General Dynamics Corporation (GD) recently received a $647 million contract from the U.S. Army TACOM Lifecycle Management Command for production of 352 Stryker vehicles. The contract was awarded to General Dynamics’ subsidiary General Dynamics Land Systems. The company expects to begin vehicle deliveries in July 2010. Work on the contract will be performed in Anniston, AL; Sterling Heights, MI; Lima, OH; and Ontario, Canada.
The Stryker contract was originally awarded to General Dynamics in 2000. To date, the company has delivered 2,988 vehicles and trained 18,438 soldiers in their operations. The U.S. Army has seven Stryker Brigade Combat Teams, three of which are deployed in combat zones – two in Iraq and one in Afghanistan.
Earlier, General Dynamics had maintained its brisk pace in order booking, taking the total backlog at the end of the second quarter of fiscal 2009 to $67.6 billion. This was a 22.2% rise compared to the $55.3 billion figure in the year-ago quarter.
General Dynamics engages in mission-critical information systems and technologies; land and expeditionary combat vehicles, armaments and munitions; shipbuilding and marine systems; and business aviation. The company operates through four segments – Information Systems & Technology (IS&T), Combat Systems, Marine Systems and Aerospace.
We view General Dynamics as a well-run company that is likely to continue to deliver on expectations driven by strong revenue growth, margin expansion and cash-flow generation. Strong defense outlays should further improve the company’s outlook for shareholders while an increasing funded backlog and an improving balance sheet signal additional positive factors for the company. We maintain our Neutral recommendation on the shares.
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