01—Abstract
Summary
Summary of the 10-Q filed April 29, 2026. Cited figures are marked; the original filing is the authoritative source.
General Dynamics Corporation (GD) reported robust financial performance for the quarter ending April 5, 2026.
Revenue increased by 10.3% year-over-year to $13.48 billiona, driven by growth across all four operating segments, particularly Marine Systems which saw over 20% growth. This top-line expansion translated into improved profitability, with operating earnings rising 12.0% to $1.42 billion. Diluted Earnings Per Share (EPS) also saw a significant increase to $4.10 compared to $3.66 in the prior year's quarter.
The company's strong operational execution is supported by a substantial backlog of $130.8 billionb, up from $118 billion at the end of the previous year. The defense segments, in particular, demonstrated strong book-to-bill ratios, indicating continued demand.
Management expressed confidence in future performance, reiterating a full-year diluted EPS outlook of $16.45 to $16.55c. The company also maintained a strong liquidity position with $3.65 billion in cash and equivalents, and generated significant free cash flow of $1.95 billion for the quarter.
02—Key points
Key Highlights
- Total revenue grew 10.3% to $13.48 billion, with all four segments contributing to the increase.
- Operating earnings increased 12.0% to $1.42 billion, and operating margin improved slightly to 10.5%.
- Diluted Earnings Per Share (EPS) rose to $4.10 from $3.66 year-over-year.
- Total backlog stands at a strong $130.8 billion, reflecting robust demand, especially in defense segments.
- The Marine Systems segment experienced significant revenue growth of 21.0%, driven by U.S. Navy shipbuilding.
- The company generated $1.95 billion in free cash flow for the quarter, demonstrating strong cash generation capabilities.
- General Dynamics reiterated its full-year diluted EPS guidance of $16.45 to $16.55.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2026filed April 29, 2026Financial Statements
Q2 FY2026 against Q2 FY2025
| Line item | Q2 FY2026Q2 FY2025 | Change |
|---|---|---|
| Revenue | $13.48B$13.04B | +3.4% |
| Operating Expenses | $12.06B$11.74B | +2.8% |
| Operating Income | $1.42B$1.30B | +8.8% |
| Net Income | $1.13B$1.01B | +10.9% |
| EPS (Basic) | $4.16$3.78 | +10.1% |
| EPS (Diluted) | $4.10$3.74 | +9.6% |
| Shares Outstanding (Basic) | 270.17M268.14M | +0.8% |
| Shares Outstanding (Diluted) | 274.13M270.94M | +1.2% |
05—Questions
Frequently Asked Questions
What drove the significant revenue growth in the Marine Systems segment?
The Marine Systems segment's 21.0% revenue increase was primarily driven by higher material and labor volumes on Columbia-class and Virginia-class submarine construction, as well as increased throughput on the John Lewis-class fleet replenishment oiler program.
How is the company managing potential risks associated with long-term contracts?
General Dynamics utilizes various techniques to estimate total contract revenue and costs, regularly reviewing and updating these estimates. Any adjustments are recognized under the cumulative catch-up method, and significant changes in estimates could impact profitability. The company also notes that while adjustments on any single contract were not material in this period, it has a large international tracked vehicle contract where variable consideration estimates could materially impact results.
What is the company's outlook on defense spending and its impact on the business?
The company notes that defense spending has been at increased levels, with stated support for further increases. This is reflected in the significant demand for U.S. Navy shipbuilding. While U.S. Army funding priorities are being reviewed, leading to a slight expected decrease in short-term combat vehicle production, demand for munitions is expected to remain elevated due to ongoing conflicts. International demand for Combat Systems products and services has also increased, particularly in Europe.
How did share repurchases and dividends fare in this quarter?
In the three months ended April 5, 2026, General Dynamics repurchased 0.6 million shares for $217 million to cover dilution and paid cash dividends of $405 million. The Board declared a quarterly dividend of $1.59 per share, marking the 29th consecutive annual increase.
06—Continue