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General Dynamics Finance

To strengthen security and drive financial excellence through disciplined capital deployment, operational efficiency, and strategic resource allocation

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To strengthen security and drive financial excellence through disciplined capital deployment, operational efficiency, and strategic resource allocation

Strengths

  • CASH FLOW: Strong free cash flow conversion rate of 105%
  • BACKLOG: $93.6B total backlog providing multi-year revenue visibility
  • MARGINS: Mission Systems segment maintains 14.3% operating margins
  • DIVERSIFICATION: Well-balanced portfolio across defense segments
  • LEADERSHIP: Experienced management team with proven capital allocation

Weaknesses

  • CAPEX: Aging manufacturing infrastructure requires significant upgrades
  • SYSTEMS: Legacy financial systems lacking integration capabilities
  • ANALYTICS: Limited predictive analytics for program cost forecasting
  • TALENT: Challenges recruiting specialized financial talent in key areas
  • PROCESSES: Manual financial processes reduce operational efficiency

Opportunities

  • BUDGET: Increasing US defense budget (+3.2% YoY) creates growth
  • INTERNATIONAL: Expanding global defense spending, especially Europe
  • M&A: Strategic acquisition opportunities in high-growth tech segments
  • DIGITIZATION: Financial transformation through digital technologies
  • ESG: Incorporating sustainability metrics into financial operations

Threats

  • COMPETITION: Increasing price pressure from emerging competitors
  • INFLATION: Persistent cost increases affecting program margins
  • CYBERSECURITY: Growing financial system security vulnerabilities
  • REGULATION: Expanding compliance requirements increasing costs
  • SUPPLY CHAIN: Disruptions affecting program delivery schedules

Key Priorities

  • MODERNIZATION: Implement integrated financial systems architecture
  • ANALYTICS: Develop predictive financial analytics capabilities
  • EFFICIENCY: Streamline financial processes through automation
  • TALENT: Enhance financial talent acquisition and development
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To strengthen security and drive financial excellence through disciplined capital deployment, operational efficiency, and strategic resource allocation

MODERNIZE SYSTEMS

Transform our financial architecture for digital agility

  • ROADMAP: Complete enterprise financial systems integration roadmap with 3-year implementation plan by Q3
  • AUTOMATION: Implement RPA for 5 high-volume transactional processes, reducing manual effort by 35%
  • CLOUD: Migrate 40% of financial applications to cloud infrastructure with 99.9% availability
  • SECURITY: Achieve SOC 2 compliance for financial systems with zero critical findings
BUILD INTELLIGENCE

Develop advanced analytics capabilities for decision agility

  • PLATFORM: Launch financial analytics platform integrating data from 8 key systems by Q3-end
  • MODELS: Implement 3 predictive cost models for major programs with >85% accuracy
  • DASHBOARD: Deploy executive financial performance dashboard with real-time metrics for top 10 programs
  • TRAINING: Complete advanced analytics training for 75% of financial leadership team
STREAMLINE PROCESSES

Enhance operational efficiency through process excellence

  • LEAN: Implement lean financial processes reducing monthly close cycle by 30% (7 to 5 days)
  • STANDARDIZATION: Deploy standardized financial processes across all 4 business segments
  • METRICS: Establish performance metrics baseline and improve efficiency by 25% in target areas
  • DOCUMENTATION: Complete documentation for 95% of critical financial processes with clear owners
DEVELOP TALENT

Build the finance organization of the future

  • HIRING: Fill 85% of open finance positions with emphasis on analytics and digital skills
  • UPSKILLING: Complete digital finance training for 90% of finance staff with certification pathway
  • RETENTION: Achieve 90% retention rate for high-performing finance team members
  • SUCCESSION: Implement succession plans for 100% of key finance leadership positions
METRICS
  • ROIC: 13.5% for 2025, targeting 14.2% for 2026
  • FREE CASH FLOW CONVERSION: >100% of net income
  • OPERATING MARGIN: 11.8%, improving to 12.3% by year-end
VALUES
  • Performance Excellence
  • Trusted Stewardship
  • Financial Discipline
  • Transparency
  • Innovation
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Align the learnings

General Dynamics Finance Retrospective

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To strengthen security and drive financial excellence through disciplined capital deployment, operational efficiency, and strategic resource allocation

What Went Well

  • MARINE: Electric Boat submarine program on budget with 12.2% margin growth
  • AEROSPACE: G700 aircraft deliveries exceeded targets driving 8.7% revenue gain
  • CASH: Free cash flow conversion hit 105%, exceeding 100% conversion target
  • BACKLOG: Total backlog grew to $93.6B representing 2.3x annual revenue
  • SYSTEMS: Combat systems segment achieved 15.2% operating margins

Not So Well

  • COSTS: Combat vehicle program experienced 7.2% cost growth above baseline
  • DELAYS: Columbia submarine program facing schedule pressures and delays
  • MARGINS: Technologies segment margins declined 120 basis points to 9.8%
  • SUPPLY: Supply chain disruptions impacted aerospace delivery schedules
  • INVENTORY: Higher than planned inventory levels impacting working capital

Learnings

  • ESTIMATION: Need more rigorous initial cost estimation processes for programs
  • ANALYTICS: Improved financial analytics could have predicted cost overruns
  • FORECASTING: Current forecasting models not capturing macroeconomic impacts
  • INTEGRATION: Post-merger financial integration taking longer than expected
  • AGILITY: Financial planning processes lack agility to respond to changes

Action Items

  • DASHBOARD: Develop real-time financial performance dashboard by Q3 2025
  • ANALYTICS: Implement advanced forecasting models for key programs immediately
  • TRAINING: Launch financial excellence training program for program managers
  • AUTOMATION: Automate three key financial reporting processes within 6 months
  • INTEGRATION: Complete systems integration roadmap for finance by end of Q2
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To strengthen security and drive financial excellence through disciplined capital deployment, operational efficiency, and strategic resource allocation

Strengths

  • DATA: Extensive program financial data available for AI training
  • INVESTMENT: Committed funding for finance technology modernization
  • LEADERSHIP: Executive support for AI-enabled financial transformation
  • EXPERTISE: Small but growing team of data science specialists
  • PILOT: Successful AI forecasting pilot in aerospace segment

Weaknesses

  • INTEGRATION: Siloed data sources limiting comprehensive AI analysis
  • TALENT: Limited AI/ML expertise within core finance organization
  • GOVERNANCE: Nascent AI governance framework for financial use cases
  • ADOPTION: Cultural resistance to AI-driven financial decisions
  • LEGACY: Outdated infrastructure hampering AI implementation

Opportunities

  • FORECASTING: AI-powered predictive modeling for program financials
  • AUTOMATION: ML-enabled process automation reducing manual workload
  • RISK: AI-driven early warning systems for program financial risks
  • INSIGHTS: Advanced analytics revealing cost optimization avenues
  • DECISIONS: AI-assisted capital allocation optimization tools

Threats

  • SECURITY: AI systems increasing financial data vulnerability surface
  • COMPLIANCE: Evolving AI regulations affecting financial applications
  • RELIABILITY: Unproven AI models potentially creating financial risk
  • COMPETITION: Competitors advancing faster with AI financial solutions
  • TRUST: Stakeholder skepticism about AI-influenced financial decisions

Key Priorities

  • PLATFORM: Develop unified AI financial analytics platform
  • CAPABILITY: Build internal AI expertise through focused hiring
  • PROCESS: Identify key financial processes for AI enhancement
  • GOVERNANCE: Establish robust AI governance framework for finance