23 Jul 08. General Dynamics (NYSE: GD) today reported second-quarter
2008 earnings. Net cash provided by operating activities in the quarter totalled $1bn. Free cash flow from operations, defined as net cash provided by operating activities from continuing operations less capital expenditures, was $910m for the period, or 142 percent of net earnings.
For the first half of 2008, net cash provided by operating activities was $1.5bn, while free cash flow from operations was $1.3bn. Margins Company-wide operating margins for the second quarter of 2008 increased 110 basis points over the second quarter of 2007, to 12.6 percent.
The company’s funded backlog grew by approximately $5.2bn or 12.9 percent in the second quarter of 2008, on strong orders for new aircraft in the
Aerospace group, as well as demand for tanks, combat vehicles, tactical communications systems and information technology services. Compared to first-quarter 2008, company-wide total backlog grew by 11.2 percent.
The company’s 2008 second-quarter financial results include a $35m benefit from the favorable settlement of a tax-refund suit; this factor increased earnings by approximately 9 cents per share in the quarter.
Sales, earnings and operating margins increased in all four General Dynamics business groups in the second quarter. The Combat Systems group experienced increased sales in its armored vehicle and tank programs compared to the year-ago period and significant margin growth. New-aircraft volume in the Aerospace group, increased shipbuilding activity in Marine Systems and continued strong demand for tactical communications and computing systems in the Information Systems and Technology sector also contributed to the overall strong performance.
“General Dynamics’ performance continued to be strong in the second quarter of 2008,” said Nicholas D.Chabraja, chairman and chief executive officer. “Sales, earnings and operating margins increased in all four business segments compared to the year-ago period, cash generation was exceptionally strong and the robust backlog suggests continued healthy demand for the products and services of each business area. “Growth in the Aerospace backlog is a reflection of continued demand for the entire existing product line and extremely strong demand for the new Gulfstream G650. We are very pleased to see this interest in the new plane and view that as an indicator of Gulfstream’s ability to anticipate and exceed its customers’ product expectations.
“On the basis of these results and a clearer sense of what the remainder of 2008 will bring, we expect fullyear 2008 earnings from continuing operations to be in the range of $6.00 to $6.05 per share, fully diluted,” Chabraja said.
Earnings from continuing operations of $641m, or $1.60 per share on a fully diluted basis, compared with 2007 second-quarter earnings from continuing operations of $518m, or $1.27 per share fully diluted. Revenues grew to $7.3bn in the quarter, a 10.8 percent increase over second-quarter 2007 revenues of $6.6bn. Net earnings were equal to earnings from continuing operations of $641m.