General Dynamics Bags Massive $12.4 Billion Submarine Contract

General Dynamics Corporation GD on Wednesday won $12.4 billion in contract modifications for the construction of two FY24 Virginia-class submarines.

The award also includes funding for shipyard productivity improvements and workforce support.

The deal includes exercising contract options that could increase the total value to $17.2 billion.

Also Read: Defense Secretary Slashes $580 Million In Wasteful Spending—Targets Overdue, Overpriced Projects

Notably, Virginia-class submarines are designed for a wide range of 21st-century missions, including anti-submarine and surface warfare, and special operations support.

General Dynamics Electric Boat is the prime contractor and lead designer, constructing them in partnership with HII’s Newport News Shipbuilding.

Mark Rayha, president of General Dynamics Electric Boat said, the company has “successfully worked with the Navy, Congress and the administration to secure funds” to increase wages for the nuclear-powered vessel workforce. This allows for “significant additional investments in capacity, shipyard processes and systems,” he added.

Last week, the company reported first-quarter fiscal 2025 revenue increased 13.9% year over year (Y/Y) to $12.223 billion, beating the consensus of $11.99 billion. EPS was $3.66 (up 27.1% Y/Y), above the consensus of $3.47.

In March, the company’s business unit, General Dynamics Electric Boat, won a $1 billion undefinitized contract modification by the U.S. Department of Defense.

Investors can gain exposure to the stock via Pacer Funds Trust Pacer Solactive Whitney Future of Warfare ETF FOWF and ETF Series Solutions U.S. Global Technology and Aerospace & Defense ETF WAR.

Price Action: GD shares are down 0.44% at $270.92 at the last check Thursday.

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