The following excerpt is from the company's .
Suite 100
Falls Church, VA 22042-4513
April 27, 2016
Contact: Lucy Ryan
Tel: 703 876 3631
lryan@generaldynamics.com
General Dynamics Reports First-Quarter 2016 Results
Diluted earnings per share from continuing operations up 9.3% to $2.34
Operating margin of 13.6%, a 40 basis-point improvement
Operating earnings up 2.5% to $1.05 billion
Earnings from continuing operations up 2% to $730 million
FALLS CHURCH, Va.
- General Dynamics (NYSE: GD) today reported first-quarter 2016 earnings from continuing op erations 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.
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.
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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
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)
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS
First Quarter
Variance
Revenue
Operating costs and expenses
Interest, net
Other, net
Earnings from continuing operations before income tax
Provision for income tax, net
Discontinued operations
Net earnings
Earnings per share—basic
Continuing operations
Basic weighted average shares outstanding
Earnings per share—diluted
Diluted weighted average shares outstanding
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)
Revenue:
Aerospace
Marine Systems
Operating earnings:
Corporate
Operating margin:
EXHIBIT C
CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31, 2015
ASSETS
Current assets:
Cash and equivalents
Accounts receivable
Contracts in process
Inventories
Other current assets
Total current assets
14,188
14,571
Noncurrent assets:
Property, plant and equipment, net
Intangible assets, net
Goodwill
11,595
11,443
Other assets
Total noncurrent assets
17,514
17,426
Total assets
31,702
31,997
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt
Accounts payable
Customer advances and deposits
Other current liabilities
Total current liabilities
12,423
12,445
Noncurrent liabilities:
Long-term debt
Other liabilities
Total noncurrent liabilities
Shareholders' equity:
Common stock
Surplus
Retained earnings
23,687
23,204
Treasury stock
(13,386
(12,392
Accumulated other comprehensive loss
(2,941
(3,286
Total shareholders' equity
10,582
10,738
Total liabilities and shareholders' equity
EXHIBIT D
CONSOLIDATED STATEMENTS OF CASH FLOWS - (UNAUDITED)
Three Months Ended
April 5, 2015
Cash flows from operating activities—continuing operations:
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation of property, plant and equipment
Amortization of intangible assets
Equity-based compensation expense
Excess tax benefit from equity-based compensation
Deferred income tax provision
(Increase) decrease in assets, net of effects of business acquisitions:
Increase (decrease) in liabilities, net of effects of business acquisitions:
Income taxes payable
Cash flows from investing activities:
Capital expenditures
Maturities of held-to-maturity securities
Net cash (used) provided by investing activities
Cash flows from financing activities:
Purchases of common stock
(1,026
Dividends paid
Proceeds from stock option exercises
Repayment of fixed-rate notes
Net cash used by financing activities
(1,193
(1,209
Net cash used by discontinued operations
Net (decrease) increase in cash and equivalents
Cash and equivalents at beginning of period
Cash and equivalents at end of period
EXHIBIT E
PRELIMINARY FINANCIAL INFORMATION - (UNAUDITED)
DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS
First Quarter 2016
First Quarter 2015
Other Financial Information (a):
Debt-to-equity (b)
Debt-to-capital (c)
Book value per share (d)
Total taxes paid
Company-sponsored research and development (e)
Shares outstanding
305,646,967
328,732,777
Non-GAAP Financial Measures:
Free cash flow from operations:
Free cash flow from operations (f)
Prior period information has been restated to reflect the reclassification of debt issuance costs from other assets to debt in accordance with ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which we adopted in the fourth quarter of 2015.
Debt-to-equity ratio is calculated as total debt divided by total equity as of the end of the period.
Debt-to-capital ratio is calculated as total debt divided by the sum of total debt plus total equity as of the end of the period.
Book value per share is calculated as total equity divided by total outstanding shares as of the end of the period.
Includes independent research and development and Aerospace product-development costs.
We believe free cash flow from operations is a useful measure for investors because it portrays our ability to generate cash from our businesses for purposes such as repaying maturing debt, funding business acquisitions, repurchasing our common stock and paying dividends. We use free cash flow from operations to assess the quality of our earnings and as a performance measure in evaluating management. The most directly comparable GAAP measure to free cash flow from operations is net cash provided by operating activities.
EXHIBIT F
BACKLOG - (UNAUDITED)
Funded
Unfunded
Estimated
Potential
Contract Value*
Total Potential
12,465
12,612
14,980
18,260
18,825
23,784
15,146
24,579
16,547
23,864
25,863
54,714
10,020
64,734
24,472
89,206
Fourth Quarter 2015
13,292
13,398
15,835
18,398
18,995
24,054
14,702
23,284
13,266
11,879
25,145
27,408
51,783
14,337
66,120
24,461
90,581
12,947
13,094
15,793
18,942
19,404
24,863
15,296
23,953
17,248
12,138
29,386
31,529
55,979
14,562
70,541
25,597
96,138
The estimated potential contract value represents management's estimate of our future contract value under unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options associated with existing firm contracts, including options to purchase new aircraft and long-term agreements with fleet customers, as applicable. Because the value in the unfunded IDIQ arrangements is subject to the customer's future exercise of an indeterminate quantity of orders, we recognize these contracts in backlog only when they are funded. Unexercised options are recognized in backlog when the customer exercises the option and establishes a firm order.
EXHIBIT G
QUARTER 2016 SIGNIFICANT ORDERS (UNAUDITED)
We received the following significant orders during the
quarter of 2016:
$405 from the Swiss government to upgrade Duro tactical vehicles through 2022.
$180 from the U.S. Army for spare parts and inventory management and support services for the Stryker family of vehicles.
$60 from the Army to design, develop and produce eight prototype Stryker vehicles with an integrated 30-millimeter gun system.
$310 for several space payloads.
$170 for new hardware, software and equipment to upgrade the United Kingdom Ministry of Defence's Bowman tactical communication system.
$160 from the Army for additional equipment for the Warfighter Information Network-Tactical (WIN-T) Increment 2 program.
$155 from the National Geospatial-Intelligence Agency (NGA) to consolidate NGA's operations from six locations to one stand-alone location at New Campus East (NCE).
$140 from the Army for ruggedized computing equipment under the CHS-4 program.
$95 for combat and seaframe control systems on an Independence-variant Littoral Combat Ship (LCS) for the U.S. Navy.
$155 from the Navy for the planning and execution of depot-level maintenance, alterations and modifications to the USS Essex (LHD-2).
$140 from the Navy for lead yard and design services for the Virginia-class submarine program.
$80 from the Navy for Advanced Nuclear Plant Studies (ANPS) in support of the Ohio-class submarine replacement program.
EXHIBIT H
AEROSPACE SUPPLEMENTAL DATA - (UNAUDITED)
Gulfstream Green Deliveries (units):
Large-cabin aircraft
Mid-cabin aircraft
Gulfstream Outfitted Deliveries (units):
Pre-owned Deliveries (units):
The above information was disclosed in a filing to the SEC. To see the filing, click .
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