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General Dynamics' (GD) Q2 Earnings Beat, Backlog Up Y/Y

Zacks Equity Research

General Dynamics Corporation GD reported second-quarter 2020 earnings from continuing operations of $2.18 per share, which beat the Zacks Consensus Estimate of $2.14 by 1.89%. Operating earnings, however, plunged 21.3% from $2.77 per share in the year-ago quarter.

Total Revenues

General Dynamics’ second-quarter revenues of $9,264 million surpassed the Zacks Consensus Estimate of $9,113 million by 1.7%. However, revenues declined 3% from $9,555 million in the year-ago quarter.

Backlog

General Dynamics recorded a total backlog of $82.7 billion, up 22% year over year. The year-over-year increase was owing to higher orders received by the Marine System segment. Funded backlog at the quarter-end was $54.4 billion.

Segmental Performance

Aerospace: The segment reported revenues of $1,974 million, down 7.6% year over year. However, operating earnings of $159 million plunged 52% from the prior-year quarter’s $331 million.

Combat Systems: Segment revenues rose 5.7% from the prior-year quarter to $1,754 million. However, operating earnings were down 1.2% from the year-ago quarter to $239 million.

Information Systems and Technology: The segment reported revenues of $1,884 million, which declined 12.7% year over year. Operating earnings also dropped 46.1% from the prior-year period to $83 million.

Marine Systems: The segment’s revenues of $2,471 million were up 6.3% from the year-ago quarter’s $2,325 million. Operating earnings also improved 1.5% from the year-ago level to $200 million.

Mission Systems: The segment’s revenues of $1,181 million declined 7.5% from the year-ago quarter’s $1,277 million. Operating earnings of $164 million, however, increased 1.2% from the year-ago quarter’s $162 million.

General Dynamics Corporation Price, Consensus and EPS Surprise

General Dynamics Corporation Price, Consensus and EPS Surprise
General Dynamics Corporation Price, Consensus and EPS Surprise

General Dynamics Corporation price-consensus-eps-surprise-chart | General Dynamics Corporation Quote

Operational Highlights

Company-wide operating margin contracted 230 basis points (bps) to 9.1% from the year-ago quarter’s 11.4%.

In the quarter under review, General Dynamics’ operating costs and expenses declined 0.5% from the year-ago period to $8,423 million.

Interest expenses in the reported quarter increased 10.9% year over year to $132 million.

Financial Condition

As of Jun 28, 2020, General Dynamics’ cash and cash equivalents were $2,300 million compared with $902 million on Dec 31, 2019.

Long-term debt as of Jun 28, 2020, was $10,470 million, which escalated from the 2019-end level of $9,010 million.

At the end of the first half of 2020, the company generated cash from operating activities of $177 million against $504 million used in the year-ago period.

Zacks Rank

General Dynamics currently carries a Zacks Rank #4 (Sell).

Recent Defense Releases

Teledyne Technologies TDY, a Zacks Rank #2 (Buy) stock, reported second-quarter 2020 adjusted earnings of $2.43 per share, which surpassed the Zacks Consensus Estimate of $2.01 by 20.9%.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Hexcel Corporation HXL, a Zacks Rank #2 stock, reported second-quarter 2020 adjusted earnings of 8 cents per share, which missed the Zacks Consensus Estimate of 20 cents by 60%.

Lockheed Martin LMT, a Zacks Rank #3 (Hold) stock, reported second-quarter 2020 adjusted earnings of $6.13 per share, which surpassed the Zacks Consensus Estimate of $5.71 by 7.4%.

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