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General Dynamics (GD) Posts Q4 Loss On Hefty Charges, Guides Lower

 January 23, 2013 09:26 AM

(By Balachander) General Dynamics Corp. (NYSE: GD) posted a quarterly loss due to hefty charges and the aerospace and defense company guided 2013 below consensus, sending shares down 4.29 percent in premarket trading on Wednesday.

On a non-GAAP basis, earnings from continuing operations were $491 million or $1.39 a share for the fourth quarter.

Net loss was $2.13 billion or $6.07 per share for the three month period, compared with earnings of $603 million or $1.68 per share in the comparable period of last year.

Revenue declined 12 percent to $8.08 billion.

Wall Street analysts, on average, expected earnings of $1.88 per share on revenue of $8.80 billion.

[Related -Northrop Grumman Corporation: How Defense Budget Will Fare In 2014?]

GD said it recorded a goodwill impairment charge of $2 billion in the fourth quarter related to its Information Systems and Technology (IS&T) group, recognizing the impact of slowed defense spending in its IS&T businesses. In addition, the company recorded other charges totalling $867 million.

"Dynamics' operating results in 2012 and the charges that we have recorded in the fourth quarter reflect the fact that some of our markets are contracting as government budgets shrink at home and abroad," said CEO Phebe Novakovic. "They also suggest opportunities for improvement in some areas of our performance, which we are addressing."

The Falls Church, Virginia-based company's business groups include aerospace, combat systems, marine systems and information systems and technology.

[Related -Lockheed Martin Corporation (NYSE:LMT): How A Small Budget Deal Impacts Defense Contractors?]

Looking ahead for the full year 2013, the company expects earnings per share from continuing operations in the range of $6.60 to $6.70, while analysts expect $7.28.

"General Dynamics (GD) could proactively guide low for next year (we'd view as bullish for shares) given budget uncertainty coupled with the introduction of a new CEO looking to reverse the trend of chasing guidance lower through the year as was the case in ‘11/'12," Deutsche Bank analyst Myles Walton wrote in a note ahead of GD results.

In the preceding third quarter, General Dynamics posted an 8 percent decline in quarterly earnings on higher operating costs and expenses.

The stock, which has been trading in the 52-week range of $61.09 to $74.54, closed Tuesday's regular trading at $70.71.

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