GENERAL DYNAMICS CORP
For the period ended Jun 29, 2025. Filed Jul 23, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 29, 2025 · Filed Jul 23, 2025
GD$354.06-0.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-30; filed 2025-04-23.
0000040533-25-000014
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-29; filed 2025-07-23.
0000040533-25-000035
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 102 previous paragraphs and 105 current paragraphs.
62 unchanged; 36 reworded; 6 added; 2 removed; 2 previous and 1 current paragraphs rearranged.
Tables are not compared: 19 previous and 19 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (6)
Current report
On July 4, 2025, the president signed the fiscal year (FY) 2025 reconciliation (the bill). Among its provisions, the bill adds funding for shipbuilding and other programs we support. The amounts ultimately allocated to specific programs are subject to the federal budgeting process. The bill also enacts changes to U.S. federal tax law, including a provision to allow for the immediate deduction of domestic research and development (R&D) expenditures beginning January 1, 2025. This provision further permits the accelerated deduction of amounts capitalized under prior law. This change in tax law will have a favorable impact on our cash taxes which we are in the process of estimating the timing and amount.
Current report
We expect the Aerospace segment’s 2025 revenue to be approximately $12.9 billion with operating margin of approximately 13.5%.
Current report
We expect the Marine Systems segment’s 2025 revenue to be approximately $15.6 billion with operating margin of approximately 7.0%
Current report
We expect the Combat Systems segment’s 2025 revenue to be approximately $9.2 billion with operating margin of approximately 14.5%.
Current report
We expect the Technologies segment’s 2025 revenue to be approximately $13.5 billion with operating margin of approximately 9.2%.
Current report
Total backlog in our defense segments was $83.8 billion on June 29, 2025, up 20% from the first quarter. This increase was driven by significant awards within the Marine Systems segment for continued construction of Virginia-class and Columbia-class submarines. Estimated potential contract value in our defense segments was $56.3 billion on June 29, 2025.
Removed paragraphs (2)
Previous report
We entered 2025 with the federal government operating under a continuing resolution (CR). Historically, Congress eventually enacts a budget that authorizes the level of spending for the fiscal year. This year, Congress signed into law a CR for the entire fiscal year. Although the CR provides funding for our key programs, including the Columbia-class and Virginia-class submarine programs, there is some uncertainty as to how the full-year CR will be implemented.
Previous report
Total backlog in our defense segments was $69.7 billion on March 30, 2025. In the first quarter of 2025, we continued to see strong demand for technology products and services as our Technologies segment achieved a book-to-bill ratio of 1.1-to-1. Estimated potential contract value in our defense segments was $51.6 billion on March 30, 2025.
Reworded paragraphs (36)
Previous wording
The administration has expressed its intention to reduce federal spending and formed the Department of Government Efficiency (DOGE) to assist in this process. Thus far, the directives of the administration and actions of the DOGE have resulted in federal government staff reductions, hiring freezes, contract modifications and terminations, and delays in contract awards. We have been working with many of our customers to identify areas that might be considered for further spending reductions.
Current wording
The administration has taken steps to address federal spending, including forming the Department of Government Efficiency (DOGE) to assist in this process. Thus far, the directives of the administration and actions of the DOGE have resulted in federal government staff reductions, hiring freezes, contract modifications and terminations, and delays in contract awards. We have experienced some award delays and contract terminations as a result of these actions as well as changes in agency priorities, largely within our IT services business. In addition, the administration has implemented new tariffs as part of U.S. trade policy. The duration and extent of the tariffs and any reciprocal tariffs, as well as any available opportunities to lessen the impact, continue to evolve. To date, these actions have not had a material impact on our results of operations, financial condition or cash flows.
Previous wording
On April 16, 2025, the world's longest-range business aircraft, our ultra-long-range, ultra-large-cabin G800 received type certification from the U.S. Federal Aviation Administration (FAA) and the European Union Aviation Safety Agency (EASA). The certification paves the way for customer deliveries beginning late in the second quarter of 2025. The G800 is the replacement aircraft for the G650, which correspondingly ended production in the first quarter of 2025.
Current wording
In April 2025, our new ultra-large-cabin G800, the world's longest-range business aircraft, received type certification from the U.S. Federal Aviation Administration (FAA) and the European Union Aviation Safety Agency (EASA). We expect G800 deliveries to commence in the third quarter of 2025. The G800 is the replacement aircraft for the G650, which had its final delivery in the second quarter of 2025.
Previous wording
Our consolidated revenue increased in the first quarter of 2025 across all four operating segments, including nearly 50% growth in our Aerospace segment. Operating margin increased 70 basis points in the first quarter of 2025 due primarily to strong operating performance in our Aerospace and Technologies segments.
Current wording
Our consolidated revenue increased in the second quarter and first six months of 2025 due primarily to growth in our Aerospace and Marine Systems segments. Operating margin increased 30 basis points in the second quarter and 50 basis points in the first six months of 2025 due primarily to strong operating performance in our Aerospace segment.
Previous wording
The increase in the Aerospace segment’s revenue in the first quarter of 2025 consisted of the following:
Current wording
The increase in the Aerospace segment’s revenue in the second quarter and first six months of 2025 consisted of the following:
Previous wording
Aircraft manufacturing revenue increased in the first quarter of 2025 due primarily to 13 G700 deliveries, which entered into service in the second quarter of 2024. Aircraft services revenue was up in the first quarter of 2025 due primarily to increased customer demand for aircraft maintenance based on established maintenance cycles, a larger installed base and customer flight activity.
Current wording
Aircraft manufacturing revenue increased in the second quarter and first six months of 2025 due primarily to additional G700 deliveries following its introduction in the second quarter of 2024. Aircraft services revenue was up in the second quarter and first six months of 2025 due primarily to increased customer demand for aircraft maintenance based on established maintenance cycles, a larger installed base and customer flight activity.
Previous wording
The increase in the segment’s operating earnings in the first quarter of 2025 consisted of the following:
Current wording
The increase in the segment’s operating earnings in the second quarter and first six months of 2025 consisted of the following:
Previous wording
Aircraft manufacturing operating earnings increased in the first quarter of 2025 due primarily to the number and mix of aircraft deliveries. G&A/other expenses decreased in the first quarter of 2025 due to reduced R&D efforts after the completion of the G700 certification process in 2024. In total, the Aerospace segment’s operating margin increased 210 basis points in the first quarter of 2025 compared with the prior-year period.
Current wording
Aircraft manufacturing operating earnings increased in the second quarter and first six months of 2025 due primarily to the number and mix of aircraft deliveries, as well as productivity improvements on the G700 aircraft since its introduction. G&A/other expenses decreased in the second quarter and first six months of 2025 due primarily to reduced R&D efforts after the completion of new aircraft certification processes. In total, the Aerospace segment’s operating margin increased 230 basis points in the second quarter and first six months of 2025 compared with the prior-year periods.
Previous wording
The increase in the Marine Systems segment’s revenue in the first quarter of 2025 consisted of the following:
Current wording
The increase in the Marine Systems segment’s revenue in the second quarter and first six months of 2025 consisted of the following:
Previous wording
Revenue from U.S. Navy ship construction was up in the first quarter of 2025 due primarily to increased volume on the Virginia-class and Columbia-class submarine programs. Operating margin for the segment remained consistent with the prior period.
Current wording
Revenue from U.S. Navy ship construction was up in the second quarter and first six months of 2025 due primarily to increased volume on Virginia-class and Columbia-class submarine construction. The Marine Systems segment’s operating margin continues to reflect the impact of supply chain challenges.
Previous wording
The increase in the Combat Systems segment’s revenue in the first quarter of 2025 consisted of the following:
Current wording
The change in the Combat Systems segment’s revenue in the second quarter and first six months of 2025 consisted of the following:
Previous wording
Weapons systems and munitions revenue increased in the first quarter of 2025 due primarily to heightened demand for artillery products. Overall, the Combat Systems segment’s operating margin was consistent with the prior period.
Current wording
Weapons systems and munitions revenue increased in the first six months of 2025 due primarily to heightened demand for artillery products. Overall, the Combat Systems segment’s operating margin increased 50 basis points in the second quarter and 20 basis points in the first six months of 2025 on improved performance.
Previous wording
The increase in the Technologies segment’s revenue in the first quarter of 2025 consisted of the following:
Current wording
The increase in the Technologies segment’s revenue in the second quarter and first six months of 2025 consisted of the following:
Previous wording
The Technologies segment’s revenue was up in the first quarter of 2025 due to higher volume of IT services. Overall, the Technologies segment’s operating margin increased 40 basis points in the first quarter of 2025 due to strong operating performance.
Current wording
The Technologies segment’s revenue was up in the second quarter and first six months of 2025 due primarily to higher volume of IT services. Overall, the Technologies segment’s operating margin increased 20 basis points in the first six months of 2025.
Previous wording
Corporate operating costs totaled $33 in the first quarter of 2025 compared with $28 in the first quarter of 2024 and consisted primarily of equity-based compensation expense.
Current wording
Corporate operating costs totaled $45 in the second quarter and $78 in the first six months of 2025 compared with $41 in the second quarter and $69 in the first six months of 2024 and consisted primarily of equity-based compensation expense. Corporate operating costs are expected to be approximately $160 in 2025.
Previous wording
The increase in product revenue in the first quarter of 2025 consisted of the following:
Current wording
The increase in product revenue in the second quarter and first six months of 2025 consisted of the following:
Previous wording
Aircraft manufacturing revenue increased in the first quarter of 2025 due to G700 deliveries. Ship construction revenue increased due primarily to higher volume on the Virginia-class and Columbia-class submarine programs. Weapons systems and munitions revenue increased in the first quarter of 2025 due to heightened demand for artillery products. The primary drivers of the increase in product operating costs were the changes in volume on the programs described above.
Current wording
Aircraft manufacturing revenue increased in the second quarter and first six months of 2025 due to additional G700 deliveries. Ship construction revenue increased due primarily to higher volume on the Virginia-class and Columbia-class submarine programs. The primary drivers of the increase in product operating costs were the changes in volume on the programs described above.
Previous wording
The increase in service revenue in the first quarter of 2025 consisted of the following:
Current wording
The increase in service revenue in the second quarter and first six months of 2025 consisted of the following:
Previous wording
Increased IT services volume drove the higher service revenue in the first quarter of 2025. The primary drivers of the increase in service operating costs were the changes in volume on the programs described above.
Current wording
Increased IT services volume drove the higher service revenue in the second quarter and first six months of 2025. The primary drivers of the increase in service operating costs were the changes in volume on the programs described above.
Previous wording
As a percentage of revenue, G&A expenses decreased to 5.1% in the first three months of 2025 compared with 5.8% in the first three months of 2024 due to growth in revenue.
Current wording
As a percentage of revenue, G&A expenses decreased to 5.0% in the first six months of 2025 compared with 5.6% in the first six months of 2024. We expect G&A expenses as a percentage of revenue in 2025 to be generally consistent with 2024.
Previous wording
Net other income was $21 in the first three months of 2025 compared with $14 in the first three months of 2024, and represents primarily the non-service components of pension and other post-retirement benefits.
Current wording
Net other income was $36 in the first six months of 2025 compared with $32 in the first six months of 2024, and represents primarily the non-service components of pension and other post-retirement benefits. In 2025, we expect other income, net to be approximately $70.
Previous wording
Net interest expense was $89 in the first three months of 2025 compared with $82 in the prior-year period. See Note H to the unaudited Consolidated Financial Statements in Part I, Item 1, for additional information regarding our debt obligations, including interest rates.
Current wording
Net interest expense was $177 in the first six months of 2025 compared with $166 in the prior-year period. See Note H to the unaudited Consolidated Financial Statements in Part I, Item 1, for additional information regarding our debt obligations, including interest rates. In 2025, we expect net interest expense to be approximately $330.
Previous wording
Our effective tax rate was 17.2% in the first three months of 2025 compared with 17.5% in the prior-year period.
Current wording
Our effective tax rate was 17.4% in the first six months of 2025 compared with 17.2% in the prior-year period. For 2025, we anticipate a full-year effective tax rate of approximately 17.5%.
Previous wording
Our total backlog, including funded and unfunded portions, was $88.7 billion at the end of the first quarter of 2025 compared with $90.6 billion on December 31, 2024. Our total backlog is equal to our remaining performance obligations under contracts with customers as discussed in Note B to the unaudited Consolidated Financial Statements in Part I, Item 1. Our total estimated contract value, which combines total backlog with estimated potential contract value, was $141.3 billion on March 30, 2025.
Current wording
Our total backlog, including funded and unfunded portions, was $103.7 billion at the end of the second quarter of 2025 compared with $88.7 billion at the end of the first quarter. Our total backlog is equal to our remaining performance obligations under contracts with customers as discussed in Note B to the unaudited Consolidated Financial Statements in Part I, Item 1. Our total estimated contract value, which combines total backlog with estimated potential contract value, was $161.2 billion on June 29, 2025.
Previous wording
The following table details the backlog and estimated potential contract value of each segment at the end of the first quarter of 2025 and fourth quarter of 2024:
Current wording
The following table details the backlog and estimated potential contract value of each segment at the end of the second and first quarters of 2025:
Previous wording
Aerospace funded backlog represents primarily new aircraft orders for which we have definitive purchase contracts and deposits from customers. Unfunded backlog consists of agreements to provide future aircraft maintenance and support services. The Aerospace segment ended the first quarter of 2025 with backlog of $19 billion.
Current wording
Aerospace funded backlog represents primarily new aircraft orders for which we have definitive purchase contracts and deposits from customers. Unfunded backlog consists of agreements to provide future aircraft maintenance and support services. The Aerospace segment ended the second quarter of 2025 with backlog of $19.9 billion.
Previous wording
Orders for new Gulfstream aircraft reflected solid demand across our portfolio of products and services. The segment’s book-to-bill ratio (orders divided by revenue) of 0.8-to-1, reflected revenue growth of nearly 50% in the first quarter of 2025.
Current wording
Orders for new Gulfstream aircraft reflected strong demand across our portfolio of products and services. The segment achieved a book-to-bill ratio (orders divided by revenue) of 1-to-1 for the first six months of 2025, even as revenue grew more than 20% year over year.
Previous wording
Beyond total backlog, estimated potential contract value represents primarily options and other agreements with existing customers to purchase new aircraft and long-term aircraft services agreements. On March 30, 2025, estimated potential contract value in the Aerospace segment was $1.1 billion.
Current wording
Estimated potential contract value represents primarily options and other agreements with existing customers to purchase new aircraft and long-term aircraft services agreements. On June 29, 2025, estimated potential contract value in the Aerospace segment was $1.2 billion.
Previous wording
We ended the first quarter of 2025 with a cash and equivalents balance of $1.2 billion compared with $1.7 billion at the end of 2024. Following is a discussion of our major operating, investing and financing activities in the first three months of 2025 and 2024, as classified on the Consolidated Statement of Cash Flows in Part I, Item 1:
Current wording
We ended the second quarter of 2025 with a cash and equivalents balance of $1.5 billion compared with $1.7 billion at the end of 2024. Following is a discussion of our major operating, investing and financing activities in the first six months of 2025 and 2024, as classified on the Consolidated Statement of Cash Flows in Part I, Item 1:
Previous wording
Cash used by operating activities was $148 million in the first three months of 2025 compared with $278 in the same period in 2024. The primary driver of cash flows in both periods was net earnings. Cash flows in both periods were affected negatively by growth in operating working capital, particularly driven by timing in our Aerospace and Combat Systems segments. These timing items were anticipated and are expected to reverse, resulting in positive cash flows from operating activities for the full year.
Current wording
Cash provided by operating activities was $1.5 billion in the first six months of 2025 compared with $536 in the same period in 2024. The primary driver of cash flows in both periods was net earnings. Cash flows in both periods were affected negatively by growth in operating working capital, particularly driven by timing in our Aerospace and Combat Systems segments. These timing items were anticipated and are expected to reverse, resulting in higher cash flows from operating activities in the second half of the year.
Previous wording
Cash used by investing activities was $130 in the first three months of 2025 compared with $182 in the same period in 2024. Our investing activities include cash paid for capital expenditures and business acquisitions; purchases, sales and maturities of marketable securities; and proceeds from asset sales. The primary use of cash for investing activities in both periods was capital expenditures. Capital expenditures were $142 in the first three months of 2025 compared with $159 in the same period in 2024.
Current wording
Cash used by investing activities was $216 in the first six months of 2025 compared with $307 in the same period in 2024. Our investing activities include cash paid for capital expenditures and business acquisitions; purchases, sales and maturities of marketable securities; and proceeds from asset sales. The primary use of cash for investing activities in both periods was capital expenditures. Capital expenditures were $340 in the first six months of 2025 compared with $360 in the same period in 2024.
Previous wording
Cash used by financing activities was $175 million in the first three months of 2025 compared with $416 in the same period in 2024. Financing activities include the use of cash for repurchases of common stock, payment of dividends, and debt and commercial paper repayments. Our financing activities also include proceeds received from debt and commercial paper issuances and employee stock option exercises.
Current wording
Cash used by financing activities was $1.4 billion in the first six months of 2025 compared with $778 in the same period in 2024. Financing activities include the use of cash for repurchases of common stock, payment of dividends, and debt and commercial paper repayments. Our financing activities also include proceeds received from debt and commercial paper issuances and employee stock option exercises.
Previous wording
On March 5, 2025, our board of directors (Board) declared an increased quarterly dividend of $1.50 per share, the 28th consecutive annual increase. Previously, the Board had increased the quarterly dividend to $1.42 per share in March 2024. Cash dividends paid were $383 in the first three months of 2025 compared with $361 in the same period in 2024.
Current wording
On March 5, 2025, our board of directors (Board) declared an increased quarterly dividend of $1.50 per share, the 28th consecutive annual increase. Previously, the Board had increased the quarterly dividend to $1.42 per share in March 2024. Cash dividends paid were $785 in the first six months of 2025 compared with $750 in the same period in 2024.
Previous wording
We paid $600 and $105 in the first three months of 2025 and 2024, respectively, to repurchase our outstanding shares. On March 30, 2025, 6.9 million shares remained authorized by our Board for repurchase, representing 2.6% of our total shares outstanding.
Current wording
We paid $600 and $139 in the first six months of 2025 and 2024, respectively, to repurchase our outstanding shares. On June 29, 2025, 6.9 million shares remained authorized by our Board for repurchase, representing 2.6% of our total shares outstanding.
Previous wording
In late March 2025, we repaid fixed-rate notes of $750 prior to their scheduled maturity on April 1, 2025. Fixed-rate notes of $750 mature in May 2025. We currently plan to repay these notes with proceeds from commercial paper or long-term debt issuances. For additional information regarding our debt obligations, including scheduled debt maturities and interest rates, see Note H to the unaudited Consolidated Financial Statements in Part I, Item 1.
Current wording
In May 2025, we issued $750 of fixed-rate notes. The proceeds were used to repay fixed-rate notes of $750 that matured in May 2025. In late March 2025, we repaid fixed-rate notes of $750 prior to their scheduled maturity on April 1, 2025 with cash on hand and commercial paper issuances. For additional information regarding our debt obligations, including scheduled debt maturities and interest rates, see Note H to the unaudited Consolidated Financial Statements in Part I, Item 1.
Previous wording
In the first three months of 2025, we received net proceeds of $1.6 billion from the issuance of commercial paper, which remained outstanding on March 30, 2025. Separately, we have $5 billion in committed bank credit facilities for general corporate purposes and working capital needs and to support our commercial paper issuances. We also have an effective shelf registration on file with the Securities and Exchange Commission (SEC) that allows us to access the debt markets.
Current wording
In the first six months of 2025, we received net proceeds of $700 from the issuance of commercial paper, which remained outstanding on June 29, 2025. Separately, we have $5 billion in committed bank credit facilities for general corporate purposes and working capital needs and to support our commercial paper issuances. We also have an effective shelf registration on file with the Securities and Exchange Commission (SEC) that allows us to access the debt markets.
Previous wording
Accounting for long-term contracts and programs involves the use of various techniques to estimate total contract revenue and costs. Contract estimates are based on various assumptions to project the outcome of future events that often span several years. We review and update our contract-related estimates regularly. We recognize adjustments in estimated profit on contracts under the cumulative catch-up method. Under this method, the impact of the adjustment on profit recorded to date on a contract is recognized in the period the adjustment is identified. The aggregate impact of adjustments in contract estimates increased our operating earnings (and diluted earnings per share) by $31 ($0.09) and $36 ($0.10) for the three-month periods ended March 30, 2025, and March 31, 2024, respectively. No adjustment on any one contract was material to the unaudited Consolidated Financial Statements for the three-month periods ended March 30, 2025, or March 31, 2024.
Current wording
Accounting for long-term contracts and programs involves the use of various techniques to estimate total contract revenue and costs. Contract estimates are based on various assumptions to project the outcome of future events that often span several years. We review and update our contract-related estimates regularly. We recognize adjustments in estimated profit on contracts under the cumulative catch-up method. Under this method, the impact of the adjustment on profit recorded to date on a contract is recognized in the period the adjustment is identified. The aggregate impact of adjustments in contract estimates increased our operating earnings (and diluted earnings per share) by $31 ($0.09) and $62 ($0.18) for the three- and six-month periods ended June 29, 2025, and $77 ($0.22) and $113 ($0.32)
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
for the three- and six-month periods ended June 30, 2024, respectively. No adjustment on any one contract was material to the unaudited Consolidated Financial Statements for the three- and six-month periods ended June 29, 2025, or June 30, 2024.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
In addition, the administration has implemented new tariffs as part of U.S. trade policy. The duration and extent of the tariffs and reciprocal tariffs, as well as the availability of exemptions or contractual remedies (or recoverability), continue to evolve.
Previous report — wording carried elsewhere
To date, none of these actions have had a material impact on our results of operations, financial condition or cash flows. However, any future impact cannot be determined right now.