General Dynamics today reported 2014 second-quarter earnings from continuing operations of $646 million, or $1.88 per share on a diluted basis, compared to second-quarter earnings from continuing operations in 2013 of $640 million, or $1.81 per diluted share. Second-quarter 2014 revenues were $7.5 billion.
There is a charge in the quarter of $105 million in discontinued operations for the sale of a business within Combat Systems, which results in net earnings for the second quarter of $541 million, or $1.58 fully diluted earnings per share.
Company-wide operating margins for the second quarter of 2014 were 12.7 percent, a 40 basis-point improvement when compared to 12.3 percent in second-quarter 2013.
Net cash provided by operating activities in the quarter totaled $866 million. Free cash flow from operations, defined as net cash provided by operating activities less capital expenditures, was $791 million in second-quarter 2014, or 122 percent of earnings from continuing operations.
The company repurchased 10.7 million outstanding shares in the second quarter, for $1.2 billion. Year-to-date, the company has repurchased 25 million outstanding shares, for $2.7 billion.
Toal backlog at the end of second-quarter 2014 was $71.1 billion. Estimated potential contract value, representing management's estimate of value in unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options, was $28.4 billion. At the end of the quarter, total potential contract value, the sum of all backlog components, was $99.5 billion.
Orders in the Aerospace group were strong in the quarter, including healthy activity across the group's portfolio. Additional significant awards received include a $17.8 billion multi-year contract from the U.S. Navy for the construction of 10 additional Virginia-class submarines, $645 million for support on the Canadian Maritime Helicopter Project, $425 million from the Centers for Medicare & Medicaid Services for contact-center services, $290 million from the U.S. Army for the production of 93 Stryker double-V-hulled vehicles and contractor logistics support, and $125 million for the construction of an additional product carrier from an affiliate of American Petroleum Tankers.
"General Dynamics' strong second quarter performance reflects our continued focus on program execution and operational improvements," said Phebe N. Novakovic, chairman and chief executive officer. "We have a solid building block for the future with an increased defense backlog and robust order activity across the portfolio of Gulfstream business jets."