General Dynamics lifts profit outlook after strong first-quarter beat, orders surge

General Dynamics’ latest quarter suggested that two parts of the industrial economy are still getting unusual support: defense spending, which remains buffered by federal demand, and high-end business aviation, where Gulfstream deliveries kept climbing even as other cyclical sectors soften.

The Reston, Virginia-based contractor lifted its full-year profit outlook after reporting first-quarter operating earnings of $1.4 billion, or $4.10 a diluted share, on revenue of $13.5 billion. Revenue rose 10.3% from a year earlier, while operating earnings and diluted earnings per share each increased 12%. Operating margin held at 10.5%, a sign that the company is still converting backlog into profit efficiently even as it works through supply-chain and labor issues in marine systems.

The strongest signal for investors was not just the beat, but the breadth of it. General Dynamics said marine systems revenue climbed 21% as production improved, while aerospace revenue increased 8.4% to $13.5 billion, helped by Gulfstream business jets. Deliveries in the aerospace unit rose to 38 aircraft from 36 a year earlier. The company said the quarter was a very good start to the year and that it was positioned well to drive additional performance throughout the year.

Orders were even more striking than revenue. General Dynamics booked $26.6 billion in new orders in the quarter, producing a consolidated book-to-bill ratio of 2-to-1. The defense businesses posted a 2.2-to-1 ratio, while Aerospace came in at 1.2-to-1. At the end of the quarter, total estimated contract value reached $188.4 billion, including $130.8 billion of backlog and another $57.6 billion of estimated potential contract value from unfunded IDIQ contracts and unexercised options. That backlog gives the company unusually strong revenue visibility going into the rest of 2026.

Cash generation was another bright spot. General Dynamics produced $2.2 billion in cash from operating activities, equal to 192% of net earnings, a sharp turnaround from a year-earlier outflow. Free cash flow recovered to nearly $2 billion. The company paid $405 million in dividends, spent $203 million on capital expenditures and ended the quarter with $3.7 billion in cash and equivalents, giving it room to keep rewarding shareholders while funding shipbuilding and aircraft production.

The results also landed against a favorable policy backdrop for naval work. The White House wants nearly $65.8 billion for naval shipbuilding in fiscal 2027, up from about $45.1 billion requested for fiscal 2026, a plan that would fund 18 warships and 16 non-battle-force ships. That spending profile could support General Dynamics Electric Boat and other shipbuilders, including Huntington Ingalls Industries, if Congress follows through.

General Dynamics ended 2025 with $52.6 billion in revenue, $118 billion in backlog and a 1.5x book-to-bill ratio. The company’s first-quarter conference call was set for 9 a.m. EDT with president Danny Deep and chief financial officer Kimberly Kuryea participating after CEO Phebe Novakovic was absent because of a family illness.