General Dynamics Corporation’s (GD) subsidiary General Dynamics Land Systems has entered into an agreement, worth $26 million, with the U.S. Army Contracting Command to manufacture two Joint Assault Bridge (“JAB”) prototypes.
Joint Assault Bridge is a multi-service fully tracked armored engineering system. It is a portable bridge that enables military vehicles to cross gorges in combat. This system offers sufficient protection along with mobility and pace.
At the end of the first quarter of 2012, General Dynamics’ total order backlog was $55.2 billion, down 4.1% year over year from $57.4 billion in the prior-year comparable period. At the same time, the company’s funded backlog increased 5.5% year over year to $46.3 billion along with a steady demand for the Gulfstream aircrafts.
General Dynamics Land Systems is a wholly-owned subsidiary operating under the purview of the Combat segment. In first quarter 2012, the Combat segment reported revenue of $1.91 billion, down 2.3% year over year from $1.96 billion. During that quarter, the segment also received new orders worth $130 million from U.K. Ministry of Defense and $75 million from the U.S. Army.
At the end of the first quarter of 2012, Combat segment’s total order backlog was $10.7 billion compared with $11.4 billion at the end of the year-ago period. During that quarter, both funded and non-funded backlogs decreased. The downward trend was the result of receding volumes in the U.S. military vehicles business, primarily the Stryker and the Mine-Resistant, Ambush-Protected (“MRAP”) programs.
Despite a decline in total backlog at the end of the first quarter of 2012, we observe that General Dynamics’ total potential contract value increased 5.1% year over year to $82.2 billion. This was driven by an increase in estimated potential contract value of Information Systems and Technology segment. Apart from that, we expect that continued demand for Gulfstream aircrafts will likely offset the headwinds from the current environment.
We are skeptical about the flow of new orders due to proposed U.S. defense budget cutbacks. General Dynamics Corporation currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.
Headquartered in Falls Church, Virginia, General Dynamics is a market leader in business aviation; land and expeditionary combat systems, armaments and munitions; shipbuilding and marine systems; and information systems and technologies. The company competes with Northrop Grumman Corporation (NOC).
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