General Dynamics Land Systems, a subsidiary of General Dynamics Corporation (GD), has received an order worth $395 million from the U.S. TACOM Lifecycle Management Command to increase the number of M1A1 Abrams tank kits by 125 under the Egyptian tank co-production program.
The company has been providing components for kits used in the co-production program since 1992. These components are dispatched to a production facility near Cairo, Egypt where it is used for the manufacturing of tanks for the Egyptian Land Forces. The contract would be the eleventh increase and will bring the total number of Egyptian co-production-built tanks to 1,130.
Work on the components will be performed in Anniston, Alabama; Tallahassee, Florida; Sterling Heights, Michigan; Lima, Ohio; and Scranton, Pennsylvania. The company expects to begin deliveries in July 2013 and continue till January 2016.
In October 2011, General Dynamics Land Systems-Canada had also received a contract worth $1.052 billion from the Government of Canada to incorporate a comprehensive upgrade package into the Canadian Army's fleet of LAV III combat vehicles. Per the contract, the company will be responsible for the modernization of 550 vehicles to significantly enhance their survivability, mobility and firepower and extending the fleet's lifecycle to 2035.
Recently, General Dynamics announced third-quarter 2011 operating earnings of $1.83 per share, which surpassed the Zacks Consensus Estimate of $1.77. Its peer, Textron Inc. (TXT) also announced third-quarter results with adjusted earnings of 45 cents per share, handsomely beating the Zacks Consensus Estimate of 31 cents. The quarterly result also exceeded year-ago earnings of 13 cents.
General Dynamics is well equipped to build nuclear-powered submarines in the U.S. Its revenue exposure is spread over a broad portfolio of products and services that will keep the overall growth momentum steady. However, the company is largely tied to the U.S. defense budget, where the threat of budget cuts is looming high. Also, we have turned slightly cautious about the risks related to the execution of key projects. The company currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.
Headquartered in Falls Church, Virginia, General Dynamics engages in mission-critical information systems and technologies; land and expeditionary combat vehicles, armaments and munitions; shipbuilding and marine systems; and business aviation.
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