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GD Q2 Deep Dive: Backlog Growth and Defense Demand Drive Strong Quarter
GD Q2 Deep Dive: Backlog Growth and Defense Demand Drive Strong Quarter

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time24-07-2025

  • Business
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GD Q2 Deep Dive: Backlog Growth and Defense Demand Drive Strong Quarter

Aerospace and defense company General Dynamics (NYSE:GD) reported Q2 CY2025 results exceeding the market's revenue expectations , with sales up 8.9% year on year to $13.04 billion. Its non-GAAP profit of $3.74 per share was 5.6% above analysts' consensus estimates. Is now the time to buy GD? Find out in our full research report (it's free). General Dynamics (GD) Q2 CY2025 Highlights: Revenue: $13.04 billion vs analyst estimates of $12.34 billion (8.9% year-on-year growth, 5.7% beat) Adjusted EPS: $3.74 vs analyst estimates of $3.54 (5.6% beat) Adjusted EBITDA: $1.53 billion vs analyst estimates of $1.46 billion (11.7% margin, 4.7% beat) Operating Margin: 10%, in line with the same quarter last year Backlog: $103.7 billion at quarter end, up 13.6% year on year Market Capitalization: $85.13 billion StockStory's Take General Dynamics delivered a second quarter that exceeded Wall Street's expectations, prompting a positive market response. Management attributed the company's performance to robust order activity, especially in the Marine Systems segment, and continued operational improvements within Aerospace. CEO Phebe Novakovic highlighted strong operating leverage, noting that all four business segments contributed to the company's year-over-year growth in revenue, earnings, and cash generation. Management credited record backlog levels and improved supply chain performance, particularly for Gulfstream jets, as key drivers behind the quarter's results. Looking ahead, General Dynamics' forward outlook revolves around sustained defense demand, new platform deliveries in Aerospace, and productivity enhancements across its businesses. Management pointed to the ramp-up of G800 jet deliveries, ongoing investments in submarine production, and improved throughput at shipyards as factors expected to shape the second half of the year. CEO Phebe Novakovic stated, 'We feel very good about the potential for the year,' while also noting that Aerospace operating margin will face some pressure from product mix, but is expected to recover as higher-margin models gain traction. Key Insights from Management's Remarks Management identified record defense backlog, strong Aerospace demand, and improvements in operational execution as the major themes shaping Q2 performance and near-term outlook. Marine Systems contract wins: The Marine segment secured major submarine construction contracts, boosting order backlog by 38%. Management emphasized that increased funding will support shipyard productivity, wage increases, and workforce training, helping to stabilize the submarine supply chain and improve delivery cadence. Aerospace delivery progress: Gulfstream delivered 38 aircraft, including more G700s as supply chain reliability improved. CEO Novakovic said all G700 retrofit aircraft are now delivered, with initial G800 deliveries set for Q3, highlighting customer interest from Fortune 500 companies. Aerospace saw a 1.3x book-to-bill ratio, reflecting continued demand across model lines and regions. Operational leverage and cost control: The company achieved double-digit growth in operating earnings and cash flow, supported by ongoing efforts to optimize manufacturing and working capital. Newly appointed EVP of Global Operations Danny Deep outlined a renewed focus on continuous improvement across the value chain to drive value creation. Technologies segment momentum: GDIT and Mission Systems both reported solid quarters, with GDIT navigating contract scope changes and slower-than-usual adjudications. Mission Systems is transitioning to higher-margin programs and investing in areas such as unmanned platforms and high-speed encryption, supporting future backlog growth. Combat Systems resilience: Despite flat revenue, Combat Systems achieved higher margins and noted growth in its European operations, benefiting from increased defense spending in the region. Management cited the cancellation of the Booker program as a U.S. headwind, but remains optimistic about new opportunities tied to next-generation platforms and munitions expansion. Drivers of Future Performance General Dynamics expects continued growth to be driven by defense demand, execution on new aerospace deliveries, and ongoing productivity initiatives, while acknowledging risks from supply chain variability and contract timing. Defense backlog and contract execution: Management highlighted the company's record defense backlog and contract value, noting that execution on major submarine and combat vehicle contracts will be a primary driver of revenue and operating margin. Progress in stabilizing the submarine supply chain is expected to gradually improve Marine segment profitability, though some near-term variability may persist. Aerospace product mix and ramp-up: The cadence of new jet deliveries, particularly the G800, will influence Aerospace segment margins. Management expects initial G800 deliveries to carry lower margins, with improvement as production matures and higher-margin models increase in mix. Any supply chain setbacks or delays could impact the segment's path to margin recovery. Adjudication pace and margin pressures: The Technologies segment's outlook depends on the pace of government contract adjudications and demand for high-speed encryption and digital modernization services. Management cautioned that contract delays or changes in federal spending priorities may introduce short-term revenue and margin fluctuations. Catalysts in Upcoming Quarters In the coming quarters, StockStory analysts will be monitoring (1) progress on ramping up G800 and G700 jet deliveries and their impact on Aerospace margins, (2) throughput and productivity improvements in the Marine segment as new funding and workforce initiatives take hold, and (3) the pace of contract adjudications and backlog conversion in the Technologies and Combat Systems segments. The ability to maintain operating leverage while navigating supply chain and government spending uncertainties will be central to results. General Dynamics currently trades at $316.88, up from $297.34 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it's free). High Quality Stocks for All Market Conditions Donald Trump's April 2024 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities. The smart money is already positioning for the next leg up. Don't miss out on the recovery - check out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today. StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

Why General Dynamics Stock Popped Today
Why General Dynamics Stock Popped Today

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time23-07-2025

  • Business
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Why General Dynamics Stock Popped Today

Key Points General Dynamics beat sales and earnings estimates soundly this morning. General Dynamics is on a roll, racking up new orders, growing sales, and growing profits even faster. Problem is, the stock costs too much. 10 stocks we like better than General Dynamics › Shares of General Dynamics (NYSE: GD), maker of Abrams main battle tanks and Gulfstream business jets, reported powerful earnings this morning, sending its stock up 6.1% through 10:50 a.m. ET. Analysts forecast GD would earn $3.44 per share on $12.2 billion in Q2 sales. Instead, the defense giant reported a $3.74-per-share profit on sales of $13 billion. General Dynamics Q2 earnings Sales climbed 8.9% year over year, and operating profit margin expanded 30 basis points to 10%. With these improved margins, earnings managed to grow 14.7%. Long-time CEO Phebe Novakovic noted that "each of our four segments achieved growth in revenue and earnings," while cash flow was "strong" and the company's backlog remains "healthy." Indeed, I'd go farther than that. Better than just "healthy," backlog now looks fantastic, thanks to General Dynamics' scoring a book-to-bill ratio (that's new orders taken in relative to older orders fulfilled and converted to revenue) of 2.2 for the quarter. Backlog now stands at $103.7 billion, enough to keep GD humming for the next two years straight. Is General Dynamics stock a buy? With its positive free cash flow of $4.1 billion, General Dynamics' cash profits fully back up reported trailing earnings of $4.1 billion. The company is projected to grow earnings better than 9% annually over the next five years, and it pays its shareholders a respectable 2% dividend yield. Based on these numbers, I'd value the stock at a minimum of $45 billion -- and probably a bit more based on the tremendous future sales growth implied by its book-to-bill ratio. That said, after today's run-up, GD stock currently costs well over $80 billion -- and I'm afraid that's too much to pay at present. My advice: Wait for better prices before buying GD stock. Should you buy stock in General Dynamics right now? Before you buy stock in General Dynamics, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and General Dynamics wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $641,800!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,023,813!* Now, it's worth noting Stock Advisor's total average return is 1,034% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025 Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Why General Dynamics Stock Popped Today was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

General Dynamics CEO's Upbeat 2025 Outlook Propels Stock To All-Time High
General Dynamics CEO's Upbeat 2025 Outlook Propels Stock To All-Time High

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time23-07-2025

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General Dynamics CEO's Upbeat 2025 Outlook Propels Stock To All-Time High

General Dynamics Corp. (NYSE:GD) traded higher Wednesday after the defense and aerospace contractor reported second-quarter 2025 results that topped Wall Street expectations. The company's strong performance in its Marine Systems and Aerospace segments contributed to the success. The company reported revenue of $13.04 billion for the quarter ended June 30, up 8.9% from a year ago and above analyst estimates of $12.19 billion. Earnings rose to $3.74 per share, a 14.7% year-over-year increase, exceeding the consensus forecast of $3.44. Operating earnings climbed 12.9% to $1.31 billion, while the company's operating margin expanded by 30 basis points to 10%.'During the first half of the year, each of our four segments achieved growth in revenue and earnings, with margins on a companywide basis expanding 50 basis points over the same period last year,' said Phebe Novakovic, chairman and chief executive officer. 'Our strong cash flow and healthy backlog position us well to have a good second half.' Segment Performance Aerospace revenue rose 4.1% to $3.06 billion, with operating earnings up 26.3% to $403 million. Operating margin expanded to 13.2%, up from 10.9% a year ago. Marine Systems posted the strongest growth, with revenue rising 22.2% to $4.22 billion. Operating earnings increased 18.8% to $291 million, though the segment's margin edged down to 6.9% from 7.1%. Combat Systems revenue was nearly flat at $2.28 billion, down 0.2%, but operating earnings rose 3.5% to $324 million. The segment's margin improved to 14.2%, up from 13.7%. Technologies revenue increased 5.5% to $3.48 billion, with operating earnings up 3.8% to $332 million. Operating margin held steady at 9.6%, compared with 9.7% a year earlier. Orders, Backlog, and Cash Flow The company reported $28.3 billion in orders during the quarter, resulting in a companywide book-to-bill ratio of 2.2. The defense segments posted a book-to-bill ratio of 2.4, while the aerospace segment came in at 1.3. View more earnings on GD Backlog totaled $103.7 billion, with an estimated total contract value of $161.2 billion, including $57.5 billion in potential unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and option value. General Dynamics generated $1.6 billion in operating cash flow, equal to 158% of net earnings. The company paid $402 million in dividends, invested $198 million in capital expenditures, reduced debt by $897 million, and ended the quarter with $1.5 billion in cash. Outlook The positive sentiment was reinforced by the CEO's remarks during the earnings conference call, detailing robust revenue projections and healthy margins across key segments. During the conference call, Novakovic revealed an ambitious forecast for the total annual revenue, expecting it to climb by approximately $900 million to reach $51.2 billion, with overall margins projected at a solid 10.3%. The company's positive trajectory is further underscored by its segment-specific projections for the year: Aerospace Segment: Anticipated annual revenue of $12.9 billion with an operating margin of 13.5%. Combat Systems Segment: Expected annual revenue of $9.2 billion with an operating margin of 14.5%. Marine Segment: Projected annual revenue of $15.6 billion with an operating margin of 7%. The CEO also provided a full-year 2025 EPS expectation in the range of $15.05 to $15.15, signaling continued confidence in the company's profitability. Fueled by the CEO's notably upbeat outlook, the company's stock has achieved a remarkable milestone, climbing to an all-time high of $316.90. This surge reflects heightened investor confidence and a clear endorsement of the company's future trajectory. Price Action: GD shares are trading higher by 5.34% at $313.50 at last check Wednesday. Read Next:Image via Shutterstock Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today's competitive market. Get the latest stock analysis from Benzinga? GENERAL DYNAMICS (GD): Free Stock Analysis Report This article General Dynamics CEO's Upbeat 2025 Outlook Propels Stock To All-Time High originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved.

General Dynamics Reports Second-Quarter 2025 Financial Results
General Dynamics Reports Second-Quarter 2025 Financial Results

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time23-07-2025

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General Dynamics Reports Second-Quarter 2025 Financial Results

Revenue $13 billion, up 8.9% from year-ago quarter Diluted EPS $3.74, up 14.7% from year-ago quarter $1.6 billion cash from operating activities, 158% of net earnings Very strong order activity in Marine and Aerospace segments RESTON, Va., July 23, 2025 /PRNewswire/ -- General Dynamics (NYSE: GD) today reported second-quarter 2025 operating earnings of $1.3 billion, or $3.74 per diluted share (EPS), on revenue of $13 billion. Compared with the year-ago quarter, revenue increased 8.9%, operating earnings increased 12.9%, and diluted EPS increased 14.7%. Operating margin of 10.0% was a 30-basis-point expansion from the year-ago quarter. "During the first half of the year, each of our four segments achieved growth in revenue and earnings, with margins on a companywide basis expanding 50 basis points over the same period last year," said Phebe Novakovic, chairman and chief executive officer. "Our strong cash flow and healthy backlog position us well to have a good second half." Cash and Capital Deployment Net cash provided by operating activities in the quarter totaled $1.6 billion, or 158% of net earnings. During the quarter, the company paid $402 million in dividends, invested $198 million in capital expenditures, and reduced total debt by $897 million. The company ended the quarter with $8.7 billion in total debt and $1.5 billion in cash and equivalents on hand. Orders and Backlog Consolidated book-to-bill ratio, defined as orders divided by revenue, was 2.2-to-1 for the quarter. Book-to-bill was 2.4-to-1 for the defense segments and 1.3-to-1 for the aerospace segment. On a companywide basis, orders totaled $28.3 billion. Backlog at the end of the quarter was $103.7 billion. Estimated potential contract value, representing management's estimate of additional value in unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options, was $57.5 billion. Total estimated contract value, the sum of all backlog components, was $161.2 billion. 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 110,000 people worldwide and generated $47.7 billion in revenue in 2024. More information is available at WEBCAST INFORMATION: General Dynamics will webcast its second-quarter 2025 financial results conference call at 9 a.m. EDT on Wednesday, July 23, 2025. The webcast will be a listen-only audio event available at An on-demand replay of the webcast will be available by telephone two hours after the end of the call through July 30, 2025, at 800-770-2030 (international: +1 609-800-9909), conference ID 4299949. Charts furnished to investors and securities analysts in connection with General Dynamics' announcement of its financial results are available at This press release contains forward-looking statements (FLS), including statements about the company's future operational and financial performance, which are based on management's expectations, estimates, projections and assumptions. Words such as "expects," "anticipates," "plans," "believes," "forecasts," "scheduled," "outlook," "estimates," "should" and variations of these words and similar expressions are intended to identify FLS. In making FLS, we rely on assumptions and analyses based on our experience and perception of historical trends; current conditions and expected future developments; and other factors, estimates and judgments we consider reasonable and appropriate based on information available to us at the time. FLS are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. FLS are not guarantees of future performance and involve factors, risks and uncertainties that are difficult to predict. Actual future results and trends may differ materially from what is forecast in the FLS. All FLS speak only as of the date they were made. We do not undertake any obligation to update or publicly release revisions to FLS to reflect events, circumstances or changes in expectations after the date of this press release. Additional information regarding these factors is contained in the company's filings with the SEC, and these factors may be revised or supplemented in future SEC filings. In addition, this press release contains some financial measures not prepared in accordance with U.S. generally accepted accounting principles (GAAP). While we believe these non-GAAP metrics provide useful information for investors, there are limitations associated with their use, and our calculations of these metrics may not be comparable to similarly titled measures of other companies. Non-GAAP metrics should not be considered in isolation from, or as a substitute for, GAAP measures. Reconciliations to comparable GAAP measures and other information relating to our non-GAAP measures are included in other filings with the SEC, which are available at EXHIBIT ACONSOLIDATED STATEMENT OF EARNINGS - (UNAUDITED)DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS Three Months EndedVariance June 29, 2025June 30, 2024$ %Revenue $ 13,041$ 11,976$ 1,065 8.9 %Operating costs and expenses (11,736)(10,820)(916) Operating earnings 1,3051,156149 12.9 %Other, net 1518(3) Interest, net (88)(84)(4) Earnings before income tax 1,2321,090142 13.0 %Provision for income tax, net (218)(185)(33) Net earnings $ 1,014$ 905$ 109 12.0 %Earnings per share—basic $ 3.78$ 3.30$ 0.48 14.5 %Basic weighted average shares outstanding 268.1274.1 Earnings per share—diluted $ 3.74$ 3.26$ 0.48 14.7 %Diluted weighted average shares outstanding 270.9277.7 EXHIBIT BCONSOLIDATED STATEMENT OF EARNINGS - (UNAUDITED)DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS Six Months EndedVariance June 29, 2025June 30, 2024$ %Revenue $ 25,264$ 22,707$ 2,557 11.3 %Operating costs and expenses (22,691)(20,515)(2,176) Operating earnings 2,5732,192381 17.4 %Other, net 36324 Interest, net (177)(166)(11) Earnings before income tax 2,4322,058374 18.2 %Provision for income tax, net (424)(354)(70) Net earnings $ 2,008$ 1,704$ 304 17.8 %Earnings per share—basic $ 7.48$ 6.22$ 1.26 20.3 %Basic weighted average shares outstanding 268.6273.8 Earnings per share—diluted $ 7.40$ 6.14$ 1.26 20.5 %Diluted weighted average shares outstanding 271.3277.4 EXHIBIT CREVENUE AND OPERATING EARNINGS BY SEGMENT - (UNAUDITED)DOLLARS IN MILLIONS Three Months EndedVariance June 29, 2025June 30, 2024$ %Revenue:Aerospace $ 3,062$ 2,940$ 122 4.1 %Marine Systems 4,2203,453767 22.2 %Combat Systems 2,2832,288(5) (0.2) %Technologies 3,4763,295181 5.5 %Total $ 13,041$ 11,976$ 1,065 8.9 %Operating earnings: Aerospace $ 403$ 319$ 84 26.3 %Marine Systems 29124546 18.8 %Combat Systems 32431311 3.5 %Technologies 33232012 3.8 %Corporate (45)(41)(4) (9.8) %Total $ 1,305$ 1,156$ 149 12.9 %Operating margin:Aerospace 13.2 %10.9 % Marine Systems 6.9 %7.1 % Combat Systems 14.2 %13.7 % Technologies 9.6 %9.7 % Total 10.0 %9.7 % EXHIBIT DREVENUE AND OPERATING EARNINGS BY SEGMENT - (UNAUDITED)DOLLARS IN MILLIONS Six Months EndedVariance June 29, 2025June 30, 2024$ %Revenue:Aerospace $ 6,088$ 5,024$ 1,064 21.2 %Marine Systems 7,8096,7841,025 15.1 %Combat Systems 4,4594,39069 1.6 %Technologies 6,9086,509399 6.1 %Total $ 25,264$ 22,707$ 2,557 11.3 %Operating earnings: Aerospace $ 835$ 574$ 261 45.5 %Marine Systems 54147764 13.4 %Combat Systems 61559520 3.4 %Technologies 66061545 7.3 %Corporate (78)(69)(9) (13.0) %Total $ 2,573$ 2,192$ 381 17.4 %Operating margin:Aerospace 13.7 %11.4 % Marine Systems 6.9 %7.0 % Combat Systems 13.8 %13.6 % Technologies 9.6 %9.4 % Total 10.2 %9.7 % EXHIBIT ECONSOLIDATED BALANCE SHEETDOLLARS IN MILLIONS (Unaudited)June 29, 2025December 31, 2024 ASSETSCurrent assets:Cash and equivalents $ 1,523$ 1,697 Accounts receivable 3,6132,977 Unbilled receivables 8,4128,248 Inventories 9,8899,724 Other current assets 1,6291,740 Total current assets 25,06624,386 Noncurrent assets:Property, plant and equipment, net 6,5566,467 Intangible assets, net 1,4371,520 Goodwill 20,87620,556 Other assets 2,9532,951 Total noncurrent assets 31,82231,494 Total assets $ 56,888$ 55,880 LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilities:Short-term debt and current portion of long-term debt $ 1,204$ 1,502 Accounts payable 3,0783,344 Customer advances and deposits 10,6789,491 Other current liabilities 3,4193,487 Total current liabilities 18,37917,824 Noncurrent liabilities:Long-term debt 7,5087,260 Other liabilities 7,4218,733 Total noncurrent liabilities 14,92915,993 Shareholders' equity:Common stock 482482 Surplus 4,1734,062 Retained earnings 42,69541,487 Treasury stock (22,975)(22,450) Accumulated other comprehensive loss (795)(1,518) Total shareholders' equity 23,58022,063 Total liabilities and shareholders' equity $ 56,888$ 55,880 EXHIBIT FCONSOLIDATED STATEMENT OF CASH FLOWS - (UNAUDITED)DOLLARS IN MILLIONS Six Months EndedJune 29, 2025June 30, 2024 Cash flows from operating activities—continuing operations:Net earnings $ 2,008$ 1,704 Adjustments to reconcile net earnings to net cash from operating activities:Depreciation of property, plant and equipment 325311 Amortization of intangible and finance lease right-of-use assets 121117 Equity-based compensation expense 8987 Deferred income tax benefit (98)(90) (Increase) decrease in assets, net of effects of business acquisitions:Accounts receivable (612)(158) Unbilled receivables (200)(601) Inventories (207)(1,152) Increase (decrease) in liabilities, net of effects of business acquisitions:Accounts payable (261)(125) Customer advances and deposits 106169 Other, net 179274 Net cash provided by operating activities 1,450536 Cash flows from investing activities:Capital expenditures (340)(360) Other, net 12453 Net cash used by investing activities (216)(307) Cash flows from financing activities:Repayment of fixed-rate notes (1,500)— Proceeds from fixed-rate notes 747— Proceeds from commercial paper, net 696— Dividends paid (785)(750) Purchases of common stock (600)(139) Other, net 39111 Net cash used by financing activities (1,403)(778) Net cash used by discontinued operations (5)(2) Net decrease in cash and equivalents (174)(551) Cash and equivalents at beginning of period 1,6971,913 Cash and equivalents at end of period $ 1,523$ 1,362 EXHIBIT GADDITIONAL FINANCIAL INFORMATION - (UNAUDITED)DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTSOther Financial Information: June 29, 2025December 31, 2024 Debt-to-equity (a) 36.9 %39.7 % Book value per share (b) $ 87.66$ 81.61 Shares outstanding 268,993,342270,340,502Second QuarterSix Months2025202420252024 Income tax (payments) refunds, net $ (202)$ 81$ (236)$ 48 Company-sponsored research and development (c) $ 119$ 147$ 220$ 284 Return on sales (d) 7.8 %7.6 %7.9 %7.5 % Non-GAAP Financial Measures: Second QuarterSix Months2025202420252024 Free cash flow:Net cash provided by operating activities $ 1,598$ 814$ 1,450$ 536 Capital expenditures (198)(201)(340)(360) Free cash flow (e) $ 1,400$ 613$ 1,110$ 176June 29, 2025December 31, 2024 Net debt:Total debt $ 8,712$ 8,762 Less cash and equivalents 1,5231,697 Net debt (f) $ 7,189$ 7,065‌ (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 from 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 HBACKLOG - (UNAUDITED)DOLLARS IN MILLIONSFundedUnfundedTotal BacklogEstimated Potential Contract Value*Total Estimated Contract Value Second Quarter 2025: Aerospace$ 18,676$ 1,227$ 19,903$ 1,165$ 21,068 Marine Systems39,29813,67452,97214,70867,680 Combat Systems15,96161616,5779,59226,169 Technologies9,9454,28514,23032,01146,241 Total$ 83,880$ 19,802$ 103,682$ 57,476$ 161,158 First Quarter 2025: Aerospace$ 18,171$ 828$ 18,999$ 1,090$ 20,089 Marine Systems30,8827,49138,37310,26148,634 Combat Systems16,12979916,9288,64925,577 Technologies9,7514,60614,35732,67047,027 Total$ 74,933$ 13,724$ 88,657$ 52,670$ 141,327 Second Quarter 2024: Aerospace$ 19,126$ 911$ 20,037$ 372$ 20,409 Marine Systems29,91211,43641,3483,98345,331 Combat Systems16,00367316,6765,81622,492 Technologies9,3653,87513,24028,28341,523 Total$ 74,406$ 16,895$ 91,301$ 38,454$ 129,755 * 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-1BACKLOG - (UNAUDITED)DOLLARS IN MILLIONS EXHIBIT H-2BACKLOG BY SEGMENT - (UNAUDITED)DOLLARS IN MILLIONS EXHIBIT IAEROSPACE SUPPLEMENTAL DATA - (UNAUDITED)DOLLARS IN MILLIONSSecond Quarter Six Months 2025202420252024 Gulfstream Aircraft Deliveries (units): Large-cabin aircraft32316252 Mid-cabin aircraft66129 Total38377461Aerospace Book-to-Bill: Orders*$ 4,003$ 2,673$ 6,364$ 5,099 Revenue3,0622,9406,0885,024 Book-to-Bill Ratio1.3x0.9x1.0x1.0x * Does not include customer defaults, liquidated damages, cancellations, foreign exchange fluctuations and other backlog adjustments. 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Q1 Earnings Outperformers: General Dynamics (NYSE:GD) And The Rest Of The Defense Contractors Stocks
Q1 Earnings Outperformers: General Dynamics (NYSE:GD) And The Rest Of The Defense Contractors Stocks

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time09-05-2025

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Q1 Earnings Outperformers: General Dynamics (NYSE:GD) And The Rest Of The Defense Contractors Stocks

Let's dig into the relative performance of General Dynamics (NYSE:GD) and its peers as we unravel the now-completed Q1 defense contractors earnings season. Defense contractors typically require technical expertise and government clearance. Companies in this sector can also enjoy long-term contracts with government bodies, leading to more predictable revenues. Combined, these factors create high barriers to entry and can lead to limited competition. Lately, geopolitical tensions–whether it be Russia's invasion of Ukraine or China's aggression towards Taiwan–highlight the need for defense spending. On the other hand, demand for these products can ebb and flow with defense budgets and even who is president, as different administrations can have vastly different ideas of how to allocate federal funds. The 13 defense contractors stocks we track reported a strong Q1. As a group, revenues beat analysts' consensus estimates by 1.6% while next quarter's revenue guidance was in line. In light of this news, share prices of the companies have held steady as they are up 1.1% on average since the latest earnings results. Creator of the famous M1 Abrahms tank, General Dynamics (NYSE:GD) develops aerospace, marine systems, combat systems, and information technology products. General Dynamics reported revenues of $12.22 billion, up 13.9% year on year. This print exceeded analysts' expectations by 1.8%. Despite the top-line beat, it was still a mixed quarter for the company with a solid beat of analysts' adjusted operating income estimates but a significant miss of analysts' backlog estimates. "We continue to see steady growth and improvement in operating performance across the defense portfolio," said Phebe Novakovic, chairman and chief executive officer "The Aerospace segment saw a significant increase in profitability, reflecting the manufacturing efficiencies associated with reaching higher levels of production on our new aircraft models." The market was likely pricing in the results, and the stock is flat since reporting. It currently trades at $271.90. Is now the time to buy General Dynamics? Access our full analysis of the earnings results here, it's free. Formed through the split of IT services company SAIC, Leidos (NYSE:LDOS) offers technology and engineering solutions such as military training systems for the defense, civil, and health markets. Leidos reported revenues of $4.25 billion, up 6.8% year on year, outperforming analysts' expectations by 3.6%. The business had a very strong quarter with an impressive beat of analysts' backlog and EBITDA estimates. The market seems happy with the results as the stock is up 5.2% since reporting. It currently trades at $155.50. Is now the time to buy Leidos? Access our full analysis of the earnings results here, it's free. Responsible for the development of the first stealth bomber, Northrop Grumman (NYSE:NOC) specializes in providing aerospace, defense, and security solutions for various industry applications. Northrop Grumman reported revenues of $9.47 billion, down 6.6% year on year, falling short of analysts' expectations by 4.7%. It was a disappointing quarter as it posted full-year EPS guidance missing analysts' expectations. Northrop Grumman delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 9.2% since the results and currently trades at $482. Read our full analysis of Northrop Grumman's results here. Originally focused on refrigeration technology, Raytheon (NSYE:RTX) provides a a variety of products and services to the aerospace and defense industries. RTX reported revenues of $20.31 billion, up 5.2% year on year. This print topped analysts' expectations by 1.7%. Overall, it was a strong quarter as it also logged an impressive beat of analysts' EBITDA estimates. The stock is up 2% since reporting and currently trades at $128.49. Read our full, actionable report on RTX here, it's free. Developing submarine detection systems for the U.S. Navy, Leonardo DRS (NASDAQ:DRS) is a provider of defense systems, electronics, and military support services. Leonardo DRS reported revenues of $799 million, up 16.1% year on year. This number beat analysts' expectations by 9.2%. It was a very strong quarter as it also recorded a solid beat of analysts' adjusted operating income estimates and an impressive beat of analysts' EPS estimates. Leonardo DRS scored the biggest analyst estimates beat and fastest revenue growth among its peers. The stock is up 11.7% since reporting and currently trades at $41.27. Read our full, actionable report on Leonardo DRS here, it's free. In response to the Fed's rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed's 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump's presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025. Want to invest in winners with rock-solid fundamentals? Check out our Hidden Gem Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate. 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