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GENERAL DYNAMICS CORPORATION

(GD)
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General Dynamics : Reports Second-Quarter 2021 Financial Results

07/28/2021 | 07:01am EDT

RESTON, Va., July 28, 2021 /PRNewswire/ -- General Dynamics (NYSE: GD) today reported second-quarter 2021 net earnings of $737 million on revenue of $9.2 billion. Diluted earnings per share (EPS) were $2.61.

EPS grew 19.7% on a 17.9% increase in net earnings, as company-wide operating margin expanded to 10.4%, up 140 basis points from the year-ago quarter. Backlog of $89.2 billion was up 8% from the year-ago quarter.

"The company performed impressively this quarter, delivering very strong cash flow, improved margins and significant Aerospace order activity," said Phebe N. Novakovic, chairman and chief executive officer. "Emerging from the pandemic, we remain focused on operating discipline and wise deployment of capital."

Cash
Net cash provided by operating activities in the quarter totaled $1.1 billion. Free cash flow from operations, defined as net cash provided by operating activities, less capital expenditures, was $943 million.

Backlog
Backlog at the end of second-quarter 2021 was $89.2 billion. Estimated potential contract value, representing management's estimate of value in unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options, was $41.1 billion. Total estimated contract value, the sum of all backlog components, was $130.3 billion at the end of the quarter.

Overall demand remained strong in the quarter, with a consolidated book-to-bill ratio of 1-to-1.

Significant awards in the quarter included $135 million from the U.S. Navy to provide ongoing lead yard services for the Virginia-class submarine program and options totaling $1.6 billion of additional potential value; $620 million from the U.S. Army to upgrade Stryker vehicles to the double-V-hull A1 configuration; $435 million from the Army to produce Stryker Initial Maneuver Short-Range Air Defense (IM-SHORAD) vehicles; $240 million from the Centers for Medicare and Medicaid Services (CMS) for several contracts, including work to provide cloud services and software tools; $145 million from the Army for the production of Hydra-70 rockets; and $865 million for several key contracts for classified customers.

About General Dynamics
Headquartered in Reston, Virginia, General Dynamics is a global aerospace and defense company that offers a broad portfolio of products and services in business aviation; ship construction and repair; land combat vehicles, weapons systems and munitions; and technology products and services. General Dynamics employs more than 100,000 people worldwide and generated $37.9 billion in revenue in 2020. More information is available at www.gd.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 risks and uncertainties that 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, its Quarterly Reports on Form 10-Q and its Current Reports on Form 8-K. 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 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 second-quarter 2021 financial results conference call at 9 a.m. EDT on Wednesday, July 28, 2021. The webcast will be a listen-only audio event available at www.gd.com. An on-demand replay of the webcast will be available one hour after the end of the call and end on August 4, 2021. To hear a recording of the conference call by telephone, please call 877-344-7529 (international: 412-317-0088); passcode 10157891. Charts furnished to investors and securities analysts in connection with General Dynamics' announcement of its financial results are available at www.gd.com.

 

EXHIBIT A


CONSOLIDATED STATEMENT OF EARNINGS - (UNAUDITED)

DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS



Three Months Ended


Variance


July 4, 2021


June 28, 2020


$


%

Revenue

$

9,220



$

9,264



$

(44)



(0.5)

%

Operating costs and expenses

(8,261)



(8,430)



169




Operating earnings

959



834



125



15.0

%

Other, net

31



25



6




Interest, net

(109)



(132)



23




Earnings before income tax

881



727



154



21.2

%

Provision for income tax, net

(144)



(102)



(42)




Net earnings

$

737



$

625



$

112



17.9

%

Earnings per share—basic

$

2.63



$

2.18



$

0.45



20.6

%

Basic weighted average shares outstanding

280.7



286.4






Earnings per share—diluted

$

2.61



$

2.18



$

0.43



19.7

%

Diluted weighted average shares outstanding

282.2



286.9






 

EXHIBIT B


CONSOLIDATED STATEMENT OF EARNINGS - (UNAUDITED)

DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS



Six Months Ended


Variance


July 4, 2021


June 28, 2020


$


%

Revenue

$

18,609



$

18,013



$

596



3.3

%

Operating costs and expenses

(16,712)



(16,245)



(467)




Operating earnings

1,897



1,768



129



7.3

%

Other, net

61



46



15




Interest, net

(232)



(239)



7




Earnings before income tax

1,726



1,575



151



9.6

%

Provision for income tax, net

(281)



(244)



(37)




Net earnings

$

1,445



$

1,331



$

114



8.6

%

Earnings per share—basic

$

5.12



$

4.63



$

0.49



10.6

%

Basic weighted average shares outstanding

282.4



287.5






Earnings per share—diluted

$

5.10



$

4.61



$

0.49



10.6

%

Diluted weighted average shares outstanding

283.6



288.5




 

EXHIBIT C


REVENUE AND OPERATING EARNINGS BY SEGMENT - (UNAUDITED)

DOLLARS IN MILLIONS



Three Months Ended


Variance


July 4, 2021


June 28, 2020


$


%

Revenue:








Aerospace

$

1,622



$

1,974



$

(352)



(17.8)

%

Marine Systems

2,536



2,471



65



2.6

%

Combat Systems

1,899



1,754



145



8.3

%

Technologies

3,163



3,065



98



3.2

%

Total

$

9,220



$

9,264



$

(44)



(0.5)

%

Operating earnings:








Aerospace

$

195



$

159



$

36



22.6

%

Marine Systems

210



200



10



5.0

%

Combat Systems

266



239



27



11.3

%

Technologies

308



247



61



24.7

%

Corporate

(20)



(11)



(9)



(81.8)

%

Total

$

959



$

834



$

125



15.0

%

Operating margin:








Aerospace

12.0

%


8.1

%





Marine Systems

8.3

%


8.1

%





Combat Systems

14.0

%


13.6

%





Technologies

9.7

%


8.1

%





Total

10.4

%


9.0

%





 

EXHIBIT D


REVENUE AND OPERATING EARNINGS BY SEGMENT - (UNAUDITED)

DOLLARS IN MILLIONS



Six Months Ended


Variance


July 4, 2021


June 28, 2020


$


%

Revenue:








Aerospace

$

3,509



$

3,665



$

(156)



(4.3)

%

Marine Systems

5,019



4,717



302



6.4

%

Combat Systems

3,719



3,462



257



7.4

%

Technologies

6,362



6,169



193



3.1

%

Total

$

18,609



$

18,013



$

596



3.3

%

Operating earnings:








Aerospace

$

415



$

399



$

16



4.0

%

Marine Systems

410



384



26



6.8

%

Combat Systems

510



462



48



10.4

%

Technologies

614



545



69



12.7

%

Corporate

(52)



(22)



(30)



(136.4)

%

Total

$

1,897



$

1,768



$

129



7.3

%

Operating margin:








Aerospace

11.8

%


10.9

%





Marine Systems

8.2

%


8.1

%





Combat Systems

13.7

%


13.3

%





Technologies

9.7

%


8.8

%





Total

10.2

%


9.8

%





 

EXHIBIT E


CONSOLIDATED BALANCE SHEET

DOLLARS IN MILLIONS



(Unaudited)




July 4, 2021


December 31, 2020

ASSETS




Current assets:




Cash and equivalents

$

2,950



$

2,824


Accounts receivable

3,255



3,161


Unbilled receivables

7,923



8,024


Inventories

5,803



5,745


Other current assets

1,649



1,789


Total current assets

21,580



21,543


Noncurrent assets:




Property, plant and equipment, net

5,135



5,100


Intangible assets, net

2,003



2,117


Goodwill

20,021



20,053


Other assets

2,444



2,495


Total noncurrent assets

29,603



29,765


Total assets

$

51,183



$

51,308


LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:




Short-term debt and current portion of long-term debt

$

2,821



$

3,003


Accounts payable

2,595



2,952


Customer advances and deposits

5,956



6,276


Other current liabilities

3,609



3,733


Total current liabilities

14,981



15,964


Noncurrent liabilities:




Long-term debt

11,485



9,995


Other liabilities

9,396



9,688


Total noncurrent liabilities

20,881



19,683


Shareholders' equity:




Common stock

482



482


Surplus

3,194



3,124


Retained earnings

34,273



33,498


Treasury stock

(19,181)



(17,893)


Accumulated other comprehensive loss

(3,447)



(3,550)


Total shareholders' equity

15,321



15,661


Total liabilities and shareholders' equity

$

51,183



$

51,308


 

EXHIBIT F


CONSOLIDATED STATEMENT OF CASH FLOWS - (UNAUDITED)

DOLLARS IN MILLIONS



Six Months Ended


July 4, 2021


June 28, 2020

Cash flows from operating activities—continuing operations:




Net earnings

$

1,445



$

1,331


Adjustments to reconcile net earnings to net cash from operating activities:




Depreciation of property, plant and equipment

280



254


Amortization of intangible and finance lease right-of-use assets

159



177


Equity-based compensation expense

72



61


Deferred income tax benefit

(37)



(83)


(Increase) decrease in assets, net of effects of business acquisitions:




Accounts receivable

(94)



(1)


Unbilled receivables

134



160


Inventories

(58)



(433)


Increase (decrease) in liabilities, net of effects of business acquisitions:




Accounts payable

(364)



(782)


Customer advances and deposits

(226)



(863)


Other, net

(193)



356


Net cash provided by operating activities

1,118



177


Cash flows from investing activities:




Capital expenditures

(306)



(406)


Other, net

(2)



184


Net cash used by investing activities

(308)



(222)


Cash flows from financing activities:




Repayment of fixed-rate notes

(2,000)



(2,000)


Proceeds from commercial paper, gross (maturities greater than 3 months)

1,997



420


Proceeds from fixed-rate notes

1,497



3,960


Purchases of common stock

(1,352)



(501)


Dividends paid

(651)



(610)


Repayment of floating-rate notes

(500)



(500)


Proceeds from commercial paper, net



816


Other, net

338



(118)


Net cash (used) provided by financing activities

(671)



1,467


Net cash used by discontinued operations

(13)



(24)


Net increase in cash and equivalents

126



1,398


Cash and equivalents at beginning of period

2,824



902


Cash and equivalents at end of period

$

2,950



$

2,300


 

EXHIBIT G


ADDITIONAL FINANCIAL INFORMATION - (UNAUDITED)

DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS


Other Financial Information:









July 4, 2021


December 31, 2020





Debt-to-equity (a)

93.4

%


83.0

%





Debt-to-capital (b)

48.3

%


45.4

%





Book value per share (c)

$

54.81



$

54.67






Shares outstanding

279,541,414



286,477,836















Second Quarter


Six Months


2021


2020


2021


2020

Income tax payments, net

$

212



$

13



$

245



$

56


Company-sponsored research and development (d)

$

93



$

116



$

183



$

194


Return on sales (e)

8.0

%


6.7

%


7.8

%


7.4

%









Non-GAAP Financial Measures:









Second Quarter


Six Months


2021


2020


2021


2020

Earnings before interest, taxes, depreciation and amortization:








Net earnings

$

737



$

625



$

1,445



$

1,331


Interest, net

109



132



232



239


Provision for income tax, net

144



102



281



244


Depreciation of property, plant and equipment

144



132



280



254


Amortization of intangible and finance lease right-of-use assets

80



87



159



177


Earnings before interest, taxes, depreciation and amortization (f)

$

1,214



$

1,078



$

2,397



$

2,245










Free cash flow from operations:








Net cash provided by operating activities

$

1,115



$

843



$

1,118



$

177


Capital expenditures

(172)



(221)



(306)



(406)


Free cash flow from operations (g)

$

943



$

622



$

812



$

(229)




(a)

Debt-to-equity ratio is calculated as total debt divided by total equity as of the end of the period.



(b)

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.



(c)

Book value per share is calculated as total equity divided by total outstanding shares as of the end of the period.



(d)

Includes independent research and development and Aerospace product-development costs.



(e)

Return on sales is calculated as net earnings divided by revenue.



(f)

We believe earnings before interest, taxes, depreciation and amortization (EBITDA) is a useful measure for investors because it provides another measure of our profitability and our ability to service our debt. We calculate EBITDA by adding back interest, taxes, depreciation and amortization to net earnings. The most directly comparable GAAP measure to EBITDA is net earnings.



(g)    

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 key 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 H


BACKLOG - (UNAUDITED)

DOLLARS IN MILLIONS




Funded


Unfunded


Total
Backlog


Estimated

Potential

Contract Value*


Total
Estimated
Contract Value

Second Quarter 2021:











Aerospace


$

13,155



$

366



$

13,521



$

2,099



$

15,620


Marine Systems


26,435



21,095



47,530



4,689



52,219


Combat Systems


14,157



271



14,428



7,711



22,139


Technologies


9,769



3,999



13,768



26,594



40,362


Total


$

63,516



$

25,731



$

89,247



$

41,093



$

130,340


First Quarter 2021:











Aerospace


$

11,545



$

384



$

11,929



$

2,312



$

14,241


Marine Systems


27,676



22,075



49,751



2,815



52,566


Combat Systems


14,085



143



14,228



9,120



23,348


Technologies


10,003



3,670



13,673



27,530



41,203


Total


$

63,309



$

26,272



$

89,581



$

41,777



$

131,358


Second Quarter 2020:











Aerospace


$

11,874



$

239



$

12,113



$

2,834



$

14,947


Marine Systems


25,118



17,365



42,483



14,441



56,924


Combat Systems


13,863



242



14,105



6,399



20,504


Technologies


10,320



3,648



13,968



25,902



39,870


Total


$

61,175



$

21,494



$

82,669



$

49,576



$

132,245



*

The estimated potential contract value includes work awarded on unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options associated with existing firm contracts, including options and other agreements with existing customers to purchase new aircraft and aircraft services. We recognize options in backlog when the customer exercises the option and establishes a firm order. For IDIQ contracts, we evaluate the amount of funding we expect to receive and include this amount in our estimated potential contract value. The actual amount of funding received in the future may be higher or lower than our estimate of potential contract value.

 

EXHIBIT H-1

BACKLOG - (UNAUDITED)
DOLLARS IN MILLIONS

https://mma.prnewswire.com/media/1582760/EXHIBIT_H_1_Backlog.jpg 

EXHIBIT H-2

BACKLOG BY SEGMENT - (UNAUDITED)
DOLLARS IN MILLIONS

https://mma.prnewswire.com/media/1582346/EXHIBIT_H_2_Aerospace_Backlog.jpg

https://mma.prnewswire.com/media/1582347/EXHIBIT_H_2_Marine_Backlog.jpg

https://mma.prnewswire.com/media/1582348/EXHIBIT_H_2_Combat_Backlog.jpg

https://mma.prnewswire.com/media/1582349/EXHIBIT_H_2_Technologies_Backlog.jpg

https://mma.prnewswire.com/media/1582472/EXHIBIT_H_2_Segment_Key.jpg

EXHIBIT I

SECOND QUARTER 2021 SIGNIFICANT ORDERS - (UNAUDITED)
DOLLARS IN MILLIONS


We received the following significant contract awards during the second quarter of 2021:

Marine Systems:

  • $135 from the U.S. Navy to provide ongoing lead yard services for the Virginia-class submarine program and options totaling $1.6 billion of additional potential value.
  • $100 from the Navy for maintenance and modernization work on the USS Pinckney, an Arleigh Burke-class (DDG-51) guided-missile destroyer.
  • $65 from the Navy for maintenance and modernization work on the USS Hartford, a Los Angeles-class submarine.
  • $55 from the Navy to provide ongoing lead yard services for the DDG-51 program.

Combat Systems:

  • $620 from the U.S. Army to upgrade Stryker vehicles to the double-V-hull A1 configuration.
  • $435 from the Army to produce Stryker Initial Maneuver Short-Range Air Defense (IM-SHORAD) vehicles.
  • $145 from the Army for the production of Hydra-70 rockets.
  • $100 for various munitions and ordnance.
  • $45 to produce mission control units for Abrams main battle tanks.

Technologies:

  • $865 for several key contracts for classified customers.
  • $160 to provide ship modernization services for the Navy. The contract has a maximum potential value of $730.
  • $240 from the Centers for Medicare and Medicaid Services (CMS) for several contracts, including work to provide cloud services and software tools.
  • $115 to provide enterprise information technology (IT) and cybersecurity services and solutions for the Department of Defense (DoD).
  • $40 to provide IT support services and system engineering for the U.S. Department of Energy (DOE). The contract has a maximum potential value of $90.
  • $80 to provide military information support operations for the DoD.
  • $80 from the Environmental Protection Agency (EPA) to provide infrastructure support and applications hosting services.
  • $80 from the Army for computing and communications equipment under the Common Hardware Systems-5 (CHS-5) program.
  • $65 to provide training support for the Navy.
  • $40 from the Navy to retrofit five Knifefish surface mine countermeasure systems with improved operational capabilities.
  • $40 from the Army to provide continued software support and engineering for the Warfighter Information Network-Tactical (WIN-T) Increment 2 program.

 

EXHIBIT J


AEROSPACE SUPPLEMENTAL DATA - (UNAUDITED)




Second Quarter


Six Months



2021


2020


2021


2020

Gulfstream Aircraft Deliveries (units):









Large-cabin aircraft


18



26



43



46


Mid-cabin aircraft


3



6



6



9


Total


21



32



49



55











Aerospace Book-to-Bill:









Orders*


$

3,292



$

1,072



$

5,749



$

2,928


Revenue


1,622



1,974



3,509



3,665


Book-to-Bill Ratio


2.03x



0.54x



1.64x



0.80x



*  Does not include customer defaults, liquidated damages, cancellations, foreign exchange fluctuations and other backlog
   adjustments.

 

General Dynamics (PRNewsFoto/General Dynamics) (PRNewsFoto/General Dynamics)

 

Cision
View original content to download multimedia:https://www.prnewswire.com/news-releases/general-dynamics-reports-second-quarter-2021-financial-results-301342710.html

SOURCE General Dynamics


ę PRNewswire 2021
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