Financial Data and Key Metrics Changes - In Q4 2025, orders increased by 74%, revenue grew by 20%, and EPS rose by 19% to $1.57, with free cash flow up 15% [5][17] - For the full year, orders were up 32%, revenue increased by 21%, operating profit grew by $1.8 billion, and free cash flow rose by $1.5 billion [5][18] - Operating profit for the year was $9.1 billion, with margins expanding by 70 basis points to 21.4% [18] Business Line Data and Key Metrics Changes - In the Commercial Engine Services (CES) segment, orders were up 35% and revenue grew by 24%, with services orders up 27% and revenue up 26% [5][20] - In the Defense and Power Technologies (DPT) segment, orders increased by 19% and revenue was up 11%, with profit rising by 22% to $1.3 billion [5][21] Market Data and Key Metrics Changes - The company reported a backlog of approximately $190 billion, up nearly $20 billion from the previous year [7] - The installed base of engines is 80,000, with over 2.3 billion flight hours accumulated [27][28] Company Strategy and Development Direction - The company aims for substantial revenue, EPS, and cash growth in 2026, with expectations for revenue to increase in low double digits and operating profit to reach $9.85 billion to $10.25 billion [7][8] - Investments are being made in U.S. manufacturing to support both commercial and defense customers, with a focus on improving time on wing and reducing cost of ownership [7][8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand environment, citing robust orders and a strong backlog as indicators of future performance [32][33] - The company is focused on continuous improvement and leveraging technology to enhance customer value and operational efficiency [28][29] Other Important Information - The company is transitioning its segment reporting to reflect organizational changes, with aeroderivative engines moving from CES to DPT [22][23] - The company plans to invest approximately $500 million in MRO to support LEAP engine capacity expansion [11] Q&A Session Summary Question: Can you elaborate on the commercial aftermarket backdrop? - Management noted strong momentum in services growth and expressed confidence in achieving mid-teens growth in 2026, driven by increased work scopes and pricing [31][32] Question: What is the profitability outlook for LEAP engines? - Management confirmed that LEAP original equipment is expected to be profitable in 2026, with improvements in supply chain visibility and readiness [40][44] Question: How are turnaround times improving for mature engines? - Management indicated that improvements in turnaround times are driven by better material availability and efficient execution on the shop floor, which enhances productivity [48][50] Question: What are the implications of the agreement with FTAI? - The agreement is aimed at enhancing third-party aftermarket options, which supports asset values and lowers costs of ownership for customers [93] Question: What is the expected cash flow outlook for 2026? - Management indicated that there are no abnormal cash flow expectations for 2026, with a focus on managing inventory growth and contract assets [94][95]

Financial Data and Key Metrics Changes - Revenue for the third quarter was $11.3 billion, up 26% year-over-year, with operating profit also increasing by 26% to $2.3 billion [15][20] - Earnings per share (EPS) grew by 44% to $1.66, driven by increased operating profit, a lower tax rate, and a reduced share count [15][21] - Free cash flow reached $2.4 billion, up 30%, with over 130% conversion from earnings [15][21] Business Line Data and Key Metrics Changes - In Commercial Engines and Services (CES), orders were up 5%, with services orders increasing by 32% while equipment orders decreased by 42% due to timing [17][20] - CES revenue grew by 27%, with services revenue up 28% and internal shop visit revenue up 33% [17][20] - In Defense and Propulsion Technologies (DPT), revenue grew by 26%, with defense engine volume up 83% year-over-year [20][21] Market Data and Key Metrics Changes - Year-to-date, total orders increased by 13%, with services orders up 31% [4] - The total DPT backlog reached $19 billion, up $1.5 billion year-over-year [20] - The company expects revenue growth in the high teens for the full year, up from a prior outlook of mid-teens [21] Company Strategy and Development Direction - The company is focused on its FLIGHT DECK operating model to enhance delivery and operational efficiency [3][4] - Investments in LEAP durability and next-generation technologies are prioritized to meet customer demands and improve product reliability [10][12] - The company is committed to maintaining competitive advantages through continuous improvement in services and products [23][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand environment and the ability to meet customer expectations through improved operational performance [4][5] - The company raised its full-year guidance across the board, reflecting strong year-to-date performance and expectations for continued growth [21][22] - Management highlighted the importance of collaboration with suppliers to enhance material availability and production capacity [6][9] Other Important Information - The company is investing nearly $1 billion in its supply chain to expand capacity [9] - The LEAP-1A durability kit is in production, expected to drive significant improvements in engine performance [77] - The company has secured significant commitments from major airlines, enhancing its backlog and market position [13][14] Q&A Session Summary Question: Services performance and factors driving growth - Management noted that strong services performance was driven by improved material availability and increased work scopes, with expectations for continued growth into 2026 [29][30] Question: LEAP services margin outlook - Management expressed confidence in achieving targeted LEAP services margins by 2028, citing operational improvements and cost reductions [35][41] Question: Capital deployment and share repurchase strategy - Management confirmed a balanced approach to capital allocation, focusing on reinvestment in the business while also returning capital to shareholders [45][48] Question: Spare parts performance and drivers of growth - Management highlighted pent-up demand and increased work scopes as key drivers of spare parts growth, with expectations for continued strong performance [53][56] Question: 2026 revenue growth outlook - Management indicated optimism for 2026, expecting solid revenue growth driven by a growing installed base and increased shop visit demand [61][64] Question: Defense business and R&D insights - Management discussed leveraging commercial experience to enhance defense operations, focusing on next-gen platforms and improving service models [71][72] Question: Durability of new LEAP-1A blade - Management reported positive initial performance of the LEAP-1A durability kit, with a multi-year rollout plan for the installed base [76][78] Question: Supply chain material availability improvements - Management attributed improvements to consistent efforts over the past 18 months, emphasizing collaboration with suppliers to address constraints [84][86] Question: Commercial aftermarket revenue growth - Management explained that pent-up demand and increased work scopes are driving aftermarket revenue growth, which is expected to continue [91][92]