General Dynamics reports strong Q2 results

General Dynamics (GD) reported strong second-quarter results as revenue climbed 10.9% to $8.1 billion and the company raised its full-year earnings guidance.

GD also excited investors by reporting better-than-expected margin performance, particularly in business jets, expanded its operating margins 70 basis points sequentially to 11.7%. Equally impressive, the company’s total backlog is 22% higher than it was a year ago, standing at $66 billion.

The combat systems segment, which supplies tanks and machine guns, had a quarterly revenue increase of 19%. Meanwhile, the marine systems and information systems divisions posted revenue increase of 17% and 4%, respectively.

The Gulfstream business jet division continues to be an area of weakness, with profits falling 10% despite revenues growing 6.5%. The recession has eroded business demand for expensive planes and created a large glut of used jets that are for sale. What’s encouraging is that management said they see signs that the business jet market is stabilizing. Management said these signs include increased flying hours at the Gulfstream jet division, a drop in customer defaults, and increased new-order interest.

GD shares finished the day +1.51%

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Peter J. Lazaroff, Investment Analyst