10-QPeriod: Q3 FY2023

GENERAL DYNAMICS CORP Quarterly Report for Q3 Ended Jul 2, 2023

Filed July 26, 2023For Securities:GD

Summary

General Dynamics Corporation (GD) reported solid revenue growth for the six months ended July 2, 2023, with an increase of 7.8% year-over-year to $20.03 billion. This growth was primarily driven by strong performance in its defense segments, notably U.S. Navy ship construction and international military vehicles, alongside increased demand for aircraft maintenance services in its Aerospace segment. While net earnings saw a slight decrease to $1.47 billion for the six-month period from $1.49 billion in the prior year, the company maintained a healthy operating margin of 9.5% on a consolidated basis. The company continues to manage its significant backlog, which stood at $91.4 billion as of July 2, 2023, indicating sustained future revenue visibility. Free cash flow remained robust, totaling $1.82 billion for the six months, although this represents a decrease from $2.26 billion in the prior year, partly due to higher capital expenditures and share repurchases. GD also demonstrated its commitment to shareholder returns by increasing its quarterly dividend and continuing its share repurchase program.

Financial Highlights

48 data points
Beta

Revenue

$10.15B

Net Income

$744.00M

7.3% Net Margin

Total Assets

$52.56B

Cash & Equivalents

$1.15B

Free Cash Flow

$519.00M

Financial Statements
Beta
Revenue$10.15B
Operating Expenses$9.19B
Operating Income$962.00M
Net Income$744.00M
Shares Outstanding (Basic)273.14M
Shares Outstanding (Diluted)275.09M

Key Highlights

  • 1Consolidated revenue increased by 10.5% in Q2 2023 and 7.8% for the first six months of 2023 compared to the prior year, reaching $10.2 billion and $20.0 billion respectively.
  • 2Operating earnings for the six months ended July 2, 2023, were $1.90 billion, a slight increase of 0.7% from $1.89 billion in the prior year, reflecting strong operational performance across segments despite some margin pressures.
  • 3Net earnings for the six months decreased slightly to $1.47 billion compared to $1.50 billion in the prior year, with diluted EPS at $5.34.
  • 4The Aerospace segment saw revenue growth driven by increased aircraft manufacturing and services, though operating margin slightly contracted due to production costs and R&D investments.
  • 5Defense segments (Marine Systems, Combat Systems, Technologies) showed significant revenue increases, particularly in U.S. Navy ship construction and international military vehicles, though operating margins experienced some pressure due to program mix and supply chain issues.
  • 6Total backlog remained substantial at $91.4 billion as of July 2, 2023, providing strong visibility for future revenue.
  • 7Free cash flow for the six months was $1.82 billion, a decrease from $2.26 billion in the prior year, influenced by increased capital expenditures and share repurchases.

Frequently Asked Questions

For the three months ended July 2, 2023, General Dynamics reported revenue of $10.15 billion, an increase of 10.5% from $9.19 billion in the same period of 2022. For the six months ended July 2, 2023, revenue was $20.03 billion, up 7.8% from $18.58 billion in the prior year. This growth was primarily driven by higher volume across the defense segments and increased aircraft services revenue.

As of July 2, 2023, General Dynamics' total backlog, which represents remaining performance obligations under contracts, stood at $91.4 billion. This backlog indicates significant future revenue streams and provides strong visibility into the company's upcoming performance.

Consolidated operating earnings for the six months ended July 2, 2023, were $1.90 billion, a slight increase of 0.7% from $1.89 billion in the prior year. However, net earnings for the period were $1.47 billion, a slight decrease from $1.50 billion in the prior year. The diluted earnings per share for the six months were $5.34. The slight decrease in net earnings was influenced by factors including shifts in contract mix and supply chain cost pressures impacting operating margins.

In the Aerospace segment, revenue growth was driven by higher aircraft manufacturing and aircraft services. In the defense segments, Marine Systems saw growth from increased volume on the Columbia-class submarine program, Combat Systems benefited from higher international military vehicle volumes and weapons systems, and Technologies saw increased revenue due to demand and a recent acquisition. Overall, strong performance in U.S. Navy ship construction and international military vehicles were significant contributors.