Dividends, sharebuys "important," CEO says
* Continued focus on cost-cutting
* CEO happy with portfolio mix (Adds details from analyst call)
By Andrea Shalal-Esa
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The maker of tanks, ships and Gulfstream jets reported net earnings of $571 million , or $1.62 per share, up from $564 million or $1.57 per share, a year earlier.
The largely upbeat report drove the company's shares nearly 5 percent higher in morning trading, with the stock trading $3.23 higher at $70.38 .
Revenues dipped to $7.4 billion from $7.58 billion .
Analysts polled by Thomson Reuters I/B/E/S had forecast earnings of $528 million , or $1.50 per share, on revenue of $7.55 billion .
Operating margins edged up to 11.4 percent from 11.3 percent a year earlier, the company said.
Chief Executive Phebe Novakovic , who has carried out a series of management changes since taking over on Jan. 1 , said the company was focused on operations, cost improvement and cash generation.
"Going after overhead is critical to margin expansion in the down environment," Novakovic told an analysts call, noting that cost-cutting efforts would also make the company's products more competitive.
"So you ... better believe that we're going to be very, very focused on taking costs out and we've done it. And we'll continue to do it," she said.
She said General Dynamics (GD) would continue to reduce its workforce as needed in the current budget environment but declined to forecast any specific areas targeted for layoffs.
Novakovic also underscored the company's commitment to dividend increases and "shareholder-friendly" share buybacks.
General Dynamics (GD
) increased its quarterly dividend payment by 10 percent to 56 cents a share in March, a trend she called "important." It repurchased 1 million shares in the first quarter and still had authorization to buy back over 9 million more shares, she said.
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Novakovic said the company also needed to strengthen its balance sheet "a touch" after charges in the fourth quarter, with no acquisitions on the near-term horizon.
Novakovic called the first-quarter results "a strong start toward achieving our objectives for the year."
She said the Gulfstream business was expected to grow significantly over the longer term, while the company's marine group would see expanded submarine sales. Margins would remain a key focus area for the information services sector, while international orders should help combat systems bridge to more robust U.S. Army spending in future years.
"In general, I like ... the offsetting cyclicality we have embedded and in all respects, we see a clear way forward," she said.
General Dynamics' (GD
) backlog at the end of the quarter was $48.5 billion , down from $55.2 billion a year earlier.
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The company said the estimated value of various unfunded contracts and options that have not been exercised was $25.2 billion . (Reporting By Andrea Shalal-Esa ; Editing by John Wallace and Andrea Ricci )
And second, regarding the dividend and share repurchases:
General Dynamics sees consistent dividends, more share buybacks
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Novakovic said General Dynamics (GD
) had increased its quarterly dividend payment by 10 percent to 56 cents a share in March, a trend she called "important."
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"With respect to dividends what you need to expect from us is consistency, predictability, and sustainability," she said, adding that General Dynamics (GD
) also planned to act "in shareholder-friendly ways with respect to shareholder repurchases."
) also planned to act "in shareholder-friendly ways with respect to shareholder repurchases."
General Dynamics (GD
) repurchased 1 million shares in the first quarter.
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Novakovic said the company also needed to strengthen its balance sheet "a touch" after charges in the fourth quarter, with no acquisitions on the near-term horizon. (Reporting ByAndrea Shalal-Esa ; Editing by Gerald E. McCormick )
The Chump portfolio remains long GD, with roughly a 2.5% position.
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