General Dynamics (NYSE:GD) reported its fourth-quarter fiscal 2025 results on Wednesday, as investors weighed the defense contractor's latest earnings report, with shares trading lower following the release.
General Dynamics' fourth-quarter EPS of $4.17 beat the $4.10 estimate, and sales of $14.379 billion exceeded the $13.805 billion estimate.
The company posted net earnings of $1.143 billion, or $4.17 per diluted share, on revenue of $14.379 billion, up 7.8% from $13.338 billion a year earlier.
Fourth-quarter orders totaled $22.4 billion, and the consolidated book-to-bill ratio was 1.6x. The company ended the year with a backlog of $118.046 billion.
In the quarter, Aerospace revenue was $3.788 billion, up 1.2% year over year, with a 12.7% operating margin, including 45 Gulfstream deliveries.
Marine Systems revenue rose 21.7% to $4.818 billion with a 7.2% margin, Combat Systems revenue increased 5.8% to $2.535 billion with a 15.0% margin, and Technologies revenue slipped 0.1% to $3.238 billion with a 9.0% margin.
Cash provided by operating activities totaled $1.561 billion in the quarter, representing 137% of net earnings. Free cash flow for the quarter was $952 million.
Full-Year Results
For the full year, General Dynamics posted net earnings of $4.210 billion, up 11.3% from 2024, on revenue of $52.550 billion, up 10.1%. Diluted EPS for the year was $15.45, up 13.4% from $13.63.
For the year, the consolidated book-to-bill ratio was 1.5x, and total estimated contract value reached $178.939 billion, up 24% from a year earlier.
"We had a solid fourth quarter, capping off a year that saw growth in revenue and earnings in all four segments coupled with an impressive 30% growth in company-wide backlog," said Phebe N. Novakovic, chairman and chief executive officer.
"As we focus on execution of programs for our customers, we are also preparing aggressively for future growth, investing nearly $1.2 billion in capital expenditures in 2025 – with even more investments planned in the year ahead."
For the year, General Dynamics generated $5.120 billion in operating cash flow and $3.959 billion in free cash flow, while investing $1.161 billion in capital expenditures. The company returned capital through $1.593 billion in dividends and $637 million in share repurchases, paid $568 million in tax payments, and reduced total debt by $749 million.
General Dynamics ended 2025 with $2.333 billion in cash and equivalents and total debt of $8.013 billion, lowering its debt-to-equity ratio to 31.3% from 39.7% a year earlier. Return on invested capital was 14.2%, and return on equity was 17.9%.
Earnings Call
General Dynamics outlined a confident 2026 outlook during its conference call, forecasting operating earnings of about $5.7 billion and earnings per share in the range of $16.10 to $16.20.
The company expects total 2026 revenue of $54.3 billion to $54.8 billion, implying profit margins of roughly 10.4%.
By segment, Aerospace revenue is projected at $13.6 billion with an operating margin of around 14%, supported by planned 160 Gulfstream aircraft deliveries.
Combat Systems revenue is expected to reach $9.6 billion to $9.7 billion with a 14.1% margin, while Marine Systems revenue is forecast at $17.7 billion and Technologies revenue at $13.8 billion.
Management also noted that tariffs had a $41 million impact in 2025.
GD Price Action: General Dynamics shares were down 4.31% at $350.81 at the time of publication on Wednesday, according to Benzinga Pro data.
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