- General Dynamics’ operating earnings climbed 14.7 percent to $1.5 billion
- The company’s diluted EPS rose 15.7 percent to $4.49
- Danny Deep will succeed nine-time Wash100 awardee Phebe Novakovic as CEO on Jan. 1, 2027
General Dynamics reported third-quarter 2026 revenue of $14.6 billion, up 12.9 percent year over year, as the defense contractor recorded $98.8 billion in orders and ended the period with a $220.3 billion backlog.
The company said in an earnings release published Friday that operating earnings climbed 14.7 percent to $1.5 billion, while diluted earnings per share rose 15.7 percent to $4.49.
General Dynamics Chairman and CEO Phebe Novakovic said the company’s third-quarter financial and operational results were supported by revenue growth across its four business segments, alongside strong bookings and operational performance. She attributed the company’s outlook to sustained backlog growth and investments made across its businesses over the past decade, saying it is “poised to drive continued performance in the years to come.”
Novakovic told analysts that the third-quarter call was her last earnings call. The nine-time Wash100 Award winner, who has led the company since 2013, is set to transition to executive chairman, with President Danny Deep succeeding her as CEO, effective Jan. 1, 2027.
What Drove General Dynamics’ Q3 Backlog & Orders?
The company’s defense segments accounted for $93.8 billion in orders, while the aerospace segment contributed another $5 billion. Of the defense orders, $71.6 billion came from marine systems, including $29.5 billion for five additional Columbia-class submarines under Build 2 and $42.1 billion for nine additional Virginia-class submarines under Block VI.
General Dynamics reported a companywide book-to-bill ratio of 6.8-to-1. Its defense segments recorded an 8.5-to-1 book-to-bill ratio during the quarter, while the technologies segment posted a 1.4-to-1 ratio. Combat systems’ book-to-bill ratio was just below 1-to-1 following a strong second quarter. Aerospace recorded a 1.4-to-1 ratio.
The company ended the quarter with $220.3 billion in backlog. It also reported $50.4 billion in estimated potential contract value from unfunded indefinite-delivery/indefinite-quantity contracts and unexercised options. Together, the figures brought General Dynamics’ total estimated contract value to $270.7 billion.
How Did General Dynamics’ Business Segments Perform?
Marine Systems generated $5 billion in revenue, up 21.1 percent from the prior-year quarter, as construction volumes for Columbia- and Virginia-class submarines, DDG 51 destroyers and T-AO oilers drove segment growth. Operating earnings rose 34.4 percent, while the segment’s operating margin expanded by 80 basis points.
Aerospace revenue reached $3.54 billion, a 9.3 percent year-over-year gain. General Dynamics attributed the growth to the delivery of one more Gulfstream aircraft than a year earlier and higher aircraft services revenue at Gulfstream and Jet Aviation. The company delivered 40 Gulfstream aircraft during the quarter, including 35 large-cabin and five mid-cabin models.
The Technologies segment recorded $3.7 billion in revenue, up 10.8 percent, with General Dynamics Information Technology leading the segment’s growth. Operating earnings rose 5.8 percent to $346 million, although the segment’s operating margin contracted by 40 basis points, largely due to a shift in business mix, according to Novakovic.
Combat Systems revenue rose 6 percent to $2.4 billion, supported by demand for wheeled and tracked vehicles from U.S. allies and growth in munitions. Operating earnings declined by $5 million to $330 million on a 110-basis-point contraction in operating margin, which Novakovic attributed largely to land systems’ shift from legacy production programs to new development programs.
What Is General Dynamics’ 2026 Outlook?
General Dynamics raised its full-year 2026 diluted EPS guidance to $17.20 to $17.30, up from the $16.80 to $16.90 range it projected in July. The updated forecast assumes revenue of $56.5 billion to $56.8 billion and an operating margin of about 10.5 percent.
