Travel restrictions due to the COVID-19 pandemic delayed deliveries of business-jet aircraft, which resulted in a $549 million decline in revenue for the Aerospace segment. Nevertheless, the segment’s backlog remains strong, up $1.1 billion, or 9.1%, over the year-ago quarter.
Gulfstream, a General Dynamics company, manufactured 34 aircraft in the first quarter but could deliver only 23—20 large-cabin and three midsize jets—due to international travel restrictions, compared with 34 deliveries (27 large cabins and seven midsize) in the same period a year ago.
“Since the onset of the COVID-19 crisis, we have supported our government customers and implemented multiple safety measures to keep our people as safe as possible,” said Phebe N. Novakovic, chairman and chief executive officer. “We are responding to the COVID travel restrictions’ impact on Gulfstream and are managing our costs throughout our business.”
Capital Deployment
The company repurchased 3.4 million of its outstanding shares in the first quarter to cover dilution from the exercise of stock options. In March, the board of directors increased the company’s quarterly dividend 8 cents to $1.10 per share, which was the company’s 23rd consecutive annual dividend increase.
Backlog
Total backlog at the end of first-quarter 2020 was $85.7 billion, up 23.9% year-over-year. Estimated potential contract value, representing management’s estimate of value in unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options, was $38.1 billion. Total estimated contract value, the sum of all backlog components, was $123.9 billion, up 20.1% year-over-year.
Orders
Significant awards in the quarter included an IDIQ contract with a maximum potential value of $885 million to modernize the U.S. Army’s training programs, $875 million for the construction of two additional U.S. Navy John Lewis-class (T-AO-205) oilers, an IDIQ contract with a maximum potential value of $505 million to provide supercomputing resources to the National Oceanic Atmospheric Administration’s (NOAA) Weather and Climate Operational Supercomputing System (WCOSS), $300 million from the Army to upgrade Abrams tanks to the M1A2 System Enhancement Package Version 3 (SEPv3) configuration and $225 million for parts and support for Stryker armored fighting vehicles.