Phebe Novakovic
Chairman and Chief Executive Officer at General Dynamics
Thanks, Jason. Now, let me continue to review the quarter in the context of the other business segments and provide color as appropriate and guidance for the full year. First, Aerospace. Aerospace had revenue of $1.95 billion, and operating earnings of $236 million with the 12.1% operating margins. Revenue was $86 million more than last year's second quarter, on the strength of additional new aircraft deliveries, coupled with higher Gulfstream service center volume, partially offset by less volume in Jet Aviation completion center.
The 24 deliveries are modestly fewer than planned and are a result of supply chain issues. On the good news side of the equations, supply chain conditions are improving. We still have a significant backlog of late parts, the processes are in place to catch-up, deliveries are trending positive. And we have greater transparency. In short, the suppliers are more predictable and are complying with catch-up schedules. This will help both revenue and margins as we do less out-of-station work.
Operating earnings of $236 million or $2 million behind last year's second quarter, as a result of a 60 basis point reduction in operating margin. Operating margin in the quarter was off largely as a result of the supply chain issues and higher R&D expense. The shortage of parts continues to cause significant out-of-station work, impacting efficiency. As mentioned earlier, we see improvement here, and that should help as we go through the second half. Sequentially, Aerospace had a 3.2% increase in revenue and a 3.1% increase in operating earnings on identical operating margins.
Moving to the demand environment. Aerospace had a very good quarter with a book-to-bill of 1.3:1 in dollar terms and even higher for Gulfstream aircraft alone. Vibrant sales activity and strong pipeline replenishment were evident in the quarter. The U.S., particularly large corporations, led the way with the Mid East and Asia participating to a lesser degree.
The 700 flight test and certification program continues to progress. The aircraft design, manufacturing and the overall program are very mature. However, we now target certification in the fourth quarter and see no major obstacles in our path. To give you a little more insight, we will complete our FAA type inspection authorization in September. This is a fly, we are required to do pursuant to FAA requirement and plan. When we are finished, the FAA will fly some confirmatory flight tests to verify portions of our results. That will be followed by a brief period of paper submission, followed by FAA review.
As most of you know, we had planned to deliver considerable number of G700s in the third and fourth quarters, that has now flipped into the fourth quarter. We now expect to deliver 27 aircraft in the third quarter, with a rapid increase in the fourth quarter deliveries. In short, we are making good progress under difficult circumstances. However, we expect to deliver five to six fewer aircrafts than the 145 we forecast at the beginning of the year. On the other hand, we expect more service revenue than initially anticipated. I'll have more on this later in my remarks.
Next, Combat Systems. Combat had revenue of $1.92 billion, up a stunning 15.5% over the year ago quarter with growth in each of the business units. Earnings of $251 million are up 2.4%, margins at 13%, represent a 170 basis point reduction over the year ago quarter. So we saw a powerful revenue performance, coupled with more modest operating margin in large part attributable to mix.
The increase in revenue came from international vehicle programs at both Land Systems and European Land Systems. OTS has also enjoyed higher artillery program volume, including programs to expand production capacity for the U.S. government. These programs carry dilutive margins, but will result in more production at accretive margins over time.
On a sequential basis, revenue is up $168 million or 9.6%, and earnings are up $6 million or 2.4% on a 100 basis point reduction in margin for the reasons described. Year-to-date, revenue is up $339 million or 10.1%, and operating earnings are up $24 million or 5.1%. We also experienced very strong order performance. Orders in the quarter resulted in 1.4:1 book-to-bill, evidencing strong demand for munitions and domestic combat vehicles. International programs also contributed to the strong book-to-bill. So a very exciting first half for Combat.
Turning to Marine Systems. Once again, our shipbuilding group is demonstrating impressive revenue growth. Marine Systems revenue of $3.1 billion is up $408 million, a robust 15.4% against the year ago quarter. Columbia-class construction and engineering volume drove the growth, and to a lesser degree, T-AO growth. Operating earnings are $235 million, up $24 million over the year ago quarter, with a 30 basis point decrement in operating margin. We anticipate that all of our yards are now well positioned for slow but steady incremental margin growth over time with fewer perturbations.
On a sequential basis, revenue was up $67 million or 2.2%, and operating earnings are up $24 million or 11.4% on a 60 basis point improvement in margin. For the first half, revenue was up $749 million or 14.1%, and earnings are up $24 million or 5.7%. So a good quarter and first half.
So let me move on to give you our updated forecast for the year. The figures I'm about to give you are all compared to our January forecast which I won't repeat. There is, however, a chart with respect to all of this, it will be posted on our website, which should be helpful. In Aerospace, revenue will be down almost $200 million due to the five or six fewer aircraft deliveries, offset in part by stronger service activity. So look for revenue of $10.2 billion. We also expect margins to be down from a projected 14.6% to 14.1%. This implies operating earnings of $1.4 billion.
With respect to the Defense businesses, Combat Systems saw a revenue of $400 million to $500 million higher than previously projected due to new program starts and an increased threat environment. So look for the total revenue of around $7.75 billion. Margins will be down 50 basis points from 14.7% to 14.2% on mix. All-in operating earnings will be up $25 million over the previous forecast.
Marine Systems revenue should be up $900 million or $1 billion on acceleration of work throughout the yards. This is a leading indicator of improving efficiency. So we will have annual revenue around $11.8 billion with an operating margin around 7.6% for the reasons I have previously described to you. Operating earnings for the year should be up $20 million over the previous forecast. Technologies revenue will be $100 million to $200 million better than previous guidance, but operating margin will be 9.4%, 10 basis points lower than previously forecast. So for the group, we expect annual revenue of about $12.7 billion, with operating earnings around $1.2 billion, steady with prior guidance.
There is some opportunity here to capture 10 basis points to 20 basis points of margin. On a company-wide basis, we see annual revenue higher than our initial guidance and an overall operating margin about 40 basis points lower. So look for total revenue to be around $42.45 billion, about $1.2 billion up from previous guidance. Operating earnings should be down modestly from prior guidance, but below the line items and lower share count will leave our EPS guidance the same.
One final note before I conclude my comments. Howard has informed the company that he intends to retire later this year. So this will be his last earnings call. We are grateful for the excellent work that Howard has done since joining our team. I hope many of you will join me in congratulating Howard on a job well done. Nicole Shelton, who some of you know already, will be taking over the mantle with the third quarter call.
That concludes my remarks, and we will be happy to take your questions.
