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GENERAL DYNAMICS CORP (GD)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $13.3B (+14.3% YoY), diluted EPS $4.15 (+14.0% YoY), with operating margin 10.7% and net earnings $1.15B (+14.2% YoY) .
  • Backlog ended at $90.6B; total estimated contract value reached a record $144.0B (+9.1% YoY), with a consolidated book-to-bill of 0.9x for the quarter and 1.0x for the year .
  • Aerospace delivered 47 aircraft (42 large-cabin), but G700 deliveries fell short of plan due to supply-chain timing, customization, and rework; management issued detailed 2025 guidance including EPS of ~$14.75–$14.85 and ~150 Gulfstream deliveries .
  • Street consensus comparisons were not available via S&P Global at query time; management noted the company “beat consensus for the year by $0.05” .

What Went Well and What Went Wrong

What Went Well

  • Aerospace revenue and operating earnings surged YoY in Q4: revenue +36.4% to $3.74B; operating earnings +30.3% to $585M; deliveries totaled 47 aircraft (42 large cabin), with improved demand for G700 .
  • Technologies delivered record order activity with total awards of $21.8B and win rates in the low-80% range; book-to-bill was 1.1x for 2024, supporting durable growth .
  • Combat Systems posted healthy margin and backlog: Q4 operating margin 14.9% (up 10bps YoY) and backlog nearly $17B, with robust munitions orders and capacity ramps .

Management quotes:

  • “It is fair to say that the quarter-over-quarter results are quite strong.”
  • “GDIT delivered their fourth consecutive year of revenue and earnings growth… their highest ever revenue and earnings.”
  • “Combat saw robust order intake… resulting in a book-to-bill of 1.3:1.”

What Went Wrong

  • Gulfstream G700 deliveries missed internal targets due to late engine arrivals, first-of-type customized interiors requiring extended STCs, supplier quality escapes necessitating component replacements and extra test flights, and foreign registration delays; margins compressed vs plan .
  • Marine Systems margins weakened: Q4 operating earnings down 7.8% YoY and margin fell 130 bps to 5.1% due to submarine supply-chain quality issues and out-of-sequence work increasing costs .
  • Working capital built in 2024 (inventories at Gulfstream, undefinitized contracts at EB and OTS), driving full-year FCF conversion to 85% and a 2025 expectation of 80–85% conversion .

Financial Results

Company-Level Summary

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Billions)$11.668 $11.671 $13.338
Diluted EPS ($)$3.64 $3.35 $4.15
Operating Margin (%)11.0% 10.1% 10.7%
Net Earnings ($USD Billions)$1.005 $0.930 $1.148

Segment Breakdown (Revenue, Operating Earnings, Margin)

SegmentQ4 2023 Revenue ($MM)Q3 2024 Revenue ($MM)Q4 2024 Revenue ($MM)Q4 2023 Op. Earnings ($MM)Q3 2024 Op. Earnings ($MM)Q4 2024 Op. Earnings ($MM)Q4 2023 MarginQ3 2024 MarginQ4 2024 Margin
Aerospace$2,744 $2,482 $3,743 $449 $305 $585 16.4% 12.3% 15.6%
Marine Systems$3,408 $3,599 $3,960 $217 $258 $200 6.4% 7.2% 5.1%
Combat Systems$2,364 $2,212 $2,395 $351 $325 $356 14.8% 14.7% 14.9%
Technologies$3,152 $3,378 $3,240 $305 $326 $319 9.7% 9.7% 9.8%
Total$11,668 $11,671 $13,338 $1,288 $1,057 $1,423 11.0% 10.1% 10.7%

KPIs

KPIQ4 2023Q3 2024Q4 2024
Gulfstream Deliveries (units)39 28 47
Cash from Operations ($MM)$1,196 $1,416 $2,160
Free Cash Flow ($MM)$892 $1,215 $1,805
Total Backlog ($MM)$93,627 $92,634 $90,597

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Company EPS ($)FY 2025N/A~$14.80 (range $14.75–$14.85) New issuance
Company Revenue ($B)FY 2025N/A~$50.3 New issuance
Company Operating Margin (%)FY 2025N/A~10.3% New issuance
Effective Tax Rate (%)FY 2025N/A~17.5% New issuance
FCF Conversion (%)FY 2025N/A~80–85% New issuance
Aerospace Deliveries (units)FY 2025N/A~150 New issuance
Aerospace Operating Margin (%)FY 2025N/A~13.7% (up ~70 bps YoY) New issuance
Marine Systems Revenue ($B)FY 2025N/A~$15.0 New issuance
Marine Systems Operating Margin (%)FY 2025N/A~6.8% New issuance
Combat Systems Revenue ($B)FY 2025N/A~$9.1 New issuance
Combat Systems Operating Margin (%)FY 2025N/A~14.5% (+30 bps YoY) New issuance
Technologies Revenue ($B)FY 2025N/A~$13.5 (GDIT up LSD; Mission Systems slightly down) New issuance
Technologies Operating Margin (%)FY 2025N/A~9.2% (down ~40 bps) New issuance
Dividend per Share ($)Feb 7, 2025 paymentDeclared $1.42 on Dec 4, 2024 $1.42 (payable Feb 7, 2025) Maintained

Note: Q3 2024 updated FY 2024 guidance was ~$48B revenue and ~$14.00 EPS ; full-year actuals were $47.7B revenue and $13.63 diluted EPS .

Earnings Call Themes & Trends

TopicQ-2 (Q2 2024)Q-1 (Q3 2024)Current (Q4 2024)Trend
G700 deliveries & margin trajectoryLot 1 cost burden described; 50–52 deliveries targeted; margin step-ups 600–700 bps in Lots 2/3 Delivered 4 vs planned; detailed root causes; plan to deliver 27 in Q4; margin expansion expected Delivered 15 G700 in Q4; reiterated causes; 2025 posture conservative; G800 H1 cert targeted Improving execution; cautious 2025 planning
Marine Systems supply chain & marginsDelays/ out-of-sequence work; margin pressure; throughput improving Supply chain not improving as hoped; lumpy margins; pressure on VA class cadence Q4 margin down to 5.1%; CR funding supports productivity; gradual stabilization expected Stabilization gradual; funding helps, risks remain
Orders/backlog durabilityBacklog ~$91.3B; TBV ~$130B Backlog $92.6B; total value $137.6B; book-to-bill 1.1x Backlog $90.6B; total value $144.0B; FY book-to-bill 1.0x Durable and rising total value
Technologies win rates & pipelineRobust pipeline >$120B; margin expansion Record awards; backlog +13.5% YoY; win rates low 80% Total awards $21.8B; win rates low 80%; capture mid-60% Strong, sustained
Combat munitions & vehiclesCapacity ramp; robust orders; margin ~13.7% Book-to-bill 1.5x; backlog ~$18B; high operating leverage Margins 14.9%; backlog nearly $17B; continued demand Solid growth, healthy margins
Cash conversion & WCPlan ~100% FY 2024; backloaded to Q4 FCF >100% in Q4; FY short of 100% due to G700 timing Q4 CFO $2.2B; FY FCF conversion 85%; 2025 80–85% Lower near-term conversion
Tariffs/macro policyNot centralDiscussed supply-chain inflation and workforce demographics in Marine Addressed potential tariffs, will adapt; Marine inflation pressures, contract clauses Policy-sensitive but manageable

Management Commentary

  • “While we beat consensus for the year by $0.05, we did not beat our own expectations and prior guidance for reasons largely beyond our control.”
  • On G700 shortfall: “Aircraft engines arrive significantly late to schedule… highly customized interiors… supplier quality escape… foreign registration delays.”
  • Marine Systems: “Margins continue to be adversely impacted by additional delays in quality issues from the submarine supply chain… we are redoubling our cost cutting.”
  • 2025 outlook: “Revenue of approximately $50.3 billion… margin of 10.3%… EPS around $14.80… Gulfstream deliveries will be 150.”

Q&A Highlights

  • G800 certification: expected in H1 2025; learnings from G700 apply; deliveries of G800 and remaining G650 will be balanced; no G400 in 2025 delivery forecast .
  • Marine funding mechanisms: CR funding supports Columbia and Virginia; industrial base funding flows to suppliers; aim to stabilize supply chain; inflation contract protections exist but not sufficient vs realized cost growth .
  • Aerospace margins: early G700 lots carry lower margins; step-up of ~600 bps in lots 3–4 remains intact; services mix can create variability .
  • Working capital: continued build at Gulfstream (800/400 cert), EB and OTS on undefinitized contracts; unwind expected by end of 2025 or earlier .
  • Book-to-bill assumption: company expects ~1.0x in 2025; demand supports munitions and vehicles internationally and in the U.S. .

Estimates Context

  • Street consensus via S&P Global was unavailable at the time of query due to data access limits; no quarter-specific EPS/revenue comparisons to consensus are provided.
  • Management stated they “beat consensus for the year by $0.05,” implying a modest FY positive delta; however, detailed Q4 consensus vs actual comparisons could not be validated here .

Key Takeaways for Investors

  • Q4 beat on fundamentals vs YoY with strong Aerospace volume and steady Combat/Technologies execution, but Marine margins deteriorated on submarine supply-chain issues; expect gradual stabilization aided by CR/industrial-base funding .
  • 2025 guidance is clear and constructive: EPS ~$14.80, revenue ~$50.3B, Aerospace deliveries ~150 with margin uplift; cautious posture reflects 2024 execution learnings on G700 and certification cadence for G800 .
  • Backlog durability remains a key support for the multi-year thesis: $90.6B backlog and $144.0B total estimated contract value set a foundation for growth despite near-term margin volatility in Marine .
  • Watch Aerospace production/quality cadence and foreign registration timing; successful ramp and G800 certification in H1 2025 are likely stock catalysts alongside margin expansion from later G700 lots .
  • Monitor Marine supply chain quality and funding translation into contracted terms; margin recovery path depends on supplier throughput/quality and productivity gains at EB/Bath/NASSCO .
  • Technologies’ record orders, strong win rates, and large pipeline support steady top-line with industry-leading margins, albeit with a 2025 mix-driven margin dip (~9.2%) .
  • Near-term cash conversion is lower (80–85% expected in 2025) due to WC build; dividend remains intact ($1.42 declared for Feb 2025) and buybacks remain opportunistic, with net debt modestly reduced YoY .