© Reuters. FILE PHOTO: Saudi men are seen at General Dynamics stand displaying the latest defence system at World Defense Show in Riyadh, Saudi Arabia, March 6, 2022. REUTERS/Ahmed Yosri/File Photo
By Pratyush Thakur and Mike Stone
(Reuters) -U.S. defense contractor General Dynamics (NYSE:) beat Wall Street estimates on Wednesday, as demand for artillery and armored vehicles helped overcome higher operating expenses.
Shares of the Reston, Virginia-based company were up as high as 3% before trading opened in New York.
Late last year the Pentagon began to award contracts to backfill weapons sent to Ukraine as it fought to repel Russia’s invasion.
Revenue for 155 millimeter artillery replacements, for example, which has been essential to Ukraine’s ground strategy has begun to boost General Dynamics earnings. Other weapons systems like combat vehicles such as Stryker (NYSE:) as well as Abrams tanks have all been have sent to Ukraine and are slated to be backfilled.
The company’s book-to-bill ratio, a comparison of orders received to units shipped and billed, was 1.4 to 1.
Amid easing supply chains but a tight labor market, General Dynamics, in its effort to avert a strike, reached a tentative agreement with United Auto Workers (UAW) members over a new labor contract.
UAW members at the company make highly profitable military vehicles, including tanks and light armored vehicles, according to the union.
However, sales at the aerospace unit, which makes Gulfstream business jets, slumped 13.4% as supply chain challenges made it harder to deliver planes.
Gulfstream made good on last quarter’s promise to deliver 27 jets in the quarter, but it was much lower than the 35 jets during the same period a year ago. So far this year 72 of the business jets have been delivered with a target of 139-140 by year end.
A near certification of G700 business jets will be essential for the company to make its deliveries. “This could still be possible given 40 G700s are built and awaiting certification and guidance [from management] of 19 G700s,” to be built in the fourth quarter, Sheila Kahyaoglu an analyst at Jefferies wrote in a note on Wednesday.
The company’s third-quarter profit was $3.04 per share, ahead of analyst estimates of $2.91 per share. Quarterly revenue rose 6% to $10.57 billion, beating estimates of $10.05 billion, according to LSEG data.
General Dynamics joined peer defense contractors Lockheed Martin (NYSE:) and RTX to report better-than-expected quarterly results.
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