GD - Earnings call transcript Q3 2021 | General Dynamics Corporation

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Operator

Good morning and welcome to the General Dynamics Third Quarter 2020 Earnings Conference Call. All participants will be in listen-only mode.

If you would like to ask [Operator Instructions]

Howard Rubel

Thank you Operator, and good morning everyone. Welcome to the General Dynamics Third Quarter 2021 Conference Call. today estimates made outlook. the statements forward-looking represent regarding our Company's Any estimates risks some subject uncertainties. These to and are

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

additional certain available completed, We on filings refer GAAP with website, and webcast; measures, SEC, slides including my non-GAAP our the disclosures Relations the Phebe the which comparable all the about see accompany our financial reconciliations that will to these these to our Novakovic. measures page our Chief that also turn investorrelations.gd.com. to please are earnings With to Chairman measures, non-GAAP it's of release for this pleasure of over Executive Investor call and press Officer,

Phebe Novakovic

us. per we earnings the XXX Consensus earnings earnings Thank per everyone, Good million. share you, diluted of by Howard. net beat morning, revenue than X.X this with X.XX of reported Earlier billion, $X.XX and of anticipated We sell-side. revenue being share lower on of for and operating on somewhat $X.XX billion, morning, by thanks

results. than Operating are is up are operating real per X.X%. the points This reasonably anticipated. but third for than all X.X% earnings good, XX last are is to about the up story the quarter X.X% year. However, and more is led beat. less against earnings basis up Revenue sequential up X%. share margin Net up earnings the earnings This is us

are are Operating per from was million, cash quarter very revenue $X.XX, up by Income. up year-to-date and we XXX XXX is respects. XXX% Free last earnings in earnings operating net in basis, had X.X%. almost quarter from X.XXX Here, activities the XX.X%, powerful a X.X%. up important second EPS We and billion, perspective; share follows flow Net a a or net is X.X%. a million quarter summary, we a a in strong On by quarter. or are cash XXX This strong all cash earnings a million good of operating X.XX by Net XX.X%. up earnings. that beat XXX% X.X%, In cash flow was earnings XX.X%, a by earnings quarter a billion, performance revenue enjoyed

into then me let taxes the Jason answer segments. around questions. right you move around backlog, deployment the some additional performance your color of So Have of color and cash, and give cash, business

Shortly ensuing that At a production and announced renewed We this and the quarter. we half second demand the aerospace. cutting demand reached the you there anticipated in in months, quarter slowly let additional were second that quarter production certain the of XX -planned Both production. COVID First in half implemented outset, had over planned point for second XX year. and in third their fourth of result the a and this remind last as were the of me deliveries year, was reduction production to to with in clear cuts the that increased pre low thereafter post-COVID planned we became resulted chain issues. in of cuts April supply year, in that related

quarter, is to than aircraft XX of aircraft as on XX.X% million year-ago opposed million delivery the operating of turn have. mid-February, preference. X.XX On the of supply and up for had to the a earlier chain particularly anticipated. in a results demand to challenges XX quarter. margin. one but us, full a delivered. revenue operating fact, on one billion slipped more into We customer Aerospace that, in months This With also it let fourth created In planned, XX Aerospace and managed the we the accelerated XXXX. XXX opportunities, operations X.X% than problem rich fewer is quarter earnings for had with four balance, me Revenue

in had the On down hand, an operating driven higher was in are XX in the will result the million attached degradation basis of expenses in Centers. earnings margins. planned. X.X is X.X additional around sequential press margins not This expense, million alone, story numbers other on real and ramping spectacular. the perspective, order related but terms, an of Service a only allocation XXX dwell book-to-bill X. are better available on aircraft From quarter-over-quarter In G&A the release. warranties [Indiscernible] of XX the This on margins to up of I settlement X. the points supplier here the production. The earnings by of and charts was to by sales, delivered as R&D offset, to of the gross boarded to after quarter had book-to-bill million a GXXX Gulfstream dollar $XX end and these in the improved on a improvement, claim part they're margins Aerospace

quite was The quarter have some second in and number the of quarter we strongest seen the units time. that order

slightly was quarter better. This

rolled the accelerated the discussed, in into on quarter. third and through quarter. and the the continued remainder quarter developed truly through that As that demand previously of activity second in middle sales quarter over pipeline the February first of continued The increased

to a a experience activity of continue pipeline. high We and level solid interest

product highest new are the well. From continued GXXX As years. a quarter the the consistent Gulfstream order a quality Margins excellent. basis and backlog the a last result of on activity, perspective, this and GXXX perform is in improving to is X

XXXX accomplished. the X of a on follow of performing into for the the has We in much metrics with these further but Rolls-Royce hours test service be well, delivery to end is fourth We through XXXX XXX A fourth a These track to remains remain are the of quarter. on GXXX of the months. quarter XX entry to The engine to successful building the for have X delivered GXXX scheduled quarter, approximately five with new aircraft aircraft. test in the program in momentum. customers

to up came slip short. third attributable mentioned and I XX deliveries The had As one quarter was earlier, planned preference. we the in customer

we Main up points tanks a In margins. improvement X.X% XX slipped combat Combat stable and systems a fourth, that brigade X.XXX quarter-over-quarter, year-ago Strykers up operating is the [Indiscernible] Further term, from the down If goes in operating our year-ago one quarter, Demand the billion over earnings quarter. quarter. Romania, Yet combat on basis XX margin planned, in vehicle a revenue the of order of near or but strong the Battle year-to-date vehicles and our X.X% a U.S. in year-to-date everything systems. for and is performing Story while theme for an operating are in aircraft We on fourth another Domestic Switzerland. on into about [Indiscernible] Denmark, up the stable the X.X% will revenue are strength year, continued basis half the with and combat sequential opportunity system year. of as upside we per and potential excellence is operating basis, XXX and the where improvement million in The as quarter XX all systems performance. combat period strong Republic, X.X% deliver rich the the margin. Czech the operating well. have that per example significant of program, however of remained planned in had leverage with with XX internationally, from and possible MPF point are Abrams Poland, the intermediate earnings

the issues in Ajax test and read have may during the have that in about emerged phase. press some vibration noise program You

quarter Ministry working an In can closely by Systems impressive are resolved. We and the that be of both Combat was Group. rows Army issues British this are summary, very with and performance of confident again, operating once Defense, technical the

Systems, of In customer. summary, clearly strong, Navy visibility Electric ship contract, up is group for X.X% are revenue repair XXX over growth the also remains shipyards. up given is Throughout program fact, Marine a an a revenue early budget. on XXX is fairly and in first construction the On quarters the construction schedule. backlog in X.X%. Operating last or Year-to-date in our million this million and time. in to margin Columbia quarter, point up XX X.XX still quarter is the ship The performance over million of the on year-ago in new our to group, a across operating revenue distributed revenue are the evenly year-ago our up operating We solid up work, business, in of cost the basis growth is on we real quarter and million quarter basis, X margins. sequentially margin FYXX steady earnings revenue growth, support and It quarter. are the is on XX improvement quarter continued This well impressive up a above X.X%. this opportunity improvement X.X% revenue very remains earnings The over XX billion been Turning while and three current strong year-to-date. had was visible. boats sequential basis. supported in have programs continuing particularly a repair has

of This mission timing revenue to down Moving driven several shortages. from was systems to segment on technologies. decrease XXX year-ago quarter X.XX the chip part of billion X%, quarter programs the a in had million attributable the by revenue in from

a state which revenue margin. are rate grew that or of X.X% quarter XX point EBITDA at including Operating of result. up a XX.X% local basis year-ago XXX the truly margin competitors taxes, million carry technology are below XX.X%, Most information on operating line. and local the against of taxes hand, a other on is our impressive state X.X%. and our the On million drag XX earnings

and relatively perspective, XX.X quarter systems. will however, good remains with periods. update. both This a consistent The The both customers businesses. for now the same X:X little priority on a spaces. an than move a needs, particularly to we which quarter dollars support at book-to-bill toward tens costs as are unclassified trust spending active around and comparative DDIT model. to our was of opportunity a the order are This our of XXX Good in more be we less the and book-to-bill the customers Earnings X:X budget on prospects billions at or pipeline quarter than revenues decrease civil activity of Total is cyber more remains margins. opportunity government throughout less and somewhat admission better expect defense million backlog is all security the year a better top will the horizon. in second order From well-positioned and significant the and over impact zero remain revenue billion.

months. with my nine concludes remarks respect to good quarter and very that a first So

to As my the remarks we referenced we look about except call, update towards in be I we in gave as last year, end with that the the guidance you Systems. to on line the of Mission expect performance

now unchanged. over Aiken remarks. our the will turn However, remains I further call Jason to for EPS guidance CFO,

Jason Aiken

in XXX% for performance quarter. our of flow earnings was cash flow in Thank conversion start performance the from months, full-year rate Operating again, expenditures, the free $X.X the strong you, the on the morning. capital and Once from our Phoebe, our net was continued free in and including segment; billion technology XXX% orders flow first is our good cash conversion. I'll with quarter. X $X.X XX% billion cash cash strength XX%, our approaching or conversion cash Through outlook range. to Gulfstream

time, the the for us performance For we've range past year. achieving of the first year in our than sight some several for seen cash good those of and to line years target end you the the X gives months who us is of followed better through upper of this

That the the quarter, sales. Looking sales little at capital in months. for X% or expenditures first deployment, X million of us the under of capital $XXX X% puts were a

in somewhat so So the the still We're fourth in of year. projecting quarter. spending that obviously in capex X.X% our sales, the below implies forecast range of uptick an for trending full-year

million paper We was of shares were year a also and $XXX on billion We ended to a of in July, share. average commercial paid and repurchases notes in per in $XXX the shares matured the although an That million repurchase $XXX to-date of of outstanding. no $X under new quarter just million brings repaid we price there X.X that XXX issuances, at XXX,XXX million quarter. spent dividends the a

retire the X.X quarter a last billion, from third from balance billion $X.X year. end and We XXX balance down of ended than net time cash XX.X this that the over more a quarter, We down expect and million before debt to last billion year. fully of the of with position just

for fourth we With the year net XXXX. end the $XX in quarter, the billion balance CP scheduled a time expect since with repayment debt first to below the

remains the bringing for As in year months period million to quarter was $XX interest the the the The was were rate third a quarter a consistent for XX.X%, us of story first in nine Company for rate first first to the expense a and a tax trailing XX%. the months. interest our with ratio bringing million down months, XXXX. result, XXXX. around expense XX.X% for X.X once one-to-one down in activity months in from X.X XX million, nine whole, the for which net strong net for XXX again the the third That Order as XXX book-to-bill the outlook, with times nine XXX the brings a quarter a full-year in ratio from to quarter and the same our backlog for million, times a

book-to-bill a mentioned, the Aerospace the X.X book-to-bill order Phebe As while X:X. way the the Group in the of with times recorded activity technologies led in quarter,

X% and total And potential my quarter in in backlog and contract a that's up options of the was Foreign the with billion. to start turn the to $XXX impact a fluctuation IDIQ total Including combat billion, resulted That of reduction systems. I'll the quarter, in a majority remarks back time finished Q&A. that this exchange with over Howard concludes backlog last contracts, We $XX.X XXX.X value, year. rate over in it million

Howard Rubel

Thank you, Jason.

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

Operator

[Operator if your you. change [Operator Thank Instructions]. you do Instructions]. minds, And

from Our from first question Mark (ph) comes today Walton UBS.

Analyst

it will to XXX Thanks. I'm service. normally than XXX like I the reengineer some for Phebe, of you talk online materially of that but expect the and be usually about the are we'd bit the and move into XXX you XXX wonder, would the potential engines, new-generation entry thanks. reset lighter of with transition margin do pretty seems coming expect XXXs haven't reset impact if could the Great, of we'd margins level just that the a curious new

Phebe Novakovic

through We on number so element each fair get questions walking a here. of I think this it's worthwhile

we'll at margins. make some by X let's you the Development, that of comments think then about a a First, it a elicited I'd until be of replaces Product the get to When couple present, New comes have the we XXX look joined take the in Jason soon like and I to bit earnings. and will XXX, later. at models production margins, and maybe little XXX, points about the XXX

operating margins. all leverage Deck. that, aircrafts the is it XXX all same to GXXX the engine producibility, and going the which supplier give Gulfstream. XXX, have same do. these This seeing into same Symmetry design same remember, and additional The do all wings, or Importantly, us similar all undergird and producibility. in remember wing we and to I modern implied we improvement increase single an really and for basic design you, one add one related, We that we all our we uplift spotlight embedded the our are commonality and more property, doing and the and producibility of be everything wings, This goes to the the need that of have productivity amplify here's have in that's they the fuselage; fuselage. engines important capex turns and -- plant, GXXX family, every production, for And to on of equipment to engines, allowed same and we're design basic built Flight to a margin are it airplanes tells the from part, but for the from too uplift need and XXX in it improving services. now these think the the But, to airplanes have to remember of our the again to

unpack awful R&D, and for we a Now, tutorial little of -- that a a if little we some talk get lot to I'd of an questions about accounting. Jason bit, perhaps, R&D and but a for all like more bit on not bit

Jason Aiken

of to long-term lot a and new the have investment development new get reminder, any do what -- investing we over a As on commitment Gulfstream time? point So margins spend, steady technologies Phebe over and impact does overall in product performance R&D of around we demonstrated 's will this a have questions product time. that

if expense look period, XXX, as the of sales I a roughly period range. time, X% over it's is you and largely called Company-sponsored change behind spend been part that R&D don't multiyear we we've time. it over R&D, a I averaged to think expect is and over to wouldn't say And but us that spent parcel

Phebe As GXXX down. of a keep part spend those helps the XXX and development. and mentioned, commonality XXX clean the that the sheet while so among as airplane

right so spend. are both of within airplanes And R&D of that profile those

efforts to to think as you were see in in overall, R&D quarterly and were we month, inside did more line are to those any next probably That program these those little including see the supplier expense that the quarter. extent we we'll the has perturbations lumps with the create tends programs, you're offsets contribute development lumpiness with to but and two suppliers bit quarter, this period do that expect in R&D chunks I spend to a and Company-sponsored that this received right of familiar announced come that for R&D. the

don't that an they in once frankly come, have we the Gulfstream the we overtime. improvement introduction, overall expect that to So trajectory -- see the impact or for margin

Phebe Novakovic

year going you they and to Earnings and insight does will in help improve. 'XX, we're amplify if what going back? margins call and looking better give They're on hope 'XX point are both at of you Margins their Gulfstream. be I So and to at will in margins to aerospace, year way, year. mean color by that we're your in than improve this the what explain better were into helps at next last low some answer were years and step again, Mile. question, all some that when give we next those 'XX guidance, the you 'XX

Analyst

Phoebe, great. That's Thanks I'll one. stick to

Operator

move Thank David, you, We Strauss. to please (ph). on David go our be now next from which Miles coming will question ahead.

David Strauss

ask highlighted good been the you, that you it's backlog Thanks, Phebe, about wanted years. morning. to Gulfstream in X is the highest

if all on you the how you've of like comment also go today. aircraft years take at as where got rates backlog on based the about you something And I in think balance production revenue, so Gulfstream? just challenges, at you same chain time that I supply X.X kind do think

Phebe Novakovic

supports increased reduced COVID we'll the all into large and back on that to call, after supply to increased get specificity part up. needs the by demand, COVID chain we driven I as production, in last supply The demand response were next COVID, in challenges that noted, but gear year chain production

bit So a give the wanted of I to little the earnings you around margin why but and there's that's a performance. color headwind,

David Strauss

'XX? Okay. But should 'XX see higher in all being said, and that production we

Phebe Novakovic

drive to that a anticipating revenue. higher We're

David Strauss

Alright, you thank very much.

Phebe Novakovic

as my "Hey have. demand, in remarks, ramp you and problem be this manage a thought backlog. said up challenges. " we good continuing we've But look, some we got as manage and to to demand. them. you you, I there challenges as But that rich those that. I very ramping got is wanted a can guys to was with possible nice, tell will understand important this We've through are We a I be up, strong transparent

David Strauss

Thank you. helpful. Very

Operator

Research. of to going now Robert, is David. open. now Vertical Stallard line to move Robert Thank you, your We're

Robert Stallard

so much. Thanks Good morning.

Phebe Novakovic

Morning.

Robert Stallard

challenges. on was these wondering you could elaborate if I Phebe,

Chip face up. the of headwinds Mission Systems some ramps some in You will you're division also in that seems issues see Aerospace potential conscious

its and you in generally also peers chain of Thank seeing on you One was if businesses. topic be comment about could in what wondering supply your challenges could the defense future. you. broader I talked this

Phebe Novakovic

on We've year chip we and I I expect issues, you next look would had pretty businesses, impacts. to Defense chip they manage well. measured impact, of Systems. the that to the seeing supply our Mission significantly begun quarter, challenges. into how impacted are to material portfolio Aerospace some tried some give to those significant note or of would at the chain able of not I however, note, mitigate been shortage supply But chain but even close -- do since we the that go even somewhat. through across the

significant hasn't and than For I us only a it's Systems. by been Mission speak other can us, for impact driven that issue, at technologies and

Robert Stallard

it the Aerospace, in with challenges is And lead tight? you're or time Yup. parts finding specific just a there, that particularly suppliers is issue

Phebe Novakovic

that time. really don't a little I down a a a It's getting lead year forward increase any This timing we primarily last The But, on to moment to just and particular basis. bit that. impacting the spooled that the production speed. folks issue at adds up of problems in see back see fact headwind is we going

Robert Stallard

Thank sense. makes much. you That very

Operator

Rumohr now We're Thank to you, of over Von going to over Cai to Cai, move Robert. you. Cowen.

Cai Von Rumohr

on some improved in at so net you seeing are corporate, much. fractional. most the worth importantly, And opportunity you versus specifically Thank pricing us Phebe, color could high you for give any versus demand Gulfstream, sector?

Phebe Novakovic

Let me answer those order. inverse in the

We let pricing; me your some pressure and have seen unpack then, demand. upward on

pandemic. to America product product our than lines. importantly or One, fact, demand evenly, the a individuals was and very and net look, of high worth and XXXX, much a increase nothing unusual of think our wealth the some strong. the economy, distribution, across Fortune and creation; [Indiscernible] quite, the there's pent-up North mix, during of is, that geographic is report pretty demand So And view create quite buildup in customer attractive the demand combination our COVID mix increased return is spread The the did strong factors. I other on

Cai Von Rumohr

That's much. Excellent. Thanks I all so have.

Operator

you to Epstein Thank line's Ron America. the Ron, yours. to going of Cai. we're And Bank move of

Phebe Novakovic

Ron. Hey,

Ron Epstein

Yeah, Good hey. Phebe. morning,

bit. a changing gears Just little

discussion some everybody [Indiscernible] that. -- focus is there to was I'm maybe on going not while going so think to of A back, do a I

Phebe Novakovic

innovative. Oh my, how

Ron Epstein

some Abrams, if right. maybe I the MX in around tanks them, purchasing press the I of Polish XXX remember was Ministry Defense I Abrams There think some imagine that. discussion and

Phebe Novakovic

Right.

Ron Epstein

international give the Where you can on the other business Land some going and business? of that. stand do if color they on Systems in some Maybe

Phebe Novakovic

as the support is tanks to Department their very given this XXX we, as Poland. of and potential well and frankly, working order for historical we're have, a of a with our customer, their experience, system west. closely particularly Poles out location If streaming the folks powerful Yeah, of to Defense with geographic

if think maybe bit again, to East. just process two in demand somewhere through Middle is this out signals looking the FMS course, and you any Czech haven't sale, gotten give safer. additional we Republic, world at year little and color, of Denmark, we So, a But we're of see an Switzerland, Romania, FMS between The the period. increased the Spain of coming

Ron Epstein

Great. Thank you.

Operator

Thank you.

We will now move over to Seaport Richard Research our Safran next question of from Partners.

Richard Safran

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

Phebe Novakovic

Good, you. thank

Richard Safran

Well, hear. an flow on the business to great you're I deployment, update thinking to dividends, such about performance, good that's repurchases, invest wanted With commercial in paper. get cash how capital

retiring your I heard I as any ahead, are are you or but look think past in the on stated we update just current in dividend should about if here the paper, you your on Jason, thinking considering you invest you're you've strategy thinking Now, maintaining it. repeatable, business about changes? remarks any about commercial there's but curious how it's need be depending and that

Phebe Novakovic

specifics, the We return, strategy day from give to good business essentially management capital or me framework investments, been dividends, opportunistically. we any repurchase. capital strategic you but and can in the our team. strategy where of Let Jason turn and on one share and get this This Jason? capital that a has opportunity or advent our fill the can deployment then invest Acquisitions remains the unchanged.

Jason Aiken

thing your fourth so commercial future debt than it around maturity and due. course late in in The just paper the that repayment to add point as sufficient more comes got debt, commercial year. priorities paper will I only is on repay the next that think on we've mature, is the normal we'll in next quarter hand, cash I'd here

billion a around due. it's dollars that'll come think I

continues So mature, the pay no target credit mentioned. for a point a until ladder mid we course And term real those our down the in a comfortable so debt then can support elements due long those focus we'll of on up to get eminent issues due think Company. the that to rating as place we there, to we priorities Phebe

Richard Safran

Thanks very much.

Operator

next Seifman you, of Morgan. is be Seth Thank question our now Richard. line Will your taking Seth, JP now open. from

Seth Seifman

and everyone. much morning good very Thanks

Phebe Novakovic

Hi, Seth.

Seth Seifman

the about think you I timeline And thinking when before out testifying and week changes anything you'd certification, that which point [Indiscernible] then guess, Phebe, a also the in the ODA, XXX tent, long engine as and Hi. you align the XXX, the the in is mentioned specifically last Congress. to for there pole certification about today?

Phebe Novakovic

Yes.

estimate moment still late later. for XXX X So the with remains months next our at to X the to XXX, year the follow

complex changes any through. in performing moment. and adapted well we our for of you, see got do, through, the those we'll For see mindful you that know. design This work What moment of before let going a to challenging challenging. on and you to they some But reason and adjust the forward outperforming the regulators that decades, always FAA's are testicles its followed meeting of have our are we don't know terms if processes engine you'll engine particular at these at either book and are issues always any don't lot who but We've its certification we and estimates, or years is extremely to basis a in of capability, game we've specification. to get so we

Seth Seifman

working And Thanks. in then maybe maybe at the then capital you Great. 'XX. on as for the update year and without on just capital see for follow-up guidance, working to be what and Jason, just you buckets of you end expect are opportunity could where specific this a us if

Jason Aiken

Sure.

well year the hundred last activity and seen throughout we've quarter. the [Indiscernible] the capital sell as the the quarter, of largely can six in this benefit you the exhibits in call million it The the working $XXX Gulfstream. that is from order significant from and the That hundred a see think the five particles couple morning, as I performance as from or was the of at test X,X of programs. continued

look So that be to and we capital get in and business as that, work level get and working a beyond is to level the some see of in certainly I to that as just benefit We're would we this we big you through year Working a to continue bit expect year-to-date XXX% of benefit ahead, the really expect this fourth quarter headwind but capital the as XXX% grows, a approaching that quarter. back conversion is still above think the to year. next year. conversion

So program, test at of continued would part as off got benefits sell Gulfstream. at through we get articles, is Systems. of And that demand Once those XXX the well. to you've cadence the then, ongoing course, look the we Combat

and the And You've seen on as a us a more that continue really 'XX. order to there I program will international in regular be well think 'XX, into large Combat of even into achieve as a tailwind tailwind, Systems.

are those some the of major So movers.

The should of is profile peaking it, we other of this Systems. year side in expenditure in capital be Marine investment of the where terms course,

to that'll by see to return down So year and start XXXX. come we normal more level next the historical

of years. So really we big the should X, the where there those movers you ought are over sense give a and next the capital moving X see to working

Seth Seifman

Thanks very much.

Operator

Thank Seth. you,

Morgan to from question will be Liwag Kristine Our you. Kristine, over Stanley. from next

Kristine Liwag

Good and morning, Jason. Phebe Howard and

Phebe Novakovic

Morning.

Kristine Liwag

currently the production? the anticipate you vaccine And order sense also you a vaccinated? of affect employees do do will executive of GD how that percentage are Phebe, labor have and

Phebe Novakovic

Yes.

our mandate, like to So workforce. the opportunity before I'd the I reiterate take of acknowledgment again, to our get into

critical factory I floor on in stayed were the they national point of as think the they they and sacrifices cognizant with result that, a they necessary where a made, stood watch courage that and and our goods places early and personally onset proud I'm of frankly, their I am courage are it's pandemic, needed, our the the perspective, to of of to and the from remember in important of the declared the and shipyards throughout fortitude pandemic, services the security. were produce showed. business we in workers that infrastructure my national fully for

let to the me Now turn mandate.

the largest as customers businesses, As our of you that contract and implementation. the are know, geographic mandate received covered we been order well because contractor, modifications the implement could our of And customer, mandate of with has the are mandate, working diversity are executing of we operational set others many our office fully the are a Two many businesses executive accordingly. to executed. corporate of are our in trigger as an process federal by on and

either keep mandate. at, or in we we're Then, we tally, some range a we yes, form so. or partial vaccination, the understand the of So believe pretty full XX% running in

Kristine Liwag

to Thanks, that and production and you I then We're suppliers the with you able to and with add mandate. potential do chain regards rate to mitigating get plans have How that one are And if not could seeing for aerospace. you're comply supply parts? on maybe how chain aerospace the Gulfstream? if your issues about supply of think some also

Phebe Novakovic

Defense I frankly, this impact the supply to see the there the that, Walt lot in extent an that throughout affect business a is Aerospace Well, any a lines mandate the of any it'll lines chain of of our deal in But certainly with Gulfstream or of moment mindful, particular workflow at other should large we will they challenge at as emerge. perturbation, don't of business. and be

systematically, methodically, challenges with dealing thoroughly. of history a and have We

operating that may apply or and discipline not that operating that may arise. emergent approach to issues us discipline. Any expect you'd So

Kristine Liwag

Thank you Phebe. very much,

Operator

you, Thank question. from proceed Baird. move our your next now Peter, with Arment We'll Peter of please question to Kristine.

Peter Arment

food everyone. Thanks. Phebe. morning, Good morning,

Phebe Novakovic

Good morning.

Peter Arment

just ask any quarter operating clarification, there in just one-timers you performance had maybe that -- this is any the on Is given the Phebe, there XX.X% technologies just and -- the segment, strong there.

Phebe Novakovic

No.

Peter Arment

or -- just or this around going do just its if able margin view sustain forward, being a XX% any Thank you. not, double-digit segment that? color you to

Phebe Novakovic

double-digit Yes, forward. going margin

Okay?

Peter Arment

any of just terms I -- changes you ability No, of to that in Yeah. any or there -- kind your manage are seeing

Phebe Novakovic

Peter Arment

price a know environment. I very competitive it's

Phebe Novakovic

No, across so change should been our entity, have consistent any not see this we've systemic performance at I that. impacted that in pretty the moment, don't margin

Peter Arment

Great. it one leave at I'll thanks.

Operator

you, Peter. Thank

Matt of comes over Wells question Fargo. you. to next Akers from Matt, Our

Matt Akers

Thanks. Good morning. Hi.

Phebe Novakovic

Morning.

Matt Akers

aircrafts? of if platforms sort for have some I the incremental that -- talk you of bought cannibalizing just GXXX that XXX, kind to feedback, your about, wonder guess how of much early of of of there, seeing other the kin sort demand some versus the other you're could of wouldn't and I customers potentially

Phebe Novakovic

basis high companies. the there new of that of I And the see number of there's that think or extent the cannibalization instances taken a XXX in are lot to-date. pretty terms XXX customer a the worth There norm, and XXX interest here. to here we The XXXX much, there. or there. and be nothing is of no individuals and incremental portfolio, some here rest We've frankly, here. XXX good Fortune XXX a demand adds for that notable ultimately incremental But net orders. The base. Gen our typical would And in to may outside steady. But good this that [Indiscernible] have argue I exceptional particularly is than the XXX being other there's We the and, both of customer be pretty replacement remained

Matt Akers

Phebe. Thanks, Okay.

Operator

Thank you, Matt.

comes from question Global. Alembic over Skibitski of you. Pete, to next Our Pete

Pete Skibitski

morning, Good everyone.

Phebe Novakovic

Morning.

Pete Skibitski

seems presence if lot was Congress. you if a your some by occurring tailwind odds There see of I be requests you on to wage And that of could wondering to to be And XXXX you you'd the of could the fiscal on this into Phebe, in wondering with end share I'm if could maybe Defense -- Budget. us, if the not? or a share the budget GD your year incremental law Programs support support calendar signed thoughts

Phebe Novakovic

I I know on fulsome congressional as processes, you in-depth as much an do, signing. the of likelihood about the given reporting think budget

-- go of going I of some but our part and not beneficiaries I'm So to increased importantly, all were and supported timing, think on frankly hypothetical were programs of on Congress. our the spending major the all of well speculate

up So by particular way, down. or surprises, all-in-all no we had the

this how being quite budget on out. is So comfortable we were played

Pete Skibitski

at Thank it leave I'll you. that.

Howard Rubel

you, take we'll just one Thank question. Operator, please. more

Operator

Of course.

of Noah, Noah Our will Sachs. over Goldman Poponak be next question to you. coming from

Noah Poponak

Thanks. Good morning, everybody.

Phebe Novakovic

Good morning.

Noah Poponak

debating the of in market demand. in sustainability the keep and large, recent market this investors the uptick Phebe, jet end at business

it's like feel -- people some a And

Phebe Novakovic

that. I a of have heard lot

Noah Poponak

kind of you on from Exactly. a to and to wonder had you've I the seeing? new enough decision time, deal there speak customers I the Well, I in not sustainability or real if what have you've guess perhaps wait made, so just of if we're enough view of heard more you've guess, customers, pragmatic many to

Phebe Novakovic

our about are, reiterate There market. I the to that as demand back, customer think across tried be the this, entrants force. Well, Fortune and we're think before, that new I -- that as seeing, little is chicken base, I XXXX noted, wouldn't nor existing into in I is should anybody, I

entered have over additional the profitability net into last two worth their Companies years their some the individuals market. high increased As who have and

and and strong I'm I of -- the sustainability. most Gulfstream jet the back, not can small economy. no only would resilient Gulfstream. in, are that in a speak is So most through strong But data been in mix, economic and terms our -- the noted demand worried about at driven that suggest I fact and a are economy, earlier, business the think by moment we customers product that the for is The market, broad-based market These cycles. in part data [Indiscernible] I measure as demand, given our the attractive have

[Indiscernible] pipeline So good again, we we've are a and got going forward. very

Noah Poponak

That's helpful. if Do customers a how months brand-new? even many in you XX of the last have sense, directionally, truly are your

Phebe Novakovic

our and and have we've but customers -- but historic would I of market folks, number increases. fair to share back, in gotten it's it, go Parse pretty some regular costumers are new new regular a our -- also

remains I'm concerned, demand pipeline robust. So very very, good we had and as far as the

Noah Poponak

Great.

lot. a thanks Okay,

Operator

Noah. you, Thank

hand any Rubel As back that I closing question. for to like would to Howard our remarks. final was

Howard Rubel

us today. Melissa. Thank joining our call all on Thank you, for you

As a third release quarter reminder, highlights the please website and Dynamics the presentation. for earnings General refer to

will call. If other at have questions, you reached now end any our That XXX-XXXX-XXX. I can be

Operator

for Quarter the XXXX and great concludes have of rest This joining Earnings a Third your Dynamics Thank General day. Call. you

General Dynamics (GD) 27 Oct 212021 Q3 Earnings call transcript