General Dynamics' CEO paints a more optimistic supply chain picture
Former Raytheon CEO Thomas Kennedy interviews General Dynamics CEO Phebe Novakovic during the Boston College Chief Executives Club luncheon in June 2019. Photo by Pat Greenhouse / The Boston Globe via Getty Images
By
Ross Wilkers
"That is behind us now," Phebe Novakovic told an investor conference. Which means the conversation now turns to strategy and investment priorities.
General Dynamics' Mission Systems unit appears to now be at the point where that team can focus on its programs and less on mitigating disruptions.
During a TD Cowen-hosted investor conference on Tuesday, GD's chief executive Phebe Novakovic drew a contrast between what the Mission Systems unit was facing and how things are today.
"They got hit pretty hard by supply chain shortages, particularly in chips, but not exclusively in chips. That is behind us now," Novakovic told attendees.
Like most other companies, GD has previously spoken of being more conservative with its assumptions regarding the health of supply chains.
Disruptions to them are still a factor everyone has to live with, but Mission Systems looks to have worked through the backup during the second half of 2023.
Which suggests that more of the conversation, at least for an investor audience, can turn to the business strategy.
Novakovic described some of Mission Systems' research-and-development priorities for today as including what she called "high-end crypto space," as well as undersea guided munitions.
Mission Systems' revenue profile also is not exclusive to direct customer-facing programs.
"They are a heavy merchant supplier to a lot of the primes, and that's a good place to be, particularly as you see growth in platform businesses," Novakovic said at TD Cowen's 45th Annual Aerospace and Defense Conference.
Mission Systems and GDIT comprise General Dynamics Technologies segment.
The company released its fourth quarter and full-year 2023 financial results on Jan. 24. But there were no analyst questions about Technologies during the conference call. Here are their results presented below.
Fourth quarter Technologies revenue of $3.1 billion was down 3.1% from the prior year period, while operating earnings of $305 million represented a year-over-year decrease of 10.3%.
Full-year Technologies sales of $12.9 billion were up 3.4% from those of 2023 and operating earnings of $1.2 billion showed a 2% decrease on the bottom line.
GD's initial financial guidance for 2024 has the segment's revenue climbing about 1% to $13 billion.
Technologies ended 2023 on a total backlog of $8.9 billion, of which $3.8 billion is funded.
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