GE(US:GE)2025-10-21 12:30Financial Data and Key Metrics Changes - Revenue grew 26% to $11.3 billion, with operating profit also up 26% to $2.3 billion, driven by strong deliveries across aftermarket, original equipment (OE), and defense [6][19] - Earnings per share (EPS) increased 44% to $1.66, supported by higher operating profit, a lower tax rate, and a reduced share count [20][30] - Free cash flow reached $2.4 billion, up 30% with over 130% conversion [20][30] Business Line Data and Key Metrics Changes - In Commercial Engines and Services (CES), orders were up 5%, with services orders up 32% and equipment orders down 42% due to timing [22] - CES revenue grew 27%, with services revenue up 28% and internal shop visit revenue up 33% [22][24] - In Defense and Propulsion Technologies (DPT), revenue grew 26%, with engines volume up 83% year over year [25][26] Market Data and Key Metrics Changes - Total orders increased 2% in the third quarter, with year-to-date orders up 13% and services orders up 31% [5] - The total DPT backlog reached $19 billion, up $1.5 billion year over year [25] Company Strategy and Development Direction - The company is focused on enhancing its operational model, Flight Deck, to improve delivery and meet robust customer demand [4][7] - Investments in LEAP durability and next-generation technologies are prioritized to deliver value to customers [6][15] - The company is raising its full-year guidance across the board, expecting revenue growth in the high teens and CES growth in the low 20s [28][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand for services and products, with a significant backlog of approximately $175 billion [7][8] - The company is optimistic about its trajectory entering 2026, with expectations for continued growth and improved operational performance [30][32] Other Important Information - The company is investing nearly $1 billion in its supply chain to expand capacity [12] - The LEAP third-party maintenance, repair, and overhaul (MRO) network is growing rapidly, with external shop visits up roughly twofold [12] Q&A Session Summary Question: Services outperformance and sequential step down in Q4 - Management noted strong services growth driven by improved material availability and increased work scopes, with expectations for a seasonal step down in Q4 due to typical demand patterns [37][41] Question: LEAP services margin outlook - Confidence in achieving LEAP services margin targets by 2028 is based on ongoing improvements in supply chain performance and operational efficiencies [46][50] Question: Capital deployment and M&A considerations - The company maintains a balanced capital allocation approach, prioritizing reinvestment in the business and returning capital to shareholders while remaining open to strategic M&A opportunities [53][57] Question: Spare parts performance and drivers - Spare parts growth is attributed to pent-up demand, increased work scopes, and improved material availability, with expectations for continued growth in 2026 [61][66] Question: 2026 revenue growth and margin expectations - The environment for 2026 appears better than previously expected, with projected revenue growth and profit growth, although not at the same levels as 2025 [69][72] Question: Defense business and R&D insights - The defense business is leveraging commercial experience to enhance development cycles and sustainment models, with significant investments in next-generation platforms [79][82] Question: Durability of LEAP-1A blade - Initial performance of the LEAP-1A durability kit is promising, with expectations for a multi-year rollout across the installed base [86][88] Question: Supply chain material availability improvements - Improvements in supply chain material availability are the result of cumulative efforts and collaboration with suppliers, focusing on problem-solving and operational efficiency [92][95]