GENERAL DYNAMICS CORPORATION FALLS CHURCH, Va., Oct. 28, 2015 /PRNewswire/ --
-- Revenue up 3.1% to $7.99 billion
-- Operating earnings up 3.5% to $1.03 billion
-- Earnings from continuing operations up 5.6% to $733 million
-- Diluted earnings per share from continuing operations up 11.2% to $2.28
General Dynamics (NYSE: GD) today reported third-quarter 2015 earnings from continuing operations of $733 million, a 5.6 percent increase over third-quarter 2014, on revenue of $7.99 billion. Diluted earnings per share from continuing operations were $2.28 compared to $2.05 in the year-ago quarter, an 11.2 percent increase.
"General Dynamics had another solid quarter," said Phebe Novakovic, chairman and chief executive officer. "This is our fourth consecutive quarter with more than $1 billion in operating earnings, and we expect to maintain this momentum as we see the results of our focus on operating discipline, lower cost structure and execution on our strong backlog."
Margin
Company-wide operating margin for the third quarter of 2015 was 12.9 percent, with margin expansion in the Aerospace and Information Systems and Technology groups when compared to third-quarter 2014.
Cash
Net cash provided by operating activities in the quarter totaled $822 million. Free cash flow from operations, defined as net cash provided by operating activities less capital expenditures, was $652 million.
Capital Deployment
The company repurchased 7.15 million of its outstanding shares in the third quarter. Year-to-date, the company has repurchased 19.28 million outstanding shares.
Backlog
General Dynamics' total backlog at the end of third-quarter 2015 was $68.7 billion. The Aerospace group continued to experience steady demand in the quarter with order activity for each of the products in the Gulfstream portfolio. Also, each of the defense businesses had significant orders in the quarter. The estimated potential contract value, representing management's estimate of value in unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options, was $25.5 billion. Total potential contract value, the sum of all backlog components, was $94.3 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 2014 were $30.9 billion. More information 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 third-quarter securities analyst conference call at 9 a.m. EDT on Wednesday, October 28, 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 October 28 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 59471842. The phone replay will be available from 1 p.m. October 28 through November 4, 2015.
EXHIBIT A
CONSOLIDATED STATEMENTS OF EARNINGS - (UNAUDITED)
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS
Third Quarter Variance
2015 2014 $ %
---- ---- --- ---
Revenue $7,994 $7,751 $243 3.1%
Operating costs and expenses 6,960 6,752 (208)
----- ----- ----
Operating earnings 1,034 999 35 3.5%
Interest, net (23) (21) (2)
Other, net 2 1 1
--- --- ---
Earnings from continuing operations before income tax 1,013 979 $34 3.5%
Provision for income tax, net 280 285 5
--- --- ---
Earnings from continuing operations $733 $694 $39 5.6%
==== ==== ===
Discontinued operations, net of tax - 2 (2)
--- --- ---
Net earnings $733 $696 37 5.3%
==== ==== ===
Earnings per share-basic
Continuing operations $2.31 $2.09 $0.22 10.5%
Discontinued operations $ - $0.01 $(0.01)
--- --- ----- ------
Net earnings $2.31 $2.10 $0.21 10.0%
===== ===== =====
Basic weighted average shares outstanding 316.7 331.8
===== =====
Earnings per share-diluted
Continuing operations $2.28 $2.05 $0.23 11.2%
Discontinued operations $ - $0.01 $(0.01)
--- --- ----- ------
Net earnings $2.28 $2.06 $0.22 10.7%
===== ===== =====
Diluted weighted average shares outstanding 321.9 338.2
===== =====
EXHIBIT B
CONSOLIDATED STATEMENTS OF EARNINGS - (UNAUDITED)
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS
Nine Months Variance
2015 2014 $ %
---- ---- --- ---
Revenue $23,660 $22,490 $1,170 5.2%
Operating costs and expenses 20,518 19,668 (850)
------ ------ ----
Operating earnings 3,142 2,822 320 11.3%
Interest, net (64) (67) 3
Other, net 5 2 3
--- --- ---
Earnings from continuing operations before income tax 3,083 2,757 326 11.8%
Provision for income tax, net 882 821 (61)
--- --- ---
Earnings from continuing operations $2,201 $1,936 $265 13.7%
====== ====== ====
Discontinued operations, net of tax - (104) 104
--- ---- ---
Net earnings $2,201 $1,832 $369 20.1%
====== ====== ====
Earnings per share-basic
Continuing operations $6.79 $5.75 $1.04 18.1%
Discontinued operations $ - $(0.31) $0.31
--- --- ------ -----
Net earnings $6.79 $5.44 $1.35 24.8%
===== ===== =====
Basic weighted average shares outstanding 324.0 336.9
===== =====
Earnings per share-diluted
Continuing operations $6.68 $5.64 $1.04 18.4%
Discontinued operations $ - $(0.30) $0.30
--- --- ------ -----
Net earnings $6.68 $5.34 $1.34 25.1%
===== ===== =====
Diluted weighted average shares outstanding 329.4 343.1
===== =====
EXHIBIT C
REVENUES AND OPERATING EARNINGS BY SEGMENT - (UNAUDITED)
DOLLARS IN MILLIONS
Third Quarter Variance
2015 2014 $ %
---- ---- --- ---
Revenue:
--------
Aerospace $2,343 $2,289 $54 2.4%
Combat Systems 1,345 1,395 (50) (3.6)%
Information Systems and Technology 2,219 2,247 (28) (1.2)%
Marine Systems 2,087 1,820 267 14.7%
----- ----- ---
Total $7,994 $7,751 $243 3.1%
====== ====== ====
Operating earnings:
-------------------
Aerospace $426 $411 $15 3.6%
Combat Systems 218 232 (14) (6.0)%
Information Systems and Technology 219 202 17 8.4%
Marine Systems 181 170 11 6.5%
Corporate (10) (16) 6 37.5%
--- --- ---
Total $1,034 $999 $35 3.5%
====== ==== ===
Operating margin:
-----------------
Aerospace 18.2% 18.0%
Combat Systems 16.2% 16.6%
Information Systems and Technology 9.9% 9.0%
Marine Systems 8.7% 9.3%
Total 12.9% 12.9%
EXHIBIT D
REVENUES AND OPERATING EARNINGS BY SEGMENT - (UNAUDITED)
DOLLARS IN MILLIONS
Nine Months Variance
2015 2014 $ %
---- ---- --- ---
Revenue:
--------
Aerospace $6,709 $6,409 $300 4.7%
Combat Systems 4,116 4,118 (2) - %
Information Systems and Technology 6,804 6,691 113 1.7%
Marine Systems 6,031 5,272 759 14.4%
----- ----- ---
Total $23,660 $22,490 $1,170 5.2%
======= ======= ======
Operating earnings:
-------------------
Aerospace $1,296 $1,199 $97 8.1%
Combat Systems 648 591 57 9.6%
Information Systems and Technology 673 573 100 17.5%
Marine Systems 556 510 46 9.0%
Corporate (31) (51) 20 39.2%
--- --- ---
Total $3,142 $2,822 $320 11.3%
====== ====== ====
Operating margin:
-----------------
Aerospace 19.3% 18.7%
Combat Systems 15.7% 14.4%
Information Systems and Technology 9.9% 8.6%
Marine Systems 9.2% 9.7%
Total 13.3% 12.5%
EXHIBIT E
CONSOLIDATED BALANCE SHEETS
DOLLARS IN MILLIONS
(Unaudited)
October 4, 2015 December 31,
2014
--------------- -------------
ASSETS
Current assets:
Cash and equivalents $3,372 $4,388
Accounts receivable 3,796 4,050
Contracts in process 4,215 4,591
Inventories 3,239 3,221
Other current assets 666 1,157
--- -----
Total current assets 15,288 17,407
------ ------
Noncurrent assets:
Property, plant and equipment, net 3,370 3,329
Intangible assets, net 800 912
Goodwill 11,533 11,731
Other assets 1,989 1,976
----- -----
Total noncurrent assets 17,692 17,948
------ ------
Total assets $32,980 $35,355
------- -------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt $501 $501
Accounts payable 2,387 2,057
Customer advances and deposits 5,871 7,335
Other current liabilities 4,419 3,858
----- -----
Total current liabilities 13,178 13,751
------ ------
Noncurrent liabilities:
Long-term debt 2,912 3,410
Other liabilities 6,156 6,365
----- -----
Total noncurrent liabilities 9,068 9,775
----- -----
Shareholders' equity:
Common stock 482 482
Surplus 2,697 2,548
Retained earnings 22,655 21,127
Treasury stock (11,915) (9,396)
Accumulated other comprehensive loss (3,185) (2,932)
------ ------
Total shareholders' equity 10,734 11,829
------ ------
Total liabilities and shareholders' equity $32,980 $35,355
------- -------
EXHIBIT F
CONSOLIDATED STATEMENTS OF CASH FLOWS - (UNAUDITED)
DOLLARS IN MILLIONS
Nine Months Ended
-----------------
October 4, 2015 September 28, 2014
--------------- ------------------
Cash flows from operating activities-continuing operations:
Net earnings $2,201 $1,832
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation of property, plant and equipment 272 285
Amortization of intangible assets 88 91
Equity-based compensation expense 84 94
Excess tax benefit from stock-based compensation (69) (66)
Deferred income tax provision 88 94
Discontinued operations, net of tax - 104
(Increase) decrease in assets, net of effects of business acquisitions:
Accounts receivable 254 189
Contracts in process 391 380
Inventories (29) (259)
Increase (decrease) in liabilities, net of effects of business acquisitions:
Accounts payable 334 174
Customer advances and deposits (1,508) 1,231
Income taxes payable 13 148
Other current and noncurrent liabilities 206 (238)
Other, net (155) (261)
---- ----
Net cash provided by operating activities 2,170 3,798
----- -----
Cash flows from investing activities:
Maturities of held-to-maturity securities 500 -
Purchases of held-to-maturity securities - (500)
Capital expenditures (360) (337)
Proceeds from sales of assets 290 7
Other, net (12) 4
--- ---
Net cash provided (used) by investing activities 418 (826)
--- ----
Cash flows from financing activities:
Purchases of common stock (2,729) (3,117)
Dividends paid (655) (618)
Repayment of fixed-rate notes (500) -
Proceeds from stock options exercises 240 475
Other, net 71 66
--- ---
Net cash used by financing activities (3,573) (3,194)
------ ------
Net cash (used) provided by discontinued operations (31) 26
--- ---
Net decrease in cash and equivalents (1,016) (196)
Cash and equivalents at beginning of period 4,388 5,301
----- -----
Cash and equivalents at end of period $3,372 $5,105
====== ======
EXHIBIT G
PRELIMINARY FINANCIAL INFORMATION - (UNAUDITED)
DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS
Third Quarter 2015 Third Quarter 2014
------------------ ------------------
Other Financial Information:
----------------------------
Debt-to-equity (a) 31.8% 30.1%
Debt-to-capital (b) 24.1% 23.1%
Book value per share (c) $33.95 $39.26
Total taxes paid $246 $292
Company-sponsored research and development (d) $104 $73
Shares outstanding 316,128,160 331,389,741
Non-GAAP Financial Measures:
----------------------------
2015 2014
---- ----
Quarter Year-to-date Quarter Year-to-date
------- ------------ ------- ------------
Free cash flow from operations:
Net cash provided by operating activities $822 $2,170 $2,504 $3,798
Capital expenditures (170) (360) (175) (337)
---- ---- ---- ----
Free cash flow from operations (e) $652 $1,810 $2,329 $3,461
==== ====== ====== ======
(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 Gulfstream
product-development costs.
(e) 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 H
BACKLOG - (UNAUDITED)
DOLLARS IN MILLIONS
Funded Unfunded Total Estimated Total Potential
Backlog Potential Contract
Contract Value* Value
-------------- -----
Third Quarter 2015
------------------
Aerospace $13,459 $100 $13,559 $2,479 $16,038
Combat Systems 18,591 658 19,249 5,261 24,510
Information Systems and Technology 7,294 2,122 9,416 15,074 24,490
Marine Systems 14,391 12,127 26,518 2,734 29,252
------ ------ ------ ----- ------
Total $53,735 $15,007 $68,742 $25,548 $94,290
======= ======= ======= ======= =======
Second Quarter 2015
-------------------
Aerospace $13,893 $125 $14,018 $2,474 $16,492
Combat Systems 18,454 476 18,930 5,199 24,129
Information Systems and Technology 7,096 2,037 9,133 15,562 24,695
Marine Systems 15,993 11,952 27,945 2,345 30,290
------ ------ ------ ----- ------
Total $55,436 $14,590 $70,026 $25,580 $95,606
======= ======= ======= ======= =======
Third Quarter 2014
------------------
Aerospace $11,924 $143 $12,067 $1,857 $13,924
Combat Systems 20,879 732 21,611 5,760 27,371
Information Systems and Technology 7,421 1,452 8,873 16,520 25,393
Marine Systems 14,308 17,574 31,882 2,524 34,406
------ ------ ----- ------
Total $54,532 $19,901 $74,433 $26,661 $101,094
======= ======= ======= ======= ========
* 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 H-1
BACKLOG AND ESTIMATED CONTRACT
VALUE -(UNAUDITED)
DOLLARS IN MILLIONS
https://photos.prnewswire.com/prnvar/20151027/280964-INFO
Photo - http://photos.prnewswire.com/prnh/20151027/280964-INFO
EXHIBIT H-2
BACKLOG AND ESTIMATED CONTRACT
VALUE BY SEGMENT -(UNAUDITED)
DOLLARS IN MILLIONS
https://photos.prnewswire.com/prnvar/20151027/280992-INFO
Photo - http://photos.prnewswire.com/prnh/20151027/280992-INFO
EXHIBIT I
THIRD QUARTER 2015 SIGNIFICANT
ORDERS (UNAUDITED)
DOLLARS IN MILLIONS
We received the following significant orders during the third quarter of 2015:
Combat Systems
-- $610 from the U.K. Ministry of Defence to provide in-service support for
the AJAX armoured fighting vehicle fleet until 2024.
-- $285 from the U.S. Army to refurbish and upgrade 150 Abrams main battle
tanks to the situational awareness configuration for the Kingdom of
Morocco under a Foreign Military Sales (FMS) contract.
-- $60 from the Army under the Stryker wheeled armored vehicle program for
production of double-V-hulled vehicles.
-- $50 to produce various calibers of ammunition.
Information Systems and Technology
-- $340 from the Centers for Medicare & Medicaid Services for
contact-center services.
-- $155 from the Army for ruggedized computing equipment under the CHS-4
program.
-- $100 from the U.S. Air Force to deliver enterprise IT services.
-- $90 from the Army under the Warfighter Field Operations Customer Support
(FOCUS) program to provide support for live and virtual operations.
-- $80 from the Army under Increment 2 of the Warfighter Information
Network-Tactical (WIN-T) program for additional equipment, engineering
and support services.
Marine Systems
-- $265 from the U.S. Navy for design work on the Ohio-class submarine
replacement program.
-- $155 from the Navy to provide design, engineering, material and
logistics support and research and development activities for active
U.S. submarines.
-- $50 from the Navy for the design and manufacture of two moored training
ships.
EXHIBIT J
AEROSPACE SUPPLEMENTAL DATA - (UNAUDITED)
Third Quarter Nine Months
2015 2014 2015 2014
---- ---- ---- ----
Gulfstream Green Deliveries (units):
------------------------------------
Large-cabin aircraft 31 32 87 87
Mid-cabin aircraft 9 6 23 19
--- --- --- ---
Total 40 38 110 106
=== === === ===
Gulfstream Outfitted Deliveries (units):
----------------------------------------
Large-cabin aircraft 31 25 89 84
Mid-cabin aircraft 12 6 27 24
--- --- --- ---
Total 43 31 116 108
=== === === ===
Pre-owned Deliveries (units): - 3 5 3
----------------------------- === === === ===
http://photos.prnewswire.com/prnvar/20140428/81320
Logo - http://photos.prnewswire.com/prnh/20140428/81320
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/general-dynamics-reports-third-quarter-2015-results-300167323.html
SOURCE General Dynamics
