Defense and aerospace operator
General Dynamics Corp.
) announced fourth-quarter 2013 operating earnings of $1.76 per
share, in line with the Zacks Consensus Estimate. Earnings were
ahead of the year-ago figure of $1.39.
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General Dynamics during its third quarter release projected
earnings per share for 2013 in the range of $6.90 to $7.00.
General Dynamics' operating earnings for the year at $7.03
per share exceeded the high end of the guidance. The
better-than-expected performance was driven by its Aerospace
segment. The bottom line was a cent ahead of the Zacks Consensus
Estimate and 8.5% higher than the year-ago figure of $6.48 per
GAAP earnings per share in 2013 were $6.67 versus a loss of 94
cents in 2012. The difference between operating and GAAP earnings
was due to the 36 cent loss from discontinued operations related
to the pending settlement of the long-standing A-12 litigation.
General Dynamics announced fourth-quarter 2013 total revenue of
$8.1 billion, ahead of the Zacks Consensus Estimate of $8.00
billion. Revenue was 0.4% higher than the year-ago figure of
The year-over-year growth was driven by the Aerospace and
Information Systems and Technology segments, partly offset by
lower contribution from Combat Systems and Marine Systems.
General Dynamics announced 2013 total revenue of $31.2 billion,
ahead of the Zacks Consensus Estimate of $31.1 billion. Revenue
was 0.9% lower than the year-ago figure of $31.5 billion.
The year-over-year decline in total revenue was due to softer
performance from its Combats Systems division.
Annual Segment Performance
The Aerospace segment reported 2013 revenue of $8.1 billion, up
17.4% from the prior year. Operating income from this segment was
$1.41 billion, reflecting a solid jump of 65.0% from $0.85
billion a year ago.
Combat Systems reported revenue of $6.1 billion, down 23.4% year
over year. Operating income from this segment was $0.9 billion,
up 36.3% from $0.7 billion in the prior year.
Marine Systems reported revenue of $6.7 billion, up 1.8% year
over year. Operating income from this segment was $0.7 billion,
down 11.2% from $0.75 billion in the prior year.
Information Systems and Technology reported revenue of $10.3
billion, reflecting growth of 2.5% from the previous year.
Operating income from this segment was $0.8 billion, up 158.1%
year over year.
Operating costs and expenses during the year declined 10.2% year
over year to $27.5 billion, thereby expanding operating income by
342.4% to $3.7 billion.
Interest expense in 2013 was $86 million which reflected a
decline of 44.9% from the previous year.
Total backlog at the end of the fourth quarter was $46 billion,
which declined 4% sequentially and 10.3% year over year. In the
reported quarter, orders were strong in the Aerospace group;
however, delivery and lower order booking for the other segments
lowered the overall backlog of the company.
Cash and cash equivalents as of Dec 31, 2013, were $5.3 billion
versus $3.3 billion as of Dec 31, 2012. Long-term debt as of Dec
31, 2013 was $3.9 billion, in line with the 2012 end level.
Cash flow from operating activities in 2013 was $2.68 billion
versus $3.1 billion in 2012. Free cash flow in 2013 was $2.7
billion versus $2.23 billion in 2012.
During the year the company repurchased shares worth $740 million
and disbursed $591 million as dividends.
Rockwell Collins Inc.
) reported first quarter fiscal 2014 earnings per share of 96
cents, beating the Zacks Consensus Estimate by a penny. Earnings
were also up by 2 cents year over year.
) reported fourth quarter 2013 earnings from continuing operation
of 60 cents per share, in line with the Zacks Consensus Estimate.
General Dynamics was able to meet fourth quarter and exceed 2013
consensus estimates. Margins also improved year over year, thanks
to its cost control efforts.
Despite the risk of defense budget cuts, we believe its varied
product offerings will provide General Dynamics with a cushion
against any loss in contracts.
General Dynamics currently has a Zacks Rank #2 (Buy). Another
heavyweight in the industry,
The Boeing Co.
), shares the same Zacks Rank as General Dynamics and is
scheduled to release its earnings on Jan 29.