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General Dynamics Reports Strong Performance in Third Quarter 2011
• Funded backlog increases on continuing demand for key products
FALLS CHURCH, Va. –
General Dynamics (NYSE: GD) today reported third-quarter 2011 earnings from continuing operations of $665 million, or $1.83 per share on a fully diluted basis, compared to 2010 third-quarter earnings from continuing operations of $649 million, or $1.70 per share fully diluted. Revenues in the quarter were $7.9 billion. Operating earnings were $998 million, an increase of 3.3 percent over third-quarter 2010.
Net earnings for the third quarter of 2011 were $652 million, compared to $650 million in the year-ago period. Net earnings on a per-share, fully diluted basis were $1.80 in the current quarter, an increase of
5.9 percent over the year-ago period.
Company-wide operating margins in the quarter grew to 12.7 percent, an increase of 60 basis points over third-quarter 2010. The growth in operating margins was driven by improvement in the Information Systems and Technology and Marine Systems groups.
Funded backlog grew in three of the company’s four business groups, increasing by 3.7 percent in third-quarter 2011 to $45.9 billion. Total backlog, which includes both funded and unfunded orders, grew by 2.5 percent in the quarter, to $58.5 billion.
The Aerospace group’s funded backlog increased $358 million in the third quarter on the strength of continued international demand for Gulfstream’s portfolio of aircraft. The $1.3 billion increase in funded defense-related backlog was supported by several significant orders in the quarter, including a $1.8 billion award to Marine Systems for two DDG-1000 Zumwalt-class destroyers, as well as a $565 million contract for construction of a DDG-51 Arleigh Burke-class destroyer which includes an option for an additional ship. Similarly, Combat Systems was awarded a $250 million order to produce 115 Stryker vehicles with the new double-V-hull configuration, and a $205 million order from the U.S. Marine Corps for upgrade kits for mine-resistant, ambush-protected vehicles.
In addition to the total backlog, the company’s estimated potential contract value grew by 28.7 percent over the end of the second quarter, largely on the strength of a $5.7 billion increase in the Information Systems and Technology group. Estimated potential contract value is management’s estimate of the ultimate value of unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options.
Net cash provided by operating activities in the third quarter totaled $136 million, and $1.2 billion year-to-date. Third-quarter free cash flow from operations, defined as net cash provided by operating activities less capital expenditures, was $15 million. Cash performance in the quarter was impacted by inventory growth in the Aerospace group in preparation for ultra-large-cabin G650 green aircraft deliveries in the fourth quarter.
“General Dynamics continued to execute effectively in the third quarter,” said Jay L. Johnson, chairman and chief executive officer. “This solid operating performance reflects our ongoing focus on increasing efficiency, improving productivity and driving cost out of our businesses. Importantly, order activity in the quarter underscored the enduring nature of customer demand for our products and services.”
General Dynamics, headquartered in Falls Church, Virginia, employs approximately 93,800 people worldwide. The company is a market leader in business aviation; land and expeditionary combat systems, armaments and munitions; shipbuilding and marine systems; and information systems and technologies. More information about the company is available on the Internet 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 certain risks and uncertainties, which 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 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 third-quarter securities-analyst conference call at 9 a.m. Eastern Time on Wednesday, October 26, 2011.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 noon October 26 and will continue for 12 months. To hear a recording of the conference call by telephone, please call 888-286-8010 (international: 617-801-6888); passcode 75906545.The phone replay will be available from noon October 26 until midnight November 2, 2011.