10-QPeriod: Q2 FY2021

GENERAL DYNAMICS CORP Quarterly Report for Q2 Ended Apr 4, 2021

Filed April 28, 2021For Securities:GD

Summary

General Dynamics Corporation (GD) reported solid financial results for the first quarter ended April 4, 2021. Revenue increased by 7.3% to $9.39 billion compared to the prior year, driven by growth across all operating segments, notably in Marine Systems due to increased U.S. Navy ship construction and in Aerospace from higher aircraft deliveries. Despite a slight decrease in operating margin to 10.0% from 10.7% year-over-year, primarily attributed to a less favorable mix in aircraft deliveries and mark-to-market adjustments in the Aerospace segment, the company maintained strong operating earnings of $938 million. Diluted earnings per share saw a modest increase to $2.48 from $2.43 in the comparable period. The company also reported a robust backlog of $89.6 billion, providing good visibility into future revenues. Financially, GD maintained a healthy cash position and generated positive cash flow from operations.

Financial Highlights

49 data points
Beta

Revenue

$9.39B

Net Income

$708.00M

7.5% Net Margin

Total Assets

$49.96B

Cash & Equivalents

$1.81B

Free Cash Flow

-$131.00M

Financial Statements
Beta
Revenue$9.39B
Operating Expenses$8.45B
Operating Income$938.00M
Net Income$708.00M
Shares Outstanding (Basic)284.10M
Shares Outstanding (Diluted)285.20M

Key Highlights

  • 1Revenue increased by 7.3% to $9.39 billion in Q1 2021, compared to $8.75 billion in Q1 2020, reflecting broad-based growth across segments.
  • 2Operating earnings remained strong at $938 million, a slight increase from $934 million in the prior year.
  • 3Diluted Earnings Per Share (EPS) grew to $2.48 from $2.43 year-over-year.
  • 4Total backlog remained substantial at $89.6 billion, indicating strong future revenue potential.
  • 5The Aerospace segment saw a revenue increase of 11.6% driven by higher aircraft manufacturing, though operating margin decreased due to product mix and mark-to-market adjustments.
  • 6Marine Systems experienced a 10.6% revenue increase due to higher U.S. Navy ship construction volume.
  • 7The company repurchased $759 million of its common stock and increased its quarterly dividend, signaling confidence in its financial health and commitment to shareholder returns.

Frequently Asked Questions

Revenue growth was driven by increases across all operating segments. Marine Systems saw higher revenue from increased U.S. Navy ship construction, particularly on the Virginia-class and Columbia-class submarine programs. The Aerospace segment's revenue increased due to more deliveries of large-cabin G500 and G600 aircraft, despite the ongoing impact of reduced production rates from 2020. The Technologies and Combat Systems segments also contributed to the overall revenue increase.

The consolidated operating margin decreased to 10.0% from 10.7% in the prior year. This was primarily due to a less favorable mix of aircraft deliveries and mark-to-market adjustments related to aircraft in the G500 flight test program within the Aerospace segment. While other segments showed improved margins or remained stable, the impact on the consolidated margin was significant.

General Dynamics ended the quarter with $1.8 billion in cash and equivalents. Cash flow from operating activities was $3 million for the quarter, a significant improvement from a use of $666 million in the prior year, though still impacted by working capital movements. The company repurchased approximately $759 million of its stock and paid $315 million in dividends, demonstrating its commitment to returning capital to shareholders. The total backlog of $89.6 billion provides good visibility into future cash generation.

The COVID-19 pandemic continues to cause disruptions, with the Aerospace segment experiencing the most significant impact due to reduced production rates and dependence on global economic improvement for new aircraft demand. The U.S. government business, particularly in the Technologies segment, has also seen some disruption from customer site closures. However, the company has implemented measures to mitigate adverse consequences and expects the situation to be temporary, though longer-term impacts remain uncertain.