Gulfstream posts higher 3Q revenue; misses deliveries
G700 aircraft
General Dynamics reported third quarter results wherein the company reported aerospace revenue of $2.5bn, up by a sharp 22% year-on-year from $2bn.
“The company continues to see strong growth and steady improvement in operating performance,” said Phebe Novakovic, chairman and chief executive officer. “Demand across the portfolio also remains strong in the current environment.”
Business jet deliveries made by the Gulfstream-manufacturer in the third quarter inched up slightly to 28, from 27 in the previous year. The shortfall stemmed from the G700 program, where only four aircraft were handed over. Moreover, jet deliveries were lower by 24% on a sequential basis compared to 37 in second quarter of 2024.
“Deliveries of the G700 in the Aerospace division came in 12 planes below expectations, as Gulfstream was hit by a number of issues including a late in the quarter quality escape from a supplier. As a result, 10 G700 deliveries this year are expected to slip into next year,” said Robert Stallard of Vertical Research Partners in results analysis.
On a cumulative basis, General Dynamics aerospace segment revenues during the nine months grew by a significant 28%YoY to $7.5bn compared to $5.8bn in 2023 while the segment’s operating earnings grew by a healthy 19.9%YoY to $879m.
So far, the company has made 111 deliveries in the first nine months. The company revised its 2024 deliveries outlook in the 3Q results from 160 deliveries to 150 deliveries. The company is now expecting revenue of $12.3bn from aerospace with an operating margin of 12.3%. To note, so far, in the nine months, the company’s operating margin is hovering around 13.5%.
The company’s aerospace segment ended the quarter with a backlog of $19.8bn – lowest in last five quarters – with addition of $2.4bn in the third quarter.
“We think some investors had been well informed of the G700 issues, and were positioned negatively heading into the print. While the G700 problems look likely to be sorted over coming months, GD’s comments on the shipbuilding supply chain are more troubling as they are likely to take longer to fix, and probably limit upside for margins,” said Stallard.
