• Revenue $10.6 billion, up 6% year over year
  • Net earnings $836 million, diluted EPS $3.04
  • $1.3 billion net cash provided by operating activities
  • Record-high $95.6 billion backlog, 1.4-to-1 book-to-bill

RESTON, Va., Oct. 25, 2023 /PRNewswire/ -- General Dynamics (NYSE: GD) today reported third-quarter 2023 net earnings of $836 million on revenue of $10.6 billion. Diluted earnings per share (EPS) were $3.04.

"We continue to see strong demand and steady revenue growth across the business, resulting in significant growth in backlog," said Phebe N. Novakovic, chairman and chief executive officer. "Both operating earnings and net earnings increased over last quarter, and cash from operations was a highlight."

Cash
Net cash provided by operating activities in the quarter totaled $1.3 billion, or 158% of net earnings. After $227 million in capital expenditures, the company generated free cash flow from operations of $1.1 billion, or 131% of net earnings. During the quarter, the company repaid $500 million in fixed-rate notes, paid $363 million in dividends, and used $56 million to repurchase shares.

Backlog
Orders remained strong across the company with a consolidated book-to-bill ratio, defined as orders divided by revenue, of 1.4-to-1 for the quarter, with particular strength in the Marine Systems and Aerospace segments. Company-wide backlog of $95.6 billion was the highest in the company's history. Estimated potential contract value, which represents management's estimate of additional value in unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options, was $37.3 billion. Total estimated contract value, the sum of all backlog components, was $132.9 billion at the end of the quarter.

Aerospace received $2.9 billion in new orders during the quarter, growing backlog to $20.1 billion.

Significant awards in the quarter for the three defense segments included a U.S. Navy contract for an undisclosed amount for construction of three Flight III Arleigh Burke-class guided-missile destroyers; $1.5 billion in contracts for Virginia-class submarine lead yard services, development studies and design efforts, as well as spare parts for maintenance availabilities; $140 million, with a maximum potential value of $1.3 billion, for Columbia-class submarine advanced nuclear plant studies (ANPS); $1.1 billion, with maximum potential value up to $1.9 billion, for munitions, ordnance, and the establishment of additional production capacity; a Department of Homeland Security contract with maximum potential value of $710 million to continue infrastructure modernization of its St. Elizabeth's campus in Washington, D.C.; and $365 million, with maximum potential value of $775 million, for several key contracts for classified customers. 

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 $39.4 billion in revenue in 2022. More information is available at GD.com.

WEBCAST INFORMATION: General Dynamics will webcast its third-quarter 2023 financial results conference call today at 9 a.m. EDT. The webcast will be a listen-only audio event available at GD.com. An on-demand replay of the webcast will be available by telephone two hours after the end of the call through November 1, 2023, at 800-770-2030 (international: +1 647-362-9199), conference ID 4299949. Charts furnished to investors and securities analysts in connection with the announcement of financial results are available at GD.com

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 investorrelations.gd.com.

 

EXHIBIT A

CONSOLIDATED STATEMENT OF EARNINGS - (UNAUDITED)

DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS



Three Months Ended


Variance


October 1, 2023


October 2, 2022


$


%

Revenue

$                     10,571


$                       9,975


$        596


6.0 %

Operating costs and expenses

(9,514)


(8,877)


(637)



Operating earnings

1,057


1,098


(41)


(3.7) %

Other, net

19


41


(22)



Interest, net

(85)


(86)


1



Earnings before income tax

991


1,053


(62)


(5.9) %

Provision for income tax, net

(155)


(151)


(4)



Net earnings

$                          836


$                          902


$        (66)


(7.3) %

Earnings per share—basic

$                         3.07


$                         3.29


$     (0.22)


(6.7) %

Basic weighted average shares outstanding

272.6


273.9





Earnings per share—diluted

$                         3.04


$                         3.26


$     (0.22)


(6.7) %

Diluted weighted average shares outstanding

274.7


276.4





  

EXHIBIT B

CONSOLIDATED STATEMENT OF EARNINGS - (UNAUDITED)

DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS



Nine Months Ended


Variance


October 1, 2023


October 2, 2022


$


%

Revenue

$                     30,604


$                     28,556


$     2,048


7.2 %

Operating costs and expenses

(27,647)


(25,572)


(2,075)



Operating earnings

2,957


2,984


(27)


(0.9) %

Other, net

65


120


(55)



Interest, net

(265)


(279)


14



Earnings before income tax

2,757


2,825


(68)


(2.4) %

Provision for income tax, net

(447)


(427)


(20)



Net earnings

$                       2,310


$                       2,398


$        (88)


(3.7) %

Earnings per share—basic

$                         8.45


$                         8.70


$     (0.25)


(2.9) %

Basic weighted average shares outstanding

273.2


275.8





Earnings per share—diluted

$                         8.39


$                         8.61


$     (0.22)


(2.6) %

Diluted weighted average shares outstanding

275.4


278.4





 

EXHIBIT C

REVENUE AND OPERATING EARNINGS BY SEGMENT - (UNAUDITED)

DOLLARS IN MILLIONS



Three Months Ended


Variance


October 1, 2023


October 2, 2022


$


%

Revenue:








Aerospace

$                  2,032


$                   2,347


$          (315)


(13.4) %

Marine Systems

3,002


2,769


233


8.4 %

Combat Systems

2,224


1,788


436


24.4 %

Technologies

3,313


3,071


242


7.9 %

Total

$                10,571


$                   9,975


$            596


6.0 %

Operating earnings:








Aerospace

$                     268


$                      312


$            (44)


(14.1) %

Marine Systems

211


238


(27)


(11.3) %

Combat Systems

300


271


29


10.7 %

Technologies

315


285


30


10.5 %

Corporate

(37)


(8)


(29)


(362.5) %

Total

$                  1,057


$                   1,098


$            (41)


(3.7) %

Operating margin:








Aerospace

13.2 %


13.3 %





Marine Systems

7.0 %


8.6 %





Combat Systems

13.5 %


15.2 %





Technologies

9.5 %


9.3 %





Total

10.0 %


11.0 %





 

EXHIBIT D

REVENUE AND OPERATING EARNINGS BY SEGMENT - (UNAUDITED)

DOLLARS IN MILLIONS



Nine Months Ended


Variance


October 1, 2023


October 2, 2022


$


%

Revenue:








Aerospace

$                  5,877


$                   6,117


$          (240)


(3.9) %

Marine Systems

9,053


8,071


982


12.2 %

Combat Systems

5,904


5,129


775


15.1 %

Technologies

9,770


9,239


531


5.7 %

Total

$                30,604


$                 28,556


$         2,048


7.2 %

Operating earnings:








Aerospace

$                     733


$                      793


$            (60)


(7.6) %

Marine Systems

657


660


(3)


(0.5) %

Combat Systems

796


743


53


7.1 %

Technologies

897


887


10


1.1 %

Corporate

(126)


(99)


(27)


(27.3) %

Total

$                  2,957


$                   2,984


$            (27)


(0.9) %

Operating margin:








Aerospace

12.5 %


13.0 %





Marine Systems

7.3 %


8.2 %





Combat Systems

13.5 %


14.5 %





Technologies

9.2 %


9.6 %





Total

9.7 %


10.4 %





 

EXHIBIT E

CONSOLIDATED BALANCE SHEET

DOLLARS IN MILLIONS



(Unaudited)




October 1, 2023


December 31, 2022

ASSETS




Current assets:




Cash and equivalents

$                        1,352


$                        1,242

Accounts receivable

3,132


3,008

Unbilled receivables

8,453


8,795

Inventories

8,282


6,322

Other current assets

1,560


1,696

Total current assets

22,779


21,063

Noncurrent assets:




Property, plant and equipment, net

6,013


5,900

Intangible assets, net

1,681


1,824

Goodwill

20,386


20,334

Other assets

2,666


2,464

Total noncurrent assets

30,746


30,522

Total assets

$                      53,525


$                      51,585

LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:




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

$                               7


$                        1,253

Accounts payable

3,315


3,398

Customer advances and deposits

9,351


7,436

Other current liabilities

3,289


3,254

Total current liabilities

15,962


15,341

Noncurrent liabilities:




Long-term debt

9,248


9,243

Other liabilities

8,358


8,433

Total noncurrent liabilities

17,606


17,676

Shareholders' equity:




Common stock

482


482

Surplus

3,671


3,556

Retained earnings

38,626


37,403

Treasury stock

(21,124)


(20,721)

Accumulated other comprehensive loss

(1,698)


(2,152)

Total shareholders' equity

19,957


18,568

Total liabilities and shareholders' equity

$                      53,525


$                      51,585

 

EXHIBIT F

CONSOLIDATED STATEMENT OF CASH FLOWS - (UNAUDITED)

DOLLARS IN MILLIONS



Nine Months Ended


October 1, 2023


October 2, 2022

Cash flows from operating activities—continuing operations:




Net earnings

$                      2,310


$                      2,398

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




Depreciation of property, plant and equipment

446


420

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

195


224

Equity-based compensation expense

136


140

Deferred income tax benefit

(158)


(132)

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




Accounts receivable

(89)


259

Unbilled receivables

448


422

Inventories

(1,904)


(915)

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




Accounts payable

(83)


(68)

Customer advances and deposits

2,171


1,598

Other, net

42


(436)

Net cash provided by operating activities

3,514


3,910

Cash flows from investing activities:




Capital expenditures

(600)


(620)

Other, net

(8)


(378)

Net cash used by investing activities

(608)


(998)

Cash flows from financing activities:




Repayment of fixed-rate notes

(1,250)


Dividends paid

(1,068)


(1,024)

Purchases of common stock

(434)


(1,119)

Other, net

(40)


103

Net cash used by financing activities

(2,792)


(2,040)

Net cash (used) provided by discontinued operations

(4)


21

Net increase in cash and equivalents

110


893

Cash and equivalents at beginning of period

1,242


1,603

Cash and equivalents at end of period

$                      1,352


$                      2,496

 

EXHIBIT G

ADDITIONAL FINANCIAL INFORMATION - (UNAUDITED)

DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS


Other Financial Information:









October 1, 2023


December 31, 2022





Debt-to-equity (a)

46.4 %


56.5 %





Book value per share (b)

$                73.13


$                 67.66





Shares outstanding

272,896,860


274,411,106














Third Quarter


Nine Months


2023


2022


2023


2022

Income tax payments, net

$                   167


$                    202


$                   493


$                    767

Company-sponsored research and development (c)

$                   140


$                    124


$                   395


$                    361

Return on sales (d)

7.9 %


9.0 %


7.5 %


8.4 %









Non-GAAP Financial Measures:









Third Quarter


Nine Months


2023


2022


2023


2022

Free cash flow:








Net cash provided by operating activities

$                1,321


$                 1,283


$                3,514


$                 3,910

Capital expenditures

(227)


(255)


(600)


(620)

Free cash flow (e)

$                1,094


$                 1,028


$                2,914


$                 3,290










October 1, 2023


December 31, 2022





Net debt:








Total debt

$                9,255


$               10,496





Less cash and equivalents

1,352


1,242





Net debt (f)

$                7,903


$                 9,254






(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 2023:











Aerospace


$            19,654


$                 405


$            20,059


$                        785


$               20,844

Marine Systems


30,445


17,277


47,722


3,113


50,835

Combat Systems


14,375


719


15,094


6,098


21,192

Technologies


9,833


2,852


12,685


27,302


39,987

Total


$            74,307


$            21,253


$            95,560


$                   37,298


$             132,858

Second Quarter 2023:











Aerospace


$            19,050


$                 447


$            19,497


$                        888


$               20,385

Marine Systems


30,318


13,410


43,728


3,238


46,966

Combat Systems


14,349


718


15,067


6,196


21,263

Technologies


9,732


3,333


13,065


27,639


40,704

Total


$            73,449


$            17,908


$            91,357


$                   37,961


$             129,318

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


*   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/2256027/Exhibit_H_1.jpg

EXHIBIT H-2

BACKLOG BY SEGMENT - (UNAUDITED)

DOLLARS IN MILLIONS

EXHIBIT H-2

https://mma.prnewswire.com/media/2256026/Exhibit_H_2.jpg

EXHIBIT I

THIRD QUARTER 2023 SIGNIFICANT ORDERS - (UNAUDITED)

DOLLARS IN MILLIONS

We received the following significant contract awards during the third quarter of 2023:

Marine Systems:

  • $140 from the U.S. Navy for advanced nuclear plant studies (ANPS) in support of the Columbia-class submarine program. The contract including options has a maximum potential value of $1.3 billion.
  • $965 from the Navy for lead yard services, development studies and design efforts for Virginia-class submarines.
  • $515 from the Navy for procurement and delivery of initial Virginia-class spare parts to support maintenance availabilities.
  • $220 from the Navy to provide in-service support of systems and components on the USS Jimmy Carter (SSN23).
  • $40 from the Navy to provide maintenance for submarines at the Naval Submarine Base New London in Connecticut. The contract including options has a maximum potential value of $185.
  • A contract from the Navy for the construction of three Flight III Arleigh Burke-class (DDG-51) guided-missile destroyers.

Combat Systems:

  • $770 for various munitions and ordnance with a maximum potential value of $1.2 billion.
  • $345 for two contracts from the U.S. Army to establish additional capacity for 155mm M795 load, assemble and pack (LAP) production, and projectile metal parts. These contracts have a maximum potential value of $730.
  • $145 from the Army to provide system and sustainment technical support services for Abrams main battle tanks.
  • $135 to produce launch pod containers for the Guided Multiple Launch Rocket System (GMLRS) for the Army.
  • $100 from the Army to produce Stryker maneuver short-range air defense (M-SHORAD) vehicles.
  • $95 from the Army for the production of Hydra-70 rockets.

Technologies:

  • $365 for several key contracts for classified customers. These contracts have a maximum potential value of $775.
  • $55 to continue infrastructure modernization of the U.S. Department of Homeland Security's (DHS) St. Elizabeth's Campus in Washington, D.C. The contract including options has a maximum potential value of $710.
  • $10 from the U.S. Air Force to manufacture high-altitude electromagnetic pulse and radiation-hardened general area alerting, personal area alerting and ultra-high frequency line of sight communications for the Global Aircrew Strategic Network Terminal Increment 2 (GASNTi2) system. The contract has a maximum potential value of $225.
  • $30 to provide software development, integration, testing, technical support, configuration control and sustainment services for the Air Force. The contract including options has a maximum potential value of $140.
  • $20 from the Administrative Office of the United States Courts (AOUSC) to provide risk management, monitoring and oversight and support services to the Administrative Office Technology Office (AOTO). The contract including options has a maximum potential value of $115.
  • $105 from the Army for computing and communications equipment under the Common Hardware Systems-5 program.
  • $95 for development, production and support of all hardware and software required for the Airborne Ruggedized Tactical Environment Mission Information System (ARTEMIS) for the Navy.
  • $90 to modernize the Payments, Claims, and Enhanced Reconciliation (PACER) application for the U.S. Department of the Treasury.

 

EXHIBIT J

AEROSPACE SUPPLEMENTAL DATA - (UNAUDITED)

DOLLARS IN MILLIONS




Third Quarter

Nine Months



2023


2022


2023


2022

Gulfstream Aircraft Deliveries (units):









Large-cabin aircraft


22


28


57


66

Mid-cabin aircraft


5


7


15


16

Total


27


35


72


82










Aerospace Book-to-Bill:









Orders*


$                2,916


$                2,705


$              7,119


$              9,600

Revenue


2,032


2,347


5,877


6,117

Book-to-Bill Ratio


1.44x


1.15x


1.21x


1.57x


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

 

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

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