On October 25, 2023, General Dynamics Corp (GD, Financial) released its third-quarter 2023 financial results. The company reported a revenue of $10.6 billion, marking a 6% increase year over year. Net earnings for the quarter were $836 million, with a diluted earnings per share (EPS) of $3.04. The company also reported a record-high backlog of $95.6 billion, indicating strong demand across its business segments.
Financial Highlights
Net cash provided by operating activities in the quarter totaled $1.3 billion, or 158% of net earnings. After $227 million in capital expenditures, the company generated free cash flow from operations of $1.1 billion, or 131% of net earnings. During the quarter, the company repaid $500 million in fixed-rate notes, paid $363 million in dividends, and used $56 million to repurchase shares.
Backlog and Orders
Orders remained strong across the company with a consolidated book-to-bill ratio, defined as orders divided by revenue, of 1.4-to-1 for the quarter, with particular strength in the Marine Systems and Aerospace segments. Company-wide backlog of $95.6 billion was the highest in the company’s history. Estimated potential contract value, which represents management’s estimate of additional value in unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options, was $37.3 billion. Total estimated contract value, the sum of all backlog components, was $132.9 billion at the end of the quarter.
Segment Performance
Aerospace received $2.9 billion in new orders during the quarter, growing backlog to $20.1 billion. Significant awards in the quarter for the three defense segments included a U.S. Navy contract for an undisclosed amount for construction of three Flight III Arleigh Burke-class guided-missile destroyers; $1.5 billion in contracts for Virginia-class submarine lead yard services, development studies and design efforts, as well as spare parts for maintenance availabilities; and $1.1 billion for munitions, ordnance, and the establishment of additional production capacity.
Balance Sheet Overview
As of October 1, 2023, General Dynamics Corp (GD, Financial) reported total assets of $53.5 billion, up from $51.6 billion as of December 31, 2022. Total current assets stood at $22.8 billion, while noncurrent assets were $30.7 billion. Total liabilities and shareholders' equity also increased to $53.5 billion from $51.6 billion at the end of 2022.
Looking Ahead
With a strong financial performance in the third quarter and a record-high backlog, General Dynamics Corp (GD, Financial) is well-positioned for future growth. The company's strong cash flow generation and robust demand across its business segments underscore its solid financial health and growth prospects.
