GE(US:GE)2024-04-23 16:00Financial Data and Key Metrics Changes - GE Aerospace reported a 10% organic revenue growth in Q1 2024, with adjusted operating profit of $1.5 billion, up more than $600 million, and adjusted EPS of $0.82, up more than 3x year-over-year [9][18] - Free cash flow was $1.7 billion, doubling year-over-year, driven by higher earnings and working capital improvements [20][76] Business Line Data and Key Metrics Changes - Commercial Engines & Services (CES) revenue grew 16%, with service growth of 12% and equipment growth of 31% [23][24] - Defense & Propulsion Technologies (DPT) revenue grew 18%, with orders up 34% and profit of $250 million, up 26% [25][26] Market Data and Key Metrics Changes - Orders for GE Aerospace grew 34%, with strong demand across both Commercial Engines & Services and Defense & Propulsion Technologies [18][22] - Total engine deliveries improved by 9% year-over-year, with defense deliveries up over 50% [12][21] Company Strategy and Development Direction - GE Aerospace is focused on safety and quality, utilizing the FLIGHT DECK operating model to enhance execution and customer service [11][17] - The company is investing over $650 million in manufacturing facilities and supply chain improvements to support long-term customer needs [15][80] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the forward trajectory, raising full-year operating profit guidance and projecting a path to a $10 billion operating profit target by 2028 [10][28] - The company anticipates continued strong demand for services as air travel increases, with a focus on improving turnaround times and addressing supply chain challenges [12][53] Other Important Information - GE Aerospace has a backlog exceeding $150 billion, reflecting strong customer commitments and ongoing fleet modernization [15][20] - The company initiated a quarterly dividend of $0.28, a 250% increase, and announced a $15 billion share buyback program [20][28] Q&A Session Summary Question: About the updated LEAP delivery guidance - Management indicated that the change in LEAP delivery guidance was influenced by supplier constraints and alignment with customer needs [35][36] Question: Orders growth breakdown - Most of the 34% increase in orders was attributed to volume growth, with pricing contributing as well [38][39] Question: Q1 margins performance - Margins were up due to pricing and customer mix, despite some headwinds from long-term service agreements [41][45] Question: LEAP production issues and aftermarket implications - Management noted that lower LEAP production could positively impact the aftermarket, with expectations for increased shop visits [48][50] Question: Shop visit growth challenges - Management expressed confidence in achieving shop visit growth despite supply chain challenges, with improvements already noted in Q2 [51][53] Question: Impact of freight demand on CES - Increased freight demand, particularly influenced by geopolitical factors, has led to a more positive outlook for CES [56][58] Question: LEAP OE versus spares provisioning mix - The spare engine ratio is expected to decline gradually, reflecting changes in LEAP output [61][64] Question: Free cash flow expectations - Free cash flow is expected to exceed $5 billion for the year, driven by earnings growth and working capital improvements [74][76] Question: $650 million investment benefits - The investment aims to enhance operational capabilities and support capacity expansions, particularly in additive manufacturing [79][80]