General Dynamics Corp. GD

NYS: GD | ISIN: US3695501086   27/03/2024
281,90 USD (+1,28%)
(+1,28%)   27/03/2024

General Dynamics Reports Third-Quarter 2022 Financial Results

  • Revenue of $10 billion, up 4.3% year over year
  • Net earnings of $902 million, up 4.9% year over year
  • Diluted EPS of $3.26, up 6.2% year over year

RESTON, Va., Oct. 26, 2022 /PRNewswire/ -- General Dynamics (NYSE: GD) today reported third-quarter 2022 net earnings of $902 million on revenue of $10 billion. Diluted earnings per share (EPS) were $3.26, a 6.2% increase from the year-ago quarter.

"We saw continued strong demand in the quarter, particularly in Aerospace, Combat Systems and Marine Systems," said Phebe N. Novakovic, chairman and chief executive officer. "Our businesses delivered solid operating performance and cash flow even as they managed through the challenges of inflation and supply chain constraints."

Cash
Net cash provided by operating activities in the quarter totaled $1.3 billion, or 142% of net earnings. After $255 million in capital expenditures, the company generated free cash flow of $1 billion, or 114% of net earnings.

Backlog
Orders remained strong across the company with a consolidated book-to-bill ratio, defined as orders divided by revenue, of 1.1-to-1 for the quarter, with particular strength in the Aerospace and Combat Systems segments. In addition to company-wide backlog of $88.8 billion, estimated potential contract value, representing management's estimate of additional value in unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options, was $37 billion. Total estimated contract value, the sum of all backlog components, was $125.8 billion at the end of the quarter.

Aerospace backlog grew in the quarter to $19.1 billion, up 1.4% sequentially and 29.7% from the year-ago quarter.

Significant awards in the quarter for the three defense segments included $1.4 billion from the U.S. Navy for construction of an additional Expeditionary Sea Base auxiliary support ship and two additional John Lewis-class (T-AO-205) fleet replenishment oilers; a contract worth up to $1.1 billion to produce Abrams main battle tanks in the system enhancement package version 3 (SEPv3) configuration for Poland; an IDIQ contract with a maximum potential value of $910 million to provide information technology infrastructure and modernization support services for the U.S. Air Forces in Europe under the Europe-Wide Information Technology and Enterprise Network program; $700 million from the Navy for maintenance and modernization work on the USS Hartford, a Los Angeles-class submarine; $370 million for various munitions and ordnance; a Navy contract with a maximum potential value of $275 million to support development, production and installation of fire control systems for the Columbia- and Dreadnought-classes of ballistic missile submarines; and $315 million for several key classified contracts.

About General Dynamics
Headquartered in Reston, Virginia, General Dynamics is a global aerospace and defense company that offers a broad portfolio of products and services in business aviation; ship construction and repair; land combat vehicles, weapons systems and munitions; and technology products and services. General Dynamics employs more than 100,000 people worldwide and generated $38.5 billion in revenue in 2021. More information is available at www.gd.com.

Certain statements in this press release, including any statements about the company's future operational and financial performance, may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Words such as "expects," "anticipates," "plans," "believes," "forecasts," "scheduled," "outlook," "estimates," "should" and variations of these words and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on management's expectations, estimates, projections and assumptions. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Therefore, actual future results and trends may differ materially from what is forecast in forward-looking statements due to a variety of factors. Additional information regarding these factors is contained in the company's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q and its Current Reports on Form 8-K. All forward-looking statements speak only as of the date they were made. The company does not undertake any obligation to update or publicly release revisions to any forward-looking statements to reflect events, circumstances or changes in expectations after the date of this press release.

WEBCAST INFORMATION: General Dynamics will webcast its third-quarter 2022 financial results conference call at 9 a.m. EDT on Wednesday, October 26, 2022. The webcast will be a listen-only audio event available at www.gd.com. An on-demand replay of the webcast will be available by telephone one hour after the end of the call and end on November 2, 2022, at 866-813-9403 (international: +44 204-525-0658); passcode 273572. Charts furnished to investors and securities analysts in connection with General Dynamics' announcement of its financial results are available at www.gd.com.

 

EXHIBIT A 


CONSOLIDATED STATEMENT OF EARNINGS - (UNAUDITED)
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS





Three Months Ended


Variance




October 2, 2022


October 3, 2021


$


%

Revenue



$                          9,975


$                          9,568


$        407


4.3 %

Operating costs and expenses



(8,877)


(8,488)


(389)



Operating earnings



1,098


1,080


18


1.7 %

Other, net



41


34


7



Interest, net



(86)


(99)


13



Earnings before income tax



1,053


1,015


38


3.7 %

Provision for income tax, net



(151)


(155)


4



Net earnings



$                             902


$                             860


$           42


4.9 %

Earnings per share—basic



$                            3.29


$                            3.09


$        0.20


6.5 %

Basic weighted average shares outstanding



273.9


278.6





Earnings per share—diluted



$                            3.26


$                            3.07


$        0.19


6.2 %

Diluted weighted average shares outstanding



276.4


280.4





 

EXHIBIT B 


CONSOLIDATED STATEMENT OF EARNINGS - (UNAUDITED)
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS





Nine Months Ended


Variance




October 2, 2022


October 3, 2021


$


%

Revenue



$                       28,556


$                       28,177


$        379


1.3 %

Operating costs and expenses



(25,572)


(25,200)


(372)



Operating earnings



2,984


2,977


7


0.2 %

Other, net



120


95


25



Interest, net



(279)


(331)


52



Earnings before income tax



2,825


2,741


84


3.1 %

Provision for income tax, net



(427)


(436)


9



Net earnings



$                          2,398


$                          2,305


$           93


4.0 %

Earnings per share—basic



$                            8.70


$                            8.20


$        0.50


6.1 %

Basic weighted average shares outstanding



275.8


281.1





Earnings per share—diluted



$                            8.61


$                            8.16


$        0.45


5.5 %

Diluted weighted average shares outstanding



278.4


282.4





 

EXHIBIT C


REVENUE AND OPERATING EARNINGS BY SEGMENT - (UNAUDITED)
DOLLARS IN MILLIONS





Three Months Ended


Variance




October 2, 2022


October 3, 2021


$


%

Revenue:










Aerospace



$                    2,347


$                     2,066


$             281


13.6 %

Marine Systems



2,769


2,637


132


5.0 %

Combat Systems



1,788


1,745


43


2.5 %

Technologies



3,071


3,120


(49)


(1.6) %

Total



$                    9,975


$                     9,568


$             407


4.3 %

Operating earnings:










Aerospace



$                        312


$                        262


$               50


19.1 %

Marine Systems



238


229


9


3.9 %

Combat Systems



271


276


(5)


(1.8) %

Technologies



285


327


(42)


(12.8) %

Corporate



(8)


(14)


6


42.9 %

Total



$                    1,098


$                     1,080


$               18


1.7 %

Operating margin:










Aerospace



13.3 %


12.7 %





Marine Systems



8.6 %


8.7 %





Combat Systems



15.2 %


15.8 %





Technologies



9.3 %


10.5 %





Total



11.0 %


11.3 %





 

EXHIBIT D


REVENUE AND OPERATING EARNINGS BY SEGMENT - (UNAUDITED)
DOLLARS IN MILLIONS





Nine Months Ended


Variance




October 2, 2022


October 3, 2021


$


%

Revenue:










Aerospace



$                    6,117


$                     5,575


$             542


9.7 %

Marine Systems



8,071


7,656


415


5.4 %

Combat Systems



5,129


5,464


(335)


(6.1) %

Technologies



9,239


9,482


(243)


(2.6) %

Total



$                   28,556


$                   28,177


$             379


1.3 %

Operating earnings:










Aerospace



$                        793


$                        677


$             116


17.1 %

Marine Systems



660


639


21


3.3 %

Combat Systems



743


786


(43)


(5.5) %

Technologies



887


941


(54)


(5.7) %

Corporate



(99)


(66)


(33)


(50.0) %

Total



$                     2,984


$                     2,977


$                 7


0.2 %

Operating margin:










Aerospace



13.0 %


12.1 %





Marine Systems



8.2 %


8.3 %





Combat Systems



14.5 %


14.4 %





Technologies



9.6 %


9.9 %





Total



10.4 %


10.6 %





 

EXHIBIT E


CONSOLIDATED BALANCE SHEET
DOLLARS IN MILLIONS






(Unaudited)







October 2, 2022


December 31, 2021

ASSETS







Current assets:







Cash and equivalents




$                           2,496


$                           1,603

Accounts receivable




2,794


3,041

Unbilled receivables




8,111


8,498

Inventories




6,257


5,340

Other current assets




1,347


1,505

Total current assets




21,005


19,987

Noncurrent assets:







Property, plant and equipment, net




5,565


5,417

Intangible assets, net




1,921


1,978

Goodwill




20,155


20,098

Other assets




2,470


2,593

Total noncurrent assets




30,111


30,086

Total assets




$                         51,116


$                         50,073

LIABILITIES AND SHAREHOLDERS' EQUITY







Current liabilities:







Short-term debt and current portion of long-term debt




$                           2,252


$                           1,005

Accounts payable




3,106


3,167

Customer advances and deposits




6,661


6,266

Other current liabilities




3,640


3,540

Total current liabilities




15,659


13,978

Noncurrent liabilities:







Long-term debt




9,239


10,490

Other liabilities




8,567


7,964

Total noncurrent liabilities




17,806


18,454

Shareholders' equity:







Common stock




482


482

Surplus




3,511


3,278

Retained earnings




36,774


35,420

Treasury stock




(20,638)


(19,619)

Accumulated other comprehensive loss




(2,478)


(1,920)

Total shareholders' equity




17,651


17,641

Total liabilities and shareholders' equity




$                         51,116


$                         50,073

 

EXHIBIT F


CONSOLIDATED STATEMENT OF CASH FLOWS - (UNAUDITED)
DOLLARS IN MILLIONS





Nine Months Ended




October 2, 2022


October 3, 2021

Cash flows from operating activities—continuing operations:






Net earnings



$                        2,398


$                        2,305

Adjustments to reconcile net earnings to net cash from operating activities:






Depreciation of property, plant and equipment



420


408

Amortization of intangible and finance lease right-of-use assets



224


242

Equity-based compensation expense



140


96

Deferred income tax benefit



(132)


(38)

(Increase) decrease in assets, net of effects of business acquisitions:






Accounts receivable



259


133

Unbilled receivables



422


(252)

Inventories



(915)


94

Increase (decrease) in liabilities, net of effects of business acquisitions:






Accounts payable



(68)


(291)

Customer advances and deposits



1,598


228

Other liabilities



(309)


(455)

Other, net



(127)


119

Net cash provided by operating activities



3,910


2,589

Cash flows from investing activities:






Capital expenditures



(620)


(502)

Other, net



(378)


1

Net cash used by investing activities



(998)


(501)

Cash flows from financing activities:






Purchases of common stock



(1,119)


(1,491)

Dividends paid



(1,024)


(983)

Repayment of fixed-rate notes




(2,500)

Proceeds from commercial paper, gross (maturities greater than 3 months)




1,997

Proceeds from fixed-rate notes




1,497

Repayment of floating-rate notes




(500)

Other, net



103


223

Net cash used by financing activities



(2,040)


(1,757)

Net cash provided (used) by discontinued operations



21


(16)

Net increase in cash and equivalents



893


315

Cash and equivalents at beginning of period



1,603


2,824

Cash and equivalents at end of period



$                        2,496


$                        3,139

 

EXHIBIT G 


ADDITIONAL FINANCIAL INFORMATION - (UNAUDITED)
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS 











Other Financial Information:











October 2, 2022


December 31, 2021





Debt-to-equity (a)


65.1 %


65.2 %





Book value per share (b)


$                  64.29


$                   63.54





Shares outstanding


274,548,961


277,620,943
















Third Quarter


Nine Months



2022


2021


2022


2021

Income tax payments, net


$                     202


$                      257


$                     767


$                      502

Company-sponsored research and development (c)


$                     124


$                      112


$                     361


$                      295

Return on sales (d)


9.0 %


9.0 %


8.4 %


8.2 %










Non-GAAP Financial Measures:











Third Quarter


Nine Months



2022


2021


2022


2021

Free cash flow:









Net cash provided by operating activities


$                  1,283


$                   1,471


$                  3,910


$                   2,589

Capital expenditures


(255)


(196)


(620)


(502)

Free cash flow (e)


$                  1,028


$                   1,275


$                  3,290


$                   2,087












October 2, 2022


December 31, 2021





Net debt:









Total debt


$                11,491


$                11,495





Less cash and equivalents


2,496


1,603





Net debt (f)


$                  8,995


$                   9,892







(a)

Debt-to-equity ratio is calculated as total debt divided by total equity as of the end of the period.



(b)

Book value per share is calculated as total equity divided by total outstanding shares as of the end of the period.



(c)

Includes independent research and development and Aerospace product-development costs.



(d)

Return on sales is calculated as net earnings divided by revenue.



(e)

We define free cash flow as net cash provided by operating activities less capital expenditures. We believe free cash flow is a useful measure for investors because it portrays our ability to generate cash from our businesses for purposes such as repaying debt, funding business acquisitions, repurchasing our common stock and paying dividends. We use free cash flow to assess the quality of our earnings and as a key performance measure in evaluating management.



(f)

We define net debt as short- and long-term debt (total debt) less cash and equivalents. We believe net debt is a useful measure for investors because it reflects the borrowings that support our operations and capital deployment strategy. We use net debt as an important indicator of liquidity and financial position.

 

EXHIBIT H


BACKLOG - (UNAUDITED)
DOLLARS IN MILLIONS






Funded


Unfunded


Total

Backlog


Estimated

Potential

Contract Value*


Total

Estimated

Contract Value

Third Quarter 2022:













Aerospace




$             18,536


$                  516


$             19,052


$                          773


$                 19,825

Marine Systems




26,966


15,273


42,239


3,263


45,502

Combat Systems




13,305


534


13,839


5,754


19,593

Technologies




10,130


3,573


13,703


27,162


40,865

Total




$             68,937


$             19,896


$             88,833


$                     36,952


$               125,785

Second Quarter 2022:













Aerospace




$             18,237


$                  549


$             18,786


$                          877


$                 19,663

Marine Systems




26,965


14,873


41,838


3,904


45,742

Combat Systems




13,236


202


13,438


6,939


20,377

Technologies




9,448


4,120


13,568


27,028


40,596

Total




$             67,886


$             19,744


$             87,630


$                     38,748


$               126,378

Third Quarter 2021:













Aerospace




$             14,312


$                  378


$             14,690


$                       1,974


$                 16,664

Marine Systems




24,639


21,684


46,323


5,127


51,450

Combat Systems




13,040


308


13,348


7,594


20,942

Technologies




9,619


4,118


13,737


26,784


40,521

Total




$             61,610


$             26,488


$             88,098


$                    41,479


$               129,577


The estimated potential contract value includes work awarded on unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options associated with existing firm contracts, including options and other agreements with existing customers to purchase new aircraft and aircraft services. We recognize options in backlog when the customer exercises the option and establishes a firm order. For IDIQ contracts, we evaluate the amount of funding we expect to receive and include this amount in our estimated potential contract value. The actual amount of funding received in the future may be higher or lower than our estimate of potential contract value.

 

EXHIBIT H-1


BACKLOG - (UNAUDITED)
DOLLARS IN MILLIONS

 

Exhibit-H-1

https://mma.prnewswire.com/media/1929109/Exhibit_H_1.jpg

 

EXHIBIT H-2


BACKLOG BY SEGMENT - (UNAUDITED)
DOLLARS IN MILLIONS

 

Exhibit-H-2

https://mma.prnewswire.com/media/1929110/Exhibit_H_2.jpg

 

EXHIBIT I


THIRD QUARTER 2022 SIGNIFICANT ORDERS - (UNAUDITED)
DOLLARS IN MILLIONS

We received the following significant contract awards during the third quarter of 2022:

Marine Systems:

  • $1.4 billion from the U.S. Navy for construction of an additional Expeditionary Sea Base (ESB) auxiliary support ship and two additional John Lewis-class (T-AO-205) fleet replenishment oilers following orders for long-lead materials awarded in the second quarter of 2022. The award also includes a $715 option for an additional T-AO-205 oiler.
  • $700 from the Navy for maintenance and modernization work on the USS Hartford, a Los Angeles-class submarine.
  • $235 from the Navy to provide engineering, technical, design and planning yard support services for operational strategic and attack submarines.
  • $45 from the Navy for lead yard services, development studies and design efforts for Virginia-class submarines.

Combat Systems:

  • A contract worth up to $1.1 billion to produce Abrams main battle tanks in the system enhancement package version 3 (SEPv3) configuration for Poland.
  • $370 for various munitions and ordnance.
  • $165 to produce 39 additional light armored vehicles (LAVs) for the Canadian government.
  • $125 from the U.S. Army to provide system and sustainment technical support services for Abrams main battle tanks.
  • $80 from the Army for the production of Hydra-70 rockets.
  • $40 from the U.S. Defense Logistics Agency (DLA) to provide spare parts for Abrams main battle tanks.

Technologies:

  • An IDIQ contract to provide information technology (IT) infrastructure and modernization support services for the U.S. Air Forces in Europe under the Europe-Wide Information Technology and Enterprise Network (EITEN) program. The contract has a maximum potential value of $910.
  • $315 for several key classified contracts.
  • A contract from the Navy to support development, production and installation of fire control systems for the Columbia- and Dreadnought-classes of ballistic missile submarines. The contract has a maximum potential value of $275.
  • $60 to provide the Army National Guard with an integrated network and security operations center. The contract has a maximum potential value of $265.
  • $160 from the U.S. Department of State (DoS) to provide overseas consular services to support visa application and issuance at U.S. embassies and consulates throughout the world under the Global Support Strategy (GSS) program.
  • $95 to provide IT network operations and maintenance services for the Army.
  • $85 from the Army for computing and communications equipment under the Common Hardware Systems-5 program.
  • $70 from the Army to provide hardware, software and logistics sustainment support.
  • $55 from the U.S. Air Force for the Battlefield Information Collection and Exploitation System (BICES) program to provide intelligence information sharing capabilities.
  • $50 from the Defense Information Systems Agency (DISA) to provide enterprise network and telecommunications services.

 

EXHIBIT J


AEROSPACE SUPPLEMENTAL DATA - (UNAUDITED)





Third Quarter


Nine Months




2022


2021


2022


2021

Gulfstream Aircraft Deliveries (units):










Large-cabin aircraft



28


25


66


68

Mid-cabin aircraft



7


6


16


12

Total



35


31


82


80











Aerospace Book-to-Bill:










Orders*



$               2,705


$               3,247


$               9,600


$               8,996

Revenue



2,347


2,066


6,117


5,575

Book-to-Bill Ratio



1.15x


1.57x


1.57x


1.61x


*  Does not include customer defaults, liquidated damages, cancellations, foreign exchange fluctuations and other backlog adjustments.

 

 

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