General Dynamics (NYSE: GD) reported a 3% rise in earnings for the second quarter of 2019 helped by lower costs and expenses as well as a decline in income tax provision. The results exceeded analysts’ expectations.
Net income rose by 3% to $806 million and earnings grew by 6% to $2.77 per share driven by lower weighted average shares outstanding.
Revenue increased by 4% to $9.56 billion driven by aerospace and defense portfolios. The results reflected its relentless focus on driving down costs and improving performance.
General Dynamics’ total backlog was $67.7 billion at the end of second-quarter 2019. Estimated potential contract value, representing management’s estimate of value in unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options, was $34.2 billion. Total estimated contract value, the sum of all backlog components, was $101.9 billion, up 3% year-over-year.
Order activity remained strong across the aerospace and defense portfolios. Aerospace booked $2.2 billion in orders in the quarter, a 1-to-1 book-to-bill on 12.7% year-over-year revenue growth. The company continues to experience strong demand across its product portfolio in its Aerospace segment.
The company expects continued investment in the development of new aircraft products and technologies to support the Aerospace segment’s long-term growth. Similarly, the company believes the aircraft services business will be a strong source of revenue as the global business-jet fleet continues to grow.
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The international demand for military equipment and information technologies presents opportunities for General Dynamics’ non-US operations and exports from its North American businesses. While the revenue potential can be significant, there are risks to doing busines in foreign countries, including changing budget priorities and overall spending pressures unique to each country.
Shares of General Dynamics ended Tuesday’s regular session up 0.73% at $185.97 on the NYSE. Following the earnings release, the stock rose 0.72% in the prevmarket session.
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