Gulfstream Caps Strong Q4 with Near Record G650 Orders

 - January 24, 2018, 10:14 AM

Gulfstream Aerospace finished 2017 with an increase in both large-cabin and mid-cabin deliveries for a total of 30 and experienced its second-best quarter ever in terms of G650/650ER orders, according to parent company General Dynamics.

The strong finish helped boost full-year 2017 revenues at the General Dynamics Aerospace group—which includes both Gulfstream and Jet Aviation—by 4 percent to $8.13 billion and operating earnings by 13.2 percent to $1.59 billion. The group further strengthened its operating margin to 19.6 percent.

For the quarter, aerospace revenues increased by $157 million, or 8.6 percent, to $1.98 billion, while earnings jumped 24.1 percent, to $340 million.

Gulfstream delivered 23 large-cabins and seven mid-cabins in the fourth quarter, up a unit in each category over the same period in 2016. For the year, deliveries overall were down by a unit to 120 as large-cabin deliveries declined four units to 94. Mid–cabins deliveries, however, were up three to 27.

General Dynamics chairman and CEO Phebe Novakovic said the group overall had an “outstanding year” and “very good order intake, particularly in the fourth quarter.” Net orders at Gulfstream were up 20 percent on the strength of large-cabin orders. Gulfstream G650/650ER orders were up 78 percent year-over-year, making the fourth quarter the best for G650 family sales in three years and the second best quarter overall. Gulfstream now is finding early customers returning for new G650s, Novakovic added.

While she said the company doesn’t normally speak of overall market conditions, Novakovic said she senses that order activity is picking up throughout the industry and is looking forward to hearing reports of other airframers.

The company's aerospace backlog grew by more than $600 million in the fourth quarter, to $12.44 billion. But that is still down from $13.215 billion at the end of 2016.

With the strengthened order intake and the anticipated introduction of the new G500 and G600, General Dynamics predicted the aerospace group will enjoy a $220 million increase in revenues, reaching the $8.35 to $8.4 billion range. But the company expects a slightly lower margin, 18 percent, as the company increases research and development spending and transitions its assembly lines with the ending for the G450, the slowing of the G550 program, and the introduction of the G500 and G600 this year.

Plans call to continue the 550 long-range jet at a low rate for the “foreseeable future,” Novakovic said.

Looking further she expects 2018 to be a slower year in terms of compound annual growth rate in light of the transition, but picking up significantly by the 2021 time frame.