GD - Earnings call transcript Q1 2021 | General Dynamics Corporation

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Operator

Good morning everyone, and welcome to the General Dynamics First Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please also note, today's event is being recorded. At this time, I would now like to turn the conference over to Howard Rubel, Vice President of Investor Relations. Sir, please go ahead.

Howard Rubel

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

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

Phebe Novakovic

and Good Howard. being for you, thanks morning everyone us. Thank with

little more on million. revenue Defense $X.XX revenue $XX $X by business up $XXX driven share. was more anticipated from our of about press we we up per As later. point operating the above quarter expense. and the $XX million earnings is XX%, diluted was Operating basis of margin on million $XXX or $X.XX consensus granular, income XXX the quarter. share a up lower I'll net operating operating the lower points nicely than last $X.X Aerospace, operating a with ago you side guidance our up earnings and to is discern different Defense but in up can fully From earnings million by last or million. to side first by up as corporate per million $XXX perspective, of bit rated are are side and of year was This down you, reported beat The release, against X.X%, quarter the in a slightly operating earnings year's Revenue $X billion, $XX Aerospace margin Aerospace combined million, more net have first company entire earnings consensus. against this are still the million A say while $XXX on in for The XX basis are year. be X.X% earnings million. To million the of is $XXX

anticipated than and in operating $XXX have XX more roughly more by earnings. have side the We revenue million sell

were It's also This almost good something hard it's beat. So, It's quarter. pure it. very own the handsomely. start operations all about a our in very year. to beat confess that like respects solid a a to find expectations we to not rather I must is

some So, move segments, around performance around your the let me deployment backlog, right of have into the we'll questions. cash. color then taxes, at business And of and cash, color Jason answer

of year sell by Revenue million $XXX First, operating Aerospace. Aerospace billion side. $XXX ago the revenue year quarter. XX.X% almost our enjoyed and than earnings us the quarter. is with and than side guidance sell and the the exclusively year is deliveries also but ago almost Revenue The consistent is of anticipated operating margin than is higher GXXX XX.X% margin. and GXXX an than $X.X $XXX quarter, expectations. operating million, million higher The with lower more ago difference

into fourth of quarter. the the orders activity truly perspective quarter terms, took this Aerospace some is February mark-to-market sales quarter in excluding quarter In book-to-bill inventories. quarter a one. Gulfstream The the from to the Without to alone rolling with launched also charge our we X.X the the of a last over remainder quarter had very The one. GXXX a an Finally, to from operating was book-to-bill well. years, when in momentum quarter in respect pure developed the middle perspective, appears of through order performance superb. charges the to strong on strongest and two second as unit we GXXX. continued X.XX for the with XXXX be had the accelerated of test the of the

of ultimately level without restrictions when should Gulfstream travel interest improve to restrictions are countries see the are quarantine removal further in Demand in this and of is It benefit activity. revenue. these We level activity in even removed. requirements U.S. experiencing high a accelerated outside experienced constructive of many a service increase the the X.X%

Margins and and much more is consistent Jet down earnings. maintenance sites On increase slowly. of on facilities Aviation's GXXX The is FBOs suburb. service and to the million a are revenue in recovering operating MRO as business accelerate. perform Aviation a certain and FBOs do Jet continue The basis around with will its travel better quality GXXX coupled improving service other well. hand, are modest $XX

end As of aircraft is interior test track XXX fully on these five-test of beautiful. entry X,XXX fourth GXXX for and GXXX XXXX. We aircraft remain into over service customers. the the week, first quarter Its in delivered of absolutely have the hours outfitted on has the is we of to last The flying.

Looking quarter forward, delivery to be most a from we our the challenging second perspective. expect

Systems X.X% we However, as quarters, improvement we Combat Combat also the rapid increase planned expect in has $X.X up and of deliveries. year over ago revenue in had quarter. fourth billion, Systems. production an and more third the for

all the XxX Vehicles XxX three sales Combat of to of Vehicles. Eagle companies the While group to Wheeled the increased and source Switzerland primary contributed sales our our was within and growth, Spain

X.X% reasonable impressive XX growth. in all-in-all, margin. Combat over the quarter higher and grown quarters measure. a ago by basis. on at $XXX of XX in is basis observe interesting earnings XX good performance revenue up an any the are So, volume point It the on also year a million This was Systems to has Operating last quarter improvement

flow that program, all the You the quarter this item year be this year. which cash This to may Canadian the was notable the of so The free a was contemplated. contract on appears This ago continued and for have last development year behind contract formal to be signing issues. recall segment risk to that us. continues helpful perform settled International in to restructured parties on

Systems. to Marine Turning

$X.XX up construction volume. X.X% first that XXXX. XX.X% report against of first revenue that Class was led You XXXX at that XXXX. the up ago, in against year am I Class report Columbia revenue by Virginia able quarter first quarter billion may a first growth quarter V was XXXX the time to of The Block and recall in quarter this I is was pleased very today to

enjoyed and is at also construction We This growth. increases T-AO NASSCO. impressive very volume nice in ESB continued

has the on up quarter fact, this last quarters versus earnings for revenue the margin XX are ago up in on an Operating been of group year in basis. XX In or a $million $XXX quarter million the operating X.X%. X.X% quarter,

operating we our improve to year. strive the will as progress through margin We

in a the XXth award side, backlog. order backlog Block Virginia was observe Class $XX.X quarter, of billion total down sequentially, summit. $XXX On should There the total V the including order the million I obviously significant leaving activity powerful in the only was

mentioning. year at IT quarter grew taxes Finally, on basis which value is our ahead revenue and and $XX up revenue or on Operating of in new almost XX The Technologies. the This grew $X.X quarter estimated basis notable is carry supplied XX in X.X%. ago backlog million EBITDA operating This was increase of margin segment the by local billion up the earnings $XXX technology, up Total items best-in-class total an taxes, are EBITDA ramp sequentially million million from have some consensus. This the XX.X%, in and including mostly margin. information first result. competitors below that Most with million programs. quarter, contract associated $XXX $X a local drag state or X.X% worth GDIT's points impressive about X% about alone quarter. were same. point remained of or is state also a X.X% lines. the margin. the of There

any On since customer the $XX the proposals, the most CSRA, quarters and in represent highest awaiting XX% the submitted proposals business opportunities. acquisition which of bid decision, also of of represent front, business which They value ended billion work. existing new recompetition proposal opportunities of of new versus with over in GDIT quarter dollar

book-to-bill quarter of on order order with good and concludes to respect very horizon. X.X a good activity the good in prospects quarter. So, remarks one the my a That to with

guidance you of time year. at the As update never we this know,

end however, turn your over the Aiken, CFO, at as I'll remarks, you a our call comprehensive is will, to custom. now for update the take we'll second then give We our quarter and the questions. further of Jason

Jason Aiken

quarter. cash for the quarter. cash our morning. essentially even the free you, with we Thank operating broke Phebe flow cash in start expenditures, perspective, capital our and million. I'll Including good an From $XXX flow performance negative was

us who you first quarter some for been know significant user several time, those followed fairly you in cash of we've years. past a for For the of the

strong and the program, a from large to This payments Gulfstream ongoing large the on at pattern referenced Combat Systems earlier. marked our order part quarter Phebe was amendment contract consistent activity due that with international in improvement progress

XXX% to year the So, was range. our cash nicely flow conversion of reinforces for quarter the and our in XX% the expectations of free ahead outlook

Looking sales. million I a XX% or still the roughly year but of sales. That's CapEx down year capital expecting at quarter we're in capital first quarter which deployment. expenditures, be XX% of full and $XXX mentioned ago, between X.X% X.X% to from the were

of more ended maturing We $XXX the dividend balance interest $X.XX due year with the time with net last also quarter $XXX cash the $XXX from over position is XXXX refinancing per in issued a at of debt price million first increase X% up in share. to conjunction debt all $XXX just in repurchase this of the little incremental a nearly first in per $XXX paid from than $XX.X was of spent down and XXXX. shares a of And in the million million the X.X quarter The and billion we the by to billion, average million, dividends $X.X $X.X Net billion share. year. of quarterly expense an increase this, we notes. quarter After million on last

refinance capital. this $X debt and declining achieve debt and deployment result plan this a portion have later this those in But we to billion more a to balance year, balanced of maturing notes of of will We outstanding beyond. still year a

Plan quarter, the the Act. Rescue American passed Congress During

business. may be two contains our aware, affect provisions you it As that

workers extended prevented fee will it it reimbursement to allows technologies provision facility provide although CARES benefit from does contractor the This to the First, COVID-related of closures. payments Act those for due our business, to costs. on not working were of who continue that

So margins. ongoing on the diluted that will have segments impact an

the our million year by Second, funding a this by to pension required act amount relief of reducing plans provides contribution of the dollars. couple pension hundred

government of contracts. However, this on U.S. our reimbursed costs same reduces amount the provision we're pension

from when lower benefit flow a coupled tax is contributions, XXXX our As impact with the reduced pension on result, cash immaterial. the the

act with reinforcing is cash our from quarter the years, rate full of XX.X% expect at We net over period. to exceed a benefit the XXX% income next that couple over the free increase the consistent in expectation. of our that can expectation modestly cash year The tax flow

that our on front. So, to outlook no change

as company a again activity quarter, even X% grew first order were than a with and quarter. as the backlog we a whole, in more the the Finally, in story book-to-bill one-to-one by once strong for

As was value, led contracts, this the X% the Phebe in total concludes We respectively. backlog time book-to-bill, options times last Howard, $XXX.X $XX.X and activity and to groups with mentioned, remarks. X.X of potential ago over X.X% total for IDIQ quarter it the billion, up order way including quarter. times finished billion. over a that a up the year, back Aerospace my Technologies Q&A. and That's the I'll X.X in contract year you turn the over with

Howard Rubel

Jason. you, Thank

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

Operator

from Our time, first will question-and-answer Ladies go Instructions] Raviv [Operator at from your Jon gentlemen, Citi. question. with this and comes begin we question Please today the ahead session.

Jonathan Raviv

Thanks. Hey, on year. hear. GDIT. talked to X% good Thanks actually had guys growth for the you about Question The this on everyone. opportunity [ph], staffing morning,

definitely did a good so start. of You X% first the quarter,

to upon some And We've the of So, commentary of delays look milestones and in kind overall awards. just any heard slowness on then there. environment.

Some highlighting, some that growth. disruptions the other contractors organic have impact been

XXXX to could as view how over your these that awards any impacting come through. out of flow So, XXXX, and -- how some using new businesses that's

Phebe Novakovic

external decisions. to order this some it impact a behind milestones, process. on as you noted, we necessarily business $XX aren't look as about way, this with on any There expect quarter, we full customer’s as But such X,XXX large is COVID, we billion that that if think But with So, And respect over contracts. of backlog -- to we And decisions government to submitted really program milestones I the for. and frankly cadence wins wins on very with the that gets in through obviously, the factors the those we that will were work of begin are exhibited. number waiting to that new proposals that some operating and we contracts. were suspect not pleased major increase. in a the the surprised decision-making growth they their the And -- that back many large had very fact or of new many program

pretty So, all-in-all, stead. in good we've looked to be

Jonathan Raviv

-- you, then And thank as Phebe.

to from to that be As at be business. some Would you a is contractor a and this When like the this consider of and with brief or new new follow-up, it other -- almost of the key addressable? element maybe a huge this takeaways of again, that things sticking business market. you also adjudicate, of lot whites-pace technology that to more things lot doing are contractors, government backlog you creating is mentioned look almost

Phebe Novakovic

it's So, a combination. think, I

the given contracts is of on the those And our a good thing bid fair we're in then, of that's it number more winning again combining programming. for and a number I than us the large scale think, preexisting two, some contracts. current effort magnitude workload is just larger share, government the is pure required of that Number program to one.

So, we see much pretty think I that that's unfolding. how market

Jonathan Raviv

Thank you very much.

Operator

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

Seth Seifman

Thanks very good much morning. and

Phebe Novakovic

Hi, Seth.

Seth Seifman

-- you could you some I think downs quantify that. mentioned wondering I inventory I on if you if wondering GXXX, was right was could

Aerospace so margin. could a Just the cleaner have we at look

Phebe Novakovic

Yeah.

as of see So, giving to the test us. we're not did on have We mark-to-market airplanes, detailed behind in by which much our we product XXX expected is But margin. some the airplanes, pretty habit test be on a of with airplanes. that test largely product

you to -- just better seen awesome to we even that that color that absent give tell performance. have noted would I operating So,

Seth Seifman

QX? without Aerospace, sort of we when it possible bit trajectory through and guess little is as should quantifying I talk to the the margins of -- we maybe -- into it, Right. guess there is year a expect go about the at I

Phebe Novakovic

we QX. to increasing be lower lower through and So, our we we QX, QX in in expect, as quarter-over-quarter, deliveries compressed to see as and not noted, be we production then -- margin airplanes, result largely noted, that took into as margins as mid-cabin. of I go XXXX XX recall, the QX, about on -- admitted that of year for before ended all we least nicely but our reasons as the the But last a the we production some is year which largely XXX

our and rate. rate we what begins demand see we or to increase return normal picks some to production So, delivery and increasingly when ought up to the had hence considered

that'll drive margin. So,

Seth Seifman

Okay. Thanks.

Phebe Novakovic

the the think impact By when particularly way, the margin, of about you XXX. the out of entry into service

Operator

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

Cai von Rumohr

Thanks Yes. quarter, much. so Good Phebe.

Phebe Novakovic

Cai. you, Thank

Cai von Rumohr

at could at moving So, XX decent Like terms which a heard demand, that we've what net But -- still orders basically had you you said worth, which we Gulfstream? on some I looking weak specific And for any ultra at up is GXXX, very and number on you those said are give is You strong. models. broadly color the more think pace? heard first, it's based. in corporate are we've demand high is of us

Phebe Novakovic

yes, In good quarter that with all broad the to respect respect pace. activity, really a up, buyers it beginning is in order, indoor moving the section are quarter number some quarter's a to order, and was U.S. than Fortune XX:XX this With the order across U.S. balance increases. orders. strong as space more see the half to accounted the economy And XXX had of big a of clarity reenter market that for this end, the around at

increase should quarantine good economies, increased being about as U.S. the and the to continue we So, removal demand restrictions restrictions see economy, of if expect confidence but and of also international lifting look, stead. and as Gulfstream it, we see to in global think we you demand, very the the travel see of obviously

Cai von Rumohr

And continuing weird mentioned you are up. we the not down to demand So, come this and that getting routes of all while happening, better. where know pre-owned opening international have prices are situation we

up? to the your see long to were planes, kind sort of it production Given that demand you the or if wanted, if deliveries take strength can in there deliver moving more so rate of you those would we demand, uptick how

Phebe Novakovic

about adjust But as demand more we months -- increase. lead at a continue I it airplanes, looking remarks, So, we'll my continue six and be sufficiently on takes few noted time. production to as see agile just in average, and to we're

now. and how two balanced it looking forward of quarters. to liked I it So we lead ramping we the ourselves pretty yet time Prudent, take efficient up. when about right to But that are comes does

Cai von Rumohr

Thank you.

Operator

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

David Strauss

Thanks. Good morning.

Phebe Novakovic

Good morning, David.

David Strauss

the Phebe, want earlier Gulfstream. follow-up to in of your on around comments some margin

that to to And margin we it teens XXX forward, got XXX being Is do going still comes time this particularly starts over the used high expect when to business way this the to accretive the mid deliver? a you about business. to be right when think So, in?

Phebe Novakovic

a So, when on We But margins. will given many times as work talked -- deliveries. you accretive we've we'll our portfolio can margins our the business at short-term. XXX to service a airplanes. of our the place think margin XXX the with as firmament for and mid-teen XXX issues, a as the a be were whole as solitary margin host in before about that of imagine, mix we Gulfstream -- begin about And are continue this an better kind host was, not driven aligning backlog, which acceleration couple least ago, of -- And backlog. of when which of of whole the years demand you of is effect we recall, mix, by the

when and transition too that XXX, the wasn't XXX So, people. XXX, -- XXX period XXX were the much also us helping through replacing But there with XXX. of wait we for

to expect as said, margin I see as -- we And us. go forward. behind some we largely is accretion that nice So

David Strauss

capital down come Inventories on you little And helpful. there? what to you expect could bit moving pieces -- a comment a the That's advances, of do headwind. bit, benefit of and Great. think

capital So, -- how within move just here? expect should we pieces different the Thanks. to working from

Jason Aiken

Sure.

been we've of major a inventory have we new now. sort thought earlier That that of as we in a several than to headwind We and Gulfstream we at happen, outside was models than year, at the the end normal run happen. for general, level going been for the have production to the buildup for about, entry last the recall test better saw in service. business, talked elevated that going turn years the obviously into and invested little pieces You'll was thought moving bit airplanes the has rates start little a between to

outperform And us so XXXX. that flow for we helped -- our cash expectations

You point in about for to that this can into on mind, and see that program to continuing same normalize time, inflection at and be XXXs a as keep XXXs We'll building up think the no toward longer Gulfstream XXX moves the that the But year. we're headwind. service. start hit entry

shifted that'll XXXX a neutral into year So, more period a and in little become and eventually tailwind then beyond. this the

a with that neutral discussed international the event at contract modification several is, more last The that to the into other piece year. earlier years, for obviously, which Systems, that program Combat Phebe a large headwind turned again was

year last little this XXXX, becomes tailwind a and XXXX, and in in stabilized a meaningful XXXX. a that So then bit very more more becomes modest tailwind year, and

that did XX% there range the still way in outperformed are of of out cash on CapEx the an as kind Systems. to bit -- the those of So, you little XXXX, now XXX% flow high piece keeping is the range that's year, little us in two were we the elevated about XX%-ish really range. gets we're high sort The moving go in a one Gulfstream And think Last Marine from toward to if at profile back moving, better. a range. that investment of we you us XX% expectation a -- when trajectory the pieces mid

So, the next year, it sales once gets that X% into back of normalizes, range.

the and range, us allow two above You Systems the those nicely pieces see should becoming Combat in being a XXX%-plus large business that at even expect tailwinds at to to us XXX%. get whole XXX% working with to Gulfstream capital the really

a for So, trajectory that of that our we Hopefully those where expectation of we're for sense and the improvement for going moving all the ahead. gives the see basis that's you kind major pieces.

David Strauss

Thanks very Absolutely. Yeah. much.

Operator

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

Ronald Epstein

Yeah. Good morning.

Phebe Novakovic

Good morning, Ron.

Ronald Epstein

in the that on electric of forth, that How to to Columbia got they Class over business? boat and going? Class Switching supply having you? the the so in ship terms so both Virginia chain, everything is to are the workforce, how's -- and and How adjusting do

Phebe Novakovic

hiring something ramp It's we importantly, going risks the included training, XX-year-period ramping have work Virginia, you very potential into break that important complex we new well, technologies all construction There's supply in been -- in worked the program high-end then a readiness, exemplary could with that more known and We program ago. Navy both foresee -- started Columbia. risks XX%. XX risks facility of on technology a and potential workforce with up Virginia chain That boat when contest remember the program level And to prototyping, and at retiring construction assiduously in that which -- that and on very years and the potential about has that this think equally maturity. an significantly XX% to to readiness, design reduce completion known readiness, entered new Columbia. up design

for on program, any I blocking tackling victory hit building mitigated so level ship has allowed and the prior good. risk planning XX we will the -- every running program known forward. bat, of and of you detailed of unprecedented right retire and us years historically an can't risks conceivable on declare all measures very to at and So all to taken going unprecedented know, of complex have the but a out so and so it’s far Columbia, ground this lot verbally awful

allowed very that They've the very gates strongly. of out coming execute done a to has right job. So us really good

Ronald Epstein

Gulfstream you it think Got had it the Got has ship U.S., been in demand How's on seems business. relations, on an mean, it. region? when for like good Got the China And about the impact that Pacific's the it. for focus I been it. Gulfstream?

Phebe Novakovic

we Not can see. that

a quite of in good. So, We've install got steady lot there. and been base, Asia large intimacy our nice, customer has demand

particular not today So, that we have it, seen impact.

Ronald Epstein

it. you. it. Thank Got Got

Operator

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

Myles Walton

Thanks. morning. Good

Phebe Novakovic

morning, Good Myles.

Myles Walton

Heard on of could getting looking leverage, you're are plenty a on bit, building up What point a historically at you there? appetite was landscape in acquisitive hoping to there. maybe M&A firepower. been your is terms go getting thoughts GDs, attractive, for I so an little company. Is which your we Obviously, of always the growing pretty

Phebe Novakovic

of of on investment So, we a have through and and lines execution been business period our large across significant primary many our is focus here focus.

We see will horizon and entice on don't potential -- significant here for niche look we But bolt-ons there. here always would the any anything opportunities we us. of that

Myles Walton

you ratios Okay. that the what's for? it, maybe a of said color you'll Jason, And there. know I but we're aiming little some refinance target

Jason Aiken

Yeah.

target of to mid land prioritize going seek ratio to our -- A less be continue perhaps then That's we're to rating. think I of going always long-term. where a to sort we

maturing year like. had sort you're of outsize an ladder now over if key right for aware this XX as -- And phasing looks what we is of so, next to maturity the out of versus debt years debt XX us our level the look you

And reasonable well firepower picture of so, step capital of for do that sort bring debt to considerable a aiming of deployment time as into allows measures, is more what down available in that we're and really deployment flexibility as over have us the balanced other opportunities. to

Myles Walton

you. Thank

Operator

Kahyaoglu go your with Jefferies. Sheila from Please from And ahead question next comes question. our

Sheila Kahyaoglu

Good Thank everyone. morning, you.

Phebe Novakovic

Sheila. Hi,

Sheila Kahyaoglu

has know covered big always for on us a numbers. because I maybe picture you, question Howard Phebe, the Hey.

how over the or a portfolio the at -- You've that? over the as flat decade, from at almost operating you been or comes think whether years, focus lines decade as the next focus from now about where budget a customer where do XX leverage company for GD GD goes and

Phebe Novakovic

return a a business, really best invest of that So, from of strategic value. our could ago lines in we where decided on invested significant number we drive perspective, and realize believe years capital several we to the

Marine period We the Gulfstream, Gulfstream, have GDIT, Group. primarily GDIT been and in that the at

product. undergirding it's is value -- that than good from really, about operations. as that now the perspective are across the all execution a it my discipline value execution wise the requires hallmark performance. is So it all execution. and capital across of smart creation here, of financial And see of and capital key discipline execution series limit. been I we several a all And and all investments deployment the drive has It's wise requires do everything and elements nice is a years, perm to about based next long-term faster creation. But of Ultimately, on it

So that's see I us what doing.

Sheila Kahyaoglu

much. very you Thank

Operator

next Our with Pete ahead Global. question. Alembic comes question Skibitski Please from go your from

Pete Skibitski

Jason Phebe and good morning, and Hey, Howard.

Phebe Novakovic

Good morning.

Pete Skibitski

Combat, both of wondering you there us was as well out I'm Phebe, competitive of are I -- if in as what expectations wondering sole for could maybe give orders international sense a opportunities. you, source kind

Phebe Novakovic

States, emanating as -- world become sales And units outside of state the business United United FMS has sales international from an well unfortunately, humankind, So, consists dangerous outside from place. of for as entities from two items, primarily the outside the the United States. our the increasingly States

U.S. East, and nations of a in see little in demand Eastern that Commonwealth we reflection of in the parts of so, U.K. as Europe, well. And Europe, our Asia, the former and Middle for of many allies many concern in with increased products bit the the in

has So, looked United our we a us nice, positions And in had FMS, the particularly units for steady allies business and ex-U.S. in key our of States Combat for history coming signals domiciled long from its that providing States are the United demand And outside to through selling opportunities with dangerous. allies again, a number comp government have we of U.S. Systems our opportunities. those FMS

of orders. we our in continuing see nice cadence So, terms that

Pete Skibitski

programs budget think wise, MSP. expect MPS Do all U.S. you you for and tightness? Okay. you're survive that competing And this any they

Phebe Novakovic

XX all vulnerable. were the So, to the MPS, We of plus think new significantly. considerably. only army army demands -- how wants. them most were We offering. program programs with But And their and there liked But got MSP, develop at I where last they're year. -- we what are see that with think person always intimacy that's We -- they stretched prototypes. That with are those -- only contracted our very delivered site. attuned we the the to so -- helps it's army

go it important So, comes key that taking both their platforms. major way existing we to and long and -- and us But upgrade with Stryker And there's modernization for with that is recall are element before army a and and participating, a of seriously innovative undergoing new are Abrams, upgrading key technologies, but means another to element fruition. programs.

go earlier going the to provide for to amplify budget the cuts we to schedule that to the There's of potential bit a comments strong. our come on continuing back performing programs all-in-all, like antidote demand on future. in there and like and about -- any nothing nothing an see So, execution. And is

integrator is army's Wheeled Combat of the and remain such. Combat Systems So, will major

that that remains place ensures strong. pretty in the firmament So our

Pete Skibitski

Thank you much. very Right.

Operator

Peter question. And our Arment Baird. go from from next your comes question with Please ahead

Peter Arment

of morning, Jason. a Good there. Thanks. guess on up Phebe, question the on Phebe, kind budgets, following Yes. comments just I your

soon. Just at administration get priorities are a administration, you -- when details lot with you the thinking we obviously budget portfolio? the look how just -- think GDs to we're it and alignment more got But the from the skinny Thanks. some about new new

Phebe Novakovic

funding increased programs Combat moment can that for relatively it the And the regrettably working the demand we but particularly hottest good supporting increased short-term. be the submarines rhetoric current products are perhaps Russia. very the at Systems both ship submarines -- executed the of additional unfortunately, see I a has a clearly, Ron and -- with was to all can is case, meet Navy So, to in our submarine theater as With -- respect business, And our production. Group, -- theater record you of on the executing pacific have that stead. of in the think mentioned puts building

or whether is And not, so we reality been were this like we the administration with appropriately it to that which and quick to has Russians. respond very the faced

highly you believe that now Combat so And in we see faced with reality Europe. System that we're that aligned is with --

is distinguished advocate the career. driven that new strong not an of priority. security this So, administration changed. all-in-all, we Remember, liked our threat National U.S. throughout positioning the and has president particularly by been administration's strategy threat his the long has with of and of national perception Security and

but changes very aligned. in among So, we we instances, in see relative ourselves see priority all some will systems, well

Peter Arment

as And quick a follow-up. just

color doesn't but you see just get give lot [ph] a there. a Maybe little about, of that a have how us lot opportunities on Something could you Thanks. the you capabilities. talked CyOps

Phebe Novakovic

from would So, it any -- But but all to referred be the both embedded it if CyOps. discuss this you mean just height that. One put think cyber, way. in fallen would our be I -- to of if to business let's you is get and cyber you of of

electronic always have leading apply innovations edge technologies the to cyber respect We on of that with the in world moment. been and the real site to

Peter Arment

Appreciate Thanks, all Phebe. color. the

Operator

ahead Seaport Safran question. Richard Our comes go from next Please Global. from question with your

Richard Safran

Phebe, are you? Jason, How Howard, good morning.

Phebe Novakovic

Fine.

Richard Safran

service addition of on interested in had something program, does this much the I is, to back think what offering? the cloud milCloud the was the I at something government? appreciated. be regarding or is, new I enhance cloud know opens this you X.X. services how question opportunity, us the size announcement where added does, cost Just just What is or First wanted opportunities the would maybe Amazon to the Amazon and to that this Was in of for February anything IT expanding it your can was up that I you tell improve the

Phebe Novakovic

all of surprisingly, the cloud. Department So, is moving Defense to the major U.S. increasingly are not institutions as

drive existing an of ultimately technology increased that of adoption offer. And incrementally the contracts so, important market. an And adoption frankly, of offerings across we the expansion our our part cloud we will that our are offerings -- believe suite and

a significant we well-positioned it. presents execute and cloud opportunity, on are to So,

Richard Safran

execution. of for then kind comments and your and broad strategic you to that. second And Okay. a question just -- about for Thanks

Over you're going thinking the reasons. I how discuss past impacting or and that if are year -- of the more adjust and you a so, was to you how long you've about COVID? was wondering, just to after and improving I changes? How that number operate you're are permanent what changes obvious how margins. just for persist these operating, clearly made changes wondering

Phebe Novakovic

bit and what changes expect to declare infer to determinative some -- footprint. that in but little and estate to with question dispositive some any see to I We some have We But and So, work-from-home cases change that from performance commercial of capacities, the hybrid that be a a something as extent work-at-home mean do do emanating remains don't real you're completely. structural. be let COVID which or the execution. in of may to me is asking. that seen, either real evidence too there lot more believe move see soon that a is still hear might from anecdotal for We systemic it

performance -- this what frankly, operating think through of disciplined its across the challenges both to during going we they company COVID The units environment. operating you our really in manifestation frankly, business and and was the a have able of more and COVID our that really COVID -- our and provided were of the to significant I the and discipline -- to back that is a performance all the the company's some and better workforce adapt to the leverage. execution operating costumers saw vagaries

So, static. what never to on excellence that. a about. Operating improvement better around I underscored, go That's build it It to and all we as continue And that better that we excellence. permeate I continue to then continue has amplified will get operating we understanding that. will frankly, continuous -- and me, of discipline that our And forward. suspect will is to is have And longstanding think of that, better.

the operating that So, undergirds I a our of importance discipline there'll performance. structural don't that change but focuses be it's in performance, simply on think

Richard Safran

Excellent Thanks. color.

Howard Rubel

just And last have one for please. will question, Jamie, we time

Operator

go with comes from from question Research. Stallard Vertical Please your final Robert ahead our And question.

Robert Stallard

much. very morning. Thanks Good

Phebe Novakovic

Morning.

Robert Stallard

this forwards has pricing a division. then looking quick I an couple in XX pulled wondering and the had second quarter fed a how the just roughly demand secondly, And for the Clearly, also at? time order Phebe, Are seen on here. into you. Aerospace if is at looking very first But delivery? lead talked still months of strong a first any between we the And before. quarter. you was you from aircraft ones How quarter Thank first quarter? the

Phebe Novakovic

and of it you comes as forward, think on execute demand, demand about arrives it it less that when doorstep. comes pull your So,

demand saw nice customer -- start we -- starting to noted a I of steady broad and increase respect February, across a demand as is in we our with saw what mid base and in specter So, we the U.S.

is Our initial into Pricing very quarter. that that is show well. or demand estimates indications carrying second the holding through up are

know, very about pricing. you precious As is lost. It disciplined we are once our all

We’ve get hard a back. don’t it You slog. had

done elements I to And six additional anytime don’t I months about the interim earlier, up as noted has very So, significantly all that pricing have that changing well. it’s of production and ramp to see given perform. soon,

So, I that question. answers your hope

Robert Stallard

Yeah. That’s helpful. Thank very you.

Howard Rubel

ends our everybody answer And and in call. much. office. very be Thank much time. this will be your my your available now for reached Operator, to I questions, you I Thank very you can

Operator

that with gentlemen, thank and call. you conference attending. Ladies do conclude for today's We we'll

You disconnect may now lines. your

General Dynamics (GD) 28 Apr 212021 Q1 Earnings call transcript