General Dynamics (GD) Surpasses Revenue Expectations But Misses Earnings Targets in Q3 2024
General Dynamics Corp (GD) reported a mixed bag of results for the third quarter of fiscal 2024, exceeding revenue estimates but falling short on earnings per share. The company’s revenue for the quarter climbed 10.4% year-over-year to $11.671 billion, surpassing the consensus estimate of $11.641 billion. However, earnings per share (EPS) came in at $3.35, up 10.2% year-over-year but below the consensus estimate of $3.53.
Despite the miss on earnings, General Dynamics showcased robust growth across its portfolio, highlighting continued strong demand in the current environment. The company’s operating earnings climbed 11.7% year-over-year to $1.181 billion, with an accompanying 12 basis points expansion in operating margin to 10.1%.
Segment-Wise Revenue Performance
General Dynamics’ Aerospace segment emerged as a standout performer, with revenue surging 221% year-over-year to $2.482 billion. This impressive growth reflects strong demand for the company’s aircraft, particularly its large-cabin models. Gulfstream, General Dynamics’ aircraft manufacturing division, delivered 28 aircraft during the quarter, including 24 large-cabin models. In comparison, the company delivered 27 aircraft in the same period last year.
The Marine Systems segment also exhibited robust growth, with revenue increasing 19.9% year-over-year to $3.599 billion. The Combat Systems segment, however, experienced a slight decline, with revenue falling 0.5% year-over-year to $2.212 billion. The Technologies segment recorded a 2% year-over-year increase in revenue to $3.378 billion.
Strong Cash Flow and Backlog
General Dynamics generated $1.952 billion in net cash provided by operating activities for the nine months ending September 29, 2024. For the third quarter alone, net cash provided by operating activities reached $1.4 billion, equivalent to 152% of net earnings. This robust cash flow positions the company well for future investments and shareholder returns.
The company’s consolidated book-to-bill ratio for the quarter was 1.1-to-1, indicating strong demand for its products and services. The company-wide backlog stood at $92.6 billion, with an estimated potential contract value of $45 billion, bringing the total estimated contract value to $137.6 billion. Orders within the Aerospace segment totaled $2.4 billion, resulting in a 2.8% year-over-year increase in backlog to $19.8 billion. In the Defense segments, orders reached $10.5 billion, with particular strength in the Combat Systems segment.
Price Action
General Dynamics shares were trading slightly higher by 0.003% at $306 premarket at the last check on Wednesday, suggesting a positive market reaction to the company’s financial performance.