| Metric / Quarter                              | Q4 2022       | Q1 2023       | Q2 2023       | Q3 2023       | Q4 2023       | Q1 2024       | Q2 2024       | Q3 2024       |
|-----------------------------------------------|---------------|---------------|---------------|---------------|---------------|---------------|---------------|---------------|
| **Total Backlog ($ Billion)**                 | **91.1**  **[0000040533-23-000014_gd-20221231.htm:45]** | **89.8**  **[GD_3247339_1]** | **91.4**  **[0000040533-23-000058_gd-20230702exhibit991.htm:0]** | **95.6**  **[0000040533-23-000068_gd-20231001exhibit991.htm:0]** | **93.6**  **[0000040533-24-000007_gd-20231231.htm:45]** | **93.7**  **[0000040533-24-000013_gd-20240331exhibit991.htm:4]** | **91.3**  **[0000040533-24-000035_gd-20240630.htm:28]** | **92.6**  **[0000040533-24-000041_gd-20240929exhibit991.htm:0]** |
| **Estimated Potential Contract Value ($ Billion)** | **36.6**  **[0000040533-23-000014_gd-20221231.htm:46]** | **38.5**  **[0000040533-23-000027_gd-20230402.htm:26]** | **38.0**  **[0000040533-23-000060_gd-20230702.htm:29]** | **37.3**  **[0000040533-23-000070_gd-20231001.htm:30]** | **38.3**  **[0000040533-24-000004_gd-20231231exhibit991.htm:0]** | **40.3**  **[0000040533-24-000014_gd-20240331.htm:26]** | **38.5**  **[0000040533-24-000033_gd-20240630exhibit991.htm:0]** | **44.941**  **[0000040533-24-000043_gd-20240929.htm:29]** |

ab0da80760d2bb1f47a4b96848738f0615ab968c4e620275e7bb958793a46163

**Estimated Potential Contract Value ($ Billion)**

f4424b3e814a6225bd66306201e6bbf209f1917b34a4b53fdd935a04d08aeea4

Total Revenue [USD, Millions]

Cost of Goods Sold (COGS) [USD, Millions]

SG&A [USD, Millions]

R&D [USD, Millions]

D&A [USD, Millions]

Interest Expense [USD, Millions]

Operating Income (EBIT) [USD, Millions]

Net Income [USD, Millions]

EPS - Basic [USD, Per Share]

EPS - Diluted [USD, Per Share]

cc125447bf9613503fe8d36ae2d91f7e419b112cec1571c996f64bd2c7a17e10

General Dynamics is a global aerospace and defense company that provides a wide range of products and services across four main operating segments: Aerospace, Marine Systems, Combat Systems, and Technologies. The company is involved in business aviation, ship construction and repair, land combat vehicles, and technology services, catering primarily to defense markets. Notable achievements include significant revenue growth in their Gulfstream aircraft and Columbia-class submarine programs, as well as substantial new awards in IT services **[0000040533-24-000007_gd-20231231.htm:3]** **[0000040533-24-000035_gd-20240630.htm:23]** **[0000040533-24-000014_gd-20240331.htm:22]** **[0001308179-24-000257_lgd2024_def14a.htm:52]** **[0001308179-24-000257_lgd2024_def14a.htm:37]** **[0000040533-24-000007_gd-20231231.htm:37]**.

1. **Combat Systems** - Provides land combat vehicles, weapons systems, and munitions, playing a crucial role in the company's strong performance in defense markets.
2. **Marine Systems** - Engages in ship construction and repair, primarily for the U.S. Navy, with significant contributions from the Columbia-class submarine program.
3. **Technologies** - Offers technology products and services, including IT services and mission systems, with notable achievements such as substantial new awards at GDIT.
4. **Aerospace** - Focuses on business aviation, including the manufacturing and servicing of Gulfstream aircraft, which has seen significant growth.

bca87e655da63ace96a93958a51ab5c29891a59bccbf4178c8f5511c757c96bf

848621c8c41fe63930e0966477c441b48293b626e8a1ca2cf6c56245791f47ac

| Segment / Quarter | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|-------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| **Aerospace** ($ billion) | **2.5**  **[GD_3160415_2]**  | **1.892**  **[0000040533-23-000027_gd-20230402.htm:22]**  | **1.95**  **[GD_3329384_3]**  | **2.032**  **[0000040533-23-000070_gd-20231001.htm:25]**  | **2.74**  **[GD_3370671_3]**  | **2.084**  **[0000040533-24-000014_gd-20240331.htm:22]**  | **2.94**  **[0000040533-24-000035_gd-20240630.htm:23]**  | **2.482**  **[0000040533-24-000043_gd-20240929.htm:25]**  |
| **Marine Systems** ($ billion) | **2.97**  **[GD_3160415_3]**  | **2.992**  **[0000040533-23-000027_gd-20230402.htm:22]**  | **3.1**  **[GD_3327798_5]**  | **3.002**  **[0000040533-23-000070_gd-20231001.htm:25]**  | **3.408**  **[GD_3370671_5]**  | **3.331**  **[0000040533-24-000014_gd-20240331.htm:22]**  | **3.453**  **[0000040533-24-000035_gd-20240630.htm:24]**  | **3.599**  **[0000040533-24-000043_gd-20240929.htm:25]**  |
| **Combat Systems** ($ billion) | **2.18**  **[GD_3160415_3]**  | **1.756**  **[0000040533-23-000027_gd-20230402.htm:22]**  | **1.92**  **[GD_3327798_5]**  | **2.224**  **[0000040533-23-000070_gd-20231001.htm:25]**  | **2.36**  **[GD_3370671_4]**  | **2.102**  **[0000040533-24-000014_gd-20240331.htm:22]**  | **2.288**  **[0000040533-24-000035_gd-20240630.htm:24]**  | **2.212**  **[0000040533-24-000043_gd-20240929.htm:25]**  |
| **Technologies** ($ billion) | **3.25**  **[GD_3160415_4]**  | **3.241**  **[0000040533-23-000027_gd-20230402.htm:22]**  | **3.2**  **[GD_3327798_3]**  | **3.313**  **[0000040533-23-000070_gd-20231001.htm:25]**  | N/A | **3.214**  **[0000040533-24-000014_gd-20240331.htm:22]**  | **3.295**  **[0000040533-24-000035_gd-20240630.htm:24]**  | **3.378**  **[0000040533-24-000043_gd-20240929.htm:25]**  |
| **Total Revenue** ($ billion) | **10.9**  **[0000040533-23-000003_gd-20221231exhibit991.htm:0]**  | **9.881**  **[0000040533-23-000027_gd-20230402.htm:22]**  | **10.2**  **[0000040533-23-000058_gd-20230702exhibit991.htm:0]**  | **10.571**  **[0000040533-23-000070_gd-20231001.htm:25]**  | **11.7**  **[0000040533-24-000004_gd-20231231exhibit991.htm:0]**  | **10.731**  **[0000040533-24-000014_gd-20240331.htm:22]**  | **11.976**  **[0000040533-24-000035_gd-20240630.htm:23]**  | **11.671**  **[0000040533-24-000043_gd-20240929.htm:25]**  |

f204907bbafb4b1ae1d651f316c97bf4800f196861e8d4a24eafd0ae6ae224f0

1. Given the ongoing supply chain challenges impacting submarine schedules, what specific steps are you taking to mitigate these issues, and how do you plan to manage the potential delays in the Virginia class submarine program?  **[GD_3403353_10]** **[GD_3403353_22]** **[GD_3403353_11]** 
2. With the elevated costs associated with the G700, including paint interiors and component replacements, how confident are you in achieving the anticipated 600 to 700 basis point margin improvement, and what is the revised timeline for this margin expansion?  **[GD_3403353_27]** **[GD_3403353_8]** 
3. Considering the higher labor inflation and increased costs on boats already in production, what is the status of your negotiations with the Navy regarding contract adjustments or remedies, and how might this affect your profitability in the Marine segment?  **[GD_3403353_25]** 
4. As the G800 enters production, how do you anticipate it will impact your margins in the Aerospace segment, especially in light of the ongoing supply chain issues and the delayed margin improvements from the G700?  **[GD_3403353_8]** 
5. Given the strong demand for your Combat Systems products in Europe and the reliance on direct commercial sales from your European businesses, how are you addressing potential geopolitical risks and ensuring sustained growth in that region?  **[GD_3403353_31]** 

aa1f327564137820815d9637139fc1bce763dbb35b1eac2be605a359b5958ccf

ee916e41269cfd2350caa9999e344dd7bae2f42b1e8eb57b027aeadbe9d4bbc6

- The Marine Systems segment has one primary competitor with which it partners on the Virginia-class submarine program and to which it subcontracts on the Columbia-class submarine program. For commercial and repair work, it competes with several additional U.S. shipyards  **[0000040533-24-000007_gd-20231231.htm:16]** .
- The Combat Systems segment competes with a large number of U.S. and non-U.S. businesses  **[0000040533-24-000007_gd-20231231.htm:16]** .
- The Technologies segment competes with many companies, from large government contracting and commercial technology companies to small niche competitors with specialized technologies or expertise  **[0000040533-24-000007_gd-20231231.htm:16]** .
- The Aerospace segment has several competitors for each of its Gulfstream products  **[0000040533-24-000007_gd-20231231.htm:16]** .

0c4afaf529b61a3db7c63a930b997ce22d5d0cb1151d4b04cc718ddb6243c277

0970891033c3593d1940213a9ece6d6bf2073a082360d00b41b74a5ba51a9626

North America

- United States

- Canada

- Other

Europe

- United Kingdom

- Switzerland

- Russia

- Spain

Asia/Pacific

- China

Africa/Middle East

South America

Revenues from International Operations

Total Revenue

c288928546e8615ea15f15dd55b9cfc18e109e27654151d196e14782bb6d8a5c

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

### Q3 2024 Earnings Call
- **Issued Period**: Q3 2024
- **Guided Period**: FY 2024
- **Guidance**:
  - **Aerospace Sales**: Expected to be about **$12.3 billion** with a **13.2% margin**. Anticipate **150 deliveries** versus the previously expected **160**, with 10 deliveries slipping into the next year.
  - **Marine Systems Revenue**: Expected to be about **$13.9 billion** with margins of **6.9%**.
  - **Company-wide Revenue**: Expected to be around **$48 billion** with margins of around **10.3%**.
  - **Earnings Per Share (EPS)**: Guidance of approximately **$14 per share**, which is about **$0.45 below** previous expectations  **[GD_3403353_7]** .

### Q2 2024 Earnings Call
- **Issued Period**: Q2 2024
- **Guided Period**: FY 2024
- **Guidance**:
  - **Aerospace Segment**: Earnings estimate remains unchanged, but revenue is expected to be higher with about a **100 basis point drop in margins**. Delivery estimate of about **160 airplanes** for the year.
  - **Defense Businesses**:
    - **Combat Systems**: Revenue is expected to be about **$200 million higher** than previously projected, with total revenue around **$8.7 billion**. Margins are expected to remain the same.
    - **Marine Systems**: Revenue should increase by **$1 billion**, with annual revenue between **$13.4 billion and $13.8 billion** and an operating margin around **7.4%**.
  - **Technologies Segment**: No change in earlier guidance.
  - **Company-wide**: Annual revenue is expected to increase by about **$2 billion**, with overall margins down about **30 basis points**. Total revenue is projected to be between **$47.8 billion and $48.2 billion**. Operating earnings are expected to increase modestly. EPS guidance is **$14.40 to $14.50**, which is **$0.05 over prior guidance**  **[GD_3394092_6]** .

### Q1 2024 Earnings Call
- **Issued Period**: Q1 2024
- **Guided Period**: FY 2024
- **Guidance**:
  - **Aerospace Deliveries**: Plan to deliver 50 to 52 G700 aircraft in 2024, despite the delay in deliveries due to late FAA certification.
  - **Cash Conversion**: Anticipate achieving about 100% free cash flow conversion in 2024.
  - **Capital Expenditures**: Expected to be between 2% and 2.5% of revenue for the year, with over 50% of that spend for infrastructure at their shipyards.
  - **Operating Margins**: Expect margins to improve sequentially throughout the year, particularly in the Aerospace segment, with significant improvement in Q3 and Q4.
  - **Revenue and Earnings**: For Aerospace, expect revenue and earnings to increase as they deliver more G700s, with margins improving as the year progresses  **[GD_3380421_5]** **[GD_3380421_1]** **[GD_3380421_14]** **[GD_3380421_2]** **[GD_3380421_3]** .

### Q4 2023 Earnings Call
- **Issued Period**: Q4 2023
- **Guided Period**: FY 2024
- **Guidance**:
  - **Aerospace Segment**:
    - Revenue: Approximately **$12 billion**, up around **40%** over 2023.
    - Operating Margin: Expected to be up **130 basis points** to **15%**.
    - Gulfstream Deliveries: Around **160** aircraft, including about **50 G700** deliveries.
  - **Combat Systems Segment**:
    - Revenue: Expected to be up about **3%** to **$8.5 billion**.
    - Operating Margin: Improvement of **50 basis points** to **14.4%**.
  - **Marine Systems Segment**:
    - Revenue: Anticipated to be about **$12.8 billion**.
    - Operating Margin: Improvement to **7.6%**.
  - **Technologies Segment**:
    - Revenue: Expected to be up about **1%** to **$13 billion**.
    - Operating Margin: Expected to improve **20 basis points** to about **9.5%**.
  - **Company-wide**:
    - Total Revenue: Approximately **$46.3 billion to $46.4 billion**, an increase of around **9.5%**.
    - Operating Margin: **11%**, up **100 basis points** from 2023.
    - Earnings Per Share (EPS): Forecasted around **$14.4**, with a reasonable range of **$14.35 to $14.45**  **[GD_3370671_7]** .

2ee683eaf711c0a09942e8b1b209c33851d3c5b486b1f3a2c6d2e2c124902df5

| Name                  | Position                                                      | Start Date | Short Bio                                                                                                                                                                                                 |
|-----------------------|---------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Jason W. Aiken        | Executive Vice President, Technologies and Chief Financial Officer | Jan 2023   | Jason W. Aiken has been serving as the Executive Vice President, Technologies and Chief Financial Officer at GD since January 2023. He was previously the Senior Vice President and CFO from Jan 2014 to Dec 2022  **[0000040533-24-000007_gd-20231231.htm:34]** **[0000040533-23-000014_gd-20221231.htm:33]** . |
| Christopher J. Brady  | Vice President and President of General Dynamics Mission Systems | Jan 2019   | Christopher J. Brady has been serving as the Vice President of GD and President of General Dynamics Mission Systems since January 2019. He was previously the Vice President of Engineering at GD Mission Systems  **[0000040533-24-000007_gd-20231231.htm:34]** . |
| Mark L. Burns         | Vice President and President of Gulfstream Aerospace Corporation | Jul 2015   | Mark L. Burns has been the Vice President of the company and President of Gulfstream Aerospace Corporation since July 2015. He was previously the President of Product Support at Gulfstream Aerospace Corporation  **[0000040533-24-000007_gd-20231231.htm:34]** . |
| Danny Deep            | Vice President and President of General Dynamics Land Systems | Apr 2020   | Danny Deep has been serving as the Vice President of the company and President of General Dynamics Land Systems since April 2020. He was previously the COO of General Dynamics Land Systems  **[0000040533-24-000007_gd-20231231.htm:34]** .                      |
| Gregory S. Gallopoulos| Senior Vice President, General Counsel and Secretary          | Jan 2010   | Gregory S. Gallopoulos has been serving as the Senior Vice President, General Counsel, and Secretary of GD since January 2010. He was previously the Vice President and Deputy General Counsel  **[0000040533-24-000007_gd-20231231.htm:34]** **[0000040533-23-000014_gd-20221231.htm:34]** .                  |
| M. Amy Gilliland      | Senior Vice President and President of General Dynamics Information Technology | Sep 2017   | M. Amy Gilliland has been serving as Senior Vice President of GD since April 2015 and as President of General Dynamics Information Technology since September 2017  **[0000040533-24-000007_gd-20231231.htm:34]** **[0000040533-23-000014_gd-20221231.htm:34]** .                                      |
| Kevin M. Graney       | Vice President and President of Electric Boat Corporation     | Oct 2019   | Kevin M. Graney has been serving as the Vice President of the company and President of Electric Boat Corporation since October 2019. He was previously the President of NASSCO  **[0000040533-23-000014_gd-20221231.htm:34]** .                                  |
| Kimberly A. Kuryea    | Senior Vice President, Human Resources and Administration     | Apr 2017   | Kimberly A. Kuryea has been serving as the Senior Vice President, Human Resources and Administration at GD since April 2017. She was previously the Vice President and Controller  **[0000040533-24-000007_gd-20231231.htm:34]** **[0000040533-23-000014_gd-20221231.htm:34]** .                             |
| William A. Moss       | Vice President and Controller                                 | Apr 2017   | William A. Moss has been serving as the Vice President and Controller at GD since April 2017. He was previously the Staff Vice President of Internal Audit  **[0000040533-24-000007_gd-20231231.htm:35]** **[0000040533-23-000014_gd-20221231.htm:34]** .                                               |
| Phebe N. Novakovic    | Chairman and Chief Executive Officer                          | Jan 2013   | Phebe N. Novakovic has been the Chairman and Chief Executive Officer of GD since January 2013. She was previously the President and Chief Operating Officer  **[0000040533-24-000007_gd-20231231.htm:35]** **[0001308179-24-000257_lgd2024_def14a.htm:12]** .                                              |
| Mark C. Roualet       | Executive Vice President, Combat Systems                      | Mar 2013   | Mark C. Roualet has been serving as the Executive Vice President, Combat Systems at GD since March 2013. He was previously the President of General Dynamics Land Systems  **[0000040533-24-000007_gd-20231231.htm:35]** **[0000040533-23-000014_gd-20221231.htm:34]** .                                   |
| Robert E. Smith       | Executive Vice President, Marine Systems                      | Jul 2019   | Robert E. Smith has been serving as the Executive Vice President, Marine Systems at GD since July 2019. He was previously the President of Jet Aviation  **[0000040533-24-000007_gd-20231231.htm:35]** **[0000040533-23-000014_gd-20221231.htm:34]** .                                                 |

5c43205bce97ee0be71e0935564d3212ce880b3971b1a32610b4475ee32441a1

Adjustments for Non-Cash Items [USD, Millions]

Stock-Based Compensation [USD, Millions]

Changes in Working Capital [USD, Millions]

Capital Expenditures (CapEx) [USD, Millions]

Proceeds from / Repayments of Debt [USD, Millions]

Share Repurchases [USD, Millions]

Dividend Payments [USD, Millions]

Net Change in Cash [USD, Millions]

efe89b1265d1a97aff40e74e3c4c0a2003e1d916228b6b7f5277f44456c8cf48

| Program Details          | Program 1       |
|--------------------------|-----------------|
| Approval Date            | N/A             |
| End Date/Duration        | N/A             |
| Total additional amount  | N/A             |
| Remaining authorization  | **4 million shares**  **[0000040533-24-000043_gd-20240929.htm:17]** **[0000040533-24-000043_gd-20240929.htm:32]**  |
| Details                  | **154,314 shares purchased at an average price of $287.64 per share during Q3 2024**  **[0000040533-24-000043_gd-20240929.htm:41]**  |

f68d3f8bbf659d420fb67ff160ece498dc1ecd21f2ba3e3f345849b2cbb75d71

**Annual guidance for FY 2024:**
- **Aerospace Sales**: $12.3 billion  **[GD_3403353_7]**  (no prior guidance)  
- **Aerospace margin**: 13.2%  **[GD_3403353_7]**  (no prior guidance)  
- **Aerospace deliveries**: 150  **[GD_3403353_7]**  (lowered from 160  **[GD_3394092_6]** )  
- **Marine Systems Revenue**: $13.9 billion  **[GD_3403353_7]**  (raised from $13.4–$13.8 billion  **[GD_3394092_6]** )  
- **Marine Systems margin**: 6.9%  **[GD_3403353_7]**  (lowered from 7.4%  **[GD_3394092_6]** )  
- **Company-wide Revenue**: $48 billion  **[GD_3403353_7]**  (no change from $47.8–$48.2 billion  **[GD_3394092_6]** )  
- **Company-wide margin**: 10.3%  **[GD_3403353_7]**  (no prior guidance)  
- **EPS**: $14  **[GD_3403353_7]**  (lowered from $14.40–$14.50  **[GD_3394092_6]** )  

a941478a5df2b2c2286243313b1a08fc66e74ede7c4891a5d2d5324b51e0b169

| Name       | Start Date | End Date | Reason for Change |
|------------|------------|----------|-------------------|
| KPMG LLP   | 2002  **[0000040533-24-000007_gd-20231231.htm:95]**    | Present  | Current auditor   |

afbcf95f9b2cfe5b9827404f5e84b8fb2be456ae7519b30f19511ed66be5a30a

655484bcf403778c91b7560ebf4bc4a84a9faa9eaa85313d94b1a6540f688be7

846cc9e678748bcde7afd11aef112cfea1ce579325ae83bc2a13d3d520685dd9

4d98138ee438d9b724b032d6f509dc28014d09917a0ca05a9c84b502ebae7676

- **Strong demand for combat vehicles and munitions**: General Dynamics is experiencing robust demand in its Combat Systems segment, both domestically and internationally. The company is executing on new and existing programs for wheeled and tracked vehicles, with Foreign Military Sales being a significant driver of demand.  **[GD_3413537_10]** **[GD_3413537_23]**
- **Significant expected margin improvements in Aerospace**: The company anticipates a **600 basis point** increase in margins for Lots 3 and 4 in its Aerospace segment, with room for further improvement beyond Lot 3. Additionally, as supply chain issues are resolved, margins are expected to build nicely, supported by new product certifications like the G800.  **[GD_3413537_13]** **[GD_3413537_21]**
- **Well-positioned to benefit from increased defense spending**: With the new U.S. administration expressing intent to support defense exports, General Dynamics is poised to capitalize on this opportunity. The company's programs are well-positioned for the modern fight, and ongoing funding for key Navy programs like the **Columbia and Virginia class submarines** should drive growth in the Marine Systems segment.  **[GD_3413537_24]** **[GD_3413537_15]** **[GD_3413537_12]**

dc2dec7e251424800452d9372ca5ce2a4f441b4dad5e023c9a5b1a9a73b4dd18

- **Underfunding of key programs may impact future revenues.** Phebe Novakovic noted that the **Stryker program in '25 was underfunded**, and the company needs to work with the customer to get a more rational funding profile.  **[GD_3413537_10]**
- **Marine Systems margins are under pressure due to supply chain delays and increased costs.** Despite increased productivity, it's **"not enough to offset the cost impact"**, and supply chain stabilization will **"take a bit of time."**  **[GD_3413537_16]**
- **Uncertainty in aircraft certification may delay future deliveries.** The timing of the G400 certification is **"beyond our control"**, and no G400 deliveries are included in the forecast of **150** aircraft for this year.  **[GD_3413537_22]**

652ef2424560926c89f03b991cc204d67b9825e2c84a9225dd1d6e7c4f6ec558

1. **G700 and G800 Deliveries and Margins**  
   **Q:** Will G800 certification and deliveries be impacted by G700 issues?  
   **A:** Phebe Novakovic stated they expect **G800 certification in the first half** and have worked through the significant problems experienced on the G700 due to the almost identical commonality of parts. They anticipate delivering fewer G800s and plan a combination of G650s and 800s equal to the number of G650s delivered previously. Challenges are believed to be behind them.  **[GD_3413537_8]** ,  **[GD_3413537_23]** 

2. **Aerospace Margin Improvement**  
   **Q:** Can you update on margin step-ups for G700 lots 3 and 4?  
   **A:** Novakovic confirmed they expect a **600 basis point improvement** in margins on lots 3 and 4 of the G700, with room for further improvement beyond lot 3.  **[GD_3413537_13]** 

3. **Supply Chain Impact on Deliveries**  
   **Q:** How are supply chain issues affecting Aerospace deliveries and margins?  
   **A:** Planning has become more conservative to match supply chain realities. GD aims to align with supply chain cadence to avoid quality issues and increased costs. Margins are expected to build nicely due to commonality of parts, new manufacturing facilities, and use of AI and digital engineering.  **[GD_3413537_21]** 

4. **Marine Systems Inflation Challenges**  
   **Q:** How are inflation and supply chain issues impacting Marine Systems' costs and margins?  
   **A:** Inflation and supply disruptions led to significant cost increases, with some materials rising by **37%**, not fully covered by contract protections. The Navy and Congress have provided funding to stabilize the supply chain, but additional funding is needed to execute the program of record. GD continues to manage costs and improve productivity to offset these pressures.  **[GD_3413537_11]** ,  **[GD_3413537_19]** 

5. **Combat Systems Demand and Funding**  
   **Q:** What's the outlook for Combat Systems' vehicle demand and funding?  
   **A:** Vehicle demand remains strong both domestically and internationally for wheeled and tracked vehicles. GD is executing on new and existing programs, with Foreign Military Sales being a significant driver. Notably, the **Stryker program in '25 was underfunded**, and GD is working with the customer to obtain a more rational funding profile.  **[GD_3413537_10]** 

6. **Working Capital Expectations**  
   **Q:** What are the expectations for working capital changes in Aerospace?  
   **A:** There will continue to be a working capital buildup at Gulfstream due to the G800 and G400 certification processes, which will begin to unwind at the end of **2025** or slightly earlier. Increases are also expected in Combat and Electric, which will unwind over time.  **[GD_3413537_18]** 

7. **Impact of New Administration**  
   **Q:** How will the new U.S. administration affect GD's business trajectory and profitability?  
   **A:** GD plans to maintain agility and respond to changes with accurate and quick decisions. Defense spending is threat-driven, and threats have increased. GD believes its programs are well-positioned for the modern fight and anticipates continued demand.  **[GD_3413537_15]** ,  **[GD_3413537_23]** 

8. **Technology Segment Margin Pressure**  
   **Q:** What's causing year-over-year margin pressure in the Technologies segment?  
   **A:** Growth will be at GDIT, whose businesses carry lower margins. There's a mix shift with mature programs retiring and newer programs starting, causing timing and mix issues temporarily impacting margins.  **[GD_3413537_22]** 

9. **G400 Deliveries and Certification**  
   **Q:** Are any G400 deliveries included in the 150 forecast for this year?  
   **A:** No G400 deliveries are included in the forecast. The G400 will come after the G800, with certification timelines beyond GD's control. Both programs are progressing well.  **[GD_3413537_23]** 

10. **International Exports and European Demand**  
    **Q:** Is GD seeing more flexibility in export policies or impact from European local procurement?  
    **A:** The administration intends to support exports, and GD is prepared to support that. In Europe, GD's business is domiciled there, and they've seen increased spending over the past few years without significant changes due to local political preferences.  **[GD_3413537_24]** 

86f719c005488f9351dec0c4baeb89c6ddb501536e550b973b72b042a0a4ef56

General Dynamics sees strong Combat Systems demand and projects a 600-bp margin jump in Aerospace (Lots 3 & 4). Despite underfunded Stryker in ’25 and Marine Systems cost pressures, GD expects supply-chain relief and continued defense-tailwinds to drive long-term growth.

f613359c88fa0541d6b73e9e04c59b7c9c92e0e002959998c09764b55873e07b

71e4c358f0b9a11152dc2233fc3a8827a8251a0a50aaf8dd75c0a5d73bba0b3e

**Quarterly guidance for 2025:**  
- **Q1 EPS**: $3.50  **[GD_3413537_7]**  (no prior guidance)  
- **Q2 EPS**: $3.30  **[GD_3413537_7]**  (no prior guidance)  
- **Q3 EPS**: $3.70  **[GD_3413537_7]**  (no prior guidance)  
- **Q4 EPS**: $4.30  **[GD_3413537_7]**  (no prior guidance)

**Annual guidance for FY 2025:**  
- **Company-wide revenue**: $50.3B  **[GD_3413537_7]**  (raised from $48B  **[GD_3403353_7]** )  
- **Operating margin**: 10.3%  **[GD_3413537_7]**  (no change from 10.3%  **[GD_3403353_7]** )  
- **EPS**: $14.80  **[GD_3413537_7]**  (raised from $14  **[GD_3403353_7]** )  

- **Aerospace revenue**: $12.650B  **[GD_3413537_7]**  (raised from $12.3B  **[GD_3403353_7]** )  
- **Aerospace operating margin**: 13.7%  **[GD_3413537_7]**  (raised from 13.2%  **[GD_3403353_7]** )  
- **Gulfstream deliveries**: 150  **[GD_3413537_7]**  (no change from 150  **[GD_3403353_7]** )  

- **Combat Systems revenue**: $9.1B  **[GD_3413537_7]**  (no prior guidance)  
- **Combat Systems operating margin**: 14.5%  **[GD_3413537_7]**  (no prior guidance)  

- **Marine Systems revenue**: $15B  **[GD_3413537_7]**  (raised from $13.9B  **[GD_3403353_7]** )  
- **Marine Systems operating margin**: 6.8%  **[GD_3413537_7]**  (lowered from 6.9%  **[GD_3403353_7]** )  
- **Marine Systems earnings growth**: 10% or better  **[GD_3413537_7]**  (no prior guidance)  

- **Technologies revenue**: $13.5B  **[GD_3413537_7]**  (no prior guidance)  
- **Technologies operating margin**: 9.2%  **[GD_3413537_7]**  (no prior guidance)  

- **Effective tax rate**: 17.5%  **[GD_3413537_6]**  (no prior guidance)  
- **Cash conversion**: 80–85%  **[GD_3413537_5]**  (no prior guidance)  
- **Capital expenditures**: Relatively flat  **[GD_3413537_5]**  (no prior guidance)  
- **Interest expense**: Relatively flat  **[GD_3413537_5]**  (no prior guidance)  

34a805b1913afc96edb3069362d72b0eb5ac7d45f3d7f54d0cf55134c71c0999

1. **Marine Supply Chain Impact**  
   **Q:** How are supply chain issues affecting submarine schedules?  
   **A:** Supply chain challenges have already impacted submarine schedules, as the supply chain is not improving at the hoped-for rate. Costs have risen significantly, and there is pressure from demographic challenges and increased demand. The company is adjusting its pace to align with more predictable but elongated supply chain schedules  **[GD_3403353_10]** ,.  **[GD_3403353_19]** 

2. **Aerospace Margin Outlook**  
   **Q:** What is the outlook for margins in the Aerospace segment?  
   **A:** Despite current supply chain challenges and initial margin pressures from the G700, the Aerospace segment expects gross margin improvement of about **600 to 700 basis points** going forward. The G800 is anticipated to contribute positively to margins next year  **[GD_3403353_8]** ,.  **[GD_3403353_27]** 

3. **Combat Systems Growth**  
   **Q:** What is the long-term visibility for Combat Systems growth?  
   **A:** The backlog and pipeline support steady growth in Combat Systems, driven by the unfortunate threat environment and robust demand domestically and internationally, especially in Europe and the Middle East. Margins are expected to remain around **14.5%**, with potential for earnings expansion  **[GD_3403353_16]** ,  **[GD_3403353_17]** ,.  **[GD_3403353_31]** 

4. **Marine Margins Outlook**  
   **Q:** What is the expected margin trend in the Marine segment?  
   **A:** Marine segment margins are expected to be **lumpy** and may face pressure due to supply chain impacts. The ability to drive incremental margins depends on cost management and productivity improvements. Margins may remain variable through next year and beyond  **[GD_3403353_12]** ,.  **[GD_3403353_19]** 

5. **Navy Contract Negotiations**  
   **Q:** What is the timing and impact of Navy contract negotiations?  
   **A:** The timing for contracts on Block 6 Virginia-class submarines and Columbia-class submarines is uncertain due to cost increases in the economy. Margin impact will occur over time as programs are executed. The company is working with the customer and Congress to address input cost increases.  **[GD_3403353_24]** 

6. **G700 Delivery Progress**  
   **Q:** Have G700 deliveries increased, and are issues resolved?  
   **A:** G700 deliveries are on schedule, with more than one delivered in October. Engine availability has improved, and interiors are not a concern. Some aircraft deliveries will shift into next year, but overall progress is positive  **[GD_3403353_13]** ,  **[GD_3403353_14]** ,  **[GD_3403353_21]** ,.  **[GD_3403353_30]** 

7. **Capital Structure Approach**  
   **Q:** How is the company approaching its capital structure and leverage?  
   **A:** The company has a very strong balance sheet, recently upgraded credit rating, and expects to pay debt repayments on schedule. It continues to assess its position and feels good about where it stands currently.  **[GD_3403353_29]** 

8. **Combat Systems Export Sales**  
   **Q:** Are there many Combat Systems products approved for direct commercial sales?  
   **A:** Yes, particularly from European businesses, which have been making direct sales for over **25 years**. Demand for these products in Eastern and Western Europe remains very strong.  **[GD_3403353_31]** 

9. **Aerospace Services Growth**  
   **Q:** Is the current run rate for Aerospace services sustainable?  
   **A:** Aerospace services are expected to grow at the rate of fleet expansion, capturing **85% to 90%** of all Gulfstream service. While margins can be lumpy, the services business provides steady growth without significant dilution impact.  **[GD_3403353_20]** 

10. **Technology Investments Focus**  
    **Q:** What technology investments are you most excited about?  
    **A:** The company is focusing on capitalizing on growth in the Marine group, improving shipyard capabilities, and advancing the Technologies group, which has positioned itself in highly competitive businesses with strong growth prospects.  **[GD_3403353_28]** 

859ad4cc1b5def6c3a16d655575ab66d6abe55e30db3bd4457531dc928fa1e9a

- Total Revenue (Q4 2024): $13,338 million (+**14%** YoY vs. $11,668 million  **[0000040533-24-000007_gd-20231231.htm:80]** **[0000040533-24-000007_gd-20231231.htm:65]** **[0000040533-24-000007_gd-20231231.htm:11]** **[0000040533-24-000007_gd-20231231.htm:14]** )  
- Aerospace (Q4 2024): $3,743 million (+**36%** YoY vs. $2,744 million  **[0000040533-24-000007_gd-20231231.htm:80]** **[0000040533-24-000007_gd-20231231.htm:65]** **[0000040533-24-000007_gd-20231231.htm:11]** **[0000040533-24-000007_gd-20231231.htm:14]** )  
- Marine Systems (Q4 2024): $3,960 million (+**16%** YoY vs. $3,408 million  **[0000040533-24-000007_gd-20231231.htm:80]** **[0000040533-24-000007_gd-20231231.htm:65]** **[0000040533-24-000007_gd-20231231.htm:11]** **[0000040533-24-000007_gd-20231231.htm:14]** )  

0c45b964ea42b8110669715ce44f13fe233af4f6ee882c1da72412a90ed29645

da3ccd5620f3a3056d280e7a4dd2ac901e367b869980390cfdbd8315948fe880

Number of Gulfstream aircraft deliveries (units)

Segment book-to-bill ratio for new Gulfstream aircraft (ratio)

9625b69641839a499a536f4a402dbeb4b252f6a371375c0a76fea4e3ade5a329

97f8ed93b1a5cd0322a59d756a8f4da7c1f43089a7d0a7902e3aa32a76354556

| Year | Amount Due (in millions) | Debt Type          | Interest Rate (%) | % of Total Debt |
|----------|------------------------------|------------------------|-----------------------|---------------------|
| 2024     | 500                          | Fixed-rate notes       | 2.375                | 5.4% = (500 / 9267) * 100 **[0000040533-24-000043_gd-20240929.htm:14]** **[0000040533-24-000043_gd-20240929.htm:14]** |
| 2025     | 750                          | Fixed-rate notes       | 3.250                | 8.1% = (750 / 9267) * 100 **[0000040533-24-000043_gd-20240929.htm:14]** **[0000040533-24-000043_gd-20240929.htm:14]** |
| 2025     | 750                          | Fixed-rate notes       | 3.500                | 8.1% = (750 / 9267) * 100 **[0000040533-24-000043_gd-20240929.htm:14]** **[0000040533-24-000043_gd-20240929.htm:14]** |
| 2026     | 500                          | Fixed-rate notes       | 1.150                | 5.4% = (500 / 9267) * 100 **[0000040533-24-000043_gd-20240929.htm:14]** **[0000040533-24-000043_gd-20240929.htm:14]** |
| 2026     | 500                          | Fixed-rate notes       | 2.125                | 5.4% = (500 / 9267) * 100 **[0000040533-24-000043_gd-20240929.htm:14]** **[0000040533-24-000043_gd-20240929.htm:14]** |
| 2027     | 750                          | Fixed-rate notes       | 3.500                | 8.1% = (750 / 9267) * 100 **[0000040533-24-000043_gd-20240929.htm:14]** **[0000040533-24-000043_gd-20240929.htm:14]** |
| 2027     | 500                          | Fixed-rate notes       | 2.625                | 5.4% = (500 / 9267) * 100 **[0000040533-24-000043_gd-20240929.htm:14]** **[0000040533-24-000043_gd-20240929.htm:14]** |
| 2028     | 1000                         | Fixed-rate notes       | 3.750                | 10.8% = (1000 / 9267) * 100 **[0000040533-24-000043_gd-20240929.htm:14]** **[0000040533-24-000043_gd-20240929.htm:14]** |
| 2030     | 1000                         | Fixed-rate notes       | 3.625                | 10.8% = (1000 / 9267) * 100 **[0000040533-24-000043_gd-20240929.htm:14]** **[0000040533-24-000043_gd-20240929.htm:14]** |
| 2031     | 500                          | Fixed-rate notes       | 2.250                | 5.4% = (500 / 9267) * 100 **[0000040533-24-000043_gd-20240929.htm:14]** **[0000040533-24-000043_gd-20240929.htm:14]** |
| 2040     | 750                          | Fixed-rate notes       | 4.250                | 8.1% = (750 / 9267) * 100 **[0000040533-24-000043_gd-20240929.htm:14]** **[0000040533-24-000043_gd-20240929.htm:14]** |
| 2041     | 500                          | Fixed-rate notes       | 2.850                | 5.4% = (500 / 9267) * 100 **[0000040533-24-000043_gd-20240929.htm:14]** **[0000040533-24-000043_gd-20240929.htm:14]** |
| 2042     | 500                          | Fixed-rate notes       | 3.600                | 5.4% = (500 / 9267) * 100 **[0000040533-24-000043_gd-20240929.htm:14]** **[0000040533-24-000043_gd-20240929.htm:14]** |
| 2050     | 750                          | Fixed-rate notes       | 4.250                | 8.1% = (750 / 9267) * 100 **[0000040533-24-000043_gd-20240929.htm:14]** **[0000040533-24-000043_gd-20240929.htm:14]** |

0e775db582607747144f8c371ea0751ce0c34d099e49b976375ca0d9e6718c3f

- **Supply chain issues in the Aerospace segment continue to impact profitability and margins, particularly due to out-of-station work affecting aircraft like the G700.**  **[GD_3380421_25]**
- **There are margin challenges anticipated in the ramp-up of G700 deliveries, especially with the first lot, which may affect earnings in the near term.**  **[GD_3380421_25]** ,  **[GD_3380421_31]**
- **Uncertainty around exceeding 100% cash conversion for the year, with management focusing on hitting the target rather than surpassing it, possibly indicating cash flow constraints due to inventory build-up and delayed deliveries.**  **[GD_3380421_32]**

2617e539d1201899ac2a6324b946659542e983e9c8e146e43a03bf3dd9d0b996

1. **G700 Deliveries and Margins**  
   **Q:** What's the outlook for G700 deliveries and impact on margins?  
   **A:** Phebe stated they have **50 to 52 G700 aircraft** slated for delivery equally across the second to fourth quarters.  **[GD_3380421_6]**  The first lot of about **20 aircraft** will carry additional costs, impacting margins primarily in Q2.  **[GD_3380421_11]**  She anticipates revenues to increase by about **$1 billion to $1.1 billion** and earnings by **$100 million to $110 million** in Q2, with margins improving thereafter.  **[GD_3380421_11]** 

2. **Aerospace Demand and Sales Cycle**  
   **Q:** How is aerospace demand affected by monetary policy and sales cycles?  
   **A:** Phebe clarified that concerns about inflation or monetary policy aren't impacting demand but are affecting the **timing from interest to order closure**, particularly for corporate fleet orders.  **[GD_3380421_9]**  The pipeline remains robust with strong interest, despite elongated sales cycles.  **[GD_3380421_27]** 

3. **Supply Chain and Submarine Programs**  
   **Q:** How are supply chain issues affecting submarine programs and margins?  
   **A:** Stabilizing the supply chain is critical for resuming full cadence on Virginia-class and increasing Columbia-class submarine production.  **[GD_3380421_12]**  Single-source suppliers are pacing items, and investments are being made to address these weaknesses.  **[GD_3380421_17]**  Phebe expects **margins to improve at shipyards** as supply chain issues are resolved.  **[GD_3380421_20]** 

4. **DoD Budget and Virginia-class Subs**  
   **Q:** What's the impact of fewer Virginia-class subs in the DoD budget?  
   **A:** The request for **one less Virginia-class submarine** in FY25 has no short-term impact due to existing workload.  **[GD_3380421_20]**  Securing a full second ship set is crucial for the supply chain's health and long-term industrial base stability.  **[GD_3380421_20]** 

5. **Combat Systems Growth in Europe**  
   **Q:** How is combat systems growth in Europe trending?  
   **A:** Growth is driven by the threat environment, with increased orders for combat vehicles and **Abrams tanks** through the FMS process.  **[GD_3380421_7]**  This demand is expected to continue until the threat environment improves.  **[GD_3380421_7]** 

6. **Share Repurchases and Cash Flow**  
   **Q:** What's the plan for share repurchases and cash flow outlook?  
   **A:** Share repurchases will proceed in regular order.  **[GD_3380421_13]**  Prudence was exercised in Q1 due to potential government shutdowns, but **cash performance is expected to be very strong** for the remainder of the year.  **[GD_3380421_13]** 

7. **Aerospace Margins Outlook for 2025**  
   **Q:** Are higher second-half margins the starting point for 2025?  
   **A:** Once past the initial G700 deliveries, margin performance is expected to **continue improving**.  **[GD_3380421_29]**  Margins in Q3 will be significantly better than Q2, with further improvement in Q4.  **[GD_3380421_29]** 

8. **Free Cash Flow Conversion**  
   **Q:** What's the expectation for free cash flow conversion in 2024?  
   **A:** They anticipate achieving about **100% free cash flow conversion** in 2024.  **[GD_3380421_14]**  Negative cash flow in Q1 was expected due to contract timings and lack of G700 deliveries, but a strong rebound is expected in subsequent quarters.  **[GD_3380421_14]** 

9. **Mitigating Supply Chain in Munitions**  
   **Q:** How are supply chain issues in munitions being mitigated?  
   **A:** The combat supply chain is robust, and efforts are underway to ensure suppliers can manage growth.  **[GD_3380421_16]**  Focus remains on **operations and execution** to drive profitability.  **[GD_3380421_16]** 

10. **Gulfstream Backlog Adjustments**  
    **Q:** Were there significant cancellations affecting Gulfstream backlog?  
    **A:** Phebe stated there were **no notable cancellations** impacting the backlog.  **[GD_3380421_15]**  Any adjustments will be clarified separately.  **[GD_3380421_15]** 

11. **Adoption of AI in Technologies**  
    **Q:** How is AI adoption affecting the Technologies segment?  
    **A:** They've been investing in AI at GDIT and Mission Systems.  **[GD_3380421_28]**  Tailored AI solutions are expected to drive increased revenue as customers become more comfortable, though impact is minimal currently.  **[GD_3380421_28]** 

12. **R&D Spending at Gulfstream**  
    **Q:** What's the pattern of R&D spending at Gulfstream?  
    **A:** R&D spending is expected to remain **steady**, supporting multiple programs in certification.  **[GD_3380421_26]**  No significant changes are anticipated this year.  **[GD_3380421_26]** 

13. **G400 Program Status**  
    **Q:** Can you update us on the G400 program and certification timing?  
    **A:** The G400 program is doing extremely well and is set to **fly in the third quarter** with a mature aircraft.  **[GD_3380421_25]**  Phebe refrained from predicting certification timelines due to external factors.  **[GD_3380421_25]** 

14. **155mm Shell Production Ramp-up**  
    **Q:** How is the ramp-up of 155mm shell production progressing?  
    **A:** Opening the Texas facility increased shell throughput by **83%**, keeping them on track with Army goals.  **[GD_3380421_24]**  They aim to accelerate further, with the Army as a critical partner.  **[GD_3380421_24]** 

15. **G280 Program Amid Middle East Conflict**  
    **Q:** How is the G280 program faring amid Middle East conflicts?  
    **A:** Despite anticipated impacts, the G280 program is slightly **ahead of schedule**, and deliveries remain on track.  **[GD_3380421_24]** 

16. **Supply Chain Investments in Naval Sector**  
    **Q:** Where are investments needed in the naval supply chain?  
    **A:** Investments focus on **single-source, critical suppliers**.  **[GD_3380421_17]**  Collaboration with the Navy aims to stabilize the supply chain, which is the pacing item for Electric Boat.  **[GD_3380421_17]** 

17. **Aircraft Demand Outside the U.S.**  
    **Q:** How is aircraft demand outside the U.S.?  
    **A:** Demand remains strong among U.S. and international corporations and high-net-worth individuals, with **no significant changes** or surprises.  **[GD_3380421_23]** 

18. **Aerospace Supply Chain Challenges**  
    **Q:** Are there still supply chain challenges in Aerospace?  
    **A:** While quality and schedule reliability are improving, they continue to face **margin challenges** due to out-of-station work.  **[GD_3380421_22]** 

19. **Impact of Inflation on Shipbuilding**  
    **Q:** Is inflation affecting shipbuilding costs and budgets?  
    **A:** Inflation has been a factor, and efforts are underway to offset impacts by increasing throughput.  **[GD_3380421_19]**  The Navy is collaborating with the industrial base to adjust accordingly.  **[GD_3380421_19]** 

ef0f50b32a5b138e9a8dfb4700982a96b5bcce5f9ba6dcd4fa8cb8236e7c4c5c

1. **G700 Deliveries and Margins**  
   **Q:** When will G700 deliveries start, and what's the margin outlook?  
   **A:** We have **15 G700 airplanes ready** and hope to deliver them this quarter.  **[GD_3370671_8]**  The G700 comes in at **accretive margins**, but margin performance is influenced by factors like mix, pricing, and out-of-station work.  **[GD_3370671_15]** 

2. **Gulfstream Margins and Supply Chain**  
   **Q:** Why does Gulfstream's guidance imply lower margins despite G700?  
   **A:** Margins are affected by numerous factors, including supply chain impacts and mix.  **[GD_3370671_21]** **[GD_3370671_22]** **[GD_3370671_23]**  We delivered **39 aircraft in Q4**, indicating supply chain improvements, but we remain cautious about its ability to keep up.  **[GD_3370671_22]** 

3. **Capital Deployment and Cash Flow**  
   **Q:** How should we think about free cash flow and capital deployment in '24?  
   **A:** We anticipate **100% free cash flow conversion** in 2024 and beyond.  **[GD_3370671_14]**  With minimal debt maturities, there's opportunity for increased **share repurchases** as uncertainty diminishes.  **[GD_3370671_14]** 

4. **Defense Budget and Sequestration**  
   **Q:** How might the budget process and potential sequester affect you?  
   **A:** We've factored all known funding into our plan but will adjust if there's an extended continuing resolution or sequester. We're hopeful Congress passes the critical defense bill given the threat environment.  **[GD_3370671_13]** 

5. **Shipbuilding Capacity and Supply Chain**  
   **Q:** Are you capacitized to meet increased submarine demand?  
   **A:** We're sufficiently capacitated at Electric Boat for current demand. We've increased throughput on Virginia by **10%** and on Columbia by **30%** in 2024.  **[GD_3370671_9]**  We'll work with the Navy on potential capacity increases and supply chain stabilization.  **[GD_3370671_10]** **[GD_3370671_25]** **[GD_3370671_26]** 

6. **Aerospace Delivery Outlook**  
   **Q:** Can you update us on the aerospace multiyear outlook?  
   **A:** We're planning to deliver **160 airplanes** this year, with more in 2025 and even more in 2026. We'll provide additional details as time goes on.  **[GD_3370671_18]** 

7. **Combat Systems Growth**  
   **Q:** Why is Combat Systems growth guidance only 3%?  
   **A:** Contract timing makes growth appear lumpy. We expect mid- to upper single-digit growth over our plan period, with potential acceleration later in the year.  **[GD_3370671_17]** 

8. **G280 Production Impact**  
   **Q:** What's the status of G280 deliveries amid the Hamas attack?  
   **A:** We've adjusted our plan to reflect current realities. Production continues with retirees and management, and we've factored this into our expectations for the year.  **[GD_3370671_21]** 

9. **Business Jet Supply and Demand**  
   **Q:** How are you managing supply versus demand in the jet market?  
   **A:** We don't anticipate burning through our robust backlog. New aircraft drive incremental demand, and we expect continued healthy order rates supported by a solid pipeline.  **[GD_3370671_19]** **[GD_3370671_20]** 

10. **Defense Profitability Amid Inflation**  
    **Q:** Can GD grow defense profits despite earnings lagging revenue?  
    **A:** We'll focus on **operational excellence** to drive increased profitable growth, addressing impacts from inflation and mix.  **[GD_3370671_16]** 

11. **Unbilled Receivables Reduction**  
    **Q:** Why did unbilled receivables drop by $450 million?  
    **A:** This is partly due to **Ajax catching up** and ongoing payments on other large international programs in Combat Systems.  **[GD_3370671_24]** 

ddea458b0ba3f3dc0f5d4f28aac07d947d65a2162c71651c58bfa303ff5641d0

- *1. Supply chain issues in the Marine segment are worsening, impacting submarine delivery schedules and increasing costs.** Phebe Novakovic stated that the supply chain is not improving at the expected rate, leading to schedule impacts, particularly on the Virginia-class submarines, which now face considerable pressure in achieving the goal of delivering two boats per year.  **[GD_3403353_10]** **[GD_3403353_11]**
- *2. Significant under-delivery of G700 aircraft in the Aerospace segment due to multiple delays and rework issues.** In Q3 2024, only **4 G700 aircraft were delivered instead of the planned 15-16**, primarily due to late engine certifications, supplier quality issues necessitating component replacements, and Hurricane Helene disrupting operations. This shortfall adversely affected revenues and operating margins in the Aerospace segment.  **[GD_3403353_2]**
- *3. Rising manufacturing costs and supply chain constraints are leading to increased expenses without corresponding revenue growth.** Phebe Novakovic highlighted a **25% increase in the Producer Price Index for manufacturing since December 2019**, creating financial pressures on the company, particularly in the Marine Systems segment. These cost increases are not being offset by improved supply chain performance or increased deliveries.  **[GD_3403353_10]** **[GD_3403353_23]**

e21ee257c11d39b050ec7a981ec60df0501bc9800ec4bb340de3eb82cdd3ae6b

1. **G700 Certification Issues**  
   **Q:** What are the issues with the G700 and are they resolved?  
   **A:** Late in the certification process, we were required to bind some wires in the tail of the G700, which was a relatively simple fix. For aircraft already built, we removed the tails; for those in production, we hadn't installed them yet. This issue is largely behind us and contributed somewhat to the cost impact on Lot 1 but does not affect future deliveries.  **[GD_3394092_7]** **[GD_3394092_10]** 

2. **Gulfstream Margin Outlook**  
   **Q:** How will G700 issues impact Gulfstream margins moving forward?  
   **A:** We expect nice margin improvements this quarter and again in the fourth quarter, anticipating fourth-quarter margins in the mid- to high-upper teens. The Lot 1 costs are behind us, and future lots should reflect stronger profitability.  **[GD_3394092_10]** **[GD_3394092_17]** **[GD_3394092_20]** 

3. **Gulfstream Demand and Bookings**  
   **Q:** What is the outlook for Gulfstream bookings and demand?  
   **A:** The pipeline remains strong with significant interest in our new aircraft. We anticipate a more robust fourth quarter due to the expiration of accelerated depreciation. While we expect some slowdown around the U.S. presidential election, overall interest remains high, and we're confident in matching supply to demand.  **[GD_3394092_8]** **[GD_3394092_27]** 

4. **Marine Group Margins and Outlook**  
   **Q:** Can Marine segment margins return to historical levels, and what's the outlook?  
   **A:** Achieving **10% margins** is our goal over time. Supply chain stabilization, learning curve improvements on the Columbia program, and increased Virginia-class submarine throughput are necessary steps. We have improved workforce hiring and retention, and while progress is incremental, we expect steady improvement driven by the threat environment.  **[GD_3394092_9]** **[GD_3394092_26]** 

5. **Munitions Demand Outlook**  
   **Q:** How do you see munitions demand evolving over the next few years?  
   **A:** We anticipate increased munitions orders for the next **3 to 4 years**, driven by the current threat environment and lessons learned about the criticality of ammunition. We're confident in this outlook but acknowledge it's challenging to predict beyond that timeframe.  **[GD_3394092_18]** **[GD_3394092_19]** 

6. **Combat Systems Margins**  
   **Q:** How will current orders impact Combat Systems margins?  
   **A:** Bookings reflect the threat environment, including international vehicle orders and U.S. programs. Combat Systems typically has mid-**14%** margins, occasionally reaching **15%**. As we transition from lower-margin facilitization work to higher-margin production, especially in ammunition, we expect some margin expansion.  **[GD_3394092_16]** 

7. **Supply Chain Impact on Gulfstream**  
   **Q:** Are supply chain issues affecting Gulfstream resolved?  
   **A:** The supply chain has improved but isn't fully healed. We may continue experiencing some out-of-station work due to late supplier deliveries, but the situation is better than before.  **[GD_3394092_7]** **[GD_3394092_24]** 

8. **Cash Flow Expectations**  
   **Q:** What's the outlook for cash flow conversion this year and next?  
   **A:** We're still targeting a cash conversion rate approaching **100%** for this year, with most cash generation in the fourth quarter. It's too early to provide guidance for next year as we're still in the planning process.  **[GD_3394092_28]** 

9. **Growth in Aerospace Services**  
   **Q:** What are the trends in the Aerospace services business?  
   **A:** Services are growing with fleet expansion, and our goal is to capture as much Gulfstream service work as possible. This growth, along with special mission sales, is contributing significantly to revenue increases. The competitive environment remains stable.  **[GD_3394092_12]** 

10. **Technologies Segment Pipeline**  
    **Q:** What's the outlook for the Technologies segment's bookings and growth?  
    **A:** The pipeline is very active with an available market over **$120 billion**. We've been winning more than our fair share, which should drive steady growth in services and Mission Systems over the next **12 to 18 months**.  **[GD_3394092_12]** 

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- **Robust demand across key segments**, with "pretty robust demand in Marine and Combat"  **[GD_3370671_17]**  and "nice demand, continuing interest, and a very solid pipeline" in Aerospace, supporting future growth.  **[GD_3370671_21]**
- **New Gulfstream aircraft models entering service with accretive margins**, notably the **G700** "coming in at **very nice margins**"  **[GD_3370671_16]**  and the **G400** performing "very nicely in excess of the design parameters" with "considerable interest" from customers.  **[GD_3370671_11]**
- **Improved production and supply chain**, enabling increased aircraft deliveries—**39 aircraft delivered in the fourth quarter**, up from 24-25, making the company "pretty optimistic that we can continue to increase production".  **[GD_3370671_23]**

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- General Dynamics expects continued strong demand for Combat Systems in Europe due to the heightened threat environment, with increased orders for wheeled and tracked vehicles and **Abrams tanks** through the FMS process; this demand is expected to continue until the threat environment improves.  **[GD_3380421_7]**
- The company is ramping up munitions production to meet increased demand, with the opening of a new **Texas facility increasing 155mm shell production capacity by 83%**; they are on track with the Army and aim to move even faster.  **[GD_3380421_26]**
- Aerospace margins are expected to improve significantly in the second half of the year as **G700** deliveries ramp up, with third quarter margins **significantly better** than second quarter, and fourth quarter **even better still**.  **[GD_3380421_31]**

25c8843424971a94abbaa86ed0b9e01e1948e31f6884b710278adc2abe412ceb

- **Anticipated increased demand for munitions over the next several years due to the heightened threat environment**, supporting growth in the Combat Systems division.  **[GD_3394092_18]** ,  **[GD_3394092_19]**
- **Marine Systems division expects continued strong growth into 2025 and beyond**, driven by sustained demand from the U.S. Navy and the threat environment.  **[GD_3394092_26]** ,  **[GD_3394092_29]**
- **Aerospace division (Gulfstream) is seeing higher revenue due to increased services and special mission aircraft**, with potential for significant margin expansion as new aircraft mature, supporting profitability growth.  **[GD_3394092_20]** ,  **[GD_3394092_15]** ,  **[GD_3394092_12]** ,  **[GD_3394092_17]**

c8d77aae8ca70ffe0febd5a93110bbdfd2b5f7f8beac1a7ee0b9c5e19612a50a

- **Earnings growth in the defense segment is lagging revenue growth** due to inflation, mix, and industrial base issues, including impacts from COVID, raising concerns about GD's ability to continue growing defense profits.  **[GD_3370671_17]**
- **Ongoing supply chain challenges in the Marine group are affecting on-time delivery and quality**, with GD needing assistance from the Navy to stabilize the supply chain, indicating potential future operational difficulties.  **[GD_3370671_26]**
- **Cautiousness about the supply chain's ability to keep up with production**, particularly for the G700 aircraft, suggests **risk in achieving 2024 targets** in the Aerospace segment.  **[GD_3370671_23]**

438ee021ab3d77277617d86223ce69cd5c2850a1032e5d0aed9903dcb520a3fc

- General Dynamics expects continued growth in its **Combat Systems** segment, with increased revenue from the **combat vehicle business** and a **strong backlog**, indicating a "pretty good solid growth pattern" going forward.  **[GD_3403353_9]**
- The **Aerospace services** business is experiencing **nice growth** and is expected to grow steadily as the fleet expands; Gulfstream garners **85-90+% of all Gulfstream service**, making it a "nice, steady growth business".  **[GD_3403353_20]**
- General Dynamics has maintained **strong profit margins**, with margins **almost 14% for the first 9 months**, and expects to continue operating within its historical margin range of around **14.5%**.  **[GD_3403353_17]**

9c755fb204d0cfa0d31bbffab48adc07b2a7b9c58d1cac263985e086eacb1f75

- **Ongoing supply chain issues at Gulfstream are expected to continue**, causing increased costs due to out-of-station work. Management acknowledges that the supply chain "has improved, but it is not completely healed yet," indicating these challenges will persist.  **[GD_3394092_23]**
- **Uncertainty in long-term demand for munitions**, as future demand beyond the next couple of years is difficult to predict. Management admits it's "hard to look into a crystal ball much past a planning period," which may affect future revenues in the Combat Systems segment.  **[GD_3394092_18]**
- **Management unable to explain a $171 million difference between gross and net bookings**, potentially signaling issues in order intake or backlog management. When asked about the discrepancy, the CEO stated, "Nothing that I can put my finger on, to be quite honest, in the moment."  **[GD_3394092_15]**

0ff7554e017d7e214030e491ec20f4cfd8db785b5251925145b4041870f12537

General Dynamics Corp (GD)

Financials