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General Dynamics Reports First-Quarter 2016 Results

FALLS CHURCH, Va., April 27, 2016 /PRNewswire/ --General Dynamics GD, +1.40% today reported first-quarter 2016 earnings from continuing operations of $730 million, a 2 percent increase over first-quarter 2015, on revenue of $7.7 billion. Diluted earnings per share from continuing operations were $2.34 compared to $2.14 in the year-ago quarter, a 9.3 percent increase.

"General Dynamics delivered a strong first quarter, with all four groups contributing to our outstanding operating performance," said Phebe N. Novakovic, chairman and chief executive officer of General Dynamics. "We generated positive operating leverage and achieved the sixth straight quarter with operating earnings of more than one billion dollars."

Margin

Company-wide operating margin for the first quarter of 2016 was 13.6 percent, a 40 basis-point increase when compared to 13.2 percent in first-quarter 2015. Three of the company's four business groups expanded margins over the year-ago period.

Cash

Net cash provided by operating activities in the quarter totaled $439 million. Free cash flow from operations, defined as net cash provided by operating activities less capital expenditures, was $374 million.

Capital Deployment

The company repurchased 7.8 million of its outstanding shares in the first quarter. In addition, in March, the board of directors increased the company's quarterly dividend by 10.1 percent to $0.76 per share, representing the company's 19th consecutive annual dividend increase.

Backlog

General Dynamics' total backlog at the end of first-quarter 2016 was $64.7 billion. There was order activity across the Gulfstream product portfolio and strong demand for defense products, which resulted in a book-to-bill ratio (orders divided by revenue) of one-to-one in the Combat Systems group and greater than one-to-one in the Information Systems and Technology group. The estimated potential contract value, representing management's estimate of value in unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options, was $24.5 billion. Total potential contract value, the sum of all backlog components, was $89.2 billion at the end of the quarter.

About General Dynamics

Headquartered in Falls Church, Virginia, General Dynamics is a global aerospace and defense company that offers a broad portfolio of products and services in business aviation; combat vehicles, weapons systems and munitions; C4ISR and IT solutions; and shipbuilding. The company's revenues in 2015 were $31.5 billion. More information is available 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 first-quarter securities analyst conference call at 9 a.m. EDT on Wednesday, April 27, 2016. 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 12 p.m. on April 27 and will continue for 12 months. To hear a recording of the conference call by telephone, please call 855-859-2056 (international:404-537-3406); passcode 89290991. The phone replay will be available from 3 p.m.April 27 through May 3, 2016.

EXHIBIT A

CONSOLIDATED STATEMENTS OF EARNINGS - (UNAUDITED)

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DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS


















First Quarter


Variance


2016



2015


$


%

Revenue

$

7,724



$

7,784


$

(60)


(0.8)

%

Operating costs and expenses

6,671



6,757


86



Operating earnings

1,053



1,027


26


2.5

%

Interest, net

(22)



(21)


(1)



Other, net

10



3


7



Earnings from continuing operations before income tax

1,041



1,009


$

32


3.2

%

Provision for income tax, net

311



293


(18)



Earnings from continuing operations

$

730



$

716


$

14


2.0

%

Discontinued operations

(13)

*



(13)



Net earnings

$

717



$

716


$

1


0.1

%

Earnings per share—basic









Continuing operations

$

2.37



$

2.18


$

0.19


8.7

%

Discontinued operations

$

(0.04)

*


$


$

(0.04)



Net earnings

$

2.33



$

2.18


$

0.15


6.9

%

Basic weighted average shares outstanding

307.9



329.2





Earnings per share—diluted









Continuing operations

$

2.34



$

2.14


$

0.20


9.3

%

Discontinued operations

$

(0.04)

*


$


$

(0.04)



Net earnings

$

2.30



$

2.14


$

0.16


7.5

%

Diluted weighted average shares outstanding

312.3



334.7







*

In the first quarter of 2016, we recognized a final adjustment to the loss on the sale of our axle business in the Combat Systems group. The business was sold in 2015.

EXHIBIT B

REVENUE AND OPERATING EARNINGS BY SEGMENT - (UNAUDITED)

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