GE Aerospace (GE) Q2 2025 Earnings Call July 17, 2025 07:30 AM ET Company ParticipantsBlaire Shoor - Head - IRLawrence Culp - Chairman, CEO & DirectorRahul Ghai - SVP & CFOScott Deuschle - Director - Aerospace & Defense Equity ResearchMyles Walton - Managing DirectorSheila Kahyaoglu - Aerospace & Defense and Airlines Equity ResearchDouglas Harned - Managing DirectorScott Mikus - Director - Aerospace, Defense & Space ResearchSeth Seifman - Executive DirectorGavin Parsons - Director, Aerospace & Defense Equit ...

GE Aerospace (GE) Q2 2025 Earnings Call July 17, 2025 07:30 AM ET Speaker0Good day, ladies and gentlemen, and welcome to the GE Aerospace Investor Update and Second Quarter twenty twenty five Earnings Webcast. At this time, all participants are in a listen only mode. My name is Liz, and I will be your conference coordinator today. If you experience issues with the webcast slides refreshing or there appears to be delays in the slide advancement, please hit F5 on your keyboard to refresh. As a reminder, this ...

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]

Core Viewpoint - GE Aerospace is expected to report strong second-quarter 2025 results, with earnings projected at $1.43 per share and revenues at $9.7 billion, reflecting year-over-year growth of 19.2% and 17.9% respectively [1][6]. Earnings Estimates - The earnings estimate for the current quarter has increased by $0.01 over the past week, indicating a positive trend [2]. - The consensus estimate for quarterly revenues is $9.7 billion, showing a year-over-year growth of 17.9% [1][6]. Earnings Surprise History - GE Aerospace has consistently outperformed earnings estimates, with an average surprise of 18% over the last four quarters [2]. Earnings Prediction - The company has a positive Earnings ESP of +4.94% and a Zacks Rank of 1 (Strong Buy), suggesting a high likelihood of an earnings beat [3]. Segment Performance - The Commercial Engines & Services segment is expected to generate revenues of $7.43 billion, reflecting a sequential growth of 6.5% due to strong demand for its engine platforms [4]. - The Defense & Propulsion Technologies segment is anticipated to achieve revenues of $2.57 billion, indicating a 10.5% sequential increase, driven by rising defense budgets and demand for commercial air travel [5]. Operational Investments - GE has been investing in expanding and upgrading manufacturing facilities in the U.S., which is expected to enhance operational capacity and meet increased demand [6][7]. Portfolio Restructuring - The completion of the Vernova spin-off has allowed GE to focus on its core aerospace business, improving operational focus and financial flexibility [8]. Cost Challenges - High costs and operating expenses from restructuring activities and supply chain challenges may impact performance [9]. Stock Performance - GE Aerospace's shares have increased by 43.8% over the past three months, outperforming the Zacks Aerospace-Defense industry and the S&P 500 [10]. Valuation Metrics - The company is trading at a forward P/E ratio of 43.47X, which is higher than the industry average of 27.51X, indicating potential vulnerability to market sentiment shifts [12]. Investment Outlook - The robust portfolio and strength in aerospace and defense markets are expected to drive performance, with organic revenue growth projected in the low-double-digit range for 2025 [15]. - The company's focus on reducing operational costs and improving margins is expected to enhance long-term cash flow [16]. - Given the positive analyst sentiment and growth prospects, the current market conditions may be favorable for potential investors [18].

Core Insights - Howmet Aerospace Inc. (HWM) is experiencing significant growth, particularly in the commercial aerospace sector, which accounted for 52% of total revenues in Q1 2025, with a year-over-year revenue increase of 9% [1][9] Group 1: Commercial Aerospace Market - The demand for wide-body aircraft is rising due to increased air travel, leading original equipment manufacturers (OEMs) to boost their spending [2] - The growth in the commercial aerospace market is also driven by the demand for fuel-efficient aircraft and the recovery of Boeing 737 MAX production, which is expected to enhance demand for HWM's products [3][9] - HWM's peers, such as RTX Corporation and GE Aerospace, are also reporting strong growth in the commercial aerospace market, with RTX achieving 8% organic sales growth and GE benefiting from solid demand for its engines [5][6] Group 2: Defense Aerospace Market - The defense aerospace market is showing positive momentum, driven by increased demand for engine spares, particularly for the F-35 program, and rising military budgets [4] Group 3: Financial Performance - HWM's stock has surged 127.8% over the past year, significantly outperforming the industry average growth of 17.2% [8] - The company is currently trading at a forward price-to-earnings ratio of 47.53X, which is above the industry average of 26.71X [11] - The Zacks Consensus Estimate for HWM's earnings has been increasing over the past 60 days, indicating positive market sentiment [12]

Group 1 - The article discusses the historical transition of power from gold to oil, emphasizing the establishment of the petrodollar system as a means to maintain U.S. dollar hegemony [1][2][11] - The strategic value of oil, which constitutes 31.2% of global energy consumption, is highlighted as a key factor in the U.S. dollar's role as a pricing anchor [2][3] - The 1974 U.S.-Saudi agreement is described as a pivotal moment that solidified the dollar's status in global oil transactions, with 80% of oil trade being dollar-denominated by 1975 [11][14] Group 2 - The article outlines the military and financial power dynamics involved in the U.S.-Saudi negotiations, where military support was exchanged for oil pricing rights [3][4] - The impact of the oil crisis on the global economy is noted, with oil prices soaring by 400% and Western GDPs declining by 6% within three months [2][3] - The emergence of financial instruments like oil futures in the 1980s is discussed as a means for the U.S. to exert influence over global economic cycles [3][14] Group 3 - The article addresses the challenges to the petrodollar system, including attempts by countries like Iraq and Libya to shift away from dollar-denominated oil transactions, which were met with military intervention [4][12] - The rise of alternative payment systems and digital currencies is noted as a potential threat to the dollar's dominance, with the dollar's share in global reserves dropping below 58% [7][12] - The shift towards multi-currency settlements by countries like Saudi Arabia signifies a growing skepticism towards U.S. military protection and dollar reliance [8][12]

Investment Rating - The report suggests a focus on companies such as Rolls-Royce, Howmet Aerospace, LOAR, Safran, VSE Corporation, HEICO, and BAE Systems for investment opportunities Core Insights - The aerospace engine industry is characterized by high technological barriers and market concentration, dominated by a few key players like GE Aerospace, Rolls-Royce, Pratt & Whitney, and Safran, which control core technologies and aftermarket services [1][3] - The MRO segment accounts for 50-60% of the engine's lifecycle value, providing stable revenue sources for the industry [1] - The design goals for civil and military engines differ significantly, with civil engines focusing on fuel efficiency and longevity, while military engines prioritize thrust and maneuverability [2][3] - Continuous technological innovations, such as compatibility with sustainable aviation fuels and digital applications, are driving industry advancements and reinforcing competitive advantages for existing players [2][3] Summary by Sections Section 1: Aerospace Engines - Aerospace engines are crucial for aircraft performance, accounting for 20-30% of the total aircraft cost [7] - The main types of aerospace engines include piston engines and gas turbine engines, with gas turbines being the dominant type in modern aviation [33][34] Section 2: Global Aerospace Engine Industry - The global aerospace engine market is highly concentrated, with major players like GE/CFM, Rolls-Royce, and Pratt & Whitney holding over 90% of the market share in large civil aircraft [52] - The industry value chain includes design and research, manufacturing, and MRO services, with MRO being a significant profit source for OEMs [52][53]

Group 1: Cheniere Energy and LNG Industry - The U.S. has become the largest liquefied natural gas (LNG) exporter, exporting 11.9 billion cubic feet per day (Bcf/d) in 2024, surpassing Qatar and Australia [2] - Cheniere Energy exported 2.33 trillion British thermal units (TBtu) in 2024, equating to 6.37 Bcf/d, and has a total production capacity of 45 million tonnes per annum (mtpa) across its terminals [3] - The current administration supports LNG growth, and Cheniere's CEO believes there is a strategic imperative to secure permits for future capacity expansion to over 90 mtpa [5] Group 2: GE Aerospace and Aerospace Industry - GE Aerospace is a market leader in commercial aerospace and defense engines, with its joint venture CFM International producing the LEAP engine, which powers the Boeing 737 MAX and is one of two options for the Airbus A320neo family [7] - GE's GE9X engine is the sole option for the Boeing 777X, and its GEnx engine dominates orders for the Boeing 787, indicating strong market presence [8] - The next generation of engines, RISE, is expected to achieve a 20% improvement in fuel efficiency over the LEAP, potentially ensuring GE's leadership in commercial aerospace engines for decades [9] Group 3: Tesla and Electric Vehicle Industry - Tesla's Model Y is the best-selling car globally and is set to improve sales with refreshed production lines in 2025 [10] - Upcoming catalysts for Tesla include the launch of its robotaxi in June 2025 and the mass production of the Cybercab in 2026, alongside lower-cost models [11] - Tesla has significantly reduced its cost of goods per vehicle, falling below $35,000 by the end of 2024, which enhances profit margins and competitiveness in the EV market [12][13] - CEO Elon Musk has positioned Tesla as a leader in the SUV market, and the company's advancements in EVs and robotaxis suggest a strong future in the industry [15]

Core Insights - The article highlights a significant multi-billion-dollar engine and services agreement between GE Aerospace and Qatar Airways, marking one of the largest commitments for widebody aircraft by GE Aerospace [1][2] - This agreement is expected to provide a substantial tailwind to GE Aerospace's operations, financial trajectory, and long-term value proposition for shareholders [2] Agreement Details - The deal includes an order for over 400 advanced jet engines, specifically 60 GE9X engines and 260 GEnx engines, along with options for additional units and a comprehensive inventory of spares [3] - The GE9X engine offers 10% better fuel efficiency than its predecessor, while the GEnx engine family has powered about two-thirds of all Boeing 787s in operation [4] Sustainability and Services - Both engine platforms are certified to run on 100% Sustainable Aviation Fuel (SAF) blends, aligning with aviation decarbonization goals [5] - The extensive Maintenance, Repair, and Overhaul (MRO) contracts associated with the agreement are expected to generate higher profit margins and provide recurring revenue for decades, enhancing earnings predictability for shareholders [6] Strategic Positioning - The success of this deal is attributed to GE Aerospace's strategic focus following the spin-offs of GE HealthCare and GE Vernova, allowing for more deliberate capital allocation [7] - In Q1 2025, GE Aerospace reported $12.3 billion in total orders (up 12% YoY) and a 60% increase in adjusted EPS to $1.49, indicating strong financial performance [8] Future Revenue and Growth - The Qatar Airways agreement adds significantly to GE's commercial engine backlog, with a Remaining Performance Obligation (RPO) of $153.8 billion in the Commercial Engines & Services segment [9] - The deal supports GE's 2025 outlook, which includes low-double-digit adjusted revenue growth and operating profit guidance between $7.8 billion and $8.2 billion [10] Competitive Advantage - Qatar Airways' choice of GE engines is seen as a strong endorsement of GE Aerospace's technological innovation and operational reliability, marking a competitive victory in the global market [11] - The fulfillment of this large order will require increased production rates, aligning with GE Aerospace's plans to invest nearly $1 billion in U.S. manufacturing facilities [12][13] Shareholder Value - The cash flow from the agreement supports GE's capital return program, including a $0.28 quarterly dividend and a $15 billion share repurchase program [16] - Mega-deals like this one tend to enhance analyst sentiment and market confidence, reducing uncertainty and highlighting the company's competitive edge [17]

Park Aerospace (PKE) Q4 2025 Earnings Call May 15, 2025 05:00 PM ET Company Participants Brian Shore - Chairman & CEOMark Esquivel - President & COO Conference Call Participants None - Analyst Operator Good day. My name is Claudia Guntit, and I will be your conference operator today. At this time, I would like to welcome everyone to Park Aerospace Corp. Fourth Quarter FY 'twenty five Earnings Release Conference Call and Investor Presentation. At this time, I will turn today's call over to Mr. Brian Shaw, Ch ...