General Dynamics, one of the largest U.S. defense contractors, reported its second-quarter results. Net earnings of $625 million on revenue of $9.3 billion.
The details were given in a 29 July media release, to announce net cash provided by operating activities in the quarter totaled $843 million, $552 million better than the year-ago quarter. Free cash flow from operations, defined as net cash provided by operating activities less capital expenditures, was $622 million, 100% of net earnings. The company ended the quarter with $2.3 billion of cash on hand, $1.6 billion more than at the end of second-quarter 2019.
“We have continued to operate throughout the COVID-19 pandemic, meeting our customers’ needs while keeping our people as safe as possible,” said Phebe N. Novakovic, chairman and chief executive officer. “We are focused on the basics of early and aggressive cost management, performance and cash conversion as we manage through this period.”
The company delivered 32 aircraft during the quarter, up from 23 last quarter, despite continued pandemic-related challenges to making international deliveries.
Total backlog at the end of second-quarter 2020 was $82.7 billion, 22% higher than the year-ago quarter. Estimated potential contract value, representing management’s estimate of value in unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options, was $49.6 billion. Total estimated contract value, the sum of all backlog components, was $132.2 billion at the end of the quarter, approximately 30% more than the year-ago quarter.
Significant awards in the quarter included a contract to construct the first two Columbia-class submarines which will be worth $11.5 billion when funding is received from Congress; $320 million to upgrade Stryker vehicles to the double-V-hull A1 configuration; $215 million from the U.S. Army to produce Hydra-70 rockets; $175 million from the Army for computing and communications equipment under the Common Hardware Systems-5 program; $160 million in separate contracts from the U.S. Navy to provide missile components for the Aegis Ballistic Missile Defense program and gun systems for the F-35 Joint Strike Fighter; $130 million from the Centers for Medicare and Medicaid Services for several contracts, including support of the agency’s Healthcare Integrated General Ledger Accounting System (HIGLAS) application; and $125 million for several key contracts to provide intelligence services to classified customers.
General Dynamics received the following significant contract awards during the second quarter of 2020:
Combat Systems:
- S320 from the U.S. Army to upgrade Stryker vehicles to the double-V-hull A1 configuration. The contract has a maximum potential value of $2.5 billion.
- $215 from the Army for the production of Hydra-70 rockets. The contract has a maximum potential value of $3.4 billion.
- $110 from the U.S. Navy to provide missile components for the Aegis Ballistic Missile Defense program.
- $ 100 for various munitions and ordnance.
- $50 from the Navy to produce gun systems for the F-35 Joint Strike Fighter.
Information Technology;
- $120 from the U.S. Air Force for the Battlefield Information Collection and Exploitation System (BICES) program to provide intelligence information sharing capabilities for the Department of Defense (DoD). The contract has a maximum potential value of $620.
- $130 from the Centers for Medicare and Medicaid Services (CMS) for several contracts, including support of the agency’s Healthcare Integrated General Ledger Accounting System (HIGLAS) applicatioa
- $125 for several key contracts to provide intelligence services to classified customers.
- $50 from the Navy to provide training and training-related program support.
- $40 to provide IT, cloud support and network management services for a commercial customer.
Mission Systems:
- $175 from the Army for computing and communications equipment under the Common Hardware Systems-5 program.
- $105 from the Navy to support the design and development of fire-control systems for ballistic-missile submarines for the Navy and the U.K. Royal Navy.
- $60 to provide sustainment services for the Navy’s next-generation Mobile User Objective System (MUOS) satellite communications system.
- $35 from the U.S. Coast Guard to provide system sustainment support for the Rescue 21 program.
- $35 from the Army to provide continued software support and engineering for the Warfighter Information Network- Tactical (WTN-T) Increment 2 program.
Marine Systems:
- A contract from the Navy to construct the first two Columbia-class submarines, which will be worth $11.5 billion when funding is received from Congress.
- $130 from the Navy for capital expenditures and industrial base development in support of the Arleigh Burke-class (DDG-51) guided-missile destroyer program.
- $80 from the Navy for Advanced Nuclear Plant Studies (ANPS) in support of the Columbia-class submarine program.
- $55 from the Navy to support the Common Missile Compartment work under joint development for the Navy and the U.K. Royal Navy.
- $45 from the Navy to provide ongoing lead yard services for the DDG-51 program.