General Dynamics Reports Fourth-Quarter, Full-Year 2015 Results

FALLS CHURCH, Va., Jan. 27, 2016 /PRNewswire/ --

  • Full-year operating earnings growth in every group
  • Operating margin in the quarter and full-year of 13.3% 
  • Earnings from continuing operations up 3.7% to $764 million for the fourth quarter and 10.9% to $3 billion for 2015 
  • Diluted EPS from continuing operations up 9.6% to $2.40 in the quarter and up 16% at $9.08 for 2015 
  • Return on sales of 9.8% in the quarter and 9.4% for the year

General Dynamics GD today reported fourth-quarter 2015 earnings from continuing operations of $764 million, a 3.7 percent increase over fourth-quarter 2014, on revenue of $7.8 billion. Diluted earnings per share from continuing operations were $2.40 compared to $2.19 in the year-ago quarter, a 9.6 percent increase.

Full-year Results

Full-year earnings from continuing operations rose to $3 billion from $2.7 billion in 2014, a 10.9 percent increase. Diluted earnings per share from continuing operations were up 16 percent at $9.08 compared to $7.83 in 2014. Revenue for 2015 was up 2 percent, to $31.5 billion.

"General Dynamics had another record-setting year of financial performance, with operating earnings, margins, earnings from continuing operations, EPS and return on sales at the highest levels in the company's history," said Phebe Novakovic, chairman and chief executive officer.  "We have a healthy and stable backlog with the defense businesses executing on recent program wins, and Aerospace's backlog is growing year-over-year reflecting strong order activity throughout 2015.

"Over the past 36 months, this management team has demonstrated the value of focusing on operations, managing the business for cash and earnings, and growing return on invested capital. The company's accomplishments in 2015 illustrate the strength of our approach and support our commitment to disciplined growth."

Revenue

Revenue for the fourth quarter of 2015 was $7.8 billion. For the full year of 2015, revenue was $31.5 billion, a 2 percent increase compared to 2014. The Aerospace and Marine Systems groups increased revenue in 2015, with Marine Systems growing by more than 9 percent.

Margin

Company-wide operating margin for fourth-quarter and full-year 2015 was 13.3 percent. Margins grew 50 basis points over the fourth quarter of 2014 and 70 basis points for the full year, with expansion in Aerospace, Combat Systems and Information Systems and Technology during the year.

Cash

Net cash provided by operating activities for the full year totaled $2.5 billion. Free cash flow from operations, defined as net cash provided by operating activities less capital expenditures, was $1.9 billion for the year.

Backlog

General Dynamics' total backlog at the end of 2015 was $66.1 billion. It was another strong quarter for the Aerospace group, with order activity in each of the Gulfstream products and across their global market. The estimated potential contract value, representing management's estimate of value in unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options, was $24.5 billion. Total potential contract value, the sum of all backlog components, was $90.6 billion at the end of the year.

About General Dynamics

Headquartered in Falls Church, Virginia, General Dynamics is a global aerospace and defense company that offers a broad portfolio of products and services in business aviation; combat vehicles, weapons systems and munitions; C4ISR and IT solutions; and shipbuilding. More information is available at www.generaldynamics.com.

Certain statements made in this press release, including any statements as to future results of operations and financial projections, may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements are based on management's expectations, estimates, projections and assumptions. These statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Therefore, actual future results and trends may differ materially from what is forecast in forward-looking statements due to a variety of factors. Additional information regarding these factors is contained in the company's filings with the Securities and Exchange Commission, including, without limitation, its Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q.

All forward-looking statements speak only as of the date they were made. The company does not undertake any obligation to update or publicly release any revisions to any forward-looking statements to reflect events, circumstances or changes in expectations after the date of this press release.

WEBCAST INFORMATION:  General Dynamics will webcast its fourth-quarter securities analyst conference call at 11:30 a.m. EST on Wednesday, January 27, 2016. The webcast will be a listen-only audio event, available at www.generaldynamics.com. An on-demand replay of the webcast will be available by 3 p.m. on January 27 and will continue for 12 months. To hear a recording of the conference call by telephone, please call 855-859-2056 (international: 404-537-3406); passcode 22028571. The phone replay will be available from 3 p.m. January 27 through March 3, 2016.

 

 

EXHIBIT A

 

CONSOLIDATED STATEMENTS OF EARNINGS - (UNAUDITED)

DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS



















Fourth Quarter


Variance



2015


2014


$


%

Revenue


$

7,809



$

8,362



$

(553)



(6.6)

%

Operating costs and expenses


6,773



7,295



522




Operating earnings


1,036



1,067



(31)



(2.9)

%

Interest, net


(19)



(19)






Other, net


2



(3)



5




Earnings from continuing operations before income tax


1,019



1,045



(26)



(2.5)

%

Provision for income tax, net


255



308



53




Earnings from continuing operations


$

764



$

737



$

27



3.7

%

Discontinued operations, net of tax




(36)



36




Net earnings


$

764



$

701



$

63



9.0

%

Earnings per share—basic









Continuing operations


$

2.44



$

2.23



$

0.21



9.4

%

Discontinued operations


$



$

(0.11)



$

0.11




Net earnings


$

2.44



$

2.12



$

0.32



15.1

%

Basic weighted average shares outstanding


313.3



330.0






Earnings per share—diluted









Continuing operations


$

2.40



$

2.19



$

0.21



9.6

%

Discontinued operations


$



$

(0.10)



$

0.10




Net earnings


$

2.40



$

2.09



$

0.31



14.8

%

Diluted weighted average shares outstanding


318.3



335.8






 

 

EXHIBIT B

 

CONSOLIDATED STATEMENTS OF EARNINGS - (UNAUDITED)

DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS



















Twelve Months


Variance



2015


2014


$


%

Revenue


$

31,469



$

30,852



$

617



2.0

%

Operating costs and expenses


27,291



26,963



(328)




Operating earnings


4,178



3,889



289



7.4

%

Interest, net


(83)



(86)



3




Other, net


7



(1)



8




Earnings from continuing operations before income tax


4,102



3,802



300



7.9

%

Provision for income tax, net


1,137



1,129



(8)




Earnings from continuing operations


$

2,965



$

2,673



$

292



10.9

%

Discontinued operations, net of tax




(140)



140




Net earnings


$

2,965



$

2,533



$

432



17.1

%

Earnings per share—basic









Continuing operations


$

9.23



$

7.97



$

1.26



15.8

%

Discontinued operations


$



$

(0.41)



$

0.41




Net earnings


$

9.23



$

7.56



$

1.67



22.1

%

Basic weighted average shares outstanding


321.3



335.2






Earnings per share—diluted









Continuing operations


$

9.08



$

7.83



$

1.25



16.0

%

Discontinued operations


$



$

(0.41)



$

0.41




Net earnings


$

9.08



$

7.42



$

1.66



22.4

%

Diluted weighted average shares outstanding


326.7



341.3






 

 

EXHIBIT C

 

REVENUE AND OPERATING EARNINGS BY SEGMENT - (UNAUDITED)

DOLLARS IN MILLIONS



















Fourth Quarter


Variance



2015


2014


$


%

Revenue:









Aerospace


$

2,142



$

2,240



$

(98)



(4.4)

%

Combat Systems


1,524



1,614



(90)



(5.6)

%

Information Systems and Technology


2,161



2,468



(307)



(12.4)

%

Marine Systems


1,982



2,040



(58)



(2.8)

%

Total


$

7,809



$

8,362



$

(553)



(6.6)

%

Operating earnings:









Aerospace


$

410



$

412



$

(2)



(0.5)

%

Combat Systems


234



271



(37)



(13.7)

%

Information Systems and Technology


230



212



18



8.5

%

Marine Systems


172



193



(21)



(10.9)

%

Corporate


(10)



(21)



11



52.4

%

Total


$

1,036



$

1,067



$

(31)



(2.9)

%

Operating margin:









Aerospace


19.1

%


18.4

%





Combat Systems


15.4

%


16.8

%





Information Systems and Technology


10.6

%


8.6

%





Marine Systems


8.7

%


9.5

%





Total


13.3

%


12.8

%





 

 

EXHIBIT D

 

REVENUE AND OPERATING EARNINGS BY SEGMENT - (UNAUDITED)

DOLLARS IN MILLIONS



















Twelve Months


Variance



2015


2014


$


%

Revenue:









Aerospace


$

8,851



$

8,649



$

202



2.3

%

Combat Systems


5,640



5,732



(92)



(1.6)

%

Information Systems and Technology


8,965



9,159



(194)



(2.1)

%

Marine Systems


8,013



7,312



701



9.6

%

Total


$

31,469



$

30,852



$

617



2.0

%

Operating earnings:









Aerospace


$

1,706



$

1,611



$

95



5.9

%

Combat Systems


882



862



20



2.3

%

Information Systems and Technology


903



785



118



15.0

%

Marine Systems


728



703



25



3.6

%

Corporate


(41)



(72)



31



43.1

%

Total


$

4,178



$

3,889



$

289



7.4

%

Operating margin:









Aerospace


19.3

%


18.6

%





Combat Systems


15.6

%


15.0

%





Information Systems and Technology


10.1

%


8.6

%





Marine Systems


9.1

%


9.6

%





Total


13.3

%


12.6

%





 

 

EXHIBIT E

 

CONSOLIDATED BALANCE SHEETS - (UNAUDITED)

DOLLARS IN MILLIONS












December 31, 2015



December 31, 2014

ASSETS





Current assets:





Cash and equivalents


$

2,785



$

4,388


Accounts receivable


3,446



4,050


Contracts in process


4,357



4,591


Inventories


3,366



3,221


Other current assets


617



1,157


Total current assets


14,571



17,407


Noncurrent assets:





Property, plant and equipment, net


3,466



3,329


Intangible assets, net


763



912


Goodwill


11,443



11,731


Other assets


1,754



1,958


Total noncurrent assets


17,426



17,930


Total assets


$

31,997



$

35,337


LIABILITIES AND SHAREHOLDERS' EQUITY





Current liabilities:





Short-term debt and current portion of long-term debt


$

501



$

501


Accounts payable


1,964



2,057


Customer advances and deposits


5,674



7,335


Other current liabilities


4,306



3,858


Total current liabilities


12,445



13,751


Noncurrent liabilities:





Long-term debt


2,898



3,392


Other liabilities


5,916



6,365


Total noncurrent liabilities


8,814



9,757


Shareholders' equity:





Common stock


482



482


Surplus


2,730



2,548


Retained earnings


23,204



21,127


Treasury stock


(12,392)



(9,396)


Accumulated other comprehensive loss


(3,286)



(2,932)


Total shareholders' equity


10,738



11,829


Total liabilities and shareholders' equity


$

31,997



$

35,337



Note: Prior period information has been restated to reflect the reclassification of debt issuance costs from other assets to debt in accordance with Accounting Standards Update (ASU) 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.

 

 

EXHIBIT F

 

CONSOLIDATED STATEMENTS OF CASH FLOWS - (UNAUDITED)

DOLLARS IN MILLIONS












Twelve Months Ended



December 31, 2015



December 31, 2014


Cash flows from operating activities—continuing operations:





Net earnings


$

2,965



$

2,533


Adjustments to reconcile net earnings to net cash provided by operating activities:





Depreciation of property, plant and equipment


366



375


Amortization of intangible assets


116



121


Equity-based compensation expense


110



128


Excess tax benefit from equity-based compensation


(77)



(83)


Deferred income tax provision


167



136


Discontinued operations, net of tax




140


(Increase) decrease in assets, net of effects of business acquisitions:





Accounts receivable


604



330


Contracts in process


231



281


Inventories


(156)



(303)


Increase (decrease) in liabilities, net of effects of business acquisitions:





Accounts payable


(89)



(161)


Customer advances and deposits


(1,756)



691


Other current liabilities


(83)



(246)


Other, net


101



(214)


Net cash provided by operating activities


2,499



3,728


Cash flows from investing activities:





Capital expenditures


(569)



(521)


Maturities of held-to-maturity securities


500




Purchases of held-to-maturity securities




(500)


Proceeds from sales of assets


291



102


Purchases of available-for-sale securities


(123)



(136)


Sales of available-for-sale securities


122



135


Maturities of available-for-sale securities


6



4


Other, net


(27)



(186)


Net cash provided (used) by investing activities


200



(1,102)


Cash flows from financing activities:





Purchases of common stock


(3,233)



(3,382)


Dividends paid


(873)



(822)


Repayment of fixed-rate notes


(500)




Proceeds from stock option exercises


268



547


Other, net


79



82


Net cash used by financing activities


(4,259)



(3,575)


Net cash (used) provided by discontinued operations


(43)



36


Net decrease in cash and equivalents


(1,603)



(913)


Cash and equivalents at beginning of year


4,388



5,301


Cash and equivalents at end of year


$

2,785



$

4,388


 

 

EXHIBIT G

 

PRELIMINARY FINANCIAL INFORMATION - (UNAUDITED)

DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS




















Fourth Quarter 2015




Fourth Quarter 2014



Other Financial Information (a):









Return on equity (b)


26.4

%




20.2

%



Debt-to-equity (c)


31.7

%




32.9

%



Debt-to-capital (d)


24.0

%




24.8

%



Book value per share (e)


$

34.31





$

35.61




Total taxes paid


$

95





$

446




Company-sponsored research and development (f)


$

94





$

101




Shares outstanding


312,987,277





332,164,097













Non-GAAP Financial Measures (a):











2015


2014



Fourth Quarter


Twelve Months


Fourth Quarter


Twelve Months

Free cash flow from operations:









Net cash provided by operating activities


$

329



$

2,499



$

(70)



$

3,728


Capital expenditures


(209)



(569)



(184)



(521)


Free cash flow from operations (g)


$

120



$

1,930



$

(254)



$

3,207











Return on invested capital:









Earnings from continuing operations




$

2,965





$

2,673


After-tax interest expense




64





67


After-tax amortization expense




75





79


Net operating profit after taxes




3,104





2,819


Average invested capital




17,858





18,673


Return on invested capital (h)




17.4

%




15.1

%


Notes describing the calculation of the other financial information and a reconciliation of non-GAAP financial measures are on the following page.

 

 

EXHIBIT G (cont.)


PRELIMINARY FINANCIAL INFORMATION - (UNAUDITED)
DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS



(a)

Prior period information has been restated to reflect the reclassification of debt issuance costs from other assets to debt in accordance with ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.



(b)

Return on equity is calculated by dividing earnings from continuing operations for the latest 12-month period by our average equity during that period.



(c)

Debt-to-equity ratio is calculated as total debt divided by total equity as of the end of the period.



(d)

Debt-to-capital ratio is calculated as total debt divided by the sum of total debt plus total equity as of the end of the period.



(e)

Book value per share is calculated as total equity divided by total outstanding shares as of the end of the period.



(f)

Includes independent research and development and Aerospace product-development costs.



(g)

We believe free cash flow from operations is a useful measure for investors because it portrays our ability to generate cash from our businesses for purposes such as repaying maturing debt, funding business acquisitions, repurchasing our common stock and paying dividends. We use free cash flow from operations to assess the quality of our earnings and as a performance measure in evaluating management. The most directly comparable GAAP measure to free cash flow from operations is net cash provided by operating activities.



(h)

We believe return on invested capital (ROIC) is a useful measure for investors because it reflects our ability to generate returns from the capital we have deployed in our operations. We use ROIC to evaluate investment decisions and as a performance measure in evaluating management. We define ROIC as net operating profit after taxes divided by average invested capital. Net operating profit after taxes is defined as earnings from continuing operations plus after-tax interest and amortization expense. Average invested capital is defined as the sum of the average debt and shareholders' equity for the year. ROIC excludes accumulated other comprehensive loss, goodwill impairments and non-economic accounting changes as they are not reflective of our operating performance. The most directly comparable GAAP measure to net operating profit after taxes is earnings from continuing operations. After-tax interest and amortization expense is calculated using the statutory tax rate of 35 percent.

 

 


EXHIBIT H

 

BACKLOG - (UNAUDITED)

DOLLARS IN MILLIONS
























Funded


Unfunded


Total

Backlog


Estimated

Potential

Contract Value*


Total Potential

Contract

Value

Fourth Quarter 2015











Aerospace


$

13,292



$

106



$

13,398



$

2,437



$

15,835


Combat Systems


18,398



597



18,995



5,059



24,054


Information Systems and Technology


6,827



1,755



8,582



14,702



23,284


Marine Systems


13,266



11,879



25,145



2,263



27,408


Total


$

51,783



$

14,337



$

66,120



$

24,461



$

90,581


Third Quarter 2015











Aerospace


$

13,459



$

100



$

13,559



$

2,479



$

16,038


Combat Systems


18,591



658



19,249



5,261



24,510


Information Systems and Technology


7,294



2,122



9,416



15,074



24,490


Marine Systems


14,391



12,127



26,518



2,734



29,252


Total


$

53,735



$

15,007



$

68,742



$

25,548



$

94,290


Fourth Quarter 2014











Aerospace


$

13,115



$

117



$

13,232



$

2,734



$

15,966


Combat Systems


19,292



506



19,798



5,522



25,320


Information Systems and Technology


7,070



1,539



8,609



16,115



24,724


Marine Systems


13,452



17,319



30,771



2,311



33,082


Total


$

52,929



$

19,481



$

72,410



$

26,682



$

99,092




*

The estimated potential contract value represents management's estimate of our future contract value under unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options associated with existing firm contracts, including options to purchase new aircraft and long-term agreements with fleet customers, as applicable. Because the value in the unfunded IDIQ arrangements is subject to the customer's future exercise of an indeterminate quantity of orders, we recognize these contracts in backlog only when they are funded. Unexercised options are recognized in backlog when the customer exercises the option and establishes a firm order.

 

 

EXHIBIT H-1

 

BACKLOG AND ESTIMATED CONTRACT VALUE - (UNAUDITED)

DOLLARS IN MILLIONS

EXHIBIT H-1 BACKLOG AND ESTIMATED CONTRACT VALUE - (UNAUDITED) DOLLARS IN MILLIONS

Photo - http://photos.prnewswire.com/prnh/20160126/326034 

 

 

EXHIBIT H-2

 

BACKLOG AND ESTIMATED CONTRACT VALUE BY SEGMENT - (UNAUDITED)

DOLLARS IN MILLIONS

EXHIBIT H-2 BACKLOG AND ESTIMATED CONTRACT VALUE BY SEGMENT - (UNAUDITED) DOLLARS IN MILLIONS

Photo - http://photos.prnewswire.com/prnh/20160126/326035

 

 

EXHIBIT I

 

FOURTH QUARTER 2015 SIGNIFICANT ORDERS (UNAUDITED)

DOLLARS IN MILLIONS

We received the following significant orders during the fourth quarter of 2015:

Combat Systems

  • $595 to produce over 300 armored personnel carriers (APCs) for the Danish Defence Acquisition and Logistics Organization.
  • $75 from the U.S. Army for contractor logistics support and training on the Abrams main battle tank and Heavy Equipment Recovery Combat Utility Lifting Extraction System (HERCULES) vehicle programs.

Information Systems and Technology

  • $270 from the U.S. Navy to provide fire control system modifications for ballistic-missile (SSBN) and guided-missile (SSGN) submarines.
  • $180 from the Canadian Department of National Defence for the procurement of components for a fleet of CP140 aircraft and the upgrade of data management software for the aircraft.
  • $50 to upgrade the Canadian Forces' existing fleet of Combat Net Radios.
  • An IDIQ contract from the U.S. Air Forces Central Command to provide communication systems technical support services in Asia. The contract has a maximum potential value of approximately $450 over five years if all options are exercised.

Marine Systems

  • $175 from the Navy for design work on the Ohio-class submarine replacement program.
  • $95 from the Navy for development studies, design services and lead-yard services in support of the Virginia-class submarine program.
  • $65 from the Navy for planning yard services for the DDG-51 destroyer and the FFG-7 Oliver Hazard Perry-class frigate programs.

 

 

EXHIBIT J

 

AEROSPACE SUPPLEMENTAL DATA - (UNAUDITED)
















Fourth Quarter


Twelve Months



2015


2014


2015


2014

Gulfstream Green Deliveries (units):









Large-cabin aircraft


25



28



112



115


Mid-cabin aircraft


12



10



35



29


Total


37



38



147



144


Gulfstream Outfitted Deliveries (units):









Large-cabin aircraft


31



33



120



117


Mid-cabin aircraft


7



9



34



33


Total


38



42



154



150


Pre-owned Deliveries (units):


2





7



3


 

 

General Dynamics

Logo - http://photos.prnewswire.com/prnh/20140428/81320

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/general-dynamics-reports-fourth-quarter-full-year-2015-results-300210194.html

SOURCE General Dynamics

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Posted In: Press Releases
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!