General Dynamics [GD] on Wednesday reported strong first quarter results led by its Combat Systems segment followed by its shipbuilding and aerospace businesses, although the bottom-line narrowly missed consensus estimates.

Results also were below GD’s plans due to the Federal Aviation Administration certifying the Gulfstream G700 business jet later than expected, which meant no deliveries of the aircraft in the quarter versus the 15 originally planned.

Still, GD’s Aerospace Segment showed well with low double-digit increases at the top and bottom lines on higher deliveries of other business jet models and an increase in service revenue. GD began delivering G700s in the second quarter and expects to deliver 50 to 52 of the aircraft this year.

Combat Systems, which posted a 20 percent increase in sales and a 15 percent jump in income, benefited from higher volume on new international tank programs, artillery, Piranha wheeled vehicles, and bridges, Phebe Novakovic, GD’s chairwoman and CEO, said on the company’s earnings call.

Backlog at Combat Systems increased $1.5 billion to $15.6 billion from a year ago driven by wheeled and tracked combat vehicles in Europe and higher demand for some products in the U.S., Novakovic said. GD recently opened a new ammunition plant in Texas that will enable an 83 percent increase in production of 155mm artillery ammunition, she added.

Overall, in the quarter GD’s sales increased 9 percent to $10.7 billion from $9.9 billion a year ago, and net income rose 10 percent to $799 million, $2.88 earnings per share (EPS), from $730 million ($2.64 EPS), short of analysts’ estimates by three pennies per share. Operating margin increased 20 basis points to 9.7 percent.

GD’s Marine Systems segment also boasted low double-digit sales and profit increases with revenue growth mainly due to construction of the Navy’s Columbia-class ballistic missile submarine. Novakovic cautioned that the segment’s growth brings with it challenging operational and supply chain issues.

Impacts to the workforce stemming from the COVID pandemic “coupled with a number of sole-source suppliers of highly complex components has made it difficult for the industrial base to keep pace with increasing demand,” she said. “The significant financial investments we have made in our shipyards over the last 12 years, particularly at Electric Boat, has mitigated the impact on us, but we are still hit by schedule and quality problems in the supply chain.”

Novakovic said the Navy’s request for one

Virginia-class attack submarine in fiscal year 2025 will not impact the company in the short-term, but said adding a second vessel is important for the supply chain by providing long-lead material funding.

GD’s Technologies segment was down a percent on the top and bottom lines in the quarter, and orders were robust at 1.2 times sales.

Novakovic will update guidance when GD reports second quarter results in July. Currently, the company expects sales this year around $46.3 billion to $46.4 billion, earnings between $14.35 and $14.45 EPS, and operating margin of 11 percent.

Free cash flow was a $437 million outflow in the quarter due to no G700 deliveries, but the company still expects cash flow to roughly equal net income for the year. Backlog at the end of the quarter stood at $93.7 billion, up $100 million from the end of 2023.