General Dynamics Corp.

Strong results + margin expansion (good): - Q2’26 earnings: $4.24 EPS on $14.1B revenue; operating earnings $1.460B, net earnings $1.160B. - YoY: revenue +8.1%, operating earnings ~+12%, net earnings +14.4%, EPS +13.4%. - Operating margin: 10.4%, up +40 bps YoY (with revenue growth driving earnings). - Sequential: revenue +4.5%, operating earnings +2.8%, EPS +3.4%. - Beat consensus: company says it beat sell-side by $0.28 (more revenue + operating margin than expected).

Backlog and orders remain very strong (opportunity): - Q2 orders: just under $20B, book-to-bill 1.4x; all 4 segments >1.0x. - Aerospace: book-to-bill 1.5x; record backlog $136.5B (+32% YoY). - Defense/Combat: book-to-bill 1.4–2.1x within Combat Systems (notably 2.1x for Combat Systems’ segment, driven by large armored vehicle and munitions demand). - Aerospace demand described as very active across U.S. and Asia, with some cautious concern in the Middle East but activity still in the pipeline.

Cash generation unusually strong; guidance shifts modestly (good but with timing factors): - Operating cash flow: $1.9B in Q2; $4B+ in first half (combined Q1 + Q2). - Operating working capital improved: operating working capital down over $1B from end of 2025. - Free cash flow (FCF): $1.6B in Q2; $3.6B in H1. - Cash conversion: Q2 142%, H1 >150%. - Updated full-year expectation: FCF conversion ~105% of net income (i.e., still strong, but second-half lighter). - Key reasons for lighter H2: higher capex, plus ~$500M pension contribution, cash taxes weighted to H2 (> $500M payments), and working down advance payments at European Land Systems in H2. - Capital deployment: $430M dividends in the quarter; ~$100M buybacks (to cover dilution); $500M notes repaid, with another $500M due in August expected to be repaid with cash.