General Dynamics Corp (GD) Q3 2024 Earnings Call Highlights: Strong Revenue Growth Amid Supply ...

GuruFocus News
3 min read

In This Article:

  • Revenue: $11.67 billion, up 10.4% from the previous year.

  • Earnings Per Share (EPS): $3.35 per diluted share.

  • Operating Earnings: $1.18 billion, up 11.7%.

  • Net Income: $930 million, up 11.2%.

  • Aerospace Revenue: $2.48 billion, up 22%.

  • Aerospace Operating Earnings: $305 million, up 13.8%.

  • Combat Systems Revenue: $2.2 billion, flat year-over-year.

  • Combat Systems Earnings: $325 million, up 8.3%.

  • Marine Systems Revenue: $3.6 billion, up 20%.

  • Marine Systems Operating Earnings: $258 million, up $47 million.

  • Technologies Revenue: $3.4 billion, up 2%.

  • Technologies Operating Earnings: $326 million, up 3.5%.

  • Backlog: $92.6 billion.

  • Free Cash Flow: $1.2 billion, 131% of net income.

  • Capital Expenditures: $201 million, 1.7% of sales.

  • Net Debt: $7.2 billion, down over $700 million from last quarter.

  • Tax Rate: 16.5% for the quarter, 17% for the first nine months.

Release Date: October 23, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • General Dynamics Corp (NYSE:GD) reported a strong 10.4% increase in revenue, led by a 22% increase in the Aerospace segment and a 20% increase in Marine Systems.

  • Operating earnings increased by 11.7% to $1.18 billion, demonstrating solid operating leverage.

  • Combat Systems saw robust order activity with a book-to-bill ratio of 1.5 to 1, indicating strong demand.

  • Marine Systems achieved a 20% revenue growth, driven by Columbia-class and Virginia-class volume.

  • Technologies segment reported a 2% revenue increase and a 3.5% rise in operating earnings, with a strong order backlog.

Negative Points

  • General Dynamics Corp (NYSE:GD) missed Street EPS consensus due to fewer than expected G700 deliveries.

  • Supply chain deficiencies caused inefficiencies and increased costs, impacting operating margins.

  • Marine Systems faced delays from the submarine industrial base, affecting costs and schedule.

  • The Aerospace segment's operating margin was 90 basis points lower than the previous year due to supply chain issues.

  • The company revised its full-year G700 delivery forecast down from 50-52 to around 42, impacting revenue expectations.

Q & A Highlights

Q: Can you discuss the challenges faced with the G700 deliveries and the outlook for aerospace margins? A: Phebe Novakovic, CEO, explained that supply chain challenges and late deliveries have impacted G700 deliveries. However, improvements are expected, with gross margin improvements of 600 to 700 basis points anticipated. The introduction of the G800 is also expected to positively impact margins. Overall, strong margin expansion is expected in the aerospace segment moving forward.

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