GENERAL DYNAMICS CORP GD

General Dynamics delivered a strong full-year 2025, with revenue up 10.1%, operating earnings up 11.7%, and diluted EPS up 13.4%. All segments contributed to this growth, with Marine Systems and Aerospace leading with revenue increases of 16.6% and 16.5% respectively. The company also achieved a record total backlog of $118 billion, a 30% increase over the prior year, and a full-year book-to-bill ratio of 1.5x.

Aerospace experienced strong demand, particularly for Gulfstream aircraft, achieving a Q4 book-to-bill of 1.3x (1.4x for Gulfstream alone). New models like the G700 and G800 are driving increased interest. While Q4 operating earnings were down YoY due to fewer G600 deliveries, liquidated damages variance, higher overhead, and new tariffs, sequential numbers showed strong improvement. Management expects continued margin improvement in 2026 driven by improved pricing, efficiency, lower overheads, and reduced R&D costs, despite ongoing tariff headwinds^🌐.

Combat Systems reported robust order intake in Q4, with a book-to-bill of 4.3:1, leading to a full-year book-to-bill of 2.1x. Notable awards included over $4 billion for EAGLE tactical vehicles in Germany, $600 million for bridges in Norway and the UK, and $640 million for light armored vehicles in Canada. This strong order book, combined with progress on the M1E3 main battle tank, positions the segment for increased revenue growth, particularly accelerating into 2027 as engineering work transitions to production.

Marine Systems continued its exceptional revenue growth, up 21.7% YoY in Q4, driven by submarine programs and Electric Boat. Operating earnings surged 72.5% YoY with a 210 basis point margin improvement, reflecting measurable increases in productivity and throughput at all shipyards. Electric Boat's submarine tonnage produced is up 13% over last year. The company is making considerable investments in shipyards to accelerate production, with capital expenditures expected to increase significantly in 2026.

The Technologies segment faced a challenging market in 2025 due to a long continuing resolution and government contract examination, resulting in flat Q4 revenue and a slight decline in operating earnings. Despite this, the segment achieved a full-year book-to-bill of 1.2x and an increased year-over-year backlog of $16.7 billion. The completion of legacy program transitions at Mission Systems and a robust order pipeline of $120 billion position the group for durable low single-digit growth beyond 2026.

General Dynamics' capital deployment strategy prioritizes continued investment in its growing businesses to efficiently execute backlog and meet customer demands. This includes significant capital expenditures, particularly in shipyards and munitions. The company is committed to its dividend and views share repurchases as less popular currently, emphasizing internal investment as justified by strong demand and backlog.