On July 24, 2024, General Dynamics Corp (GD, Financial) released its 8-K filing for the second quarter of 2024, showcasing significant growth in revenue and earnings. The company reported a revenue of $12 billion, an 18% increase from the same quarter last year, and diluted earnings per share (EPS) of $3.26, up 20.7% year-over-year.
Company Overview
General Dynamics is a defense contractor and business jet manufacturer. The firm's segments include aerospace, marine, combat systems, and technology. General Dynamics' aerospace segment creates Gulfstream business jets and operates a global aircraft servicing operation. Combat systems produce land-based combat vehicles such as the M1 Abrams tank and Stryker armored personnel carrier, as well as munitions. The marine segment builds and services nuclear-powered submarines, destroyers, and other ships. The technologies segment contains two main units: an IT business that primarily serves the government market and a mission systems business that focuses on products that provide command, control, computing, intelligence, surveillance, and reconnaissance capabilities to the military.
Performance Highlights
General Dynamics Corp (GD, Financial) reported robust financial results for Q2 2024, with revenue reaching $12 billion, surpassing the analyst estimate of $11.44 billion. The company's operating earnings rose by 20.2% to $1.2 billion, and the operating margin expanded by 20 basis points to 9.7%. Diluted EPS of $3.26 also fell short of the analyst estimate of $3.29.
Segment Performance
| Segment | Revenue (Q2 2024) | Revenue (Q2 2023) | Change (%) |
|---|---|---|---|
| Aerospace | $2.94 billion | $1.95 billion | 50.5% |
| Marine Systems | $3.45 billion | $3.06 billion | 12.9% |
| Combat Systems | $2.29 billion | $1.92 billion | 18.9% |
| Technologies | $3.30 billion | $3.22 billion | 2.5% |
Financial Achievements
General Dynamics' net cash provided by operating activities in the quarter was $814 million, representing 90% of net earnings. The company paid $389 million in dividends, invested $201 million in capital expenditures, and repurchased shares worth $34 million, ending the quarter with $1.4 billion in cash and equivalents.
Orders and Backlog
The consolidated book-to-bill ratio was 0.8-to-1 for the quarter, with a company-wide backlog of $91.3 billion. The estimated potential contract value was $38.5 billion, bringing the total estimated contract value to $129.8 billion. Notably, the Aerospace segment reported orders totaling $2.7 billion, while the defense segments secured $7.4 billion in orders, with significant contributions from Combat Systems.
Income Statement Summary
| Metric | Q2 2024 | Q2 2023 | Change (%) |
|---|---|---|---|
| Revenue | $12 billion | $10.15 billion | 18% |
| Operating Earnings | $1.2 billion | $962 million | 20.2% |
| Net Earnings | $905 million | $744 million | 21.6% |
| Diluted EPS | $3.26 | $2.70 | 20.7% |
Balance Sheet and Cash Flow
As of June 30, 2024, General Dynamics reported total assets of $55.44 billion, with current assets amounting to $24.31 billion. The company’s total liabilities stood at $33.41 billion, while shareholders' equity was $22.04 billion. The debt-to-equity ratio was calculated at 0.42, indicating a strong financial position.
Analysis
General Dynamics Corp (GD, Financial) demonstrated strong performance across all segments, particularly in Aerospace and Combat Systems. The significant increase in revenue and operating earnings reflects the company's ability to capitalize on growing demand in the defense sector and the successful ramp-up of Gulfstream deliveries. The robust cash flow and strategic capital deployment further underscore the company's solid financial health.
Overall, General Dynamics' Q2 2024 results highlight its resilience and strategic execution in a challenging environment, making it a compelling consideration for value investors in the aerospace and defense industry.
Explore the complete 8-K earnings release (here) from General Dynamics Corp for further details.
