Key Highlights

  • Revenue was USD 14.57 billion, up 12.9%, with diluted EPS of USD 4.49, up 15.7%.
  • Nearly USD 99 billion of new orders lifted Backlog to a record USD 220 billion, double a year earlier.
  • Full-year EPS guidance rose to USD 17.20 to USD 17.30 from USD 16.80 to USD 16.90 provided in July.
  • Operating cash flow was USD 1.7 billion and free cash flow USD 1.2 billion, a 100% conversion rate.

Double-Digit Growth Across the Board

General Dynamics (NYSE:GD) reported third-quarter 2026 Revenue of USD 14.57 billion, up 12.9%. Operating Earnings were USD 1.527 billion, up 14.7%, and net earnings were USD 1.229 billion, up 16.1%. Diluted Earnings per Share of USD 4.49 rose USD 0.61, or 15.7%. Operating Margin was 10.5%, up 20 basis points. On a year-to-date basis, revenue is up 10.4%, operating earnings up 12.9% and earnings per share up 13.6%.

Orders and Segments

The company booked nearly USD 99 billion of orders, including USD 29.5 billion for five additional Columbia-class submarines and USD 42.1 billion for nine additional Virginia-class submarines. Total estimated contract value, including Options and indefinite-delivery contracts, reached USD 271 billion. Defense book-to-bill was 8.5x, Technologies was 1.4x and Aerospace was 1.4x on a dollar basis, with new aircraft orders in the first nine months up over 30%.

Aerospace revenue was USD 3.54 billion, up 9.3%, with operating earnings of USD 513 million and a 14.5% margin; Gulfstream delivered 40 aircraft, one more than a year earlier. Combat Systems revenue was USD 2.39 billion with earnings of USD 330 million, down USD 5 million on a 110 basis point margin decline tied to a shift from legacy production to development programs. Technologies revenue was USD 3.7 billion, up 10.8%, with earnings of USD 346 million.

Cash Flow and Guidance

Operating cash flow was USD 1.7 billion, bringing nine-month Operating Cash Flow above USD 5.7 billion. Free cash flow was USD 1.2 billion, and USD 4.8 billion for nine months, or 137% of net earnings. The company contributed USD 500 million to pension plans, repaid USD 500 million of notes, paid about USD 430 million in dividends and repurchased about USD 285 million of stock. It ended the quarter with USD 4.4 billion of cash and net Debt of USD 2.6 billion, a USD 3 billion improvement from year end.

Full-year diluted EPS guidance moved to USD 17.20 to USD 17.30, following USD 16.10 to USD 16.20 in January, USD 16.45 to USD 16.55 in April and USD 16.80 to USD 16.90 in July. Capital expenditures are guided to 3.5% to 4% of sales, with free cash flow conversion around 105% for the year.

Backlog Conversion Indicators

Chief executive Phebe Novakovic said this was her last Earnings Call as she transitions to executive chair. Management said free cash flow conversion carries potential upside depending on the pace of fourth-quarter capital projects. Net interest expense was USD 45 million versus USD 74 million a year earlier because higher cash balances avoided Commercial Paper borrowing costs. Items to follow include shipyard investment, the fourth-quarter Capital Expenditure ramp and conversion of the record backlog into revenue.