Oct 24 (Reuters) – U.S. aerospace and defense company General Dynamics Corp beat analysts’ estimates for quarterly profit on Wednesday, helped by higher demand for its IT services by U.S. government agencies.
The company closed its $9.7 billion purchase of IT services-heavy CSRA Inc in the middle of the year. This was the first full quarter for General Dynamics to report the results of that business as the U.S. government is in the midst of a broad modernization effort.
Revenue rose at all of the company’s businesses, with its information technology unit recording the biggest jump.
Revenue from the IT business more than doubled to $2.31 billion, as integration of the unit continued and the business won several contracts during the quarter. Major wins during the quarter for the unit included a $330 million contract from the U.S. Census Bureau and a $210 million contract from the Centers Medicare & Medicaid Services.
Profit margins at the IT services business slipped from 9.5 percent to 6.8 percent compared to the same period a year ago. Total operating margins for General Dynamics were 12.5 percent, down from 14 percent in the same period last year.
Revenue from the company’s aerospace division, which makes business jets, rose 1.8 percent. Total new Gulfstream deliveries, a key metric for investors, fell to 27 from 30 compared with the third quarter last year. But compared with the second quarter, deliveries rose by one jet and large-cabin Gulfstream deliveries rose to 21 from 18 in the second quarter.
Net earnings rose 11 percent to $851 million in the third quarter ended Sept. 30.
On an adjusted basis, the company earned $2.89 per share, beating Refinitiv estimates of $2.76.
Total revenue rose 20 percent to $9.09 billion, but fell short of estimates of $9.38 billion.
The company’s total backlog at the end of third-quarter 2018 was $69.5 billion, up 4.9 percent from second-quarter 2018. The biggest backlog contributor came from a $3.9 billion contract from the U.S. Navy for the construction of four (DDG-51) guided-missile destroyers.
(Reporting by Mike Stone in Washington and Sanjana Shivdas in Bengaluru; Editing by Shounak Dasgupta and Susan Thomas)
