General Dynamics Reports Second-Quarter 2022 Financial Results
General Dynamics (NYSE: GD) reported a strong second-quarter 2022, with net earnings of $766 million on revenue of $9.2 billion, marking a 5.4% increase in diluted EPS to $2.75. The operating margin improved to 10.6%, showing steady growth.
The company maintained a solid backlog of $87.6 billion and secured significant contracts, including $410 million with the U.S. Army for the Mobile Protected Firepower vehicle. Cash flow from operations reached $659 million, contributing to a robust cash position of $2.2 billion.
- Net earnings increased to $766 million.
- Revenue of $9.2 billion demonstrates solid growth.
- Diluted EPS rose by 5.4% to $2.75.
- Operating margin improved to 10.6%, reflecting operational efficiency.
- Strong backlog of $87.6 billion with a book-to-bill ratio of 1.1-to-1.
- Significant defense contracts awarded, enhancing future revenue streams.
- Cash provided by operating activities totaled $659 million, showing strong cash flow.
- None.
- Net earnings of
$766 million on revenue of$9.2 billion - Operating margin
10.6% , up 20 bps year over year, 90 bps sequentially - Diluted EPS of
$2.75 , up5.4% year over year - Continued strong Gulfstream demand
RESTON, Va., July 27, 2022 /PRNewswire/ -- General Dynamics (NYSE: GD) today reported second-quarter 2022 net earnings of
"Demand in the quarter was very strong in Aerospace, with margins showing steady improvement year over year," said Phebe N. Novakovic, chairman and chief executive officer. "Our defense segments demonstrated solid operating performance and had several important wins."
Cash
Net cash provided by operating activities in the quarter totaled
Backlog
Orders remained strong across the company with a consolidated book-to-bill ratio, defined as orders divided by revenue, of 1.1-to-1 for the quarter, with particular strength in the Aerospace segment driven by strong order activity for Gulfstream aircraft. In addition to company-wide backlog of
Significant awards in the quarter for the three defense segments included
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
Certain statements in this press release, including any statements about the company's future operational and financial performance, may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Words such as "expects," "anticipates," "plans," "believes," "forecasts," "scheduled," "outlook," "estimates," "should" and variations of these words and similar expressions are intended to identify forward-looking statements. 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 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 revisions to any 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 2022 financial results conference call at 9 a.m. EDT on Wednesday, July 27, 2022. The webcast will be a listen-only audio event available at www.gd.com. An on-demand replay of the webcast will be available by telephone one hour after the end of the call and end on August 3, 2022, at 866-813-9403 (international: +44 204-525-0658); passcode 671446. 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) | |||||||||||||||||||||||
Three Months Ended | Variance | ||||||||||||||||||||||
July 3, 2022 | July 4, 2021 | $ | % | ||||||||||||||||||||
Revenue | $ | 9,189 | $ | 9,220 | $ | (31) | (0.3) | % | |||||||||||||||
Operating costs and expenses | (8,211) | (8,261) | 50 | ||||||||||||||||||||
Operating earnings | 978 | 959 | 19 | 2.0 | % | ||||||||||||||||||
Other, net | 40 | 31 | 9 | ||||||||||||||||||||
Interest, net | (95) | (109) | 14 | ||||||||||||||||||||
Earnings before income tax | 923 | 881 | 42 | 4.8 | % | ||||||||||||||||||
Provision for income tax, net | (157) | (144) | (13) | ||||||||||||||||||||
Net earnings | $ | 766 | $ | 737 | $ | 29 | 3.9 | % | |||||||||||||||
Earnings per share—basic | $ | 2.77 | $ | 2.63 | $ | 0.14 | 5.3 | % | |||||||||||||||
Basic weighted average shares outstanding | 276.3 | 280.7 | |||||||||||||||||||||
Earnings per share—diluted | $ | 2.75 | $ | 2.61 | $ | 0.14 | 5.4 | % | |||||||||||||||
Diluted weighted average shares outstanding | 278.9 | 282.2 | |||||||||||||||||||||
EXHIBIT B CONSOLIDATED STATEMENT OF EARNINGS - (UNAUDITED) DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS
| |||||||||||||||||||||||
Six Months Ended | Variance | ||||||||||||||||||||||
July 3, 2022 | July 4, 2021 | $ | % | ||||||||||||||||||||
Revenue | $ | 18,581 | $ | 18,609 | $ | (28) | (0.2) | % | |||||||||||||||
Operating costs and expenses | (16,695) | (16,712) | 17 | ||||||||||||||||||||
Operating earnings | 1,886 | 1,897 | (11) | (0.6) | % | ||||||||||||||||||
Other, net | 79 | 61 | 18 | ||||||||||||||||||||
Interest, net | (193) | (232) | 39 | ||||||||||||||||||||
Earnings before income tax | 1,772 | 1,726 | 46 | 2.7 | % | ||||||||||||||||||
Provision for income tax, net | (276) | (281) | 5 | ||||||||||||||||||||
Net earnings | $ | 1,496 | $ | 1,445 | $ | 51 | 3.5 | % | |||||||||||||||
Earnings per share—basic | $ | 5.41 | $ | 5.12 | $ | 0.29 | 5.7 | % | |||||||||||||||
Basic weighted average shares outstanding | 276.7 | 282.4 | |||||||||||||||||||||
Earnings per share—diluted | $ | 5.35 | $ | 5.10 | $ | 0.25 | 4.9 | % | |||||||||||||||
Diluted weighted average shares outstanding | 279.4 | 283.6 | |||||||||||||||||||||
EXHIBIT C REVENUE AND OPERATING EARNINGS BY SEGMENT - (UNAUDITED) DOLLARS IN MILLIONS
| |||||||||||||||||||||||
Three Months Ended | Variance | ||||||||||||||||||||||
July 3, 2022 | July 4, 2021 | $ | % | ||||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Aerospace | $ | 1,867 | $ | 1,622 | $ | 245 | 15.1 | % | |||||||||||||||
Marine Systems | 2,651 | 2,536 | 115 | 4.5 | % | ||||||||||||||||||
Combat Systems | 1,666 | 1,899 | (233) | (12.3) | % | ||||||||||||||||||
Technologies | 3,005 | 3,163 | (158) | (5.0) | % | ||||||||||||||||||
Total | $ | 9,189 | $ | 9,220 | $ | (31) | (0.3) | % | |||||||||||||||
Operating earnings: | |||||||||||||||||||||||
Aerospace | $ | 238 | $ | 195 | $ | 43 | 22.1 | % | |||||||||||||||
Marine Systems | 211 | 210 | 1 | 0.5 | % | ||||||||||||||||||
Combat Systems | 245 | 266 | (21) | (7.9) | % | ||||||||||||||||||
Technologies | 304 | 308 | (4) | (1.3) | % | ||||||||||||||||||
Corporate | (20) | (20) | — | — | % | ||||||||||||||||||
Total | $ | 978 | $ | 959 | $ | 19 | 2.0 | % | |||||||||||||||
Operating margin: | |||||||||||||||||||||||
Aerospace | 12.7 | % | 12.0 | % | |||||||||||||||||||
Marine Systems | 8.0 | % | 8.3 | % | |||||||||||||||||||
Combat Systems | 14.7 | % | 14.0 | % | |||||||||||||||||||
Technologies | 10.1 | % | 9.7 | % | |||||||||||||||||||
Total | 10.6 | % | 10.4 | % | |||||||||||||||||||
EXHIBIT D REVENUE AND OPERATING EARNINGS BY SEGMENT - (UNAUDITED) DOLLARS IN MILLIONS | |||||||||||||||||||||||
Six Months Ended | Variance | ||||||||||||||||||||||
July 3, 2022 | July 4, 2021 | $ | % | ||||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Aerospace | $ | 3,770 | $ | 3,509 | $ | 261 | 7.4 | % | |||||||||||||||
Marine Systems | 5,302 | 5,019 | 283 | 5.6 | % | ||||||||||||||||||
Combat Systems | 3,341 | 3,719 | (378) | (10.2) | % | ||||||||||||||||||
Technologies | 6,168 | 6,362 | (194) | (3.0) | % | ||||||||||||||||||
Total | $ | 18,581 | $ | 18,609 | $ | (28) | (0.2) | % | |||||||||||||||
Operating earnings: | |||||||||||||||||||||||
Aerospace | $ | 481 | $ | 415 | $ | 66 | 15.9 | % | |||||||||||||||
Marine Systems | 422 | 410 | 12 | 2.9 | % | ||||||||||||||||||
Combat Systems | 472 | 510 | (38) | (7.5) | % | ||||||||||||||||||
Technologies | 602 | 614 | (12) | (2.0) | % | ||||||||||||||||||
Corporate | (91) | (52) | (39) | (75.0) | % | ||||||||||||||||||
Total | $ | 1,886 | $ | 1,897 | $ | (11) | (0.6) | % | |||||||||||||||
Operating margin: | |||||||||||||||||||||||
Aerospace | 12.8 | % | 11.8 | % | |||||||||||||||||||
Marine Systems | 8.0 | % | 8.2 | % | |||||||||||||||||||
Combat Systems | 14.1 | % | 13.7 | % | |||||||||||||||||||
Technologies | 9.8 | % | 9.7 | % | |||||||||||||||||||
Total | 10.2 | % | 10.2 | % | |||||||||||||||||||
EXHIBIT E CONSOLIDATED BALANCE SHEET DOLLARS IN MILLIONS | |||||||||||
(Unaudited) | |||||||||||
July 3, 2022 | December 31, 2021 | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and equivalents | $ | 2,223 | $ | 1,603 | |||||||
Accounts receivable | 3,213 | 3,041 | |||||||||
Unbilled receivables | 7,819 | 8,498 | |||||||||
Inventories | 6,158 | 5,340 | |||||||||
Other current assets | 1,166 | 1,505 | |||||||||
Total current assets | 20,579 | 19,987 | |||||||||
Noncurrent assets: | |||||||||||
Property, plant and equipment, net | 5,479 | 5,417 | |||||||||
Intangible assets, net | 1,867 | 1,978 | |||||||||
Goodwill | 20,002 | 20,098 | |||||||||
Other assets | 2,554 | 2,593 | |||||||||
Total noncurrent assets | 29,902 | 30,086 | |||||||||
Total assets | $ | 50,481 | $ | 50,073 | |||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||
Current liabilities: | |||||||||||
Short-term debt and current portion of long-term debt | $ | 1,754 | $ | 1,005 | |||||||
Accounts payable | 3,138 | 3,167 | |||||||||
Customer advances and deposits | 6,531 | 6,266 | |||||||||
Other current liabilities | 3,313 | 3,540 | |||||||||
Total current liabilities | 14,736 | 13,978 | |||||||||
Noncurrent liabilities: | |||||||||||
Long-term debt | 9,741 | 10,490 | |||||||||
Other liabilities | 8,623 | 7,964 | |||||||||
Total noncurrent liabilities | 18,364 | 18,454 | |||||||||
Shareholders' equity: | |||||||||||
Common stock | 482 | 482 | |||||||||
Surplus | 3,466 | 3,278 | |||||||||
Retained earnings | 36,218 | 35,420 | |||||||||
Treasury stock | (20,632) | (19,619) | |||||||||
Accumulated other comprehensive loss | (2,153) | (1,920) | |||||||||
Total shareholders' equity | 17,381 | 17,641 | |||||||||
Total liabilities and shareholders' equity | $ | 50,481 | $ | 50,073 | |||||||
EXHIBIT F CONSOLIDATED STATEMENT OF CASH FLOWS - (UNAUDITED) DOLLARS IN MILLIONS | |||||||||||
Six Months Ended | |||||||||||
July 3, 2022 | July 4, 2021 | ||||||||||
Cash flows from operating activities—continuing operations: | |||||||||||
Net earnings | $ | 1,496 | $ | 1,445 | |||||||
Adjustments to reconcile net earnings to net cash from operating activities: | |||||||||||
Depreciation of property, plant and equipment | 278 | 280 | |||||||||
Amortization of intangible and finance lease right-of-use assets | 147 | 159 | |||||||||
Equity-based compensation expense | 120 | 72 | |||||||||
Deferred income tax benefit | (218) | (37) | |||||||||
(Increase) decrease in assets, net of effects of business acquisitions: | |||||||||||
Accounts receivable | (172) | (94) | |||||||||
Unbilled receivables | 695 | 134 | |||||||||
Inventories | (816) | (58) | |||||||||
Increase (decrease) in liabilities, net of effects of business acquisitions: | |||||||||||
Accounts payable | (29) | (364) | |||||||||
Customer advances and deposits | 1,402 | (226) | |||||||||
Other, net | (276) | (193) | |||||||||
Net cash provided by operating activities | 2,627 | 1,118 | |||||||||
Cash flows from investing activities: | |||||||||||
Capital expenditures | (365) | (306) | |||||||||
Other, net | — | (2) | |||||||||
Net cash used by investing activities | (365) | (308) | |||||||||
Cash flows from financing activities: | |||||||||||
Purchases of common stock | (1,094) | (1,352) | |||||||||
Dividends paid | (679) | (651) | |||||||||
Repayment of fixed-rate notes | — | (2,000) | |||||||||
Proceeds from commercial paper, gross (maturities greater than 3 months) | — | 1,997 | |||||||||
Proceeds from fixed-rate notes | — | 1,497 | |||||||||
Repayment of floating-rate notes | — | (500) | |||||||||
Other, net | 110 | 338 | |||||||||
Net cash used by financing activities | (1,663) | (671) | |||||||||
Net cash provided (used) by discontinued operations | 21 | (13) | |||||||||
Net increase in cash and equivalents | 620 | 126 | |||||||||
Cash and equivalents at beginning of period | 1,603 | 2,824 | |||||||||
Cash and equivalents at end of period | $ | 2,223 | $ | 2,950 | |||||||
EXHIBIT G ADDITIONAL FINANCIAL INFORMATION - (UNAUDITED) DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS | |||||||||||||||||||||||
Other Financial Information: | |||||||||||||||||||||||
July 3, 2022 | December 31, 2021 | ||||||||||||||||||||||
Debt-to-equity (a) | 66.1 | % | 65.2 | % | |||||||||||||||||||
Book value per share (b) | $ | 63.38 | $ | 63.54 | |||||||||||||||||||
Shares outstanding | 274,246,220 | 277,620,943 | |||||||||||||||||||||
Second Quarter | Six Months | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Income tax payments, net | $ | 550 | $ | 212 | $ | 565 | $ | 245 | |||||||||||||||
Company-sponsored research and development (c) | $ | 130 | $ | 93 | $ | 237 | $ | 183 | |||||||||||||||
Return on sales (d) | 8.3 | % | 8.0 | % | 8.1 | % | 7.8 | % | |||||||||||||||
Non-GAAP Financial Measures: | |||||||||||||||||||||||
Second Quarter | Six Months | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Free cash flow: | |||||||||||||||||||||||
Net cash provided by operating activities | $ | 659 | $ | 1,115 | $ | 2,627 | $ | 1,118 | |||||||||||||||
Capital expenditures | (224) | (172) | (365) | (306) | |||||||||||||||||||
Free cash flow (e) | $ | 435 | $ | 943 | $ | 2,262 | $ | 812 | |||||||||||||||
July 3, 2022 | December 31, 2021 | ||||||||||||||||||||||
Net debt: | |||||||||||||||||||||||
Total debt | $ | 11,495 | $ | 11,495 | |||||||||||||||||||
Less cash and equivalents | 2,223 | 1,603 | |||||||||||||||||||||
Net debt (f) | $ | 9,272 | $ | 9,892 | |||||||||||||||||||
(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 |
(f) | We define net debt as short- and long-term debt (total debt) less cash and equivalents. We believe net debt is a useful |
EXHIBIT H BACKLOG - (UNAUDITED) DOLLARS IN MILLIONS | ||||||||||||||||||||||||||||||||
Funded | Unfunded | Total | Estimated Potential Contract Value* | Total | ||||||||||||||||||||||||||||
Second Quarter 2022: | ||||||||||||||||||||||||||||||||
Aerospace | $ | 18,237 | $ | 549 | $ | 18,786 | $ | 877 | $ | 19,663 | ||||||||||||||||||||||
Marine Systems | 26,965 | 14,873 | 41,838 | 3,904 | 45,742 | |||||||||||||||||||||||||||
Combat Systems | 13,236 | 202 | 13,438 | 6,939 | 20,377 | |||||||||||||||||||||||||||
Technologies | 9,448 | 4,120 | 13,568 | 27,028 | 40,596 | |||||||||||||||||||||||||||
Total | $ | 67,886 | $ | 19,744 | $ | 87,630 | $ | 38,748 | $ | 126,378 | ||||||||||||||||||||||
First Quarter 2022: | ||||||||||||||||||||||||||||||||
Aerospace | $ | 17,114 | $ | 501 | $ | 17,615 | $ | 1,829 | $ | 19,444 | ||||||||||||||||||||||
Marine Systems | 27,656 | 15,258 | 42,914 | 4,316 | 47,230 | |||||||||||||||||||||||||||
Combat Systems | 12,760 | 299 | 13,059 | 6,298 | 19,357 | |||||||||||||||||||||||||||
Technologies | 9,067 | 4,579 | 13,646 | 29,347 | 42,993 | |||||||||||||||||||||||||||
Total | $ | 66,597 | $ | 20,637 | $ | 87,234 | $ | 41,790 | $ | 129,024 | ||||||||||||||||||||||
Second Quarter 2021: | ||||||||||||||||||||||||||||||||
Aerospace | $ | 13,155 | $ | 366 | $ | 13,521 | $ | 2,099 | $ | 15,620 | ||||||||||||||||||||||
Marine Systems | 26,435 | 21,095 | 47,530 | 4,689 | 52,219 | |||||||||||||||||||||||||||
Combat Systems | 14,157 | 271 | 14,428 | 7,711 | 22,139 | |||||||||||||||||||||||||||
Technologies | 9,769 | 3,999 | 13,768 | 26,594 | 40,362 | |||||||||||||||||||||||||||
Total | $ | 63,516 | $ | 25,731 | $ | 89,247 | $ | 41,093 | $ | 130,340 | ||||||||||||||||||||||
* | The estimated potential contract value includes work awarded on unfunded indefinite delivery, indefinite quantity |
EXHIBIT H-1 |
EXHIBIT H-2 |
EXHIBIT I |
We received the following significant contract awards during the second quarter of 2022:
Marine Systems:
$500 from the U.S. Navy for long-lead materials to support construction of two additional John Lewis-class (T-AO-205) fleet replenishment oilers.$315 from the Navy to provide submarine industrial base development and expansion for the Columbia-class program.$100 from the Navy for long-lead materials to support construction of an additional Expeditionary Sea Base (ESB) auxiliary support ship.$55 from the Navy to provide ongoing lead yard services for the Arleigh Burke-class (DDG-51) destroyer program.$50 from the Navy to improve submarine acoustic performance.
Combat Systems:
$410 from the U.S. Army to begin low-rate initial production (LRIP) of the Mobile Protected Firepower (MPF) vehicle. The contract has a maximum potential value of$1.1 billion .$295 for various munitions and ordnance with additional option value of$465 .$525 from the Army to upgrade Stryker vehicles to the double-V-hull (DVH) A1 configuration.$355 to produce Abrams main battle tanks in the system enhancement package version 3 (SEPv3) configuration for Australia.$60 to produce M3 amphibious bridge systems for an international customer. The contract has a maximum potential value of$210 .$90 from the Army for engineering and logistics support services for the Abrams family of vehicles.$50 from the Army to upgrade domestic Abrams main battle tanks to the SEPv3 configuration.
Technologies:
$545 for several key classified contracts.$160 from the U.S. Space Development Agency to build and operate ground systems for the new low earth orbit (LEO) satellite network. The contract has a maximum potential value of$325 .- An indefinite delivery, indefinite quantity (IDIQ) contract for the development and sustainment of applications and websites for the Administrative Office of the United States Courts (AOUSC). The contract has a maximum potential value of
$300 . $280 from the Centers for Medicare and Medicaid Services (CMS) for several contracts, including work to provide cloud services and software tools.$155 to provide ship modernization services for the Navy.$120 to provide global enterprise and digital modernization services under the Southern Command's (SOUTHCOM) Cyber Information Technology Enterprise Services (SCITES) contract.$10 from the Department of Veteran Affairs (VA) to provide information technology (IT) support to more than 500,000 VA personnel and contractors nationwide. The contract has a maximum potential value of$110 .$105 from the Army for computing and communications equipment under the Common Hardware Systems-5 program.$85 to provide military information support operations for the United States Special Operations Command.$75 to provide command, control and communications capabilities for the U.S. Department of Defense (DoD).
EXHIBIT J | ||||||||||||||||||||||||||
Second Quarter | Six Months | |||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
Gulfstream Aircraft Deliveries (units): | ||||||||||||||||||||||||||
Large-cabin aircraft | 17 | 18 | 38 | 43 | ||||||||||||||||||||||
Mid-cabin aircraft | 5 | 3 | 9 | 6 | ||||||||||||||||||||||
Total | 22 | 21 | 47 | 49 | ||||||||||||||||||||||
Aerospace Book-to-Bill: | ||||||||||||||||||||||||||
Orders* | $ | 3,652 | $ | 3,292 | $ | 6,895 | $ | 5,749 | ||||||||||||||||||
Revenue | 1,867 | 1,622 | 3,770 | 3,509 | ||||||||||||||||||||||
Book-to-Bill Ratio | 1.96x | 2.03x | 1.83x | 1.64x | ||||||||||||||||||||||
* Does not include customer defaults, liquidated damages, cancellations, foreign exchange fluctuations and other backlog adjustments. | ||||||||||||||||||||||||||
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SOURCE General Dynamics
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