Latest quarter
General Dynamics reported Q2 FY2026 revenue of $14.1 billion, above the $13.5 billion consensus. Adjusted earnings per share, as counted by the consensus, were $4.24, above the $3.95 estimate.
Revenue rose from $13.0 billion a year earlier, while diluted earnings per share increased from $3.74 to $4.24. CEO Phebe Novakovic said Aerospace and Marine Systems led revenue growth, although all four segments increased sales. She attributed Aerospace’s increase partly to more aircraft deliveries and higher services revenue, and said submarine programs drove Marine Systems’ growth.
General Dynamics reported an operating margin of 10.4%, compared with 10.0% a year earlier. Novakovic said Aerospace’s margin improved, while Combat Systems’ margin declined largely because of the mix of work. Free cash flow rose to $1.6 billion from $1.4 billion; CFO Kim Kuryea said each segment exceeded its planned cash flow and working capital fell from the end of 2025.
| Q2 FY2026 | Q2 FY2025 | Change | |
|---|---|---|---|
| Revenue | $14.1 billion | $13.0 billion | 8.07% |
| Diluted EPS | $4.24 | $3.74 | 13.4% |
| Gross margin | 15.5% | 14.9% | 0.5 percentage points |
| Operating margin | 10.4% | 10.0% | 0.4 percentage points |
| Free cash flow | $1.6 billion | $1.4 billion | 17.6% |
| Against the consensus | Reported | Consensus | Result |
|---|---|---|---|
| Adjusted EPS | $4.24 | $3.95 | Beat by 7.34% |
| Revenue | $14.1 billion | $13.5 billion | Beat by 4.48% |
Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.
What management said on the call
On the call, CEO Phebe Novakovic said Aerospace saw active customer interest across Gulfstream models in the U.S. and Asia, although some Middle Eastern customers were cautious. She attributed the segment’s revenue increase to additional deliveries and services work at Gulfstream and Jet Aviation. CFO Kim Kuryea said company orders were just shy of $20 billion in the quarter, with orders exceeding revenue in all four segments; backlog ended Q2 at $136.5 billion.
Novakovic said Combat Systems demand was primarily driven by U.S. allies, with orders for wheeled and tracked vehicles increasing. She also pointed to munitions growth. In response to a question about the group’s outlook, she said she expected double-digit growth at European Land Systems and Ordnance and Tactical Systems to drive high-single-digit growth for the group.
Asked about supply constraints, President Danny Deep said delivery cadence had improved across the business, but “single sources of supply for large complex components” could still set the pace. Novakovic said the company would continue investing in its shipyards to support demand. Deep said shipyard margin improvement reflected throughput, work on the shipyard floor and an improving supply chain.
On Aerospace margins, Deep said he expected the third quarter to resemble the second, followed by a higher fourth-quarter margin as aircraft production became more efficient and the mix improved. Novakovic said the company had stopped providing model-level details for future years because they had become a competitive issue; she also said, “we never discuss pricing.”
Kuryea said capital spending would increase in the second half, particularly at shipyards. She also said the company planned a pension contribution and expected cash taxes and the use of advance payments on European land programs to affect second-half cash flow.
Guidance
On the Q2 call, Novakovic raised General Dynamics’ FY2026 EPS forecast to $16.80 to $16.90 from $16.45 to $16.55. Kuryea said she now expected free-cash-flow conversion of around 105% of net income for the year; on the Q1 call, the company had expected 100% of net income.
| Metric | For | Guide | Previous guide | Change |
|---|---|---|---|---|
| Units, Gulfstream | FY2026 | 160 | — | — |
| Operating margin, Technologies | FY2026 | 9.40% | — | New |
| Revenue, Technologies | FY2026 | $14.1 billion | — | New |
| Operating margin, Marine Systems | FY2026 | 7.40% | — | New |
| Revenue, Marine Systems | FY2026 | $18.0 billion | — | New |
| Operating margin, Combat Systems | FY2026 | 13.8% | — | New |
| Revenue, Combat Systems | FY2026 | $9.8 billion | — | New |
| Operating margin, Aerospace | FY2026 | 14.7% | — | New |
| Revenue, Aerospace | FY2026 | $13.8 billion | — | New |
| Tax rate | FY2026 | 17.5% | — | New |
| Capex growth | FY2026 | 3.50%–4.00% | 3.50%–4.00% | Held |
| Free cash flow growth, Cash Conversion | FY2026 | 100.0% | — | New |
| Operating margin | FY2026 | 10.5% | — | New |
| Revenue | FY2026 | $55.7 billion | — | New |
| EPS | FY2026 | $16.80–$16.90 | $16.45–$16.55 | Raised |
| Free cash flow growth, Conversion Rate | FY2026 | 100.0% | — | New |