Summary
General Dynamics Corporation (GD) reported its second quarter and first six months results for the period ending June 29, 2014. For the three months ended June 29, 2014, net earnings were $541 million, or $1.58 per diluted share, a decrease from $640 million, or $1.81 per diluted share, in the same period of the prior year. For the six months ended June 29, 2014, net earnings were $1,136 million, or $3.29 per diluted share, down from $1,211 million, or $3.43 per diluted share, in the comparable prior-year period. The decline in net earnings was primarily due to a $106 million after-tax loss recognized on the company's axle business, which was classified as discontinued operations. Despite the year-over-year decline in net earnings, the company demonstrated resilience across its segments. Revenues for the second quarter decreased by 4.6% to $7,474 million, and for the six-month period by 2.7% to $14,739 million. However, operating margins improved, with the three-month period showing 12.7% compared to 12.3% in the prior year, and the six-month period at 12.4% versus 11.9%. This margin expansion was driven by higher-margin aircraft manufacturing and outfitting revenues in the Aerospace group and improved performance in the Information Systems and Technology segment. The company also saw a significant increase in its total backlog, reaching $71.1 billion by the end of the second quarter, largely bolstered by a major contract for Virginia-class submarines.
Financial Highlights
52 data points| Revenue | $7.47B |
| Cost of Revenue | $6.04B |
| Gross Profit | $1.44B |
| Operating Expenses | $6.53B |
| Operating Income | $949.00M |
| Net Income | $541.00M |
| EPS (Basic) | $1.61 |
| EPS (Diluted) | $1.58 |
| Shares Outstanding (Basic) | 336.69M |
| Shares Outstanding (Diluted) | 342.79M |
Key Highlights
- 1Net earnings decreased to $541 million ($1.58 per diluted share) for Q2 2014 from $640 million ($1.81 per diluted share) in Q2 2013, primarily due to a loss on discontinued operations.
- 2Revenues for the quarter declined 4.6% year-over-year to $7,474 million, with notable decreases in Information Systems and Technology and Combat Systems segments, partly offset by growth in Aerospace.
- 3Operating margins improved, with the consolidated operating margin for Q2 2014 at 12.7% (vs. 12.3% in Q2 2013) and for the six-month period at 12.4% (vs. 11.9% in the prior year), driven by the Aerospace segment.
- 4The Aerospace group showed strong performance with increased revenues and operating margins, fueled by higher deliveries of Gulfstream aircraft, particularly the G650 model.
- 5Total backlog significantly increased to $71.1 billion as of June 29, 2014, up from $55.9 billion at the end of Q1 2014, with a major boost from a large contract for Virginia-class submarines awarded to the Marine Systems group.
- 6The company repurchased approximately 25 million shares for $2.6 billion in the first six months of 2014, a substantial increase from the $455 million used for repurchases in the same period of 2013, indicating a strong focus on returning capital to shareholders.
- 7Free cash flow from operations increased to $1,132 million for the first six months of 2014, up from $922 million in the prior year, demonstrating improved cash generation capabilities.