technology segment experienced revenue growth driven by C4ISR solutions, despite a decrease in IT services.
- The Aerospace segment reported lower revenue due to planned fewer aircraft deliveries but improved its operating margin.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, General Dynamics kept $0.08.
- Revenue$30.56B100.0%
- Cost of revenue−$24.90B81.5%
- Gross profit$5.67B18.5%
- Operating costs−$1.92B6.3%
- Operating income$3.74B12.3%
- Interest, other & tax−$1.17B3.8%
- Net income$2.57B8.4%
Where FY2016 revenue went
$30.56B- Cost of revenue: $24.90B, 81% of revenue
- Net income: $2.57B, 8.4% of revenue
- Operating costs: $1.92B, 6.3% of revenue
- Interest, other & tax: $1.17B, 3.8% of revenue
Kept 8.4% as net incomeNet income $2.57B · 8.4%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed February 6, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $30.56B$31.78B | −3.8% |
| Cost of Revenue | $24.90B$19.07B | +30.5% |
| Gross Profit | $5.67B$12.71B | −55.4% |
| Operating Expenses | $26.82B$27.49B | −2.4% |
| Operating Income | $3.74B$4.29B | −12.8% |
| Interest Expense | $99.00M$98.00M | +1.0% |
| Net Income | $2.57B$3.04B | −15.3% |
| EPS (Basic) | $8.44$9.45 | −10.7% |
| EPS (Diluted) | $8.29$9.29 | −10.8% |
| Shares Outstanding (Basic) | 304.71M321.31M | −5.2% |
| Shares Outstanding (Diluted) | 310.39M326.65M | −5.0% |
05—Questions
Frequently Asked Questions
What was General Dynamics' overall financial performance in 2016?
General Dynamics demonstrated strong financial performance in 2016, with revenue holding steady at $31.4 billion and operating earnings reaching a record $4.3 billion. The operating margin improved to 13.7%, reflecting effective cost management and strong performance in its defense-related business groups.
How did the company prioritize shareholder returns in 2016?
The company returned approximately $2.9 billion to shareholders in 2016 through share repurchases totaling $2 billion and dividend payments of $0.9 billion. This reflects a strong commitment to enhancing shareholder value.
Which business segments contributed most to General Dynamics' performance?
The Marine Systems segment saw revenue growth driven by U.S. Navy contracts, while the Information Systems and Technology segment benefited from increased C4ISR solutions. The Aerospace segment's revenue decreased due to fewer aircraft deliveries, but its operating margin improved. The defense segments generally drove the company's overall strong performance.
What is the outlook for General Dynamics' business based on its backlog?
With a substantial backlog of $59.8 billion at the end of 2016, General Dynamics has significant visibility into future revenue and business stability. This backlog, spread across its diverse portfolio, supports the company's strategic positioning and ability to execute on long-term contracts.
06—Continue