Earnings Call Excerpt
General Dynamics Corporation (GD)
Q3 2009 Earnings Call
October 28, 2009 11:30 am ET
Executives
Amy Gilliland – Staff Vice President Investor Relations
Jay L. Johnson – President, Chief Executive Officer & Director
L. Hugh Redd – Chief Financial Officer & Senior Vice President
Analysts
Heidi Wood – Morgan Stanley
Douglas Harned – Sanford C. Bernstein
Robert Spingarn – Credit Suisse
Richard Safran – Buckingham Research
Sam Pearlstein – Wells Fargo Securities, LLC
Noah Poponak – Goldman Sachs
Howard Rubel – Jefferies & Co.
Cai von Rumohr – Cowen & Company
Myles Walton – Oppenheimer & Co.
Joseph Nadol – J. P. Morgan
Robert Stallard – Macquarie Research Equities
Troy Lahr – Stifel Nicolaus & Company, Inc.
David Strauss – UBS
Ronald Epstein – Bank of America Merrill Lynch
Presentation
Operator
Welcome to the Q3 2009 General Dynamics earnings conference call. At this time all participants are in a listen only mode. We will conduct a question and answer session towards the end of this conference. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes. I would now like to turn the call over to Ms. Amy Gilliland, Staff Vice President Investor Relations.
Amy Gilliland
Welcome to the General Dynamics third quarter conference call. I want to remind listeners that as always, any forward-looking statements made today represent our best estimates regarding the company’s outlooks. These estimates are subject to some risk and uncertainties. Additional information regarding these factors is contained in the company’s 10K and 10Q filings. With that, I’d like to turn the call over to our President and Chief Executive Officer Jay Johnson.
Jay L. Johnson
General Dynamics exceeded expectations in the third quarter on very good operational performance. Sales totaled $7.7 billion up more than 8% from the third quarter of last year. We had particularly strong growth across our defense businesses. Our defense portfolio delivered 14% top line growth when compared with the third quarter last year, 12% of which was organic. In addition, their operating earnings were up 14% driven by excellent operational performance across each of our three defense business groups. On the other hand, in the aerospace group, the scheduled five week furlough at Gulfstream caused a double digit reduction in sales somewhat offset by nearly $300 million in jet aviation sales.
Margins were better than I expected across the company, particularly on the defense side but frankly the aerospace group outperformed by expectations as well. This business has done an excellent job of cutting indirect costs and managing the business to preserve profitability even in light of the five week furlough. On a fully diluted basis, third quarter earnings per share from continuing operations were $1.48. Although down from last year’s $1.59 it was a good performance given the five week shut down at Gulfstream.
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