Earlier today, we reported fourth-quarter revenue of $10.5 billion, net earnings of $1 billion, and earnings per diluted share of $3.49.
This is, in most respects, a very solid quarter, even though we missed consensus by $0.05.
It is quite remarkable that we came within $0.02 of the very strong pre-pandemic fourth-quarter 2019.
On a sequential basis, suffice it to say that revenue is up 11.1%, operating earnings are up 20.6%, net earnings are up 20.1% and earnings per share are up 20.3%.
For the full year, we had revenue of $37.9 billion, down from 3.6% from the prior year, net earnings of $3.17 billion, and earnings per fully diluted shares of $11, once again, modestly below consensus.
Our business was strengthened by significant growth in the backlog to a year-end record high of $89.5 billion.
The same is true of total estimated contract value at $134.7 billion.
The total company book-to-bill was 1.1 to 1 for the year, led by the particularly strong order performance of Electric Boat.
Our cash performance for the quarter and the year was stronger than expected with a conversion rate of 91% of net income for the year.
Aerospace revenue of $2.4 billion is up 23.3% over the third quarter on the strength of the delivery of 40 aircraft, 34 of which were large cabin.
For the full year, revenue of $8.08 billion is off 17.6% from the prior year.
Nevertheless, operating earnings are still over $1 billion, far away the industry leader.
Fourth-quarter operating earnings of $401 million is 41.7% better than the third quarter on the strength of higher revenue and a 220-basis-point improvement in operating margin.
Furthermore, margins increased on a sequential basis throughout the year, ending at 16.5% in the fourth quarter.
At midyear last year, we told you to expect revenue of about $8.4 billion with earnings of $1.13 billion.
We finished the year with revenue of $8.1 billion and earnings of $1.08 billion.
The entire shortfall is attributable to 127 deliveries versus our expectation of 130.
All in all, still within the 125 to 130 deliveries we gave you right after the initial shock to the economy caused by the pandemic became manifest.
The book-to-bill at Aerospace in the fourth quarter was 0.96 to 1, dollar-denominated.
For the year, the book-to-bill was 0.88 to 1.
We had 92 units of this family of aircraft in service at year-end.
At the end of this year, we had 436 G650 in service, an average of 54 a year.
The 650 continues to be in demand, but not at that level.
Finally, on the new product development front, all five G700 flight-test aircraft are flying and have over 1,000 hours of test flight.
Revenue in the quarter of $1.96 billion is essentially the same as the year-ago quarter.
Operating earnings of $309 million are $25 million or 8.8% ahead of the final quarter of 2019 on the strength of 140 basis point improvement in operating margin to 15.8%.
For the full year, revenue of $7.2 billion is up $216 million, a 3.1% increase after a 12.3% growth in 2019 despite a revenue decline at ELS, driven by COVID shutdowns in Spain earlier in 2020.
Operating earnings of $1.04 billion are up $45 million, a 4.5% increase.
The fourth quarter had some nice order activity, including a contract for Abrams Version 3 with a ceiling of $4.3 billion and additional Stryker SHORAD orders with the ceiling of up to $1.2 billion.
Outside the U.S., we are beginning to see increased demand as our NATO allies start to emerge from COVID-constrained activity, including over $200 million of Canadian ammunition orders in the quarter.
Marine fourth-quarter revenue of $2.9 billion is up $292 million, a compelling 11.4% increase over the year-ago quarter.
Operating earnings of $247 million are up $48 million against a good fourth quarter in 2019.
Revenue was up $452 million, and earnings are up $24 million or 10.8%.
For the full year, revenue was almost $10 billion, up $796 million or 8.7%.
Operating earnings for the year of $854 million are up by $69 million or 8.8%.
In our midyear guidance to you, we anticipated revenue of about $9.6 billion and operating earnings of $845 million.
For the quarter, Technologies had revenue of $3.23 billion, off less than 1% sequentially.
Operating earnings of $352 million are up $38 million or 12.1% on a 120-basis-point improvement in margins.
As you would expect, given the environment, revenue for the first full year is off $711 million or 5.3%, and earnings are off $100 million or 7.6%.
Revenue came in at $350 million, below our guidance, $12.65 billion versus $13 billion, but margins, particularly at GDIT, were better, leading our earnings forecast to be on target.
From a margin perspective, GDIT was at 7.9%, up 40 basis points sequentially.
Mission Systems, at 16.2%, was up 290 basis points over the last quarter.
For the full year, the group's free cash flow exceeded 150% of full-year imputed net earnings, the strongest performance within General Dynamics.
These wins drove GDIT's total estimated contract value up $2 billion or 11% as compared to both the third quarter and year-end 2019.
That resulted in free cash flow for the year of $2.9 billion, a cash conversion rate of 91%, nicely ahead of our anticipated 80% to 85% of net income.
To put this in context, our cash from operations for the year of $3.9 billion was less than $20 million shy of the highest annual operating cash flow we've ever had, notwithstanding the impact of COVID on our operations in 2020.
This was the result of outstanding performance across the business to close out the year, most notably in the Aerospace group, which began to draw down its inventory that we've been discussing for some time, and the Technologies group, which continues to generate superb cash flows, as Phebe mentioned, in this case, in excess of 150% of imputed net income for the year.
As part of that agreement, we received two payments of $500 million each last year, and we received the next progress payment earlier this month in accordance with the revised schedule.
To that point, we had capital expenditures of $345 million in the fourth quarter for a full-year total of nearly $1 billion or 2.5% of sales.
You may recall, we had expected our capex to peak in 2020 at roughly 3% of sales due to these shipyard investments.
As you might expect, given the impact of the pandemic, we've managed the timing of this capex spend prudently, and the result is three years, '19, '20, and '21, at roughly 2.5% of sales.
We then expect to trend back down and return to the more typical 2% range by 2023, consistent with our previous expectations.
The net result is that we expect cash performance to continue to improve in 2021 to the 95% to 100% conversion range with year-over-year growth in free cash flow in 2021 and beyond.
We ended the year with a cash balance of just over $2.8 billion and a net debt position of approximately $10.2 billion, reflecting a $1.7 billion reduction in the fourth quarter.
Our net interest expense in the fourth quarter was $120 million, bringing interest expense for the full year to $477 million.
That compares to $110 million and $460 million in the comparable 2019 periods.
Our next scheduled debt maturities are for $2.5 billion in the second quarter and $500 million in the third quarter of this year.
But overall, we expect interest expense to drop to approximately $420 million in 2021.
We also paid $315 million in dividends in the fourth quarter, bringing the full year to $1.2 billion.
And we repurchased 700,000 shares of stock in the quarter, bringing us to just over 4 million shares for the year for $600 million or $148 per share.
With respect to our pension plans, we contributed $480 million in 2020, and we expect that to decrease to approximately $360 million in 2021, the majority of that in the second half.
We had a 15.4% effective tax rate in the fourth quarter, resulting in a full-year rate of 15.3%, consistent with our previous guidance.
Looking ahead to 2021, we expect a full-year effective tax rate of around 16%.
In particular, this reduces our corporate operating earnings, which we expect to be a negative $85 million in 2021, and increases our other income, which is below the line, which we expect to be approximately $90 million in 2021.
As an indication of the steady improvement since the peak of the disruption from the pandemic, Aerospace book-to-bill returned to 1 times in the quarter, consistent with Phebe's remarks on what we're seeing in terms of Gulfstream demand.
Marine Systems had an outstanding quarter with a book-to-bill of over 4 times due to the exercise of the $9.5 billion option for the Columbia construction contract, providing opportunity for further long-term top- and bottom-line growth for Marine Systems.
They had a very nice quarter with some notable awards, including the final resolution on the DEOS program with a potential value of $4.4 billion; the EMITS contract in support of the U.S. Army in Europe; the State Department's GSS 2.0 contract with a potential value of $3.3 billion; and a contract with the Air Force to develop a digital engineering environment.
So the headline numbers you see in the firm backlog belie the outstanding performance in the quarter, as reflected in the total estimated contract value for the group of just over $41 billion.
In Aerospace, we expect revenue to be about $8 billion, essentially flat with 2020.
Operating margins will be about 12.5%, leading to operating earnings of $1 billion, maybe slightly more.
You will recall that I told you last quarter, we will deliver 13 fewer G550s as that airplane is no longer in production.
This leaves us with 13 fewer aircraft, not including the three slips from 2020.
So all up, 10 fewer aircraft.
This reduction in revenue will be made up by a roughly $500 million increase in services across Jet Aviation and Gulfstream at about 10% lower operating margin.
In Combat Systems, we expect revenue of about $7.3 billion, an increase of approximately $100 million over 2020.
We expect the operating margin to be about 14.5% and operating earnings to exceed last year by $20 million or 2%.
The Marine group is expected to have revenue of approximately $10.3 billion, an increase of over $300 million.
Operating margin in 2021 is anticipated to be around 8.3%, driven in large part by increased work on the first two cost-plus Columbia submarines, which have conservative initial booking rates.
We expect revenue in the Technologies group of $13.2 billion, $580 million more than 2020.
This is a growth of 4.5% with GDIT growing at a rate of 7.1%.
Mission Systems will be essentially flat with organic growth of 3%, offset by the SATCOM divestiture.
We expect earnings of $1.25 billion, about $50 million more than 2020.
This implies an overall margin of 9.5% with GDIT returning to 7% or more.
So for 2021, companywide, we expect to see approximately $39 billion of revenue, up over $1 billion from 2020, and operating margin at 10.5%.
This all rolls up to a forecast range of $11 to $11.05 per fully diluted share.
On a quarterly basis, we expect earnings per share to play out much like it has in prior years with Q1 about $2.20 and progressively stronger quarters thereafter.
It assumes a 16% tax provision and assumes we buy only enough shares to hold the share count steady with year-end figures so as to avoid dilution from option exercises.
Our strong cash flow in 2020 and our anticipation of a 95% to 100% conversion rate in 2021 leaves us with the ability to engage in a share repurchase program this year to enhance the earnings per share figures I have just given you.

Summary:
Earlier today, we reported fourth-quarter revenue of $10.5 billion, net earnings of $1 billion, and earnings per diluted share of $3.49.
For the full year, revenue of $7.2 billion is up $216 million, a 3.1% increase after a 12.3% growth in 2019 despite a revenue decline at ELS, driven by COVID shutdowns in Spain earlier in 2020.