GENERAL DYNAMICS CORPORATION FALLS CHURCH, Va., April 29, 2015 /PRNewswire/ -- General Dynamics (NYSE: GD) today reported first-quarter 2015 earnings from continuing operations of $716 million, a 20.1 percent increase over first-quarter 2014, on revenues of $7.8 billion. Diluted earnings per share were $2.14 per share compared to $1.71 in first-quarter 2014, a 25.1 percent increase.
"General Dynamics delivered a powerful first quarter," said Phebe N. Novakovic, chairman and chief executive officer. "As a result of impressive revenue growth and strong operating performance, we expanded operating earnings to more than $1 billion, a 17.5 percent increase."
Margins
Company-wide operating margins for the first quarter of 2015 were 13.2 percent, a 120 basis points improvement when compared to 12 percent in first-quarter 2014. Margins grew in three of the company's four business groups.
Cash
Net cash provided by operating activities in the quarter totaled $745 million. Free cash flow from operations, defined as net cash provided by operating activities less capital expenditures, was $647 million.
Capital Deployment
The company repurchased 4.65 million of its outstanding shares in the first quarter. In addition, in March, the board of directors increased the company's quarterly dividend by 11.3 percent to $0.69 per share, representing the company's 18th consecutive annual dividend increase.
Backlog
Funded backlog at the end of first-quarter 2015 grew to $56 billion, and total backlog was $70.5 billion. In addition to total backlog, estimated potential contract value, representing management's estimate of value in unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options, was $25.6 billion. Total potential contract value, the sum of all backlog components, was $96.1 billion at the end of the quarter.
"Looking ahead, we remain confident that General Dynamics is well-positioned for growth as we maximize the value of our strong backlog and continue to focus on program execution, operations and increasing return on invested capital," Novakovic said.
General Dynamics, headquartered in Falls Church, Virginia, is a market leader in business aviation; combat vehicles, weapons systems and munitions; shipbuilding; and communications and information technology systems. More information about the company 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 29, 2015. 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 29 and will continue for 12 months. To hear a recording of the conference call by telephone, please call 888-286-8010 (international: 617-801-6888); passcode 93780294. The phone replay will be available from 1 p.m. April 29 through May 5, 2015.
EXHIBIT A
CONSOLIDATED STATEMENTS OF EARNINGS - (UNAUDITED)
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS
First Quarter Variance
2015 2014 $ %
---- ---- --- ---
Revenues $7,784 $7,265 $519 7.1%
Operating costs and
expenses 6,757 6,391 (366)
----- ----- ----
Operating earnings 1,027 874 153 17.5%
Interest, net (21) (22) 1
Other, net 3 1 2
--- --- ---
Earnings before income
tax 1,009 853 $156 18.3%
Provision for income tax,
net 293 257 (36)
--- --- ---
Earnings from continuing
operations $716 $596 $120 20.1%
==== ==== ====
Discontinued operations,
net of tax - (1) 1
--- --- ---
Net earnings $716 $595 121 20.3%
==== ==== ===
Earnings per share-basic
Continuing operations $2.18 $1.74 $0.44 25.3%
Discontinued operations $ - $ - $ -
--- --- --- --- --- ---
Net earnings $2.18 $1.74 $0.44 25.3%
===== ===== =====
Basic weighted average
shares outstanding 329.2 342.2
===== =====
Earnings per share-diluted
Continuing operations $2.14 $1.71 $0.43 25.1%
Discontinued operations $ - $ - $ -
--- --- --- --- --- ---
Net earnings $2.14 $1.71 $0.43 25.1%
===== ===== =====
Diluted weighted average
shares outstanding 334.7 347.2
===== =====
Note: Prior period information has been restated to reflect our axle business in discontinued operations.
EXHIBIT B
REVENUES AND OPERATING EARNINGS BY SEGMENT - (UNAUDITED)
DOLLARS IN MILLIONS
First Quarter Variance
2015 2014 $ %
---- ---- --- ---
Revenues:
---------
Aerospace $2,108 $2,125 $(17) (0.8)%
Combat Systems 1,363 1,258 105 8.3%
Information Systems and Technology 2,370 2,281 89 3.9%
Marine Systems 1,943 1,601 342 21.4%
----- ----- ---
Total $7,784 $7,265 $519 7.1%
====== ====== ====
Operating earnings:
-------------------
Aerospace $431 $404 $27 6.7%
Combat Systems 204 139 65 46.8%
Information Systems and Technology 217 183 34 18.6%
Marine Systems 188 166 22 13.3%
Corporate (13) (18) 5 27.8%
--- --- ---
Total $1,027 $874 $153 17.5%
====== ==== ====
Operating margins:
------------------
Aerospace 20.4% 19.0%
Combat Systems 15.0% 11.0%
Information Systems and Technology 9.2% 8.0%
Marine Systems 9.7% 10.4%
Total 13.2% 12.0%
Note: Prior period information has been restated to reflect our axle business in discontinued operations.
EXHIBIT B-1
FIRST QUARTER 2015 COMPARISON TO PRIOR YEARS
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS
First Quarter Compound Annual
Growth Rate
-----------
2013 2014 2015
---- ---- ----
Revenues $7,314 $7,265 $7,784 3.2%
Operating earnings 843 874 1,027 10.4%
Operating margins 11.5% 12.0% 13.2% +170 bps
Diluted earnings per share - continuing operations $1.62 $1.71 $2.14 14.9%
Note: Prior period information has been restated to reflect our axle business in discontinued operations.
EXHIBIT C
CONSOLIDATED BALANCE SHEETS
DOLLARS IN MILLIONS
(Unaudited)
April 5, 2015 December 31,
2014
------------- -------------
ASSETS
Current assets:
Cash and
equivalents $4,412 $4,388
Accounts
receivable 3,661 4,050
Contracts
in
process 4,444 4,591
Inventories 3,397 3,221
Other
current
assets 438 1,157
--- -----
Total
current
assets 16,352 17,407
------ ------
Noncurrent assets:
Property,
plant and
equipment,
net 3,323 3,329
Intangible
assets,
net 893 912
Goodwill 11,699 11,731
Other
assets 2,118 1,976
----- -----
Total
noncurrent
assets 18,033 17,948
------ ------
Total
assets $34,385 $35,355
------- -------
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Short-
term
debt and
current
portion
of long-
term
debt $1 $501
Accounts
payable 2,266 2,057
Customer
advances
and
deposits 6,487 7,335
Other
current
liabilities 4,358 3,858
----- -----
Total
current
liabilities 13,112 13,751
------ ------
Noncurrent liabilities:
Long-
term
debt 3,410 3,410
Other
liabilities 6,343 6,365
----- -----
Total
noncurrent
liabilities 9,753 9,775
----- -----
Shareholders' equity:
Common
stock 482 482
Surplus 2,588 2,548
Retained
earnings 21,615 21,127
Treasury
stock (9,949) (9,396)
Accumulated
other
comprehensive
loss (3,216) (2,932)
------ ------
Total
shareholders'
equity 11,520 11,829
------ ------
Total
liabilities
and
shareholders'
equity $34,385 $35,355
------- -------
EXHIBIT D
CONSOLIDATED STATEMENTS OF CASH FLOWS - (UNAUDITED)
DOLLARS IN MILLIONS
Three Months Ended
------------------
April 5, 2015 March 30, 2014
------------- --------------
Cash flows from operating activities-continuing operations:
Net earnings $716 $595
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation of property, plant and equipment 94 95
Amortization of intangible assets 30 30
Stock-based compensation expense 40 27
Excess tax benefit from stock-based compensation (30) (32)
Deferred income tax provision (8) 36
Discontinued operations, net of tax - 1
(Increase) decrease in assets, net of effects of business acquisitions:
Accounts receivable 388 119
Contracts in process 152 (94)
Inventories (183) (21)
Increase (decrease) in liabilities, net of effects of business acquisitions:
Accounts payable 210 (29)
Customer advances and deposits (871) (165)
Income taxes payable 251 150
Other current liabilities (38) (173)
Other, net (6) (117)
--- ----
Net cash provided by operating activities 745 422
--- ---
Cash flows from investing activities-continuing operations:
Maturities of held-to-maturity securities 500 -
Capital expenditures (98) (87)
Other, net 94 10
--- ---
Net cash provided (used) by investing activities 496 (77)
--- ---
Cash flows from financing activities-continuing operations:
Purchases of common stock (620) (1,430)
Repayment of fixed-rate notes (500) -
Dividends paid (206) (198)
Proceeds from option exercises 87 249
Other, net 30 32
--- ---
Net cash used by financing activities (1,209) (1,347)
------ ------
Net cash used by discontinued operations (8) (3)
--- ---
Net increase (decrease) in cash and equivalents 24 (1,005)
Cash and equivalents at beginning of period 4,388 5,301
----- -----
Cash and equivalents at end of period $4,412 $4,296
====== ======
Note: Prior period information has been restated to reflect our axle business in discontinued operations.
EXHIBIT E
PRELIMINARY FINANCIAL INFORMATION - (UNAUDITED)
DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS
First Quarter First Quarter
2015 2014
---- ----
Other Financial Information(a):
-------------------------------
Debt-to-equity (b) 29.6% 28.6%
Debt-to-capital (c) 22.8% 22.2%
Book value per share (d) $35.04 $39.93
Total taxes paid $53 $67
Company-sponsored research and development (e) $96 $86
Shares outstanding 328,732,777 342,860,725
Non-GAAP Financial Measures(a):
-------------------------------
Free cash flow from operations:
Net cash provided by operating activities $745 $422
Capital expenditures (98) (87)
--- ---
Free cash flow from operations (f) $647 $335
==== ====
(a) Prior period information has been
restated to reflect our axle
business in discontinued
operations.
(b) Debt-to-equity ratio is
calculated as total debt divided
by total equity as of the end of
the period.
(c) 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.
(d) Book value per share is
calculated as total equity
divided by total outstanding
shares as of the end of the
period.
(e) Includes independent research and
development and Gulfstream
product-development costs.
(f) We believe free cash flow from
operations is a measurement that
is useful to investors because
it portrays our ability to
generate cash from our core
businesses for such purposes as
repaying maturing debt, funding
business acquisitions 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)
DOLLARS IN MILLIONS
Funded Unfunded Total Estimated Total Potential
Backlog Potential Contract
Contract Value* Value
-------------- -----
First Quarter 2015
------------------
Aerospace $12,947 $147 $13,094 $2,699 $15,793
Combat Systems 18,942 462 19,404 5,459 24,863
Information Systems and Technology 6,842 1,815 8,657 15,296 23,953
Marine Systems 17,248 12,138 29,386 2,143 31,529
------ ------ ------ ----- ------
Total $55,979 $14,562 $70,541 $25,597 $96,138
======= ======= ======= ======= =======
Fourth Quarter 2014
-------------------
Aerospace $13,115 $117 $13,232 $2,734 $15,966
Combat Systems 19,292 506 19,798 5,522 25,320
Information Systems and Technology 7,070 1,539 8,609 16,115 24,724
Marine Systems 13,452 17,319 30,771 2,311 33,082
------ ------ ------ ----- ------
Total $52,929 $19,481 $72,410 $26,682 $99,092
======= ======= ======= ======= =======
First Quarter 2014
------------------
Aerospace $12,747 $199 $12,946 $2,000 $14,946
Combat Systems 15,870 885 16,755 8,143 24,898
Information Systems and Technology 7,134 1,343 8,477 16,494 24,971
Marine Systems 12,447 5,248 17,695 2,046 19,741
------ ----- ----- ------
Total $48,198 $7,675 $55,873 $28,683 $84,556
======= ====== ======= ======= =======
* 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.
Note: Prior period information has been
restated to reflect our axle business in
discontinued operations.
EXHIBIT G
FIRST QUARTER 2015 SIGNIFICANT
ORDERS (UNAUDITED)
DOLLARS IN MILLIONS
We received the following significant orders during the first quarter of 2015:
Combat Systems
-- $410 from the U.S. Army under the Stryker wheeled armored vehicle
program for production of 107 double-V-hulled vehicles and contractor
logistics support.
-- $220 from the Government of Canada for the integration of an enhanced
surveillance suite onto Canadian LAV III vehicles.
-- An IDIQ contract from the Army to supply 155mm ammunition. The program
has a maximum potential value of $300 over five years.
Information Systems and Technology
-- $175 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).
-- $155 for combat and seaframe control systems on two U.S. Navy Littoral
Combat Ships (LCS).
-- $70 from the Army for ruggedized computing equipment under the Common
Hardware Systems-4 (CHS-4) program.
-- $70 from the U.S. Department of State to provide supply chain management
services.
-- An IDIQ contract to manage the Army's Live Training Transformation (LT2)
live training systems, including nearly 300 training ranges worldwide.
The program has a maximum potential value of $415 over five years.
Marine Systems
-- $180 from the U.S. Navy to provide engineering and technical support for
nuclear submarines.
-- $55 from the Navy for the design and development of moored training ship
components.
EXHIBIT H
AEROSPACE SUPPLEMENTAL DATA - (UNAUDITED)
First Quarter
2015 2014
---- ----
Gulfstream Green Deliveries (units):
Large-cabin aircraft 27 29
Mid-cabin aircraft 7 6
--- ---
Total 34 35
=== ===
Gulfstream Outfitted Deliveries
(units):
-------------------------------
Large-cabin aircraft 25 33
Mid-cabin aircraft 7 6
--- ---
Total 32 39
=== ===
Pre-owned Deliveries (units): 1 -
----------------------------- === ===
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