General Dynamics (GD) Sweeps Past Q3 Earnings Estimates
General Dynamics Corporation (GD) announced third-quarter 2014 earnings from continuing operations of $2.05 per share on a diluted basis, comfortably surpassing the Zacks Consensus Estimate of $1.91 by 7.3%. Earnings also increased 11.4% from the prior-year figure of $1.84, backed by improved operating margins of the company.
General Dynamics Corporation - Earnings Surprise | FindTheBest
Total Revenue
In the third quarter, General Dynamics’ total revenues were $7,751 million beating the Zacks Consensus Estimate of $7,578 million by 2.3%. Total revenues were up 0.2% from $7,735 million in the year-ago quarter.
The year-over-year increase was due to higher contribution from the Aerospace, Combat Systems and Marine Systems segments, and partially offset by lower sales from the Information Systems and Technology segment.
Segment Performance
Aerospace: The segment reported third-quarter 2014 revenues of $2,289 million, up 6.4% year over year. Operating income was $411 million, reflecting an increase of 11.4% from $369 million in the year-ago quarter.
Combat Systems: Segmental revenues increased 6.8% year over year to $1,395 million. Operating income from this segment was $232 million, up 1.8% from $228 million in the prior year.
Marine Systems: The segment’s revenues of $1,820 million were 7.2% higher than $1,697 million a year ago. Operating income from the segment remained flat year over year at $170 million.
Information Systems and Technology: The segment reported revenues of $2,247 million, declining 12.9% from the year-ago quarter. Operating income from this segment was down 6.5% year over year to $202 million.
Operational Highlights
In the quarter under review, General Dynamics’ operating costs and expenses decreased 0.3% year over year to $6,752 million.
The company’s interest expenses decreased 4.5% year over year to $21 million.
Total backlog at the end of the third quarter was $74,433 million, up 55.7% year over year primarily due to higher backlogs at Combat Systems and Marine Systems.
Financial Condition
As of Sep 28, 2014, General Dynamics’ cash and cash equivalents were $5,105 million versus $5,301 million as of Dec 31, 2013.
Long-term debt as of Sep 28, 2014, was $3,410 million versus $3,908 million as of Dec 31, 2013.
During the first nine months of 2014, the company’s cash flow from operating activities was around $3,798 million versus $1,553 million in the year-ago period. Free cash flow from operations in the reported quarter was $2,329 million versus $364 million in the year-ago quarter.
Other Releases
Lockheed Martin Corporation (LMT) reported third-quarter 2014 earnings of $2.76 per share, beating the Zacks Consensus Estimate of $2.72 by 1.5%.
The Boeing Company (BA) reported third-quarter 2014 adjusted earnings of $2.14 per share, beating the Zacks Consensus Estimate by 8.1%.
Northrop Grumman Corporation (NOC) reported third-quarter 2014 adjusted earnings of $2.32 per share, beating the Zacks Consensus Estimate of $2.16 by 7.4%.
Our View
General Dynamics’ third-quarter earnings were well supported by its cost control efforts, higher backlogs and strong financials, which in turn helped the company beat Street estimates.
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 #1 (Strong Buy).
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