General Dynamics (NYSE: GD) today reported second-quarter 2016 diluted earnings per share of $2.44compared to $2.27 in the year-ago quarter, a 7.5 percent increase. Net earnings were $758 million, on revenue of $7.7 billion.

"General Dynamics delivered unprecedented operating performance this quarter," said Phebe N. Novakovic, chairman and chief executive officer of General Dynamics. "We are executing on our programs and focused on operations, leading to strong earnings and record-setting operating margin."

Margin

With three of the company's four business groups expanding margins over the year-ago period, company-wide operating margin for the second quarter of 2016 was 14 percent, a 30 basis-point increase when compared to 13.7 percent in second-quarter 2015. Excluding a $23 million non-recurring gain on the sale of a business in the second quarter of 2015, margin expanded 60 basis points.

Cash

Net cash provided by operating activities in the quarter totaled $393 million. Free cash flow from operations, defined as net cash provided by operating activities less capital expenditures, was $324 million.

Capital Deployment

The company repurchased 1.1 million of its outstanding shares in the second quarter. Year-to-date, the company has repurchased 8.9 million outstanding shares.

Backlog

General Dynamics' total backlog at the end of second-quarter 2016 was $63.2 billion. There was order activity across the Gulfstream product portfolio and continued demand for defense products, including another quarter of a book-to-bill ratio (orders divided by revenue) greater than one-to-one in the Information Systems and Technology group.

The estimated potential contract value, representing management's estimate of value in unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options, was $25.8 billion. Marine Systems' estimated potential contract value more than doubled from the prior quarter to $4.2 billion, with the contract for the U.S. Navy's next generation of oilers. Total potential contract value, the sum of all backlog components, was$89.1 billion at the end of the quarter.

Guidance

Given the strong performance in the first half of 2016, the company is increasing full-year EPS guidance for continuing operations from $9.20 to $9.70.

About General Dynamics

Headquartered in Falls Church, Virginia, General Dynamics is a global aerospace and defense company that offers a broad portfolio of products and services in business aviation; combat vehicles, weapons systems and munitions; C4ISR and IT solutions; and shipbuilding. The company's 2015 revenue was $31.5 billion. More information is available at www.generaldynamics.com.