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$GD General Update: Received the first full rate production order from the U.S. Army to build additional Warfighter Information Network – Tactical (WIN-T) Increment 2 systems. The $219MM order includes the production of more than 300 vehicle-based network communication nodes along with related equipment and materials.
$GD said in terms of its order activity and backlog for Gulfstream, the backlog is spread across the United States, Canada, Europe and Far East. There are very few fleet customers. The backlog is steady and it is a mix between public companies, private companies and individuals.
In $GD’s Aerospace segment, net orders were up over 20% YoY at Gulfstream for 4Q17. Within this increase, midsize orders were similar to last year. Net large cabin orders were up almost 30%. In the Combat Systems segment, orders were $1.7Bil in 4Q17. Tank orders were $975MM, part of the $2.4Bil IDIQ type contract that was awarded in the quarter.
During 4Q17, $GD posted revenues of $1.9Bil in its Aerospace segment, up 8.6% from 4Q16. Combat Systems revenue increased 5.2% to $1.7Bil. Information Systems and Technology segment revenues grew 9.5% to $2.4Bil while Marine Systems segment revenues rose 8.6% to $2Bil compared with the prior-year period.
$GD reported an 11.6% increase in 4Q17 earnings. Net income was $636MM or $2.10 per share compared to $570MM or $1.85 per share in 4Q16. The company incurred a $119MM one-time, non-cash decrement to earnings in 4Q17 from the tax reform. Revenue grew 8% to $8.3Bil compared to last year.
$GD said General Dynamics European Land Systems signed a contract to deliver up to 227 PIRANHA 5 wheeled armored vehicles in six different configurations to the Romanian Armed Forces. The contract has a total value exceeding $1Bil. These will be produced in a strategic cooperation with Romanian company Uzina Mecanică București.
$GD's General Dynamics Information Technology unit was awarded a contract by the US Army Medical Command for professional training and operations services in support of the US Army Reserve regional training sites-medical program. The single-award contract has a potential value of approx. $58.9MM for a one-year base period with four option years.
$GD's subsidiary Jet Aviation has secured its air operator’s certificate (AOC) for Malta, thereby launching its new flight operation. The Malta location joins the company’s other regional AOC operations in Zurich and Cologne. A Boeing BBJ 737-700 is already operating under the Malta AOC, with a Legacy 600 to follow in the coming weeks.
$GD's subsidiary General Dynamics Electric Boat has been awarded a $432MM contract modification by the US Navy to provide research and development and lead-yard services for Virginia-class nuclear-powered attack submarines. The contract has a potential value of $900MM through November 2018.
$GD's General Dynamics Information Technology unit was awarded the Distributed Mission Operations Center - Infrastructure, Development and Engineering support contract by the US Air Force. The single award, indefinite delivery, indefinite quantity contract has a potential value of approx. $47MM for one base year with four option years.
$GD said General Dynamics NASSCO started construction on a Kanaloa-class containership for Matson Navigation Company, Inc., as part of a two-ship contract. Construction of the first ship is scheduled to be complete in 2019. A second Kanaloa-class containership for Matson will begin construction in 2018 with delivery in 2020.
$GD's General Dynamics Information Technology unit was awarded the Mission Training Complex Capabilities Support contract by the US Army Contracting Command. The multiple award, indefinite delivery, indefinite quantity contract has a ceiling value of approx. $975MM with a five year ordering period.
$GD recently acquired a business in the IS&T group which specializes in mission support for the intelligence community. It relates to the GDIT services and is a growth market for the company. The acquisition closed near the end of 3Q17 so there is no impact to results. $GD expects it to start contributing in 4Q17 and beyond.
During 3Q17, $GD’s total backlog increased by $5.4Bil, in excess of 9% over 2Q17. There was good contract activity in all the groups, with particularly strong order intake in the Marine group. The Combat Systems group remains on course for a good year. $GD anticipates that 4Q17 will see around a 15% increase in revenue over 3Q17.
$GD had total backlog of $63.9Bil at 3Q17-end. The estimated potential contract value, representing management’s estimate of value in unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options, was $25.7Bil. Total potential contract value was $89.7Bil at the end of the quarter.