Attachment: 8-K

Document


Exhibit 99.1 
 
image2.jpg
11011 Sunset Hills Road 
Reston, Virginia 20190News
www.gd.com 

Contact: Jeff A. Davis
Tel: 703 876 3483
press@generaldynamics.com


General Dynamics Reports Second-Quarter 2021 Financial Results

July 28, 2021

•Net earnings of $737 million, up 17.9% from year-ago quarter
•Diluted EPS of $2.61, up 19.7% from year-ago quarter
•$1.1 billion in cash provided by operating activities
•Very strong Gulfstream order activity


RESTON, Va. – 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.




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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.
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EXHIBIT A
CONSOLIDATED STATEMENT OF EARNINGS - (UNAUDITED)
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS

 
 Three Months EndedVariance
 July 4, 2021June 28, 2020$%
Revenue$9,220 $9,264 $(44)(0.5)%
Operating costs and expenses(8,261)(8,430)169 
Operating earnings959 834 125 15.0 %
Other, net31 25 6 
Interest, net(109)(132)23 
Earnings before income tax881 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 outstanding280.7 286.4 
Earnings per share—diluted$2.61 $2.18 $0.43 19.7 %
Diluted weighted average shares outstanding282.2 286.9 





































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EXHIBIT B
CONSOLIDATED STATEMENT OF EARNINGS - (UNAUDITED)
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS

 
 Six Months EndedVariance
 July 4, 2021June 28, 2020$%
Revenue$18,609 $18,013 $596 3.3 %
Operating costs and expenses(16,712)(16,245)(467)
Operating earnings1,897 1,768 129 7.3 %
Other, net61 46 15 
Interest, net(232)(239)7 
Earnings before income tax1,726 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 outstanding282.4 287.5 
Earnings per share—diluted$5.10 $4.61 $0.49 10.6 %
Diluted weighted average shares outstanding283.6 288.5 
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EXHIBIT C
REVENUE AND OPERATING EARNINGS BY SEGMENT - (UNAUDITED)
DOLLARS IN MILLIONS

 
 Three Months EndedVariance
 July 4, 2021June 28, 2020$%
Revenue:
Aerospace$1,622 $1,974 $(352)(17.8)%
Marine Systems2,536 2,471 65 2.6 %
Combat Systems1,899 1,754 145 8.3 %
Technologies3,163 3,065 98 3.2 %
Total$9,220 $9,264 $(44)(0.5)%
Operating earnings:
Aerospace$195 $159 $36 22.6 %
Marine Systems210 200 10 5.0 %
Combat Systems266 239 27 11.3 %
Technologies308 247 61 24.7 %
Corporate(20)(11)(9)(81.8)%
Total$959 $834 $125 15.0 %
Operating margin:
Aerospace12.0 %8.1 %
Marine Systems8.3 %8.1 %
Combat Systems14.0 %13.6 %
Technologies9.7 %8.1 %
Total10.4 %9.0 %






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EXHIBIT D
REVENUE AND OPERATING EARNINGS BY SEGMENT - (UNAUDITED)
DOLLARS IN MILLIONS

 
 Six Months EndedVariance
 July 4, 2021June 28, 2020$%
Revenue:
Aerospace$3,509 $3,665 $(156)(4.3)%
Marine Systems5,019 4,717 302 6.4 %
Combat Systems3,719 3,462 257 7.4 %
Technologies6,362 6,169 193 3.1 %
Total$18,609 $18,013 $596 3.3 %
Operating earnings:
Aerospace$415 $399 $16 4.0 %
Marine Systems410 384 26 6.8 %
Combat Systems510 462 48 10.4 %
Technologies614 545 69 12.7 %
Corporate(52)(22)(30)(136.4)%
Total$1,897 $1,768 $129 7.3 %
Operating margin:
Aerospace11.8 %10.9 %
Marine Systems8.2 %8.1 %
Combat Systems13.7 %13.3 %
Technologies9.7 %8.8 %
Total10.2 %9.8 %



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EXHIBIT E
CONSOLIDATED BALANCE SHEET
DOLLARS IN MILLIONS
 
(Unaudited)
July 4, 2021December 31, 2020
ASSETS
Current assets:
Cash and equivalents$2,950 $2,824 
Accounts receivable3,255 3,161 
Unbilled receivables7,923 8,024 
Inventories5,803 5,745 
Other current assets1,649 1,789 
Total current assets21,580 21,543 
Noncurrent assets:
Property, plant and equipment, net5,135 5,100 
Intangible assets, net2,003 2,117 
Goodwill20,021 20,053 
Other assets2,444 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 payable2,595 2,952 
Customer advances and deposits5,956 6,276 
Other current liabilities3,609 3,733 
Total current liabilities14,981 15,964 
Noncurrent liabilities:
Long-term debt11,485 9,995 
Other liabilities9,396 9,688 
Total noncurrent liabilities20,881 19,683 
Shareholders’ equity:
Common stock482 482 
Surplus3,194 3,124 
Retained earnings34,273 33,498 
Treasury stock(19,181)(17,893)
Accumulated other comprehensive loss(3,447)(3,550)
Total shareholders’ equity15,321 15,661 
Total liabilities and shareholders’ equity$51,183 $51,308 




 
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EXHIBIT F
CONSOLIDATED STATEMENT OF CASH FLOWS - (UNAUDITED)
DOLLARS IN MILLIONS
 
  
Six Months Ended
 July 4, 2021June 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 equipment280 254 
Amortization of intangible and finance lease right-of-use assets159 177 
Equity-based compensation expense72 61 
Deferred income tax benefit(37)(83)
(Increase) decrease in assets, net of effects of business acquisitions:
Accounts receivable(94)(1)
Unbilled receivables134 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 activities1,118 177 
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 notes1,497 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, net338 (118)
Net cash (used) provided by financing activities(671)1,467 
Net cash used by discontinued operations(13)(24)
Net increase in cash and equivalents126 1,398 
Cash and equivalents at beginning of period2,824 902 
Cash and equivalents at end of period$2,950 $2,300 


 

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EXHIBIT G
ADDITIONAL FINANCIAL INFORMATION - (UNAUDITED)
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS
Other Financial Information:
 July 4, 2021December 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 outstanding279,541,414 286,477,836 
Second QuarterSix Months
2021202020212020
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 QuarterSix Months
 2021202020212020
Earnings before interest, taxes, depreciation and amortization:
Net earnings$737 $625 $1,445 $1,331 
Interest, net109 132 232 239 
Provision for income tax, net144 102 281 244 
Depreciation of property, plant and equipment144 132 280 254 
Amortization of intangible and finance lease right-of-use assets80 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.
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EXHIBIT H
BACKLOG - (UNAUDITED)
DOLLARS IN MILLIONS
 
FundedUnfundedTotal
Backlog
Estimated
Potential
Contract Value*
Total
Estimated
Contract Value
Second Quarter 2021:
Aerospace$13,155 $366 $13,521 $2,099 $15,620 
Marine Systems26,435 21,095 47,530 4,689 52,219 
Combat Systems14,157 271 14,428 7,711 22,139 
Technologies9,769 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 Systems27,676 22,075 49,751 2,815 52,566 
Combat Systems14,085 143 14,228 9,120 23,348 
Technologies10,003 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 Systems25,118 17,365 42,483 14,441 56,924
Combat Systems13,863 242 14,105 6,399 20,504
Technologies10,320 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.






 



 





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EXHIBIT H-1
BACKLOG - (UNAUDITED)
DOLLARS IN MILLIONS




chart-e053ce90412d4eee981.jpg
Funded BacklogUnfunded Backlog











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EXHIBIT H-2
BACKLOG BY SEGMENT - (UNAUDITED)
DOLLARS IN MILLIONS

chart-40e858244c9a4ca0a7c.jpgchart-9287518d23b840ce84c.jpg
chart-db1ffe80207a4b56bcd.jpgchart-ae732ebac4294e7ea85.jpg
Funded BacklogUnfunded Backlog
















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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.
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EXHIBIT J
AEROSPACE SUPPLEMENTAL DATA - (UNAUDITED)

 Second QuarterSix Months
 2021202020212020
Gulfstream Aircraft Deliveries (units):
Large-cabin aircraft18 26 43 46 
Mid-cabin aircraft3 6 6 9 
Total21 32 49 55 
Aerospace Book-to-Bill:
Orders*$3,292 $1,072 $5,749 $2,928 
Revenue1,622 1,974 3,509 3,665 
Book-to-Bill Ratio2.03x0.54x1.64x0.80x

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










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