GD - Earnings call transcript Q3 2018 | General Dynamics Corporation

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Operator

Good morning, and welcome to the General Dynamics' Third Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Howard Rubel, Vice President of Investor Relations. ahead. go Please

Howard Alan Rubel

These and Dynamics' Gary, statements everyone. to company's Welcome today risks to Thank uncertainties. and quarter good XXXX General outlook. the regarding third our forward-looking are conference the subject represent some you, estimates morning, estimates call. made Any

information factors Chief over call in to Chairman and is Additional Officer, the XX-Q Phebe and the XX-K regarding to that, With turn these Executive Novakovic. filings. I contained company's would like our

Phebe N. Novakovic

and good morning. Howard, Thanks,

than release, share we tax and Against EPS operating and quarter of to to press With was better in or lower, another of it the margins As solid of $XXX reported is that earnings large our $X.X $X.XX up income appear beat $X.XX higher apparent billion, We CSRA the XX%, quarter, enjoyed from of $X.XX operations respect occurred than $X.XX line. million. quarter. somewhat attributable from the billion billion, $X.X part would line. continuing of essentially earnings for on our in The and year-ago operations from the was the operating year-ago revenue continuing somewhat revenue EPS was fully Most acquisition. diluted revenue consensus. better consensus, performance on

the increase, points However, increase. the X.X% is largely lower XX.X% XX.X% grew and All excluding expense operating a income quarter-over-quarter. was basis revenue to was continuing $XXX $XX transaction. the quarter's quarter segments million, a up from than CSRA. five XXXX, margin Operating up XXX CSRA reporting of X.X%, impact of attributable million, earnings up The were third at amortization operations

operating of amortization or operating operating to the earnings, $X.X transaction Sequentially, $XX X%, was related economic million. expense were revenue billion, X.X%. year-to-date two million, down margin revenue is billion quarters Operating up and earnings or the or XX.X%. earnings with million, of On $XX.X earnings $XX absent were were of terms the very an $X.XX XX.X%. In much basis, alike. $XX up were billion The a up

X.X%, share were up $XXX With were payment and cash X.X% cash of $XXX Importantly, pension earnings we per better million, flow continuing activities continuing $XXX operations operations $XXX operating cash, to million by of diluted after net and free earnings had respect million from provided a of up in from $X.XX year-to-date. the quarter operations or million. from discretionary

the the We at and doubled for continue than year-to-date, at the at business Capital Marine to million totaled to customers' requirements. appropriately necessary invest future. Aerospace continued spending expenditures the group to level our units as support has nine $XXX months, expand million for invest have to $XXX facilities more to a

$XX.XX enjoyed As can in attached you year, roughly is billion of very from healthy increase increase, release, The increase billion press total a quarter. backlog and charts to second $X.XX $X.X the year-ago a over quarter. X% see this the the of we over the the backlog quarter billion

a order contracts. book-to-bill GDIT's of Marine increase contract While potential sterling its activity Technology result several and enjoyed times group, a sharp Mission Systems. at a X.X. value all very Mission there Information intake as a in of strong good was particularly there IDIQ was book-to-bill the Systems contract groups, X.X and was in estimated

with GXXX earnings and was revenue year-to-date on sequential million, or first September was XX.X%. in expected. basis of of the way, million on a On picture was fourth lower several million, each group, good or Gulfstream in quarter We book-to-bill XXXX, about business quarter. Revenue X.X% off operating in up X.X%, $XXX XX.X% and days third words ago. be the values reduction or quarter basis, to of margin an for as $XXX will GXXXs. On point of a margin. the operating in million, quarter to By in to operating the compared X.X%, with intake the delivery X.X another Aerospace few a a stronger flat, Aerospace. had $X up $XXX same nearly million, $XX The revenue on a the to million, the X.X earnings a X.X%, solid delivered starting dollars down or had or measured with say reduction earnings on basis, me and were operating million Let the basis. in second the revenue XX X a of was margins, our to off $XXX are was alone X orders. groups, order $XX X operating XX

I While quarter Deliveries the are order us fire intake was fourth Gulfstream the are This quarter. next I GXXXs pipeline we was in is was quite surrounding very its had and production times. to tell XX help X is nacelles am nacelles hampered both on by to as caused Pratt deliver of to issues schedule. intake. delivery that over and That, our sales good active. behind say, cost taken line should financial schedule. contretemps and as to progress hold of until not in certainly and can the making discussions to It and also pleased you has good it satisfactory in on to NORDAM's reliable the GXXX inability more could nacelles GXXX group, provide prospects numerous anticipated. we support

the X. again, expect On trailing X increased XX QX. are, slightly even accounting about intake to the in basis, the than better in for months it and excess quarter the is optimistic a delivery of reasonably third to We look quarter, book-to-bill order in fourth

progress Our GXXX at and next so from can with on GXXX, year. travel certification gross shortly commencing the range X,XXX work done on delivery X.X. certification first margins. better will deliveries miles the with well The lot miles GXXX before X,XXX The we anticipate year-end continues X.XX profited has of those nautical carry the GXXX nautical to front at

nautical nearly GXXX the quite its range demonstrated was with an X,XXX from miles the GXXX at has nautical context; X,XXX nautical miles hour mach X,XXX at X.XX The of miles long-range of flight. cutting Just mach, that range approximate stunning. actually X.X predecessor, put of now range to mach, X.X in some also at

If was GXXX in to plan you and respectively. the XXXX XXXX, when we deliver in and GXXX recall, XXXX, announced our

and with We the have GXXX the GXXX. do done so so will with

Combat On the Systems, the sequential basis difference point quarter quarter were on $X a solid XXXX, or was million, had volume or a no Next, XX.X% Combat second quarters. of revenue revenue Year-to-date material but or should $XX basis, are $X.XX million very $XXX profit. X.X%, with quarters X.X%, quarter increases X%. up of in margins. earnings quarter for consecutive million earnings margin. and million, down in year-ago to reported a has X.X% point over margin. third earnings XXXX in was or $XX revenue revenue up decline in despite operating million $XXX decline operating over with Compared XX billion, operating third were in basis XX I up point much a now that or by eight out Combat alike, Operating Systems and

are All of programs our well. major performing

for We growth, continue to see both internationally and opportunities domestically.

increased Army the with nicely. U.S. work has our Importantly,

powerful brigade Strykers vehicle. begin and of capable the supporting a of tank, to modernize $XXX In the placed most order and the to the the will to XXX modernizing a order version process the recently has nine newest, fully all upgrade to fifth, the million process battle of the Army AX fourth part brigades. The configuration, main Abrams addition complete

We are efforts and have innovative solutions actively their with requirements. and Army's involved modernization to also the developed longer-term meet cost-effective

X.X%. the compared $X million, the million For of to or increase Marine, $XXX or were down X.X% quarter was down $XXX revenue $XX year's $XX million the a compared last for group year-ago sequentially earnings Operating billion, reported In third contrast, to at revenue quarter. quarter. million by

driven a to $XX work, Revenue billion decline four was operating Offsetting $XXX expect were to mix. Year-to-date we due other in by was design margins V by in or that Block repair million, of been there over sequential step-up for timing higher With million, across should the this construction $X.X year Block ship revenue a of work. Columbia or X.X% profit related million earnings recent construction awards up work. naval Virginia-class and X.X% expected, As category. the has for was repair $XXX XXXX. design and volume and IV, of

the IS&T Systems, federal report leading through that opportunity ships of to the to would from you quarter, CXISR Mission a GDIT, III civil the IT the business; for received segments, the last Flight we Department of agency affords multi-year the down DDG of the and Defense, in we FY the We to intelligence services providers two XXXX XXXX. are contract of of one contract four a told curve and prior part agencies. Bath quarter large XX performance. billion move as Navy and The close ships. its Just learning The $X.X improve scheduled

commented $X.XX billion third or Let's strong last compared benefit quarter. or start million last $XXX was Similarly, at further year. XX.X% higher Systems' X.X% with up $XXX revenue $XX with upon X% very were organic year-to-date already supports Systems' generating order performance. the mix up increase. operating year, which last future anticipated and Mission have million, Mission million, were revenue to Mission better or and of quarter $X.XX of the leverage growth. quarter, in operating of $XX higher over the XX.X% I intake $XXX billion earnings than by million the earnings Systems. a Operating their year's was million, Year-to-date or

in billion the of quarter, Technology, By continues was after were This million Moving were acquisition integration in really $X.X X.X%, business in going profits is It early was The over $XX this the accretive CSRA. XXX% $X.XX modestly margins excluding quarter. up quarter. billion an in acquisition. the $X.XX quarter. sound revenue X.X%, out is down way, break quite or X.X% related remarkable to for $X.X results. year-to-date, to up up revenue be we're amortization of not $XX year-ago costs. and plan year-ago excluding to you year. to deliver But transition accretive this the were Operating able million, excluding Reported margins the The the is revenue CSRA million, CSRA early from X.X%. XX%. or for GDIT Information generated the

to Finally, on we've our call centers of creates services. focus of enterprise as our solutions MAXIMUS part This announced strategy. transaction divestiture high-end and portfolio-shaping professional IT the

this it impact transaction and way, markets. well-placed public-facing the assets more this with core. shifts are By results. from focused no away We us whom to These will business-to-business material MAXIMUS, have XXXX the for is are

all far next fully concerned, in operating revenue margins year what the quarter this and as billion and $XX of we quarter mean excess fourth last as the with are the does quarter. expect So consistent

tax However, higher around XX% in of a effective rate we the expect quarter.

stronger-than-expected to us range increase tax enabled million offset guidance transactions and costs by rate the operating of year, part from lower-than-planned the CSRA in the for This the year results guidance for the a of $XX.XX $XX to year-to-date $XX.XX pretty be to For year late is range to year. to range to $XX our a the end-of-year actual of $XX.XX close narrow. we anticipate a in so performance,

as tempting a in we The to result, be fall upcoming time me businesses of us year when in ask January have that guidance later was may insight get about better and we it that gave next process our grounded is the planning you this you year, process, remind this as thorough. As year. full let the last and

So piecemeal at next I to want don't juncture. prematurely this year

from many detail, as hear our more me in custom You'll years. has with January been for

spend in this me see year minute how telling So a I you let perspective.

without are X.X% We growing CSRA.

schedule. I'd And CSRA double-digit integration growing, that's particularly goes. stead turn finally, good next the as a and is during is Officer, recapitalizing, to U.S. very our Chief the group call like and us X.X%, to And she is year. have for The steady Gulfstream backlog puts which large EPS Marine and The Mission Aiken. is of of our in growing year is performing now, growth. impressive ahead Systems beautifully. Financial Jason at And transition. We Army over is

Jason Wright Aiken

Phebe, and morning. good you, Thank

issued XXXX of expense net year-to-date quarter The to the roughly million Our in was acquisition to finance and bringing in to comparable compares $XXX million. the expense $XX due is billion CSRA. increase we the XXXX. $XX debt of the million, periods $XX $XXX of the That in to interest million

expense million. For $XXX to approximately year, interest be expect we the

the Our This for lower is tax than to effective quarter XX.X% during tax attributable return. XX.X% rate the quarter the our of was previous our and expectation year-to-date. is finalization and XXXX

or tax a point the from more to the tax our a As we This previous target of our on lowering a income year XX% are low for approximately full range. a of share. charge million estimate per the quarter rate fourth operations XX%. in quarter $XX implies XX% rate $X.XX in statement. the had We result, of discontinued rate One

of piece resulted pre-tax issue. this interest sale a organizational accounting in a P&L GAAP CSRA recall, the due of You'll sold the we outcome. breakeven conflict business to rules, an Under

for and a that gain the the there tax in operations. tax discontinued sale on gain is on was However, expense purposes, reported

dividends for hold $XXX consistent paid capital with quarter of XXX,XXX to our we in third enough our deployment, to to X.X Turning shares purchased us $XXX shares year-to-date share bringing and stock, in million to million. plan in our steady. This XXXX is acquire count million the shares

Phebe tax ramped the benefits in excess up expenditures, reform, with of In plan of of expect in million which recent the to quarter discussed, light addition, a pension discretionary X% contribution have as and the to we sales associated capital our we our made year. be the in for $XXX

acquisition. repaying CSRA commercial the To the repay the will our the retire in end, billion a which acquisition. issued quarter over $X.X consistent of borrowings CP we from year, fully of finance to end balance of repaid expect paper that to our the quarter, the the also debt of rapidly with We by priority

Our the quarter conversion reflecting the discretionary rate free pension the be conversion low year, less for the the cash range, was to contribution. in XXX% we mid-XX% additional cash flow expect target, XX%, typical free flow And to our for our pension over contribution. excluding

contracts, particular, times and one about to in when potential Finally, more the was total the quarter, significant at all-time international book-to-bill quarter, our total to activity of in backlog an in the options order a is the exchange $XXX.X billion. foreign the include the given headwind X.X This follow-up all increase total Phebe's to rate X% $XX.X resulting company impact of segment, comments And end you IDIQ quarter. Combat our footprint. the billion the high in impressive the in growth increased presented given backlog which ongoing value fluctuations, by more its contract Systems

by changes reduced over of driven rate the nine backlog the strong months the first segment's Specifically, year, dollar the FX million. $XXX by

turn an over economic but numbers is reported the this accounting I'll translation Q&A. for concludes to nonetheless. remarks, back no it a effect with my course, the you Of headwind Howard, that value and implication, to

Howard Alan Rubel

Jason. Thanks,

has As only a reminder, ask participants question, to that so chance participate. one a to ask we everyone

remind get in the additional please to Gary, If questions, the back you have please queue. queue? could how participants enter you

Operator

question comes first Wells go from Fargo. Pearlstein The Sam with Please ahead.

Samuel J. Pearlstein

Good morning.

Phebe N. Novakovic

Hi, Sam.

Samuel J. Pearlstein

Only there the GXXX talk just was NORDAM inflow. about Hi. a little I more bit that if because talked I settlement, this wondering could a was whole you a and about cash situation. United Technologies believe,

terms So, in is can occur fourth that quarter? the come is help you any P&L to of in of it that us in it impact the did terms quarter or might have this something had in still and

Phebe N. Novakovic

there agreement, of this or say. a the to That were are of So, revenue settlement we result all to details that's settlement. non-disclosure adjustments material a as earnings said, so the subject no can

Samuel J. Pearlstein

Okay. Thank you.

Operator

with The ahead. Barclays. next from question comes Strauss David Please go

David Strauss

Good morning.

Phebe N. Novakovic

Hi, David.

David Strauss

couple a ask I part Gulfstream. to question wanted about Phebe, on

is from talked to for about I and fair XXXX just income operating about this think cadence the know I here didn't since relative said XXXX in but billion before, game want So, the talk $X.X to you you Gulfstream. XXXX, you've

you tell could coming if availability increase also in a through going off of I orders increase about maybe you that nearer-term the stands about today. on how And in GXXX; that there, heard that a and talked bit us then, you NBAA, heard up and now. a XXXX, think about you. rate little we XXXX slight Thank we comments pretty but about GXXX feel well where slight

Phebe N. Novakovic

that Can just your me on question. first the me? clarity get part you restate let for So, of

David Strauss

Yeah. Yeah.

a of EBIT in and that believe I slight feel in in still about XXXX. about that Thanks. then that. and you Gulfstream at in how holds, off a $X.X increase slight previously, increase If XXXX XXXX you've talked So, billion

Phebe N. Novakovic

get So, I don't to but want this it into way. XXXX, think about

we the X to that the higher are very the have since this really We'll program. then, low the be in to the of And XX year margins move those carried We delivering GXXX that as remainder going have of test burden disproportionate into of GXXXs delivering production, relatively XXXX. a carry GXXX margins. lot

guidance set we moment our you all in rates. production go the with So, all-in-all, that could gave comfortable year at all of into back that's January this we're the I about we and implied until

with that's So to that. respect

we that On GXXX, accordingly. rate adjust the

very decision ISR demand platform, the haven't in particularly that We is space. there made yet, but that nice for

So level. whatsoever. availabilities of as And to long there. still customers as fairly near-term out at who as then low there ISR are continue GXXX powerful be a system, to government those of and see continue any this availabilities I'm produce not aware the we'll

Operator

with ahead. Carter The Copeland next from question Melius. Please comes go

Carter Copeland

Hey, good all. morning,

Phebe N. Novakovic

Hi, Carter.

Carter Copeland

settlement. back that. I a million they quickly pretty go the UTC payment yesterday to explicit to $XXX want mean that to NORDAM had just related I was

the So does go? and the methodologically guidance appreciate I QX, can million gain NDA, have in speaking, this but the doesn't gain if terms imply you a just a QX of in where didn't $XXX like

Phebe N. Novakovic

all, the of one First no discern can number.

is it all, material. simply of Second not

So – expansive by while are will violate. bound we, on nondisclosure, this and however, not a which more UT a little agreement, be can I I

So there you go.

Carter Copeland

Okay. Thank you.

Operator

next with ahead. go Stallard comes Robert The Vertical question Please Research. from

Robert Stallard

so much. morning. Thanks Good

Phebe N. Novakovic

morning. Good

Robert Stallard

order the on Saudi whether defense wondering of Arabia recent. backlog was to you side the prospects. the is business, exposure on you comment Arabia having and this potential any of have on some with I obviously impact Phebe, is been Saudi what if could your issues near-term

Phebe N. Novakovic

with So know will in it we is the don't I of backlog government contract I regard. don't the is. what that you largest the tell Canada. at We look have

see the the contract status build contract in on that changed, to and that vehicle schedule, that has of are moment. changed no We we has continuing indication that

as steady goes. she So,

Operator

next go from Baird. with comes question The Peter Please ahead. Arment

Peter J. Arment

I mean, for here there question really be about a impressive contract Or The just, Systems the margin there. performance Systems. I guess, you think XX.X% year-to-date. natural ceiling cadence, you guess, XX.X% mean, Quick margin the – Mission Phebe. is when Systems? to and I Mission kind at look I what's of morning, mix? Yes. Good continues when Marine on

Phebe N. Novakovic

mix. Systems performance, and any I think, Mission by product future different quarter, given So, most that dependent products performance, profitability their orders margins is especially timing But simply year, within again, driven the can, different any it's their And and the in of of of various mix are in given portfolio. indicative by mix. And the driven products that of vary. on thousands and wholly their

Operator

Please from Research. comes Hunter go with Wolfe question next The Keay ahead.

Hunter K. Keay

Good Thanks. made rate test back do margin fair around despite between you GXXX, before the to double-digit should GXXX, the favor hit probably bit me it comment particularly you can quicker? GXXX the little around morning. differential the that a Phebe, a parse that and just the flights? and deliveries assume a margins the on GXXX GXXX Is ramping

Phebe N. Novakovic

of that not I'm Oh, don't specificity the moment. margins by And I parse becomes I airplane there think amount test the the because gross program. nervous know going do of get a I program. carry about GXXX highly is commonality fair was that and they will GXXX And test better the have you'll in they that. not competitive. between start the giving frankly, to to margins fact is, But the recall, larger of share

it at GXXX once will just up and nicely we an come a higher it's first go GXXX. We'll But on performance Think So analogous well the start increase we that where through get they quickly. rate. once the we'll perform to the way. about on down – continue will margins lot,

Hunter K. Keay

Thank you.

Operator

go next The ahead. Walton Myles UBS. Please question with from comes

Myles Alexander Walton

morning. Good Thanks.

Phebe N. Novakovic

Hi, Myles.

Myles Alexander Walton

one question, and question. have Hey. clarification one I

to last just sure and So talking clarification, similar XQ make on million XQ to and color segment you're I not about number? margin $XX quarter the greater reported you the wanted sales the than fourth mentioned quarter. of

Phebe N. Novakovic

Yes.

Myles Alexander Walton

just billion in for organic terms year? and in sales lower right, we make then we greater I now sure And implied $XX number, right the that are to the of top-line, full XQ. the want billion? $XX are growth, the somewhere to the triangulating X.X% so Okay. than the looking Is

Phebe N. Novakovic

to you, in takes discern puts and all the of Yes. particular Yes, and be will gave able the we Q. you

that okay? for So We help have all laid you, that out should you.

Myles Alexander Walton

right? there deliveries, it's GXXX segment, is that particular I on a imagine Is Aerospace the

Phebe N. Novakovic

just we anticipated. when to have anticipated, we other than GXXX in point you we've had frankly And as a groups, had a considerably fewer timing regards. is accurately it lower Aerospace originally and executed. quite thing there's a sales the bottom-line we two than then like defense One, really from it's deliveries had pre-owned looks on are question contracts Well, the good perspective. going out, of which And get

So nothing across defense of note of units. any the

Myles Alexander Walton

All right. Thanks.

Operator

go The ahead. next Shapiro comes George question from with Research. Please Shapiro

George D. Shapiro

Good morning.

Phebe N. Novakovic

Good morning, George.

George D. Shapiro

on On GXXXs, bill book the GXXX Phebe, being have than imply deliver of to didn't that are but does of and delayed so one? you book each were bill of was X.X, the GXXX sold book also, about now you those fact what's the didn't that GXXX And to number less out X.X the orders and GXXX any or that orders months planes? your you comment, Thanks. to to bill

Phebe N. Novakovic

all but that give for. I've becomes that our have And much levels So, too churn any with coming go coming But year because I don't may don't they across got first I to We or well out. the airplanes I'm asked by data existing about in because out. new talked these track so so it that plane come to are you airplanes back comfortable available, so not going within that have before, the many that meaningless conclusion ultimately concern the next you to there's we've new a portfolio. I way, detailed,

George D. Shapiro

GXXX But was bill to for book the one the the and/or less GXXX? than

Phebe N. Novakovic

that. track No, don't we

George D. Shapiro

one. stick my will I with Okay. Thanks.

Phebe N. Novakovic

it Painful as for is you.

George D. Shapiro

right. That's

Operator

The - next go morning. Robert ahead. Securities Credit Credit Robert from comes Spingarn Suisse LLC question (USA) Suisse. with Please Spingarn M. Good

Phebe N. Novakovic

Marine, about of Spingarn Robert LLC Securities Credit - wanted on (USA) good couple morning, morning. I – Marine. to ask ask Suisse I M. hey, Phebe. wanted things Good you

that. we're of and wanted of I ramp on next and should about suppose the how we too. few perspective? about margins margins. of it, that a revenues XX, about margin think on perhaps the to the about has the first you've both DDG-XX, years, four ships the Huntington do which on think over they're award, at we think years could impact while The couple then talk there I recent And how out pricing, Columbia we separately the from got

Phebe N. Novakovic

pleased outcome we had its you nice with learning. competition profitability. ship it Bath terrific ship gives to of performance, on four about the ships, opportunity we've Bath's were very that the And over with because if So, a DDG-XXXX, improve think

first have restart, the the the We ships delivered under on the is of and second guess think, I of the the third DDG-XX restart construction.

are nice ship seeing some We over ship there. learning

of mix So entirely wholesome my is margins, Right for driven a think timing almost Bath and they development performance this I and group bit where a us the get in now, from gives point to need Boat. view, Marine really With the respect is to opportunity by be. at Marine. large, Electric to in margin

You've lower III, mature close the I Block Columbia-class a by delivered Block got IV – Virginia-class volume that is think engineering higher margins lower final very we to ship. and offset contract our

on that these So, and these learning continuous transitions us remember if we been of ships you now did through recall, three with block a curve. you've

as we've ensure the all going three NASSCO. we but LLC Ultimately, learning of improve Securities construction move Columbia, on think work to we margins have bit? on that none and you Robert Should going on if margins are, obviously, of Bath decrease improvements be Suisse so to we those Block as less though, benefit the down coming little we M. see There drift and past, operating in it's at mix we've clear – IV. however, some all the see a IV, going a - that Block we've curve think and Credit as excellence about about, done more or And Columbia contract engineering ships, margins can overall to us we So, toward for so. three incumbent though, opportunities get of got to of we're that or our blocks. don't phase, that year again business to upon next Spingarn our will in (USA) with that got place think a and And mature until down could Columbia. you're just your moved as we

Phebe N. Novakovic

on way much time, get lower to is on moving there. carries margins the the And advent we've think that think, of said decrease I margins got is, inadvisably don't parts I and these And margins. variability, the last I offers want because in think, too engineering we out I quarter I into call. cost lot something, there work, look, the but opportunities. this as of in decrease a that the construction, Columbia, trend there's some the the plus move which about

Okay. you. I moment at the Securities think get tell, potential there (USA) Credit to - but So, that Spingarn Suisse M. better. is too soon to Robert it's LLC Thank

Operator

The next question comes Raviv from Please Jon with Citi. go ahead.

Jon Raviv

Hey. morning. Good

Phebe N. Novakovic

Hi.

Jon Raviv

I about more little you're portfolio-shaping to if progressing some you do then, well a space that opportunities there was side, far. in thus of there do to seems the be M&A, could and as wondering Is the terms process? deleveraging is Thank And bit other talk down integration capacity it? is about down more to had or you've of the trimming CS also that on you. progressing GDIT

Phebe N. Novakovic

constantly better our will a with MAXIMUS, which opportunities. to public-facing IT, a with are of for call really On centers, of core. home we the to allows enterprise core, in large expect, have better portfolio our on and the want, IT continue looking and you can our case we, business solutions. us our focus to is look And as going-forward business shape basis, IT to our for as professional infrastructure services portfolio-shaping align lines they So opportunities

priority darn made clear, deployment down pay we're our is to draw for expeditiously. going think capital I it net However, down debt, pretty we've net fairly debt

think that. about you So, should

Jon Raviv

Thank you.

Operator

Rumohr & with Cowen Cai comes Please from go question Company. The next von ahead.

Cai von Rumohr

much. Yes. you Thank very

in plant you first in And, because of year? days or track basically offer the that extent down for production? have XX were were hurt you the orders? a delivery Is any fact early without pickup they we for, And can delivery positions. we I NORDAM, positions. the now? And of weaker assume it the something the over said what is Phebe, the quarter any and uncertainty orders lot of took fully rest on So, September, seen about, than to about be the of Should therefore, kind firm from what, the delay that you look

Phebe N. Novakovic

you out look, that comfortable our spot can excellence. operating of when quite destiny, in own sweet I more when particularly and own we now point my rightly it's Well, I control a am line, always

to We can supply at GXXX deliveries get we around sending around get rate line, times. greater Gulfstream full and have nacelles seen – and because we nacelle can are the process takes to and customers as not And production, on that don't started imagine, interested year. going support a line, has are assured, the our then to you and the So, to up them will the delivery while while that of date well assurity you're it comforted – in stabilized a get who we're this specificity can Gulfstream increasingly airplane and you have on there your clarity certain. yes, up, chain we've at nacelles, it and be now takes rest with we GXXX real a give

question? wholesome. Can last So you the part I consider that repeat all very of your

Cai von Rumohr

a it's so quarter one Excuse we've think, delay. one-month that me, like heard delay. a I

of we going are or because that going you're QX from being depressed should So be to expect very, see of issues? recovery very we kind still to QX, up the NORDAM

Phebe N. Novakovic

now. understand I Okay.

on increase the of way nacelle. the reducing the are as shortening we time, time impact in about that span So to the production our is this think terms we

it's really GXXX think but support well-positioned will in soon of QX. the too be manufacturing robust pretty to tell, So I we to

Cai von Rumohr

Thank you.

Operator

Doug from with next Bernstein. ahead. The Please comes question go Harned

Douglas Stuart Harned

you. morning. Thank Good

Phebe N. Novakovic

Doug. Hi,

Douglas Stuart Harned

how And the Navy a been about ability can to Hi. history for plans On Marine, but shown has growth. of Marine? lot uncertainty. Ingalls certainly fleet, and you theirs fund growth do a your investment these the describe has of discussion larger the also you raised plans there's you do around need have invest more. the lot capital wait? Can think you when about even to mean, for a Huntington when decide I

Phebe N. Novakovic

investment possible, capital key terms deployment Well, in expenditure the the in yeah, as return. to, capital is time the marry any with of quickly as

our couple in Boat. got that Navy plan, at has We've two that understands Navy the yards this support in another And master worked exclusively, Electric billion the contract ensure facilities in so but to that million shipbuilding. closely provisions And hundred through at there's exclusively actually and to other well, happens. not increase order very $X.X

deployed preponderance So support the Boat am is particularly quite appropriate, Electric and comfortable the I is – funding deployed Navy's will timed construction. well to at and where that is be pretty of our the wholesome. all This

for to doing boat. have right large we're We construction very what of and the important now. And missile this prepare Columbia-class that's got very,

Douglas Stuart Harned

classes, main the is focus I'm the then? a would that the we've at I said, getting guess secure is that's So Columbia be very main – trajectory. what

other may so be programs less Some and...

Phebe N. Novakovic

yet capitalizing the am capitalize have and become that Well, look, that ships funded compete supported by going for the not business programs I That's We for U.S. wholesome programs in. that to Congress. not do record know decision. fully I'm I to and a of

Douglas Stuart Harned

Okay. Thank you.

Operator

The next ahead. with go JPMorgan. question comes from Please Seth Seifman

Seth M. Seifman

Thanks and good very morning. much,

programs, a I variety a wider I noticed nice of Mission there that Systems, smaller are segment. since backlog guess, in and So the pickup in in

we investment the are digits, grow ability how pieces mid the are of underperform of should that as positioned going So, to there any probably the that? Mission level? think much relative business, outperform them years And that of forward more to are maybe think to Systems there of outlay or going or any relative to account be the about high-single we few next is which over growth to just

Phebe N. Novakovic

So and well in cyber, ground on forces going-forward terms communications very basis. EW of networks, we a and positioned are

a award Army. the had an think Product we [Life business, Management] contract we (sic) from Life contract If Line CHS-X. a for line you of Cycle large new about had then Cycle Product Management And increase, for backlog very also IDIQ the of

for all important, those and – very provides those both growth. continued a platform were were So

ground As Army its networking innovates and re-capitalizes we relationship of that spot are the Army. the around forces, the and comms, sweet with in

you with lot customers can their irrespective for very products a look, capabilities, these our strong are low-cost, – it, driven So a impressive we're of high-cycle intimacy frankly, that undergirded and to think their vendors businesses the understand them so – really producer needs. being bringing of with by rates about needs by if that very best win high-quality suit

Howard Alan Rubel

I'd afford last the for time one question, Gary, to And, like please?

Operator

from comes go Global. ahead. Skibitski with Pete Please Alembic question that And

Peter John Skibitski

some and program standpoint. production Marine. was tube follow-up whole Phebe, the Thanks. cost There about issues morning. schedule over could feared a a missile negatively impact Yeah. it in just at the the people think Hey, summer I least suppliers news and Good some D.C. on from one of from

So I just was that program be and problem the if wondering about if or a it's may you could it'll maybe talk easily you think if resolved. impact

Phebe N. Novakovic

U.S. identified with Columbia's has that is and and raise readiness had interesting But to supplier of growth. closely of on Navy production an the and the the not about what issues support Navy are very have for Boat And that Electric worked point, significant chain an ensuring you schedule. the million with the readiness. it $XXX of an the resolved, recognized impact on appropriation have and that tangentially and we precisely So purpose Congress the supply is

and supply – don't rate chain doing you and and full go Congress potential Navy production very are process it. undertaken, to of exercise any is important we that. want you we're So very a to into U.S. the that you with reduction challenges, identify risk the pleased This have effort before in that the

this on come to all more that, – So right? is

Peter John Skibitski

Good color.

Operator

to question-and-answer would concludes back the conference I closing over Rubel This to Howard like session. any turn remarks. for our

Howard Alan Rubel

call Thank today. you joining our for us on

If Thank at any forward reached questions, Bye. be additional speaking you. soon. to you can I have XXX-XXX-XXXX. look with you I

Operator

for you has now conference The Thank today's presentation. attending concluded.

disconnect. now may You

General Dynamics (GD) 24 Oct 182018 Q3 Earnings call transcript