The company's IT hardware and product unit seems to assume that some fragility is now normal.
Across all of General Dynamics' businesses, the IT hardware and product unit has felt the pressure of the world's supply chain disruptions more than any other and especially regarding electronic components like computer chips.
So it makes sense that GD's third quarter earnings call with investors Wednesday also presented another checkpoint for analysts to ask where the current situation is today and what the company is doing about it.
GD Chief Financial Officer Jason Aiken, who also leads the Technologies segment as executive vice president, started with the positive by saying he feels "very good about what" the Mission Systems hardware team has done to work through the problems.
Then came the candor and level-setting:
"The supply chain, to be completely candid with you, remains, and I think we expect to remain, what I call fragile. I don't think that's going to get back to what we saw pre-pandemic for the foreseeable future," Aiken told analysts. "But the fact is the Mission Systems has fully incorporated that new reality into their outlook, and so I expect their future to be a lot more stable and predictable as they've incorporated the new normal, if you will, in supply chain on the electronics side for them."
Aiken said the second half of last year started with a large backup on the supply chain side at Mission Systems in the third quarter, which then flowed through in the fourth quarter. Much of Mission Systems' book of business is generated through product shipments.
The end of this year should present a "more regular order and a more regular drumbeat" for Mission Systems, Aiken said.
Technologies revenue of $3.3 billion in the third quarter was 7.9% higher than the prior year period, while operating earnings of $315 million were up 10.5% year-over-year.
GD continues to see full-year Technologies sales of $12.7 billion in its outlook.
Mission Systems is one of two business units within GD's Technologies segment alongside the IT services division.
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