GENERAL DYNAMICS RESULTS IN LINE WITH EXPECTATIONS
28 Jan 09. General Dynamics (NYSE: GD) today reported that earnings from continuing operations in the fourth quarter of 2008 were $630m, or $1.62 per share on a fully diluted basis, compared to 2007 fourth-quarter earnings from continuing operations of $578m, or $1.42 per share fully diluted. Revenue increased to $7.9bn in the quarter, compared to fourth-quarter 2007 revenue of $7.5bn.
Full-year 2008 Results
Earnings from continuing operations for the full year of 2008 were $2.48bn, or $6.22 per share on a fully diluted basis, an increase of 19.1 percent over 2007 full-year earnings from continuing operations of $2.1bn, or $5.10 per share fully diluted. Revenue for the full year of 2008 was $29.3bn, compared with $27.2bn for 2007, an increase of 7.6 percent.
Net cash provided by operating activities from continuing operations totalled $805m in the quarter and $3.1bn for the year. Free cash flow from operations, defined as net cash provided by operating activities from continuing operations less capital expenditures, was $629m in the quarter and $2.6bn for the year.
The company’s total backlog grew by $13.6bn in the fourth quarter of 2008, to $74.1bn. Compared to year-end 2007, total backlog increased by $27.3bn. Funded backlog at year-end 2008 was $51.7bn, an increase of $14.5 billion over the prior year.
Operating margins for the fourth quarter of 2008 increased to 11.9 percent from 11.6 percent for fourth-quarter 2007. For the full year, company-wide operating margins increased by 110 basis points over 2007, to 12.5 percent.
General Dynamics’ net earnings for the fourth quarter of 2008 were $612m, which includes charges related to the sale of certain assets in Spain, compared to fourth-quarter 2007 net earnings of $579m. Net earnings for the full year were $2.46bn in 2008, compared to $2.1bn in 2007.
“General Dynamics continued to perform well in the fourth quarter of 2008,” said Nicholas D. Chabraja, chairman and chief executive officer. “Sales increased in the Aerospace, Marine Systems and Information Systems and Technology groups when compared to the year-ago period, and company-wide operating margins increased 30 basis points in the quarter. The company’s funded and total backlog grew significantly over the previous quarter, and Marine Systems’ total backlog more than doubled, reflecting an order for eight additional Virginia-class nuclear-powered submarines.
“For the full year of 2008, all four business groups generated increased sales, operating earnings grew significantly faster than revenue and free cash flow from operations totaled 106 percent of net earnings,” Chabraja said. “These results reflect our continued focus on creating shareholder value through the fundamental strengths of the company: maximizing the profitability of a durable and growing backlog through continual performance improvement, and strong cash generation that supports strategic capital-deployment decision-making.
“Given the strength of our performance in 2008 and our record backlog going into the new year, we expect 2009 earnings to be in the range of $6.70 to $6.75 per share, fully diluted,” Chabraja said.
General Dynamics received the following significant contract orders during the fourth quarter of 2008:
* Combined orders totalling $117 for RG-31 vehicle-related spares under the Mine Resistant Ambush Protected (MRAP) vehicle program.
* $217 from the Swiss government for 232 Duro wheeled armored personnel vehicles and 12 Piranha wheeled military vehicles in various configurations. This contract has a potential value of $353 if all options are exercised.
* Approximately $140 from the German government for 198 EAGLE IV wheeled military vehicles and related logistics and support services.
* $13.8bn from the U.S. Navy for the construction of eight Virginia-class sub