General Dynamics Corporation (GD) on Q1 2021 Results - Earnings Call Transcript
Operator: Good morning everyone, and welcome to the General Dynamics First Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode. Please also note, today's event is being recorded. At this time, I would now like to turn the conference over to Howard Rubel, Vice President of Investor Relations. Sir, please go ahead. Howard Rubel: Thank you, operator and good morning everyone. Welcome to the General Dynamics first quarter 2021 conference call. Any forward-looking statements made today represent our estimates regarding the company's outlook. These estimates are subject to some risks and uncertainties. Additional information regarding these factors is contained in the company's 10-K, 10-Q and 8-K filings. Phebe Novakovic: Thank you, Howard. Good morning everyone and thanks for being with us. As you can discern from our press release, we reported earnings of $2.48 per diluted share on revenue of $9.4 billion, operating earnings of $938 million and net income of $708 million. Revenue is up $640 million or 7.3% against the first quarter last year. Operating earnings are up $4 million and net earnings are up $2 million. To be a little more granular, revenue on the Defense side of the business is up against last year's first quarter by $444 million and Aerospace is up $196 million. The operating earnings on the Defense side are up $45 million or 6.4%, while operating earnings in the Aerospace side are down $20 million, but still nicely above consensus. I'll have more to say about this A bit later. The operating margin for the entire company was 10%, 70 basis points lower than the year ago quarter. This was driven by a 250 basis point lower margin rated Aerospace, as was fully anticipated in our guidance to you, combined with $21 million more in corporate operating expense. From a slightly different perspective, we beat consensus by $0.18 per share. We have roughly $500 million more in revenue than anticipated by the sell side and have 50 more operating earnings. So, it's a pure operations beat. I must confess that we were also beat our own expectations rather handsomely. This is in almost all respects a very solid quarter. It's hard to find something not to like about it. It's a very good start to the year. So, let me move right into some color around the performance of the business segments, have Jason at color around cash, backlog, taxes, and deployment of cash. And then we'll answer your questions. First, Aerospace. Aerospace enjoyed revenue of $1.9 billion and operating earnings of $220 million, with an 11.7% operating margin. Revenue is almost $200 million higher than anticipated by us and the sell side. Revenue is also $196 million higher than the year ago quarter. The difference is almost exclusively more G500 and G600 deliveries than the year ago quarter. The 11.7% operating margin is lower than the year ago quarter, but consistent with our guidance and sell side expectations. Finally, we took some mark-to-market charges with respect to our G500 test inventories. Without the charge from a pure operating perspective, performance in the quarter was superb. Aerospace also had a very strong quarter from an orders perspective with the book-to-bill of 1.3 to one. Gulfstream alone had a book-to-bill of 1.34 to one. In unit terms, this is the strongest order quarter for the last two years, excluding the fourth quarter of 2019 when we launched the G700. Jason Aiken: Thank you, Phebe and good morning. I'll start with our cash performance in the quarter. From an operating cash flow perspective, we essentially broke even for the quarter. Including capital expenditures, our free cash flow was negative $131 million. For those of you who followed us for some time, you know we've been a fairly significant user of cash in the first quarter for the past several years. This quarter was a marked improvement from that pattern due in large part to the strong order activity at Gulfstream and ongoing progress payments on our large international Combat Systems program, consistent with the contract amendment Phebe referenced earlier. So, the quarter was nicely ahead of our expectations and reinforces our outlook for the year of free cash flow conversion in the 95% to 100% range. Looking at capital deployment. I mentioned capital expenditures, which were $134 million in the quarter or 1.4% of sales. That's down between 25% and 30% from the first quarter a year ago, but we're still expecting full year CapEx to be roughly 2.5% of sales. We also paid $315 million in dividends and increase the quarterly dividend by a little more than 8% to $1.19 per share. And we spent nearly $750 million on the repurchase of 4.6 million shares at an average price of just over $161 per share. After all this, we ended the first quarter with a cash balance of $1.8 billion and a net debt position of $11.4 billion, down $1.3 billion from this time last year. Net interest expense in the quarter was $123 million, up from $107 million in the first quarter of 2020. The increase in 2021 is due to the incremental debt issued last year in conjunction with the refinancing of maturing notes. We have $3 billion of outstanding debt maturing later this year, and we plan to refinance a portion of those notes to achieve a more balanced deployment of capital. But this will still result in a declining debt balance this year and beyond. During the quarter, Congress passed the American Rescue Plan Act. As you may be aware, it contains two provisions that affect our business. First, it extended the provision of the CARES Act that allows reimbursement of contractor payments to workers who were prevented from working due to COVID-related facility closures. This will continue to benefit our technologies business, although it does not provide for fee on those costs. So that will have an ongoing diluted impact on the segments margins. Howard Rubel: Thank you, Jason. As a reminder, we asked participants to ask one question and one follow-up, so that everyone has chance to participate. Operator, could you please remind participants how to enter the queue? Operator: Ladies and gentlemen, at this time, we will begin the question-and-answer session. Our first question today comes from Jon Raviv from Citi. Please go ahead with your question. Jonathan Raviv: Hey, good morning, everyone. Thanks. Thanks for the opportunity to hear. Question on actually on GDIT. The staffing , you guys had talked about 7% growth this year. You did 5% of the first quarter, so definitely a good start. So, any kind of milestones to look upon there. And then just overall commentary on the environment. We've heard of some delays and slowness in awards. Some other contractors have been highlighting, some disruptions that impact the organic growth. So, any view as to how that's impacting your 2021 and how that could flow out over 2022, some of these new businesses -- using awards come through. Phebe Novakovic: So, as I noted, we submitted a very large number of proposals in the quarter, and we are waiting over $30 billion in customer’s decisions on contracts. And COVID, obviously, had some impact on those -- that decision-making process. But we suspect that as -- we expect that as the government gets back to full operating cadence that we will begin to work through some of that backlog on the order decisions. Jonathan Raviv: And then as -- thank you, Phebe. As a brief follow-up, again, sticking to the technology and maybe also like key market. When you look at this huge -- almost backlog of things to be adjudicate, you mentioned that a lot of it is new business. Would you consider a lot of this new business to be takeaways from other contractors, or is this some that element of whites-pace almost with the government creating and doing more things that are contractor addressable? Phebe Novakovic: So, I think, it's a combination. I think, we're winning more than our fair share, number one. Number two, the government is combining a number of preexisting current workload in the larger contracts given that the scale and magnitude of the effort that's required again is a good thing for us to bid on those large contracts. And then, some of it is just pure program programming. So, I think that's pretty much how we see that market unfolding. Jonathan Raviv: Thank you very much. Operator: Our next question comes from Seth Seifman from JPMorgan. Please go ahead with your question. Seth Seifman: Thanks very much and good morning. Phebe Novakovic: Hi, Seth. Seth Seifman: I was wondering if you could -- I think you mentioned some inventory right downs on G500, I was wondering if you could quantify that. Just so we could have a cleaner look at the Aerospace margin. Phebe Novakovic: Yeah. So, we're not in the habit of giving detailed product by product margin. We did have a mark-to-market on some of our test airplanes, on the 500 test airplanes, which is pretty much to be expected with test airplanes. But we see that as largely behind us. So, I noted that just to tell -- to give you awesome color that absent that we would have seen even better operating performance. Seth Seifman: Right. I guess maybe without quantifying it, is there -- is it possible to talk a little bit about the -- I guess the trajectory of margins at Aerospace, when we should expect through the year and sort of as we go into Q2? Phebe Novakovic: So, we expect, as I noted, deliveries to be lower in Q2, margins to be compressed in Q2, but increasing nicely then quarter-over-quarter, as we go through Q3 and into Q4. But recall, we admitted before that we see 2021 as our lower margin year for all the reasons that we noted, not the least of which is we took about 10 airplanes, largely as -- on our production last year largely as a result of the -- ended the 550 production and some mid-cabin. So, when the demand begins to increase or increasingly picks up and we ought to see some return to what we had considered our normal production rate and hence delivery rate. So, that'll drive margin. Seth Seifman: Okay. Thanks. Phebe Novakovic: By the way, when you think about margin, particularly out the impact of the entry into service of the 700. Operator: Our next question comes from Cai von Rumohr from Cowen. Please go ahead with your question. Cai von Rumohr: Yes. Thanks so much. Good quarter, Phebe. Phebe Novakovic: Thank you, Cai. Cai von Rumohr: So, could you give us some more on demand at Gulfstream? You basically said it's broadly based. But first, what are we looking at in terms of corporate demand, which we've heard is still weak and ultra high net worth, which we've heard is very strong. And any color on specific models. Like I think you said you had 70 orders for the G700, are those -- is that number moving up at a decent pace? Phebe Novakovic: indoor 22:46: So, look, if you think about demand, as we see the lifting of the international travel restrictions and removal of quarantine restrictions and the increased confidence of obviously the U.S. economy, but also global economies, we expect to see demand continue to increase and should it, we see Gulfstream as being in very good stead. Cai von Rumohr: So, you mentioned demand getting better. And we know that pre-owned prices are continuing to come down and we have the weird situation where all of this happening, while international routes are not opening up. Given the strength in demand, if you wanted, or if the demand were there to sort of deliver more planes, how long would it take you to kind of uptick your production rate so that we can see those deliveries moving up? Phebe Novakovic: So, on average, it takes about six months lead time. But we're -- looking at just a few more production airplanes, as I noted in my remarks, and we'll continue to adjust and be sufficiently agile as we see demand continue to increase. So I liked how we balanced ourselves right now. Prudent, yet forward looking and we are pretty efficient when it comes to that to ramping up. But it does take the lead time of about two quarters. Cai von Rumohr: Thank you. Operator: And our next question comes from David Strauss from Barclays. Please go ahead with your question. David Strauss: Thanks. Good morning. Phebe Novakovic: Good morning, David. David Strauss: Phebe, want to follow-up on some of your earlier comments around the margin in Gulfstream. So, over time we got used to this being a mid to high teens business. Is that still the right way to think about this business going forward, particularly when the 700 comes in? And do you expect the 700 to be margin accretive when it starts to deliver? Phebe Novakovic: So, the 700 will be margin accretive when we begin deliveries. We think about this on -- given our portfolio and our place in the firmament as a mid-teen margin business for the short-term. But as you can imagine, we'll continue to work margins. And as we've talked about many times before our margins at Gulfstream are a whole host -- driven by a whole host of issues, not the least of which is service mix, mix of airplanes. And when we were -- a couple of years ago, that was, as you recall, an acceleration of the 650 backlog, which kind of solitary effect of better aligning 650 demand with the backlog. So, there wasn't too much of wait for people. But also helping us transition through that period when we were replacing the 450, 500 -- the 450, 550 with 500 and 600. So that is largely behind us. And we -- as I said, expect to see some nice margin accretion as we go forward. David Strauss: Great. That's helpful. And do you think -- could you comment a little bit on the moving pieces of capital and what to expect there? Inventories come down a bit, advances, benefit of headwind. So, just -- how we should expect the different pieces within working capital to move from here? Thanks. Jason Aiken: Sure. You'll recall the major moving pieces that we've talked about, sort of outside the normal run rates for the business, in general, have been the elevated inventory level at Gulfstream as we have invested in the new models between test airplanes and the buildup for production and entry into service. That obviously has been a headwind for several years now. We saw that start to turn at the end of last year, a little bit better than we thought was going to happen, a little earlier than we thought was going to happen. And so we -- that helped us outperform our cash flow expectations for 2020. You can think about that for Gulfstream continuing to normalize this year. We'll start to see the 500s and 600s hit that inflection point and no longer be a headwind. But at the same time, keep in mind, we're building up on the 700 as that program moves toward entry into service. So, that'll become a little more neutral this year and then eventually shifted into a tailwind in the 2022 period and beyond. The other piece is, obviously, the large international program at Combat Systems, which again was a headwind for several years, that turned with the modification to that contract that Phebe discussed earlier into a more neutral event last year. So that stabilized last year and becomes a very modest tailwind this year, and then becomes a more meaningful tailwind in 2022, 2023, and a little bit more in 2024. So, when you think about the way those two pieces are moving, that kind of gets us on a cash flow trajectory from -- if you go back to 2019, we were in the 60%-ish range moving toward an expectation of the 80% range. Last year, we outperformed that a little bit as Gulfstream did a little better. And now we're in the high -- mid to high 90% range. The one piece there that's still sort of keeping us out of the 100% range really is the elevated investment profile in CapEx at Marine Systems. So, once that normalizes, next year, it gets back into the 2% of sales range. You should expect to see us the whole business at large being in the 100% to 100%-plus range, really with those two working capital pieces at Gulfstream and Combat Systems becoming the tailwinds that allow us to get even nicely above a 100%. So, that's kind of the trajectory for all those major moving pieces. Hopefully that gives you a sense of where we're going and the basis for our expectation for the improvement that we see ahead. David Strauss: Yeah. Absolutely. Thanks very much. Operator: Our next question comes from Ron Epstein from Bank of America. Please go ahead with your question. Ronald Epstein: Yeah. Good morning. Phebe Novakovic: Good morning, Ron. Ronald Epstein: How are you? Switching over to the ship business? How is the electric boat adjusting to both having the Virginia Class and the Columbia Class in -- everything that they got to do in terms of workforce, supply chain, so on and so forth, and how's that going? Phebe Novakovic: It's going very well, on both ramping up Virginia and equally importantly, more significantly Columbia. There's something important to remember when you think about Columbia. We started work on that program 14 years ago. And in that 14-year-period we have worked assiduously with the Navy to reduce all known potential risks that we could foresee in the ramp up of a very complex new program that -- and that included workforce hiring and training, supply chain readiness, facility readiness, construction prototyping, technology readiness, retiring potential known risks -- the potential risks in new high-end technologies and then the design maturity. That -- this boat entered into construction with a 83% design completion level and break contest to Virginia, which has been an exemplary program at 43%. So all of this prior planning and 14 years of detailed blocking and tackling at every conceivable level has mitigated an awful lot of risk and allowed us to -- for verbally hit the ground running on Columbia, and so far so good. I will know, it’s a very complex program, so you can't declare victory on any ship building program right out of the bat, but we have taken unprecedented and historically unprecedented measures to retire all the known risks going forward. So that has really allowed us to execute coming right out of the gates very strongly. They've done a very good job. Ronald Epstein: Got it. Got it. Got it. And it seems like the focus on the Pacific's been good for the ship business. How's it been for Gulfstream? I mean, when you think about U.S., China relations, has that had an impact on Gulfstream demand in the region? Phebe Novakovic: Not that we can see. So, our demand in Asia has been quite steady and good. We've got nice, large install base, a lot of customer intimacy there. So, today we have not seen it, that particular impact. Ronald Epstein: Got it. Got it. Thank you. Operator: Our next question comes from Myles Walton from UBS. Please go ahead with your question. Myles Walton: Thanks. Good morning. Phebe Novakovic: Good morning, Myles. Myles Walton: Heard your thoughts on M&A for a little bit, so I was hoping maybe we could go there. Obviously, you're getting to a point on your leverage, which is getting pretty attractive, building up plenty of firepower. What are you looking at in terms of landscape GDs, always historically been an acquisitive company. Is the appetite growing there? Phebe Novakovic: So, we have been through a significant investment period across many of our large lines of business and our focus here is on execution and primary focus. We will -- we always look for potential niche bolt-ons here and there. But we don't see anything on the horizon here of any significant opportunities that would entice us. Myles Walton: Okay. And Jason, what's the target ratios that we're aiming for? I know you said you'll refinance some of it, but maybe a little color there. Jason Aiken: Yeah. I think perhaps less of a target ratio then -- we're going to continue to prioritize our mid A rating. That's always going to be sort of where we seek to land long-term. And so, the key for us right now is we had -- as you're aware of sort of an outsize level of debt maturing this year versus if you look out over the next 10 to 20 years what our debt ladder maturity phasing looks like. And so, really what we're aiming to do is sort of bring that into more of a balanced picture of capital deployment that allows us to step down the debt over time in reasonable measures, as well as have considerable flexibility and firepower available for other deployment opportunities. Myles Walton: Thank you. Operator: And our next question comes from Sheila Kahyaoglu from Jefferies. Please go ahead with your question. Sheila Kahyaoglu: Good morning, everyone. Thank you. Phebe Novakovic: Hi, Sheila. Sheila Kahyaoglu: Hey. Phebe, maybe a big picture question for you, because I know Howard always has us covered on the numbers. You've been at GD as the -- over almost a decade now and at the company for 20 years, how do you think about where GD goes over the next decade, whether from a portfolio focus or customer focus as the budget flat lines or where operating leverage comes from that? Phebe Novakovic: So, from a strategic perspective, we decided several years ago to invest in a number of our significant lines of business, where we believe that we could realize the best return on invested capital and really drive value. We have been in that period at Gulfstream, GDIT, primarily the Gulfstream, GDIT and the Marine Group. So the key now from my perspective is all about execution. And execution has been the hallmark of everything that we do here, and it is the undergirding of all financial performance. And it requires a discipline across -- it requires discipline across a series of elements and that are faster than all operations. But really, as I see the next several years, it's all about execution and wise deployment of capital to drive nice value creation. Ultimately, long-term value creation is based on good product. It's a perm execution wise investments and smart capital limit. So that's what I see us doing. Sheila Kahyaoglu: Thank you very much. Operator: Our next question comes from Pete Skibitski from Alembic Global. Please go ahead with your question. Pete Skibitski: Hey, good morning, Phebe and Jason and Howard. Phebe Novakovic: Good morning. Pete Skibitski: Phebe, I was wondering -- in Combat, I'm wondering if you could give us a sense of what international orders are out there for you, maybe both kind of sole source expectations as well as competitive opportunities. Phebe Novakovic: So, international consists of two items, primarily sales outside the United States from entities outside -- from our business units outside the United States, as well as FMS sales emanating from the United States. And unfortunately, for the state of humankind, the world has become an increasingly dangerous place. And so, we see the reflection of that concern in many of U.S. allies with increased demand for many of our products in Europe, Eastern Europe, a little bit in Asia, parts of the Middle East, and in the former Commonwealth nations and in the U.K. as well. So, we looked for nice, steady demand signals coming from outside the United States for our business units that are domiciled ex-U.S. And FMS, United States has had a long history of providing its allies with FMS opportunities. And we have a number of those in our comp opportunities and our Combat Systems again, selling through the U.S. government to key us allies positions in particularly dangerous. So, we see that nice cadence continuing in terms of our orders. Pete Skibitski: Okay. And U.S. wise, you expect programs that you're competing for this MPS and all MSP. Do you think they survive any budget tightness? Phebe Novakovic: So, new programs are always the most vulnerable. But with MPS, we were -- the only person -- they're only contracted to develop -- I think there were 12 prototypes. We delivered those last year. We liked our offering. We think it's what the army wants. But we are very attuned to army demands and how they see their site. And that's where -- intimacy with the army helps significantly. That plus -- so with all of them at MSP, that program got stretched considerably. So, we are taking it seriously and participating, but there's a long way to go before that comes to fruition. But recall another element and a key element of army modernization is upgrading with key -- with important and innovative new technologies, their existing platforms. And for us that means Stryker and Abrams, and both are undergoing major upgrade programs. So, all-in-all, we see the demand for our programs continuing to go strong. And there is nothing like -- going back to the earlier comments about execution. There's nothing like performing on schedule and on budget to amplify and provide a bit of an antidote to any potential cuts that come in the future. So, Combat is the army's major integrator of Combat Wheeled Systems and will remain such. So that ensures that our place in the firmament remains pretty strong. Pete Skibitski: Right. Thank you very much. Operator: And our next question comes from Peter Arment from Baird. Please go ahead with your question. Peter Arment: Yes. Thanks. Good morning, Phebe, Jason. Phebe, a question on the budgets, I guess just kind of following up on your comments there. Just -- we got the skinny budget from the new administration, and obviously we're to get some -- a lot more details soon. But how are you thinking about just the alignment with the new administration priorities when you think it look at GDs portfolio? Thanks. Phebe Novakovic: So, clearly, as I think -- perhaps it was Ron mentioned the demand for products that meet the pacific theater have -- has increased that puts our ship building business, particularly submarines in a very good stead. And you can see all of -- both the rhetoric of funding supporting increased submarine production. And we are executing on the current programs of record and working with the Navy to -- additional submarines can be executed in a relatively short-term. With respect to our Combat Systems Group, unfortunately, but regrettably the case, the hottest theater at the moment is Russia. And so whether we like it or not, that is the reality with which we were faced and this administration has been very quick to respond appropriately to the Russians. And so you see -- we believe that Combat System is highly aligned with that reality that we're now faced with in Europe. So, all-in-all, we liked our positioning with the new administration's priority. Remember, and particularly administration and this president has been an advocate of strong national security throughout his long and distinguished career. U.S. National Security strategy is driven by the threat of the perception of threat that has not changed. So, we will see some changes in relative priority among systems, but in all instances, we see ourselves very well aligned. Peter Arment: And just as a quick follow-up. Something that doesn't get talked a lot about, but you have a lot of CyOps capabilities. Maybe you could just give us a little color on how you see the opportunities there. Thanks. Phebe Novakovic: So, if you mean from both cyber, cyber is embedded in all of our business and if you get to -- but I think you referred to CyOps. One would be -- it would be the height of fallen to discuss any of that. But let's just put it this way. We have always been on the leading edge of innovations with respect to cyber and electronic technologies that apply to the real world site in the moment. Peter Arment: Appreciate all the color. Thanks, Phebe. Operator: Our next question comes from Richard Safran from Seaport Global. Please go ahead with your question. Richard Safran: Phebe, Jason, Howard, good morning. How are you? Phebe Novakovic: Fine. Richard Safran: First question I had is, I was interested in the announcement and I think it was back in February where at IT you added Amazon cloud services to the milCloud 2.0. What I wanted to know is, how much does the addition of Amazon enhance your offering? Was this something that just improve the cost on the program, or is this something that maybe opens up new opportunities for expanding cloud service to the government? Just anything you can tell us regarding the size of the opportunity, or what this does, would be appreciated. Phebe Novakovic: So, not surprisingly, the U.S. Department of Defense is moving as all major institutions are increasingly to the cloud. And so, our cloud offerings are -- an incrementally important part of our offerings that we believe will ultimately drive increased adoption across our existing contracts and adoption of the technology suite that we offer. And frankly, an expansion of the market. So, cloud presents a significant opportunity, and we are well-positioned to execute on it. Richard Safran: Okay. Thanks for that. And then second -- and just to kind of a broad strategic question for you and your comments about execution. Over the past year or so, you've made a number of changes to adjust how you're operating, clearly for obvious reasons. I was just wondering, what are the more permanent changes and how you operate -- and that are going to persist long after COVID? I was just wondering if you discuss how these changes? How you're thinking about that impacting and improving margins. Phebe Novakovic: So, let me infer a little bit from the question you're asking. We hear a lot of anecdotal evidence that there may be systemic changes emanating from COVID that have to do with work-at-home and what that might mean for a commercial real estate footprint. We still believe it is too soon to declare any change structural. We do expect to see some -- the extent to which remains to be seen, but some work-from-home either in hybrid capacities, or in some cases more completely. But I don't see that move as something that is dispositive and determinative of real performance and execution. I think what you saw -- going back to execution through COVID -- and frankly, this company's performance across its business units during COVID was really a manifestation of the discipline that we have in all of our operating -- and our operating performance and our operating leverage. The more disciplined a company is the better they were able to adapt to the vagaries and some of the really significant challenges that COVID provided both to the workforce and frankly, the costumers and the environment. So, I think that, to me, it underscored, amplified our operating excellence. And I suspect that that will continue -- then understanding of that will continue to permeate as we go forward. And we will continue to build on that. Operating excellence is never static. It has to get better and better and better. That's what continuous improvement is all about. And frankly, we have a longstanding discipline of around that. So, I don't think there'll be a structural change in our operating performance, but it's simply undergirds the importance of that discipline that focuses on performance. Richard Safran: Excellent color. Thanks. Howard Rubel: And Jamie, we will have time for just one last question, please. Operator: And our final question comes from Robert Stallard from Vertical Research. Please go ahead with your question. Robert Stallard: Thanks very much. Good morning. Phebe Novakovic: Morning. Robert Stallard: Phebe, just a couple of quick ones on the Aerospace division. Clearly, a very strong first quarter here. But I was wondering if you had seen any demand pulled forwards into the first quarter from the second quarter. And then secondly, you talked this before. How is the lead time for aircraft looking at? Are we still looking at roughly 12 months between an order and a delivery? And also how has pricing fed in the first quarter? Thank you. Phebe Novakovic: So, think of that demand, less about pull forward, demand comes when it comes and you execute it as it arrives on your doorstep. So, what we saw with respect to demand is starting -- as I noted in mid February, we start -- and we saw a nice steady increase in demand across a broad specter of our customer base and the U.S. Our initial estimates show or indications are that that demand is carrying through into the second quarter. Pricing is holding up very well. As you all know, we are very disciplined about our pricing. It is precious once lost. You don’t get it back. We’ve had a hard slog. So, pricing has done very well. And as I noted earlier, it’s about six months to ramp up additional production and I don’t see that interim significantly changing anytime soon, given all of the elements that have to perform. So, I hope that answers your question. Robert Stallard: Yeah. That’s very helpful. Thank you. Howard Rubel: Operator, this now ends our call. Thank you very much everybody for your time. And I will be available to answer your questions, and I can be reached in my office. Thank you very much. Operator: Ladies and gentlemen, with that we'll conclude today's conference call. We do thank you for attending. You may now disconnect your lines.GD Ratings Summary
GD Quant Ranking
Related Analysis
General Dynamics Stock Dips Amid G700 Certification Delay
General Dynamics Corporation's Stock Performance Amid G700 Certification Delay
General Dynamics Corporation (GD:NYSE) saw its stock value dip today, a movement that caught the attention of investors and market analysts alike. This decline came in the wake of the company's latest financial disclosures, where it reported revenues that surpassed market expectations but failed to meet the anticipated earnings per share (EPS) figures set by Wall Street. The heart of the issue seemed to stem from a delay in the certification of the G700 aircraft, a key product for General Dynamics. The company had been optimistic about completing the G700's certification in time to begin deliveries within the quarter, but the process dragged on until late March, disrupting the company's plans and likely affecting how investors view its stock.
The stock's performance today reflects a broader trend observed over the past year. GD's shares have seen highs and lows, with today's trading session recording a slight decrease of about -0.38%, bringing the stock price to approximately $283.81. This fluctuation falls within the day's trading range of $282.81 to $286.77, showcasing the volatility that can come with unexpected corporate developments like the G700 certification delay. Despite today's dip, it's important to note that GD's stock has experienced significant growth over the past year, reaching a peak of $296.5 and a low of $202.35, indicating a generally positive trajectory for the company's valuation.
The market capitalization of General Dynamics stands at roughly $77.76 billion, a testament to the company's size and the value it holds in the eyes of investors. With a trading volume of 186,072 shares, it's clear that GD remains a actively traded stock, suggesting that the investment community is closely monitoring the company's performance and how it navigates challenges like the G700 certification delay. This level of activity also points to the broader interest in defense and aerospace stocks, sectors where General Dynamics plays a significant role.
The delay in the G700 aircraft certification is a critical factor to consider when analyzing General Dynamics' current stock performance. Such delays can have ripple effects, not only delaying revenue from aircraft deliveries but also potentially shaking investor confidence in the company's ability to meet its timelines and project goals. This situation underscores the complexities of the aerospace sector, where certification processes are rigorous and time-consuming, reflecting the high standards of safety and performance required in the industry.
In summary, General Dynamics' stock movement today is a reflection of the intricate balance between company performance, investor expectations, and the unforeseen challenges that can arise in the aerospace and defense sectors. While the company has shown resilience and growth over the past year, today's slight decline highlights the impact of operational hurdles like the G700 certification delay on investor sentiment and stock value. As General Dynamics works to overcome these challenges, investors will likely keep a close watch on how these developments affect the company's financial health and market position.
