GD · Q2 2026 Earnings

Bullish

General Dynamics

Reported July 29, 2026

30-second summary

GD delivered Q2 revenue of $14.09B (+8.1% YoY, beating consensus by 4.1%) and GAAP EPS of $4.24 (beating $3.97 consensus by 6.8%) — well above the $3.95–$4.10 range implied by the raised FY26 guide, breaking the "Q2 trails Q1/Q4" cadence management laid out one quarter ago. Aerospace held margin at 14.5% (100bps above the FY ~14% guide), Marine ran +10.4% at 7.3% margin, and book-to-bill of 1.4x pushed backlog to a fresh record of $136.5B. Management reaffirmed — did not re-raise — FY26 EPS at $16.45–$16.55, which through H1 already implies flat-to-down H2 EPS versus a run-rate that keeps beating.

Headline numbers

EPS

Q2 FY2026

$4.24

+6.8% vs est.

Revenue

Q2 FY2026

$14.09B

+8.1% YoY

+4.1% vs est.

Free cash flow

Q2 FY2026

$1.65B

Operating margin

Q2 FY2026

10.4%

Key financials

Q2 FY2026

Metric	Q2 FY2026	Q2 FY2025	YoY	Q1 FY2026	QoQ
Revenue	$14.09B	$13.04B	+8.1%	$13.48B	+4.5%
EPS	$4.24	$3.74	+13.4%	$4.10	+3.4%
Operating margin	10.4%	10.0%	+40bps	10.5%	-10bps
Free cash flow	$1.65B	$1.40B	+17.6%	$1.95B	-15.7%

Guidance

Reaffirmed full-year FY2026 EPS and CapEx guidance; Q2 FY2026 revenue and earnings beat consensus with strong double-digit growth in Aerospace (+15.1%) and Marine Systems (+10.4%).

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Revenue	Q2 FY2026	—	$14.094 billion	+4.1% above estimate	Beat
Earnings Per Share	Q2 FY2026	—	$4.24	+6.8% above estimate	Beat

Reaffirmed unchanged this quarter: Earnings Per Share ($16.45 to $16.55), Capital Expenditures (% of sales) (3.5% to 4.0%), Free Cash Flow Conversion Rate (100% of net income), Effective Tax Rate (17.5%)

Segment KPIs

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
Aerospace	$3.525B	$3.062B	+15.1%
Marine Systems	$4.66B	$4.22B	+10.4%
Combat Systems	$2.29B	$2.283B	+0.3%
Technologies	$3.619B	$3.476B	+4.1%

Other KPIs

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
Book-to-Bill Ratio	1.4x	2.2x	—
Total Backlog	$136.5 billion	$103.7B	—
Estimated Potential Contract Value	$50.4 billion	—	—
Total Estimated Contract Value	$186.9 billion	$161.2B	—
Aerospace Operating Margin	14.5%	13.2%	—
Marine Systems Operating Margin	7.3%	6.9%	—
Operating Cash Flow to Net Earnings	162%	—	—
Gulfstream Aircraft Deliveries	41 units	38 units	—

Management tone

No earnings call transcript was available for this quarter; the observations below draw only on prepared press-release commentary and are correspondingly narrower.

Narrative arc: Q2-25 operating-leverage confidence → Q3-25 shutdown-conditional caution → Q4-25 forward-leaning conviction → Q1-26 off-cycle guide raise → Q2-26 quiet reaffirmation on a clean beat.

Two quarters ago management broke its stated convention to raise FY EPS after Q1, citing performance that "exceeded our own expectations." This quarter, facing a Q2 beat of similar magnitude ($0.14–$0.29 above the implied range), management held the guide. The press-release language reverted to workmanlike: "Our businesses delivered solid results in the quarter, with revenue growth across all four segments — including double-digit increases in revenue and noteworthy margin expansion in Aerospace and Marine Systems." Gone is the Q1 assertiveness of "we will do our level best to execute and beat"; in its place is a description of results without a forward-leaning commitment. Without transcript color this could reflect either operational conservatism about H2 mix or normalized cadence after an off-script Q1 — the Q3 print will disambiguate.

The demand and capacity language stayed intact and specific: "well positioned to support our customers' needs and are continuing to make significant investments to increase output to meet strong and growing demand." The CapEx-as-capacity-investment story that framed Q4-25 and Q1-26 is still the operating spine of the narrative — the shift is in guide posture, not in strategic framing.

Answers to last quarter's watch list

EPS cadence vs. raised FY guide — Q2 EPS printed $4.24 versus the $3.95–$4.10 implied range, breaking above the "Q2/Q3 trail Q1/Q4" mix framing management set at Q1. YTD EPS of $8.34 against $16.45–$16.55 FY leaves $8.11–$8.21 for H2, or roughly $4.05 average per quarter — flat to Q1 and down from Q2. Either H2 genuinely mixes down, or the guide is now conservative. Status: Resolved positively

Aerospace margin durability above 14% — Q2 printed 14.5%, 100bps above the FY ~14% guide, following Q1's 15.0%. H1 average of 14.75% is well ahead of the guide; the durability question is answered. Status: Resolved positively

Marine margin trajectory — Q2 held at 7.3%, matching Q1 and marking a sustained ~30bps expansion versus FY25's 7.0% print. Revenue growth decelerated from +21% to +10.4% but margin held — the throughput-driven productivity story remains intact. Status: Resolved positively

$1B June/August debt refinancing — Not addressed in the press release. Without transcript color, cannot verify terms or resulting FY26 interest expense trajectory. Status: Continue monitoring

CapEx run-rate — CapEx as % of sales guide reaffirmed at 3.5%–4.0%. Absolute H1 CapEx dollars not disclosed in the press release; against H1 revenue of ~$27.57B, the guide implies ~$965M–$1.10B H1 CapEx. Status: Continue monitoring

Backlog conversion at Combat Systems — Q2 Combat revenue printed +0.3% YoY (versus +4.9% in Q1), consistent with — arguably softer than — the "engineering year" framing. No sign of pull-forward from 2027. Status: Continue monitoring

What to watch into next quarter

Whether Q3 brings an FY26 EPS re-raise — Q1 raise was $0.30; Q2 was reaffirmed on a $0.14–$0.29 beat. If Q3 also comes in $0.10+ above the $3.95–$4.10 implied range without a raise, that's evidence H2 has a mix step-down management sees but the market doesn't. If Q3 comes in-range, the guide holds cleanly. If Q3 also beats and a raise follows, the Q2 reaffirmation was tactical caution.

Combat Systems Q3 revenue — +0.3% in Q2 is the softest print in our coverage. Watch whether Q3 recovers toward Q1's +4.9% pace or continues to decelerate — a second sub-1% print would put the FY $9.6–$9.7B revenue guide at risk.

Total estimated contract value trajectory — $186.9B is down $1.5B QoQ, the first sequential decline in our coverage. Watch whether Q3 resumes the record-setting pace or confirms Q1's $188.4B was the intake peak.

Aerospace margin holding above 14% — Q1 15.0%, Q2 14.5%. Watch whether Q3 stays above the FY guide or shows the first signs of G800 lot-2 dilution/mix regression.

Marine revenue growth cadence — decelerated from Q1 +21% to Q2 +10.4%. FY26 guide of $17.3–$17.7B against H1 of $8.98B implies H2 needs ~$8.32–$8.72B, well below H1. Watch whether Q3 growth normalizes into the 8–12% band that the FY guide implies, or whether Q1 was a pull-forward.

H2 free cash flow against the 100% conversion guide — H1 FCF of ~$3.6B against H1 net income of ~$2.2B (Q2 alone at 162% conversion) has already pre-funded much of the FY 100% target. Watch whether H2 CapEx ramps aggressively enough to compress the print, or whether the FY conversion guide is now the floor rather than the ceiling.

Sources

General Dynamics Q2 2026 earnings press release, SEC Form 8-K Exhibit 99.1 (filed 2026-07-29): https://www.sec.gov/Archives/edgar/data/40533/000004053326000029/gd-20260705exhibit991.htm
General Dynamics prior-quarter briefs and FY26 guidance history (tapebrief coverage Q2-2025 through Q1-2026)

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