GD (GD)

“We have another $500 million of notes coming due in August that we anticipate repaying with cash on hand.”

“But as you know, we're trying to get to 2 Virginia-class and 1 Columbia in the early 2030s time frame. And we're on that path, and we're actually where we expect to be at this point in the process.”

“But with respect to the 300, and thank you for raising that because I think it's important to recognize that we're going to have a gap in production from the end of the 280, which the final 280 ought to deliver in the second quarter of next year, and the onset of the 300, which late '27, early '28, somewhere in that.”

“Yes. I think we're still coming down the curve, specifically around completion. So I think there's still more opportunity, and we're seeing that both on the G700 as well as the G800. So I think there's still more room for them.”

“The international portfolio was up more than 35% since 2024, and we expect that to continue to be a key driver of growth for the year and beyond.”

“So we like very much the positioning that NASSCO is in, and we see some growth there as well with additional product coming in, because they have additional capacity, by the way.”

“And at NASSCO, again, it will be driven by increased demand and coming down our learning curves on the oilers and other support and supply ships.”

“Yes. So at Bath, growth will continue as we improve our throughput and productivity, which they are doing and have done materially over the last few years.”

“And we can expect that, that will continue a slow, steady drumbeat as we continue to focus on executing.”

“And I think the margins, you can expect them to continue to be in that neighborhood with some slight variability all associated with mix.”

“Yes. I think from a margin standpoint, as Phebe mentioned in her remarks, I think the third quarter will look a lot like the second quarter with the fourth quarter being the strongest from a margin standpoint.”

“And then within Land Systems, this is a transition period, as we talked about before, but the double-digit growth at OTS and ELS ought to drive high-single-digit growth for the group going forward.”

“So I think what we expect to see is double-digit growth continuing at European Land Systems given the threat environment and the demand for combat support vehicles as well as other systems, OTS because of artillery missile components, 155.”

“I mean, there are still some challenging areas, as I think we mentioned in the last call, where we have single sources of supply. But generally, the supply chain is improving, and we're counting on it to continue to improve.”

“But we don't have any expectation that it will slow down much because there's just volume out there that we have to execute on.”

“I think we'll see it continue to grow, maybe not quite at that pace, but certainly, we're getting up into, as you say, a law of large numbers.”

“All this rolls up to an increased EPS forecast of $16.80 to $16.90 for the year.”

“So for 2026, company-wide, we expect to see revenue of approximately $55.7 billion and operating margin of 10.5%.”

“In Technologies, we expect revenue of $14.1 billion and an operating margin of 9.4%.”

“Our outlook for the year now anticipates revenue around $18 billion with an operating margin for the year of 7.4%.”

“In Combat, we expect revenue of about $9.8 billion, coupled with a 13.8% operating margin.”

“The third-quarter operating margin will be about the same as this quarter with a better fourth quarter.”

“We anticipate a 14.7% operating margin for the year.”

“Gulfstream will still deliver about 160 airplanes.”

“For 2026, we now expect Aerospace revenue of around $13.8 billion.”

“This rate is a little higher than our outlook for the full year, which remains around 17.5%.”

“At this point, our expectation for net interest expense for the year is approximately $270 million.”

“Second, our cash taxes are weighted toward the back half of the year with over $500 million of payments expected.”

“First, pension. We have decided to contribute approximately $500 million to our pension plans.”

“That said, we will have a lighter second half than the first, which is due to higher planned capital expenditures, which I've already discussed, and 3 other factors I'll address now.”

“Given our strong cash performance so far, we now expect a free cash flow conversion rate a little north of 100% of net income for the year, let's say, around 105%.”

“You should expect the profile of our investment to grow significantly in the back half of the year as we continue to invest, especially in our shipyards, to accelerate production and meet future demand.”

“We continue to expect capital expenditures between 3.5% and 4% of sales for the full year.”

“There is some potential upside delivering large-cabin aircraft and some risk on the 280 deliveries for obvious reasons.”

“In fact, we will deliver only our 25th G800 this coming quarter, so very positive, given how early we are in that program.”

“and at NASCO, we'll deliver the final expeditionary sea-based ship this summer with capacity to support additional TAOs or other auxiliary -- or commercial programs.”

“We are also off to a solid start in the first month of this quarter.”

“So we are progressing towards that. I won't get into the specific rates that we're currently producing at. But suffice to say that it's up significantly over last year already. And the path to 2 Virginias and 1 Columbia per year. I can't predict the exact timing, but we are on the way there. And certainly, that is the target.”

“In terms of dividends, we have -- and we remain committed to paying our dividend. We've increased it for 29 straight years and really think it's part of our investment identity and part of our value proposition.”

“Our updated guidance for 2026 would be an EPS range of $16.45 to $16.55.”

“And as it relates to [ Stryker ] program, for example, those rates are down, although that vehicle and that platform continues to be versatile and used in a number of different applications, those rates won't replace what we had seen historically”

“and during this period, and speak specifically to next-generation main battle tank with [ M13 ] or we'll see some lower volumes on the current version of the tank.”

“For us specifically, I think you should expect second quarter to look a lot from a cadence and delivery standpoint, a lot like what you just saw in the first quarter. And then third and fourth quarter will be higher and the fourth quarter will be our strongest both from a mix and a margin standpoint.”

“Yes. I mean it's certainly -- as we continue to invest throughout the year, it certainly has an impact on our cash flow, and that's what we're evaluating as it impacts the quarter, but we're certainly driving to get our working capital off the balance sheet to offset the increase in CapEx.”

“So I would say this was more outperformance against our expectations for the quarter, which does mean moving some of the cash from second quarter into the first quarter. So as I mentioned, cash will be positive, but down in the quarters to follow, but very strong for the year.”

“We expect that we will be in production next year and producing artillery rounds for them and for the foreseeable future.”

“From a delivery standpoint, we should expect that second quarter will be very similar to first quarter and then the third and fourth will be our highest, and that's per plan.”

“I think you'll see some mix movement in the second and third quarter, but certainly as planned, and then you'll see a really strong fourth quarter.”

“and so we're in the process of integrating and assembling those in one of our larger yards and expect to have a real key milestone achieved by the end of this year and on a path to deliver that first boat in -- by the end of 2028.”

“we don't anticipate that any of these awards are going to change dramatically the number of ships that we have to produce in the immediate term.”

“Looking at the year from a quarterly perspective, the first and fourth quarters would represent the high points, favoring the fourth quarter given its typical increased volume with the second and third quarters trailing a bit on expected mix.”

“Our plan assumes that the $1 billion will be refinanced, but this is something that we will continue to evaluate throughout the year.”

“We now expect the first quarter to represent the largest quarter of free cash flow with positive cash flow in each of the remaining quarters, supporting our continued efforts to drive cash to the left.”

“We continue to expect a free cash flow conversion rate of 100% of net income for the year, but the strong cash acceleration into the first quarter results in a profile that will look a little different than what I provided in January.”

“You should expect the profile of our investment to grow each quarter as we continue to invest, especially in our shipyards to accelerate production and meet demand.”

“While capital expenditures were around 1.5% of sales in the quarter, we continue to expect capital expenditure between 3.5% and 4% of sales for the full year.”

“And we're certainly looking at the cash conversion rate for the year in terms of is it possible that we could exceed 100%, and we'll see where we go there, too.”

“I think we could see a small impact the longer this goes on. They're still producing those airplanes ready for us to complete, but we could see some minor impact.”

“But you should expect significant and consistent margin improvement over time. Throughout our plan period.”

“So we all continue to push margin, and we see high probability of improved margins over time.”

“This is a business that tends to be in the 14-15% margin range. We expect that to continue with some variability.”

“Some of these are long cycle programs but certainly at European Land Systems, we expect to grow quickly.”

“I think as you think about it in the context of Combat, which is where the bulk of our international activity is, European Land Systems will be the fastest grower by far. And so we expect to see really, really positive growth over the plan period and you'll start to see the real acceleration, as Phebe said earlier, in '27 and beyond.”

“We believe there's margin improvement, headroom at Gulfstream, and we'll continue to pursue that.”

“We'll continue to invest, year over year. In our businesses because we have a long-term growth there, and it's embedded in our backlog.”

“So what we're doing right now is working to absorb that growth while increasing margins. So we believe this is a prudent plan.”

“And, quite frankly, into the next couple of years.”

“So we think those improvements will be durable and steady as you've seen from 2024 to 2025. We'll see continued strength there and increases.”

“So the tariffs that we are going to see in 2026 are largely based on cash that we expended in 2025. It will be higher than in 2025, so higher than the $41 million, but those tariffs are contemplated in our 2026 margins.”

“So we'll see some increase in revenue growth this year and when accelerating into '27 when we begin to move into production of some of these programs in Europe.”

“But we continue to expect improvement there.”

“Think we'll see some improved pricing, improved efficiencies, some lower overheads, and some lower research and development costs, so that will be helpful.”

“Yeah. Look. We think margins are going to continue to improve. As you said, you know, we're up about 70 basis points in '26 versus '24.”

“This should leave us with operating earnings around $5.7 billion at the midpoint of the anticipated revenue range.”

“We anticipate operating margins of 10.4%, up 20 basis points from 2025 actuals.”

“So for 2026 companywide, we expect to see revenue in the range of $54.3 billion to $54.8 billion.”

“This should leave operating earnings of about $1.3 billion.”

“We continue to see long-term low single-digit growth from the group and continued industry-leading margins.”

“Operating margins are expected to decrease around 30 basis points to 9.2%.”

“In Technologies, 2026 revenue is expected to be up to $13.8 billion.”

“This should result in operating earnings around $1.3 billion.”

“Our outlook for this year anticipates revenue in a range of $17.3 billion and $17.7 billion with a 30 basis point improvement at the operating margin line.”

“Which should lead to improved earnings around $1.36 billion at the midpoint of the revenue range.”

“In Combat Systems, we expect revenue in a range of $9.6 to $9.7 billion coupled with an operating margin of 14.1%.”

“Gulfstream deliveries will be 160 with a little upside.”

“This should result in operating earnings of around $1.9 billion.”

“Operating margin is expected to be increased to around 14%.”

“In 2026, we expect Aerospace revenue to be about $13.6 billion, up around $500 million over 2025.”

“Additionally, our cash taxes should remain around the same level, with both years receiving some benefit from the R&D capitalization recovery.”

“Looking ahead to 2026, we expect the tax rate to remain at a similar level.”

“Under the assumption that we refinance the maturing notes, we expect interest expense to increase to approximately $340 million due to higher expected interest rates on the new debt.”

“The quarters are expected to each be positive and grow slightly with the fourth quarter still representing the largest, but much less of a climb as compared to 2025's plan.”

“Our capital expenditures will equal between 3.5-4% of sales as we continue to invest especially in our shipyards to accelerate production and meet future demand.”

“Capital expenditures are expected to increase over $900 million or 79% from 2025.”

“We expect to return to our free cash flow conversion rate goal of 100% of net income.”

“Our plan assumes that these notes will be refinanced, but this is something that we will continue to evaluate as time approaches.”

“Well, the operating assumption is that those contracts are executed this year.”

“Our R&D will be about the same for a while.”

“Overall, we are increasing our EPS forecast to between $15.30 to $15.35.”

“On a company-wide basis, we see annual revenue of around $52 billion and margins of around 10.3%.”

“This rate is approaching our outlook for the full year, which remains around 17.5%.”

“We are targeting over 2% of sales for the full year CapEx, given the expected investments in the fourth quarter that I mentioned a moment ago.”

“As a result, we anticipate a free cash flow conversion percentage in the low 90s for the year.”

“Coming off strong cash collections in the third quarter, we now expect about half as much free cash flow as we generated in the third quarter in the fourth quarter.”

“Across all our businesses, our continued focus on operational performance is bearing fruit as evidenced by our third quarter results, and we expect continued margin strength and strong cash generation in the future.”

“As we transition from legacy programs, which are nearly completed to programs with highly differentiated content, we expect to see continued growth with robust margins for this year and into the future.”

“To the extent that the supply chain stabilizes, I think that's where we will see meaningful margin expansion.”

“So I think the way to think about this is that we anticipate similar growth that we've seen over the last few years.”

“So we'll continue to see gross margin improvement as we come down our learning curve.”

“So we'll continue to increase, I think, year-over-year for the next couple of years. That's sort of our plan.”

“This positions the group well for better revenue growth than they have had in the last 2 years.”

“However, we are seeing metrics showing improved performance across the business, which should lead to improved operating margins little by little.”

“The longer it lasts, the more it will impact us, particularly the shorter-cycle businesses.”

“If a resolution can be reached in the near term, we would expect to be able to achieve the forecast that I just discussed.”

“As I said last quarter, we fully expect the certification of the G800, its better-than-planned performance characteristics and early deliveries to customers will stimulate demand.”

“In short, I'm increasingly confident that we can meet this year's delivery plan.”

“I think we're keeping it about 1x. That's sort of been our cadence and our thought patterns and our observations, frankly. But the demand has been quite good.”

“And we think we'll largely be through that by the end of the year and have both of those prime lines up and running, and this issue will be behind us.”

“So we've seen nice increases in demand, and we expect that to continue.”

“All of this rolls up to an increased EPS forecast of $15.05 to $15.15.”

“So for 2025 company-wide, we expect to see revenue of approximately $51.2 billion and operating margin of 10.3%.”

“In Technologies, we are making no change to the 2025 revenue and earnings estimate provided at the beginning of the year.”

“Our outlook for this year now anticipates revenue around $15.6 billion with operating margin of 7%, which should provide better earnings than previously estimated.”

“It will continue during the rest of 2025, albeit at slightly lower growth rate.”

“This should lead to somewhat improved earnings over our last estimate.”

“In Combat, we expect revenue of about $9.2 billion, coupled with a 14.5% operating margin.”

“The third quarter operating margin will be about the same as this quarter with a somewhat better fourth quarter.”

“We anticipate a 13.5% operating margin for the year, 20 basis points lower than our earlier estimate.”

“We said this is the final year of that transition, and so we're starting to see an inflection to growth.”

“This will obviously put some pressure on operating margin in the second half, but we still expect the margins in the third quarter to be very similar to the second quarter, coupled with a stronger fourth quarter.”

“We expect to deliver about 13 G800s for the year, which is about 3 less than the G650s we delivered in the second half of last year.”

“This rate is a little lower than our outlook for the full year, which remains around 17.5%.”

“Similar to last year, you should expect capital expenditures to be somewhat higher in the second half of the year, spending a little over 2% of sales for the year.”

“I am frequently asked questions about Aerospace operating margin. And when it will move into the high teens, that is above 15%. The simple answer is maybe 2026, but for sure, in 2027, with degradation again in 2028, with the delivery of a significant number of G400s.”

“The G800 comes out of the box at a higher lot 1 at a higher incremental margin than the 700 that didn't bear as much of the developmental costs. And it will to have margin expansion as we come down our learning curves and move from one lot to the next.”

“We would need some additional capital if, in fact, the Navy ups on that strategy, but not an enormous amount.”

“So I would tell you there's opportunity for them in the second half, depending on how that demand goes.”

“And so really from a revenue expectation, it is the pace of adjudications that we're watching for the second half of the year, but feel very good about where we are from an earnings perspective.”

“In short, I am increasingly confident that we can meet this year's delivery plan.”

“I think we're sticking with the forecast that we gave you in January at this point in time. We're obviously always trying to improve upon that. But at this point in the year, we're going to stick to that forecast.”

“And so I would say that we will likely have slightly more interest expense predicted for the rest of the year.”

“We are close to 1:1 for the year. I think we're actually 9, but why pick nit, that's very close to 1. So we continue to see that as achievable in the moment.”

“The 650 will deliver at high margins and the 800 will come in at higher margins than the 700 because it's not carrying as much burden as the 700 for a slot of 700.”

“So we're continuing to improve G700 margins.”

“We're staying by, you didn't ask this question, but I'll answer it anyway. But we'll stick with, as we stand today with our -- we're going to hover in the upper sixes in margin.”

“Yes, we're holding consistent for a whole series of reasons, including mips, among others, in the second quarter. Pretty much the progression that we gave you last call in January.”

“I think pretty consistent. We'll have some mixed changes quarter-over-quarter like we typically do, but pretty consistent. And we're sticking with our with the estimate that we gave you on the last call.”

“The outlook for the year remains the same and I think we'll know a lot more by the midpoint of the year.”

“The growth profile continues to look strong and demand is not abated.”

“We are rapidly increasing munitions capacity and production with the opening of our projectile facility in Texas and our load and assembly and PAC facility in Arkansas.”

“We expect that the certification of the G800, it's better than plant performance characteristics and the early deliveries to customers will stimulate demand.”

“In short, we expect revenue growth throughout the year, but at a slowing rate of growth because G700 deliveries began in the second quarter of last year.”

“For the rest of the year, we expect modestly positive cash flow in the second quarter, followed by substantially improving free cash flow in each of the third and fourth quarters.”

“We don't think the defense guys get hit much. There will be some Gulfstream impacts and nothing we see so far is extraordinary but we had a long way to go.”

“This is expected to be a smooth entry into service and we have some reason to believe that we can exceed our planned deliveries of G800.”

“So I'm very confident that we will drive margin performance going forward.”

“Margins will build and build nicely at Aerospace.”

“Yes, it is. and there's room for improvement beyond Lot 3.”

“We have, over the last few years, as you all know, an increase in spending. And I think the -- certainly, our expectations are that increases.”

“So our vehicle demand continues pretty strongly, both internationally and within the U.S.”

“So we're thinking about a combination of G650s and 800s. It's about equal to give or take, a few airplanes, the number of G650s we delivered.”

“On a quarter basis, if one were to assume an average of $3.70 per quarter, the first quarter would be off $0.20, the second quarter of $0.40, the third quarter right on the number and the fourth, up $0.60.”

“We continue to see long-term single-digit growth from the group and continued industry-leading margins.”

“Operating margins are expected to decrease about 40 basis points to about 9.2%.”

“Within the group, GDIT will be up low single digits and Mission Systems will be slightly down less than 0.5%.”

“This should lead to improved earnings 3.5% to 4% better than in 2024.”

“As I just noted, we anticipate a 13.7% operating margin for the year, quite a bit stronger in the first quarter, but weaker in the second and third quarters, followed by a strong fourth quarter.”

“Finally, our cash taxes and pension contributions are expected to increase.”

“We expect working capital will continue to build in 2025 and unwind in '26, although it could be earlier.”

“And as I say, over time, we should see some real stabilization within the supply chain, but it's going to take a bit of time.”

“I think that we've seen, as I said, some stabilization. We need a ways to go. The money that the Navy has been pumping into the industrial base will help over time.”

“And the demand for those products in Europe, in Eastern and Western Europe remains very, very strong.”

“So I would say that we're pretty optimistic over -- starting about next year and into the future of the margin performance at Aerospace.”

“Yes. I mean these are the first ones out of the block. So we don't see that as a constraining item next year.”

“We're seeing it in the fourth quarter right off the bat. And I expect to see that margin expansion continue throughout next year and beyond.”

“Well, that will happen. I don't have exact clarity on when those gross margin improvements will happen, but I think relatively soon and over the course of potentially the next year, we have to see some really nice margin expansion.”

“Some of these airplanes will go into next year, that will help next year.”

“So we have long said that services is going to grow at the rate of the fleet expansion.”

“this tends to be a 14.5% margin business given some margin variability quarter-to-quarter, again, largely driven by mix. And I suspect that will continue in that range.”

“So at least for the foreseeable future, we see nice steady growth in Combat.”

“So our book-to-bill and backlog supports nice growth. The unfortunate threat environment also continues to drive demand.”

“we anticipate some more supply chain impacts in the fourth quarter.”

“And we expect to see very nice growth going forward.”

“we expect fourth quarter to be relatively flat but still have about 5.9% growth for the group in the year.”

“Facilitization for increased munition production is largely behind us. We're moving into production. We'll see increased revenue from our combat vehicle business and so we do see a pretty good solid growth pattern as we go forward.”

“we'll have very nice margin expansion as we go through into next year.”

“when we look forward, as we've talked about before, we see gross margin improvement of about 600 to 700 basis points, that remains the same.”

“All up, that indicates EPS guidance of approximately $14 per share, about $0.45 below our previous expectations.”

“On a company-wide basis, we see annual revenue of around $48 billion and margins of around 10.3%.”

“Marine Systems revenue should be about $13.9 billion with margins of 6.9% for all the reasons I've previously noted.”

“We are expecting 150 versus 160 deliveries with 10 of the deliveries slipping into next year.”

“In Aerospace, we expect sales to be about $12.3 billion with a 13.2% margin.”

“As a result, for the year, we believe our full year tax rate will be closer to 17%.”

“We're still targeting to be around 2% of sales for the full year given the commitments that remain.”

“For the fourth quarter, we are expecting free cash flow to again be greater than 100% of net income, but we now expect the full year to fall short of our 100% conversion target as G700 deliveries pushed into 2025.”

“prospects remain strong with a large qualified funnel of more than $120 billion in opportunities they are pursuing across the group.”

“In the U.S., we are increasing production of 155-millimeter ammunition projectiles as well as expanding our support to the U.S. Army across several other areas, including final loading and assembly of artillery.”

“Overall, demand remains solid across Combat, particularly in our ordinance and international combat vehicle businesses.”

“We look forward to a strong finish to the year in the fourth quarter but will fall somewhat short of our midyear forecast.”

“the interest level of buyers and the expiration of accelerated depreciation at year's end suggests a reasonably strong order intake in the fourth quarter, and that is what we are seeing.”

“we now expect to deliver around 42 for the year with 27 in the fourth quarter.”

“I'd say they are going to be kind of lumpy probably through next year and maybe even beyond.”

“Given the recent projections from the supply chain on deliveries, we need to get our cadence in sync with the supply chain and take costs out of the business if we are to hope to see incremental margin growth.”

“We anticipate five in October, nine in November and 13 in December, recognizing there is some risk as these numbers could vary a little bit up or down through the quarter.”

“So I think we've got a very balanced plan through this year and the way we think about the market. Certainly, the pipeline supports that and has supported it. There's an awful lot of interest in these new airplanes.”

“So we opened up the facility. The first line is running and producing as we anticipated. We are standing up lines 3 and 4. So that's a material increase in the throughput of that facility, but it's a modern facility with a very strong and good workforce. So we're pretty encouraged that we will quickly come down our learning curves and produce at or above our plan.”

“But we anticipate for the next couple of years, increased munitions orders as dictated by the threat environment. And we're pretty confident in that.”

“With respect to the defense businesses, Combat will have revenue of about $200 million higher than previously projected as a result of continued demand.”

“We look forward to a powerful second half with increasing revenue and earnings quarter-over-quarter as we forecasted at the end of last quarter.”

“repair continues to be pretty strong as the demand from the U.S. Navy is increasing.”

“Yes. But I would say that when you look at the cash profile for the rest of the year, most of that cash does come in the fourth quarter. So most of that working capital will unwind in the fourth quarter, not the third quarter.”

“Planning purposes is the latter. But that's probably all the clarity we've got at the moment. It all depends on the certification process, but we anticipate, I think and reasonably anticipate that they'll come out of the gate very strong.”

“As we move from the lower margin facilitization work to the higher-margin throughput on -- that's generated like the throughput on ammunition, you'll see a little bit of margin expansion there.”

“And I think we'll see as we're going forward, I'd say that Combat Systems is typically, as we talked about in the past, probably a mid-14% margin business, but it will have quarter variability, sometimes up around 15%.”

“Pretty good for us. The service business, and we expect it to continue to grow this year, which is driving a lot of the revenue increase, along with special mission.”

“Yes. So the Lot 1 consisted of about 20 or so airplanes. All five are test airplanes, they'll deliver next year.”

“So we believe that over time, that will continue as it has in the last couple of years drive services growth and frankly, at Mission Systems as well. So I think technology is positioned for a nice steady slow growth, which is exactly what we have promised in the past and what we're delivering.”

“Services is growing this year. As is, by the way, special mission, which is driving a lot of the revenue increase this year, but we should see nice steady growth over time in the service sector.”

“With respect to the margin trajectory, we see nice margin improvement in this quarter and then again in the fourth quarter. Think about the fourth quarter as mid- to high-upper teens.”

“It is, and we ought to fly very soon.”

“But we do expect, as I noted in my remarks, a more robust fourth quarter because we've got the expiration of the accelerated depreciation.”

“All up, that indicates EPS guidance of $14.40 to $14.50, $0.05 over prior guidance.”

“So total revenue of $47.8 billion to $48.2 billion, and operating earnings up modestly.”

“On a company wide basis, we see annual revenue up about $2 billion, with overall margins down about 30 basis points.”

“So we will have annual revenue between $13.4 billion and $13.8 billion with an operating margin around 7.4%, with operating earnings up around $45 million over the January forecast.”

“Marine Systems revenue should be up $1 billion of Electric Boat and somewhat at Bath.”

“All in, operating earnings will be up $30 million over the previous forecast.”

“So look for total revenue of about $8.7 billion.”

“We are still holding to our delivery estimate of about 160 airplanes.”

“For the second half of the year, we expect the rate to be lower in the third quarter and then a bit higher in the fourth due to typical timing items.”

“This rate is a little lower than our outlook for the full-year, which remains around 17.5%.”

“At this point, our expectation for interest expense for the year remains unchanged at approximately $320 million.”

“Similar to last year, you should expect capital expenditures to be somewhat higher in the second half of the year and slightly above 2% of sales when the year wraps up.”

“The planned G700 deliveries in the second half are significant, which will reduce working capital.”

“With the majority of the cash generated in the fourth quarter, we are still planning a cash conversion rate around 100% for the year.”

“After the planned slow start in the first half, we expect significant second half growth.”

“We anticipate that all of our yards are now well positioned for slow, but steady incremental margin growth over time with fewer perturbations.”

“We expect demand for ammo to continue to rise for some time to come as we rapidly increase production of our artillery shells and components.”

“The interest level of buyers and the expiration of accelerated depreciation at the end of the year suggests a reasonably strong order intake in the second half of the year, particularly in the fourth quarter.”

“Look for about 16 in the third quarter and 23 to 25 in the fourth quarter.”

“Separately, we still expect to deliver 50 to 52 G700s this year.”

“You will see much stronger operating margins in the third quarter, followed by even better operating margin and related earnings in the fourth quarter.”

“The good news is that margins on the G700 are expected to increase by 600 to 700 basis points in lot two and by a similar increment in lot three.”

“The supply chain has improved, but it is not completely healed yet. So I suspect we'll continue to have some out-of-station work.”

“We are hopeful that the additional funding that we're putting into the supply chain should help stabilize over time.”

“So look, yes, I think once you get through the first lot, our performance from a margin standpoint will continue to improve. And you'll see that, third quarter will be significantly better than second quarter, and fourth quarter will be even better still.”

“I will say the program is doing extremely well. And it's -- it will fly in the third quarter, and I think we'll be flying a pretty mature airplane.”

“So we're on track with the Army to get where we need to be, and our objective is to move even faster.”

“I will tell you, our throughput and productivity has been strong on Columbia. It enjoys the highest national security priority. So we have done pretty well on Columbia and are increasing our throughput on Columbia.”

“Yes. So in the combat world, it's a little bit more of a robust supply chain in general that we typically have not had difficulty with, typically... But we're pretty comfortable that we can execute the growth.”

“But the cash performance for the remainder of the year is going to be very strong, and we will act accordingly.”

“So think about it that way, more of a timing issue with the completion of the deals and not a headwind to overall demand.”

“Demand for Combat Systems and products continues to increase, particularly in Europe and in some lines of business in the U.S.”

“And we should get there.”

“Well, pretty much steady as she goes, particularly this year... So I'd see that at least through this year is pretty consistent. No real surprise this year, steady as she goes.”

“We're still sticking to our deliveries, but I think it's notable that they're managing pretty well in this tough environment.”

“So let me address that in the inverse order. Margins will be improving at our shipyards. We have every expectation all of our shipyards, NASSCO, Bath and Electric Boat.”

“But we do believe that working with the Navy customer, the continued infusion into that supply chain will help stabilize.”

“Our expectation is quarter-over-quarter. Remember, this is a high operating leverage group. So they ought to do quite well here.”

“So both of those things will reverse throughout the course of the year, and combat margins will increase.”

“But we expect that most of that negative cash will reverse in the second quarter with a stronger third quarter and then a steeper ramp in the fourth quarter.”

“So with respect to cash and the expectation, we still anticipate achieving about 100% of free cash flow conversion in 2024.”

“But for right now, we're sticking with both our mix, our earnings, our margin and revenue expectations.”

“But we see the -- we don't see any real changes in the mix throughout the year.”

“So we see that demand signal continuing until the threat environment, frankly, improves.”

“The group's continued focus on margin performance will result in sequential margin expansion throughout the year as they continue to build their backlog and grow.”

“We anticipate that this will improve as we progress through the year.”

“As the year goes on, we will continue to work with our Army customer to further increase ammo capacity to meet their requirements.”

“And we expect nicely improving margins, particularly in the second half.”

“So expect margins in the second quarter to be similar to the first quarter with significant improvement in Q3 and Q4.”

“Similar to last year, you should expect capital expenditures to increase in subsequent quarters throughout the year, as we anticipate spending between 2% and 2.5% of revenue on CapEx this year.”

“We expect most of the negative free cash flow to reverse in the second quarter, followed by substantially improving free cash flow in each of the third and fourth quarters.”

“Gulfstream still plans to deliver 50 to 52 G700s this year. So our Aerospace forecast for the year remains unchanged.”

“I think right now, we're just focused. Given the steep ramp in the second half of the year, we're really focusing on trying to hit that mark at this point in time.”

“So we definitely see improvement. We are optimistic that they can keep pace, but it's not without its margin challenges.”

“So it's a good planning assumption. It is how we are thinking about our internal planning.”

“We continue to target certification of G800 for 9 months after the G700 certification, although I'm increasingly reluctant to give estimates about these things that are ultimately out of our control.”

“Look, I think the way that we've always talked about Marine growth being somewhat lumpy, $300 million to $500 million in any given year, but in the next two years, we expect between $600 million and $1 billion in per annum growth.”

“No, I wouldn't look at anything macro with respect to that. In a quickly growing environment, contracts tend to come in a little bit more lumpier, and so this is simply a question of timing. I think we see mid to upper single digits over and toward the higher upper single digits over our planned period”

“Yeah, the G700 comes in at accretive margins, but as you all know, and many of you are quite expert in this, we've talked about over the years, including on this call, the margin performance at Gulfstream is driven by a host of issues”

“If you think about it, the demand signals we see and our expected growth make share repurchases increasingly compelling.”

“Combat systems, on the other hand, should continue to see tailwinds as they work through some of the receivables and work in process on the international programs that we've made some great progress on in recent years. So that'll continue for a couple of years.”

“On a quarterly basis, the first two quarters look a lot alike with very strong third and fourth quarters.”

“We see long term low single digit growth for the group and continued industry leading margins.”

“Within the group, GDIT will be up low single digits, emissions systems will be down slightly due to a transition from legacy systems and a slow ramp up on new programs.”

“Our outlook for this year anticipates revenue of about $12.8 billion, with operating margin improvement to 7.6%, which should result in a meaningful improvement in earnings in 2024.”

“In 2024, we expect aerospace revenue of about $12 billion, up around 40% over 2023.”

“we expect to contribute approximately $75 million in 2024.”

“So, we expect CapEx to be between 2% and 2.5% of sales next year and closer to 2% thereafter.”

“Yes, so we're going to deliver 160 airplanes that's in our plan this year. I will say that '25 will be more deliveries and '26 even more deliveries, but at this point given the issues that you mentioned, we're not going to be any more granular than that.”

“if we can get past that in March, then I think it provides a lot of optionality for us as we look ahead on the capital deployment front.”

“To the extent that these demand signals start to convert into order activity, we could see some opportunity for additional revenue later in the year, particularly in our armaments and munitions business.”

“I don’t have any expectation that we’ll see any issues as we look ahead, even as the demand for their product, both domestically as well as internationally, continues to grow.”

“there’s really not any incremental risk to 2023.”

“As far as year-end guidance is concerned, we’re holding at $12.65 for the year.”

“We are well positioned to achieve our target for the year of a cash conversion rate over 100% of net income.”

“Based on the strength of the first three quarters, the group is on track to achieve our increased sales forecast of $12.7 billion for the year.”

“frankly I expect to see us get back into the double-digit margin range here in the fourth quarter”

“We’re working ahead of schedule to accelerate that production capacity up to 85,000, even as high as 100,000 rounds per month, and I think the Israel situation is only going to put upward pressure on that demand”

“you should see growth in the defense business across all three of the segments going into 2024.”

“I do expect--again, not to get ahead of the planning process we’re going through, but I expect each of the businesses to show growth going into next year.”

“we do expect to see incremental improvement in the margin, starting in the fourth quarter.”

“In terms of margins, we expect them to get better, frankly. My expectation is that this quarter would be the trough for the group. We expect to see improvement in the fourth quarter and we expect to see modest sequential incremental improvement over time in this group.”

“you should expect to see that tick down a little as we finish up the 700 this year and get through the 800 next year”

“we would expect at that point, that’s one of the factors that will really drive over time the margin improvement in the shipyard”

“we’re seeing modest signs throughout the quarter that things are actually getting better.”

“we should be in good shape to be somewhere in that range for deliveries this year.”

“19 is the number that we have targeted and are still striving to get to.”

“frankly we don’t see that demand signal slowing down.”

“that naturally is an adder to the outlook for 2024.”

“There will be a number of puts and takes from what we published last quarter, but it should all come about the same place.”

“This is consistent with our guidance last quarter to expect a lower rate in the third quarter and a higher rate in the fourth, so no change to our outlook of 17% for the full year, which again implies a higher tax rate in the discrete fourth quarter.”

“We’re still targeting to be slightly below 2.5% of sales for the full year, so that implies an uptick in capital investments in the fourth quarter.”

“This is a drumbeat we expect to see continue in the fourth quarter.”

“The production and delivery cadence on the hardware side appears to have stabilized, so we expect their results to be somewhat more predictable despite the lingering fragility in the supply chain that will continue to be the new normal.”

“All that said, we’re looking for slow but steady incremental margin growth over time.”

“The large capacity expansion that we’re putting in place today will further increase production.”

“As you’d expect, these contracts will result in additional production at accretive margins over time.”

“On the other hand, we continue to expect more service revenue than initially predicted.”

“we plan to deliver 10 to 12 fewer aircraft this year than the 145 we had originally forecast in the beginning of the year.”

“We continue to plan for certification in the fourth quarter of this year, largely dependent upon the availability of FAA resources and a credit the FAA may allow for company flying.”

“It would, however, be a stretch to get to 1 to 1 in the fourth quarter, given our expectation of over 60 deliveries.”

“We continue to have vibrant sales activity going into the fourth quarter and expect strong orders.”

“All-in including G700s, we anticipate in excess of 60 deliveries in the quarter, assuming we’re granted FAA certification before the end of the year.”

“We are on track to deliver between 40 and 45 currently in-service aircraft in the fourth quarter.”

“I don’t necessarily see that as being a pull forward or something that creates a headwind into 2024.”

“if we can achieve certification in the, call it early to mid December time frame, then we’ve got a good shot at getting the planned deliveries of G700s out the door this year.”

“We’ve already increased munitions capacity and working with the federal government and the Army and OSD in particular, we have a very detailed plan to further increase capacity, which will allow us then to increase production very rapidly and move to the left, the munition availability to meet the United States’ needs and, frankly, external needs as well.”

“We will deliver 19 G700s, and we’re not going to tell you margins will be accretive.”

“To give you a little more insight, we will complete our FAA Type Inspection Authorization in September.”

“So, Technologies and Combat are simply a question of mix. And I suspect Combat will quickly return to its normal operating leverage.”

“And that’s really starting to bear fruit... and we’d expect to see the results of that continue in the second half of the year and beyond.”

“But barring any major structural shift between the percentage contributions of the IT services versus defense hardware parts of the business, we continue to expect this to be a low double-digit margin business over time.”

“And then it’s really the transition from more mature programs to newer programs, and those margins will improve as we come down our learning curves.”

“So we expect the -- this year to be considerably higher than last year.”

“But our best estimate, what we’re planning for right now is that we will be able to have sufficient time to deliver these airplanes.”

“Operating earnings should be down modestly from prior guidance, but below-the-line items and lower share count will leave our EPS guidance the same.”

“On a company-wide basis, we see annual revenue higher than our initial guidance and an overall operating margin about 40 basis points lower. So look for total revenue to be around $42.45 billion, about $1.2 billion up from previous guidance.”

“So for the group, we expect annual revenue of about $12.7 billion, with operating earnings around $1.2 billion, steady with prior guidance.”

“Technologies revenue will be $100 million to $200 million better than previous guidance, but operating margin will be 9.4%, 10 basis points lower than previously forecast.”

“Operating earnings for the year should be up $20 million over the previous forecast.”

“With respect to the Defense businesses, Combat Systems will have revenue of $400 million to $500 million higher than previously projected due to new program starts and an increased threat environment. So look for the total revenue of around $7.75 billion.”

“We also expect margins to be down from a projected 14.6% to 14.1%. This implies operating earnings of $1.4 billion.”

“On the other hand, we expect more service revenue than initially anticipated.”

“We now expect to deliver 27 aircraft in the third quarter, with a rapid increase in the fourth quarter deliveries.”

“As mentioned earlier, we see improvement here, and that should help as we go through the second half.”

“On the good news side of the equation, supply chain conditions are improving. We still have a significant backlog of late parts, but processes are in place to catch up, deliveries are trending positive and we have greater transparency.”

“The measures implemented at Mission Systems to overcome what seems to be the new normal in the supply chain are taking effect. So we feel good about their prospects for the balance of the year.”

“But of course, that implies a rate in the mid-17% range for the second half of the year. To shape that for you, we’d expect the rate to be somewhat lower in the third quarter and higher in the fourth due to typical timing items.”

“There’s no change to our outlook for the full year of approximately 17%.”

“At this point, our expectation for interest expense for the year remains unchanged at approximately $360 million.”

“Similar to last year, you should expect capital expenditures to be higher in the second half of the year, but in line with our expectation to be just under 2.5% of sales for the year.”

“The year-to-date results are consistent with our expectation for the year of a cash conversion rate in excess of 100%.”

“Supply chain issues and past COVID labor issues have impacted operating margins, but there is relief in sight. We expect improvement as we progress.”

“I suspect that the -- at least for the foreseeable future, the munitions portion of the business will remain about that, same as we see uplift in all of our all three businesses.”

“They’re getting better, but we’ve got a while to go before they hit their two-a-year or more cadence.”

“Electric Boat needs to continue to get better to offset likely additional supply chain challenges as the Virginia supply chain begins to improve.”

“Right now, we continue to track low- to mid-single digit, but we’ll see if we can’t get some juice out of that over time.”

“There is some opportunity here to capture 10 to 20 basis points of margin.”

“But we have, as I said earlier, a very clear line of sight into the third and fourth quarters and the majority of these suppliers fully anticipate getting better.”

“So we've done a lot to increase production already, and we are quite confident that we can go even faster.”

“That's part of the reason why volume was up nicely in the quarter, and they seem to be on a good path to overcoming that bottleneck in their system. So gives us confidence for the opportunities we have in the second half of the year.”

“We are holding to what we gave you in terms of out-year expectations for Aerospace.”

“And I think what you're getting at is the deliveries that we expect to execute for the year at about 145. We're pretty confident we can get there. If we miss, it's just going to be by a little.”

“We are quite confident that we will move throughput much quicker and will expedite the delivery of this critical capability to the Army.”

“The measures implemented at Mission Systems to overcome what seems to be the new normal in the supply chain are taking effect, which gives us confidence about their outlook for the balance of the year.”

“But recall, this is a group that has extremely strong operating leverage and based on their efficiency and blocking and tackling on the shop floor. So we'll expect to see margins continue.”

“We have seen the orders come through. And we do not yet have out your clarity on the exact timing of the additional production, but we will see additional production.”

“So on a going-forward basis, it's our working assumption that we will continue to see 1:1. And at the moment, we see no reason why that can't be achieved.”

“And what you ought to think about is the third quarter and fourth quarter being quite robust.”

“Virginia is -- it will stabilize once we get the schedule and supply chain issues resolved.”

“So we think that we plan to have Q1 as our lowest margin quarter. And we'll continue to work to that.”

“Nonetheless, we look forward to very strong third and fourth quarters.”

“I would say, however, that our quarterly progression differs from prior years and that the second quarter will be our lowest quarter because of mix and volume across the business.”

“We anticipate that this will improve as we progress through the year.”

“We continue to target certification of the G700 for late summer this year.”

“This has impacted the first quarter and will impact the second quarter, but relief is in sight as deliveries commence.”

“This is consistent with our expectation for the year of a cash conversion rate in excess of 100%.”

“So I think there's upward over time, margin opportunity, but we're not going to get into parsing specifics until we have good clarity. But we're very comfortable that we will improve steadily and repeatedly.”