Certification of Gulfstream Aerospace's two newest products -- the large-cabin, mid-range G280 and the ultra high-speed, ultra-long-range flagship G650 -- helped boost the Savannah-based business jet manufacturer's revenues by 30 percent in the third quarter, even as parent company General Dynamics' earnings slipped 8 percent, company chairman and CEO Jay Johnson reported Wednesday.
General Dynamics (NYSE:GD) posted third-quarter 2012 earnings of $600 million or $1.70 per share, compared to third quarter 2011 earnings of $665 and $1.83 per share. Company-wide operating margins were 11.4 percent compared to 12.7 percent in third quarter 2011.
Third-quarter aerospace revenues were $1.8 billion in 2012, up $424 million from the same quarter last year. Operating earnings were up 20.3 percent to $261 million.
Gulfstream's total order backlog was $16 billion, with $15.8 billion of that funded.
"We continue to be encouraged by the size of our large-cabin backlog and the health of our order pipeline," Johnson told analysts during a morning conference call Wednesday.
Sales were boosted by several multi-aircraft orders, with more expected in the fourth quarter, he said.
"Overall, it was a very successful third quarter at Gulfstream, highlighted by the Federal Aviation Administration's certification of both the G280 and the G650," Johnson said.
Revenues for the quarter topped $1.8 billion, due primarily to higher green G650 deliveries, he added.
A green aircraft is one that has completed the initial phase of manufacturing and has received a certificate of airworthiness from the Federal Aviation Administration. It's called "green" because it's covered with a green protective coating that is washed off before the aircraft gets its final coat of paint.
Green aircraft are delivered to one of five Gulfstream completion centers to be fitted with interiors and painted before final delivery to the customer.
In a departure from recent years, domestic orders represented some 60 percent of Gulfstream's year-to-date book.
"Gulfstream's sales staff reported their best order quarter of the year, driven by several multi-aircraft deals in North America," Johnson said. "This metric represents a resurgence of North American demand and some softening of international demand, driven by political uncertainty in some regions and the overall negative impact of the European debt crisis on global economic sentiment."
Even so, Johnson said, Gulfstream's international customer interest remains healthy across the board.
With an estimated wait time of five years for a G650 order placed today, and 18 months for a G450 and G550, the sales staff continued to book healthy orders for the G650 as well as all other models in the third quarter, he said.
All three aircraft are manufactured in Savannah.
"Looking to the fourth quarter, the Gulfstream team expects to see its strongest sales quarter of the year," Johnson said, adding that deliveries of the first G280s and G650s to customers are "just weeks away."
Green deliveries for 2012 are projected to include 24 G650s, 80 G450 and G550 models and 15-20 mid-cabin models, Johnson said.
GULFSTREAM BY THE NUMBERS
3Q 2011 3Q 2012
Revenues $1.41 billion $1.83 billion
Operating earnings $217 million $261 million
Operating margins 15.4 percent 14.2 percent
Green deliveries 25 34
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