GD - Earnings call transcript Q1 2020 | General Dynamics Corporation

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Operator

Good morning and welcome to the General Dynamics First Quarter 2020 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'd now like to turn the conference over to Howard Rubel, Vice President of Investor Relations. ahead. go Please

Howard Rubel

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

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

Novakovic. over and Chief Chairman With I'd that our like complete, Officer, to Phebe to turn the call Executive

Phebe Novakovic

Thank you, Howard.

to full moment armed proud which to employees I us. let continued face patriotic a Before national the as me COVID-XX and fulfill to in to company's have We've company done. in such hard we as together. a on have operations, support of General quarter, their the of continue forces this discuss mission and address performance our designated critical our I impact am crises who response infrastructure are Dynamics' take its required work we to been

in serve men uniform Our continue must women and as to and well. we

Ensuring work priority. remains and workforce our our a has environment top safe been for

large have our from social CDC where guidelines practice employees sites cannot these tele-working we home recommended and unfortunately that. follow XX,XXX possible. distancing sites, do We At manufacturing

use of We have shift work and increased PPE. the

are We where temperature conducting screening feasible.

ultimately and those as we testing well. screening additional will As available, become aggressively implement

is business. Our in our the will been the and continue This impact and our leadership on people. early have workplace COVID-XX teams to be leading in its crisis

of deterioration some facilities. experienced we've driven absenteeism a far efficiency our So by at in couple

the additional in facilities see We to incurring of significant infection environment expect rate slow. our the sanitize also we provide rather PPE. absenteeism to decline We're cost and as to work

the suppliers. our issues, the supply weaknesses in chain are been OEMs. difficult. sort of of to with but hurt disruptions have also closely suppliers way with of We've the by through airplane working can some Hopefully, some is commercial them particularly also we seen Gulfstream respect who the definite Gulfstream these

us to industrial accelerating that is prove We Defense believe will of to payment this base. helpful. defense support Department The very the be to

performance, release, can million. down quarter year. of of earnings first $XXX share earnings $XX X.X% company's operating press on million were as million the of from or our against and net discern and quarter billion reported of income you earnings $X.XX Regarding million X.X% earnings $X.XX only was million first $XXX per Revenue revenue diluted the were $XX or Operating or $XXX and net X.X%. last down down we

all forecast was more operating against in The Not predicated. defense surprisingly in against revenue comment will side and our earnings is and shortfall was the year of of last which upon this up group. business on the this the plan shortly. I aerospace detail heard

plan. modestly On systems with side up combat in modest experience operating the revenue decline at of year marine and reasonably the the We were against business, our at technology were consistent systems. and quarter defense and along mission growth solid systems ago revenue the information with

However, margin. both earnings year had consistent operating last systems on improved operating and with IT mission

company The only lower year quarter. was the points for basis operating XX.X% than margin ago entire XX the

operating and to the its of our on of strength aerospace, to some for of some on you level give the give year. operations details I sheet. the into and I the -- impact resilience a COVID-XX company's particularly forecast get provide I Before the anticipating -- wanted balance the moment at data you want spend backlog

extremely a total modest supplemented reduction be the in is sizable of backlog should billion attributable in later off only down of of funded Columbia against is largely Marine up quarter which $X.X year. was end contract the billion. $X.X backlog to $XX.X some working importantly, with The further $XX.X billion backlog the billion Total at last its construction backlog, segment

growth. Aerospace technology information continues backlog impressive show held constant. to Importantly, backlog relatively

bill was excluding foreign to book the fluctuations. impact all X.X the exchange So of to X up,

In strong. this remained uncertainty, balance of time crisis our sheet and

in number our credit a in dependence just paper you will market and on Jason rating. our increased commercial which a through reduced of few retained flexibility walk undertaken the our quarter financing mid-A liquidity, financial activities and Following moments, we

Both sheet payment the increased the strength an that underpinning increased has us dividend. strength ability of our deployment After share GD board our per sustainability. balance approved is all financial year this that the $X.XX and business of increase in our including consecutive is our This liquidity give capital the confidence of XXrd its dividend March.

The to restrictions. quarter aircraft travel due the biggest two Wall completed into the quarter impact. were first to XX scheduled story the to in second somewhat the of in aircraft delivery mitigate part quarter able pull We deliver COVID-XX for to the was Street's for inability delivery

were are lifted and people scheduled soon the These So completed, deliveries. they down net, as traveling. restrictions planes we them XX and delivered will want customers as are be safe travel feel

did obviously recognize to us issue. those This scheduled inability to purely of The on end earnings and not of is a the timing make revenue the planes. permit quarter deliveries

In imposed aircrafts others on fact May scheduled of countries. foreign are by deliver the the or three in to on delivered dependent are this three month, and have travel restrictions

hopeful are resolution for prompt of these We issues.

XX.X though in With that for even its revenue operations ago experienced aerospace quarter. better its the with of considerable had difficulty the revenue the of weeks and some earnings had year operating and quarter, billion earnings margin. operating Jet last few of $X.X $XXX part in process, of a million aviation

we perspective, two of order most the or typically an quarter three when activity. weeks the are From last see the order

activity quarter's it quite progressing This nicely until when mid-March was largely ceased.

benefited to a have aerospace book-to-bill from the X.X However, segment which of X deliveries. reduced did

this lot work rides sales It on our to make in transactions to and contract people close but of a folks calls, in to continue issues. is interest get environment. together take to can't difficult person for and to customers difficult on difficult is see we We demonstration

removed. to we While are activity demand moment, restrictions hard accelerated that at travel predict is very see believe the we will when

own we XXX and reduction of our chain anticipated primarily between be The we To supply and excess and deliveries. will be strict golf guidelines. XXX appears deliveries lesser stream own absenteeism year, XXX delivery by due in facilities. of that a our somewhat CDC efficient workforce issues It the in degree, less of of with will to the driven our compliance now is had For one shutdown aircraft.

recognition business resumes. facilities, actions do these and performing from of however its We as the FBOs impacts, risks. we In well. of Apart cost are and found production expect managing The aviation do reducing well. the these FBOs carefully our of travel is when reasonable much here its We certain maintenance jet impacts better side believe will very equation. have

billion XX side to Sales the year ago were earnings over US point was land quarter. of up up government million assembly of performance margin. the that operating systems been revenue had in $XXX up we the have X.X% system $X.X in improvement facility. its a basis This of X.X% an largest in The were considering on headquarters the shut manufacturing Combat European at a impressive near Spain. of XX%, down

$XXX early in receivable recall will very This received $XXX satisfaction quarter. second to notable parties. our segment all another be the restructured in the quarter million free in was formal settled cash the the first the this respect we may development received international for to you issues the The the to contract Canadian helpful standing the we this which month. on of program, million With signing flow and quarter of that

outside a XXXX of the deliveries in in begin scheduled further will arrearage. systems with activity amortization consistent scheduled and Abrams order We cadence progress quarter the and had the regular alone million in payments Stryker orders X.X and nice Combat X. the making million of in had with book-to-bill The over US. $XXX group $XXX over the from quarter orders a customers of in to in

the COVID-XX on businesses, since crisis the clarity As we of domestically different. we have internationally country's each combat more response work is to than of through the the effects

diligently in manage earnings margin result, preserve $XXX of a of order technology costs operating almost and in profitability. our and billion to X.X%. we and the million have operating our quarter As revenue of in margin as had past Information $X the

on XX point and basis basis line. from including improvement year result. competitors point in quarter. ago drag segment and taxes, of Our XX Most EBITDA best an and is local state margin carry XX.X% the margin below taxes the which impressive a was that local a This are EBITDA state our

all in revenue contracting X% and of and XXXX despite Sequentially, in about intelligence QX and completions division, program actions our homeland the the late essentially is of the quarter customer series of A the quarter. a civilian to by lines late quarter personnel. from central revenue sites The in our flat exit security slowdown of factors. non-core attributable decline federal to the a closure of and three was decision business in some division

including customers noted toward their impacted mission of begin dramatically some all the the in sites shelter will employee. continue our has end place the we Conversely, a last until increased to customers some do of essential their of weeks. rules our received to four the closed classified to and of revenue in As number have number of but quarter This RFPs lift. I so

the March, has accelerated the of RFPs over at beginning valued $X government the Since XXX billion.

$XX.X X.X due to quarter total Their backlog trailing earlier, book-to-bill with X.X contract and $X.XXX business total month billion. an ultimately in despite continues the a to XX awards million As I book-to-bill to backlog X contract the This basis growth. The IT of nicely values slowdown to the impressive is build a mentioned estimated in on virus. X. positions for is

our $XXX billion various but an a line in business. Mission driven of decline $XX the in million cycle revenue communications point ago was against year as operating modest of sale tactical of steady basis The a million drop XX as Systems' margin. earnings the products of in revenue down decrease quarter in well improvement $X.X expected on held short was by

growth backlog and our control up anticipate We pick Navy surface strong business pipeline. saw new to underwater the in progresses system the by as and nice revenue supported fire U.S. fleet funded integration programs. We year

again up ago many to a only modestly at report work billion to Works, Turning and once is NASCO is the particularly good at to of Iron quarter. at year mix operational are inefficiencies. Boat. solid due good and of was the Nevertheless, shift Earnings Bath failure the against leading to performance Systems, $X.XX X.X% to Marine news story. up this Revenue the Electric employees

to in delivered In the boat March the EB USS four Vermont, block Navy ship this sea and the earlier completed the month. successfully for lead trials

block and program on work addition, up the of five now continued to third has represents In a Virginia revenue. ramp

plan advanced increased the also our of construction on October Columbia as we first have the approach construction date in We year. this

now me forecast an this you my do updated give uncertain in let best to So world.

related present to of and produce billion $X.X is repeat we're given billion. and operating but expectation earnings aerospace for aircraft aerospace about Our about ball precision, revenue To supply our workforce crystal at our certainly reduced chain forecast of revising the $X.XX to moment, at deliver ability issues XXXX lacks the and to guidance productivity.

businesses, we well. largely default we at and as we potential to backlog, defense these to impact so our mindful delivering With for full-year date respect been a are has holding targets are the While the minimal, are of segments. cancellations issues

over revenue there past our we the have path several current at on However, experience earning on make weeks, levels, that pressure but modest up based to on is the side. a

as progress more our quarter past We on at our midpoint year and the the with clarity we forecast will of will side refine of practice. the second the house through consistent defense gain

we $XX.XX per share this for So at $XX.XX year. fully see companywide basis the point, to a EPS at diluted on

remarks. further the for turn over our now CFO, call I'll Aiken to Jason

Jason Aiken

Thank you, and Phebe morning. good

the would billion extreme I front key of note on $X of the like of we seen billion anticipation and we've of in May in year in in outbreak the at The of thing the of issued markets is pending pandemic $X.X late attractive first quarter. financing rates. since maturity In March volatility this the the notes fixed-rate given very notes to the accomplishment a

the in due in to our planning half financial our flow $XXX liquidity payments To While point, second negative of the at net the year. pre-COVID-XX, the performance free Gulfstream our airplanes enhances of associated The our cash delayed able light cash weren’t quarter during in by free deliver. was fact of additional we XX notably is million. weighted COVID-XX this impacted toward quarter pandemic, customer outbreak financing the with the that most the was to the was the cash flexibility that part particularly flow

Phebe were As the two also in last of weeks customer quarter. postponed the orders noted,

month our side, help On accelerated the sustain suppliers some our contract in payments customers of from those rates we've the progress to coming increased form mechanism, and supply base. seen the we've other but payment to defense monies of in April on starting passed our of

received first had suppliers and of to with we net basis. a as down our $XXX on $XX slightly ended the from last of almost time accelerated this an fact debt In this customers we payments from and approximately $X.X cash year. billion a our $XX.X million of week, balance After all in last million accelerated billion quarter advanced position

interest expense million XXXX lower of $XXX the from commercial million down first paper net $XXX average Our quarter in quarter in was balance. outstanding on the a

the to the borrowing approximately discussed for forecast reflect I interest additional up we're our interest be But to million will earlier. year, year. revising expense for the QX the peak $XXX

balance. as As had we we our in debt quarter billion as over maturing as renewed down first Phebe $X balance and couple the of to quarters repay paper ample expect come of which we $X.X the in noted, commercial the May the we liquidity including billion well during credit lines outstanding next

the capital ago. were the capital front, deployment million of with consistent $XXX year On in quarter expenditures

be We on as in of our the of million circumstances anticipated the last we reduced manage repurchase the in This the X.X cash constraints from unable we year million forecast the range exercises the $XXX and sales paid somewhat we for from covers original expect of that stock current $XXX option CapEx light the for number. quarter but were year. plus In shares. dilution to on spent our address to spend down the in dividends a sales of to X.X% the due year still dilution million of

be income partially company free the of the to across forecasted, the capital rates, cash somewhat XX% year XX% to cash in versus the XX% net Gulfstream expenditures, to we reflecting For in and by and reductions now previously production the of delivery range lower aircraft XX% we taxes. cost the expect savings flow reduced offset

the several taxes taxes, of effective international Speaking benefiting factors from including and was research XX.X% credits. lower development increased our tax quarter rate and for tax

to our tax lowering rate we're year from anticipated the For XX.X% XX%.

with that's IDIQ contracts As And quarter. the in total $XXX thought this total backlog consider including Phebe the ago the time just $XX.X we her year. of you up mentioned year year and remarks, you ideology over XX% last throughout one for billion, the XX% value contract and finished as quarterly quarter potential up was over last options billion progression

Obviously anticipate year below the range updated the with more we expect, to EPS there's the second than targets the have a quarter steady being the discussed. as to normally at this $X.XX point point quarter the might low in uncertainty $X.XX that we ramp but would in second in in first half Phebe you the of achieve

my concludes to back Howard, that and I'll the turn it for over you remarks Q&A.

Howard Rubel

Thanks Jason.

As ask to how so please question chance has follow-up, and a Chad enter you we ask could participants one participate. to everyone a one reminder the participants to remind queue? that

Operator

question with Thank go Seth will Seifman [Operator ahead. first And you. instructions] come our JPMorgan. from Please

Seth Seifman

Hi. Good morning.

Sorry I was mute. on

the this are nature realize So in where unprecedented I difficult the is probably we of situation. very given

I maybe backlog coming better. Gulfstream bit maybe a thought people out consistent and where was I even at think year a talked about deliveries think fairly you with the this probably

this As the periods as know year what kind any to any distinct that Gulfstream talk beyond seeing we of any don’t might backlog deliver backlog, to about to of out about the past? we now of year look we if think versus the in through way I aspects way and of there move is that you is out and some there or bound as to the pressure this way maybe pressure happen

Phebe Novakovic

address me two let in parts. So that

the supply by in reduction most probations exclusively year was chain. this Our driven production in

financial saw to they this hit, and Some even our aviation exposure crisis difficulty commercial were original some rate. some production that with impaired the crisis up keeping they and both The difficulties. of before exacerbated having market entered somewhat our suppliers from

in your which So go chain. we fast weakening took with frankly production this production helps we down environment can look current you your as to in de-risks we and if respect only some believe de-risk the see link demand. 'XX as of But weakest year's fact

So one. that's part

I aviation out us in be specific portfolio business we expect And really lead will and teaming to think market question demand we will for robust which recover new eluded a fully to products. strong a as timing is two, think with course. in this The but this due of bit I is we again Part environment. how a

as it that financially of unpredictable. about occur is are weak result of think on crisis you providers If one airline could ill a who outcomes commercial afford this the either particular to or business can rely the those

reality aviation there remains if aviation result case But crisis. comprehend and we inert case understand to have to the this leads business the will for much there as for this that particular all I business is markets in advantage by think of down be in market crisis and price I important same not fundamental of a compete of this distinct product, frankly availability. made somewhat that think an and all the or up is service competition So and on a that only strengthened us is to cost the

Operator

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

Robert Stallard

Phebe, might is the and the whether this FBOs demand this of comment business in on be could seen the the April in off what indicator where I market going. partly lead as environment you a if could you well, was shorter quarter and wondering jet cycle

Phebe Novakovic

it not just was is Sure, human I particular worldwide unusual and all a think fact particularly sectors. that and environment that the beings,

drove of hours. imposition in really our So and hence the restrictions the States United flying both travel elsewhere, that

in we the we the and some traveling. decrease some number when are restrictions to -- begin believe So of of safer that a considerable travel people ease of in little hours flying these saw resume a bit still will

I and most We've of some pace good but smaller service you a resume avionics implemented referred we that work remains our inspections a resolve. discretionary furloughs of back the fallen maintenance rolling at upgrades anticipate continue some tell some we couple solid. bit, sites, the normal I'll approach cadence at scheduling our flying again planned normal once of centers will or a think that loading have at for likewise this to begin but of

Operator

come And Shapiro with question the George from will next Shapiro Research.

George Shapiro

for Jason you I One maybe did, one missed it. mentioned then The and but Jason for you Phebe. one if for you and

reconcile, that's what cancellations, the just if guess there difference I gave the gross back number. in back is you your can the and primarily you you If then you look in roughly list or backlog, it? at net the orders which a $XXX Is have

for the the is of terms for in the And you XXX, second weaker Phebe, expectation assume rest quarter I the a then to also of the Eisai certification for deliveries for where lot status the than thanks? the year, year be and the of going

Phebe Novakovic

with but had A back. Okay. the were respect Well, XXXX airplanes. customers of around I quarter. second to we as moment you With that those of the second quarter reduction to four deliveries risk cost can out charges be in a depresses and think Their chunk and of stronger, our defaults -- in we taking expect bit. production could the will we'll in those the have business so we that are see charges in particularly imagine some for any not the quarter,

and these But deliveries restrictions them and how on we once travel be fast areas depending what higher sequence expect to and could be lift. in what at

the the we and and deliveries that's both come if some States, pick abate United because of environment. it, restrictions some in airplanes the constrained fly their elsewhere very see is nicely. those revolve reopening rolling difficult to we of typically But in extremely It's -- to up travel transfer Savanna kind expect of outside we kind and think hard as fly States United to we effectually of need them it you to people those about we or

Operator

is go Barclays. next question our David And Strauss ahead. with Please from

David Strauss

Thanks. Good morning.

production by are a would decremental decremental work and related the issues margins billion Just just implied took more by expectation about I than productivity I this down issues, because reduced of you much about revenue see? some How thought EBIT issues? high bit to and margins. one on by of supplier margins, million think XX applying Phebe you Gulfstream driven is decremental higher mid The $X.X we $XXX

Phebe Novakovic

efficiency in but Some we some CDC on of particularly that to operating based optimize as mix. also is driven environment, is a of learn it

David Strauss

up the follow down obviously capital And debt then in deployment, have Okay. here you a May. on pay

headwinds are You the guys maybe sits, thanks? versus current stock to with commercial your thinking price that in currently repurchase doing how environment about where deal but you paper, share given political

Phebe Novakovic

from uncertainty key. point I great is out periods about think political in volatility, balance my in policy of you're but right maintaining to concerns, concerns the the quite your your arena the the stock strength sheet and liquidity and perspective buybacks of

going moment. to the on repurchases stay we're So at stock

Operator

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

Carter Copeland

revolvers might us own are kind know the I on of terms each customers unique your when like expenditures downturns one just not. of exercise fingerprint some has companies its wondered on tapping aerospace conversation is Phebe, that majority of your on through I out of demand customer flips some the in sort would I of in one big this imagine if what Fortune going these of color the what sort there and timing help XXX you the and give aircraft of

continued how how would purchases thanks. I I are then how that of does in does those, assume and going in just the future, is the of terms evolve -- that that what timing discussion,

Phebe Novakovic

the of these on the key XXXX So recession great in active, we last impact was interest the elements it the multiple that time simply different stopped one remains that experienced sectors. because the is that in of whereas distinctly very recession timeframe, from

Here how it's does back. more the we soon timing. economy about been and can travel really get How simply soon about reopen restrictions

time of some we more we stabilization occur, economy continuing. question conversations in reduction terms of but hasn’t this That as the see environment. translating as a restrictions how well in orders, as some the of travel in activity all going that to in stopped, that as are into of but is the see timing So take this the

of very we're economic time, to and have is different large always if backlog very backlog dire, you from economies the being is mindful. As very of which last up are to we're the mindful become we're but crises follow an really that holding worldwide results the distinctly going have issue moment that nicely, that the carefully

is that at itself kind through has albeit reasons before for This a different company ways. different environment and very manifesting been of this

Carter Copeland

to characterize And to protecting the right decisions you way it temporary for will furloughs is guess in nature the from doing? related, s things get in are standpoint whether deliveries fair your return lower when what capacity normal? that upside the Is you're make to to production or a I you timing production it's to think about

Phebe Novakovic

the we outcomes we'll. have chain I so quickly, it it, is as the if next in with manage have you you in fairly risk moment that think year also react right in what way that best up think what is you fact in -- recognizing can that our the it possible changes best keep our to sized your the can does prepares have supply and us environment, that when about various to to are as increasingly outflow like done postulating but production weaken postulating demand

the see. we understanding what So risk in found think I moment, can as where our we possibly as we well have

Operator

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

Cai von Rumohr

very you Thank much.

you base a they would the of but may and as COVID of talked GXXXs install a basically number particular down kind of year in terms GXXX should to go preowned demand one is in there's dealers expect that impact concerns preowned the as where to later in the large with starting with up pricing that abates, compete you been weakening there pick So we've the and have your indicate the have The production. erode market. is of

you market, pressures preowned Are the pricing about you what seeing or potential are to thanks? concerned from extent

Phebe Novakovic

significant preowned well Gulfstream preowned the and price. see XXX like new build each seen to cabin large the see yet of any. our market have below We for on including standard any We we've That is done threshold. impact no up inventory of

our of pricing. current a is inventory our the in at current we see nor that demand, current we moment, do So either impacted preowned lot nor our house -- our have it

So again the very saw issue simply moment. what Preowned this than in the timeframe. different XXXX, is an we XXXX not in is

Cai von Rumohr

Thanks and are so on much the in production late give expectation be us you certification can follow-up you how GXXX or GXXX, an one update the and XXXX? of GXXX would doing

Phebe Novakovic

go to test reverse let's it's order performance -- in the GXXX test continues pattern. So

be So we wholesome belt and and that change increasing. to are for some of year, production for both the is we GXXX has performing of airplane hours have the about XXX in of extremely our those under have the GXXX, and is been The mix the but the course going some set demand well. issue programs

in the I tease I that the EASA, more had directly see these airplanes, speak that on they're to in answer think of their market, to of they're asked the indirectly. the the failed question that but MAX. people this I impacted timing, well these and And George what by do them impressed. pretty exactly you doubt it has no them well impact the slowed and while as them EASA terms for been can't airplanes as we'll and that can get through more And

Operator

with Poponak Noah from Goldman comes go question next ahead. Sachs. The Please

Noah Poponak

to here today, chain is and disruption and XXX% none supply of XXX% is from the you’ve revenue that to Gulfstream inability made airplane from that of it fly and disruption reduction of demand outlook impact? Phebe, delivery deliver

Phebe Novakovic

demand isn’t driven. Really

think increased number our I discussed we of two but some as think shifts. these the I of to we've also noted issues social supply distancing couple as cleaning PPE me let under chain, as but detail I times, factors some have fulsome a reiterate efficiency just but I've plants the additional plant as production work manufacturing assembly we shift rules, optimize within learn within

but the you said if in will also of chain. allow about frankly of environment, in as from some but simply us here seen production issue inherent the over that we an that any predominant issue, to terms optimize demand. to also impacts I the was significantly So it that supply overwhelmingly time was you began inefficiency as mitigate And weakening there, think

taking We of salutary where have that you of done of today, demand do mitigation could I a 'XX de-risk we're and 'XX. nice see think some and for some the benefits one potentially the risk provide job to that's actions

our So that's all couple in moment. founded believe I've we've that said at we respects why times, the a risk

Noah Poponak

you you deferrals the seen year Have seen any cancellations QX in just but not any or existing to through date, -- have backlog?

Phebe Novakovic

continuing out up Yeah note had recognize to that the very will while of whom of hold But we I and the backlog mentioned three de-risk of not backlog, how but back all the of hearing earlier, we that coming backlog whom moment. customer and and that at so is come expect any to have any the we of nicely. we've they're seen additional but all noises we're far we today this four impacts the base to

Operator

Our is Please America. next Epstein of from with ahead. Ron go Bank question

Ron Epstein

Maybe put of of that procurement flow the navy contract they're its year? you and of they systems, procurement the a how to the a short the your the leadership navy your accelerated business, you period through naval to tell are changing of little in mean that they’ll amount to rest work talk expect and I in bit of if gears you time. in seeing How under the do business you very how has navy proud

Phebe Novakovic

on which have stability entire have navy particularly increased foresight and leaders been repair we gotten during the this our at procurement that we've crisis. contract side. of people velocity awards, see beacons So They and really the

and big see cycle supportive any shorter Our on but large have have to those need supply very new additional we contracts. to the they industrial on undergird in the in velocity expect wouldn't particular ship businesses understanding defense been increase construction our very, chain. the is I

Ron Epstein

questions supply some follow-on, that a out one you times playing even see do if How And defense work remarks that largely you particularly then you of trying supplier and in in let's the got concerns a your much aerospace that that Gulfstream? the some prepared mentioned couple commercial got mitigate their you’ve chain. over it call risk? mom-and-pop into don’t who you’ve a smaller as do is How and supplying to are

Phebe Novakovic

to all and can at on-site support bring of you -- with We will. and provide closely to all We're our get if challenge mitigation closely if with negotiations. know them in imagine where we are it all. So ultimately the have to moment, are sensitive can we house these suppliers working we working

But the here. think can this so, reasons we we as can. risk I as not that do there but and to all will continue well It's have for through is understand risk you without managed

Operator

Thank ahead. Please The Raviv next Citigroup. question you. Jon with go comes from

Jon Raviv

a growth visibility when backlog for those or any see can translate about to talk how you be the supporting it slide we the IT on how environment new of and in priorities might those crisis? to of can trends dissipate. into coronavirus of might current nice oriented also some Turning perspective out some the that coming you then moment, customer items support when IT is And

Phebe Novakovic

is So coupled an the enormous agility elements customer one of GDIT of with intimacy. their

So very new civilian as the work both with our on federal closely defense them environments. We'll customers on Intel adjust and opportunities.

back a I needs that customer that one ability our to these attend regular regular challenges to think of get sites. and up drive is our and the and in order will cadence then

will customer ultimately be and additional of site revenue additional While on GDIT successful many had then revenue up and of with winning A revenue on to has in that that have begins been but business our the operations, the part very gets our customer profitable people full that. work translate home. in look once these at bore drive so into can from to them lot

working sense from with superb backed-up to of growth some revenue their if back So then have IT have backlog. our But issues they're the timing winning bit incremental side hiatus this They from impact any of I just think need we rates. that on get a positioned from good had particularly have a some taken. we customers capture everybody for and and a

and they market fit nicely comfortably space. their very now in right So

Jon Raviv

about as in that be larger talk monetization, focus might more where business environment type acceleration work the conversations be you cloud, NIH customer there might in of on of developing just how the CDC, IT current workforces can implementation follow-up And further aggregated a packages. this further

priorities of sort accelerate the any how out thinking about So coming national or shift of might this.

Phebe Novakovic

a discern trend seen that that from. could have know we don’t I anything realistically one

too it's early. think I

as workforce the distributed I far too that's As way think early.

cloud actually haven't that the we lot a way our how have its COVID need customer efficiency or But in sites. customer the wholesale plays either look environment. be out on is on as structural or think say seen shift strategic a we thinking they to our at a I that in metrics of about, to the people mission post

as do about do there integrated long social shifts some. think naturally will Again we and we long how how distancing, long suspect keep shifts. be we the distancing, I how keep rolling

I their some haven't about change mission. will our how thinking that of of So structural is think, a in seen play so out, but customer I far material

Howard Rubel

final we one operator. then have question, And

Operator

with Kahyaoglu Sheila from come will Please ahead. question Jefferies. that go And

Sheila Kahyaoglu

some Jason, is the XX% you cash can dynamics XX% flow, you, given conversion to maybe intact. it are seems Canada of one this free of XXXX payments the revisit the in the for

fair working So deliver about perhaps assume capital either QX and progress to payments Gulfstream may still inventories? billion $X it XX with couldn’t or $XXX million that's so was aircrafts? to you or of other given be inventories that changes what Is a are in

Jason Aiken

Sure.

two coming forecasts payments up in a on that on solidify of of those on I outlook. of think here. instantly the you’ve program is number million were a $XXX to element in number The our picked inherent news the certainly drivers Canadian welcome the

mechanisms about think have XX% we're some of progress and rates business other you payment and advance the of the the to contract accelerated When seeing. XX% from defense payments some moved side

not As I to of supply that essentially mentioned through the most is if flowing chain. all

a sort So the of that's pass when comes really to it net outlook.

the of and XXX portion test just Gulfstream that working Gulfstream at so steady these sort inflection think to that XXX pushes some working XX sort getting it deliveries more on that state and between about level push a up inflection we rate this I So think about should it, is out of of overall or start the production and point say impact, when it's bottom the year line When really you you through inventory down. Gulfstream with expecting the were the to really production production out that capital production somewhat. point capital the to on at it X of some the with will at drawdown working shifts airplane and call months out

driver So conversion. cash that's the in free on the the really flow difference

Phebe Novakovic

on thank and for you and Thank you call everyone today. else being this Chad

As the our highlights presentation General contains a outlook. reminder earnings website first release summary and to Dynamics' refer quarter which please for the

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

Operator

The conference not today's has Thank attending concluded. for presentation. you

disconnect now your may You line.

General Dynamics (GD) 29 Apr 202020 Q1 Earnings call transcript