Revenues and earnings at General Dynamics’ aerospace division slid in the first-quarter as Gulfstream deliveries fell nearly 16 percent year-over-year, the company announced today. The segment, which also includes aircraft MRO and completions firm Jet Aviation, posted revenues of $1.987 billion in the quarter, down $121 million from a year ago, and a $411 million profit versus $431 million in the first quarter of 2015.

Gulfstream delivered 27 completed aircraft (19 large-cabin jets, eight midsize jets) in the first quarter, compared with 32 (25 large-cabin, seven midsize) in the same period last year. About half of these aircraft were handed over to U.S. customers, while 30 percent went to Middle Eastern and European clients and the remainder to Asia Pacific customers.

General Dynamics chairman and CEO Phebe Novakovic said that Gulfstream’s sales in the first quarter were on par with last year’s first quarter, adding that sales this month have been “strong.” Book-to-bill in the first quarter was 0.7:1, which Novakovic said is above the five-year average of 0.5:1 for the quarter. Aerospace backlog stood at $12.612 billion as of March 31, down from $13.398 billion at the end of last year. G650 backlog is now 24 months, while G450/550 backlog is still nine to 12 months.

Novakovic directly addressed financial analysts' questions about the rising inventory of pre-owned G650s. Noting that the G650 created this new category and still stands alone in this market space, Novakovic said that investors shouldn’t panic about the increase in pre-owned G650 inventory, which more than doubled over the last year and now sits at about 22 aircraft.

“The G650 pre-owned market is immature and still developing,” she said. “Some of these aircraft have been on the market for years without any price reduction,” implying that some aircraft owners aren’t serious sellers. “We haven’t seen any G650 order cancellations as a result of the increase in pre-owned inventory.”