GD’s aerospace revenues climb despite lower Gulfstream deliveries


Revenues and earnings at General Dynamics ’(GD’s) aerospace unit (Gulfstream Aerospace and Jet Aviation) climbed in the first quarter of 2022, despite Gulfstream delivering three fewer aircraft.

Aerospace revenues in the quarter increased to $1.9bn, a 0.8% year-over-year (YoY) increase. Earnings rose 10.8% to $243m – a 12.8% operating margin. Gulfstream completed and delivered 25 jets (21 large-cabin and four G280s) in the quarter, down from 28 (25 large-cabin, three G280s) in the same period of 2021.

Addressing investors yesterday, GD chairman and CEO Phebe Novakovic said: “Revenue was $16m ahead of last year’s first quarter despite the delivery of three fewer aircraft. Revenue was almost $180m higher than anticipated by the sell-side. The difference is almost entirely growth at Gulfstream Services and Jet Aviation.”

Operating earnings of $243m are $23m ahead of Q1 2021. The 12.8% operating margin is a 110 basis points higher than a year ago, she said. “Here, the gross margin on delivered aircraft was slightly better, particularly the 500, but fully offset by increased R&D spending. The improvement comes from higher service revenue, coupled with significantly better margin on net revenue.”

From an order perspective, GD’s aerospace segment had a “strong quarter”, with a book-to-bill of 1.7:1. Gulfstream aircraft orders had a book-to-bill of 2.1:1.

Novakovic added: “The US market remains robust with some slight improvement in Southeast Asia and the Middle East. China remains slow. The Russian invasion of Ukraine has stopped activity in Eastern Europe and slowed activity in Western Europe. All of this, however, is trumped by the strength of the US market.”