Summary
General Dynamics Corporation (GD) reported a slight decrease in revenue for the first quarter of 2016 compared to the prior year, primarily driven by lower volumes in Combat Systems, Information Systems and Technology, and Aerospace segments, partially offset by increased activity in Marine Systems. Despite the revenue dip, the company demonstrated strong operating performance, with operating earnings exceeding $1 billion for the sixth consecutive quarter and an improved operating margin of 13.6%. This margin expansion was attributed to positive operating leverage as costs decreased more than revenue, and improved performance and cost-reduction initiatives across several segments. The company continued its aggressive share repurchase program, buying back approximately $1 billion of its stock in the quarter, and also increased its quarterly dividend for the 19th consecutive year. GD maintains a strong backlog of $64.7 billion, though slightly down from the previous quarter, reflecting ongoing demand across its diverse business segments. The company's liquidity remains solid with a substantial cash balance and available credit facilities.
Financial Highlights
52 data points| Revenue | $7.48B |
| Cost of Revenue | $3.63B |
| Gross Profit | $3.84B |
| Operating Expenses | $6.55B |
| Operating Income | $924.00M |
| Net Income | $641.00M |
| EPS (Basic) | $2.08 |
| EPS (Diluted) | $2.04 |
| Shares Outstanding (Basic) | 307.93M |
| Shares Outstanding (Diluted) | 313.50M |
Key Highlights
- 1Revenue for the first quarter of 2016 was $7.724 billion, a slight decrease of 0.8% compared to $7.784 billion in the same period of 2015.
- 2Operating earnings increased by 2.5% to $1.053 billion from $1.027 billion year-over-year, with an improved operating margin of 13.6% compared to 13.2%.
- 3The Aerospace segment saw a revenue decrease of 5.7%, primarily due to fewer aircraft deliveries, while the Combat Systems segment revenue decreased by 6.6% due to international vehicle sales transitions.
- 4Marine Systems revenue increased by 9.7%, driven by higher U.S. Navy ship construction activity, particularly on the Virginia-class submarine program.
- 5General Dynamics repurchased approximately $1 billion of its common stock in the quarter and increased its quarterly dividend by 10%, marking the 19th consecutive annual increase.
- 6The company's total backlog stood at $64.7 billion at the end of the quarter, a slight decrease from $66.1 billion at year-end 2015.
- 7Net earnings were $717 million ($2.30 diluted EPS) for the quarter, a slight increase from $716 million ($2.14 diluted EPS) in the prior year, with earnings from continuing operations up to $2.37/$2.34 (basic/diluted).