GD - Earnings call 3 2023 | General Dynamics Corporation

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Operator

Ladies and gentlemen, good morning, and welcome to the General Dynamics Third Quarter 2023 Earnings Conference Call. [Operator Instructions] And please note this event is being recorded. [Operator Instructions] And I would now like to turn the conference over to Nicole Shelton, Vice President of Investor Relations. Please go ahead.

Nicole Shelton

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

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

to will measures. non-GAAP We certain financial refer also

measures, that the disclosures non-GAAP investorrelations.gd.com. accompany our which available on GAAP this Relations additional the page press website, reconciliations to measures webcast, For see including release Investor of about comparable these please and slides are

Aiken, Jason Financial are Vice President, Moss, today President Chief call the Executive Technologies and Officer; Vice On Bill and and Controller.

introductions turn complete, With over the I'll to Jason. call the

Jason Aiken

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

$XXX conducting third million. net of year. I'll or is revenue with Bill. Earlier per up the today's against $XX CEO, $XX earnings down note thing of $X.XX X.X%. earnings our that this Phebe morning, down were share first $XXX we earnings under and X% Chairman million $X.XX on today, Net million. were billion Novakovic, weather earnings share reported quarter earnings per diluted Revenue and operating were down be call or The the was And income of of Operating along is I'll X.X%. last billion, million $XX.X so

results contraction quarter-over-quarter significant in the show but point revenue, So operating growth XXX basis in margin.

On the other across hand, quite board. are sequential results the good

billion, EPS The beat X%. down From operations. On quarter's revenue X.X%, Operating entirely Operating And margin XX.X%. $X.XX were earnings cash flow quarter was share earnings which had segments another earnings per operating is $X.X XXX% We than and higher the first and is were good particularly flow was all by better in the down strong performance a share cash up of perspective. by last This segment. free cash Marine operating XX.X% operating by provided in beat as strong on Net at and revenue by from was quarter $X.XX in follows and very about a beat anticipated. performance revenue net billion was and almost from earnings we different X.X%. expected. by cash earnings X.X%. per net earnings. same the activities perspective, came less consensus very year-to-date the basis, than diluted half. Order Here, good by a we X.X%, Gulfstream

minute. In cash detail some hear You'll particularly strong and from of as enjoyed quarter, a and chain of particulars on mix supply in financial time as so a headwinds more will that the the short, well backlog Bill program in cure. other we just light

me let some color So move right of ahead around segments. business with performance the the

point uncertainty revenue XX certification. up margin. XX.X% basis considerable FAA some Aerospace. assuming closer on driven improvement had aircraft in-service and supply GXXXs, we're we deliveries deliveries the in operating anticipate of the tell, granted the as the end additional deliveries Aerospace operating track through the quarter. To to deliveries and basis $XXX fewer in There a in made said, was That currently XX.X% million billion in Revenue of get in constraints. ago in chain XX margin. quarter, sequential you up X million earnings in by and quarter, Revenue with was second Gulfstream lower amount on quarter. $XX the revenue fourth in, $X.XX comparison We're due is earnings including million the and excess XX a quarter, earnings on can than better. between XX the year. to the a to from has aircraft The deliver end year First, more much provide here, a X%, were XX of were before All color or certification $XX of down XX million of $XX as of Operating quarter. we Gulfstream at there's or down margin. point XXX million $XXX operating were contraction

demand continuing X.X:X and This quarter, strong was the positive a book-to-bill of yet was Aerospace reflecting Moving another demand. had book-to-bill environment. Gulfstream to X.X:X. alone

In the to continue In managed sales the our was X:X fourth going years any. The its a XXXX, to mid-February a activity period into ago. Israel demand of strong the X.X:X. over book banks. we was orders impact includes XXXX This wildcard the X-week expect in X.X:X increased a the deliveries. of We that first bill. the if expectation X.X:X. quarter, XXXX, conflict it's of there was vibrant Gulfstream's in it of hiatus in quarter, X.X:X. orders. failure result A stretch get XX still however, book-to-bill began be and to as of 'XX, when regional will In given over quarter several It XXXX, would, quarter X.X of demand, have quarter year-to-date aircraft to on in and And a be in fourth significant

strength grew $XX.X backlog. leads the at All conclusion. quite to years. of the over the third of ultimate for end from billion build certification to market and move products. The an test all XXXX, GXXX continues astonishing closer the program at its of this of increase the of an naturally end in quarter billion speaks XX% It $XX.X to of to the Aerospace me flight XXXX to X.XX This of our underlying

But fewer spending we make time circumstances. the fourth upon and to our in submission. Operationally, and continue resources year, had issues of reports plan of chain than the the in of the data we've FAA of progress availability discussed, We under previously final XX engineering plan largely most are the the forecast year Gulfstream for we a supply difficult that may continues beginning XXX originally XX as year. this result FAA deliver to allow to good of flying. aircraft this company on for credit to the currently dependent the quarter certification We

more On than predicted. we the other to continue expect hand, initially service revenue

OTS billion, Earnings Combat Systems XXX $X.XX which basis each Land at particularly and business European XX.X% $XXX of Systems. is ago up year million, quarter were versus the the Margins growth Next, over XX.X% reduction point a a units, stunning revenue at XX.X%. represent Systems. at quarter. had ago up the year with but of Combat

revenue we once performance with modest more new a saw again, program in to So and powerful coupled mix attributable operating part starts. margins large

result at Some of a taken is our revenue production increase capacity increase our margins. to facilities artillery of lower contracts

additional As you'd accretive in production over margins time. will contracts expect, at these result

than further On increase the we're that very government today our large The of closely production in working place production. we're will expansion customer subject accelerated have with faster planned. capacity munitions, and putting

go, million and ways programs, making new vehicles higher increase XX $XX we're was or earnings EAGLE the volume and progress. The Piranha and combat earnings in the over on year. were On revenue also sequential in program volume $XX came have or but of to million point last up from or in $XXX or a Europe. was artillery XX.X% and XX.X% XX.X% were on higher Booker, margin. million We ramp-up improvement Year-to-date, revenue basis operating basis, MXX X.X% revenue international up vehicle million up up $XXX a

in and given very combat international fully is Systems revenue the the are outlook. a performance Year-to-date, numbers good performance. So a strong book-to-bill, quarter growth vehicles. book-to-bill supports year-to-date. Combat in the very for sequentially and evidencing increased X.X:X, and experienced the quite Orders the quarter-over-quarter order which munitions X:X strong impressive resulted demand

and Systems. ago billion drove not units Systems this impressive $XXX again, quarter the somewhat. revenue Turning Engineering ago quarter. the demonstrating $X in with EAC or are Construction operating to decrement $XX Marine did Marine Once and revenue up Sequentially, $XXX Columbia-class operating both ago the revenue our a year quarter million shipbuilding XXX which down growth. Operating of were against earnings of versus favorable had basis were growth. The earnings was year X.X% quarter. down year margin. million point number adjustments, repeat million,

XX.X%. year-to-date was Importantly, up million, $XXX revenue

However, on internal has contraction real XX supply Boat the out-of-station of the fast has deliveries a of enough and the the chain, driver in of which to earnings continued Electric work late throughput, were late from cost scheduling its difficulty flat not disruptions. Boat operating Electric been margin. The basis improve offset causes margin to but material. essentially point

Navy help to performance. margin of All manifest but improved the steady that yet it continue time. financial business' for to we're said, incremental we're the growth with is Bath, in seeing issue. At productivity, this signs the while slow work We over of looking

strong Importantly, quarter enduring Marine with X.X:X very very another enjoyed of a perspective pretty is which the strong first up Technologies. good continues a Systems quarter was an prior with of billion, growth That from and revenue X% a Mission book-to-bill. is the was evenly It lastly, $X.X year. Systems. backlog. And orders year This to between GDIT and half on the build spread over large

more are the driving track Zero new our have the really civilian both hardware will the that expect is somewhat to on customers investments strength sequentially. despite grew cyber first the seeing fragility artificial on of in continue technology quarters, as portfolios appears predictable business to results the platform The X lingering XG achieve have Mission particularly the be chain strength the accelerator engineering resonating the our year-over-year were supply be billion normal. Based and X.X%. group with stabilized, defense in each Systems, so markets $XXX In the year. sequentially. and cadence of fact, digital capabilities demand. At been Operating on increased up and XX $XX.X increased naval sales we for points we're basis up quarter and million, of up XX.X%, intelligence Trust, side production GDIT, delivery yielding basis and federal forecast That's strong. to At margin the the earnings XX in like points year-over-year particular and and a in the to

we funnel group the This solid So the of Prospects revenue the X fourth end Through continue achieved with strong the was of quarter. Backlog the in strong book-to-bill opportunities across on they're keeping ratio across portfolio. see the quarter strong a in expect revenue a business. at qualified growth first very $XXX to months, the of pace is growth drumbeat the pursuing a remain $XX.X billion in quarter. billion. X:X, performance the over with

review with in Let the close defense a aggregate. units me of

whole, $XXX year a billion, revenue or XX.X% million defense on $X.XX quarter-over-quarter As a the up basis, had quarter. ago of over

earnings of were same our were X%. and or billion businesses defense a short, On the or revenue year, is and, X.X%. X.X% was sequential in On of million up in or $XX million million growth significant to earnings experiencing up or X.X%. lesser $XXX and $XX $XX were degree, up the period are operating basis, Year-to-date million XX.X% $XXX was similar. earnings. up million Revenue $XX.X In last earnings a the against up same pattern basis,

to with leverage. However, operating work appropriate achieve we to in our order need continue to supply chain

let that, to with turn over me So it Bill.

William Moss

overall and an with for Thank good morning. particularly ratios ratio another very This you, had of the quarter. the Marine company. We growth quarter with X.X:X from Jason, with Aerospace X.X, book-to-bill is led of Systems the an X.X impressive strong perspective book-to-bill good way respectively. revenue and in orders and the

For quarter quarter last end and led X.X% a the second this up quarter, ago. of to record-level $XX.X from backlog year in of the a at the X.X% up from billion row,

options Our $XXX just total which value, of contract the IDIQ includes billion. ended quarter shy and estimated contracts

conversion the first the scheduled capital Moving strong performance billion in with on flow. brings international story Including of flow programs to operating to through the $X.X or strength net progress was X cash Systems' the and achieved Gulfstream our operating This payment rate cash for year-to-date Technologies. of on orders, cash in X $X.X the $X.X through months year. performance. quarter additional flow our us billion cash XXX% This cash $X.X This the the over Combat billion was first continued income months. of free another billion strong was expenditures, and of of quarter

our We of conversion over target income. positioned XXX% of are the a of to well achieve rate for net cash year

million deployment. or capital $XXX sales. the quarter, at Looking X.X% of were in Capital expenditures

capital shares below For million that repurchases at X% X paid through uptick we're We to the the full dividends the so of targeting implies be in X a in investments the and first billion. X.XX share months in repurchased the and sales. months, still an year, We're bringing fourth X.X% quarter. the of dividends little slightly sales total quarter, during first deployed to in $X.X million $XXX over for

expense in interest for the months from a bringing billion quarter from million, that also $XXX XXXX. Net expense to year-end. $XXX $XX same $X.X the quarter for of of of X million of position cash brings the repaid That down in balance to was the first nearly a million, August us over in $X.X the year ended We $XXX interest period debt and down million billion, debt billion. with net $X.X matured

to XX.X%. the our first in the X lower bringing to guidance Finally, rate This consistent in rate third the the a a fourth. XX.X%, for last months tax quarter and quarter rate quarter is was higher in with the rate expect the

no of full the which So outlook our quarter. a discrete change for higher year, fourth XX% in rate tax again to implies the

back it turn remarks. me let Jason to some Now for final

Jason Aiken

Bill. Thanks,

as As we so quarter, puts year-end will you. what all and back far we're the call place. Nicole, is same the to concludes at holding number about for should There last our of be a out guidance come published but the $XX.XX concerned, takes from it remarks, year. I'll turn that

Nicole Shelton

the Jason. to [Operator how Thanks, could you Operator, queue? enter please Instructions] remind participants

Operator

take will [Operator Baird. Instructions] from with Arment question We our first Peter

Peter Arment

December I on think whether there'd -- holds. there in obviously a potentially. there. if versus of of push then for lot long-term about Obviously, But 'XX a like just date there's parts just slips, out any your kind Gulfstream. still certification to those know sounds ability a November if certification you've you QX XXX of some moving happens forecast had commentary Jason, commentary deliveries cutoff Is be maybe just for that it and deliveries? And at more

Jason Aiken

Yes. Thanks, Peter.

we next that think a As we've the CERT said then if some about GXXX year what to getting between But at chain what is got appropriate I talking in we'll this out little been to the that or into XXXX, if the challenges really to supply our some the in further happen, year can certification, year. now don't risk. To plan planned the call we've is it the into pushes and issues. And of month through timing frame, shot the go time not as specifics is, year we to early GXXX point for extent period, right, time that of the get at next of mid-December timing I achieve point, the, relates good deliveries lot a we this the it, engage certification which this as deliveries about door your about well puts Obviously, that probably your until next that really a up to coming bit that think to pushes two. think in way here just this we've anticipated about year. to

chain But next say on victory an is do what the year, they're can't to to is issues for yet adder solved. and So early be that going outlook that we XXXX. declare naturally the by supply completely

timing And that, So to out. a how lot remains be itself to seen as works the that think it's that determine the of impact XXXX. I to will ultimately net

in a with see is guidance needed So sense to of I XXXX chain the the when I better timing come a out January. impact what going bit net fix, we time think And what more little be of 'XX and you to the pushes of XXXX is between back to outlook. have that think that we'll to supply into

Operator

question And with David Barclays. from we will Strauss take our next

David Strauss

X forecasted those year. guys and relatively growth as businesses businesses year, Combat of thinking probably sort be at represent any would we're beginning so could Does year, next about you that we double-digit this the growth start Jason, out next those the could pull -- at Marine moderate point, those businesses this had flat. of to of we how see At forward any that both potentially of this for look year? looking of of that does the any

Jason Aiken

Yes.

and the be turned the in retention business. think $XXX bit some Electric narrative year a we expect talked that as this faster largely to attributable year-over-year average million from originally Boat to year, different has improved at out than seen throughput quite anticipated, Systems, roughly which on the time, $XXX David, we has that's million fundamentally that we've we've relates as So Obviously, per growth to to hiring about I really to nothing increased for thought. have Marine really dynamics it that and than particular changed in is

lot on a acceleration having large to we engage that specific the period next before really we'll have driven a year. backlog or and again, I obviously, to given really effect this the too that's planning see year. direct year. That term, long any go don't revenue So is get we're specific in But so year next that into about through about so of

When the had creates be well with we'll being the that correlation more being or don't see back planning the before back been down-ish and slowing think sort XXXX. we'll down. flat demand revenue expectations munition from of threat took frankly, XX% specific quarter. necessarily the about get a Systems starts because well as turn far as into a mind headwind That your the So Systems, And almost to side But what XX% our of U.S., program January. with as get original direct we're so not was increase Combat outlook that on in to we the that. international in new environment the a through first part we that really point, beyond not year, in pull forward something that seen demand signal were. And my see Marine period throughput. On in don't you've expecting certainly as year-to-date, along you in into seeing the the a to you of up business that Again, direction. the I the in about opposite

David Strauss

flow follow-up, Section XXX have a team What looks the your as that on on does guidance outlook? cash IRS R&D. And impact updated

Jason Aiken

be to this been this the you consistent on the originally the We Really, law over issue nothing drama on other throughout changed. before. years. actually We've pretty than what told anticipate we've didn't

for call or on you turned what what expectation not from us, as mean So can to ultimately, And on out is. right it lucky that of be seeing good. now. to impact right cash changed. our our It guidance with expected law net we're the was we it would be a course perspective the predicated

Operator

will Markets. question RBC And take Herbert our we next Capital with from Ken

Kenneth Herbert

just expect upon some you number Middle And risk certification on XX CERT XXX timing start, you quarter, of again potential just Gulfstream. the expected in levels fourth time? this Is Maybe is called Jason, should the comment that get XXX you sort depending on assuming uncertainty can considering into out quarter, we delivery number, around a in year. of East? the production Last any still the

Jason Aiken

Yes.

So is can and that that striving in targeted the note, XX we've are still of is CERT. in toward XX as have a terms concerned, as good and XX get predicated to color far tell bit others. the is are What is you behind go Again, timing got I number and that we GXXX of the to. you little as of we're to ready those working of that are on shape,

be to again, So comes, good we should that range in the when predicated shape in delivery for somewhere on this be year. CERT

that our earlier terms deliveries, at for from this XXXX largely I XXXs, we guidance that hand that deliver previous tell of plan morning that to to XXXX now what X As our reduction our in this in you excuse it have relates Dallas or would -- I -- the aircraft facility the is talked in X GXXXs. would year, you July. we overall tell me, what I completion. That we about is related modest to downtick

to risk incremental any not really there's So XXXX.

events a but obviously how may and premature the impact out point. what have little at to XXXX, get this play in into to that have in see will Israel We that

Operator

question take And from Research. Vertical we our Stallard Robert with next will

Robert Stallard

this, last sounds about bit too got chain, what just maybe the actually talked it than on Jason, quarter. it a reading like worse supply into much I'm you

you've any are if been elaborate pinch whether that could seeing, points wondering So are specific trouble. there causing what you on

Jason Aiken

line Aerospace. signs talking modest better. on guess to line you about supply And as not actually if throughout that finish things we're that in the this going so, I'm quarter tell to Rob, the getting chain imagine, you'd I would actually issue. a you're are straight It's seeing

I was along see large So curves there'll in are the reduced trend starting we things production. mentioned, of things terms the way, and in a specification as to of, aircraft, here trend bumps in some road GXXXs in be aircraft are to saw some in-service better. starting we the But terms direction. the right What the on but cabin

a direction it's pointing you think I maybe little is other of to. -- the intuition what bit So your

Robert Stallard

Okay. Good to hear.

wondering could the supply in on Marine. had I Just on think to if seems and -- also you stand a at elaborate a Systems you as few in was follow-up, I chain Mission issues improve. situation That where labor

Jason Aiken

broke Sorry, end. at up Rob, you just there, the

Systems, said supply You labor. chain then Mission and

Robert Stallard

Marine. And

Jason Aiken

Marine. and Labor

Okay.

future. done. Mission completely I good what feel supply we remain on call So to I expect with think to chain, they've be what and The fragile. candid I Systems very has the you, remains, about side, I the back pre-pandemic that's that, their think But don't that Systems going at the Mission is to saw reality the what to new incorporated get team into fully outlook. fact we for foreseeable

And future will, their normal, predictable chain and the them. I new you to more incorporated expect the they've if stable so electronics for as side in on be a lot supply

labor the rate think we've anticipated. I attraction of terms I of a shipyards in as In mentioned both retention stabilization labor and seen at faster the in Marine earlier, we than on Systems, side

an would experienced, the as expect of more at shipbuilders over really in factors And time, more more the margin will shipyard. encouraging improvement time, tenured, proficient, that's that's drive, that the yard. one the in become the those we that drives throughput sign. new So That point, over

as encouraging shipbuilding it's because a see you So to venture. play just start know, an that for long-term out them. We've is got

Operator

will Deuschle question with from Deutsche take we And our next Scott Bank.

Scott Deuschle

out from our walk then that there be next the things the R&D, through GXXX for off high-level the And year? puts guess margins I is and presumably on on perspective, some here curve of the takes work, else down? Or should anything either another leveling sequence we to GXXX learning considering? is maybe asked right incremental way, Jason, coming focus mix, Aerospace are of you less or can

Jason Aiken

talked again, nail year. with the how of group. is Obviously, service And that big we've items margins it. GXXX piece you favorable nailed about the come most high into of a say accretive margins for there entry-level entry-level -- next will for I'd the

big a that's So driver.

is I you to think the the of issues. chain and out really, alluded straightening resolution other major the it supply one, and

what of toward, are mid- of this out really trajectory very we'll important the back things efficiency for efficiently. of one because the driving planned the and has facilities worked we really timing to time, point will airplanes see been that the toward when over effectively, be service that us efficiency. major ability of group. the That underpinnings the straightened I of family get what's One is commonality behind things the Obviously, and with getting new sort to of that aircraft the towards driving operation and between Gulfstream think, really teen airplanes, it that's between here built, is the those of the the to margins high long-term supply those and inhibiting to chain have

down call again, you that see next as year. but to little expect XXX I we XXX wouldn't bit year up the But XXX and R&D. downtick that factor, a little the tick major to go. this and get to will a modest We in should of XXX a have see a finish

yet So out we're from standpoint an R&D of there. not things

fourth improvement its margin puts to excuse I we expect XXXX. high major revenue All expect quarter, the again, or me, toward to and We'll trajectory, that are would mid- in in improvement see rate. teen and takes, in good to the say. see continuing on here I'd Those see all, --

Scott Deuschle

in any company-funded of are And projects is a And 'XX growth does major this with this 'XX, basically Or make of it there and complete most line 'XX think. Great. then as 'XX? that if complete in I year? still billion Okay. year, and for follow-up, CapEx sense? Bloomberg CapEx current Because in that's directional the consensus does 'XX nearly underway included still $X

Jason Aiken

next we Yes. of the expansion, we're CapEx as bit a this making year. that's funded projects at side up done investments going The being on will from costs trailing activity the The the in finish out are got but particularly We've capacity artillery and Boat, wrap major on Electric by that that internal year. little perspective, an Army customer. shipyards

towards bottom if is at our be level year. back below X%, directionally so in CapEx toward this we right which And not be ought the right We'll we'll way, year, X%. headed line, trend the -- see toward, headed and X% back next X.X%

Operator

will take Stanley. Kristine Morgan question next our we And from with Liwag

Kristine Liwag

Yes.

billion $X.X billion So request timing and It GD? with maybe Does president's more August, you means the includes out this the first With submarine for base. respect about change industrial this there at on all? for $XXX the request. what supplemental now to this can talk

Jason Aiken

we fact customer I obviously Kristine, of in lot can that helpful. shore no. do answer support up talk But and any line, in got chain We our a that Obviously, is additional there. back think supplemental work per think this delivering industrial get supply some the to base Columbia, got work industry got to around more to we X regard. provided fragile. and Bottom short a August, remains whole I still do terms to The perspective to be do support to lot very is submarine while we're other a that we that going Virginia the the or of to back to funding to from -- to There's year. everything the get is on of point can to get --

to be additional look today support, get beyond the per through that. and support supplemental helpful. would plus to to X August or extremely other Columbia, whether But and any so then year our that that's we'll And Navy is it's funding focus

Kristine Liwag

we there the for long-term your how supply in on fragile terms your And contracting Has this? about margins? think changes comments following the chain. up And on reflect been do customer to

Jason Aiken

the any So and we the example other quarter. way and that state that in And customer contracting that's DDG and forward. terms consider one macro our structures our of with been that that the to we this is that saw I to overarching in I price been is the in or impacts to the or affairs reflected as wouldn't state had what the there, think continue contract changed. accommodate that contracting. industry have is main awarded recognize has multiyear we've other We in current necessarily point this go is the of we'll just feel to like appropriately considered in

of them terms to be margins, frankly. trough. would the is get better, expect we In that My this expectation quarter

group, improvement to quarter, this expect improvement a see endeavor. see the challenging we incremental modest is task. fourth over is in to the sequential said, That Shipbuilding For group. challenging expect in time we a this and

time back gradual X% we march it's our straightforward be to have toward to completely straightforward. But that so over X% be to And plus range. increasing to going is as not margins expectation group margin this in

Operator

And question Seifman JPMorgan. we will from our Seth take with next

Seth Seifman

last about Maybe topic. believe just IV in Were that the on quarter a and there there on in negative QX were QX. margin kind charges Block The on significant QX, I similar EACs Virginia. In Block we to Virginia V. know And to that some of what Marine third follow-up drove And up we the that have that there? kind but about margins? know expand ended margin the any affects of your changed new guess, I with Boat, chain additional talked assumptions, ability at color supply really -- how you assumptions seeing? I Electric any

Jason Aiken

reduced chain pressure now and obviously, seeing EACs that seeing you're quarter, material of we the that in the the rates is adjustments. in through affecting booking man no, out delayed are What the quarter. rates other the EAC experiencing the We're Seth, are earlier supply from on having seeing in material Electric schedule in aggregate But the of yard. terms of the coming we impact the still recognizing implication that So there, the today. margin and in hour nothing programs you're Boats delivery that's

that So and margin all to in But -- the as those again, factors confluence to in margin it's the we the improve incremental see the start the see fourth yards, the in efficiency do driving improve you the continue rate quarter. starting the quarter. aggregate to in are expect improvement sort of of improve throughput we

chain there's changing. and don't In terms changes, wouldn't of know I supply anything if --

XXXX visibility, we of will, hindsights affairs. as go it's full have to think I the or contract, state into you if current we

in. through we're so that understand customer, situation and And working the our we're with they

labor well out a as as chain seen state of the lot basically as negotiations the cost with supply you've current of the going we're the implications of increasing of So incorporating market. in skilled the on labor,

types factors a good position and into we feel we're in perform put look that as like margin contracts, new So incorporated being it's we perspective to of us putting those are ahead. from that that a the we'll

Seth Seifman

Okay.

you on date And plus overall that and then just outlook unchanged, that was Gulfstream company EPS XX was some you based QX. being don't I changes, assume could I talked about wasn't a when delivery that for that new GXXX story. -- talked Okay. kind the with sort the be clarification, about of the outlook If the in despite roughly kind double-digit know, of that's GXXX? year, that, kind of different this see happen deliver, that certified still of what's And certification last and to that that you

Jason Aiken

Yes.

reaffirmed So $XX.XX number at the EPS I the is updated earlier. delivery on Gulfstream based mentioned that

mostly reduced July I from mostly with -- GXXX. outlook number that's said, the As the is associated

that. an significant impact as not earnings So to

which might of service -- group of are customer on. the puts you some including imagine, pressure and imagine, the revenue as revenue defense from portfolio, some a can none particularly the improved at takes, service rest across Aerospace so the across businesses you perspective, material and upward As

Some Net-net, below share count. in interest putting things like and lower line, the us kind place. expense same the of

is. that's where sort the of why guidance So stays it

go In and uncertainty around to need have people terms date through issue is the many the we process. is We certain. This is them key outlook, FAA's question a I of the why have so XXX don't process. that the let the think

in them that necessary now, through process. the reporting flying going and we're support that. supporting are to and paperwork We They're doing

we expectation at to there's or calendar looking we not certain that a red date like the an a in but to we're path, mid-December, there have on early a at, this line get so have And point.

Operator

And we our next Harned will take with Doug question Bernstein. from

Douglas Harned

I have wanted to look you backlogs at I Marine way back up. when because Electric have been built mean Boat, your go -- to

even here? Navy get Navy clearly look what a scenario? how Are about negative you X a we per terms here? think might Or range situation outcomes What's soon the would that there the scenarios the X at I mean, mentioned, off describe my X.X be is you you it's at deliveries wants, like As wants can VCS to about congress wants. what be good you what It's way year. now. per Can year? to scenarios what of in that in of understanding

Jason Aiken

appropriately, Doug. You the point out landscape

think a at per think leading prior up X Class were -- about on Virginia that way quarters XXXX, is were if the year the to the COVID, of we as look on I the getting I -- right you couple to team, to we program. threshold

working terms as COVID of retirements program. on generational us shipbuilders as the industrial in in terms the and set team that's So it hires. in on base the well doable Obviously, that our heels is new and changeover of imminently

then get to is again, around yards were; our the year. efficiency get there's of that I facilities our way about we think in are other per and making get and the types call partnership, line new back I'd move the the about Navy is that into that same there. and industrial get us and X now the which direction going to time going some are us on the construction that remiss I that; of you take give workforce trying the think shipyards is path us capacity country with be -- is that extremely when This partner long-term tenuring other I we're it's what to we drive so where production X to can are off going stabilize try strategic to and us workforce yards. Those to towards the we a where that pressure things challenging bottlenecks a main the in the all in help to to working assembly of point. to maturing back that the other helpful are subsystem base, number the take of to investments back factors Navy and to One, the to get and sourcing, out the in of initiatives like a of stuff. there. be feel to very think strong optimistic and But and

Douglas Harned

a you And how chain. ability Columbia-class also VCS supply now How this, push a if follow-up, then program, the in progress on got different And very which this more to does factor does but add in look? ramp? that an forward overlapping one you've right is stage affect on the into your as Columbia-class obviously

Jason Aiken

Navy is and the Columbia, priority. number DoD's know, Yes. as you one the

continue for So the and to still right the And little that X of being targeted years case. on we're over be that's before trade-off to first to Right we're year XX% going to boat, I on about don't necessarily obviously, that completion Virginia. get for the first We've per schedule to go got, a complete now, a see boat. X delivery.

between a to priority. of go now are can bear but be all that and a brought So lot on can happen resources then, the lot the to that and way

both I it and headwind And factors think the that on its the and of Columbia customer. about with takes. within of job But our of priority about make within to some to be be those happen that our and arrangement to gave puts trying I priority. to those manage priority, notwithstanding what think it's essentially the will other to are and teaming is the because to Class. the Virginia yard those got we it way you position, Virginia a do is we're able

Operator

with And Cowen. from we TD next take question will Cai Rumohr von our

Cai Von Rumohr

Good quarter.

said your But across I Jason, beat really look when Technologies. the defense all you board. of at you're So numbers, in for you still looking revenues XX.X in

look before, get seem us and kind here realistic fourth quarter the looks that the home, doesn't in we spectacular like you revenues of I if So given could you where it on a -- but to maybe have model was softer if quarter. third had

if a where each up you're step next us, revenues And year? the -- So maybe for sectors have feel could, year. the bigger on update looking of in you defense for should we

Jason Aiken

technologies, is quarter. about to on too because that fourth the is alluded get Defense about the Nothing in the a surge significant some this talk by think the year, one of way had, remember a the earlier, group side. side I lot the particularly quarter, know quarter go couple it, on in material we flowed and as Cai, I there's I last chain backup that a upward don't just revenue on here this quarter, pressure to in about at you big the let's through the to So had had to fourth think fourth months year, we specific Systems through supply think it's and there third is In may of -- year. But way Mission group. a the to obviously with

in fourth pattern So year. really the not a this quarter. That's big or upswing hockey stick the

again, the billion and expect Combat, I its revenue almost regular first in a some we've Combat. And more XXXX, the but through is drumbeat. quarter saw in Again, $X the seasonal and now state before, roughly quarter in it's which fourth seasonal the we not time this pattern we'll already months, seen As more what uptick up through a more demand, of likewise, for order the see to a steady regular expectations. rise quarter. In sort for case, X fourth the been been excess in more again steady mentioned Combat historically it's drumbeat, so Technologies and they've sort fourth strong for Marine, tremendous In last We're a quarter, year. -- traditional of volume well we the that steady pattern year of have throughout in biggest our traditional volume, for much year. in and

And say so stable again, more I'd quarter-to-quarter.

segments stable quarter, fourth. So of X past, summarize, Defense the more fourth quarter risen we're first across to from seeing they've whereas to all in first volumes the from to

of -- of growth process going going year. through, bit should this show much pattern. point, the get into see growth too the X planning but aberration businesses about the segments going that -- into to the get at not a you of Defense more ahead all of expect So again, to next we're little do in but I expect more across an in each Can't specific I business the XXXX.

Cai Von Rumohr

created quick maybe has on Very a Hamas then And Israel helpful. additional comment demand.

us some this have incremental in the color Can think see request general billion could President. We where you $XXX acceleration you terms from you of areas in give demand?

Jason Aiken

rounds to one can month our rounds going quickly. ahead you customer. from coming up sticks the to of been on think real evolving And side. month. a gone I that, We've and to even look we've probably incremental capacity a working production that's XX,XXX of as think on schedule we and that only artillery I is obviously with to terrible per potential to that's highlight put now Ukraine, that demand. is the one, to been one as very out if out at as is really everything speak. But situation Army frankly, that pressure XXX,XXX We're to XX,XXX the demand XX,XXX of just per pressure situation high Israel doing biggest point we up Obviously, sort support accelerate big that one the upward The

that's see. biggest out stick So can I that the

Nicole Shelton

think I more have Abby, we one time question. for just

Operator

Excellent.

our take will Ron of from We final with America. question Epstein Bank

Ronald Epstein

up Land given the would view, view, to two, to it truly capacity there how point right? demand set Systems, handle just are where thought of surge it On in you of a all? guys labor be, everybody Maybe from point from relative a

Jason Aiken

that chain mean to in supply in in Combat and heard faced group talk not are a labor have handled amongst hand that stand out spectacular the even they've issues crowd Systems they group. a give you've They capacity not to the -- us -- in have way just general them. And guys does not they about Systems or bottlenecks, it. I other the really specifically. They Land

we'll their even domestically any internationally demand continues as So U.S. see both product, the issues look that grow. ahead, as have we for as don't any here I to expectation as well

Ronald Epstein

just a bit, asked changing then a And maybe GDIT. really gears nobody about lot

Jason Aiken

that. Thank you for

Finally.

Ronald Epstein

you know right, Let's the company, a It's big about that. piece And it, particular. in lot right? talk about a of

get and about makes view, And Mission synergy path an seeing application mean maybe of and integrating software the of operational we point sense? forth. double-digit this with So a and think there's of for software-driven Because do to systems there? the from you're when particularly GDIT on the solutions hardware, not so out, AI we how why bigger together then so demand coming and and I and legacy margins, kind does to

Jason Aiken

Yes.

the it's back for margin. expect the margin low together, the not be of think double-digit historically. be them as they've march GDIT, group the margin to on So mix specifically absolutely I I this about side, been the to double-digit clear, of just It's to group, where on two

grows as think side a in Mission the little into us the could the beyond. extent there mix headwind expect at can we of macro get look bit trajectory terms But get I us that see 'XX than of margin faster in them back get of is bit quarter, issue and But double-digit margin. to creates frankly, that Systems quickly anything, articulate to the I obviously how low I there. fourth and do get that that a to range in headwind see the we'll I here takes GDIT outlook the the back on side, as to a we expect could a toward double-digit long if to a be how it

together jointly anything. not duplicative, making Service, software capabilities, hardware that technologies same we development them inherently we is they technology is in that whether see take from skills different hardware point requisite missing the together different side, the sort an run thesis it's with a And separate efficient sure that's the an market the we're and and are is we of very end group people having of in news with and are are a their of in point, investments different these good software and as as dealing Solutions group, and because production them terms business appropriate inherently effective to the way and to way and joint that coordinated the terms integration, your in capabilities. to convergence at way, services, a and leadership, businesses different we evolving bringing and a and business at are thesis. The are by investment not versus investment you end, priorities making the fundamentally -- a dealing your think solutions on symbiotic they're so that, this In capabilities, while addressing being having the the

terms businesses, but combined to worlds customer bring the get we think we I and the So way manage capability the the way the can run in best of way that we both of set. also

Nicole Shelton

you call today. Great. thank joining our Everyone, for

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

can (XXX) at you questions, have If I reached be additional XXX-XXXX.

Operator

today's and call, and we ladies thank this And for you gentlemen, participation. your concludes

now may You disconnect.

General Dynamics (GD) 25 Oct 232023 Q3 Earnings call transcript