Electric Boat, a business wing of
General Dynamics Corporation
), has received a contract modification for the supply of
on-board repair parts for Virginia-class submarines from the U.S
Navy. The contract worth $11.5 million has a potential value of
$85 million, if all options are exercised.
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The current contract is a part of the originally awarded Dec 2008
contract worth $14 billion. Per the contact, Electric Boat along
with its teammate Northrop Grumman Shipbuilding had to construct
eight Virginia-class submarines. Northrop Grumman Shipbuilding
was then a subsidiary of
Northrop Grumman Corporation
), which later was spun-off and now trades independently as
Huntington Ingalls Industries, Inc.
The Virginia-class submarine is the first U.S. Navy warship that
is capable of performing all mission requirements, which includes
anti-submarine and surface ship warfare, delivering special
operation forces; strike; intelligence, surveillance and
reconnaissance; irregular warfare; and mine warfare.
Apart from this contract, the company is also working on a
contract to provide research and development and lead-yard
services for Virginia class nuclear-powered attack submarines.
This contract has a cumulative value of $881 million through 2014
if all options are exercised and funded.
The company received the contracts as a result of its proven
technical capabilities. The employees working under this contract
cover all aspects of the submarine life cycle, which includes
concept formulation and design through construction, maintenance
and modernization, and finally inactivation and disposal.
Based in Falls Church, Virginia, General Dynamics engages in
mission-critical information systems and technologies; land and
expeditionary combat vehicles, armaments and munitions;
shipbuilding and marine systems; and business aviation.
Going forward, General Dynamics' revenue exposure to a number of
uncorrelated markets is expected to keep the overall growth
momentum steady. Moreover, these types of contracts will add to
the top line of Combat Systems and Marine Systems segments.
Recently, the company announced fourth quarter and full year 2012
earnings. The company reported fourth quarter earnings of $1.39
per share, missing the Zacks Consensus Estimate of $1.90 per
share. General Dynamics generated total revenue of $8.08 billion
in the reported quarter versus $9.15 billion in the year-ago
quarter, reflecting a decrease of 11.7%. Reported quarter revenue
also failed to meet the Zacks Consensus Estimate by $731 million.
Lockheed Martin Corporation
) which is one other defense major, the future prospects of
General Dynamics is also tied to the U.S. defense budget. The
company presently retains a short-term Zacks Rank #3 (Hold).