General Dynamic's Marine Systems group (24% of revenue) is a major shipbuilder for the US Navy, and it provides MRO (maintenance/repair/overhaul) services. Through Electric Boat, Marine Systems manufactures the Virginia-class nuclear-powered submarine, while Bath Iron Works builds the Arleigh Burke-class guided-missile destroyer (DDG-51). NASSCO builds auxiliary and support ships for the US Navy, as well as oil tankers and container ships for commercial customers.

On the civilian side of the business, the company's Aerospace segment (23% of revenue) produces mid- and large-cabin business jet aircraft, for which the company provides maintenance, refurbishment, and outfitting.

The Information Technology segment (23% of revenue) offers IT services (consulting, design, integration, operations and maintenance, cloud, applications development, and cyber defense). Other operations include IT infrastructure modernization (system development and engineering, data center, and cloud strategy, migration and operations); and professional services (logistics, training, and life sciences).

The Combat Systems division (17% of revenue) is composed of Armament and Technical Products; European Land Systems; Land Systems; and Ordnance and Tactical Systems.

Mission Systems division (13% of revenue) is a provider of C4ISR (command, control, communications, computers, intelligence, surveillance, and reconnaissance) products and systems. Its core offerings are space, intelligence and cyber systems; ground systems and products; and naval, air and electronic systems.

Geographic Reach

General Dynamics operates around the world, serving government and commercial customers on five continents spanning more than 45 countries. The US represents its largest market, generating around 80% of sales.

Sales and Marketing

General Dynamics' main customer is the US Department of Defense. The company conducts business with government customers around the world with operations in Australia, Austria, Brazil, Canada, China, Estonia, Germany, Indonesia, Malaysia, Mexico, the Netherlands, the Philippines, Russia, Singapore, Spain, Switzerland, Thailand, the United Arab Emirates, and the UK. About 65% of its revenues stem from the US government, and 20% come from US commercial customers.

Financial Performance

General Dynamics' revenues – apart from a slight dip in 2016 – have seen steady growth over the last five years, rising 17% between 2014 and 2018. With a strong backlog and recent contract awards, the company is well positioned for long-term growth.

Revenue increased 17% to $36.2 billion in 2018 compared to $31.0 billion the prior year. Marine Systems' revenue improved amid higher volumes under US Navy contracts. The Aerospace division saw increased demand for maintenance work, higher pre-owned aircraft sales, and the 2018 acquisition of Hawker Pacific added to revenues. The acquisition of CSRA boosted the IT segment, while Combat Systems' results experienced higher volumes for the Abrams tank and Piranha wheeled vehicle. The Mission Systems division saw stronger demand for communications and information systems from both the US and UK militaries. 

General Dynamics' net income rose 14.9% to $3.3 billion in 2018, mainly due to reduced tax liability under the US Tax Cuts and Jobs Act.

The company's cash and equivalents stood at $963 million at the end of 2018 compared to $3.0 billion the year before. Cash from operations contributed $3.1 billion, while investing activities used $10.2 billion, mainly for acquisitions and capital expenditures. Financing activities provided $5.1 billion, primarily received from debt and commercial paper issuances.

Strategy

In 2018, General Dynamics split its Information Systems and Technology (IS&T) business unit into two separate operating segments upon the completion of the company's acquisition of CSRA, a provider of IT services to the US government. CSRA's operations were combined with General Dynamics' existing IT services business to create the new Information Technology division. The Mission Systems segment was established to house the company's C4ISR offerings. These moves are expected to improve operating efficiencies across the two new segments.

The company is also making investments in the Aerospace unit. In 2018 General Dynamics bought Hawker Pacific, a provider of integrated aviation services in the Asia Pacific and Middle East regions. The deal added 19 new locations with fixed base operation (FBO); and maintenance, repair, and overhaul (MRO) facilities to the company's global footprint. Also in 2018, the company received FAA certification for its next-generation Gulfstream G500 aircraft, and achieved the first G500 customer delivery.

The company is the lead contractor for the US Navy's next-generation ballistic missile submarine, the Columbia-class. The Navy considers the Columbia-class sub a top priority, offering strategic nuclear deterrent capabilities for decades. The Columbia-class submarines are scheduled to replace the Ohio-class fleet when it reaches the end of its service life in 2027.

Mergers and Acquisitions

In April 2018 General Dynamics acquired CRSA, a provider of information technology services to the federal government, for about $9.7 billion in cash and the assumption of debt. The acquisition was made to beef up the IT offerings of General Dynamics, catapulting it to the No. 2 spot among large government IT contractors. The combined company would have close to $10 billion in revenue from government IT services. The move comes as government spending was expected to increase with a strong push from the White House and the US Congress.

Later in 2018 the company bought Hawker Pacific, a provider of integrated aviation services. The deal, which was valued at $250 million, added 19 new locations in the Asia Pacific and Middle East regions with fixed base operation (FBO); and maintenance, repair, and overhaul (MRO) facilities.