FALLS CHURCH, Va., Sept. 19, 2024 /PRNewswire/ -- General Dynamics Information Technology (GDIT), a business unit of General Dynamics (NYSE:GD), announced today that it was awarded a $299 million contract to continue supporting the Pentagon's network infrastructure. The contract, awarded by the Defense Information Systems Agency (DISA) through the Joint Service Provider Enterprise Transport Management-Next Generation (JSP ETM-NG) program, has a one-year base period and two six-month options. General Dynamic ...

Strong growth from these two industry giants should continue to reward shareholders. Investors looking to add some firepower to their portfolios should pay attention to the aerospace and defense industry. Beyond the several geopolitical conflicts adding a tailwind of demand, a bigger industry development may be the ongoing shift toward more high-tech solutions. Companies capitalizing on this "defense tech" theme are well-positioned to deliver positive returns. Here are two outperforming stocks that could be ...

General Dynamics (GD) closed the most recent trading day at $294.35, moving -0.19% from the previous trading session. This change lagged the S&P 500's daily loss of 0.16%. On the other hand, the Dow registered a gain of 0.09%, and the technology-centric Nasdaq decreased by 0.3%. Heading into today, shares of the defense contractor had gained 3.34% over the past month, lagging the Aerospace sector's gain of 3.61% and the S&P 500's gain of 3.64% in that time. The investment community will be closely monitorin ...

RESTON, Va., Aug. 1, 2024 /PRNewswire/ -- General Dynamics (NYSE:GD) announced today that Kevin Graney, who currently serves as president of Electric Boat, has informed the company that he will retire at the end of the year. He will be succeeded by Mark Rayha, who currently serves as senior vice president and chief operating officer of Electric Boat, effective December 1. Mark Rayha will become president of General Dynamics Electric Boat effective December 1. "Kevin has served General Dynamics with distinct ...

Core Insights - The defense sector is expected to gain importance due to worsening geopolitical circumstances and significant election cycles, prompting investors to consider top defense stocks [1][2] Group 1: Lockheed Martin (LMT) - Lockheed Martin reported Q2 earnings per share (EPS) of $6.85, surpassing the expected $6.46, resulting in a 6% earnings surprise [3] - For fiscal 2024, analysts project sales to reach $71.08 billion, a 5.2% increase from the previous year, with a high estimate of $72.13 billion [4] - The stock trades at a reasonable valuation of 1.8x sales, compared to an average of 1.69x between Q2 2023 and Q2 2024 [20] Group 2: Northrop Grumman (NOC) - Northrop Grumman achieved Q2 EPS of $6.36, exceeding the consensus target of $5.93, leading to a 7.2% earnings surprise [22] - Analysts forecast fiscal 2024 sales to rise to $41.31 billion, up 5.1% from $39.29 billion in the prior year [23] - The stock currently trades at 1.76x trailing-year sales, slightly below the average of 1.81x over the past year [6] Group 3: RTX (Raytheon Technologies) - RTX reported Q2 EPS of $1.41, beating the anticipated $1.30, resulting in an 8.61% earnings surprise [8] - Sales are expected to increase to $79.41 billion, a 6.9% rise from last year's $74.31 billion [9] - The stock trades at 2.16x sales, higher than the previous year's 1.89x but still within a reasonable range [24] Group 4: General Dynamics (GD) - General Dynamics posted Q2 EPS of $3.26, slightly missing the target of $3.31, but has shown strong performance in Q3 2024 [26] - Analysts predict fiscal 2024 revenue to reach $48.07 billion, a 13.7% increase from the prior year [42] - The stock trades at 1.77x sales, consistent with other defense companies [11] Group 5: L3Harris Technologies (LHX) - L3Harris reported Q2 EPS of $3.24, beating the consensus of $3.18, with an average EPS of $3.14 over the past four quarters [28] - For fiscal 2024, sales are anticipated to rise to $21.23 billion, a 9.3% increase from the previous year [33] - The stock trades at 2.06x sales, which is reasonable compared to the past year's average of 2.1x [12] Group 6: Textron (TXT) - Textron achieved Q2 EPS of $1.54, exceeding the consensus of $1.47, resulting in a 4.7% earnings surprise [34] - The stock appears undervalued, trading at 1.28x sales, compared to an average of 1.2x over the past year [29] - Analysts expect sales to reach $14.5 billion in the current year, a 6% increase from $13.7 billion last year [39] Group 7: Kratos Defense (KTOS) - Kratos is noted for its focus on unmanned systems, which are increasingly critical in defense [30] - The company posted Q1 EPS of $0.11, significantly above the target of $0.05, with an average earnings surprise of around 70% over the past year [15] - The stock trades at 2.8x revenue, higher than the previous year's average of 2.15x [35]

Core Viewpoint - General Dynamics Corporation reported second-quarter 2024 earnings per share (EPS) of $3.26, slightly missing the Zacks Consensus Estimate of $3.30 by 1.2%, but showing a year-over-year increase of 20.7% from $2.70 [1] Revenue Performance - Total revenues reached $11.98 billion, exceeding the Zacks Consensus Estimate of $11.52 billion by 3.9%, and improved 18% from the prior-year figure [2] Segmental Performance - Aerospace segment revenues were $2.94 billion, up 50.5% year over year, with operating earnings of $319 million, an increase of 35.2% [3] - Marine Systems revenues rose 12.9% to $3.45 billion, with operating earnings of $245 million, up 4.3% year over year [3] - Technologies segment revenues improved 2.5% to $3.30 billion, with operating earnings totaling $320 million, a 13.1% increase [4] - Combat Systems revenues were $2.29 billion, up 18.9% from the previous year, with operating earnings improving 24.7% to $313 million [4] Operational Highlights - Total operating earnings amounted to $1,156 million, reflecting a 20.2% increase from $962 million in the year-ago quarter [5] Cost and Expenses - Operating costs and expenses increased 17.7% year over year to $10.82 billion [6] Interest Expenses - Interest expenses declined by 5.6% to $84 million [7] Backlog - General Dynamics recorded a total backlog of $91.30 billion, down from $93.73 billion in the first quarter, with a funded backlog of $74.41 billion [8] Financial Condition - As of June 30, 2024, cash and cash equivalents totaled $1,362 million, down from $1,913 million as of December 31, 2023 [10] - Long-term debt decreased to $7,257 million from $8,754 million at the end of 2023 [11] - Cash flow from operating activities for the first half of 2024 was $536 million, compared to $2,193 million in the same period last year [11]

PART I - FINANCIAL INFORMATION This section presents the company's unaudited consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1 - Unaudited Consolidated Financial Statements](index=3&type=section&id=Item%201%20-%20Unaudited%20Consolidated%20Financial%20Statements) This section presents the company's unaudited consolidated financial statements, including statements of earnings, comprehensive income, balance sheet, cash flows, and shareholders' equity, along with detailed notes explaining significant accounting policies, revenue recognition, earnings per share, income taxes, and other financial details for the periods ended June 30, 2024, and July 2, 2023 [Consolidated Statement of Earnings (Three Months)](index=4&type=section&id=Consolidated%20Statement%20of%20Earnings%20(Three%20Months)) This table provides a comparative overview of the company's consolidated earnings for the three months ended June 30, 2024, and July 2, 2023 | Metric | June 30, 2024 (Millions USD) | July 2, 2023 (Millions USD) | Change (Millions USD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $11,976 | $10,152 | $1,824 | 18.0% | | Operating earnings | $1,156 | $962 | $194 | 20.2% | | Net earnings | $905 | $744 | $161 | 21.6% | | Basic EPS | $3.30 | $2.72 | $0.58 | 21.3% | | Diluted EPS | $3.26 | $2.70 | $0.56 | 20.7% | [Consolidated Statement of Earnings (Six Months)](index=5&type=section&id=Consolidated%20Statement%20of%20Earnings%20(Six%20Months)) This table presents the company's consolidated earnings for the six months ended June 30, 2024, and July 2, 2023, highlighting key financial performance metrics | Metric | June 30, 2024 (Millions USD) | July 2, 2023 (Millions USD) | Change (Millions USD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $22,707 | $20,033 | $2,674 | 13.3% | | Operating earnings | $2,192 | $1,900 | $292 | 15.4% | | Net earnings | $1,704 | $1,474 | $230 | 15.6% | | Basic EPS | $6.22 | $5.39 | $0.83 | 15.4% | | Diluted EPS | $6.14 | $5.34 | $0.80 | 15.0% | [Consolidated Statement of Comprehensive Income (Three and Six Months)](index=6&type=section&id=Consolidated%20Statement%20of%20Comprehensive%20Income%20(Three%20and%20Six%20Months)) This table details the consolidated comprehensive income for both three- and six-month periods, including net earnings and other comprehensive income components | Metric | Three Months Ended June 30, 2024 (Millions USD) | Three Months Ended July 2, 2023 (Millions USD) | Six Months Ended June 30, 2024 (Millions USD) | Six Months Ended July 2, 2023 (Millions USD) | | :--- | :--- | :--- | :--- | :--- | | Net earnings | $905 | $744 | $1,704 | $1,474 | | Other comprehensive income (loss), net of tax | $22 | $235 | $(275) | $457 | | Comprehensive income | $927 | $979 | $1,429 | $1,931 | [Consolidated Balance Sheet](index=7&type=section&id=Consolidated%20Balance%20Sheet) This table provides a comparative snapshot of the company's financial position, including assets, liabilities, and shareholders' equity, as of June 30, 2024, and December 31, 2023 | Metric | June 30, 2024 (Millions USD) | December 31, 2023 (Millions USD) | Change (Millions USD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total assets | $55,442 | $54,810 | $632 | 1.2% | | Total liabilities | $33,406 | $33,511 | $(105) | -0.3% | | Total shareholders' equity | $22,036 | $21,299 | $737 | 3.5% | | Cash and equivalents | $1,362 | $1,913 | $(551) | -28.8% | | Total current assets | $24,312 | $23,615 | $697 | 2.9% | | Total current liabilities | $18,257 | $16,432 | $1,825 | 11.1% | [Consolidated Statement of Cash Flows](index=8&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) This table outlines the company's cash flows from operating, investing, and financing activities for the six months ended June 30, 2024, and July 2, 2023 | Cash Flow Activity | Six Months Ended June 30, 2024 (Millions USD) | Six Months Ended July 2, 2023 (Millions USD) | Change (Millions USD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $536 | $2,193 | $(1,657) | -75.5% | | Net cash used by investing activities | $(307) | $(404) | $97 | -24.0% | | Net cash used by financing activities | $(778) | $(1,875) | $1,097 | -58.5% | | Net decrease in cash and equivalents | $(551) | $(88) | $(463) | 526.1% | [Consolidated Statement of Shareholders' Equity (Three and Six Months)](index=9&type=section&id=Consolidated%20Statement%20of%20Shareholders'%20Equity%20(Three%20and%20Six%20Months)) This table details changes in shareholders' equity, including net earnings, dividends, and share repurchases, for the three- and six-month periods | Metric | June 30, 2024 (Millions USD) | July 2, 2023 (Millions USD) | | :--- | :--- | :--- | | Total Shareholders' Equity (Three Months) | $22,036 | $19,478 | | Net earnings (Three Months) | $905 | $744 | | Cash dividends declared (Three Months) | $(392) | $(359) | | Shares purchased (Three Months) | $(34) | $(288) | | Total Shareholders' Equity (Six Months) | $22,036 | $19,478 | | Net earnings (Six Months) | $1,704 | $1,474 | | Cash dividends declared (Six Months) | $(783) | $(723) | | Shares purchased (Six Months) | $(139) | $(378) | [Notes to Unaudited Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the accounting policies, estimates, and other financial information supporting the consolidated financial statements [A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=10&type=section&id=A.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) General Dynamics is a global aerospace and defense company. The financial statements are unaudited, prepared under SEC rules, and consolidate wholly-owned and majority-owned subsidiaries. Assets and liabilities for long-term contracts are classified as current, consistent with industry practice. Property, plant and equipment are carried at historical cost, net of accumulated depreciation - General Dynamics is a global aerospace and defense company offering products and services in business aviation, ship construction and repair, land combat vehicles, weapons systems and munitions, and technology products and services[17](index=17&type=chunk) | PP&E Category | June 30, 2024 (Millions USD) | December 31, 2023 (Millions USD) | | :--- | :--- | :--- | | PP&E | $13,269 | $13,000 | | Accumulated depreciation | $(6,993) | $(6,802) | | PP&E, net | $6,276 | $6,198 | [B. REVENUE](index=11&type=section&id=B.%20REVENUE) Revenue is recognized when performance obligations are satisfied, either over time (75-77% of revenue for H1 2024, primarily defense segments) or at a point in time (23-25% of revenue, primarily Aerospace business jet manufacturing). Total backlog (remaining performance obligations) was $91.3 billion as of June 30, 2024, with 60% expected to be recognized by year-end 2025. Adjustments in contract estimates increased revenue and operating earnings for both three- and six-month periods - Revenue from products and services transferred to customers over time accounted for **75% and 77% of revenue** for the three- and six-month periods ended June 30, 2024, respectively. Revenue recognized at a point in time accounted for **25% and 23%** for the same periods[27](index=27&type=chunk)[28](index=28&type=chunk) - Total backlog (remaining performance obligations) was **$91.3 billion** on June 30, 2024. Approximately **60%** is expected to be recognized as revenue by year-end 2025, an additional **25%** by year-end 2027, and the balance thereafter[29](index=29&type=chunk) | Impact of Adjustments in Contract Estimates | Three Months Ended June 30, 2024 (Millions USD) | Three Months Ended July 2, 2023 (Millions USD) | Six Months Ended June 30, 2024 (Millions USD) | Six Months Ended July 2, 2023 (Millions USD) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $92 | $58 | $149 | $152 | | Operating earnings | $77 | $10 | $113 | $87 | | Diluted earnings per share | $0.22 | $0.03 | $0.32 | $0.25 | | Revenue by Major Products and Services (Six Months Ended) | June 30, 2024 (Millions USD) | July 2, 2023 (Millions USD) | | :--- | :--- | :--- | | Aircraft manufacturing | $3,328 | $2,367 | | Aircraft services | $1,696 | $1,478 | | Total Aerospace | $5,024 | $3,845 | | Nuclear-powered submarines | $4,866 | $4,159 | | Surface ships | $1,365 | $1,319 | | Repair and other services | $553 | $573 | | Total Marine Systems | $6,784 | $6,051 | | Military vehicles | $2,555 | $2,427 | | Weapons systems, armament and munitions | $1,375 | $911 | | Engineering and other services | $460 | $342 | | Total Combat Systems | $4,390 | $3,680 | | Information technology (IT) services | $4,336 | $4,296 | | C5ISR solutions | $2,173 | $2,161 | | Total Technologies | $6,509 | $6,457 | | Total revenue | $22,707 | $20,033 | | Revenue by Contract Type (Six Months Ended June 30, 2024, Millions USD) | Aerospace | Marine Systems | Combat Systems | Technologies | Total Revenue | | :--- | :--- | :--- | :--- | :--- | :--- | | Fixed-price | $4,522 | $3,227 | $3,887 | $2,674 | $14,310 | | Cost-reimbursement | — | $3,556 | $468 | $2,847 | $6,871 | | Time-and-materials | $502 | $1 | $35 | $988 | $1,526 | | Total revenue | $5,024 | $6,784 | $4,390 | $6,509 | $22,707 | | Revenue by Customer (Six Months Ended June 30, 2024, Millions USD) | Aerospace | Marine Systems | Combat Systems | Technologies | Total Revenue | | :--- | :--- | :--- | :--- | :--- | :--- | | U.S. government: DoD | $104 | $6,709 | $2,468 | $3,786 | $13,067 | | U.S. government: Non-DoD | — | $1 | $5 | $2,348 | $2,354 | | U.S. government: FMS | $21 | $70 | $464 | $21 | $576 | | Total U.S. government | $125 | $6,780 | $2,937 | $6,155 | $15,997 | | U.S. commercial | $2,639 | $2 | $119 | $98 | $2,858 | | Non-U.S. government | $695 | $2 | $1,259 | $228 | $2,184 | | Non-U.S. commercial | $1,565 | — | $75 | $28 | $1,668 | | Total revenue | $5,024 | $6,784 | $4,390 | $6,509 | $22,707 | [C. EARNINGS PER SHARE](index=16&type=section&id=C.%20EARNINGS%20PER%20SHARE) Basic EPS is calculated using net earnings and weighted average common shares outstanding, while diluted EPS includes the dilutive effect of stock options and restricted stock/RSUs | Shares Outstanding (in thousands) | Three Months Ended June 30, 2024 | Three Months Ended July 2, 2023 | Six Months Ended June 30, 2024 | Six Months Ended July 2, 2023 | | :--- | :--- | :--- | :--- | :--- | | Basic weighted average shares outstanding | 274,122 | 273,137 | 273,809 | 273,570 | | Dilutive effect of stock options and restricted stock/RSUs | 3,600 | 1,950 | 3,553 | 2,266 | | Diluted weighted average shares outstanding | 277,722 | 275,087 | 277,362 | 275,836 | [D. INCOME TAXES](index=16&type=section&id=D.%20INCOME%20TAXES) The company's net deferred tax liability decreased to $522 million as of June 30, 2024. The company participates in the IRS Compliance Assurance Process and does not expect the global minimum tax (Pillar Two) rules to materially impact its financial results | Deferred Tax Liability | June 30, 2024 (Millions USD) | December 31, 2023 (Millions USD) | | :--- | :--- | :--- | | Deferred tax asset | $29 | $28 | | Deferred tax liability | $(551) | $(655) | | Net deferred tax liability | $(522) | $(627) | - The company participates in the IRS Compliance Assurance Process (CAP) and was placed in the phase reserved for taxpayers with low risk of noncompliance for tax years 2023 and 2024[46](index=46&type=chunk) - Any legislation enacted consistent with the Pillar Two model rules is not expected to have a material effect on the company's results of operations, financial condition, or cash flows, as it generally does not have material operations in jurisdictions with tax rates lower than the proposed **15% minimum**[49](index=49&type=chunk) [E. UNBILLED RECEIVABLES](index=17&type=section&id=E.%20UNBILLED%20RECEIVABLES) Unbilled receivables represent revenue recognized on long-term contracts less associated advances and progress billings. Net unbilled receivables increased to $8.568 billion as of June 30, 2024, including $1.3 billion related to a large international tracked vehicle contract | Unbilled Receivables | June 30, 2024 (Millions USD) | December 31, 2023 (Millions USD) | | :--- | :--- | :--- | | Unbilled revenue | $41,313 | $40,552 | | Advances and progress billings | $(32,745) | $(32,555) | | Net unbilled receivables | $8,568 | $7,997 | - Net unbilled receivables included **$1.3 billion** (June 30, 2024) and **$1.2 billion** (December 31, 2023) associated with a large international tracked vehicle contract in the Combat Systems segment, for which the customer resumed payments in Q1 2023[50](index=50&type=chunk) [F. INVENTORIES](index=18&type=section&id=F.%20INVENTORIES) Inventories, primarily for business jet aircraft, are stated at the lower of cost or net realizable value. Total inventories increased to $9.686 billion as of June 30, 2024, mainly due to increased production of new Gulfstream aircraft models, including the G700, and strong customer demand | Inventory Category | June 30, 2024 (Millions USD) | December 31, 2023 (Millions USD) | | :--- | :--- | :--- | | Work in process | $6,317 | $5,655 | | Raw materials | $3,279 | $2,886 | | Finished goods | $28 | $22 | | Pre-owned aircraft | $62 | $15 | | Total inventories | $9,686 | $8,578 | - The increase in total inventories was primarily due to the ramp-up in production of new Gulfstream aircraft models, including the G700, which received FAA certification on March 29, 2024, and increased production of in-service aircraft reflecting strong customer demand[52](index=52&type=chunk) [G. GOODWILL AND INTANGIBLE ASSETS](index=18&type=section&id=G.%20GOODWILL%20AND%20INTANGIBLE%20ASSETS) Goodwill decreased slightly to $20.452 billion as of June 30, 2024, primarily due to foreign currency translation adjustments. Net intangible assets also decreased to $1.550 billion, with amortization expense of $89 million for the six months ended June 30, 2024 | Reporting Unit | December 31, 2023 (Millions USD) | Acquisitions (Millions USD) | Other (Millions USD) | June 30, 2024 (Millions USD) | | :--- | :--- | :--- | :--- | :--- | | Aerospace | $3,199 | — | $(122) | $3,077 | | Marine Systems | $297 | — | — | $297 | | Combat Systems | $2,812 | $41 | $(44) | $2,809 | | Technologies | $14,278 | — | $(9) | $14,269 | | Total Goodwill | $20,586 | $41 | $(175) | $20,452 | | Intangible Assets | Net Carrying Amount June 30, 2024 (Millions USD) | Net Carrying Amount December 31, 2023 (Millions USD) | | :--- | :--- | :--- | | Contract and program intangible assets | $1,306 | $1,388 | | Trade names and trademarks | $231 | $254 | | Technology and software | $13 | $14 | | Other intangible assets | — | — | | Total intangible assets | $1,550 | $1,656 | - Amortization expense for intangible assets was **$89 million** for the six-month period ended June 30, 2024, compared to **$100 million** for the same period in 2023[57](index=57&type=chunk) [H. DEBT](index=20&type=section&id=H.%20DEBT) Total debt principal remained stable at $9.333 billion as of June 30, 2024, with $2.004 billion classified as current portion. The company has a $4 billion committed bank credit facility and an effective shelf registration for accessing debt markets, and was in compliance with all debt covenants | Debt Category | June 30, 2024 (Millions USD) | December 31, 2023 (Millions USD) | | :--- | :--- | :--- | | Total debt principal | $9,333 | $9,340 | | Less unamortized debt issuance costs and discounts | $72 | $79 | | Total debt | $9,261 | $9,261 | | Less current portion | $2,004 | $507 | | Long-term debt | $7,257 | $8,754 | - The company has a **$4 billion** committed bank credit facility expiring in March 2027 for general corporate purposes and working capital needs, and to support commercial paper issuances[59](index=59&type=chunk) - The company was in compliance with all customary covenants and restrictions on its financing arrangements as of June 30, 2024[60](index=60&type=chunk) [I. OTHER LIABILITIES](index=21&type=section&id=I.%20OTHER%20LIABILITIES) Total other current liabilities decreased slightly to $3.195 billion, while total other noncurrent liabilities decreased to $7.892 billion as of June 30, 2024. Key components include salaries and wages, dividends payable, customer deposits on commercial contracts, and retirement benefits | Other Current Liabilities | June 30, 2024 (Millions USD) | December 31, 2023 (Millions USD) | | :--- | :--- | :--- | | Salaries and wages | $1,126 | $1,191 | | Dividends payable | $391 | $362 | | Lease liabilities | $309 | $325 | | Workers' compensation | $241 | $237 | | Other | $1,128 | $1,151 | | Total other current liabilities | $3,195 | $3,266 | | Other Noncurrent Liabilities | June 30, 2024 (Millions USD) | December 31, 2023 (Millions USD) | | :--- | :--- | :--- | | Customer deposits on commercial contracts | $2,214 | $2,576 | | Retirement benefits | $2,124 | $2,219 | | Lease liabilities | $1,549 | $1,497 | | Other | $2,005 | $2,033 | | Total other liabilities | $7,892 | $8,325 | [J. COMMITMENTS AND CONTINGENCIES](index=21&type=section&id=J.%20COMMITMENTS%20AND%20CONTINGENCIES) The company is defending a putative class action lawsuit alleging conspiracy not to solicit naval architects and marine engineers, which was dismissed by the District Court but is now on appeal. Other legal proceedings, environmental liabilities, and government contract audits are not expected to have a material impact. The company also has $1.8 billion in letters of credit and guarantees, and provides product warranties - A putative class action lawsuit alleging conspiracy not to solicit naval architects and marine engineers was dismissed by the District Court on April 19, 2024, but plaintiffs initiated an appeal on May 20, 2024. The ultimate outcome or potential loss cannot be estimated at this time, but could have a material impact[62](index=62&type=chunk) - Environmental costs are accrued when probable and estimable, with a significant percentage expected to be recoverable under U.S. government contracts. No individual or aggregate environmental liability is believed to be material[65](index=65&type=chunk)[66](index=66&type=chunk) - The company has entered into letters of credit, bank guarantees, surety bonds, and similar arrangements totaling approximately **$1.8 billion** as of June 30, 2024[69](index=69&type=chunk) | Warranty Liabilities (Millions USD) | Six Months Ended June 30, 2024 | Six Months Ended July 2, 2023 | | :--- | :--- | :--- | | Beginning balance | $597 | $603 | | Warranty expense | $57 | $35 | | Payments | $(53) | $(47) | | Adjustments | $7 | $2 | | Ending balance | $608 | $593 | [K. SHAREHOLDERS' EQUITY](index=23&type=section&id=K.%20SHAREHOLDERS'%20EQUITY) The company repurchased 0.5 million shares for $139 million in H1 2024, with 4.2 million shares remaining authorized for repurchase. Quarterly dividends increased to $1.42 per share. Accumulated other comprehensive loss (AOCL) increased to $(1.434) billion, primarily due to foreign currency translation adjustments and changes in retirement plans' funded status - In the first six months of 2024, the company repurchased **0.5 million shares** for **$139 million**. As of June 30, 2024, **4.2 million shares** (**1.5% of total outstanding**) remained authorized for repurchase[74](index=74&type=chunk) - The Board declared an increased quarterly dividend of **$1.42 per share** for the three- and six-month periods ended June 30, 2024, marking the **27th consecutive annual increase**[75](index=75&type=chunk) | Accumulated Other Comprehensive Loss (AOCL) (Millions USD) | December 31, 2023 | June 30, 2024 | | :--- | :--- | :--- | | AOCL, beginning balance | $(1,159) | $(1,159) | | Other comprehensive loss, net of tax | $(275) | $(275) | | AOCL, ending balance | $(1,434) | $(1,434) | [L. SEGMENT INFORMATION](index=24&type=section&id=L.%20SEGMENT%20INFORMATION) The company operates through four segments: Aerospace, Marine Systems, Combat Systems, and Technologies. All segments reported revenue and operating earnings growth for both the three- and six-month periods ended June 30, 2024 | Segment Financials (Three Months Ended) | June 30, 2024 Revenue (Millions USD) | July 2, 2023 Revenue (Millions USD) | June 30, 2024 Operating Earnings (Millions USD) | July 2, 2023 Operating Earnings (Millions USD) | | :--- | :--- | :--- | :--- | :--- | | Aerospace | $2,940 | $1,953 | $319 | $236 | | Marine Systems | $3,453 | $3,059 | $245 | $235 | | Combat Systems | $2,288 | $1,924 | $313 | $251 | | Technologies | $3,295 | $3,216 | $320 | $283 | | Corporate | — | — | $(41) | $(43) | | Total | $11,976 | $10,152 | $1,156 | $962 | | Segment Financials (Six Months Ended) | June 30, 2024 Revenue (Millions USD) | July 2, 2023 Revenue (Millions USD) | June 30, 2024 Operating Earnings (Millions USD) | July 2, 2023 Operating Earnings (Millions USD) | | :--- | :--- | :--- | :--- | :--- | | Aerospace | $5,024 | $3,845 | $574 | $465 | | Marine Systems | $6,784 | $6,051 | $477 | $446 | | Combat Systems | $4,390 | $3,680 | $595 | $496 | | Technologies | $6,509 | $6,457 | $615 | $582 | | Corporate | — | — | $(69) | $(89) | | Total | $22,707 | $20,033 | $2,192 | $1,900 | [M. FAIR VALUE](index=25&type=section&id=M.%20FAIR%20VALUE) Fair value is categorized into three levels based on input observability. The company's financial instruments include cash and equivalents, receivables, debt, and derivatives. Most assets and liabilities are valued using Level 1 (quoted prices) or Level 2 (observable inputs) methods, with some Level 3 assets for direct private equity investments - Fair value is classified into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than quoted prices), and Level 3 (unobservable inputs)[83](index=83&type=chunk) | Financial Assets (Liabilities) Measured at Fair Value (June 30, 2024, Millions USD) | Carrying Value | Fair Value | Level 1 | Level 2 | Level 3 | | :--- | :--- | :--- | :--- | :--- | :--- | | Marketable securities held in trust: Cash and equivalents | $2 | $2 | $— | $2 | $— | | Marketable securities held in trust: Available-for-sale debt securities | $132 | $132 | $— | $132 | $— | | Marketable securities held in trust: Commingled equity funds | $49 | $49 | $49 | $— | $— | | Marketable securities held in trust: Commingled fixed-income funds | $6 | $6 | $6 | $— | $— | | Marketable securities held in trust: Other investments | $44 | $44 | $27 | $— | $17 | | Cash flow hedge assets | $43 | $43 | $— | $43 | $— | | Cash flow hedge liabilities | $(64) | $(64) | $— | $(64) | $— | | Short- and long-term debt principal (amortized cost) | $(9,333) | $(8,540) | $— | $(8,540) | $— | [N. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES](index=26&type=section&id=N.%20DERIVATIVE%20FINANCIAL%20INSTRUMENTS%20AND%20HEDGING%20ACTIVITIES) The company uses derivative financial instruments, primarily foreign currency forward contracts, to hedge market risks from foreign currency exchange rates, commodity prices, and investments. Notional forward exchange contracts outstanding were $7.1 billion as of June 30, 2024. Gains and losses on qualified cash flow hedges are deferred in AOCL, while non-qualified derivatives are recognized in earnings, with no material impact on results of operations - The company uses derivative financial instruments, principally foreign currency forward purchase and sale contracts, to offset and minimize foreign currency exchange rate risk[87](index=87&type=chunk) - Notional forward exchange contracts outstanding were **$7.1 billion** on June 30, 2024, up from **$5.7 billion** on December 31, 2023. These are designated as cash flow hedges[90](index=90&type=chunk) - Net gains and losses recognized in earnings on derivative financial instruments that do not qualify for hedge accounting, and those reclassified from AOCL related to qualified hedges, were not material to results of operations for the three- and six-month periods ended June 30, 2024, and July 2, 2023[92](index=92&type=chunk) [O. RETIREMENT PLANS](index=29&type=section&id=O.%20RETIREMENT%20PLANS) The company provides defined contribution and defined benefit retirement plans. Net periodic benefit cost for pension benefits was $35 million for the six months ended June 30, 2024, a significant decrease from $303 million in the prior year, while other post-retirement benefits showed a net credit | Net Periodic Benefit Cost (Credit) (Six Months Ended, Millions USD) | June 30, 2024 Pension Benefits | July 2, 2023 Pension Benefits | June 30, 2024 Other Post-retirement Benefits | July 2, 2023 Other Post-retirement Benefits | | :--- | :--- | :--- | :--- | :--- | | Service cost | $37 | $33 | $2 | $2 | | Interest cost | $314 | $325 | $14 | $15 | | Expected return on plan assets | $(411) | $(415) | $(17) | $(16) | | Net actuarial loss (gain) | $98 | $367 | $(16) | $(16) | | Prior service (credit) cost | $(3) | $(7) | $1 | $1 | | Net periodic benefit cost (credit) | $35 | $303 | $(16) | $(14) | [Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202%20-%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, and results of operations, including a business overview, environmental factors, detailed segment results, backlog, liquidity, and critical accounting policies. It highlights revenue and earnings growth across segments, challenges from supply chain and global conflicts, and capital deployment strategies [BUSINESS OVERVIEW](index=30&type=section&id=BUSINESS%20OVERVIEW) General Dynamics operates as a global aerospace and defense company across four distinct segments, serving both government and commercial customers - General Dynamics is a global aerospace and defense company with four operating segments: Aerospace, Marine Systems, Combat Systems, and Technologies. The defense segments primarily serve the U.S. government, while Aerospace serves a diverse base of corporate and individual buyers[98](index=98&type=chunk)[99](index=99&type=chunk) [BUSINESS ENVIRONMENT](index=30&type=section&id=BUSINESS%20ENVIRONMENT) The company's business environment is shaped by new product certifications, ongoing supply chain disruptions, inflationary pressures, and geopolitical conflicts driving demand - The G700 aircraft received European Union Aviation Safety Agency (EASA) type certification in May 2024, following U.S. Federal Aviation Administration (FAA) certification in March 2024, enabling customer deliveries to begin in Q2 2024. Approximately **50 G700 aircraft** are expected to be delivered in 2024[100](index=100&type=chunk) - Ongoing supply chain challenges and inflationary pressures continue to impact global economies and businesses, affecting production ramp-up and operational efficiency, particularly in Aerospace and Marine Systems, while the Russia-Ukraine conflict has increased demand for Combat Systems products[101](index=101&type=chunk) [RESULTS OF OPERATIONS](index=31&type=section&id=RESULTS%20OF%20OPERATIONS) This section analyzes the company's financial performance, including revenue recognition methods, consolidated results, and detailed segment-level performance [INTRODUCTION](index=31&type=section&id=INTRODUCTION) This section outlines the company's revenue and operating cost recognition methods for its Aerospace and defense segments. Aerospace revenue is recognized upon aircraft delivery, with costs based on estimated average unit cost. Defense segment revenue is recognized over time using costs incurred as a measure of progress. Operating earnings and margin are influenced by delivery mix, operational efficiency, volume, performance, and contract mix - In the Aerospace segment, revenue for new aircraft is recorded upon customer delivery and acceptance, while service revenue is recognized as work progresses or upon delivery. Operating costs are accumulated in production lots and recognized at aircraft delivery based on estimated average unit cost[103](index=103&type=chunk)[104](index=104&type=chunk) - In the defense segments, revenue on long-term government contracts is generally recognized over time as work progresses, using costs incurred to date relative to total estimated costs at completion to measure progress. Operating earnings and margin are driven by changes in volume, performance (adjustments to contract estimates), or contract mix[106](index=106&type=chunk)[107](index=107&type=chunk) [CONSOLIDATED OVERVIEW](index=32&type=section&id=CONSOLIDATED%20OVERVIEW) Consolidated revenue increased by 18.0% in Q2 2024 and 13.3% in H1 2024, driven by growth across all segments. Operating margin improved by 20 basis points to 9.7% for both periods | Metric | Three Months Ended June 30, 2024 | Three Months Ended July 2, 2023 | Variance (Millions USD) | Variance (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $11,976 | $10,152 | $1,824 | 18.0% | | Operating earnings | $1,156 | $962 | $194 | 20.2% | | Operating margin | 9.7% | 9.5% | 0.2% | | | Metric | Six Months Ended June 30, 2024 | Six Months Ended July 2, 2023 | Variance (Millions USD) | Variance (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $22,707 | $20,033 | $2,674 | 13.3% | | Operating earnings | $2,192 | $1,900 | $292 | 15.4% | | Operating margin | 9.7% | 9.5% | 0.2% | | - Consolidated revenue increased in the second quarter and first six months of 2024, driven by **double-digit percentage growth** in Aerospace, Marine Systems, and Combat Systems segments[111](index=111&type=chunk) [REVIEW OF OPERATING SEGMENTS](index=32&type=section&id=REVIEW%20OF%20OPERATING%20SEGMENTS) This section provides a detailed review of the financial performance, revenue drivers, and operating margins for each of the company's four operating segments [AEROSPACE](index=32&type=section&id=AEROSPACE) Aerospace segment revenue increased by 50.5% in Q2 2024 and 30.7% in H1 2024, driven by higher aircraft manufacturing (including G700 initial deliveries) and increased aircraft services demand. Operating earnings grew by 35.2% in Q2 and 23.4% in H1, but operating margin decreased due to initial G700 production costs and supply chain issues. The 2024 outlook projects $12.7 billion in revenue and approximately 14% operating margin | Metric | Three Months Ended June 30, 2024 | Three Months Ended July 2, 2023 | Variance (Millions USD) | Variance (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $2,940 | $1,953 | $987 | 50.5% | | Operating earnings | $319 | $236 | $83 | 35.2% | | Operating margin | 10.9% | 12.1% | -1.2% | | | Gulfstream aircraft deliveries (units) | 37 | 24 | 13 | 54.2% | | Metric | Six Months Ended June 30, 2024 | Six Months Ended July 2, 2023 | Variance (Millions USD) | Variance (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $5,024 | $3,845 | $1,179 | 30.7% | | Operating earnings | $574 | $465 | $109 | 23.4% | | Operating margin | 11.4% | 12.1% | -0.7% | | | Gulfstream aircraft deliveries (units) | 61 | 45 | 16 | 35.6% | - Aircraft manufacturing revenue increased due to the number and mix of aircraft deliveries, including initial deliveries of the ultra-long-range, ultra-large-cabin G700 aircraft. Aircraft services revenue increased due to higher customer demand for maintenance, a larger installed base, and increased flight activity[114](index=114&type=chunk) - The Aerospace segment's operating margin decreased by **120 basis points in Q2** and **70 basis points in H1 2024**, reflecting additional costs associated with the first lot of G700 aircraft, out-of-station work due to late supply chain deliveries, and extended certification processes[115](index=115&type=chunk) - The 2024 outlook for the Aerospace segment projects approximately **$12.7 billion in revenue** and an operating margin of approximately **14%**[116](index=116&type=chunk) [MARINE SYSTEMS](index=34&type=section&id=MARINE%20SYSTEMS) Marine Systems segment revenue increased by 12.9% in Q2 2024 and 12.1% in H1 2024, primarily due to increased volume on Columbia-class and Virginia-class submarine programs. Operating earnings grew by 4.3% in Q2 and 7.0% in H1, but operating margin continued to be impacted by supply chain challenges. The 2024 outlook projects $13.4-13.8 billion in revenue and approximately 7.4% operating margin | Metric | Three Months Ended June 30, 2024 | Three Months Ended July 2, 2023 | Variance (Millions USD) | Variance (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $3,453 | $3,059 | $394 | 12.9% | | Operating earnings | $245 | $235 | $10 | 4.3% | | Operating margin | 7.1% | 7.7% | -0.6% | | | Metric | Six Months Ended June 30, 2024 | Six Months Ended July 2, 2023 | Variance (Millions USD) | Variance (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $6,784 | $6,051 | $733 | 12.1% | | Operating earnings | $477 | $446 | $31 | 7.0% | | Operating margin | 7.0% | 7.4% | -0.4% | | - Revenue from U.S. Navy ship construction and engineering increased due to higher volume on the Columbia-class and Virginia-class submarine programs. The segment's operating margin continues to reflect the impact of supply chain challenges[119](index=119&type=chunk) - The 2024 outlook for the Marine Systems segment projects approximately **$13.4-13.8 billion in revenue** and an operating margin of approximately **7.4%**[120](index=120&type=chunk) [COMBAT SYSTEMS](index=34&type=section&id=COMBAT%20SYSTEMS) Combat Systems segment revenue increased by 18.9% in Q2 2024 and 19.3% in H1 2024, driven by heightened demand for weapons systems and munitions, and higher volume on U.S. military vehicle programs (M10 Booker) and international sales (Abrams tanks, wheeled combat vehicles). Operating earnings grew by 24.7% in Q2 and 20.0% in H1, with operating margin improving by 70 basis points in Q2 and 10 basis points in H1. The 2024 outlook projects $8.7 billion in revenue and approximately 14.4% operating margin | Metric | Three Months Ended June 30, 2024 | Three Months Ended July 2, 2023 | Variance (Millions USD) | Variance (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $2,288 | $1,924 | $364 | 18.9% | | Operating earnings | $313 | $251 | $62 | 24.7% | | Operating margin | 13.7% | 13.0% | 0.7% | | | Metric | Six Months Ended June 30, 2024 | Six Months Ended July 2, 2023 | Variance (Millions USD) | Variance (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $4,390 | $3,680 | $710 | 19.3% | | Operating earnings | $595 | $496 | $99 | 20.0% | | Operating margin | 13.6% | 13.5% | 0.1% | | - Revenue from weapons systems and munitions increased due to heightened demand for artillery products, leading to facility expansion. U.S. military vehicle revenue increased due to higher volume on the M10 Booker combat vehicle program. International military vehicle revenue increased from Abrams main battle tank sales to allies and wheeled combat vehicle sales in Europe[122](index=122&type=chunk) - The 2024 outlook for the Combat Systems segment projects approximately **$8.7 billion in revenue** and an operating margin of approximately **14.4%**[124](index=124&type=chunk) [TECHNOLOGIES](index=35&type=section&id=TECHNOLOGIES) Technologies segment revenue increased by 2.5% in Q2 2024 and 0.8% in H1 2024, driven by higher volume across the portfolio, including new program ramp-ups in IT services and C5ISR solutions. Operating earnings grew by 13.1% in Q2 and 5.7% in H1, with operating margin improving by 90 basis points in Q2 and 40 basis points in H1 due to strong operating performance. The 2024 outlook projects approximately $13 billion in revenue and 9.5% operating margin | Metric | Three Months Ended June 30, 2024 | Three Months Ended July 2, 2023 | Variance (Millions USD) | Variance (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $3,295 | $3,216 | $79 | 2.5% | | Operating earnings | $320 | $283 | $37 | 13.1% | | Operating margin | 9.7% | 8.8% | 0.9% | | | Metric | Six Months Ended June 30, 2024 | Six Months Ended July 2, 2023 | Variance (Millions USD) | Variance (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $6,509 | $6,457 | $52 | 0.8% | | Operating earnings | $615 | $582 | $33 | 5.7% | | Operating margin | 9.4% | 9.0% | 0.4% | | - Revenue increased due to higher volume across the portfolio, including the ramp-up of new programs in Information Technology (IT) services and C5ISR solutions. Operating margin improved due to strong operating performance[126](index=126&type=chunk) - The 2024 outlook for the Technologies segment projects approximately **$13 billion in revenue** and an operating margin of approximately **9.5%**[128](index=128&type=chunk) [CORPORATE](index=36&type=section&id=CORPORATE) Corporate operating costs, primarily equity-based compensation expense, totaled $41 million in Q2 2024 and $69 million in H1 2024. These costs are expected to be approximately $140 million for the full year 2024 - Corporate operating costs were **$41 million in Q2 2024** and **$69 million in H1 2024**, primarily consisting of equity-based compensation expense. Corporate operating costs are expected to be approximately **$140 million in 2024**[129](index=129&type=chunk) [OTHER INFORMATION](index=36&type=section&id=OTHER%20INFORMATION) This section provides additional financial details, including product and service revenue, G&A expenses, other net income, interest expense, and income tax provisions [PRODUCT REVENUE AND OPERATING COSTS](index=36&type=section&id=PRODUCT%20REVENUE%20AND%20OPERATING%20COSTS) Product revenue increased by 23.5% in Q2 2024 and 17.5% in H1 2024, with corresponding increases in operating costs. This growth was driven by higher aircraft manufacturing, weapons systems and munitions, ship construction, and military vehicle production | Metric | Three Months Ended June 30, 2024 | Three Months Ended July 2, 2023 | Variance (Millions USD) | Variance (%) | | :--- | :--- | :--- | :--- | :--- | | Product Revenue | $7,160 | $5,797 | $1,363 | 23.5% | | Product Operating Costs | $(6,127) | $(4,915) | $(1,212) | 24.7% | | Metric | Six Months Ended June 30, 2024 | Six Months Ended July 2, 2023 | Variance (Millions USD) | Variance (%) | | :--- | :--- | :--- | :--- | :--- | | Product Revenue | $13,294 | $11,310 | $1,984 | 17.5% | | Product Operating Costs | $(11,315) | $(9,556) | $(1,759) | 18.4% | - The increase in product revenue was driven by additional aircraft manufacturing deliveries, heightened demand for artillery products (weapons systems and munitions), higher volume on Columbia-class and Virginia-class submarine programs (ship construction), and increased military vehicle production[130](index=130&type=chunk) [SERVICE REVENUE AND OPERATING COSTS](index=37&type=section&id=SERVICE%20REVENUE%20AND%20OPERATING%20COSTS) Service revenue increased by 10.6% in Q2 2024 and 7.9% in H1 2024, with corresponding increases in operating costs. This growth was primarily due to higher volume in ship services (Columbia-class submarine program), aircraft services (maintenance work), and C5ISR solutions/IT services (new program ramp-ups) | Metric | Three Months Ended June 30, 2024 | Three Months Ended July 2, 2023 | Variance (Millions USD) | Variance (%) | | :--- | :--- | :--- | :--- | :--- | | Service Revenue | $4,816 | $4,355 | $461 | 10.6% | | Service Operating Costs | $(4,049) | $(3,670) | $(379) | 10.3% | | Metric | Six Months Ended June 30, 2024 | Six Months Ended July 2, 2023 | Variance (Millions USD) | Variance (%) | | :--- | :--- | :--- | :--- | :--- | | Service Revenue | $9,413 | $8,723 | $690 | 7.9% | | Service Operating Costs | $(7,929) | $(7,386) | $(543) | 7.4% | - The increase in service revenue was driven by higher volume on the Columbia-class submarine program (ship services), additional aircraft maintenance work (aircraft services), and higher volume including new program ramp-ups in C5ISR solutions and IT services[131](index=131&type=chunk) [G&A EXPENSES](index=37&type=section&id=G%26A%20EXPENSES) General and administrative (G&A) expenses as a percentage of revenue decreased to 5.6% in H1 2024 from 5.9% in H1 2023, and are expected to remain generally consistent with 2023 for the full year - G&A expenses as a percentage of revenue decreased to **5.6% in the first six months of 2024**, compared with **5.9% in the prior-year period**. The company expects G&A expenses as a percentage of revenue in 2024 to be generally consistent with 2023[132](index=132&type=chunk) [OTHER, NET](index=37&type=section&id=OTHER,%20NET) Net other income was $32 million in H1 2024, down from $46 million in H1 2023, primarily representing the non-service components of pension and other post-retirement benefits. The company expects net other income to be approximately $60 million in 2024 - Net other income was **$32 million** in the first six months of 2024, compared with **$46 million** in the prior-year period, primarily representing the non-service components of pension and other post-retirement benefits. The company expects net other income to be approximately **$60 million in 2024**[133](index=133&type=chunk) [INTEREST, NET](index=37&type=section&id=INTEREST,%20NET) Net interest expense decreased to $166 million in H1 2024 from $180 million in H1 2023, reflecting scheduled debt repayments in 2023. The company expects 2024 net interest expense to be approximately $320 million - Net interest expense was **$166 million** in the first six months of 2024, compared with **$180 million** in the prior-year period, reflecting the repayment of scheduled debt maturities in 2023. The company expects 2024 net interest expense to be approximately **$320 million**[134](index=134&type=chunk) [PROVISION FOR INCOME TAX, NET](index=37&type=section&id=PROVISION%20FOR%20INCOME%20TAX,%20NET) The effective tax rate for H1 2024 was 17.2%, an increase from 16.5% in the prior-year period. The company anticipates a full-year effective tax rate of approximately 17.5% for 2024 - The effective tax rate was **17.2%** in the first six months of 2024, compared with **16.5%** in the prior-year period. For 2024, the company anticipates a full-year effective tax rate of approximately **17.5%**[135](index=135&type=chunk) [BACKLOG AND ESTIMATED POTENTIAL CONTRACT VALUE](index=38&type=section&id=BACKLOG%20AND%20ESTIMATED%20POTENTIAL%20CONTRACT%20VALUE) Total backlog was $91.3 billion at the end of Q2 2024, a decrease from $93.7 billion at the end of Q1 2024. Total estimated contract value, combining backlog with estimated potential contract value, was $129.8 billion. The defense segments' backlog was $71.3 billion, with significant contract awards in Q2 2024 - Total backlog, including funded and unfunded portions, was **$91.3 billion** at the end of Q2 2024, compared with **$93.7 billion** at the end of Q1 2024[136](index=136&type=chunk) - Total estimated contract value, which combines total backlog with estimated potential contract value, was **$129.8 billion** on June 30, 2024[136](index=136&type=chunk) | Segment Backlog and Estimated Potential Contract Value (June 30, 2024, Millions USD) | Funded Backlog | Unfunded Backlog | Total Backlog | Estimated Potential Contract Value | Total Estimated Contract Value | | :--- | :--- | :--- | :--- | :--- | :--- | | Aerospace | $19,126 | $911 | $20,037 | $372 | $20,409 | | Marine Systems | $29,912 | $11,436 | $41,348 | $3,983 | $45,331 | | Combat Systems | $16,003 | $673 | $16,676 | $5,816 | $22,492 | | Technologies | $9,365 | $3,875 | $13,240 | $28,283 | $41,523 | | Total | $74,406 | $16,895 | $91,301 | $38,454 | $129,755 | [AEROSPACE](index=38&type=section&id=AEROSPACE) The Aerospace segment ended Q2 2024 with a backlog of $20 billion, primarily from new aircraft orders. The book-to-bill ratio for H1 2024 was 1-to-1, despite over 30% year-over-year revenue growth. Estimated potential contract value was $372 million - The Aerospace segment ended Q2 2024 with a backlog of **$20 billion**, primarily representing new aircraft orders with definitive purchase contracts and deposits[138](index=138&type=chunk) - Orders for new Gulfstream aircraft increased sequentially, resulting in a segment book-to-bill ratio of **1-to-1** for the first six months of 2024, even with over **30% year-over-year revenue growth**[139](index=139&type=chunk) - Estimated potential contract value in the Aerospace segment was **$372 million** on June 30, 2024, primarily consisting of options and other agreements for new aircraft and long-term services[139](index=139&type=chunk) [DEFENSE SEGMENTS](index=39&type=section&id=DEFENSE%20SEGMENTS) Total backlog in the defense segments was $71.3 billion on June 30, 2024. In Q2 2024, Combat Systems achieved a book-to-bill ratio of 1.5-to-1, and Technologies achieved 1-to-1. Estimated potential contract value was $38.1 billion. Significant contract awards were received across Marine Systems, Combat Systems, and Technologies - Total backlog in the defense segments was **$71.3 billion** on June 30, 2024. The Combat Systems and Technologies segments achieved book-to-bill ratios of **1.5-to-1** and **1-to-1**, respectively, in Q2 2024[142](index=142&type=chunk) - Estimated potential contract value in the defense segments was **$38.1 billion** on June 30, 2024, including unexercised options and unfunded work on indefinite delivery, indefinite quantity (IDIQ) contracts[141](index=141&type=chunk)[142](index=142&type=chunk) - Significant contract awards in Q2 2024 included: * **Marine Systems:** $205M for DDG-51 planning yard services (max potential $1.1B), $55M for submarine non-nuclear maintenance, $55M for USS James E. Williams maintenance, $35M for U.S. and U.K. submarine technologies design, $35M for Columbia-class ANPS * **Combat Systems:** Two contracts from Canadian government for Logistics Vehicle Modernization (LVM) program (max potential $1.9B), $25M from U.S. Army for Stryker fleet technical support (max potential $535M), $385M for munitions and ordnance (max potential $460M), $390M from Army for artillery propellant capacity, $375M from Army to upgrade Stryker vehicles, $325M from Army for M10 Booker Combat Vehicle LRIP, $230M from Army to upgrade Abrams main battle tanks, $120M from Army for Abrams technical support * **Technologies:** $530M for classified customers (max potential $665M), $205M from North Carolina DHHS for Medicaid Management Information System (max potential $525M), $50M from CMS for Benefits Coordination & Recovery Center (max potential $285M), $55M for Army IT network operations, $185M from CMS for cloud services, $30M for U.S. Air Force cybersecurity, $145M for Navy ship modernization, $10M for Navy platforms hardware/software integration[144](index=144&type=chunk)[145](index=145&type=chunk)[147](index=147&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=40&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company emphasizes cash flow generation and prudent capital deployment, prioritizing investments, dividends, strategic acquisitions, and opportunistic share repurchases. Cash and equivalents decreased to $1.4 billion at the end of Q2 2024. Net cash from operating activities significantly decreased in H1 2024, while cash used in investing and financing activities also saw changes - Capital deployment priorities include investments in products and services, a predictable dividend, strategic acquisitions, and opportunistic share repurchases[148](index=148&type=chunk) - Cash and equivalents balance was **$1.4 billion** at the end of Q2 2024, down from **$1.9 billion** at the end of 2023[149](index=149&type=chunk) [OPERATING ACTIVITIES](index=41&type=section&id=OPERATING%20ACTIVITIES) Net cash provided by operating activities was $536 million in H1 2024, a significant decrease from $2.2 billion in H1 2023. This decline was primarily due to growth in operating working capital, driven by the ramp-up in new Gulfstream aircraft production and timing in the Combat Systems segment - Net cash provided by operating activities was **$536 million** in the first six months of 2024, a decrease from **$2.2 billion** in the same period in 2023[150](index=150&type=chunk) - Cash flows in H1 2024 were negatively affected by growth in operating working capital, particularly driven by the ramp-up in production of new Gulfstream aircraft models in the Aerospace segment and timing in the Combat Systems segment[150](index=150&type=chunk) [INVESTING ACTIVITIES](index=41&type=section&id=INVESTING%20ACTIVITIES) Cash used by investing activities was $307 million in H1 2024, a decrease from $404 million in H1 2023. The primary use of cash for investing activities in both periods was capital expenditures, which totaled $360 million in H1 2024 - Net cash used by investing activities was **$307 million** in the first six months of 2024, compared with **$404 million** in the same period in 2023[151](index=151&type=chunk) - Capital expenditures were **$360 million** in the first six months of 2024, compared with **$373 million** in the same period in 2023[151](index=151&type=chunk) [FINANCING ACTIVITIES](index=41&type=section&id=FINANCING%20ACTIVITIES) Cash used by financing activities was $778 million in H1 2024, a decrease from $1.9 billion in H1 2023, primarily due to lower share repurchases and debt repayments. The Board declared an increased quarterly dividend of $1.42 per share. The company plans to repay $500 million in fixed-rate notes maturing in November 2024 using cash on hand or borrowings - Net cash used by financing activities was **$778 million** in the first six months of 2024, compared with **$1.9 billion** in the same period in 2023[152](index=152&type=chunk) - Cash dividends paid were **$750 million** in H1 2024, up from **$705 million** in H1 2023, following an increased quarterly dividend of **$1.42 per share** declared in March 2024[153](index=153&type=chunk) - The company paid **$139 million** for share repurchases in H1 2024, significantly less than **$378 million** in H1 2023. Fixed-rate notes of **$500 million** mature in November 2024, which the company plans to repay using cash on hand, potentially supplemented by commercial paper or other borrowings[154](index=154&type=chunk)[155](index=155&type=chunk) [NON-GAAP FINANCIAL MEASURE - FREE CASH FLOW](index=42&type=section&id=NON-GAAP%20FINANCIAL%20MEASURE%20-%20FREE%20CASH%20FLOW) Free cash flow, a non-GAAP measure defined as net cash from operating activities less capital expenditures, was $176 million in H1 2024, a substantial decrease from $1.820 billion in H1 2023. This metric is used to assess the company's ability to generate cash for debt repayment, acquisitions, share repurchases, and dividends - Free cash flow, defined as net cash from operating activities less capital expenditures, was **$176 million** in the first six months of 2024, a significant decrease from **$1.820 billion** in the same period in 2023[158](index=158&type=chunk) | Metric | Six Months Ended June 30, 2024 (Millions USD) | Six Months Ended July 2, 2023 (Millions USD) | | :--- | :--- | :--- | | Net cash provided by operating activities | $536 | $2,193 | | Capital expenditures | $(360) | $(373) | | Free cash flow | $176 | $1,820 | | Cash flows as a percentage of net earnings: Net cash provided by operating activities | 31% | 149% | | Cash flows as a percentage of net earnings: Free cash flow | 10% | 123% | [ADDITIONAL FINANCIAL INFORMATION](index=43&type=section&id=ADDITIONAL%20FINANCIAL%20INFORMATION) This section covers environmental matters, critical accounting policies, and guarantor financial information, providing further context to the company's financial position [ENVIRONMENTAL MATTERS AND OTHER CONTINGENCIES](index=43&type=section&id=ENVIRONMENTAL%20MATTERS%20AND%20OTHER%20CONTINGENCIES) This section refers to Note J for a discussion of environmental matters and other contingencies, reiterating that the aggregate liability from these matters is not expected to have a material impact on the company's financial results - For a discussion of environmental matters and other contingencies, refer to Note J to the unaudited Consolidated Financial Statements in Part I, Item 1. The aggregate liability with respect to these matters is not expected to have a material impact on the company's results of operations, financial condition, or cash flows[159](index=159&type=chunk) [APPLICATION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES](index=43&type=section&id=APPLICATION%20OF%20CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) The preparation of financial statements involves significant estimates and assumptions, particularly for long-term contracts. Adjustments in contract estimates increased operating earnings by $77 million ($0.22 diluted EPS) for Q2 2024 and $113 million ($0.32 diluted EPS) for H1 2024. No single adjustment was material - Accounting for long-term contracts involves various techniques to estimate total contract revenue and costs, with estimates based on assumptions about future events. Adjustments in estimated profit are recognized under the cumulative catch-up method[161](index=161&type=chunk) - The aggregate impact of adjustments in contract estimates increased operating earnings by **$77 million** (**$0.22 diluted EPS**) for the three-month period ended June 30, 2024, and **$113 million** (**$0.32 diluted EPS**) for the six-month period ended June 30, 2024[161](index=161&type=chunk) [GUARANTOR FINANCIAL INFORMATION](index=43&type=section&id=GUARANTOR%20FINANCIAL%20INFORMATION) Summarized financial information is presented for the combined obligor group (parent and 100%-owned guarantor subsidiaries) for debt obligations. The parent's ability to service debt depends on cash distributions from subsidiaries. The guarantee of each guarantor is limited by fraudulent conveyance laws | Combined Obligor Group Financials (Millions USD) | Six Months Ended June 30, 2024 | Year Ended December 31, 2023 | | :--- | :--- | :--- | | Revenue | $8,930 | $16,276 | | Operating costs and expenses, excluding G&A | $(7,892) | $(14,316) | | Net earnings | $392 | $773 | | Combined Obligor Group Balance Sheet (Millions USD) | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total assets | $10,047 | $10,504 | | Total liabilities | $14,880 | $15,374 | [Item 3 - Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203%20-%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been no material changes to the disclosures regarding quantitative and qualitative market risk from the company's Annual Report on Form 10-K for the year ended December 31, 2023 - No material changes have occurred with respect to quantitative and qualitative disclosures about market risk since the Annual Report on Form 10-K for the year ended December 31, 2023[170](index=170&type=chunk) [Item 4 - Controls and Procedures](index=45&type=section&id=Item%204%20-%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2024. There were no material changes in internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2024[171](index=171&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2024, that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting[172](index=172&type=chunk) [FORWARD-LOOKING STATEMENTS](index=45&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section contains forward-looking statements based on management's expectations, estimates, projections, and assumptions, which are subject to various factors, risks, and uncertainties that could cause actual future results to differ materially. Key risk factors include general economic conditions, defense spending, contract performance, customer demand, commodity prices, global conflicts, legal proceedings, cybersecurity, and acquisitions - The report contains forward-looking statements based on management's expectations, estimates, projections, and assumptions, which are not guarantees of future performance and involve difficult-to-predict factors, risks, and uncertainties[173](index=173&type=chunk) - Key risk factors include: * General U.S. and international political and economic conditions * Decreases in U.S. government defense spending or changing priorities * Termination of government contracts * Differences in anticipated and actual program performance, including supplier issues * Changing customer demand for business aircraft and economic conditions * Changing prices for energy and raw materials * Impact of the COVID-19 pandemic or other similar outbreaks * Status or outcome of legal and/or regulatory proceedings * Potential effects of government audits and reviews * Cybersecurity events and other disruptions * Risks related to acquisitions and joint ventures * Potential for increased regulation related to global climate change[173](index=173&type=chunk)[174](index=174&type=chunk) PART II - OTHER INFORMATION This section covers legal proceedings, risk factors, equity security sales, other information, and a list of exhibits filed with the report [Item 1 - Legal Proceedings](index=46&type=section&id=Item%201%20-%20Legal%20Proceedings) This section refers to Note J of the unaudited Consolidated Financial Statements for information relating to legal proceedings - For information relating to legal proceedings, refer to Note J to the unaudited Consolidated Financial Statements in Part I, Item 1[176](index=176&type=chunk) [Item 1A - Risk Factors](index=46&type=section&id=Item%201A%20-%20Risk%20Factors) There have been no material changes to the risk factors disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2023 - No material changes have occurred with respect to risk factors since the Annual Report on Form 10-K for the year ended December 31, 2023[177](index=177&type=chunk) [Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202%20-%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company purchased 118,734 shares of its common stock under its publicly announced share buyback program during Q2 2024 at an average price of $286.75 per share. No unregistered sales of equity securities occurred in Q2 2024 | Period | Total Number of Shares Purchased | Average Price per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Maximum Number of Shares That May Yet Be Purchased Under the Program | | :--- | :--- | :--- | :--- | :--- | | 4/1/24-4/28/24 | 17,574 | $284.50 | 17,574 | 4,278,017 | | 4/29/24-5/26/24 | 93,345 | $287.50 | 93,345 | 4,184,672 | | 5/27/24-6/30/24 | 7,815 | $289.50 | 7,815 | 4,176,857 | | Total (Q2 2024) | 118,734 | $287.35 | 118,734 | | - The company did not make any unregistered sales of equity securities in the second quarter of 2024[179](index=179&type=chunk) [Item 5 - Other Information](index=47&type=section&id=Item%205%20-%20Other%20Information) During the quarter ended June 30, 2024, none of the company's directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - None of the company's directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2024[180](index=180&type=chunk) [Item 6 - Exhibits](index=47&type=section&id=Item%206%20-%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including a consulting agreement, subsidiary guarantors, CEO and CFO certifications (pursuant to Sections 302 and 906 of Sarbanes-Oxley Act), and various Inline XBRL documents - Key exhibits filed include: * Consulting Agreement between Mark C. Roualet and General Dynamics Corporation (10.1) * Subsidiary Guarantors (22) * Certifications by CEO and CFO pursuant to Section 302 of Sarbanes-Oxley Act (31.1, 31.2) * Certifications by CEO and CFO pursuant to 18 U.S.C. Section 1350 (Section 906 of Sarbanes-Oxley Act) (32.1, 32.2) * Inline XBRL Instance Document, Taxonomy Extension Schema, Calculation Linkbase, Definition Linkbase, Label Linkbase, and Presentation Linkbase Documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE) * Cover Page Interactive Data File (104)[182](index=182&type=chunk) [SIGNATURES](index=48&type=section&id=SIGNATURES) The report is duly signed on behalf of General Dynamics Corporation by William A. Moss, Vice President and Controller, as the Authorized Officer and Chief Accounting Officer, on July 24, 2024 - The report was signed by William A. Moss, Vice President and Controller (Authorized Officer and Chief Accounting Officer) on July 24, 2024[184](index=184&type=chunk)

Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance. Revenue- Technologies: $3.30 billion versus the six-analyst average estimate of $3.27 billion. The reported number represents a year-over-year change of +2.5%. Revenue- Marine Systems: $3.45 billion versus $3.18 billion estimated by six analysts on average. Compared to the year-ago quar ...

Core Viewpoint - General Dynamics reported quarterly earnings of $3.26 per share, which fell short of the Zacks Consensus Estimate of $3.30 per share, but showed an increase from $2.70 per share a year ago [1][2] Financial Performance - The company posted revenues of $11.98 billion for the quarter ended June 2024, exceeding the Zacks Consensus Estimate by 3.89%, and up from $10.15 billion year-over-year [6] - This quarterly report represents an earnings surprise of -1.21%, with the previous quarter's earnings being $2.88 per share against an expectation of $2.89 per share, resulting in a surprise of -0.35% [5] Stock Performance - General Dynamics shares have increased approximately 13.4% since the beginning of the year, compared to the S&P 500's gain of 16.5% [7] - The stock currently holds a Zacks Rank 3 (Hold), indicating it is expected to perform in line with the market in the near future [10] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $3.87 on revenues of $11.96 billion, and for the current fiscal year, it is $14.54 on revenues of $46.85 billion [11] - The trend of estimate revisions for General Dynamics is mixed, which could change following the recent earnings report [10] Industry Context - General Dynamics operates within the Aerospace - Defense industry, which is currently ranked in the top 34% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [12]

Exhibit 99.1 GENERAL DYNAMICS | --- | --- | |-------------------------------|-------| | | | | 11011 Sunset Hills Road | | | Reston, Virginia 20190 | News | | www.gd.com | | Contact: Jeff A. Davis Tel: 703 876 3483 press@generaldynamics.com General Dynamics Reports Second-Quarter 2024 Financial Results July 24, 2024 • Revenue of $12 billion, up 18% from year-ago quarter • Operating earnings of $1.2 billion, up 20.2% from year-ago quarter • Diluted EPS of $3.26, up 20.7% from year-ago quarter • Operating marg ...