General Dynamics (GD) no longer mentions seasonality in its 2020 10-K. In the prior year’s annual report, General Dynamics mentioned seasonality twice but only to point out that it’s not an issue impacting the company:

“Our business is not seasonal in nature. The receipt of contract awards, the availability of funding from the customer, the incurrence of contract costs and unit deliveries are all factors that influence the timing of our revenue. In the United States, these factors are influenced by the federal government’s budget cycle based on its October-to-September fiscal year.”

Omitting the reference from the latest annual report may mean only that the statement was unnecessary in the first place. Or it may be a subtle but important clue that future contract receipts may be lumpier than in years past.

If the omission is a signal that contract receipts could be lumpier in the future, General Dynamics appears to help investors understand why.

The unfunded portion of General Dynamic’s backlog is growing faster than overall backlog growth. While total backlog increased 2.9% in the year ending December 31, 2020, the unfunded portion grew 4.4%. The unfunded portion for GD’s largest backlog segment— Marine— which sells ships and submarines to the U.S. Navy, increased 8.9%. These funds are contingent upon the new administration’s priorities, which other defense contractors have warned is not certain.

Separately, pandemic related travel restrictions and site closures disrupted General Dynamics’ U.S. government business, which accounts for approximately two thirds of the company’s revenue. Delays could push out milestone payments, which are highlighted in the company’s annual report:

“In our defense segments, amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., biweekly or monthly) or upon achievement of contractual milestones.”

The pandemic also negatively impacted the company’s aerospace business, prompting it to reduce its aircraft production rate. Production cuts will also upend milestone payments that were relatively easy to forecast and largely in General Dynamics’ control:

“In our Aerospace segment, we generally receive deposits from customers upon contract execution and upon achievement of contractual milestones.”