General Dynamics Beats Q2 Earnings Estimates on Cost Control - Analyst Blog

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General Dynamics Corporation ( GD ) announced second-quarter 2014 adjusted earnings of $1.88 per share, surpassing the Zacks Consensus Estimate of $1.76 by 6.8%. Earnings also increased 3.9% from the prior-year figure.

On a GAAP basis, the company's earnings per share were $1.58 versus $1.81 a year ago. The variance between GAAP and adjusted earnings was due to a charge of 30 cents related to discontinued operations for the sale of a business under the company's Combat Systems segment.

General Dynamics Corporation - Earnings Surprise | FindTheBest

Total Revenue

In the second quarter, General Dynamics' total revenues of $7,474 million missed the Zacks Consensus Estimate of $7,532 million by 0.8%. Total revenues were down 4.6% from $7,834 million in the year-ago quarter.

The year-over-year decline was due to lower contribution from the Aerospace, Combat Systems, and Information Systems and Technology segments; partially offset by higher sales from the Marine Systems segment.

Segment Performance

Aerospace: The segment reported second-quarter 2014 revenues of $1,995 million, down 2.8% year over year. Operating income was $384 million, reflecting a decrease of 1.3% from $389 million in the year-ago quarter.

Combat Systems: Segmental revenues decreased 0.5% year over year to $1,465 million. Operating income from this segment was $220 million, up 0.5% from $219 million in the prior year.

Marine Systems: The segment's revenues of $1,851 million were 5.2% higher than $1,759 million a year ago. Operating income from the segment was $174 million, down 2.2% from the prior-year figure of $178 million.

Information Systems and Technology: The segment reported revenues of $2,163 million, declining 15.2% from the year-ago quarter. Operating income from this segment was down 5.1% year over year to $188 million.

Operational Highlights

In the quarter under review, General Dynamics' operating costs and expenses decreased 5.1% year over year to $6,525 million.

The company's interest expenses increased 12.2% year over year to $46 million.

Total backlog at the end of the second quarter was $71,093 million, up 44.2% year over year primarily due to higher backlogs at Combat Systems and Marine Systems.

Financial Condition

As of Jun 29, 2014, General Dynamics' cash and cash equivalents were $3.8 billion versus $5.3 billion as of Dec 31, 2013.

Long-term debt as of Jun 29, 2014, was $3.4 billion versus $3.9 billion as of Dec 31, 2013.

During the first half of 2014, the company's cash flow from operating activities was around $1.29 billion versus $1.09 billion in the year-ago period. Free cash flow from operations was roughly $0.8 billion.

During the second quarter, General Dynamics repurchased 10.7 million shares worth $1.2 billion and disbursed around $0.2 billion as dividends.

Other Releases

Rockwell Collins Inc. ( COL ) reported third-quarter fiscal 2014 earnings per share of $1.19, beating the Zacks Consensus Estimate by a penny.

Lockheed Martin Corporation ( LMT ) reported second-quarter 2014 earnings of $2.76 per share, beating the Zacks Consensus Estimate of $2.66 by 3.8%.

The Boeing Company ( BA ) reported second-quarter 2014 adjusted earnings of $2.42 per share, beating the Zacks Consensus Estimate by 19.8%.

Our View

General Dynamics' second-quarter earnings were well supported by its cost control efforts and share repurchases, helping the company beat the Street estimates in spite of soft revenues.

A sharp rise in backlog backed by significant improvement at the Combat Systems and Marine Systems segments is expected to boost General Dynamics' forthcoming results.

General Dynamics currently has a Zacks Rank #3 (Hold).


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.




This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: GD , BA , COL , LMT

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