We beat consensus by $0.09 per share on somewhat lower revenue than anticipated by the sell side.
However, operating margin is up about 40 basis points more than anticipated.
Revenue is up 1.5% against the third quarter last year.
Operating earnings were up less than 1%.
Net earnings are up 3.1% and earnings per share are up 5.9%.
Here, we beat last quarter revenue by 3.8%, operating earnings by 12.6%, net earnings by 16.7%, and earnings per share by 17.6%.
On a year-to-date basis, revenue is up $733 million or 2.7%.
Operating earnings are up $137 million or 4.8%, net earnings are up $140 million, and earnings per share are up $0.64, a strong 8.5%.
Cash flow from operating activities was $1.47 billion, that is 171% in net earnings.
Free cash flow was $1.275 billion, 148% of net income.
We had anticipated renewed post-COVID demand in the second half of this year and planned increased production for the second half with 32 planned deliveries in the third quarter and 39% in the fourth quarter.
Aerospace had revenue of $2.07 billion and operating earnings of $262 million, with a 12.7% operating margin.
We managed delivery of 31 aircraft as opposed to the 32 planned, one slipped into the fourth quarter on customer preference.
Revenue is $91 million more than the year-ago quarter, up 4.6% on one fewer aircraft delivered.
On the other hand, operating earnings are down $21 million, on a 160 basis point degradation in margins.
This was the result of an additional $28 million in G&A expenses driven by higher R&D expense and around a $20 million settlement of a supplier claim related to the allocation of warranties after the end of G550 production.
In dollar terms, aerospace had a book-to-bill of 1.6:1.
Gulfstream alone had a book-to-bill of 1.7:1.
We continue to experience a high level of interest activity and a solid pipeline.
We have delivered 131 of these aircraft to customers through the end of the quarter with 20 scheduled for delivery in the fourth quarter.
The G700 has approximately 1,800 test hours on the five test aircraft.
As I mentioned earlier, we had planned 32 deliveries in the third quarter and came up on short.
We implanted for 39 in the fourth and LAD-1 that slipped into the quarter.
If everything goes as planned, we will deliver 40 aircraft in the fourth quarter.
Combat systems had revenue of $1.745 billion, down 3.1% from the year-ago quarter.
However, earnings are up 2.2% over the year ago quarter on the strength of an 80 basis point improvement in operating margin, yet another example of strong operating leverage from Combat systems.
Further that theme on a year-to-date basis, Combat system revenue was up $201 million or 3.8%, while operating earnings are up a significant 7.4% on a 50 basis point improvement in operating margins.
Revenue of $2.64 billion is up $232 million, above 9.6% over the year ago quarter.
Year-to-date revenue was up 7.5%.
In fact, revenue in this group has been up for the last 16 quarters on a quarter over year ago quarter basis.
Operating earnings are $229 million in the quarter, up $6 million or 2.7% on an operating margin of 8.7%.
On a sequential basis, operating earnings are up $19 million, on a 40 basis point improvement in margins.
This segment had revenue of $3.120 billion in the quarter, down $130 million from the year ago quarter or 4%.
On the other hand, information technology grew revenue against the year ago quarter at a rate of 1.4%.
Operating earnings of $327 million are up $13 million or 4.1% on a 10.5% operating margin.
EBITDA margin is a truly impressive 14.4%, including state and local taxes, which are a 50 basis point drag on that result.
This quarter revenues decrease will impact the year, and we now expect revenue to be around $12.6 billion or $400 million less than our second quarter update.
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 GDIT was a little better than 1:1 and somewhat less emission systems.
Operating cash flow was $1.5 billion in the quarter, once again on the strength of Gulfstream orders and from continued strong cash performance from our technology segment.
Including capital expenditures, our free cash flow was $1.3 billion or a 148% net earnings conversion.
Through the first nine months, our conversion rate is 91%, approaching our full-year outlook for free cash flow conversion in the 95% to 100% range.
Capital expenditures were $196 million in the quarter or 2% of sales.
That puts us a little under the 2% of sales for the first nine months, so trending somewhat below our forecast for the year.
We're still projecting full year capex in the range of 2.5% of sales.
We also paid $332 million in dividends and spent $117 million on the repurchase of 600,000 shares in the quarter.
That brings year-to-date repurchases to 8.5 million shares at an average price of just under $174 per share.
We repaid $500 million of notes that matured in July.
And although there were no new issuances, we ended the quarter with $2 billion of commercial paper outstanding.
So we ended the third quarter with a cash balance of just over $3.1 billion and a net debt position of $10.5 billion, down more than $800 million from last quarter and down $1.4 billion from this time last year.
With the scheduled CP repayment in the fourth quarter, we expect to end the year with a net debt balance below $10 billion for the first time since 2018.
As a result, net interest expense in the quarter was $99 million, down from $118 million in the third quarter of 2020.
That brings the net interest expense for the first nine months of the year to $331 million, down from $357 million for the same period in 2020.
The tax rate in the quarter was 15.3%, bringing our rate to 15.9% for the first nine months, consistent with our full-year outlook, which remains around 16%.
Order activity and backlog were once again a strong story in the third quarter with a 0.9 times book-to-bill for the company as a whole, bringing us to a 1:1 ratio for the first nine months and a 1.2 times ratio for the trailing 12 months.
As Phebe mentioned, the order activity in the Aerospace group led the way with a 1.6 times book-to-bill in the quarter, while technologies recorded a book-to-bill of one-to-one.
Foreign exchange rate fluctuation resulted in a $300 million reduction in backlog in the quarter, with the majority of that impact in Combat Systems.
We finished the quarter with a total backlog of $88.1 billion, that's up 8% over this time last year, and total potential contract value, including options and IDIQ contracts was $129.6 billion.

Summary:
We continue to experience a high level of interest activity and a solid pipeline.
Revenue of $2.64 billion is up $232 million, above 9.6% over the year ago quarter.
We finished the quarter with a total backlog of $88.1 billion, that's up 8% over this time last year, and total potential contract value, including options and IDIQ contracts was $129.6 billion.