Core Insights - GE Aerospace operates through two main segments: Commercial Engines and Services, and Defense Propulsion Technologies [2] Group 1 - The presentation is led by Peter Arment, a senior aerospace defense analyst at Baird, who introduces GE Aerospace and its executive Rahul Ghai [1] - Rahul Ghai has a long history in the aerospace and multi-industrial sectors, having joined GE Aerospace in 2023 before the spin-off in 2024 [1]

Summary of GE Aerospace FY Conference Call Company Overview - **Company**: GE Aerospace (NYSE: GE) - **Industry**: Aerospace and Defense - **Key Segments**: Commercial engines and services, Defense propulsion technologies Core Points and Arguments 1. **Market Leadership**: GE Aerospace has the largest engine install base in the industry with 78,000 engines, powering three out of every four commercial aircraft and two out of three U.S. combat aircraft [4][5] 2. **Revenue Composition**: In 2025, approximately 70% of revenue is expected to come from services, supported by a $175 billion backlog, primarily driven by the install base [5][6] 3. **Growth Projections**: - Services orders growth has increased by over 30% year-to-date, leading to a 25% growth in commercial services revenue [5][6] - Full-year outlook for commercial services has been raised to low to mid-20s growth, translating to an additional $1 billion in services revenue [6] - Defense propulsion technologies (DPT) revenue expectations have been increased to high single digits from mid-single digits [6][12] 4. **Operational Improvements**: The implementation of the FlightDeck operating model has improved material flow by over 30% year-over-year, enhancing operational efficiency and supplier performance [6][7][29] 5. **Future Outlook for 2026**: - Anticipated growth in air traffic and engine shop visits, with a projected double-digit increase in shop visits over 2025 [10][11] - LEAP engine deliveries expected to grow by 15%-20%, reaching around 2,000 engines [12][13] - Services growth is expected to normalize to a double-digit growth rate between 2024 and 2028 [12][16] 6. **LEAP Engine Performance**: - LEAP engines are achieving performance levels comparable to CFM56 engines, with expectations for improved durability and profitability in the coming years [18][20] - External shop visits for LEAP engines are projected to increase significantly, unlocking spare parts revenue [20][39] Additional Important Insights 1. **Supply Chain Management**: GE Aerospace has focused on improving transparency and communication with suppliers, which has been crucial for meeting demand and resolving issues [36][38] 2. **Defense Propulsion Technologies Growth**: - DPT has seen an 80% increase in defense engine shipments year-over-year, with a $19 billion backlog driving future growth [42][43] - Growth opportunities are identified in international markets and classified projects, with expectations for mid-single digit growth in DPT [47][48] 3. **Cultural Shift**: The FlightDeck initiative has transformed the company culture towards greater transparency and accountability, enhancing overall operational performance [29][34] Conclusion - GE Aerospace is positioned for strong performance in 2025 and optimistic growth in 2026, with a solid backlog and operational improvements driving future revenue [48][49]

Core Viewpoint - Rolls-Royce share price has experienced a strong uptrend this year, reaching its all-time high, but recent performance has stalled as some investors are booking profits while awaiting upcoming developments [1] Group 1 - The share price of Rolls-Royce is currently at its all-time high, indicating strong market performance [1] - Recent profit-taking by investors has led to a stall in the company's share price performance [1]

Core Insights - GE Aerospace reported strong third-quarter 2025 results, with revenues and earnings exceeding expectations, following its spin-off from General Electric in April 2024 [1][2]. Financial Performance - Adjusted earnings were $1.66 per share, surpassing the Zacks Consensus Estimate of $1.46, and reflecting a 44% year-over-year increase [2][8]. - Total revenues reached $12.2 billion, a 24% year-over-year increase, with adjusted revenues at $11.3 billion, up 26% year-over-year, beating the consensus estimate of $10.3 billion [2][3]. Segment Analysis - The Commercial Engines & Services segment saw revenues increase by 27% year-over-year to $8.88 billion, exceeding the consensus estimate of $8.25 billion, driven by higher shop visit work and increased spare parts revenue [3]. - The Defense & Propulsion Technologies segment reported revenues of $2.83 billion, up 26% year-over-year, also surpassing the consensus estimate of $2.52 billion, although total orders decreased by 5% year-over-year to $2.9 billion [4]. Cost and Profitability - Cost of sales increased by 24.7% year-over-year to $7.76 billion, while selling, general, and administrative expenses decreased by 10.2% to $1.2 billion [5]. - Operating profit (non-GAAP) was $2.3 billion, reflecting a 26.5% year-over-year increase, with a stable margin of 20.3% [5]. Balance Sheet and Cash Flow - As of the end of Q3 2025, GE Aerospace had cash and equivalents of $12.5 billion, down from $13.6 billion at the end of December 2024, with long-term borrowings increasing to $18.8 billion [6]. - Adjusted free cash flow for the quarter was $2.36 billion, compared to $1.82 billion in the same quarter last year [6]. Shareholder Returns - The company paid $0.4 billion in dividends and repurchased approximately $1.8 billion in shares during the quarter [7]. Future Outlook - For 2025, GE expects adjusted EPS in the range of $6.00-$6.20 and free cash flow up to $7.3 billion, with adjusted revenues projected to grow in the high-teens range [8][9]. - The Commercial Engines & Services segment is expected to see revenue growth in the low twenties range, while the Defense & Propulsion Technologies segment is projected to grow in the high-single-digit range [10].

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 44% to $1.66, driven by increased operating profit, a lower tax rate, and a reduced share count [15][22] - Free cash flow reached $2.4 billion, up 30%, with over 130% conversion from earnings [15][22] 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][18] - CES revenue grew 27%, with services revenue up 28% and internal shop visit revenue up 33% [17][18] - In Defense and Propulsion Technologies (DPT), revenue grew 26%, with defense engine volume up 83% year-over-year [20][23] Market Data and Key Metrics Changes - Year-to-date, orders increased by 13%, with services orders up 31% [4] - The total DPT backlog is at $19 billion, up $1.5 billion year-over-year [20] - The company expects to grow LEAP deliveries more than 20% for the full year, up from a prior outlook of 15% to 20% [7][22] Company Strategy and Development Direction - The company is focused on enhancing its FlightDeck operating model to improve delivery and meet customer demand [3][5] - Investments in LEAP durability and next-generation technologies are prioritized to deliver value to customers [9][12] - The company is committed to maintaining competitive advantages through a strong backlog and 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 [4][9] - The company raised its full-year guidance for revenue growth to high teens, up from mid-teens, reflecting strong year-to-date performance [20][22] - Management highlighted the importance of ongoing investments in technology and supply chain improvements to support future growth [9][24] Other Important Information - The company is investing nearly $1 billion in its supply chain to expand capacity [9] - The LEAP 1A HPT blade is now in production, expected to enhance output significantly [7][12] - The company has secured significant commitments from major airlines, including Korean Air and Cathay Pacific, for its engines [13][14] Q&A Session Summary Question: Can you elaborate on the services performance and factors influencing it? - Management noted that strong services performance was driven by improved material availability and increased work scopes, with expectations for continued growth [29][30] Question: What gives confidence in the LEAP services margin outlook? - Management highlighted ongoing improvements in supply chain and operational performance, projecting continued growth in internal shop visits and external channel performance [35][41] Question: How is capital deployment being balanced with share repurchase and potential M&A? - Management confirmed a balanced approach to capital allocation, prioritizing reinvestment in the business while also returning capital to shareholders and considering strategic M&A opportunities [44][48] Question: What is driving the strong aftermarket revenue growth despite deceleration in ASK growth? - Management attributed the growth to pent-up demand for shop visits and increased work scopes, alongside a growing external LEAP channel [90][91]

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][19] - Earnings per share (EPS) grew 44% to $1.66, driven by increased operating profit, a lower tax rate, and a reduced share count [15][19] - Free cash flow reached $2.4 billion, up 30%, with over 130% conversion from earnings [15][19] Business Line Data and Key Metrics Changes - In Commercial Engines and Services (CES), orders were up 5%, with services orders increasing by 32% and equipment orders down 42% due to timing [17][19] - CES revenue grew 27%, with services revenue up 28% and internal shop visit revenue up 33% [17][19] - In Defense and Propulsion Technologies (DPT), revenue grew 26%, with engine volume up 83% year-over-year [19][19] Market Data and Key Metrics Changes - Year-to-date, orders increased by 13%, with services orders up 31% [4] - The total DPT backlog is at $19 billion, up $1.5 billion year-over-year [19] - The company expects to grow LEAP deliveries more than 20% for the full year, up from a prior outlook of 15% to 20% [7][19] Company Strategy and Development Direction - The company is focused on enhancing its FlightDeck operating model to improve delivery and meet customer demand [3][5] - Investments in LEAP durability and next-generation technologies are prioritized to deliver value to customers [10][12] - The company is committed to expanding its supply chain capacity, investing nearly $1 billion to support growth [9][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand for services and products, raising full-year guidance across the board [5][19] - The company anticipates continued growth in commercial services and engine deliveries, with a positive outlook for 2026 [20][56] - Management highlighted the importance of addressing supply chain challenges and improving material availability [78] Other Important Information - The company has secured significant commitments from major airlines, including Korean Air and Cathay Pacific, for its engines [12][13] - The company is actively working on next-generation engine technologies, including the GE9X and RISE program [11][12] Q&A Session Summary Question: Can you elaborate on the services performance and factors driving it? - Management noted that improved material availability and increased work scopes contributed to strong services growth, with expectations for continued demand [28][30] Question: What gives confidence in the LEAP services margin outlook? - Management highlighted ongoing improvements in supply chain performance and operational efficiencies as key factors supporting the margin outlook [34][36] Question: How does the company balance capital deployment and share repurchase? - Management stated that the capital allocation approach remains balanced, focusing on reinvestment in the business while returning capital to shareholders [41][42] Question: What is the outlook for 2026, particularly regarding CES revenue growth? - Management indicated a positive outlook for 2026, expecting solid revenue growth driven by an increasing installed base and higher shop visit demand [55][56]

GE Aerospace third quarter 2025 performance Financial results & company highlights October 21, 2025 Caution concerning forward-looking statements: This document contains "forward-looking statements" – that is, statements related to future events that by their nature address matters that are, to different degrees, uncertain. For details on the uncertainties that may cause our actual future results to be materially different than those expressed in our forward-looking statements, see www.geaerospace.com/inves ...

Group 1 - GE Aerospace stock has increased over 60% year to date, indicating potential overvaluation concerns among investors, but recent earnings support a long-term investment thesis [1] - Aerospace companies are evaluated based on long-term recurring revenue potential from high-margin services, particularly GE's commercial aerospace engines [2] - The industry model involves selling engines at a loss initially due to high development and production costs, but these engines can generate significant aftermarket revenue over their 40-year lifespan through maintenance, repair, and overhaul (MRO) services [3] Group 2 - GE Aerospace aims to increase engine deliveries for long-term profitability, despite the negative impact on near-term earnings, with a focus on the LEAP engine used in Boeing 737 MAX and Airbus A320neo [4] - In the second quarter, LEAP engine deliveries rose by 38% year over year to 410 units, recovering from a 13% decline in the first quarter, aligning with full-year guidance [6] - While engine delivery growth may suppress near-term profits, it is expected to enhance long-term earnings and cash flow, indicating that GE is addressing supply chain issues that affected deliveries in 2024 [8]

Group 1 - The article emphasizes the importance of earnings season for obtaining updates on companies in investment portfolios or watchlists, despite some overhyping of its significance [1] Group 2 - The article does not provide specific company or industry insights, focusing instead on the general context of earnings season and its relevance to investors [2][3]

Financial Performance - GE Aerospace reported adjusted revenue of $102 billion, a 23% year-over-year increase in Q2 2025[54] - The company's operating profit reached $23 billion, also a 23% increase compared to the previous year[54] - Free cash flow surged to $21 billion, a significant 92% increase year-over-year[54] - Adjusted EPS increased by 38% year-over-year, reaching $166[54] - Orders increased by 27% year-over-year, totaling $142 billion[54] Guidance and Outlook - GE Aerospace is raising its 2025 adjusted revenue growth guidance to mid-teens, up from low double-digit[55] - The company expects its 2028 operating profit to reach approximately $115 billion, an increase of $15 billion from the prior outlook[57] - GE Aerospace anticipates a free cash flow of approximately $85 billion in 2028, also a $15 billion increase from the previous forecast[57] Commercial Engines & Services (CES) - Commercial Engines & Services reported a 29% year-over-year increase in services revenue for Q2 2025[32] - Equipment revenue for CES increased by 35% year-over-year[105] - The company expects double-digit revenue growth in commercial services[62] Defense & Propulsion Technologies (DPT) - Defense & Propulsion Technologies revenue increased by 7% year-over-year in Q2 2025[108] - The U S Air Force awarded a $5 billion contract for F110 engines[37]