October 22, 2008
- EPS grows 18.7 percent
- Funded backlog increases 10 percent
- Free cash flow equals 118 percent of earnings from continuing operations
FALLS CHURCH, Va. – General Dynamics (NYSE: GD) today reported 2008 third-quarter earnings from continuing operations of $634 million, or $1.59 per share on a fully diluted basis, compared to 2007 third-quarter earnings from continuing operations of $544 million, or $1.34 per share fully diluted. Revenues rose to $7.1 billion in the quarter, a 4.5 percent increase over third-quarter 2007 revenues of $6.8 billion. Net earnings, which were equal to earnings from continuing operations, increased 16 percent over the year-ago period.
Net cash provided by operating activities from continuing operations was $863 million for the third quarter, or 136 percent of net earnings. Free cash flow from operations, defined as net cash provided by operating activities from continuing operations less capital expenditures, was $749 million, or 118 percent of net earnings.
Funded backlog at the end of the third quarter 2008 was $49.7 billion, and total backlog was $60.5 billion, compared to $45.2 billion and $55.3 billion, respectively, at the end of the second quarter 2008. Backlog growth in the quarter included significant increases in three of the company’s four business groups.
Operating margins increased in each of General Dynamics’ four business groups during the third quarter of 2008. Company-wide, operating margins were 13.1 percent, a 140-basis-point improvement compared to the third quarter of 2007.
Sales in the third quarter increased in the Aerospace, Marine Systems and Information Systems and Technology groups when compared to the year-ago period. Continued customer demand generated new orders on several of the company’s key vehicle programs – including the Army’s Stryker infantry combat vehicle and Abrams tank upgrades – resulting in substantial backlog growth in Combat Systems. The strong appeal of the Aerospace group’s large-cabin products generated significant additional backlog in that segment as well.
“This was a powerful quarter for General Dynamics,” said company Chairman and Chief Executive Officer Nicholas D. Chabraja. “As the company’s core defense programs demonstrated their continued strength and the market for business-jet aircraft drove the Aerospace backlog to its highest level ever, we improved margins company-wide and generated substantial cash by maintaining our focus on solid execution.
“These factors – a durable and growing backlog, sustained performance improvement and strong cash flow – position the company to continue creating shareholder value,” Chabraja said.
General Dynamics, headquartered in Falls Church, Va., employs approximately 85,600 people worldwide. The company is a market leader in business aviation; land and expeditionary combat systems, armaments and munitions; shipbuilding and marine systems; and information systems and technologies.
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 current 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 2008 securities analyst conference call, scheduled for 11:30 a.m. Eastern Time on Wednesday, October 22, 2008. 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 3 p.m. October 22 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 76346435. The phone replay will be available from 3 p.m. October 22 until midnight October 29, 2008.
THIRD QUARTER 2008 SIGNIFICANT ORDERS (UNAUDITED)
DOLLARS IN MILLIONS
General Dynamics received the following significant orders during the third quarter of 2008:
Combined orders totaling $903 from the U.S. Army for the production of 677 Stryker vehicles including all 10 variants. These contracts have a potential value of over $1.2 billion.
$767 from the U.S. Marine Corps for the development and manufacturing of new Expeditionary Fighting Vehicle (EFV) prototypes.
$541 from the U.S. Marine Corps for 773 RG-31 Mk5E Category I vehicles and related spares under the mine-resistant, ambush-protected (MRAP) vehicle program.
$267 from the Army for Stryker modification kits to be used in Operation Iraqi Freedom.
$218 from the Army for Tank Urban Survivability Kits (TUSK) for the Abrams tank.
$173 from the Army to continue field support, including reset and battle damage repair, under the Stryker program.
$102 from the Spanish government for 100 RG-31 Mk5E mine-protected vehicles.
$85 from the Army for the production of Hydra-70 (2.75-inch) rockets. This order brings the total contract value to date to almost $800. The contract has a total potential value of over $900.
$420 from the U.S. Navy for the modernization of LSD-class amphibious assault ships.
Information Systems and Technology
Combined orders totaling $850 under the Intelligence Information, Command-and-Control Equipment and Enhancements (ICE2) program, bringing the total contract value to $3.1 billion.
Combined orders totaling over $260 under the Common Hardware/Software III program, bringing the total contract value to almost $1.6 billion.
$136 to provide technical support services for the Warfighter Information Network-Tactical (WIN-T) mobile command-and-control system.
An indefinite delivery, indefinite quantity (IDIQ) contract from the Naval Air Systems Command with a potential value of over $180 for integrated logistics support for foreign military sales.