Phebe N. Novakovic
Chairman and Chief Executive Officer at General Dynamics
Thanks, Jason. Now I may review the quarter in the context of the other business segments and provide detailed color as appropriate. First, Aerospace. Aerospace held its own in a very difficult operating environment. It had revenue of $1.9 billion and operating earnings of $229 million with a 12.1% operating margin. Revenue was $11 million less than last year's first quarter despite the delivery of four fewer aircraft.
The fewer aircraft deliveries were almost completely offset by higher Gulfstream Services, Jet Aviation volume, and Special Mission's work at Gulfstream. The 21 deliveries in the quarter are three fewer than planned, two, 280s did not deliver because of late engine deliveries.
The other plan, a large cabin for an international customer didn't deliver because of simple bureaucratic registration delays in the owner's country. Importantly, this is the first quarter in which we have missed an airplane delivery as a result of supply chain issues. Up until now, we have managed to work around late to schedule parts delivery.
Operating earnings of $229 million or $14 million behind last year's first quarter as a result of a 70 basis point degradation in operating margin. Operating margin in the quarter was under pressure as a result of fewer new airplane deliveries, a less attractive mix, severe supply chain issues, some modest cost increases from suppliers, and the prebuild of G700.
Let's take a look at some of these elements in greater detail. The shortage of parts to schedule from the supply chain, especially from Honeywell has created significant out-of-station work, which is inherently less efficient. We have a young well-trained and capable workforce. They have, however, never previously been exposed out-of-station work. They are doing well. I am pleased to report, but it had an impact.
The other impact of late-to-schedule parts deliveries, apart from cost growth is that we cannot increase our build rate until the supply of parts is more predictable. The good news is that there is light at the end of the tunnel. We see the vast majority of this problem resolving early in the third quarter, but for two large suppliers who will take a little longer to resolve.
As most of you know, we plan to deliver a considerable number of G700 in the third and fourth quarters. To do that, we must build them now and incur some period costs without the related revenue. This has impacted the first quarter and will impact the second quarter, but relief is in sight as deliveries commence.
Aerospace had a decent quarter from an order perspective with a book-to-bill of 0.9:1 in dollar terms and 1:1 in units. The quarter was looking quite good until the two regional bank failures in early March. This created a pause in the market for about three weeks. I am pleased to report that normal activity has resumed. Strong sales activity and customer interest is evident in this quarter.
The U.S. has been strong and the Middle East as well. China remains slow. The G700 flight test and certification program continues to progress well. The aircraft design, manufacture, and the overall program are very mature. We continue to target certification of the G700 for late summer this year.
Gulfstream remains committed to a safe and comprehensive certification test program. Production of customer G700 is well underway, and we are preparing for entry into service. We will deliver a mature, high-quality aircraft.
Looking forward to the next quarter, we expect to deliver 26 aircraft with rapid increases in the third and fourth quarter deliveries, as we have previously indicated. In short, the Aerospace team did a good job under difficult circumstances.
Next, Combat Systems. Combat had revenue of $1.76 billion, up 4.8% over the year-ago quarter. Earnings of $245 million are up 7.9%. Margins at 14% represent a 40 basis point improvement over the year-ago quarter. So we saw a strong operating performance coupled with a nice revenue uptick.
At Land Systems, increased revenue came from the MPF ramp-up, Stryker SHORAD and new international vehicle programs for Poland and Australia. At European Land Systems, we had higher Parana volume and OTS enjoyed higher artillery program volume. So we saw increased revenue performance at each of the businesses.
Here's a little additional color on Combat Systems' revenue results. Foreign exchange fluctuations negatively impacted Combat's revenue in the quarter due to the strength of the dollar versus the Canadian dollar, Euro and the British pound. But for the FX headwind, Combat Systems' revenue growth would have been up 7.1% over the last year rather than the 4.8% we have just reported.
We also experienced very strong order performance at Combat. Orders in the quarter are at their highest level in more than eight years, evidencing the strong demand for munitions and international Combat vehicles. There is clear upward pressure on our forecast for Combat Systems' revenue and earnings in the year.
Turning to Marine Systems. Once again, our shipbuilding units are demonstrating impressive revenue growth. As an aside, let me repeat a little recent history. The first quarter of 2020 was up 9.1% against the first quarter of '19. The first quarter of '21 was up 10.6% over '20 and first quarter of 2022 was up 6.8% over '21.
Finally, this quarter revenue of almost $3 billion is up 12.9% over 2022. This is an impressive growth ramp by any standard. This quarter's growth was led by Columbia-class construction and engineering, DDG-51 construction, and some TAO volume.
Operating earnings are $211 million in the quarter, exactly the same as a year ago, but with a 90 basis point decrement in operating margin. The primary driver of lower margins during the quarter was a charge on the Virginia program to reflect cost pressure within our supply chain and efficiency impacts at Electric Boat as a result of late material deliveries. This was partially offset by Colombia margin improvement.
Other modest margin impacts included an earnings decline at that as a result of a one-time pickup in the year-ago quarter and cost inflation reimbursement that does not carry profits. Overall, earnings are what we expected, but revenue was higher, resulting in lower margins. We anticipate that this will improve as we progress through the year.
As you know, we never update guidance at this time of the year. I would say, however, that our quarterly progression differs from prior years and that the second quarter will be our lowest quarter because of mix and volume across the business.
Nonetheless, we look forward to very strong third and fourth quarters. We will give you a comprehensive update at the end of next quarter as is our custom.
This concludes my remarks with respect to what was a challenging but in many respects, rewarding quarter.
