General Dynamics Corporation (NYSE:GD) announced first-quarter 2015 earnings from continuing operations of $2.14 per share, comfortably surpassing the Zacks Consensus Estimate of $1.94 by 10.3%. Earnings also increased 25.1% from the prior-year figure of $1.71, backed by improved operating margins.
General Dynamics Corporation - Quarterly EPS | FindTheCompany
Total Revenue
In the first quarter, General Dynamics’ total revenues of $7,784 million beat the Zacks Consensus Estimate of $7,378 million by 5.5%. Total revenues were also up 7.1% from $7,265 million in the year-ago quarter.
The year-over-year increase was due to higher contribution from the Combat Systems, Information Systems and Technology and Marine Systems segments, partially offset by lower sales from the Aerospace segment.
Backlog
Total backlog of the company stood at $70.5 billion, up 26.3% year over year. Funded backlog at the end of the quarter grew 16.1% year over year to $56 billion.
Segment Performance
Aerospace: The segment reported first-quarter 2015 revenues of $2,108 million, down 0.8% year over year. However, operating income of $431 million increased 6.7% from $404 million in the year-ago quarter.
Combat Systems: Segmental revenues increased 8.3% year over year to $1,363 million. Operating income from this segment was $204 million, up by a significant 46.8% from $139 million in the prior year.
Information Systems and Technology: The segment reported revenues of $2,370 million, increasing 3.9% from the year-ago quarter. Operating income was up 18.6% year over year to $217 million.
Marine Systems: The segment’s revenues of $1,943 million were 21.4% higher than $1,601 million a year ago. Operating income from the segment surged 13.3% year over year to $188 million.
Operational Highlights
The company’s company-wide operating margins expanded an impressive 120 basis points to 13.2% from 12% a year ago.
In the quarter under review, General Dynamics’ operating costs and expenses increased 5.7% year over year to $6,757 million.
Financial Condition
As of Apr 5, 2015, General Dynamics’ cash and cash equivalents were $4,412 million compared with $4,388 million as of Dec 31, 2014.
Long-term debt as of Apr 5, 2015, was $3,410 million, in line with the preceding quarter.
In the first quarter 2015, the company’s cash flow from operating activities was around $745 million compared with $422 million in the year-ago period. Free cash flow from operations in the quarter was $647 million, up from $335 million in the prior year.
Other Releases
Aerospace giant The Boeing Company (NYSE:BA) delivered first-quarter 2015 adjusted earnings of $1.97 per share, beating the Zacks Consensus Estimate of $1.81 by 8.8%. The quarterly number rose an impressive 11.9% from $1.76 per share a year ago.
The Pentagon’s prime contractor, Lockheed Martin Corp (NYSE:LMT) reported quarterly earnings of $2.74 per share, comfortably surpassing the Zacks Consensus Estimate of $2.48 by 10.5%. Earnings in the reported quarter however declined 4.5% from $2.87 per share a year ago, as lower fighter jet demand led to less revenue.
Northrop Grumman Corp (NYSE:NOC) delivered first-quarter 2015 adjusted earnings of $2.14 per share, missing the Zacks Consensus Estimate of $2.26 by 5.3%. The quarterly number decreased 7.4% from $2.31 per share a year ago.
Our View
General Dynamics’ revenues are derived from a broad portfolio of products and services that help to keep the overall growth momentum steady. The company is one of the only two contractors in the world equipped to build nuclear-powered submarines.
A sharp rise in backlog backed by a 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 #2 (Buy).