Summary
General Dynamics Corporation (GD) reported mixed financial results for the second quarter and first half of 2012 compared to the prior year. While revenues saw a slight increase of 0.5% in the second quarter to $7.92 billion, they decreased by 1.1% to $15.50 billion for the first half. Operating earnings for the second quarter rose by 2.2% to $970 million, but declined by 2.6% to $1.83 billion for the six-month period. The company's Aerospace segment showed strong growth, driven by new G650 aircraft deliveries, while the Information Systems and Technology segment experienced revenue declines due to slower customer acquisition cycles. Despite the mixed top-line performance, the company maintained solid operational execution and generated $1.2 billion in cash from operating activities in the first half of 2012, an increase from the previous year. GD also continued its capital return strategy, with increased dividends and share repurchases. Investors should monitor the ongoing discussions around U.S. defense spending and potential budget cuts, which could impact a significant portion of GD's revenue, as well as the long-standing A-12 litigation which, while unlikely to result in a material loss, carries significant potential financial exposure.
Financial Highlights
55 data points| Revenue | $7.93B |
| Cost of Revenue | $6.52B |
| Gross Profit | $1.42B |
| Operating Expenses | $7.03B |
| Operating Income | $905.00M |
| Interest Expense | $40.00M |
| Net Income | $600.00M |
| EPS (Basic) | $1.71 |
| EPS (Diluted) | $1.70 |
| Shares Outstanding (Basic) | 350.47M |
| Shares Outstanding (Diluted) | 352.83M |
Key Highlights
- 1Revenues increased slightly by 0.5% to $7.92 billion in Q2 2012, but decreased 1.1% to $15.50 billion for the first six months of 2012.
- 2Operating earnings increased by 2.2% to $970 million in Q2 2012, but decreased 2.6% to $1.83 billion for the first six months of 2012.
- 3The Aerospace segment experienced strong revenue growth driven by new G650 aircraft deliveries, with revenues up 15.7% in Q2 and 17.8% year-to-date.
- 4The Information Systems and Technology segment saw a revenue decline of 9.9% in Q2 and 11.6% year-to-date, primarily due to delays in tactical communication systems contracts.
- 5Cash from operating activities increased to $1.2 billion in the first six months of 2012, up from $1.1 billion in the prior year period.
- 6The company's backlog stood at $52.4 billion as of July 1, 2012, a decrease from $55.2 billion at the end of Q1 2012.
- 7General Dynamics is actively returning capital to shareholders, increasing its quarterly dividend and continuing share repurchase programs.