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GD’s Information Systems and Technology segment – upside surprise

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Information Systems & Technology segment

General Dynamics’ (GD) Information Systems & Technology, or IS&T, segment provides customers with a portfolio of services. The services address the needs of various military civilian and commercial companies around the globe.

The portfolio consists of the product design, development, production, and support in secure mobile communication systems, information technology solutions and mission support services, and intelligence, surveillance and reconnaissance, naval control systems, and cyber security solutions.

The services are provided under the following sub groups:

  1. Advanced Information Systems
  2. C4 Systems
  3. Information Technology
  4. United Kingdom Limited

In this part of the series, we’ll look at how the IS&T segment performed in 4Q14 and fiscal year 2014.

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Financial performance

The IS&T segment saw improved operative performance. This led to a less-than-expected decline in revenue. For the quarter, the revenue was $2.47 billion—down 8.3% year-over-year, or YoY, from the same quarter last year. The operating earnings grew by $16 million, or 8.2% YoY, to reach $212 million for the quarter.

Against the forecasted 20% decline, the segment’s revenue for fiscal year 2014 declined by 10.8% YoY. The segment’s revenue was $9.16 billion. For the year, the operating earnings were only down 10 million, or 1.3% YoY. This is a good performance considering the 10.8% revenue decline. The operating margins also saw better-than-expected improvements. They reached 8.6% at the end of the year.

Overall, the quarter and the year gave a pleasant upside surprise for the segment.

Other companies in the industry include L-3 Communications Holdings (LLL), Transdigm Group (TDG), and Lockheed Martin (LMT). Some of these companies are part of the Industrial Select Sector SPDR (XLI).

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