General Dynamics Corporation

General Dynamics reported second-quarter 2026 revenue of $14.1 billion, operating earnings of $1.460 billion, net earnings of $1.160 billion, and diluted EPS of $4.24. Revenue increased 8.1% year over year, operating earnings increased almost 12%, net earnings increased 14.4%, EPS increased $0.50 or 13.4%, and operating margin improved 40 basis points to 10.4%. Year to date, revenue was $27.6 billion, up 9.1%, operating earnings were nearly $2.9 billion, up 11.9%, and EPS was up $0.95 or 12.8%. For the full year 2026, the company now expects revenue of approximately $55.7 billion, operating margin of 10.5%, and EPS of $16.80 to $16.90; it also expects Aerospace revenue of around $13.8 billion with a 14.7% margin, Combat revenue of about $9.8 billion with a 13.8% margin, Marine revenue around $18 billion with a 7.4% margin, and Technologies revenue of $14.1 billion with a 9.4% margin. Kim Kuryea said operating cash flow was $1.9 billion in the quarter and over $4 billion in the first half, capex was $234 million in the quarter and $437 million in the first half, and free cash flow conversion is now expected to be around 105% for the year. Backlog ended at a record $136.5 billion, total estimated contract value was $186.9 billion, cash was about $4.3 billion, and net debt was $3.2 billion.

Phebe Novakovic said the quarter was “even better in almost all respects” and called it a “superb quarter and first half.” She emphasized that the company saw broad improvement across Aerospace, Marine, Combat, and Technologies, with Aerospace and Marine leading revenue growth and the defense businesses adding backlog. Her tone was confident but disciplined: she highlighted strong execution, improving productivity, and continued investment in shipyards and new aircraft, while also stressing that the company will not give out certain long-term details such as model-by-model backlog years or out-year margin targets.

Kim Kuryea focused on cash generation, backlog, and balance sheet strength. She said operating cash flow was $1.9 billion in the quarter, free cash flow was $1.6 billion, cash conversion was 142% in the quarter and over 150% in the first half, and full-year free cash flow conversion is now expected to be around 105% of net income. She also noted capex of $234 million in the quarter, with full-year capex expected at 3.5% to 4% of sales, plus a planned roughly $500 million pension contribution, over $500 million of expected cash taxes in the second half, and repayment of a $500 million note in June with another $500 million due in August. She ended with a cash balance of about $4.3 billion, net debt of $3.2 billion, and record backlog of $136.5 billion.

Analysts focused on Aerospace backlog and production capacity, Marine growth durability and Virginia-class build rates, the defense budget and reconciliation, M&A appetite, missile framework agreements, supply chain health, GDIT contracting, and the timing of G300/G400 and submarine contracts. Management said it would not disclose detailed years of production for Aerospace backlog, but noted supply chains have stabilized and learning curves are improving; on Marine, it said the second-half slowdown is mainly a timing issue from material receipts and that the segment remains on track to reach 2 Virginia-class and 1 Columbia in the early 2030s. Phebe also said the company continues to look at M&A but does not discuss it, and that GDIT is benefiting from agile contracting and AI/automation investments. On submarine contracts, management said the awards are expected soon and would be welcomed by the supply chain.