SAN DIEGO - General Dynamics (NYSE:GD) National Steel and Shipbuilding Company (NASSCO), a subsidiary of General Dynamics (NYSE: GD), has secured a contract from the U.S. Navy for the construction of up to eight John Lewis-class fleet replenishment oilers. The contract, which includes the vessels T-AO 214 through T-AO 221, begins with an immediate award for the tenth ship at $780 million. If all options are exercised, the contract's total value could exceed $6.7 billion.
This new agreement extends NASSCO's involvement in the Navy's twenty-ship replenishment program, with the company now contracted to build seventeen ships. Dave Carver, president of NASSCO, expressed pride in the company's ongoing relationship with the Navy, noting the significance of the T-AO program as NASSCO's longest production series.
The fleet oilers are designed to transfer fuel and other supplies to U.S. Navy ships at sea. Each vessel measures 742 feet in length, displaces 49,850 tons when fully loaded, and can carry 162,000 barrels of oil. Additionally, they offer dry cargo capacity and aviation support capabilities, with the ability to travel at speeds up to 20 knots.
The first ship in the class, the USNS John Lewis (T-AO 205), was delivered in July 2022. Currently, the USNS Sojourner Truth (T-AO 210) and the USNS Thurgood Marshall (T-AO 211) are under construction. The USNS Lucy Stone (T-AO 209) is scheduled for christening and launching on September 21, 2024, and construction for the USNS Ruth Bader Ginsburg (T-AO 212) will commence in October 2024.
General Dynamics NASSCO is recognized for its expertise in the design and construction of both Navy and commercial ships, providing significant repair services across multiple locations in the United States. The parent company, General Dynamics, is a global aerospace and defense firm with over 100,000 employees and reported revenues of $38.5 billion in 2021.
This contract award reflects the Navy's continued investment in maritime logistical capabilities and underscores NASSCO's role in supporting the U.S. naval fleet. The information for this article is based on a press release statement.
In other recent news, General Dynamics has secured a $491.6M contract from the Space Development Agency to advance the Ground Management and Integration program. This follows a partnership formed with Lockheed Martin (NYSE:LMT) to manufacture solid rocket motors in response to a shortage affecting missile production. On the analyst front, Morgan Stanley (NYSE:MS) upgraded General Dynamics stock from Equalweight to Overweight, anticipating margin expansion driven by the Gulfstream G700 aircraft. However, Deutsche Bank (ETR:DBKGn) downgraded the stock from Buy to Hold, citing concerns about the Aerospace segment's earnings.
General Dynamics also made amendments to its bylaws, streamlining procedural and disclosure requirements for stockholders proposing business or director nominations. The company reported an 18% increase in Q2 revenue, driven by a 50% rise in business jet sales, and a rise in net income to $905 million from $744 million in the same quarter last year. These developments highlight the company's recent activities and performance.
InvestingPro Insights
As General Dynamics (NYSE: GD) secures a substantial contract from the U.S. Navy, its financial health and market performance are of particular interest to investors. With a robust market capitalization of $83.59 billion and a healthy revenue growth of 10% over the last twelve months as of Q2 2024, the company reflects a strong position in the market. Furthermore, General Dynamics boasts a notable gross profit margin of 15.67%, demonstrating its ability to maintain profitability in its operations.
InvestingPro Tips highlight that General Dynamics has consistently rewarded its shareholders, raising its dividend for 11 consecutive years and maintaining dividend payments for 46 consecutive years. Such a track record is indicative of the company's financial stability and commitment to delivering shareholder value. Additionally, the company is a prominent player in the Aerospace & Defense industry, which aligns with the significance of the recent contract with the U.S. Navy.
For investors looking to delve deeper into General Dynamics' financials and market performance, InvestingPro offers additional insights. Currently, there are 16 more InvestingPro Tips available at https://www.investing.com/pro/GD, providing a comprehensive analysis for an informed investment decision.
With the company trading near its 52-week high and analysts predicting profitability for this year, General Dynamics appears to be on a steady course. The company's next earnings date is slated for October 23, 2024, which will be a pivotal moment for investors to assess the company's ongoing financial health and future prospects in light of the recent contract award.
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