Boost for US Defense Industry: General Dynamics Unit Wins $1.3B Contract Modification

General Dynamics Corporation GD received a $1.3 billion contract modification from the U.S. Department of Defense, allowing the business unit Electric Boat to acquire long lead-time materials for Virginia Class Block VI submarines, as detailed in the U.S. Department of Defense contract award.

Virginia-class submarines are built to meet a broad spectrum of 21st-century mission needs, including anti-submarine warfare, surface ship engagement, and special operations support.

General Dynamics Electric Boat, as the prime contractor and lead design yard, works in collaboration with HII’s Newport News Shipbuilding to construct these submarines.

Kevin Graney, president of General Dynamics Electric Boat, said, “This contract modification sends a crucial demand signal, enabling our suppliers to invest in the capacity and materials needed to increase production volume.”

“Consistent funding for the supply base is essential to achieve the high-rate production the Navy requires of the entire submarine enterprise.”

Last week, General Dynamics announced that Kevin Graney, who currently serves as president of Electric Boat, informed that he will retire at the end of the year. He will be succeeded by Mark Rayha, who currently serves as senior vice president and chief operating officer of Electric Boat, effective December 1.

Last month, General Dynamics reported a second-quarter revenue increase of 18% Y/Y to $11.976 billion, beating the consensus of $11.438 billion. EPS of $3.26 (up 20.7% YoY) missed the consensus of $3.29.

The company-wide backlog stood at $91.3 billion, with an estimated potential contract value of $38.5 billion.

Investors can gain exposure to the stock via Global X Defense Tech ETF SHLD and Amplify ETF Trust Amplify Cybersecurity ETF HACK

Price Action: GD shares closed lower by 2.22% at $285.90 on Monday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.