GD - Earnings call transcript Q2 2019 | General Dynamics Corporation

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Operator

Good morning, and welcome to the General Dynamics’ Second Quarter 2019 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Howard Rubel, Vice President of Investor Relations. sir. ahead, go Please

Howard Rubel

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

information factors in is Additional the XX-Q and XX-K regarding these filings. contained company’s

to Chief Executive and With my to pleasure Chairman that, turn Phebe our Novakovic. it’s the call over Officer,

Phebe Novakovic

morning, good everyone. and Howard, you, Thank

up This second quarter As million. enjoyed some GDIT share good effect the you the of per $X.XX the better $X.XX per revenue quarter can a or and $X.XX billion growth Hawker than million press from We in share, that organic but revenue. quarter Pacific. quarter, share and a is at the at than reported, divestitures $XXX higher revenue ago we release, after provided into X%. with was Remember than acquisition of million net discern our EPS at per of consensus. more $X.XX GDIT diluted and year was to year-ago $XXX better taking of as very of earnings reported account Compared $XXX divestitures

up than the was stronger X.X% in Net tax $XXX side. quarter more the was and million were of $XX earnings. earnings and Sequentially, on provided on $X.XX points XX million rate up was higher part X.X% expense. With operating million $XX beat revenue forecasted offset $XXX up or operating $X.XX of by sell of X.X% or was a operating about operating consensus, by margins. by short, to higher in a the million operating In the $XXX improvement respect margin rate, revenue or basis modest effective were earnings million earnings lower higher and interest

other of first XXXX against to Let growth XXXX. revenue XXXX second organic half not of me or results the in half acquisition the reflected of driven words, year. $X.X billion CSRA XX.X% first plus briefly the at beginning quarter's to half the CSRA In up was very compared last first turn was of first the strong the of year. last by quarter the Revenue

operating the related $X up other to good EPS only sequential the acquisition. earnings amortization we very quarter, were better. was In burdened improvement, by good a hand, good CSRA million, the and On had a first half. second short, $X.XX

external are We ahead internal expectations. of somewhat operating and both our plan

comments the for of Jason So, remainder quarter let ask me on outlook give give segment each I'll you for some into and insight then perspective for some before some the segment the reporting business the for I half. you for year. and the the our

$XXX important First respectively. $XXX had most lower, the outlook higher anticipated. were Aerospace. as XXX production and plan a of points numbers Both earnings Revenue very million in respects. good million million the operating of margin down and was billion basis Aerospace year. consistent Operating $XX and were $X.XX quarter our for with

a -- quarter-over-quarter and here concerning comparisons Let the little earning me operating and you give earnings color margins. with

with segment second driven GXXXs last in by part margins Aerospace the only delta quarter. in a of banner No that recall had in may is quarter XXXX XX.X% This second You year quarter were mix. XX.X% the results. this the against operating quarter

These significant the resulted large the had expense. the assistant two second were items difference payments unusually an It of R&D in higher XXXX the quarters. between year-over-year importantly More from quarter supplier,

Gulfstream brings was to for first alone XX million dollar at based on improvement $XXX the a The Looking numbers the X the but for higher. basis were margin. X.X revenue good book-to-bill enjoyed million The activity earnings down This up one-to-one. was in things We in $X half. operating book-to-bill sequentially, point order somewhat were operating to quarter.

order -- two for performance operating good two performance very years now. for had have We

As you have demonstrated the and certified XX to of XX, to quarter. customers end on through ourselves July we one GXXX the and know delivered them as of was XXXX the second

GXXX XXXX. now deliveries for training This operating way revenue and on commencing the XX, early its in reduce early This The to and GXXX buildup related and in pilot type the June paves help production capital earned the much certification producing August. do earnings working second will GXXXs. half both and both the to

EASA QX for and GXXX QX. validation for GXXX is for planned the Finally, the in

last X.X% Systems Similarly were over quarter side have over experienced strong quarter of quarter-over-quarter should improvement XXXX a the short, of indicate. million revenue of remind I second XXXX the clearly a of in second In quarter million Defense X% second over $X X.X% an second operating good for increase we years. everyone or the that now and last up relevant of up represented turn quarter earnings. Let's the earnings three Revenue quarter the in $X.XX XXXX. X.X%. Combat operating growth comparisons $XXX as had to or million year was the house. billion $XXX

On was million. a up basis story sequential is Revenue $XX earnings and million similar. were $XX operating the up

up the of against million For was XX.X% revenue $XXX or XXXX. half, first half the first

$XX operating of a than one-time settlement However, down more quarter million lease for year-over-year accounting the first the with decline. were litigation earnings in

in will March to However, half. as expect my second we up outlook the indicate, for catch

puts platforms good Stryker, half growth. upcoming in our continued us of tank manifesting XX% our half XX% direction Abrams programs and volumes first Army in for portfolio. growth is the upgrade in the XXXX. years up based munitions with demand the to volume perform revenue government first ordnance as of to aggregate itself the stead compared and In with program the accounted in in U.S. the and U.S. continue explicit Our well in nice which for for

XXXX. for this continue U.K. and enter were Our Ajax this reliability orders and test the of is full testing this we Major has captured of international quarter year lumpy to expect testing Backlog fiscal progress program exception. been Work year. the in then QX in fire second to to on is transitioning engineering Live production. in nicely. from is segment programs to and quarter successful fourth the no

for As a of consequence, continuous have planning good production driving and improvements. for very we a line sight

direction are at the has a growth story. very We nice right It in Combat.

respect against or operating only the to and X.X% million points $X.XX up a million, $XX basis, year ago. XX% were sequential QX respectively. up $XXX the and million were basis a margin. year X.X%, billion $X of higher than in revenue Group, was ago Marine earnings up On With XX a revenue earnings was Operating traction on million $XXX quarter

point half rate. half, down XX first $XXX up XXXX. in Operating the million the X.X% was of $X contraction were revenue margin For against billion on a first basis of earnings $X.XX or million

submarine engineering make submarine the of good and construction programs our Columbia on Virginia-class Work ballistic-missile progress. on continues to

for Virginia-class We Block begun Block and purchase long-lead V. to have are building materials IV boats

first the XXXX the respect DDG-XX expect contract the this performance challenges Block to on backlog. on us to We result start ship are in awarded nice to and be It ships. XX later addition the DDG-XX the follow-on Bath, year. on ships a DDG-XXXX With V and DDG-XXXX will considerable with behind

across We have to backlog opportunity XX large steadily DDG-XXs in with this good improve backlog. very performance

were Systems related come. be Mission Systems. and class year-to-date quarter oilers NASSCO to program. XX.X% the earnings million our the has was compelling for Finally, an ago of Earnings to up quarter us revenue $XXX Marine quarter, Systems Mission was million a been of up volumes will over increase last million. for million higher the due billion against for story the Lewis a growth to time $X.XX continue up $XXX up to so in year of and and $X sequential quarter. the were TAO year. revenue And revenue On with had long million a second or $XXX basis, $XX

year-to-date basis or million $XXX a Mission up was On Systems revenue X.X%.

X:X Systems last been us first a be million and XXXX. high-performance business enjoyed against XXXX, in and a XXXX, continue so. half book-to-bill Mission It First up has were year. earnings will at $XX of has to the half for least

divestitures $XXX half the through in in This of the mentioned down as of million that was of billion the second book-to-bill Technology year quarter. slightly year of segment reported XXXX, below we this to first course the revenue the half. $X.XX made remarks. expect I the one in my in earlier the is last times, Information second largely ago against remedy result quarter, The

were $X margin down rate. million, a as of only improved result operating earnings However,

On a essentially solid. also similar was also were $XXX profits XQ stable Operating basis, quarter. each quite million QX. Revenue results quite million at sequential for in at were $XXX $X.X with billion versus

are We good synergies. experiencing program mix and

the EBITDA industry Our results. quarter was matching leading XX.X% QX's in

our very and well integration into of ahead schedule. is GDIT Our internal has CSRA gone of

Our both -- management very nicely. businesses both from gelled team

synergy meeting working cost and goals. targets year's We this to exceed are are

billion of had with generate have bookings. good X.X In X. To to we of that end, orders to book-to-bill a $X.XX the quarter we continued

one-time. also is X.X book-to-bill book-to-bill the a half XX-months tops X. For basis also trailing our first to On

up divested Our related X% after total the businesses. is backlog of backlog excluding $X.XX billion to

operating comparisons the the over the for with across So in to business. year-to-date rest our I'm and to delivered turn summary, solid we results year. and to The going outlook you quarter-over-quarter, Jason all come call are now fulsome. back then the sequentially of have

Jason Aiken

and Phebe, you, Thank good morning.

approximately than acquisition issued expense due is the was for CSRA. of in for That the interest also quarter million we of million At $XXX delayed to period anticipated to to year second XXXX more the interest of expense for half payments the same XXXX in Our brings to paper to Canada. one increase the million be XXXX. year. international we the our debt the We're to net quarter last point $XXX the expense in related interest in commercial this finance first million. The versus $XXX the of programs $XXX million vehicle versus large expect $XXX due carrying

in these operations from of million payment cash delays. also $XXX impacted was quarter by the Our

timing a is this previously discussed we've As item.

outstanding by funding that to the respect receive customer we told will With were recently the we next considerable receivable month. balance,

the end to the continue of arrears the the balance to by expect We year. resolve of

expect year flow Assuming this excess in year, cash in free XXX% income. payments well conversion net come these be of of we still will full outstanding

in were the capital the of On million or X% deployment expenditures revenues. quarter approximately capital front, $XXX

I approximately outstanding horizon. receipt still the year, the significant that's of X% expect the just in revenues reflecting to the on consistent described, our Assuming for investment support with growth I of we reach shipyards payments the expenditures the to capital noted our timing

for half tax with the expectations in consistent quarter Our was bringing first rate full effective rate the our year. the XX.X% for the to XX%,

million on That the In X.X million anticipate down to we XXXX on the for is with in brings pay $XXX our XXX,XXX this for first to balance employee to in of and repurchase shares short-term to our and of our $XXX million free We debt cash enough the spent of we options. the We balance plan billion. of dividends million shares of $XXX year there a no deploying $XXX quarter, acquire the position paid ensure flow the approximately $XX.X the total balance half we shares. dilution borrowings. the from quarter exercised Otherwise stock ended sheet net a cash million.

our outstanding first We quarter second expect notes this commercial paper of matures to tranche floating year. the balance our the repay and of fixed next and end by in rate year of

contracts total X% total ago. of orders. up We with finished this our billion, potential and X% I'll with up year IDIQ a including year the backlog another a backlog wrap We activity quarter. over contract the billion. with up was had points the $XX.X color quarter of order and on value ago a to That's time solid quarter over a in options the and few respect $XXX

calculations. book-to-bill particularly a include in that the of you IDIQ know we posted don't strong include quarter billion you GDIT as mentioned, X.XX backlog over in a $X.X times not remind or that, quarter and with in awards which Phebe does book-to-bill I'll our As

the months year has the backlog item backlog impact exchange is first And due this I'll six Systems the ongoing experienced of rate a million on Combat in reduction issue. to the last which fluctuations $XXX note the foreign of in of

I'll back to Phebe. turn that With it over

Phebe Novakovic

Thanks Jason.

year. turning So, outlook the to our for

for our then for into Let EPS me our told provide and wrap it you forecasts guidance. year January compared segment we each the in to what

billion; XXXX; operating Aerospace, of billion, from guidance margin but our operating of an preowned from now will around of margin $X.X $X.X increased expect with aircraft $X.XXX and billion largely XX.X%. operating XX.X%. revenue with expect to earnings around on earnings the We was sales. by be and up preowned Earnings modest mix an up billion operating margin $X.X improved revenue For of $X.XX shift. The billion sales be rate performance, comes diluted will increased revenue

now $XXX to more revenue expect earnings million. billion. our revenue million $XX to million Combat million in revenues For $X.X billion and $XXX million of The XXXX and $XX to $XXX We to drives million billion, approximately earnings. range with more billion Systems, of previous $X.X guidance expect the operating to up of operating was operating earnings from $X of $XXX $X.X

For of our lower. to the and my change reason margins We no although very Marine X.X%, operating guided of to nominally guidance, billion, Group, around we've $XXX of revenue previously see bias be million. $X earnings would that

For XX% this with We billion for operating of Mission around range. Systems, year revenue we've an high provided of anticipate now outlook in earnings billion of $XXX previously with around $XXX to $X operating billion, an $X.X to the around implied million. mid margins XX.X%. This of million, margins earnings operating $X.X

XX revenue of we basis For with billion revenue $XXX now to Technology, guided and with operating of We points $X.X an operating $X.X million, an Information X.X%. X.X%, margin margin earnings expect of operating lower. of of billion

General operating will to initial our $XX.X Dynamics of guidance, range $XX.XX revenue higher about from both range of EPS $X.X have to around all This $XX.XX. outlook for increase of of permits us earnings. to earnings billion. to this $XX.XX a $XX.XX Compared revenues and a and operating to we So to billion sums our of

to quarter. better it the be appears that third will than $X.XX As quarterly the us for the second progression, quarter

now can questions. some take we Howard,

Howard Rubel

Thanks, Phebe.

and a one we participants As question to ask reminder, one ask follow-up.

So, that please could participants the how queue? remind enter chance to participate. everyone a Rocco, to has you

Operator

first Research. Today’s Vertical comes [Operator Robert question Instructions] ahead. Stallard Please from of go

Robert Stallard

morning. Thanks so much. Good

Phebe Novakovic

morning. Good

Robert Stallard

I economy May of with wondering Phebe tariffs customers the if and noted that at bit June Aerospace anything their strike a of took you like that the a was saw one and over Gulfstream? division, peers your concerns in and

Phebe Novakovic

No.

Robert Stallard

That was straightforward. pretty

Phebe Novakovic

continued have nice to we activity. have Look order

Our pipeline remains robust.

not size the very to others. but by from look think because in you As many is by market, explained only our need at marketplace before, really have I I you of experience business cabin OEM to the different aviation

the to continue quarter. throughout order of the we each in So good activity have months

Robert Stallard

helpful. very you. Thank That’s great. That’s

Operator

comes go Please ahead. our from And Bank of of next Epstein question Ronald Lynch. Merrill America

Ronald Epstein

good morning. Yeah,

Phebe Novakovic

Hi, Ron.

Ronald Epstein

to you have the on at you Rob's across demand to XXX, walk Just XXX, of mean, the through follow XXX? kind products seeing can question. environment you're Gulfstream I different XXX,

Phebe Novakovic

Sure.

the So continues demand. have to very XXX solid

aircraft XXX by of increases to good airplanes is as little delivering had by It the demand. the to the unmatched service. key continues saw demand. a else way. airplanes, tends But continued I we We some activity. have it think be and and will XXX but demand had that for performance XXX when XXX quarter end this continues very that good characteristics continues every in had other I episodic suspect that catalyst very we to The that these have that to our we’ve nice anyone solid any start has enjoy bit increase. XXX the platforms, confidence incremental on of that also has good nicely big and more end have sales the market we

Ronald Epstein

there to of some seen you blowback Chinese just question, Taiwan? sale And if press a or Abrams if potential Because press of in the the not sure Chinese there? follow-on about then it's the I'm regarding some were kind it. noise have reality there's market as any in stuff

Phebe Novakovic

that demand muted on in that the we've dampening a me As say active case But I been far actually fairly know, how to The as foreign we Taiwan. an have FMS this or works. while them increasingly but comfortable everyone U.S. where nations had no some that have sells I case our pipeline occurred. Army potentially effect we've quite tariffs and remind I'd This are. buys is in and sales tanks tank other for is any now, and that this suspect FMS had market let case.

Ronald Epstein

you very Thank much. Great.

Operator

ahead. Barclays. Please go comes And question from our Strauss David of next

David Strauss

Good Thanks. morning.

Phebe Novakovic

David. Hi,

David Strauss

looks below at first on Hey. been point? margin margin GXXX. block XX better the in deliveries on Can the Maybe deliveries GXXX you the talk you’re in this the the that's on were it and like to of deliveries Phebe, quarter so just looks that through like that expected if you based said that. the about It GXXX have quarter so I delivered light far. because pretty be

Phebe Novakovic

the the So, to bit curves. down this are certification. QX after in is learning timing we of And had issue come XXXX continuing after a a simply right and -- catch-up we frankly our

on and and our line. down Our margin airplane down each better -- that is every performance comes

moment timing backlog is simply that a of into this bit that a So, really in had in and a issue state. the steady we're through we're entering we QX and

David Strauss

highlighted on guidance, divestitures ex Thanks. flat updated And Okay. expecting business? start year. terms rate still organically then you've for that the of follow-up, strong it do to that your in based organic growth like on booking looks relatively of of actual see the in the When second come we half this my GDIT, through you're

Phebe Novakovic

this transition XXXX, all growth growth and as By is there. for year in are of we for said and positioning before a year indicators the of a us

year are of those backlog. some we next So, pretty is realize that confident that increased going to

Operator

today Our comes Seifman from go ahead. Please of next question JPMorgan. Seth

Seth Seifman

thanks and good very morning. Hello, much

Phebe Novakovic

Morning.

Seth Seifman

to has show the EPS mean the back about terms out, I had up like it quarter January what some of in not I had that a guidance ask in cadence a it heavy of half fourth the just in that kind bit that you first that little much, thought of in the of is seems but just January, want matters been and cadence half? in did second very EPS the

Phebe Novakovic

The so leading revenue Somewhat, got earnings. performance -- our think similar update real about undergirding but story margin we've the is really in more it. higher the to you guidance is guidance with

the and higher certain risk say earnings. amount and the we to and looks of range story have our So, reviews all and but precision, very overarching narrow all a I'd more revenue careful the tend that is of guidance when we give you considered opportunities ops at mid-year, and our we we result have update considers guided --

Seth Seifman

in Okay, $XX were platforms raise meaningful to of of the offset And guide million? just there great. amount in FX that and, kind of, just on in there kind was to of the had able drove the specific be by increase a Combat, if to you that terms the guide P&L that

Phebe Novakovic

and Not the our now P&L vehicles on down domestic that we and as FX. the manufacturing then velocity with the is to to the programs increasing This on of come have program learning we curves respect domestic capacity. continuing it's simply our increase are

U.S. domestic the right a the really about Army. undergirding. story that's So in It's now all

Seth Seifman

Thank you very much.

Operator

And from Please of Poponak our ahead. Noah question next Goldman Sachs. go comes today

Noah Poponak

morning, good everyone. Hey,

Phebe Novakovic

Noah. Hi,

Noah Poponak

this free I year labs payments flow, if the you the from in coming on to this just on it's cash say Canadian bigger kind half the the payments year, wondering would was working albeit, of Jason pieces next capital -- maybe worthwhile I below so of just heard to back bridge think XXX% I CapEx still year assuming you this assuming to conversion other income XXX% because year to imply take without net happen. free conversion is I cash those still know there's I'm it

you So this can clipping clean simple we kind actually XXXX it as Or pretty to conversion beyond is XXX% of year? -- as just it us starts help bridge XXXX? can

Jason Aiken

on pretty XX%, forward that. steady isolate XX%, that if XX the investments basis, are year in and this things and and frankly based catching still on Yeah, like I indicated international you looking up -- CapEx that this position on to had think program previously years on range the the of the we a are conversion year, arrears fluctuating in XXX% the range

item bit be excess outlook this of year, the we the year. would year we XXX%. and on little And resolution So if put one of think anomaly up it I caught is get a is expect for timing what precision the really in anomaly, this this the to fully nicely more causes that to item last caused

fluctuations thinking that But the conversion reconciles investments were beyond other XXX% bit to we're I be may consistently about. and think in we XX% of little year-on-year a like math So of with your expect CapEx point that. -- subject to range to year the to this be some you really

Noah Poponak

means worse you Gulfstream, back can Got has business going order pricing for the and to it. same or the that what better, in then Phebe And margin improvement to like activity, just forward? your been going in speak recent what

Phebe Novakovic

we're we've platforms. you pricing recently Well, can to about as in imagine, enjoy on our we imagine pricing, can you continue that but seen each sensitive of the and very discussing our that business well

Operator

And today Baird. next of our question Arment Peter Please from ahead. comes go

Peter Arment

Yeah thanks. Good morning, Phebe and Jason.

Phebe Novakovic

Hi.

Jason Aiken

morning. Good

Peter Arment

– kind we're it’s sounds it it integration great, ahead book-to-bill seeing that is saw of tracking planning of there? your all as it some seeing and GDIT, what like on maybe Thanks. share up sounds the -- Just characterize Or quarter, you color this picking just the Phebe you you're the given X.X you're on do the with environment is spending? this gains?

Phebe Novakovic

for That you of who a track share. a never known have those while, us fool’s for be we So errand. can

go have of an can You and awful broke. lot share

XX% quite looking is really rates, very how about with strong win been we're effectively at we acquisition the backlog pipeline; XX least been the can XX% quite XX% our that what we've recompetes acquisition X:X been built which about building have -- we we and since book-to-bill on we've -- So for building think our to programs have and execute efficiently. since that

GDIT little talk Let's bit about is. a what

You establishing interesting career is by you very and people a attract know, work. this with opportunities people the very clear is culture business some and superior development way a

on side that performance think team acquisition. well undergirds I that and that done exhibited since has quite impressive the this in my mind really have We management quite this

then -- of submitted of the the $XX at second $XX proposals. And complexity or first quarter in in half. more second almost business, the remainder -- again, about in billion year we're and about and the submittals and for about just we this was proposals give XXX XXX the you And and in size billion of half in a the submitted looking just We first and XXX on scope that numerically to the entire XXXX. proposals and know, than terms you half

very, and win we about. the that with And and you just kind the rate tells that right team very people strong that a by what execution the you pleased in to And talked now. submittals. I've need win So undergird where are and I'm very culture in need resultant velocity undergirded the management that you of -- proposals

We are doing very well with GDIT.

Peter Arment

color. Appreciate all Thanks, the Phebe.

Operator

Cai von of ahead. next our Cowen Rumohr go question comes Company. and And Please from

Cai Von Rumohr

Yes. very much. Thank you

Phebe, at times for color you terms and in give the Gulfstream could So lead us XXX? GXXX of particularly some the

Phebe Novakovic

longer So times. let individual range tell times X we've no our to portfolio. across XX lead and transitioning year plane that's we're But following all me are as been the to you new of within aircraft of months wait comfortably our

with So I'm good that.

you we well think hit think the I ones. continued each that's new have about it hit way and our of and our as -- to legacy perform times quite lead in our as nicely comfortable airplanes

really we're well the think. So I just and to managing orders we And demand. the did

Cai Von Rumohr

given Great. Thank and you've you. the number Can year? us awaiting for potential GSMO you bids some next -- gen? at the tell of us bid Okay. GDIT mid-year And like of over then color how And submits. decision what's remainder the us of pursuits Terrific. the the much at give maybe some

Phebe Novakovic

enormity contracts any to know is terms the to velocity decisions, velocity idiosyncratic and enormity think actually give and track the of that think award the and with one reasons not of of but proposals, about individual a don't pursuits. do that sense particular I you the wanted I I to all we the So really input you in the timing of share of given business the don't this I and the the of proposals customer,

going of is But a both worry talk parts. to our that frankly of real particular one I give you that. so space, about are program. happen you a moving sense this And in submissions the not think I big mention about of certainly the competitive with the size many to any lot business a don't of pursuits and we’re velocity And

Cai Von Rumohr

very you Thank much. Terrific.

Operator

comes question next of from our Walton Myles go ahead. Please And UBS.

Phebe Novakovic

Myles?

Operator

your Myles, is open. line Hello,

Myles Walton

if burden that. maybe next there. through? the could expected give Sorry about on Good year you came the rough if you first or month I one at hand the for payment clarify a full Would morning. have size to conversion just wondering you get was Jason that you of

Phebe Novakovic

think I we listen I we say now that very going Well, are think right we're these said -- where program. -- all about are on to

are you let's you As we've these and making just tripartite conversations at progress leave imagine that. nice and well told can we're sensitive where, it

Myles Walton

a Maybe then. follow-up Okay.

Phebe Novakovic

Yes, go ahead.

Myles Walton

Group, guidance topline? your on or lower on Group Marine was The was changing to the that lower, bias clarify Marine weren’t the just that the wanted margin you you I Phebe, mentioned on the nominally that

Phebe Novakovic

I said -- very lower. think nominally I

plus So, business come has in listen and a a Coast a moving that our may starts, lower and carry number and we am particularly we Navy very material this new tends number I'm when we sensitive of we additional big of at West may the parts. new have have in depending see on I that starts needs, see year shipyard to that a margin. primarily

do in as so given say condition just about we -- much -- let's as any very I'm want have So, nominally two I you so-mild ever and quarter caveat. the typically at I absolute don't gave -- that's that that there's things why clarity we that

Myles Walton

clarifying Yes, sense like I on that makes the ahead, it know. Phebe. I because so revenue was looked was just Thanks running margin.

Operator

question Skibitski Global. next of today Alembic ahead. go our Please And from comes Pete

Pete Skibitski

class the for as look at you into budget guys. afford go do – other How the two-year view that your a Columbia week this for environment? the you going or think that's out for deal crowd about to we up kind of are priorities or Navy’s program kind for ability flattening, if Phebe ship potential to good Hey, of, shaped what's this XXXX. other to morning programs

Phebe Novakovic

There and got different from national like is that priority some a national is our have it. doubt ways in for very talk available budget avenues political and our good landscape we've Columbia clarity moment. think the moment. made of a Listen, I certainly it Well, looks it’s ensure no at as that about about be that healthy let's customer budgeting. the news a various Columbia U.S. a will funding ways priority to that a of Congress and do perspective I are talking to lot for

did account set separate you That's back XXs a option. when up. the Ohio tell in a potential was I'll the we

programs understand that with that is parties consensus in other parties political more out. you So deterrent. the major mechanisms that for funding I'm Washington light the There across I ships ships at Columbia and appropriate need ships. leadership and what And raised. to build don't its political address worry So to There we -- too Defense is the to the Congress will the in much of the find Navy recapitalize working least political a under crowding we imperative seed of need an about have comfortable spectrum, Department replace

Pete Skibitski

Got it.

Just year as higher just an anomaly that that? or maybe this customers a is a this at Or something volumes of year --- follow-up the -- a what's in terms like active the just Gulfstream? reason XXX pre-owned at Is initial really behind market?

Phebe Novakovic

occasion pre-owned There is it a nothing more we'll in signifies nothing. particular. On but bit have

Pete Skibitski

Okay. Thanks, guys.

Operator

question of next Melius from Carter ahead. Research. go Our Please comes Copeland

Carter Copeland

morning, Good guys. Hey.

Phebe Novakovic

Hi, Carter.

Jason Aiken

Good morning.

Carter Copeland

little variability, future caused had bit be two you a to the expect more if new a notes And in more clarification last $XXX and seen a that impact now million should you that little my organic had airplanes the quarters? year-over-year wondered wondering know but Phebe, a calculation, -- Maximus to plus. said like we clarify you XXX that question. just on but comparison the Just steady you for gotten in stable quick that I the at several bit expect quarter you've would on be in I certification a I that the we've little us. I R&D was think then just a in Aerospace than if bit

Phebe Novakovic

-- inverse in me that order. answer let's So

some keep you'll test loaded as from test some program level amount the we you R&D a customer think business. set that's we active active the have reduction As that in we'll in And an see R&D series move in I R&D appropriate in But activities -- know see R&D. and decline. all we of that continue to of airplanes our in think then nice so the We Gulfstream. --

Jason Aiken

billion last were business. then When you to There $XXX of the smaller half a a your supportive We your total And slightly on question, business those the care a impact. other months on so that of or divestitures in Maximus. roughly add of correct couple that were did health inference portfolio. Carter a in to however up of XXX somewhere all We quarter the $X divested excess had scale the a Phebe's in we the IT commercial had point, the I we XX first annualized think, so was small was million revenues divestiture. next-generation

Carter Copeland

great. clarification. the That’s Thanks Okay. for

Howard Rubel

And please. will be coming question our Rocco last up now this

Operator

Absolutely.

Our final Please question of today comes from Citigroup. ahead. Jonathan Raviv go

Jonathan Raviv

Hey, thank timing. morning. you for Good the

Phebe Novakovic

Good morning.

Jonathan Raviv

that how important is business. of know in ramp going? XXXX, site into GDIT color recruiting people terms very supporting give you I the it's part of us Phebe on personal a some the can

Phebe Novakovic

leader throughout every that leaders businesses and every believe have turnovers. took legacy So we kept wanted teams I reducing have keep, one into almost leader and first have integration keep. acquisition to single they those really We team and one during key the wanted gelled. from gelled we fight both we are to management three quarters our this And staff we

and their long-term very I've GDIT a that leadership is robust that to wholesome with there building that impressive. we the -- very terms So very cohesion seen that chain culture quite that established, business. they up I'm down all successful cohesive energy the in both level, maintain have sign the of it's pleased and and team of really what at me is can are a

Jonathan Raviv

growth Great, with talk thanks. to that peers is mid about I the not accelerate that growth. pickup. XXXX? in share thinking market but important line know we should market about tend EBITDA digit And organic potential I mean, guys, how think some sales the and then in is about growth as in just you to should single

Phebe Novakovic

we'll this the as we're we're We'll let XXXX always Fair give point. beyond estimate you not one think view I this review reviews fall going the and we fourth some call do of XXXX see X% of in detailed Well, outlook XXXX. know in then. of and piecemeal quarter But business businesses operations each we and you do after our in-depth to analyses and year our up bottom and our enough? nice we'll where that growth growing at about

Jonathan Raviv

That’s you. right. Thank

Phebe Novakovic

Thank did. you. You

Howard Rubel

thank today. And call joining you for our

earnings As now our which highlights outlook of please year. the presentation, refer the the General balance website second quarter to will release a for reminder Dynamics the contain to and earnings

very additional questions XXX-XXX-XXXX. you much. reached If at any I be you Thank have can

Operator

has sir. you concluded now you attending we all thank and thank Today's And today's conference presentation. for

a day. have You disconnect may wonderful lines your now and

General Dynamics (GD) 24 Jul 192019 Q2 Earnings call transcript