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General Dynamics Reports First-Quarter 2021 Financial Results

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- Revenue of $9.4 billion, up 7.3% from year-ago quarter; growth in all four segments

- Net earnings of $708 million, diluted EPS of $2.48

- Record-high backlog of $89.6 billion, up 4.5% from year-ago quarter

RESTON, Va., April 28, 2021 /PRNewswire/ -- General Dynamics (NYSE: GD) today reported first-quarter 2021 net earnings of $708 million on revenue of $9.4 billion. Diluted earnings per share (EPS) were $2.48.

Revenue grew year-over-year by 7.3% company-wide, with growth in all four segments and growth exceeding 10% in the Aerospace and Marine Systems segments. Company-wide operating margin for the quarter was 10%. Orders remained strong, with backlog up 4.5% from the year-ago quarter to a record $89.6 billion.

"Continued recovery from the pandemic coupled with our focus on operating performance yielded a strong quarter, with year-over-year earnings growth driven by increased revenue across all of our four business segments," said Phebe N. Novakovic, chairman and chief executive officer. "Our improved cash outlook enabled us to continue investing in future growth while returning capital to shareholders."

Cash
Net cash provided by operating activities in the quarter totaled $3 million, compared with a use of cash of $666 million in the year-ago quarter. Free cash flow from operations, defined as net cash provided by operating activities less capital expenditures, was a net outflow of $131 million. During the quarter, the company invested $134 million in capital expenditures, paid $315 million in dividends, and repurchased $744 million in shares at an average price of $161.38 per share, ending the quarter with $1.8 billion in cash and equivalents on hand.

Backlog
Total backlog at the end of first-quarter 2021 was $89.6 billion, up 4.5% from the year-ago quarter. Estimated potential contract value, representing management's estimate of value in unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options, was $41.8 billion. Total estimated contract value, the sum of all backlog components, was $131.4 billion at the end of the quarter.

Order activity was strong across the company, with a total book-to-bill ratio (orders divided by revenue) of 1-to-1 for the quarter. Orders rose faster than revenue in the Aerospace and Technologies segments, with book-to-bill ratios for the quarter of 1.3-to-1 and 1.1-to1, respectively.

Significant awards in the quarter included a contract with a maximum potential value of $12.6 billion among multiple awardees to provide information technology (IT) and technical support services to intelligence agencies under the Solutions for the Information Technology Enterprise (SITE) III program; $1.9 billion from the U.S. Navy for the construction of a 10th Block V Virginia-class submarine; a contract with a maximum potential value of $805 million among multiple awardees to provide ship modernization services to the Navy; $295 million from the U.S. Army for various munitions and ordnance; $225 million from the Army for inventory management and support services for its Stryker vehicle fleet; $200 million from the Federal Emergency Management Agency (FEMA) to provide Coronavirus (COVID-19)-related contact-center operations and support services; $190 million in contracts from the Army for technical support and upgrades for Abrams main battle tanks; and $175 million from the Army for computing and communications equipment under the Common Hardware Systems-5 (CHS-5) program.

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 $37.9 billion in revenue in 2020. More information is available at www.gd.com.

Certain statements made in this press release, including any statements as to future results of operations and financial projections, may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. 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, without limitation, 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 any revisions to 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 first-quarter 2021 financial results conference call at 9 a.m. EDT on Wednesday, April 28, 2021. The webcast will be a listen-only audio event available at www.gd.com. An on-demand replay of the webcast will be available one hour after the end of the call and end on May 5, 2021. To hear a recording of the conference call by telephone, please call 877-344-7529 (international: 412-317-0088); passcode 10153889. 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


April 4, 2021


March 29, 2020


$


%

Revenue

$

9,389



$

8,749



$

640



7.3

%

Operating costs and expenses

(8,451)



(7,815)



(636)




Operating earnings

938



934



4



0.4

%

Other, net

30



21



9




Interest, net

(123)



(107)



(16)




Earnings before income tax

845



848



(3)



(0.4)

%

Provision for income tax, net

(137)



(142)



5




Net earnings

$

708



$

706



$

2



0.3

%

Earnings per share—basic

$

2.49



$

2.45



$

0.04



1.6

%

Basic weighted average shares outstanding

284.1



288.6






Earnings per share—diluted

$

2.48



$

2.43



$

0.05



2.1

%

Diluted weighted average shares outstanding

285.2



289.9






EXHIBIT B

REVENUE AND OPERATING EARNINGS BY SEGMENT - (UNAUDITED)

DOLLARS IN MILLIONS



Three Months Ended


Variance


April 4, 2021


March 29, 2020


$


%

Revenue:








Aerospace

$

1,887



$

1,691



$

196



11.6

%

Marine Systems

2,483



2,246



237



10.6

%

Combat Systems

1,820



1,708



112



6.6

%

Technologies

3,199



3,104



95



3.1

%

Total

$

9,389



$

8,749



$

640



7.3

%

Operating earnings:








Aerospace

$

220



$

240



$

(20)



(8.3)

%

Marine Systems

200



184



16



8.7

%

Combat Systems

244



223



21



9.4

%

Technologies

306



298



8



2.7

%

Corporate

(32)



(11)



(21)



(190.9)

%

Total

$

938



$

934



$

4



0.4

%

Operating margin:








Aerospace

11.7

%


14.2

%





Marine Systems

8.1

%


8.2

%





Combat Systems

13.4

%


13.1

%





Technologies

9.6

%


9.6

%





Total

10.0

%


10.7

%





EXHIBIT C

CONSOLIDATED BALANCE SHEET

DOLLARS IN MILLIONS



(Unaudited)




April 4, 2021


December 31, 2020

ASSETS




Current assets:




Cash and equivalents

$

1,811



$

2,824


Accounts receivable

3,191



3,161


Unbilled receivables

7,987



8,024


Inventories

5,688



5,745


Other current assets

1,731



1,789


Total current assets

20,408



21,543


Noncurrent assets:




Property, plant and equipment, net

5,090



5,100


Intangible assets, net

2,043



2,117


Goodwill

19,972



20,053


Other assets

2,450



2,495


Total noncurrent assets

29,555



29,765


Total assets

$

49,963



$

51,308


LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:




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

$

3,186



$

3,003


Accounts payable

2,736



2,952


Customer advances and deposits

5,694



6,276


Other current liabilities

3,537



3,733


Total current liabilities

15,153



15,964


Noncurrent liabilities:




Long-term debt

9,995



9,995


Other liabilities

9,475



9,688


Total noncurrent liabilities

19,470



19,683


Shareholders' equity:




Common stock

482



482


Surplus

3,152



3,124


Retained earnings

33,869



33,498


Treasury stock

(18,585)



(17,893)


Accumulated other comprehensive loss

(3,578)



(3,550)


Total shareholders' equity

15,340



15,661


Total liabilities and shareholders' equity

$

49,963



$

51,308


EXHIBIT D

CONSOLIDATED STATEMENT OF CASH FLOWS - (UNAUDITED)

DOLLARS IN MILLIONS



Three Months Ended


April 4, 2021


March 29, 2020

Cash flows from operating activities—continuing operations:




Net earnings

$

708



$

706


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




Depreciation of property, plant and equipment

136



122


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

79



90


Equity-based compensation expense

40



30


Deferred income tax benefit

(19)



(28)


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




Accounts receivable

(30)



(33)


Unbilled receivables

52



(78)


Inventories

57



(546)


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




Accounts payable

(216)



(375)


Customer advances and deposits

(544)



(373)


Other, net

(260)



(181)


Net cash provided (used) by operating activities

3



(666)


Cash flows from investing activities:




Capital expenditures

(134)



(185)


Other, net

3



8


Net cash used by investing activities

(131)



(177)


Cash flows from financing activities:




Purchases of common stock

(759)



(449)


Dividends paid

(315)



(295)


Proceeds from fixed-rate notes



3,960


Proceeds from commercial paper, net



2,271


Other, net

201



(202)


Net cash (used) provided by financing activities

(873)



5,285


Net cash used by discontinued operations

(12)



(14)


Net (decrease) increase in cash and equivalents

(1,013)



4,428


Cash and equivalents at beginning of period

2,824



902


Cash and equivalents at end of period

$

1,811



$

5,330


EXHIBIT E

ADDITIONAL FINANCIAL INFORMATION - (UNAUDITED)

DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS


Other Financial Information:













April 4, 2021


December 31, 2020

Debt-to-equity (a)





85.9

%


83.0

%

Debt-to-capital (b)





46.2

%


45.4

%

Book value per share (c)





$

54.28



$

54.67


Shares outstanding





282,597,786



286,477,836













First Quarter






2021


2020

Income tax payments, net





$

33



$

43


Company-sponsored research and development (d)


$

90



$

78


Return on sales (e)





7.5

%


8.1

%









Non-GAAP Financial Measures:













First Quarter






2021


2020

Earnings before interest, taxes, depreciation and amortization:





Net earnings





$

708



$

706


Interest, net





123



107


Provision for income tax, net


137



142


Depreciation of property, plant and equipment


136



122


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


79



90


Earnings before interest, taxes, depreciation and amortization (f)


$

1,183



$

1,167










Free cash flow from operations:








Net cash provided (used) by operating activities


$

3



$

(666)


Capital expenditures





(134)



(185)


Free cash flow from operations (g)





$

(131)



$

(851)




(a)

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



(b)

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



(c)

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



(d)

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



(e)

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



(f)

We believe earnings before interest, taxes, depreciation and amortization (EBITDA) is a useful measure for investors because it provides another measure of our profitability and our ability to service our debt. We calculate EBITDA by adding back interest, taxes, depreciation and amortization to net earnings. The most directly comparable GAAP measure to EBITDA is net earnings.



(g)

We believe free cash flow from operations is a useful measure for investors because it portrays our ability to generate cash from our businesses for purposes such as repaying maturing debt, funding business acquisitions, repurchasing our common stock and paying dividends. We use free cash flow from operations to assess the quality of our earnings and as a key performance measure in evaluating management. The most directly comparable GAAP measure to free cash flow from operations is net cash provided (used) by operating activities.

EXHIBIT F

BACKLOG - (UNAUDITED)

DOLLARS IN MILLIONS




Funded


Unfunded


Total
Backlog


Estimated

Potential

Contract Value*


Total
Estimated
Contract Value

First Quarter 2021:











Aerospace


$

11,545



$

384



$

11,929



$

2,312



$

14,241


Marine Systems


27,676



22,075



49,751



2,815



52,566


Combat Systems


14,085



143



14,228



9,120



23,348


Technologies


10,003



3,670



13,673



27,530



41,203


Total


$

63,309



$

26,272



$

89,581



$

41,777



$

131,358


Fourth Quarter 2020:











Aerospace


$

11,308



$

318



$

11,626



$

2,800



$

14,426


Marine Systems


23,646



26,336



49,982



4,876



54,858


Combat Systems


14,341



226



14,567



9,774



24,341


Technologies


9,488



3,826



13,314



27,727



41,041


Total


$

58,783



$

30,706



$

89,489



$

45,177



$

134,666


First Quarter 2020:











Aerospace


$

12,998



$

274



$

13,272



$

2,837



$

16,109


Marine Systems


26,112



17,053



43,165



4,460



47,625


Combat Systems


14,373



244



14,617



4,253



18,870


Technologies


10,322



4,356



14,678



26,595



41,273


Total


$

63,805



$

21,927



$

85,732



$

38,145



$

123,877




*

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 F-1

BACKLOG - (UNAUDITED)

DOLLARS IN MILLIONS

Exhibit F-1
Exhibit F-1

https://mma.prnewswire.com/media/1497917/Exhibit_F_1.jpg

EXHIBIT F-2

BACKLOG BY SEGMENT - (UNAUDITED)

DOLLARS IN MILLIONS

EXHIBIT F-2 Aerospace
EXHIBIT F-2 Aerospace

https://mma.prnewswire.com/media/1497918/EXHIBIT_F_2_Aerospace.jpg

EXHIBIT F-2 Marine Systems
EXHIBIT F-2 Marine Systems

https://mma.prnewswire.com/media/1497920/EXHIBIT_F_2_Marine_Systems.jpg

EXHIBIT F-2 Combat Systems
EXHIBIT F-2 Combat Systems

https://mma.prnewswire.com/media/1497923/EXHIBIT_F_2_Combat_Systems.jpg

EXHIBIT F-2 Technologies
EXHIBIT F-2 Technologies

https://mma.prnewswire.com/media/1497925/EXHIBIT_F_2_Technologies.jpg

EXHIBIT F-2 Segment Key
EXHIBIT F-2 Segment Key

https://mma.prnewswire.com/media/1497926/EXHIBIT_F_2_Segment_Key.jpg

EXHIBIT G

FIRST QUARTER 2021 SIGNIFICANT ORDERS - (UNAUDITED)

DOLLARS IN MILLIONS

We received the following significant contract awards during the first quarter of 2021:

Marine Systems:

  • $1.9 billion from the U.S. Navy for the construction of a tenth submarine in Block V of the Virginia-class submarine program.

  • $75 from the Navy for Advanced Nuclear Plant Studies (ANPS) in support of the Columbia-class submarine program.

  • $30 from the Navy for maintenance and modernization work on the USS Princeton, a Ticonderoga-class guided-missile cruiser.

Combat Systems:

  • $295 from the U.S. Army for various munitions and ordnance.

  • $225 from the Army for inventory management and support services for the Stryker fleet.

  • $120 from the Army to provide systems technical support for Abrams main battle tanks.

  • $110 to produce M3 amphibious bridging vehicles for an international customer.

  • $70 from the Army to upgrade Abrams tanks to the M1A2 System Enhancement Package Version 3 (SEPv3) configuration.

Technologies:

  • A contract to provide information technology (IT) and technical support services to the Defense Intelligence Agency (DIA) and the National Geospatial-Intelligence Agency (NGA) under the Solutions for the Information Technology Enterprise (SITE) III program. The program has a maximum potential value of $12.6 billion among multiple awardees.

  • An IDIQ contract to provide ship, carrier, submarine and service craft modernization for the Navy. The program has a maximum potential value of $805 among multiple awardees.

  • $45 from the U.S. Coast Guard to provide sustainment support for the Rescue 21 program. The contract has a maximum potential value of $235.

  • $200 from the Federal Emergency Management Agency (FEMA) to provide Coronavirus (COVID-19)-related contact-center operations and support services.

  • $175 from the Army for computing and communications equipment under the Common Hardware Systems-5 (CHS-5) program.

  • $135 to provide enterprise IT, communications and mission command support services to U.S. Army Europe.

  • $130 to provide turnkey training and simulation services for the Army's Aviation Center of Excellence in Fort Rucker, Alabama.

  • $120 from the U.S. Air Force for the Battlefield Information Collection and Exploitation System (BICES) program to provide intelligence information sharing capabilities for the Department of Defense (DoD).

  • A contract to provide software development and IT support services to the U.S. Patent and Trademark Office. The contract has a maximum potential value of $95.

  • $70 from the Army for the production of Prophet enhanced ground-based signals intelligence and electronic warfare systems.

EXHIBIT H

AEROSPACE SUPPLEMENTAL DATA - (UNAUDITED)






First Quarter







2021


2020

Gulfstream Aircraft Deliveries (units):









Large-cabin aircraft






25



20


Mid-cabin aircraft






3



3


Total






28



23











Aerospace Book-to-Bill:









Orders*






$

2,457



$

1,856


Revenue






1,887



1,691


Book-to-Bill Ratio






1.30x



1.10x




*

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

General Dynamics (PRNewsFoto/General Dynamics) (PRNewsFoto/General Dynamics)
General Dynamics (PRNewsFoto/General Dynamics) (PRNewsFoto/General Dynamics)
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SOURCE General Dynamics