GE Aerospace (GE) FY Conference Transcript

Summary of GE Aerospace FY Conference Call (May 28, 2025) Company Overview - Company: GE Aerospace - Industry: Aerospace and Defense - Revenue: Approximately $35 billion in FY 2024, with a strong first year as a standalone company [6][25] Core Business Segments - **Commercial Engines and Services (CES)**: Generated$26 billion in revenue, up 13% year-over-year, powering three-quarters of global commercial departures [8][25] - Defense and Propulsion Technologies (DPT): Revenue approaching $10 billion with a backlog exceeding$20 billion, powering two-thirds of the US combat jet and rotorcraft fleets [12][25] Key Financial Metrics - Recurring Revenue: 70% of revenue comes from predictable, recurring services [6][25] - Orders Growth: 30% growth in service orders in CES last year, continuing into Q1 2025 [9][25] - Profitability: DPT saw a profit increase of 16% in Q1 2025 [13][25] Strategic Initiatives - Flight Deck Operating Model: Focus on safety, quality, delivery, and cost, enhancing operational efficiency and customer service [4][15] - R&D Investment: $3 billion annually, representing 6-8% of sales, aimed at developing next-generation technologies [18][25] - RISE Program: A technology initiative focusing on hybrid electric and sustainable fuels, targeting a 20% improvement in fuel efficiency for next-generation aircraft [17][85] Market Dynamics - Supply Chain Improvements: Significant enhancements in supplier delivery performance, with 95% of suppliers meeting commitments, double the previous year [22][25] - Tariff and Trade Policy: Support for a return to tariff-free aerospace trade agreements, emphasizing the unique position of aerospace in the US economy [39][40] Future Outlook - Growth Projections: Anticipated high single-digit growth in commercial engines and services, with strong demand for both new make and services [42][43] - Margin Expectations: Targeting 25% margins in CES, with a focus on growing margin dollars despite potential pressure on percentage margins due to new engine introductions [46][47] Challenges and Risks - Supply Chain Challenges: Ongoing issues with parts availability affecting turnaround times in MRO shops, but improvements are being made [70][71] - Market Competition: Need to manage delivery slots and production rates in alignment with Boeing and Airbus to meet customer demand [52][66] Additional Insights - Installed Base: Over 70,000 engines globally, providing a solid foundation for recurring revenue and customer engagement [26][25] - Defense Growth Drivers: Focus on rotorcraft platforms like Apache and Blackhawk, with expectations for mid to high single-digit growth [87][89] This summary encapsulates the key points discussed during the GE Aerospace FY Conference Call, highlighting the company's performance, strategic initiatives, market dynamics, and future outlook.