General Dynamics (NYSE:GD) reported stronger-than-expected second-quarter results, with both earnings and revenue exceeding Wall Street forecasts as robust demand across its Aerospace and Marine Systems businesses supported growth. Shares edged 0.7% higher following the announcement.
The defense and aerospace company posted adjusted earnings of $4.24 per share, comfortably ahead of analysts’ consensus estimate of $3.93.
Revenue increased 8.1% year over year to $14.1 billion, exceeding market expectations of $13.47 billion.
Aerospace and Marine Systems Lead Performance
General Dynamics delivered revenue growth across all four of its business segments during the quarter, with Aerospace and Marine Systems producing the strongest gains.
The Aerospace division generated revenue of $3.5 billion, up 15.1% from a year earlier, while Marine Systems revenue climbed 10.4% to $4.7 billion.
Operating margin improved by 40 basis points to 10.4%, helping operating earnings rise 11.9% year over year to $1.5 billion.
Chairman and Chief Executive Officer Phebe Novakovic said: “Our businesses delivered solid results in the quarter, with revenue growth across all four segments, reflecting our ongoing efforts to increase the pace of execution and deliver on our backlog.”
Strong Cash Generation and Order Activity
Operating cash flow totalled $1.9 billion during the quarter, equivalent to 162% of net earnings, highlighting the company’s strong cash conversion.
General Dynamics secured approximately $20 billion of new orders, producing a book-to-bill ratio of 1.4-to-1 across the business. The Aerospace segment recorded particularly strong demand with a book-to-bill ratio of 1.5-to-1.
Backlog Continues to Expand
The company’s total backlog reached $136.5 billion at the end of the second quarter, compared with $103.7 billion a year earlier, providing substantial long-term revenue visibility.
During the quarter, General Dynamics returned $429 million to shareholders through dividends, invested $234 million in capital expenditures and reduced its total debt by $498 million, further strengthening its balance sheet.
General Dynamics stock price
