General Dynamics on Wednesday lifted its annual profit forecast and beat Wall Street estimates for first-quarter profit and revenue, driven by continued strength in its marine and aerospace segments.
Shares of the Reston, Virginia-based company rose over 10 per cent in early trading in New York, setting them on track for their best one-day jump since October 2008.
Robust defence demand amid ongoing global conflicts continued to drive higher sales across all segments during the quarter, while the company recovers from supply chain disruptions and ramps up production.
The Pentagon unveiled a $1.5 trillion defence budget request for fiscal year 2027 earlier this month, including $65 billion for shipbuilding.
General Dynamics now expects full-year 2026 profit between $16.45 and $16.55 per share, compared with its previous projection of $16.10 to $16.20 per share.
Quarterly revenue in the marine systems segment rose 21 per cent from a year ago, driven by higher production volumes on the Virginia- and Columbia-class submarine programmes.
General Dynamics reported strong order activity, with quarterly bookings running at roughly twice the level of billings, boosting the overall backlog.
The pickup in new contracts also lifted cash generation, with operating cash flow swinging to an inflow of $2.2 billion from an outflow of $148 million a year earlier, and free cash flow rebounding to nearly $2 billion from negative $290 million. The improvement was driven largely by a $764 million increase in customer advance payments.
US President Donald Trump vowed earlier this year to block defence contractors from paying dividends or buying back shares to make the military-industrial complex's production process more nimble.
"Share repurchases are a highly sensitive subject in this current environment, and so I think in this atmosphere, it behooves us to continue to be cautious," Danny Deep said. Quarterly per-share profit rose 12 per cent to $4.10, compared with analysts' estimate of $3.68, according to data compiled by LSEG.
Total revenue rose 10.3 per cent to $13.48 billion for the quarter ended April 5, compared with estimates of $12.71 billion.
(Reporting by Aatreyee Dasgupta in Bengaluru; Editing by Shailesh Kuber and Maju Samuel)