(Reuters) - Gulfstream jet deliveries helped General Dynamics Corp GD.N report a 7.3% rise in quarterly profit on Wednesday, but shares fell as much as 4% after company officials said the fourth quarter would see more deliveries of less-profitable refurbished aircraft.

FILE PHOTO: A mockup of the Gulfstream G700 is unveiled during a news conference at the National Business Aviation Association (NBAA) exhibition in Las Vegas, Nevada, U.S. October 21, 2019. REUTERS/David Becker/File Photo

“Based on the inputs we’re seeing right now and the contracts that will deliver in the fourth quarter, we would expect to see, at this point, more pre-owned aircraft in sales in the fourth quarter,” Chief Financial Officer Jason Aiken told investors on a conference call, with margins on pre-owned aircraft not being as profitable as those for new jets.

In morning trading, shares of the U.S. aerospace and defense company fell 3.5% to $173.56 after earlier sinking about 4%. Shares had surged 2.5% on Tuesday ahead of the earnings report.

Revenue in the aerospace unit jumped 23% to $2.5 billion in the third quarter ended Sept. 29, as new Gulfstream deliveries, a key metric for investors, increased to 38, from 27 a year earlier.

The company delivered some of its first G600 jets to customers in August.

Net earnings climbed to $913 million, or $3.14 per share, in the quarter, from $851 million, or $2.85 per share, a year earlier. Wall Street analysts estimated earnings per share of $3.06, according to Refinitiv data.

Revenue rose 7.3% to $9.76 billion.

On Monday, General Dynamic's Gulfstream division unveiled its widely expected G700 long-range jet, in a challenge to Bombardier Inc's BBDb.TO flagship Global 7500 aircraft.

Chief Executive Office Phebe Novakovic told analysts on the conference call on Wednesday that the first flight of the new jet would be in December.

Profit margins at the aerospace unit fell nearly three percentage points to 15.8% from 18.5% in the same quarter last year as the company invested in G600 and G700 jet production.

Operating earnings from the Marine Systems unit, which makes ships and submarines for the U.S. Navy, rose to $209 million, a 24% increase compared to the same quarter a year ago.

Combat systems, which makes tanks, saw its revenue go up 14% from last year to $1.7 billion. In July, the U.S. State Department approved the possible sale to Taiwan of 108 of General Dynamics’ M1A2T Abrams tanks, angering China.

Also in July, General Dynamics won a $2 billion contract to continue supporting global security, engineering and supply chain missions for the U.S. Department of State.

Total backlog at the end of third quarter 2019 was $67.4 billion, compared with $67.7 billion at the end of the second quarter.