General Dynamics reports better than expected first quarter
The chairman of General Dynamics said Wednesday that the defense contractor’s performance in the first quarter of 2014 exceeded the expectations both of analysts and of the company’s own executives.
Phebe N. Novakovic, chairman and chief executive officer of the Falls Church, Va.-based company, said in a conference call Wednesday that her remarks would be brief because the numbers largely speak for themselves.
GD reported that net earnings for the first quarter rose 4.2 percent, to $595 million, or $1.71 a share, compared to $571 million, or $1.62 a share, in the first quarter of last year. Revenues decreased from $7.4 billion in last year’s comparable quarter to $7.32 billion this quarter, a smaller decrease than was expected, Novakovic said.
Its backlog rose more than 20 percent since the end of 2013 to $56 billion. GD received a $10 billion, 14-year contract from the government of Canada’s Canadian Commercial Corporation to provide military and commercial vehicles, training and support services to an international customer with $3 billion in options.
GD also received $520 million to purchase parts and materials with long-lead times for Virginia-class submarines. General Dynamics owns the Electric Boat shipyard in Groton and employs nearly 95,000 worldwide.
“Interestingly, we have more funded backlog at the end of this quarter than we have had any time in the last three years. The same is true for total backlog,” Novakovic said. “The underpinnings of our defense businesses are clearly solidifying.”
The Marine Systems group, which includes the submarine business, saw first-quarter revenues fall 1.5 percent to $1.6 billion, while operating earnings were up 4.4 percent to $166 million. The five-year construction contract for the next group, or block, of submarines is expected to be awarded soon.
Novakovic predicted GD’s performance would be lower in the second quarter and flat in the third quarter, with a strong fourth-quarter finish.
GD’s stock price rose strongly, finishing the day at $111.58 a share, up more than 3 percent.
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