Generally dynamic, General Dynamics is a prime military contractor to the Pentagon (the US government accounts for about 60% of sales). The company's military operations include information systems and technology (information technology and collection, as well as command control systems); marine systems (warships, commercial tankers, and nuclear submarines); and combat systems (battle tanks, wheeled combat/tactical vehicles, munitions, and rockets and gun systems). Its aerospace unit, which is composed of Gulfstream Aerospace and Jet Aviation designs, makes, and refurbishes business jets primarily for civilian customers.
General Dynamics operates around the world, serving government and commercial customers on six continents spanning more than 40 countries.
Unlike some of its rivals who cater only to the military market that is at the mercy of government budgetary fluctuations, General Dynamics caters to military and civilian sectors, manufacturing both combat systems and high-tech systems, with each side buffering the other in times of market downturn. The Combat Systems division is composed of Armament and Technical Products; European Land Systems; Land Systems; and Ordnance and Tactical Systems.
General Dynamic's Marine Systems group is a major shipbuilder for the US Navy, and it provides MRO (maintenance/repair/overhaul) services to keep those vessels ship-shape. Marine systems manufactures the Virginia-class nuclear-powered submarine, the Arleigh Burke-class guided-missile destroyer (DDG-51), and the Lewis and Clark-class dry cargo/ammunition combat-logistics ship (T-AKE). Subsidiary Electric Boat builds nuclear submarines (Seawolf, Ohio, and Los Angeles classes), while Bath Iron Works builds DDG-51 and DDG-1000 destroyers.
On the civilian side of the business, the company's Aerospace segment produces mid- and large-cabin business jet aircraft, for which the company provides maintenance, refurbishment, and outfitting.
Last, but not least -- serving both the military and civilian sides -- the company's information systems and technology business unit provides cyber security, tactical communication systems, sensors and cameras, ruggedized computers (for use in harsh environments, such as those with strong vibrations, extreme temperatures, and wet or dusty conditions), and antennas to customers in the DoD, the Department of Homeland Security, the intelligence community, federal civilian agencies, and international customers.
Sales and Marketing
General Dynamics' main customer is the US Department of Defense (DoD). The company conducts business with government customers around the world with operations in Australia, Brazil, Canada, France, Germany, Mexico, Spain, Switzerland and the United Kingdom. Throughout 2013, 62% of its revenues were from the US government, 18% came from US commercial customers, 7% from international defense customers, and the remaining 13% stemmed from international commercial customers.
After enjoying years of revenue growth and profitability, General Dynamics saw its revenues dip by 32% from $32.7 billion in 2011 to $31.5 billion in 2012, and a marginal 1% decline to $31.2 billion in 2013. The decline in 2013 was due to lower volumes within its Combat Systems business as a result of decreased US Army spending and delays in international orders.
General Dynamics posted net income of $2.3 billion in 2013 over a net loss of $332 million in 2012 primarily due to the absence of goodwill impairment which was recorded in 2012 for its information systems and technology group, and marginally due to a decline in general and administrative costs.
The company has recorded consistent operating cash flow over the years, except for a decrease in 2012. Cash flows increased again in 2013, however, due to the rise in net income coupled with cash generated from contracts.
Though US defense spending is in decline -- with the President making a fiscal 2013 defense budget request of $525 billion, down from $531 billion in fiscal 2012 -- General Dynamics' business addresses programs that the military continues to emphasize, including the need for warfighters and the need to replace resources lost in Iraq and Afghanistan. As the first US submarine to be configured for a post-Cold War defense landscape, General Dynamics' Virginia-class submarine continues to meet the needs of the US Navy.
In an effort to boost its commercial networking business, General Dynamics in mid-2012 acquired IPWireless (renamed General Dynamics Broadband), a manufacturer of broadband wireless infrastructure and network access equipment for customers that range from wireless operators to public safety organizations. The purchase helps General Dynamics specifically serve municipalities who are moving broadband public safety networks. All in all General Dynamics acquired seven companies in 2012 for an aggregate total of $444 million.