General Dynamics Reports Second-Quarter 2019 Results
FALLS CHURCH, Va., July 24, 2019 /PRNewswire/ --
-- Revenue of $9.6 billion, up 4% year-over-year
-- Diluted earnings per share of $2.77, up 5.7% year-over-year
-- Gulfstream G600 achieves FAA certification
General Dynamics (NYSE: GD) today reported second-quarter 2019 revenue of $9.6 billion, up 4 percent year-over-year, with net earnings of $806 million. Diluted earnings per share were $2.77, an increase of 5.7 percent year-over-year.
Operating margins increased sequentially by 50 basis points over the previous quarter to 11.4 percent. In June, the all-new Gulfstream G600 earned both its type and production certificates from the U.S. Federal Aviation Administration.
"Our second-quarter results reflect our relentless focus on driving down costs and improving performance," said Phebe Novakovic, chairman and chief executive officer. "That focus on performance remains unwavering as we ramp up production of new aircraft, begin construction of both a new block and new class of submarines, and solidify our market-leading position in Information Technology."
Backlog
General Dynamics' total backlog at the end of second-quarter 2019 was $67.7 billion. Estimated potential contract value, representing management's estimate of value in unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options, was $34.2 billion. Total estimated contract value, the sum of all backlog components, was $101.9 billion, up 3 percent year-over-year.
Order activity remained strong across the aerospace and defense portfolios. Aerospace booked $2.2 billion in orders in the quarter, a 1-to-1 book-to-bill on 12.7 percent year-over-year revenue growth. Significant awards in defense portfolios in the quarter included $495 million from the U.S. Navy for industrial base development and expansion in support of the Columbia-class ballistic missile submarine program, $360 million in contracts to provide intelligence services to classified customers, $270 million from the Navy to support the joint U.S. and U.K. development of the submarine Common Missile Compartment and $260 million from the U.S. Army for production of munitions. Information Technology posted a strong book-to-bill of 1.2-to-1, driven by a $1 billion U.S. Department of State contract to provide global engineering and supply chain services.
About General Dynamics
Headquartered in Falls Church, Virginia, General Dynamics is a global aerospace and defense company that offers a broad portfolio of products and services in business aviation; combat vehicles, weapons systems and munitions; IT services; C4ISR solutions; and shipbuilding and ship repair. General Dynamics employs more than 100,000 people worldwide and generated $36.2 billion in revenue in 2018. More information is available at www.generaldynamics.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 and its Quarterly Reports on Form 10-Q. 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 second-quarter 2019 financial results conference call at 9 a.m. EDT on Wednesday, July 24, 2019. The webcast will be a listen-only audio event available at www.generaldynamics.com. An on-demand replay of the webcast will be available by 12 p.m. on July 24 and will continue for 12 months. To hear a recording of the conference call by telephone, please call 877-344-7529 (international: 412-317-0088); passcode 10132448. The phone replay will be available through August 1, 2019.
Charts furnished to investors and securities analysts in connection with General Dynamics' announcement of its financial results for second-quarter 2019 are available at www.generaldynamics.com.
EXHIBIT A
CONSOLIDATED STATEMENT OF EARNINGS - (UNAUDITED)
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS
Three Months Ended Variance
June 30, 2019 July 1, 2018*
$ %
---
Revenue $
9,555 $
9,186 $
369 4.0
%
Operating costs and expenses (8,465) (8,098) (367)
Operating earnings 1,090 1,088 2 0.2
%
Interest, net (119) (103) (16)
Other, net 12 (15) 27
Earnings before income tax 983 970 13 1.3
%
Provision for income tax, net (177) (184) 7
Net earnings $
806 $
786 $
20 2.5
%
Earnings per share-basic $
2.80 $
2.65 $
0.15 5.7
%
Basic weighted average shares outstanding 288.1 296.2
Earnings per share-diluted $
2.77 $
2.62 $
0.15 5.7
%
Diluted weighted average shares outstanding 290.8 300.1
* 2018 results include the unfavorable
impact of one-time charges of
approximately $70 associated with
costs to complete the acquisition
of CSRA Inc. In the table above,
approximately $45 of compensation-
related costs was reported in
operating costs and expenses, and
approximately $25 of transaction
costs was reported in other, net.
EXHIBIT B
CONSOLIDATED STATEMENT OF EARNINGS - (UNAUDITED)
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS
Six Months Ended Variance
June 30, 2019 July 1, 2018*
$ %
---
Revenue $
18,816 $
16,721 $
2,095 12.5
%
Operating costs and expenses (16,712) (14,625) (2,087)
Operating earnings 2,104 2,096 8 0.4
%
Interest, net (236) (130) (106)
Other, net 30 (36) 66
Earnings before income tax 1,898 1,930 (32) (1.7)
%
Provision for income tax, net (347) (345) (2)
Net earnings $
1,551 $
1,585 $
(34) (2.1)
%
Earnings per share-basic $
5.39 $
5.35 $
0.04 0.7
%
Basic weighted average shares outstanding 288.0 296.3
Earnings per share-diluted $
5.33 $
5.27 $
0.06 1.1
%
Diluted weighted average shares outstanding 290.8 300.6
* 2018 results include the unfavorable
impact of one-time charges of
approximately $75 associated with
costs to complete the acquisition
of CSRA Inc. In the table above,
approximately $45 of compensation-
related costs was reported in
operating costs and expenses, and
approximately $30 of transaction
costs was reported in other, net.
EXHIBIT C
REVENUE AND OPERATING EARNINGS BY SEGMENT - (UNAUDITED)
DOLLARS IN MILLIONS
Three Months Ended Variance
June 30, 2019 July 1, 2018*
$ %
---
Revenue:
---
Aerospace $
2,136 $
1,895 $
241 12.7
%
Combat Systems 1,659 1,534 125 8.1
%
Information Technology 2,158 2,442 (284) (11.6)
%
Mission Systems 1,277 1,147 130 11.3
%
Marine Systems 2,325 2,168 157 7.2
%
Total $
9,555 $
9,186 $
369 4.0
%
Operating earnings:
---
Aerospace $
331 $
386 $
(55) (14.2)
%
Combat Systems 242 236 6 2.5
%
Information Technology 154 156 (2) (1.3)
%
Mission Systems 162 153 9 5.9
%
Marine Systems 197 195 2 1.0
%
Corporate 4 (38) 42 110.5
%
Total $
1,090 $
1,088 $
2 0.2
%
Operating margin:
---
Aerospace 15.5
%
% 20.4
Combat Systems 14.6
%
% 15.4
Information Technology 7.1 6.4
% %
Mission Systems 12.7
%
% 13.3
Marine Systems 8.5 9.0
% %
Total 11.4
%
% 11.8
* 2018 results include the unfavorable
impact of approximately $45 of
compensation-related one-time
charges associated with costs to
complete the acquisition of CSRA
Inc. This amount was reported as a
reduction of Corporate operating
earnings in the table above.
EXHIBIT D
REVENUE AND OPERATING EARNINGS BY SEGMENT - (UNAUDITED)
DOLLARS IN MILLIONS
Six Months Ended Variance
June 30, 2019 July 1, 2018*
$ %
---
Revenue:
---
Aerospace $
4,376 $
3,720 $
656 17.6
%
Combat Systems 3,295 2,974 321 10.8
%
Information Technology 4,327 3,580 747 20.9
%
Mission Systems 2,435 2,245 190 8.5
%
Marine Systems 4,383 4,202 181 4.3
%
Total $
18,816 $
16,721 $
2,095 12.5
%
Operating earnings:
---
Aerospace $
659 $
732 $
(73) (10.0)
%
Combat Systems 448 460 (12) (2.6)
%
Information Technology 310 257 53 20.6
%
Mission Systems 310 299 11 3.7
%
Marine Systems 377 379 (2) (0.5)
%
Corporate - (31) 31 100.0
%
Total $
2,104 $
2,096 $
8 0.4
%
Operating margin:
---
Aerospace 15.1
%
% 19.7
Combat Systems 13.6
%
% 15.5
Information Technology 7.2
% 7.2
%
Mission Systems 12.7
%
% 13.3
Marine Systems 8.6
% 9.0
%
Total 11.2
%
% 12.5
* 2018 results include the unfavorable
impact of approximately $45 of
compensation-related one-time
charges associated with costs to
complete the acquisition of CSRA
Inc. This amount was reported as a
reduction of Corporate operating
earnings in the table above.
EXHIBIT E
CONSOLIDATED BALANCE SHEET
DOLLARS IN MILLIONS
(Unaudited)
June 30, 2019 December 31,
2018
---
ASSETS
Current assets:
Cash and equivalents $
702 $
963
Accounts receivable 3,673 3,759
Unbilled receivables 7,554 6,576
Inventories 6,480 5,977
Other current assets 1,148 914
Total current assets 19,557 18,189
Noncurrent assets:
Property, plant and equipment, net 4,091 3,978
Intangible assets, net 2,457 2,585
Goodwill 19,662 19,594
Other assets 2,307 1,062
Total noncurrent assets 28,517 27,219
Total assets $
48,074 $
45,408
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt $
4,960 $
973
Accounts payable 2,860 3,179
Customer advances and deposits 6,714 7,270
Other current liabilities 3,480 3,317
Total current liabilities 18,014 14,739
Noncurrent liabilities:
Long-term debt 8,975 11,444
Other liabilities 8,208 7,493
Total noncurrent liabilities 17,183 18,937
Shareholders' equity:
Common stock 482 482
Surplus 2,959 2,946
Retained earnings 30,291 29,326
Treasury stock (17,379) (17,244)
Accumulated other comprehensive loss (3,476) (3,778)
Total shareholders' equity 12,877 11,732
Total liabilities and shareholders' equity $
48,074 $
45,408
EXHIBIT F
CONSOLIDATED STATEMENT OF CASH FLOWS - (UNAUDITED)
DOLLARS IN MILLIONS
Six Months Ended
June 30, 2019 July 1, 2018
---
Cash flows from operating activities-continuing operations:
Net earnings $
1,551 $
1,585
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation of property, plant and equipment 232 206
Amortization of intangible and finance lease right-of-use assets 183 121
Equity-based compensation expense 72 71
Deferred income tax benefit (17) (6)
(Increase) decrease in assets, net of effects of business acquisitions:
Accounts receivable 64 344
Unbilled receivables (1,074) (1,030)
Inventories (556) (542)
Increase (decrease) in liabilities, net of effects of business acquisitions:
Accounts payable (301) (324)
Customer advances and deposits (607) (159)
Other, net (51) 25
Net cash (used) provided by operating activities (504) 291
Cash flows from investing activities:
Capital expenditures (362) (279)
Business acquisitions, net of cash acquired (17) (10,039)
Other, net 16 74
Net cash used by investing activities (363) (10,244)
Cash flows from financing activities:
Proceeds from commercial paper, net 1,394 2,786
Dividends paid (563) (526)
Purchases of common stock (231) (436)
Proceeds from fixed-rate notes - 6,461
Proceeds from floating-rate notes - 1,000
Repayment of CSRA accounts receivable purchase agreement - (450)
Other, net 30 3
Net cash provided by financing activities 630 8,838
Net cash used by discontinued operations (24) (6)
Net decrease in cash and equivalents (261) (1,121)
Cash and equivalents at beginning of period 963 2,983
Cash and equivalents at end of period $
702 $
1,862
EXHIBIT G
PRELIMINARY FINANCIAL INFORMATION - (UNAUDITED)
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS
2019 2018
Second Quarter Second Quarter
Other Financial Information:
---
Debt-to-equity (a) 108.2 119.0
% %
Debt-to-capital (b) 52.0 54.3
% %
Book value per share (c) $
44.58 $
40.48
Income tax payments, net $
360 $
159
Company-sponsored research and development (d) $
120 $
90
Shares outstanding 288,844,120 296,281,432
Non-GAAP Financial Measures:
---
2019 2018
Second Quarter Six Months Second Quarter Six Months
Earnings before interest, taxes, depreciation
and amortization:
Net earnings $
806 $
1,551 $
786 $
1,585
Interest, net 119 236 103 130
Provision for income tax, net 177 347 184 345
Depreciation of property, plant and equipment 118 232 117 206
Amortization of intangible and finance lease right-of-use assets 92 183 101 121
Earnings before interest, taxes, depreciation $
1,312 $
2,549 $
1,291 $
2,387
and amortization (e)
Free cash flow from operations:
Net cash provided (used) by operating activities $
291 $
(504) $
787 $
291
Capital expenditures (181) (362) (175) (279)
Free cash flow from operations (f) $
110 $
(866) $
612 $
12
(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) 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.
(f) 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 by operating
activities.
EXHIBIT H
BACKLOG - (UNAUDITED)
DOLLARS IN MILLIONS
Funded Unfunded Total Estimated Total Estimated
Backlog Potential Contract
Contract Value* Value
Second Quarter 2019:
---
Aerospace $
11,932 $
213 $
12,145 $
2,079 $
14,224
Combat Systems 14,794 438 15,232 4,113 19,345
Information Technology 4,446 4,405 8,851 17,983 26,834
Mission Systems 4,925 258 5,183 6,847 12,030
Marine Systems 18,344 7,899 26,243 3,223 29,466
Total $
54,441 $
13,213 $
67,654 $
34,245 $
101,899
First Quarter 2019:
---
Aerospace $
11,924 $
244 $
12,168 $
2,080 $
14,248
Combat Systems 15,475 515 15,990 4,185 20,175
Information Technology 4,770 3,584 8,354 16,666 25,020
Mission Systems 5,081 234 5,315 7,186 12,501
Marine Systems 19,935 7,446 27,381 3,831 31,212
Total $
57,185 $
12,023 $
69,208 $
33,948 $
103,156
Second Quarter 2018:
---
Aerospace $
12,187 $
157 $
12,344 $
2,282 $
14,626
Combat Systems 16,646 376 17,022 2,840 19,862
Information Technology 4,633 4,576 9,209 18,931 28,140
Mission Systems 4,636 645 5,281 4,287 9,568
Marine Systems 17,310 5,124 22,434 4,333 26,767
Total $
55,412 $
10,878 $
66,290 $
32,673 $
98,963
* 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
Photo - https://mma.prnewswire.com/media/951121/EXHIBIT_H_1.jpg
EXHIBIT H-2
BACKLOG BY SEGMENT - (UNAUDITED)
DOLLARS IN MILLIONS
Photo - https://mma.prnewswire.com/media/951122/EXHIBIT_H_2_Aerospace.jpg
Photo - https://mma.prnewswire.com/media/951123/EXHIBIT_H_2_Combat_Systems.jpg
Photo - https://mma.prnewswire.com/media/951126/EXHIBIT_H_2_Information_Technology.jpg
Photo - https://mma.prnewswire.com/media/951125/EXHIBIT_H_2_Mission_Systems.jpg
Photo - https://mma.prnewswire.com/media/951127/EXHIBIT_H_2_Marine_Systems.jpg
Photo - https://mma.prnewswire.com/media/951128/EXHIBIT_H_2_Key.jpg
EXHIBIT I
SECOND QUARTER 2019 SIGNIFICANT
ORDERS -(UNAUDITED)
DOLLARS IN MILLIONS
We received the following
significant contract awards
during the second quarter of
2019:
Combat Systems:
---
--
$260 from the U.S. Army for munitions production. The program has a maximum potential contract value of $1.6 billion.
--
$100 for the production of various high-performance warheads.
--
$60 for the production of control actuator systems for the Excalibur artillery system.
--
$35 from the Army for various rounds of medium-caliber ammunition.
--
$25 from the Army to provide systems technical support for Abrams main battle tanks.
Information Technology:
---
--
$1 billion from the U.S. Department of State to provide global security engineering and supply chain management services. The program has a maximum potential contract value of over $2 billion.
--
$360 for several key contracts to provide intelligence services to classified customers.
-- A contract to provide network
monitoring, network engineering and
system administration services for the
U.S. Air Force. The program has a
maximum potential value of
approximately $215.
--
$85 from the Centers for Medicare and Medicaid Services (CMS) for cloud hosting support services.
--
$70 from the CMS to provide hosting, operations and maintenance services for the agency's Healthcare Integrated General Ledger Accounting System (HIGLAS) application.
--
$50 from the U.S. Navy to provide training and training-related program support.
--
$45 from the CMS for benefits recovery services. The program has a maximum potential contract value of $275.
Mission Systems:
---
--
$90 to provide maintenance and support services for the United Kingdom's Bowman tactical communications system.
--
$80 from the Army for computing and communications equipment under the Common Hardware Systems-5 (CHS-5) program.
--
$80 to provide engineering and support services for the Army's mobile communications network.
--
$45 to support the engineering and manufacturing of the Navy's Air and Missile Defense Radar (AMDR) program.
--
$35 to build space encryption units for the Air Force.
--
$25 from the Air Force for continued modernization of the global positioning system.
Marine Systems:
---
--
$495 from the Navy for submarine industrial base development and expansion in support of the Columbia-class ballistic missile submarine program and the nuclear shipbuilding enterprise.
--
$270 from the Navy to support the Common Missile Compartment work under joint development for the Navy and the U.K. Royal Navy.
--
$85 from the Navy for planning yard, engineering and technical support services for in-service nuclear submarines.
--
$55 from the Navy to provide ongoing lead yard services for the Arleigh Burke-class (DDG-51) guided-missile destroyer program.
EXHIBIT J
AEROSPACE SUPPLEMENTAL DATA - (UNAUDITED)
Second Quarter Six Months
2019 2018 2019 2018
Gulfstream Aircraft Deliveries (units):
---
Large-cabin aircraft 23 18 50 37
Mid-cabin aircraft 8 8 15 15
Total 31 26 65 52
Pre-owned Aircraft Deliveries (units): 1 1 5 2
---
Aerospace Book-to-Bill:
---
Orders* $
2,198 $
2,291 $
5,329 $
3,736
Revenue (excluding pre-owned aircraft sales) 2,134 1,894 4,332 3,710
Book-to-Bill Ratio 1.03x 1.21x 1.23x 1.01x
* Does not include customer
defaults, liquidated damages,
cancellations, foreign exchange
fluctuations and other backlog
adjustments.
View original content to download multimedia:http://www.prnewswire.com/news-releases/general-dynamics-reports-second-quarter-2019-results-300889956.html
SOURCE General Dynamics
