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

Zacks Equity Research

General Dynamics Corporation GD reported second-quarter 2019 earnings from continuing operations of $2.77 per share, which beat the Zacks Consensus Estimate of $2.68 by 736%. Operating earnings also improved 5.7% from $2.62 in the year-ago quarter.

Total Revenues

General Dynamics’ second-quarter revenues of $9,555 million surpassed the Zacks Consensus Estimate of $9,402 million by 1.6%. Further, revenues increased 4% from $9,186 million in the year-ago quarter. In fact, revenues grew year over year in all the company’s segments (except the Information Systems and Technology segment).

Backlog

General Dynamics recorded a total backlog of $67.6 billion, up 1.96% year over year. The year-over-year increase in backlog was due to higher orders received by its Marine System segment. Funded backlog at the quarter-end was $54.4 billion.

 

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


Segmental Performance

Aerospace: The segment reported revenues of $2,136 million, up 12.7% year over year. However, operating earnings of $331 million declined 14.2% from the prior-year quarter’s $386 million.

Combat Systems: Segment revenues rose 8.1% from the prior-year quarter to $1,659 million. Moreover, operating earnings were up 2.5% from the year-ago quarter to $242 million.

Information Systems and Technology: The segment reported revenues of $2,158 million, which declined 11.6% year over year. Operating earnings also dropped 1.3% from the prior-year period to $154 million.

Marine Systems: The segment’s revenues of $2,325 million were up 7.2% from the year-ago quarter’s $2,168 million. Operating earnings also improved 1% from the year-ago level to $197 million.

Mission Systems: The segment’s revenues of $1,277 million increased 11.3% from the year-ago quarter’s $1,147 million. Operating earnings of $162 million also increased 5.9% from the year-ago quarter’s $153 million.

Operational Highlights

Company-wide operating margin contracted 40 basis points (bps) to 11.4% from the year-ago quarter’s 11.8%.

In the quarter under review, General Dynamics’ operating costs and expenses rose 14.3% from the year-ago period to $16,712 million.

Interest expenses in the reported quarter increased 81.5% year over year to $236 million.

Financial Condition

As of Jun 30, 2019, General Dynamics’ cash and cash equivalents were $702 million compared with $963 million on Dec 31, 2018.

Long-term debt as of Jun 30, 2019 was $8,975 million, which massively declined from the 2018-end level of $11,444 million.

In the first six months of 2019, the company’s cash used for operating activities was $504 million compared with $291 million cash provided by operating activities in the comparable year-ago period.

Zacks Rank

General Dynamics currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Defense Releases

Textron Inc. TXT reported second-quarter 2019 earnings from continuing operations of 93 cents per share, which surpassed the Zacks Consensus Estimate of 85 cents by 9.4%.

Lockheed Martin Corp. LMT reported second-quarter 2019 earnings of $5 per share, which surpassed the Zacks Consensus Estimate of $4.74 by 5.5%.

Hexcel Corporation HXL reported second-quarter 2019 earnings of 94 cents per share, which surpassed the Zacks Consensus Estimate of 88 cents by 6.8%.

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