General Dynamics Corp, maker of Gulfstream jets, tanks and U.S. Navy ships, reported higher-than-expected quarterly earnings on Wednesday, helped by higher sales in its combat systems unit that makes battle tanks.
However, a 1-percent year-over-year drop in quarterly revenue to $7.6 billion missed Wall Street analyst estimates of $7.94 billion, sending shares down nearly two percent before recovering during morning trading.
On a conference call with Wall Street analysts, Chief Financial Officer Jason Aiken said "lower-than-expected Army product sales impacted the third quarter and the Army had trouble executing after the six-month continuing resolution and, of course, the change in administrations slowed some execution as well."
In July, General Dynamics` CEO Phebe Novakovic had warned that U.S. President Donald Trump`s failure to fill dozens of senior-level positions at the Pentagon made it difficult for defense contractors to forecast business.
General Dynamic`s Information Systems and Technology business unit (IS&T) has thousands of shorter sales-cycle service contracts which can reflect delays quickly. IS&T revenue increased by $50 million, or 2.3 percent, over the second quarter, but was down 7.6 percent compared with the same quarter last year.
Aiken said by the end of the year, IS&T will be flat versus last year.
The company`s third-quarter 2017 results showed net earnings from continuing operations up 4.5 percent to $764 million, or $2.52 per share, up from $731 million or $2.36 per share a year ago.
Wall Street analysts expected $2.44 per share, according to Thomson Reuters I/B/E/S.
The Falls Church Virginia-based defense contractor said its total order backlog at end of third-quarter 2017 was $63.9 billion, up 9.2 percent from the end of the previous quarter.?
The company-wide operating margin for the third quarter was 13.9 percent, a 60 basis-point increase. General Dynamics had also improved operating margins by 60 basis points during the second quarter.
Shares were down $1.90 to $210.15 in morning trading.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)