General Dynamics Q4 Earnings Call Highlights

Core Insights - General Dynamics reported strong demand in Aerospace, with a book-to-bill ratio of 1.3x and Gulfstream aircraft at 1.4x, driven by the introduction of G700 and G800 models [1] - The company achieved Aerospace revenue of $13.1 billion for the year, a 16.5% increase from 2024, with segment earnings rising 19.3% to $1.75 billion [2] - Overall, General Dynamics closed 2025 with record backlog and an optimistic outlook for 2026, highlighting improved productivity and international demand [7] Aerospace Performance - Fourth-quarter Aerospace revenue was $3.788 billion, a 1.2% year-over-year increase, while operating earnings declined by $104 million [3] - For the full year 2025, Aerospace revenue increased by 16.5%, with operating earnings up 19.3% [4] - The G600 line experienced a year-over-year earnings decline of $75 million due to fewer deliveries and other factors, but G800 earnings compensated for G650 losses [8] Defense Segment - Combat Systems reported fourth-quarter revenue of $2.5 billion, up 0.8% year over year, with operating earnings of $381 million [10] - The segment achieved a fourth-quarter book-to-bill ratio of 4.3x, contributing to a backlog of $27.2 billion [11] - The company anticipates revenue growth in 2026 as European programs transition from planning to production [12] Marine Systems - Marine Systems revenue reached $4.8 billion, a 21.7% increase year over year, with operating earnings rising 72.5% to $345 million [13] - Investments at Electric Boat have increased submarine output by 13% year over year [14] Technologies Segment - Technologies reported fourth-quarter revenue of $3.24 billion, roughly flat year over year, with operating earnings down to $290 million [15] - The segment ended the year with a backlog of $16.7 billion and total estimated contract value of $49.9 billion [15] Financial Metrics and Guidance - General Dynamics ended 2025 with a record backlog of $118 billion, a 30% increase year over year, and operating cash flow of $5.1 billion [16] - For 2026, the company expects free cash flow conversion to return to 100% of net income, with capital expenditures projected to rise significantly [17] - Management provided revenue guidance for 2026 of $54.3 billion to $54.8 billion, with an operating margin of 10.4% [19]