GD 10-K & 10-Q changes, risk factors and insider trading
General Dynamics Corp. · NYSE · Ship & Boat Building & Repairing · CIK 40533 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
Full comparison: every changed paragraph (1)
Government contractors operate in a highly regulated environment and are subject to audit by the U.S. government. Numerous U.S. government agencies routinely audit and review government contractors. These agencies review a contractor’s performance under its contracts and compliance with applicable laws, regulations and standards. The U.S. government also reviews the adequacy of, and compliance with, internal control systems and policies, including the contractor’s purchasing, property, estimating, material, earned value management and accounting systems. In some cases, audits may result in delayed payments or contractor costs not being reimbursed or subject to repayment. If an audit or investigation were to result in allegations against a contractor of improper or illegal activities, civil or criminal penalties and administrative sanctions could result, including termination of contracts, forfeiture of profits, suspension of payments, fines and suspension or prohibition from doing business with the U.S. government. In addition, reputational harm could result if allegations of impropriety were made. In some cases, audits may result in disputes with the respective government agency that can result in negotiated settlements, arbitration or litigation. Moreover, new laws, regulationsregulations, executive orders or standards, or changes to existing ones, can increase our legal, reputation or operational risk, performance and compliance costs and reduce our revenue and earnings.
Management's Discussion & Analysis (MD&A)
Largest changes
“The coronavirus (COVID-19) pandemic caused significant disruptions to national and global economies and government activities, including supply chain and staffing challenges. Additionally, in response to the Russian invasion of Ukraine, the United States and several other countries imposed economic and trade sanctions, export controls and other restrictions targeting Russia and Belarus. Lastly, the impact of the conflict in the Middle East continues to evolve. The disruptions caused by these events continue to impact global economies and businesses, including ours. …”see in full comparison
“In our Aerospace segment, supply chain challenges paced our ability to ramp up production at the rate we like in response to strong customer demand for our aircraft, causing out-of-sequence manufacturing that increased costs and decreased operational efficiency. In addition, the conflict in the Middle East impacted the delivery schedule for our Israel-based supplier of mid-cabin aircraft. Within our defense segments, the COVID-19 pandemic resulted in supply chain challenges that continue to impact our Marine Systems segment. …”see in full comparison
“Our Aerospace business has been impacted by inflationary pressures and the administration’s implementation of tariffs. To date, the tariffs have not had a material impact on our results but did reduce the Aerospace operating margins by 30 basis points in 2025. The duration and extent of the tariffs continue to evolve. The ongoing sanctions on Russia have also restricted access to a segment of the market.”see in full comparison
“In the federal market, defense spending has been at elevated levels, and the administration has publicly stated support for further increases in fiscal year (FY) 2027. This is reflected in the significant demand in U.S. Navy shipbuilding, particularly submarines. We have invested in our facilities and workforce to increase production capacity to meet this demand, and expect to continue to do so. The increased demand has placed great pressure on the shipbuilding supply chain, which was already impacted by significant demographic issues coming out of the global pandemic. …”see in full comparison
“In our principal commercial market, Aerospace is experiencing strong demand for business jets. Our ability to produce new aircraft is dependent on our supply chain, and while performance has improved and the overall supply chain has stabilized, we have experienced some challenges in terms of delay including at our Israel-based supplier of mid-cabin airframes caused by the conflict with Hamas.”see in full comparison
“Aircraft manufacturing revenue increased due to additional aircraft deliveries. Ship construction revenue was up due primarily to higher volume on the Columbia-class and Virginia-class submarine programs. Weapons systems and munitions revenue increased due to heightened demand for artillery products. …”see in full comparison
Full comparison: every changed paragraph (90)
As a global aerospace and defense company, we compete in domestic and international markets, serving both government and commercial customers. Our financial performance is significantly influenced by U.S. government spending levels, administration priorities and the overall economy.
In the federal market, defense spending has been at elevated levels, and the administration has publicly stated support for further increases in fiscal year (FY) 2027. This is reflected in the significant demand in U.S. Navy shipbuilding, particularly submarines. We have invested in our facilities and workforce to increase production capacity to meet this demand, and expect to continue to do so. The increased demand has placed great pressure on the shipbuilding supply chain, which was already impacted by significant demographic issues coming out of the global pandemic. Together with the Navy customer, we have been working to stabilize and grow the supply chain to meet this heightened demand.
We have also been investing in the development of the next generation of combat vehicles and artillery. While the U.S. Army is reviewing its funding priorities and begins transitioning to next-generation combat vehicles, we expect short-term production volumes to be down slightly. Demand for our munitions products has been high and is expected to remain at an elevated level given ongoing conflicts and regional threats.
The administration began taking steps in 2025 to address federal spending and reduce the size of the government. These actions resulted in federal government staff reductions, contract modifications and terminations, and award delays. We experienced some impact from these actions which were largely limited to our IT services business. Our IT services business was also somewhat impacted by the government shutdown at the start of the current fiscal year. We expect some limited ongoing impact from these actions.
We entered 2026 with the government operating under a continuing resolution that expires on January 30. Our outlook for the year assumes that the FY26 budget is approved without significant delay or another prolonged shutdown.
Internationally, as a result of ongoing regional conflicts and the overall threat environment, we have seen increased demand, particularly in Europe, for our Combat Systems military products and services. This provides opportunities for our European businesses present in local markets as well as exports from our North American businesses. To meet this expected demand, there will be increased pressure on the supply chain and our hiring of skilled workers.
In our principal commercial market, Aerospace is experiencing strong demand for business jets. Our ability to produce new aircraft is dependent on our supply chain, and while performance has improved and the overall supply chain has stabilized, we have experienced some challenges in terms of delay including at our Israel-based supplier of mid-cabin airframes caused by the conflict with Hamas.
Our Aerospace business has been impacted by inflationary pressures and the administration’s implementation of tariffs. To date, the tariffs have not had a material impact on our results but did reduce the Aerospace operating margins by 30 basis points in 2025. The duration and extent of the tariffs continue to evolve. The ongoing sanctions on Russia have also restricted access to a segment of the market.
Overall, we believe our investments in a new family of Gulfstream aircraft will continue to fuel demand. The most recent addition is the G800, which entered service in 2025. In addition, we expect the growing installed base of aircraft will continue to lead to increased demand for global aircraft services.
GLOBAL EVENTS
The coronavirus (COVID-19) pandemic caused significant disruptions to national and global economies and government activities, including supply chain and staffing challenges. Additionally, in response to the Russian invasion of Ukraine, the United States and several other countries imposed economic and trade sanctions, export controls and other restrictions targeting Russia and Belarus. Lastly, the impact of the conflict in the Middle East continues to evolve. The disruptions caused by these events continue to impact global economies and businesses, including ours. The primary impact to our business is supply chain challenges, including availability of parts, quality escapes and inflationary pressures.
In our Aerospace segment, supply chain challenges paced our ability to ramp up production at the rate we like in response to strong customer demand for our aircraft, causing out-of-sequence manufacturing that increased costs and decreased operational efficiency. In addition, the conflict in the Middle East impacted the delivery schedule for our Israel-based supplier of mid-cabin aircraft. Within our defense segments, the COVID-19 pandemic resulted in supply chain challenges that continue to impact our Marine Systems segment. The Russia-Ukraine conflict and increased threat environment have created additional demand for certain of our products and services, particularly in our Combat Systems segment.
Any longer-term impact of these global events to our business is currently unknown due to the uncertainty around duration and their broader impact. For additional information, see the Risk Factors in Part I, Item 1A.
OUR MARKETS
With approximately 70% of our revenue from the U.S. government, government spending levels — particularly defense spending — influence our financial performance. The Congress has not yet passed a defense appropriations bill for the government’s current fiscal year. However, the government has been operating under a continuing resolution (CR) that provides funding for some federal agencies through March 14, 2025. When the government operates under a CR, all programs of record are funded at the prior year’s appropriated levels until the current year appropriations bill is signed into law. Therefore, the U.S. Department of Defense (DoD) is prohibited from starting new programs or increasing funding on existing programs unless there is an exception for the program included in the CR. The current CR included exceptions allowing the DoD to obligate additional funds for two fiscal year 2024 and one fiscal year 2025 Virginia-class submarines, and for non-executive pay improvements and infrastructure investments to support the submarine industrial base. In addition, the CR included an exception allowing the DoD to obligate funds for the construction of the second submarine under the existing Columbia-class submarine contract. We do not anticipate the current CR having a material impact on our results of operations, financial condition or cash flows. However, the impact to our business from an extended CR or government shutdown that may result from any continuing delay by Congress to pass a new defense appropriations bill would depend on the duration and government implementation of the CR or shutdown.
The long-term outlook for our U.S. defense business is influenced by the U.S. military’s funding priorities, the diversity of our programs and customers, our insight into customer requirements stemming from our incumbency on core programs, our ability to evolve our products to address a fast-changing threat environment and our proven track record of successful contract execution.
International demand for military equipment and technologies presents opportunities for our non-U.S. operations and exports from our North American businesses. While the revenue potential can be significant, there are risks to doing business in foreign countries, including changing budget priorities and overall spending pressures unique to each country.
In our Aerospace segment, we expect our investment in the development of new aircraft products and technologies to support the segment’s long-term growth. Similarly, we believe our aircraft services business will be a source of steady revenue growth as the global business jet fleet continues to grow.
In the defense segments, revenue on long-term government contracts is recognized generally over time as the work progresses, either as products are produced or as services are rendered. Typically, revenue is recognized over time using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying our performance obligations. Incurred costs represent work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Contract costs include labor, material, overhead and, when appropriate, G&A expenses. Variances in costs recognized from period to period reflect primarily increases and decreases in production or activity levels on individual contracts. Because costs are used as a measure of progress, year-over-year variances in costs result in corresponding variances in revenue, which we generally refer to as volume.
Variances in costs recognized from period to period reflect primarily increases and decreases in production or activity levels on individual contracts. Because costs are used as a measure of progress, year-over-year variances in costs result in corresponding variances in revenue, which we generally refer to as volume.
•Backlog of $90.6$118 billion, supportingan increase of 30% from 2024, supports our long-term growth expectations:
◦Strong Gulfstream aircraft order activity, including orders across all aircraft models ◦Several significant contract awards received in our defense segments, including $3.7$20.1 billion of combined awards from the U.S. Navy for advance procurement and other work for the Virginia-class and Columbia-class submarine programprograms and $9.2 billion of combined awards for wheeled and tracked vehicles for international customers
Our consolidated revenue increased in 20242025 driven by growth across all segments, including double digitdouble-digit percentage growth in our Aerospace and Marine Systems segments. Operating margin increased 10 basis points.
Aircraft manufacturing revenue increased in 20242025 due primarilyto toadditional G700 deliveries. Initial deliveries of the numbernew andG800 mixlargely ofoffset aircraftthe deliveries,decrease includingin ourG650 ultra-long-range,revenue ultra-large-cabinwith G700its aircraft, which beganfinal deliveries in the second quarter of 2024 following U.S. Federal Aviation Administration (FAA) and European Union Aviation Safety Agency (EASA) certification. The number of G700 deliveries in 2024 was impacted by supplier quality escapes, late delivery of components and out of station work.2025. Aircraft services revenue was higher in 20242025 due to increased customer demand for aircraft maintenance based on established maintenance cycles, a larger installed base and customer flight activity.
Aircraft manufacturing operating earnings increased in 20242025 butdue notprimarily atto the sameincrease ratein as revenue, reflecting additional costs associated with the initial deliveries of G700ultra-large-cabin aircraft due to out of station work caused by supplier quality escapes and late delivery of components. Aircraft services operating earnings were higher in 2024 due to higher volume.deliveries. G&A/other expenses increaseddecreased in 20242025 consistentdue withprimarily to reduced R&D expenditures after completion of the growthG800 incertification the business.process. In total, the Aerospace segment’s operating margin decreasedincreased 7030 basis points in 2024.2025.
Revenue from U.S. Navy ship construction and engineering was up in 20242025 due primarily to increased volume on theVirginia-class and Columbia-class and Virginia-class submarine programs.construction. The Marine Systems segment’s operating margin decreasedincreased 50 basis points in 2025 as 2024 dueincluded to a $123the unfavorable profit adjustment in the fourth quarterimpact of 2024 on the Virginia-class Block IV contract as it approaches completion in 2026. The Virginia-class program has been impacted by supplier quality issues and late supply chain deliveries causing cost growth and schedule delays.growth.
We expect the Marine Systems segment’s 20252026 revenue to increase to approximately $15$17.3-$17.7 billion with operating margin of approximatelyaround 6.8%.7.3%.
WeaponsWeapon systems and munitions revenue increased in 20242025 due to heightenedincreased demandpropellant forproduction artilleryand products.higher volume on missile subsystems programs. Revenue from international military vehicles was up in 2025 due to higher volume on several wheeled and tracked vehicle programs in Europe. Revenue from U.S. military vehicles was updecreased in 20242025 due primarily to the termination of the M10 Booker program and lower volume on Stryker programs, partially offset by higher volume on the U.S. Army’s M10 Booker combat vehicleXM30 program. The Combat Systems segment’s operating margin increased 3020 basis points compared with 20232024 driven by favorable contractprogram mix.
We expect the Combat Systems segment’s 20252026 revenue to increase to approximately $9.1$9.6-$9.7 billion with operating margin of approximately 14.5%.14.1%.
*Command, control, communications, computers, cyber, intelligence, surveillance and reconnaissance The Technologies segment’s revenue increased in 20242025 due primarily to strong demand for IT services, including the ramp-up of new programs, offset partially by C5ISR solutions program timing and the ramp-down of legacy programs.services. Overall, the segment’s margin increaseddecreased 3010 basis points compared with 2023 due to strong operating performance.2024.
Corporate operating costs totaled $175 in 2025 and $139 in 2024 and $160 in 2023 and consisted primarily of equity-based compensation expense.expense and other miscellaneous expenses. Corporate operating costs are expected to be approximately $150$160 in 2025.2026.
Aircraft manufacturing revenue increased due to additional aircraft deliveries. Ship construction revenue was up due primarily to higher volume on the Columbia-class and Virginia-class submarine programs. Weapons systems and munitions revenue increased due to heightened demand for artillery products. In 2024, product operating costs increased at a higher rate than revenue due to supplier quality issues and late supply chain deliveries on the Virginia-class Block IV contract within our Marine Systems segment and additional costs associated with initial deliveries of G700 aircraft due to out of station work caused by supplier quality escapes and late delivery of components in our Aerospace segment.
The increase in service revenue in 2024 consisted of the following:
Ship construction revenue was up due primarily to higher volume on submarine programs. Aircraft servicesmanufacturing revenue increased due to additional maintenanceaircraft work.deliveries. C5ISRWeapon solutionssystems and IT services revenue was up due to higher volume, including the ramp-up of new programs. Ship servicesmunitions revenue increased due to increased propellant production and higher volume on themissile Columbia-classsubsystems submarineprograms. program.International military vehicles was up due primarily to demand for wheeled and tracked combat vehicle programs. The primary drivers of the increase in serviceproduct operating costs were the changes in volume on the programs described above.
The increase in service revenue in 2025 consisted of the following:
The increase in service revenue is due to demand for IT services and aircraft maintenance work. The primary drivers of the increase in service operating costs were the changes in volume on the programs described above.
Net interest expense was $314 in 2025 and $324 in 2024 and $343 in 2023.2024. See Note K to the Consolidated Financial Statements in Item 8 for additional information regarding our debt obligations, including interest rates. We expect 20252026 net interest expense to be consistentapproximately with$340, 2024.which assumes that we refinance the notes maturing in 2026 at higher interest rates.
Our effective tax rate was 17.5% in 2025 and 16.7% in 2024 and 16.8% in 2023.2024. For further discussion, including a reconciliation of our effective tax rate from the statutory federal rate, see Note D to the Consolidated Financial Statements in Item 8. For 2025,2026, we expect a full-year effective tax rate of approximately 17.5%, generally consistent with our original expectations for 2024 before declining due to certain U.S. and foreign tax credits and benefits and other timing items.17.5%.
Demand for Gulfstream aircraft remains strong across customer types and geographic regions, generating orders from public and privately held companies, individuals, and governments around the world. Geographically, U.S. customers represented 54%68% of the segment’sGulfstream’s orders in 20242025 and 56%61% of the segment’sGulfstream’s backlog on December 31, 2024,2025, demonstrating continued strong domestic demand.
The Marine Systems segment’s backlog consists of very long-term submarine and surface ship construction programs, as well as numerous engineering and repair contracts. The segment’s total estimated contract value remainedwas steady$64.2 billion on December 31, 2025, up 30% compared with $49.4 billion at year-end 2023.2024. The increase was due primarily to $20.1 billion of combined submarine awards, a contract award for the construction of John Lewis-class (T-AO-205) fleet replenishment oilers and a contract award for the construction of an Arleigh Burke-class (DDG-51) guided-missile destroyer.
Significant contract awards in the Marine Systems segment during 2024 include:
•$780 from the U.S. Navy for the construction of an additional John Lewis-class (T-AO-205) fleet replenishment oiler. The contract including options for an additional seven T-AO-205 oilers has a maximum potential value of more than $6.7 billion.
•$2.9 billion from the Navy for long-lead materials for Block V and Block VI Virginia-class submarines.
•$205 from the Navy for planning yard services for the Arleigh Burke-class (DDG-51) guided-missile destroyer program. The contract including options has a maximum potential value of $1.1 billion.
•$770 from the Navy for lead yard services, development studies, design and engineering efforts, procurement and delivery of initial spare parts to support maintenance availabilities for Virginia-class submarines.
•$530 from the Navy to provide maintenance, modernization and repair services for the DDG-51 destroyer, USS Hartford Los Angeles-class submarine and Wasp-class amphibious assault ship programs.
•$455 from the Navy to provide engineering, technical, design and planning yard support services for operational strategic and attack submarines.
•$255 for future technology development on the next-generation attack submarine, SSN(X), program for the Navy.
•$115 for advanced nuclear plant studies (ANPS) in support of the Columbia-class submarine program.
•$55 from the Navy to support non-nuclear maintenance on submarines based at the New England Naval Submarine Support Facility.
The Combat Systems segment’s backlog consists of a mix of U.S. and international combat vehicles, weaponsweapon systems and munitions programs. The vehicle programs are generally long-term franchise programs, while the weaponsweapon systems and munitions programs tend to be shorter-term in nature. The segment’s backlog was $27.2 billion on December 31, 2025, up 16.8%60.3% from $17 billion at year-end 2023 to $17 billion.2024. The segment’s estimated potential contract value was $8.6$14.7 billion on December 31, 2024,2025, up 69.7% compared with $6.2$8.6 billion at year-end 2023.2024. The increase in the Combat Systems segment’s backlog and estimated potential contract value was driven primarily by $9.2 billion of combined awards for wheeled and tracked vehicles for international customers, $3.3 billion for various munitions and ordnance, and $1 billion for next-generation Abrams main battle tanks.
Significant contract awards in the Combat Systems segment during 2024 include:
•$2 billion for various munitions and ordnance. These contracts have a maximum potential value of $3.2 billion.
•An IDIQ contract to provide medium-caliber ammunition cartridges for the U.S. Army. The contract has a maximum potential value of $3 billion among two awardees.
•$1.6 billion from the Army to produce 155mm artillery projectile metal parts and propelling bag charges and establish additional capacity for artillery propellant. The contracts have a maximum potential value of $2.5 billion.
•$1.3 billion for the production of Pandur 6x6 wheeled combat vehicles from the Austrian Federal Ministry of Defense. The contract including options has a maximum potential value of $2 billion.
•Two contracts from the Canadian government for the Logistics Vehicle Modernization (LVM) program to provide a new fleet of light and heavy armored vehicles and logistics support services for the Canadian Army. These contracts including options have a maximum potential value of $1.9 billion. The scope of the work is shared with an industry partner.
•$605 from the Army for Stryker vehicle upgrades, systems technical support and inventory management. The contracts have a maximum potential value of $1.1 billion.
•$350 from the Army for Abrams main battle tank upgrades, engineering and logistics support services, and system and sustainment technical support services.
•$325 from the Army for the third phase of the low-rate initial production (LRIP) of the M10 Booker Combat Vehicle.
What changed in the latest 10-Q
Risk Factors
There have been no material changes with respect to this item from the disclosure included in our Annual Report on Form 10-K for the year ended December 31, 2025.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
Largest changes
Our Aerospace business has been impacted by inflationary pressures and ongoing tariffs.see in full comparisonOnIn February20,2026, the U.S. Supreme Court held that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) werenot authorized. Following the ruling, Customsunauthorized, andBorder Protection (CBP) has establisheda phased process was developed to refundpreviously-paidtheIEEPApreviously paid tariffs. To date, we have received refunds of some of these tariffs. However, the timing ofthecollection ofpreviouslyremainingpaidtariffIEEPA tariffsrefunds is uncertain.TheseOverall,developmentstariffswereas applied in their current form and tariffs yet to be refunded are not material to our results of operations.Non-IEEPA tariffs continue to impact the business, but do not present a significant burden in their current form.
“Ship services revenue was up in the second quarter and first six months of 2026 due to higher volume of engineering and repair work. The increase in C5ISR solutions and IT services revenue was driven by higher volume across the Technologies segment. Aircraft services revenue was up in the second quarter and first six months of 2026 due primarily to FBO activity and additional customer demand for aircraft maintenance. Military vehicle services revenue was down in the second quarter and first six months of 2026 due primarily to lower vehicle support volume. …”see in full comparison
“Total backlog in our defense segments was $112.5 billion on July 5, 2026. The defense segments achieved a book-to-bill ratio of 1.4-to-1 in the second quarter of 2026 and 1.8-to-1 in the first six months. The increase in backlog was primarily driven by awards in the Marine Systems segment for continued construction of Virginia-class submarines and to produce armored combat support vehicles in the Combat Systems segment. Estimated potential contract value in our defense segments was $49.2 billion on July 5, 2026.”see in full comparison
“Total backlog in our defense segments was $108.6 billion on April 5, 2026. The increase was driven by a $15.4 billion award within the Marine Systems segment for continued design and support work on the Columbia-class submarines program. In the first quarter of 2026, the defense segments achieved a book-to-bill ratio of 2.2-to-1. Estimated potential contract value in our defense segments was $56.6 billion on April 5, 2026.”see in full comparison
“Increased C5ISR solutions and IT services volume drove the higher service revenue in the first quarter of 2026. Ship services revenue was up in the first quarter of 2026 due to higher volume of engineering and repair work. The primary drivers of the increase in service operating costs were the changes in volume on the programs described above.”see in full comparison
“We entered 2026 with the government operating under a continuing resolution (CR). Full-year appropriations were enacted in early February for all federal departments except for the Department of Homeland Security, which remains partially shutdown. This shutdown has not had a material impact on our business.”see in full comparison
Full comparison: every changed paragraph (49)
As a global aerospace and defense company, we compete in domestic and international markets, serving both government and commercial customers. Our financial performance is significantly influenced by U.S. government spending levels, administration priorities and the overall economy. In the federal market, defense spending has been at increased levels, and the administration has publicly stated support for further increases.
We entered 2026 with the government operating under a continuing resolution (CR). Full-year appropriations were enacted in early February for all federal departments except for the Department of Homeland Security, which remains partially shutdown. This shutdown has not had a material impact on our business.
In the federal market, defense spending has been at increased levels, and the administration has publicly stated support for further increases. ThisThere is reflected in the significant demand in U.S. Navy shipbuilding, particularly submarines. We have invested significantly in our facilities and workforce to increase production capacity to meet this demand, and expect to continue to do so. The increased demand has placed great pressure on the shipbuilding industrial base, which was already impacted by significant demographic issues coming out of the global pandemic. Together with the Navy customer, we have been working to stabilize and grow the supply chain to meet this heightened demand.
We have also been investing in the development of the next generation of combat vehicles and artillery. While the U.S. Army is reviewing its funding priorities and begins transitioning to next-generation combat vehicles, we expect short-term combat vehicle production volumes to be down slightly. Demand for our munitions products has been high and is expected to remain at an elevated level given ongoing conflicts and regionalthe threats.administration's support for further increases.
In our principal commercial market, our Aerospace group is experiencing strong demand for business jets. We believe our investments in a new family of Gulfstream aircraft will continue to fuel demand. The most recent addition is the G800, which entered into service last year. In addition, we expect the growing installed base of aircraft will continue to lead to increased demand for global aircraft services. The ongoing sanctions on Russia have restricted access to a segment of the market.
Our Aerospace business has been impacted by inflationary pressures and ongoing tariffs. OnIn February 20, 2026, the U.S. Supreme Court held that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were not authorized. Following the ruling, Customsunauthorized, and Border Protection (CBP) has established a phased process was developed to refund previously-paidthe IEEPApreviously paid tariffs. To date, we have received refunds of some of these tariffs. However, the timing of the collection of previouslyremaining paidtariff IEEPA tariffsrefunds is uncertain. TheseOverall, developmentstariffs wereas applied in their current form and tariffs yet to be refunded are not material to our results of operations. Non-IEEPA tariffs continue to impact the business, but do not present a significant burden in their current form.
Our consolidated revenue increased in the second quarter and first quartersix months of 2026 driven by growth across all four operating segments, including over 20% growthprimarily in our Aerospace and Marine Systems segment driven by increased material volume.segments. Operating margin increased 1040 basis points in the second quarter and 20 basis points in the first quartersix months of 2026.2026 due to improved operating performance in our Aerospace and Marine Systems segments.
2026 Outlook
We expect our full-year diluted earnings per share (EPS) to be between $16.45 and $16.55.
The increase in the Aerospace segment’s revenue in the second quarter and first quartersix months of 2026 consisted of the following:
Aircraft manufacturing revenue increased in the second quarter and first quartersix months of 2026 due primarily to additionalthe number and mix of aircraft deliveries. Aircraft services revenue was up in the second quarter and first quartersix months of 2026 due primarily to higher fixed-base operator (FBO) activity and increased customer demand for aircraft maintenance, a larger installed base and customer flight activity.maintenance.
The increase in the segment’s operating earnings in the second quarter and first quartersix months of 2026 consisted of the following:
Aircraft manufacturing operating earnings increased in the second quarter and first quartersix months of 2026 due primarily to increased deliveries and improvedaircraft performance.mix. Aircraft services operating earnings increased in the second quarter and first quartersix months of 2026 due to higher volume and a favorable serviceservices mix. In total, the Aerospace segment’s operating margin increased 70130 basis points in the second quarter and 100 basis points in the first quartersix months of 2026 compared with the prior-year periodperiods resultingdue fromto theimproved sameoperating factors.performance.
We expect the Aerospace segment’s 2026 revenue to be approximately $13.8 billion with operating margin of approximately 14.7%.
The increase in the Marine Systems segment’s revenue in the second quarter and first quartersix months of 2026 consisted of the following:
Revenue from U.S. Navy ship construction was up in the second quarter and first quartersix months of 2026 due primarily to increased material and labor volume on Columbia-class and Virginia-class submarine construction and higher throughput on the John Lewis-class (T-AO-205) fleet replenishment oiler at our NASSCO shipyard.oiler. The Marine Systems segment’s operating margin increased 3040 basis points in the second quarter and first quartersix months of 2026 on improved performance.performance at each of our shipyards.
We expect the Marine Systems segment’s 2026 revenue to be approximately $18 billion with operating margin of approximately 7.4%.
The increase in the Combat Systems segment’s revenue in the second quarter and first quartersix months of 2026 consisted of the following:
Weapon systems and munitions revenue increased in the second quarter and first quartersix months of 2026 due primarily to increased artillery production. International military vehicles increased in the second quarter and first six months of 2026 due primarily to higher volume on several wheeled and tracked vehicle programs in Europe. Revenue from U.S. military vehicles decreased in the second quarter and first quartersix months of 2026 due to lower U.S. Army demand as part of theirits recapitalization efforts and the termination of the M10 Booker program. Overall, the Combat Systems segment’s operating margin increased 20 basis pointsdecreased in the second quarter and first quartersix months of 2026 drivendue by favorableto program mix.
We expect the Combat Systems segment’s 2026 revenue to be approximately $9.8 billion with operating margin of approximately 13.8%.
The increase in the Technologies segment’s revenue in the second quarter and first quartersix months of 2026 consisted of the following:
*Command, control, communications, computers, cyber, intelligence, surveillance and reconnaissance The Technologies segment’s revenue increased in the second quarter and first quartersix months of 2026 due primarily to higher volume across several C5ISR programs, mostparticularly notablysystems insupporting thea group'svariety spaceof portfolioland and air platforms and international markets.programs. Overall, the Technologies segment’s operating margin decreased 1020 basis points in the firstsecond quarter and first six months of 2026.2026 due to program mix.
We expect the Technologies segment’s 2026 revenue to be approximately $14.1 billion with operating margin of approximately 9.4%.
Corporate operating costs totaled $38$49 in the second quarter and $87 in the first quartersix months of 2026 compared with $33$45 in the second quarter and $78 in the first quartersix months of 2025 and consisted of equity-based compensation expense and other miscellaneous expenses. Corporate operating costs are expected to be approximately $180 in 2026.
The increase in product revenue in the second quarter and first quartersix months of 2026 consisted of the following:
Aircraft manufacturing revenue increased in the second quarter and first six months of 2026 due to additional aircraft deliveries. Ship construction revenue increased due primarily to higher volume on the Columbia-class and Virginia-class submarine programs. Aircraft manufacturing revenue increased in the first quarter of 2026 due to additional aircraft deliveries.program. Weapon systems and munitions revenue increased in the second quarter and first quartersix months of 2026 due primarily to increased artillery production. The primary drivers of the increase in product operating costs were the changes in volume on the programs described above.
The increase in service revenue in the second quarter and first quartersix months of 2026 consisted of the following:
Ship services revenue was up in the second quarter and first six months of 2026 due to higher volume of engineering and repair work. The increase in C5ISR solutions and IT services revenue was driven by higher volume across the Technologies segment. Aircraft services revenue was up in the second quarter and first six months of 2026 due primarily to FBO activity and additional customer demand for aircraft maintenance. Military vehicle services revenue was down in the second quarter and first six months of 2026 due primarily to lower vehicle support volume. The primary drivers of the increase in service operating costs were the changes in volume on the programs described above.
Increased C5ISR solutions and IT services volume drove the higher service revenue in the first quarter of 2026. Ship services revenue was up in the first quarter of 2026 due to higher volume of engineering and repair work. The primary drivers of the increase in service operating costs were the changes in volume on the programs described above.
As a percentage of revenue, G&A expenses increasedwere to 5.4%5.2% in the first threesix months of 2026 compared with 5.1%5.0% in the first threesix months of 2025. We expect G&A expenses as a percentage of revenue in 2026 to be generally consistent with 2025.
Net other income was $18$14 in the first threesix months of 2026 compared with $21$36 in the first threesix months of 2025, and represents primarily the non-service components of pension and other post-retirement benefits. In 2026, we expect net other income to be approximately $15.
Net interest expense decreased to $69$118 in the first threesix months of 2026 from $89$177 in the prior-year period, reflecting lower interest expense associated with commercial paper issuances. See Note H to the unaudited Consolidated Financial Statements in Part I, Item 1, for additional information regarding our debt obligations, including interest rates. In 2026, we expect net interest expense to be approximately $270.
Our effective tax rate was 17.8%17.7% in the first threesix months of 2026 compared with 17.2%17.4% in the prior-year period. For 2026, we anticipate a full-year effective tax rate of approximately 17.5%.
Our total backlog, including funded and unfunded portions, was $136.5 billion at the end of the second quarter of 2026 compared with $130.8 billion at the end of the first quarter of 2026 compared with $118 billion on December 31, 2025.quarter. Our total backlog is equal to our remaining performance obligations under contracts with customers as discussed in Note B to the unaudited Consolidated Financial Statements in Part I, Item 1. Our total estimated contract value, which combines total backlog with estimated potential contract value, was $188.4$186.9 billion on AprilJuly 5, 2026.
The following table details the backlog and estimated potential contract value of each segment at the end of the second and first quarterquarters of 2026 and fourth quarter of 2025:
Aerospace funded backlog represents primarily new aircraft orders for which we have definitive purchase contracts and deposits from customers. Unfunded backlog consists of agreements to provide future aircraft maintenance and support services. The Aerospace segment ended the firstsecond quarter of 2026 with backlog of $22.3$24 billion.
Orders for new Gulfstream aircraft reflected very strong demand across our portfolio of products and services. The segment achieved a book-to-bill ratio (orders divided by revenue) of 1.2-to-11.5-to-1 in the second quarter of 2026 and 1.3-to-1 in the first quartersix ofmonths, 2026.even as revenue grew more than 10% in each period.
Beyond total backlog, estimated potential contract value represents primarily options and other agreements with existing customers to purchase new aircraft and long-term aircraft services agreements. On AprilJuly 5, 2026, estimated potential contract value in the Aerospace segment was $1$1.2 billion.
Total backlog in our defense segments was $112.5 billion on July 5, 2026. The defense segments achieved a book-to-bill ratio of 1.4-to-1 in the second quarter of 2026 and 1.8-to-1 in the first six months. The increase in backlog was primarily driven by awards in the Marine Systems segment for continued construction of Virginia-class submarines and to produce armored combat support vehicles in the Combat Systems segment. Estimated potential contract value in our defense segments was $49.2 billion on July 5, 2026.
Total backlog in our defense segments was $108.6 billion on April 5, 2026. The increase was driven by a $15.4 billion award within the Marine Systems segment for continued design and support work on the Columbia-class submarines program. In the first quarter of 2026, the defense segments achieved a book-to-bill ratio of 2.2-to-1. Estimated potential contract value in our defense segments was $56.6 billion on April 5, 2026.
We ended the firstsecond quarter of 2026 with a cash and equivalents balance of $3.7$4.3 billion compared with $2.3 billion at the end of 2025. Following is a discussion of our major operating, investing and financing activities in the first threesix months of 2026 and 2025, as classified on the Consolidated Statement of Cash Flows in Part I, Item 1:
Cash provided by operating activities was $2.2$4 billion in the first threesix months of 2026 compared with cash$1.5 used by operating activities of $148billion in the same period in 2025. The primary driver of cash flows in both periods was net earnings. Cash flows in the first quartersix months of 2026 were affected positively by reductions in operating working capital led by theour Combat Systems segment. Cash flows in the first quarter of 2025 were affected negatively by growth in operating working capital, particularly driven by timing in ourand Aerospace and Combat Systems segments.
Cash used by investing activities was $202$424 in the first threesix months of 2026 compared with $130$216 in the same period in 2025. Our investing activities include cash paid for capital expenditures; business acquisitions; purchases, sales and maturities of marketable securities; and proceeds from asset sales. The primary use of cash for investing activities in both periods was capital expenditures. Capital expenditures were $203$437 in the first threesix months of 2026, up 43%29% compared with $142$340 in the same period of 2025, and are expected to remaincontinue elevatedto forincrease in the remainingsecond quartershalf of 2026.
Cash used by financing activities was $629$1.6 billion in the first threesix months of 2026 compared with $175$1.4 billion in the same period in 2025. Financing activities include the use of cash for payment of dividends, debt and commercial paper repayments and repurchases of common stock to cover dilution, payment of dividends, and debt and commercial paper repayments.dilution. Our financing activities also include proceeds received from debt and commercial paper issuances and employee stock option exercises.
On March 9, 2026, our board of directors (Board) declared a quarterly dividend of $1.59 per share, the 29th consecutive annual increase. Previously, the Board had increased the quarterly dividend to $1.50 per share in March 2025. Cash dividends paid were $405$834 in the first threesix months of 2026 compared with $383$785 in the same period in 2025.
We paid $217$319 and $600 in the first threesix months of 2026 and 2025, respectively, to repurchase our outstanding shares to cover dilution. On AprilJuly 5, 2026, 6.15.8 million shares remained authorized by our Board for repurchase, representing 2.3%2.2% of our total shares outstanding.
In June 2026, we repaid fixed-rate notes of $500 at the scheduled maturity using cash on hand. Fixed-rate notes of $500 mature in both June and August 2026. We arecurrently evaluatingplan theto refinancing ofrepay these notes andusing cash on hand but will continue to monitor market conditions as maturitieswell drawas near.the need for future borrowings. For additional information regarding our debt obligations, including scheduled debt maturities and interest rates, see Note H to the unaudited Consolidated Financial Statements in Part I, Item 1.
On AprilJuly 5, 2026, we had no commercial paper outstanding, but we maintain the ability to access the commercial paper market in the future. Separately, we have $4 billion in a committed bank credit facility for general corporate purposes and working capital needs and to support our commercial paper issuances. We also have an effective shelf registration on file with the Securities and Exchange Commission (SEC) that allows us to access the debt markets.
Accounting for long-term contracts and programs involves the use of various techniques to estimate total contract revenue and costs. Contract estimates are based on various assumptions to project the outcome of future events that often span several years. We review and update our contract-related estimates regularly. We recognize adjustments in estimated profit on contracts under the cumulative catch-up method. Under this method, the impact of the adjustment on profit recorded to date on a contract is recognized in the period the adjustment is identified. The aggregate impact of adjustments in contract estimates changed our operating earnings (and diluted earnings per share) by $54$29 ($0.16$0.08) and $83 ($0.24) for the three- and six-month periods ended July 5, 2026, and $31 ($0.09) and $62 ($0.18) for the three-monththree- and six-month periods ended AprilJune 5, 2026, and March 30,29, 2025, respectively. No adjustment on any one contract was material to the unaudited Consolidated Financial Statements for the three-monththree- and six-month periods ended AprilJuly 5, 2026, or MarchJune 30,29, 2025.
GD insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 7 filings (7 insiders, 8 trade dates, 188,688 shares, about $68.9M). Net open-market shares: -188,688 (purchases minus sales); net value about -$68.9M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-23 | Steel Robert K |
Open-market sale | 700 | $345.82 | $242.1K |
| 2026-09-23 | Steel Robert K |
Option exercise | 700 | $274.51 | $192.2K |
| 2026-09-23 | Steel Robert K |
Open-market sale | 1,780 | $346.01 | $615.9K |
| 2026-09-23 | Steel Robert K |
Option exercise | 1,780 | $227.58 | $405.1K |
| 2026-09-23 | Steel Robert K |
Open-market sale | 2,190 | $346.12 | $758.0K |
| 2026-09-23 | Steel Robert K |
Option exercise | 2,190 | $232.90 | $510.1K |
| 2026-09-23 | Steel Robert K |
Option exercise | 2,770 | $168.56 | $466.9K |
| 2026-09-23 | Steel Robert K |
Open-market sale | 2,770 | $346.08 | $958.6K |
| 2026-09-16 | Stratton John G |
Grant/award | 105 | $356.69 | $37.5K |
| 2026-09-16 | Schumacher Laura J |
Grant/award | 105 | $356.69 | $37.5K |
| 2026-09-16 | Reynolds Catherine B |
Grant/award | 105 | $356.69 | $37.5K |
| 2026-09-16 | Nye C Howard |
Grant/award | 52 | $356.69 | $18.5K |
| 2026-09-16 | Hooper Charles W |
Grant/award | 21 | $356.69 | $7.5K |
| 2026-09-16 | Haney Cecil D |
Grant/award | 10 | $356.69 | $3.6K |
| 2026-09-16 | De Leon Rudy F |
Grant/award | 52 | $356.69 | $18.5K |
| 2026-09-08 | Rayha Mark |
Shares withheld for tax | 19 | $358.07 | $6.8K |
| 2026-08-14 | Deep Danny |
Shares withheld for tax | 5,833 | $395.05 | $2.3M |
| 2026-08-14 | Deep Danny |
Shares withheld for tax | 17,070 | $395.07 | $6.7M |
| 2026-08-14 | Deep Danny |
Option exercise | 8,530 | $167.61 | $1.4M |
| 2026-08-14 | Deep Danny |
Option exercise | 25,070 | $165.47 | $4.1M |
| 2026-08-13 | Smith Robert Edward |
Shares withheld for tax | 23,930 | $390.66 | $9.3M |
| 2026-08-13 | Smith Robert Edward |
Shares withheld for tax | 6,755 | $390.99 | $2.6M |
| 2026-08-13 | Smith Robert Edward |
Option exercise | 9,430 | $189.00 | $1.8M |
| 2026-08-13 | Smith Robert Edward |
Option exercise | 35,010 | $165.47 | $5.8M |
| 2026-08-11 | De Leon Rudy F |
Gift | 128 | — | — |
| 2026-08-10 | Kuryea Kimberly A |
Option exercise | 28,300 | $223.93 | $6.3M |
| 2026-08-10 | Kuryea Kimberly A |
Shares withheld for tax | 21,557 | $395.59 | $8.5M |
| 2026-08-10 | Wall Peter A |
Option exercise | 1,990 | $223.93 | $445.6K |
| 2026-08-10 | Wall Peter A |
Open-market sale | 1,990 | $396.43 | $788.9K |
| 2026-08-07 | Gallopoulos Gregory S |
Gift | 1,500 | — | — |
| 2026-08-05 | Brady Christopher J |
Open-market sale | 6,320 | $383.32 | $2.4M |
| 2026-08-05 | Brady Christopher J |
Option exercise | 6,320 | $191.71 | $1.2M |
| 2026-08-04 | Deep Danny |
Option exercise | 5,900 | $223.93 | $1.3M |
| 2026-08-04 | Deep Danny |
Shares withheld for tax | 4,565 | $380.74 | $1.7M |
| 2026-08-04 | Deep Danny |
Option exercise | 6,090 | $191.71 | $1.2M |
| 2026-08-04 | Deep Danny |
Shares withheld for tax | 4,428 | $380.84 | $1.7M |
| 2026-08-03 | Novakovic Phebe N |
Open-market sale | 7,271 | $383.85 | $2.8M |
| 2026-08-03 | Novakovic Phebe N |
Open-market sale | 22,707 | $382.17 | $8.7M |
| 2026-08-03 | Novakovic Phebe N |
Open-market sale | 15,917 | $383.09 | $6.1M |
| 2026-08-03 | Novakovic Phebe N |
Open-market sale | 5,673 | $381.17 | $2.2M |
| 2026-07-31 | Novakovic Phebe N |
Option exercise | 166,660 | $165.47 | $27.6M |
| 2026-07-31 | Novakovic Phebe N |
Shares withheld for tax | 115,092 | $379.17 | $43.6M |
| 2026-07-31 | Gilliland Marguerite Amy |
Option exercise | 43,180 | $165.47 | $7.1M |
| 2026-07-31 | Gilliland Marguerite Amy |
Open-market sale | 26,210 | $378.42 | $9.9M |
| 2026-07-31 | Gilliland Marguerite Amy |
Open-market sale | 16,970 | $377.44 | $6.4M |
| 2026-06-17 | Malcolm Mark |
Open-market sale | 3,210 | $365.00 | $1.2M |
| 2026-06-17 | Malcolm Mark |
Open-market sale | 2,270 | $365.00 | $828.5K |
| 2026-06-17 | Malcolm Mark |
Option exercise | 2,270 | $191.71 | $435.2K |
| 2026-06-17 | Malcolm Mark |
Option exercise | 3,210 | $165.47 | $531.2K |
| 2026-06-16 | Stratton John G |
Grant/award | 104 | $359.85 | $37.4K |
| 2026-06-16 | Schumacher Laura J |
Grant/award | 104 | $359.85 | $37.4K |
| 2026-06-16 | Reynolds Catherine B |
Grant/award | 104 | $359.85 | $37.4K |
| 2026-06-16 | Nye C Howard |
Grant/award | 52 | $359.85 | $18.7K |
| 2026-06-16 | Mattis James N |
Grant/award | 58 | $359.85 | $20.9K |
| 2026-06-16 | Hooper Charles W |
Grant/award | 20 | $359.85 | $7.2K |
| 2026-06-16 | Haney Cecil D |
Grant/award | 10 | $359.85 | $3.6K |
| 2026-06-16 | De Leon Rudy F |
Grant/award | 52 | $359.85 | $18.7K |
| 2026-06-01 | Maisano Dana Omahen |
Grant/award | 480 | — | — |
| 2026-05-12 | Burns Mark Lagrand |
Option exercise | 36,480 | $168.56 | $6.1M |
| 2026-05-12 | Burns Mark Lagrand |
Open-market sale | 2,565 | $345.93 | $887.3K |
Well-known investors holding GD (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 2,095,666 | $742.4M | 0.26% | Reduced 6% |
| D. E. Shaw & Co. | 2026-06-30 | 1,242,347 | $440.1M | 0.27% | Added 36% |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 499,224 | $176.8M | 0.27% | Added 170% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 453,829 | $160.8M | 0.09% | Added 12% |
| Renaissance Technologies | 2026-06-30 | 453,720 | $160.7M | 0.22% | Added 1403% |
| Millennium Management (Israel Englander) | 2026-06-30 | 403,938 | $143.1M | 0.1% | Reduced 16% |
| Markel Group (Tom Gayner) | 2026-06-30 | 391,000 | $138.5M | 1.05% | No change |
| PRIMECAP Management | 2026-06-30 | 388,450 | $137.6M | 0.08% | No change |
| Gotham Asset Management (Joel Greenblatt) | 2026-06-30 | 196,280 | $69.5M | 0.16% | Added 40% |
| Two Sigma Investments | 2026-06-30 | 63,592 | $22.5M | 0.02% | Reduced 82% |
| Bridgewater Associates | 2026-06-30 | 16,888 | $6.0M | 0.02% | New position |
| First Eagle Investment Management | 2026-06-30 | 97 | $34.4K | 0.0% | No change |