Revenue was essentially flat against the second quarter last year, but operating earnings are up $125 million and net earnings are up $112 million.
Earnings per share are up $0.43.
To be a little more granular, revenue on the defense side of the business is up against last year's second quarter by $308 million or 4.2%.
The Aerospace is down $352 million, pretty much as planned.
Operating earnings on the defense side are up $98 million, or 14.3%, and operating earnings in Aerospace are up $36 million on a 390 basis point improvement in operating margin.
The operating margin for the entire company was 10.4%, 140 basis points better than the year-ago quarter.
From a slightly different perspective, we beat consensus by $0.07 per share on somewhat lower revenue than anticipated by the sell side.
However, operating margin is 20 basis more than anticipated, coupled with a somewhat lower share count.
On a year-to-date basis, revenue is up $596 million or 3.3%, and operating earnings are up $129 million or 7.3%.
Overall, margins are up 40 basis points.
The defense numbers are particularly good with revenue up $752 million or 5.2%, and operating earnings up $143 million or 10.3%.
On the Aerospace side of the business, revenue on a year-to-date basis is down $156 million or 4.3%, but earnings are up $16 million or 4% on a 90 basis point improvement in operating margins.
Free cash flow of $943 million is 128% of net income.
Cash flow from operating activities was 151% of net income.
Aerospace had revenue of $1.6 billion and operating earnings of $195 million, with a 12% operating margin.
Revenue was $352 million less than the year-ago quarter or 17.8% as a result of fewer planned aircraft deliveries.
On the other hand, operating earnings are up $36 million or 22.6% on a 390 basis point improvement in margins.
In dollar terms, Aerospace had a book-to-bill of 2:1.
Gulfstream alone had a book-to-bill of 2.1:1, even stronger if expressed in unit terms.
We have delivered 115 of these aircraft to customers as we speak.
The G700 has approximately 1,600 test hours on the five test aircraft.
Looking forward, we have planned 32 deliveries in the third quarter and 39 in the fourth.
Combat systems had revenue of $1.9 billion, up 8.3% over the year-ago quarter.
It is also interesting to observe that combat systems revenue has grown in 17 of the last 19 quarters on a quarter over the year-ago quarter basis.
For the first half of the year, combat systems revenue of $3.7 billion, is $257 million or 7.4% over the first half of last year.
Operating earnings for the quarter at $266 million are up 11.3% on higher volume and a 40 basis point improvement in margin.
For the first half, combat systems earnings of $510 million are up $48 million or 10.4% over the last year's first half.
The quarter was also good for combat systems from an order perspective with a 1:1 book-to-bill, leaving a modest increase in total backlog.
Revenue of $2.54 billion is up $65 million over the year-ago quarter.
In the quarter, the growth was led by the DDG-51 and T-AO volume.
For the first half, revenue is up $302 million or 6.4%.
In fact, revenue in this group has been up for the last 15 quarters on a quarter versus the year-ago quarter basis.
Operating earnings are $210 million in the quarter, up $10 million or 5% on operating margins of 8.3%.
The segment has revenues of $3.16 billion in the quarter, up $98 million from the year-ago quarter or 3.2%.
The revenue increase supplied by information technology, mostly associated with the ramp-up of new programs, was almost 10%.
Operating earnings at $308 million are up $61 million or 24.7% on a 9.7% operating margin.
EBITDA margin is an impressive 13.7%, including state and local taxes, which are a 50 basis point drag on that result.
Total backlog grew $95 million, so good order activity in the quarter with a book-to-bill of 1:1 and good order prospects on the horizon.
The book-to-bill at IT was a little better than 1:1, and somewhat less at Mission Systems.
In total, GDIT has nearly $34 billion in submittals awaiting customer decision with most representing new work.
In addition to these submittals, our first half order book does not reflect approximately $4.6 billion of awards made in GDIT that are now in protest, including two sizable contracts challenged by a competitor.
Business has the opportunity to submit another nearly $20 billion in proposals through the end of the year.
From an operating cash flow perspective, we generated over $1.1 billion on the strength of the Gulfstream order book and additional collections on our large international combat vehicle contract.
Including capital expenditures, our free cash flow, as Phebe noted, was $943 million, or a 128% net earnings conversion.
So the strong quarter derisks that profile somewhat and reinforces our outlook for the year of free cash flow conversion in the 95% to 100% range.
I mentioned capital expenditures, which were $172 million in the quarter or 1.9% of sales.
That's down from last year, but our full-year expectation remains in the range of 2.5% of sales.
We also paid $336 million in dividends and spent approximately $600 million on the repurchase of 3.3 million shares.
That brings year-to-date repurchases to 7.9 million shares at an average price of just under $173 per share.
We have 279.5 million shares outstanding at the end of the quarter.
We repaid $2.5 billion of notes that matured in May, in part with proceeds from $1.5 billion in notes we issued in May.
We also issued $2 billion of commercial paper during the quarter to facilitate the repayment of those notes and for liquidity phasing purposes, but we expect to fully retire that CP before the end of the year.
After all this, we ended the second quarter with a cash balance of just under $3 billion and a net debt position of $11.4 billion, consistent with the end of last quarter and down more than $900 million from this time last year.
As a result, net interest expense in the quarter was $109 million, down from $132 million in the second quarter of 2020.
That brings the interest expense for the first half of the year to $232 million, down slightly from $239 million for the same period in 2020.
We repaid another $500 million of notes on July 15, as we continue to bring down our debt balance this year and beyond.
At this point, we expect our interest expense for the year to be approximately $425 million.
The tax rate in the quarter and the first half at 16.3% is consistent with the full-year expectation.
So no change to our outlook of 16% for the year.
Order activity and backlog were once again a strong story in the second quarter with a 1:1 book-to-bill for the company as a whole.
As Phebe mentioned, order activity in the aerospace group led the way with a twice book-to-bill, while combat and technologies each recorded a book-to-bill of 1:1 on solid year-over-year revenue growth.
We finished the quarter with a total backlog of $89.2 billion.
That's up over 8% over this time last year.
And total potential contract value, including options and IDIQ contracts, was $130.3 billion.
You'll recall in the second quarter of last year, we recognized a loss of approximately $40 million on an international contract that resulted from scheduled delays caused by COVID-related travel restrictions.
And despite the fact that our activity on the contract has been dormant for over a year, the accounting rules required us to reverse approximately $45 million of previously recognized revenue in the quarter.
Without this reversal, the technologies group would have seen organic growth of 6.4% in the quarter.
In our aerospace, we expect an additional $200 million of revenue with an operating margin of around 12.4%, which is 10 basis points below what we previously forecasted.
This will result in an additional $10 million of operating earnings.
With respect to the defense businesses, combat systems should have another $100 million of revenue and add another 10 basis points of operating margin.
So total revenue of $7.4 billion and operating margin number around 14.6%.
Marine Systems has an additional $300 million and 10 basis points of improved margin.
So annual revenue of $10.6 billion with an operating margin around 8.4%.
Technology revenue will be down $200 million from our previous forecast but adds 30 basis points of operating margin.
So annual revenue of $13 billion with an operating margin of around 9.8%.
So on a companywide basis, we see annual revenue of about $39.2 billion and an overall operating margin around 10.6%.
This rolls up to earnings per share around $11.50, $0.45 to $0.50 better than our forecast going into the year.

Summary:
We finished the quarter with a total backlog of $89.2 billion.
And total potential contract value, including options and IDIQ contracts, was $130.3 billion.