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01/10 16:34
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights strong financial performance with significant EPS and free cash flow growth, and raised guidance for 2025 and 2028. Despite some order timing issues, revenue and profit growth are robust. The Q&A section confirms strong demand and strategic capital allocation, although some details on future improvements were vague. Overall, positive financial metrics and optimistic guidance suggest a positive stock price movement.
Orders Up 2% in Q3 2025, with solid growth in commercial services, partially offset by the timing of equipment orders in commercial equipment and defense. Year-to-date, orders are up 13%, with services up 31%.
Revenue Grew 26% in Q3 2025, driven by strong deliveries across aftermarket, OE, and defense.
Profit $2.3 billion in Q3 2025, up 26% year-over-year, driven by strong deliveries across aftermarket, OE, and defense.
EPS (Earnings Per Share) Grew 44% to $1.66 in Q3 2025, supported by strong revenue and profit growth.
Free Cash Flow Conversion Over 130% in Q3 2025, reflecting strong operational performance.
CES (Commercial Engines and Services) Operating Profit Grew 35% year-over-year in Q3 2025, driven by robust services demand, improved material availability, and increased services revenue (up 28%).
Defense and Propulsion Technologies (DPT) Revenue Grew 26% in Q3 2025, supported by higher output. Profit increased by 75% year-over-year.
CES Services Revenue Up 28% year-over-year in Q3 2025, with internal shop visit revenue up 33% and spare parts revenue up more than 25%.
Total Engine Deliveries Up 41% year-over-year in Q3 2025, with commercial units up 33% and record LEAP deliveries up 40%.
Defense Units Up 83% year-over-year in Q3 2025, marking the second consecutive quarter of defense output exceeding 80% growth.
Revenue (Overall) $11.3 billion in Q3 2025, up 26% year-over-year, with both CES and DPT segments growing over 25%.
Operating Profit (Overall) $2.3 billion in Q3 2025, up 26% year-over-year, with flat operating margins at 20.3%.
Adjusted EPS $1.66 in Q3 2025, up 44% year-over-year, driven by increased operating profit, a lower tax rate, and a reduced share count.
Free Cash Flow $2.4 billion in Q3 2025, up 30% year-over-year, driven by higher earnings and favorable cash flow from long-term service agreements.
CES Orders Up 5% in Q3 2025, with services up 32% and equipment down 42% due to timing of some wide-body and regional orders shifting from Q3 to Q4.
CES Revenue Up 27% in Q3 2025, with services up 28% and equipment revenue up 22%.
CES Profit $2.4 billion in Q3 2025, up 35% year-over-year, driven by higher services margins, volume, price, and favorable shop visit and spare parts mix.
DPT Orders Down 5% in Q3 2025 due to timing across quarters, but defense book-to-bill remained above 1 in the quarter and is 1.2x year-to-date.
DPT Revenue Grew 26% in Q3 2025, with Defense and Systems revenue up 24% and Propulsion and Additive Technologies revenue up 29%.
DPT Profit $386 million in Q3 2025, up 75% year-over-year, driven by higher volume, customer mix, price, and lower losses at additive.
LEAP-1A HPT blade: The next iteration of the LEAP-1A HPT blade is now in production, enhancing output and durability.
LEAP services technologies: Investments in analytics-based maintenance predict optimal shop visit times and reduce reliance on new materials, improving cost of ownership and turnaround times.
9X engine: Launched second dust test to mature design pre-entry into service, making it the most tested engine in GE's history.
RISE compact core development: Started dust testing on next-generation HPT blades, marking the earliest testing in development for durability and safety.
Open Fan technology: Introduced a Chief Mechanic and Architect role to prioritize durability and safety in engine design.
Korean Air partnership: Secured the largest fleet commitment in Korean Air's history, including 103 Boeing aircraft powered by GEnx, GE9X, and LEAP-1B engines with long-term services.
Cathay Pacific partnership: Secured commitment for GE9X engines to power 14 additional 7779s, totaling 35 777Xs aircraft powered by GE9X.
FLIGHT DECK operating model: Improved supply chain collaboration and problem-solving, resulting in a 2x increase in supplier output and 95% shipment target achievement for three consecutive quarters.
LEAP turnaround times: Achieved a 30% reduction in engine disassembly time at the Malaysia MRO shop, with total LEAP internal shop visit output growing by over 30%.
XEOS MRO facility: Completed its first LEAP shop visits in Poland, expanding maintenance capacity.
LEAP third-party MRO network: External shop visits increased twofold, enhancing maintenance capabilities.
$1 billion supply chain investment: Investing in supply chain capacity expansion to support growing fleet demands.
R&D investment: Annual $3 billion R&D investment to improve durability, efficiency, and turnaround times, along with advanced defense capabilities.
Supply Chain Constraints: The company is addressing key constraints in the supply chain, which have required significant collaboration with suppliers and the use of FLIGHT DECK tools. While progress has been made, challenges remain in improving material availability and meeting customer demand.
LEAP Turnaround Times: The company acknowledges that there is still significant work to do in improving LEAP engine turnaround times to meet customer expectations, despite some progress in reducing disassembly time and increasing shop visit output.
Capacity Expansion: The company is investing nearly $1 billion in its supply chain to expand capacity, but it is also relying on suppliers to make similar investments. This dependency on external suppliers poses a risk to meeting future growth demands.
Regulatory and Environmental Costs: The company has faced increased corporate costs, including reserves for environmental, health, and safety expenses, which could impact profitability.
Timing of Equipment Orders: The timing of some wide-body and regional equipment orders has shifted, which could affect revenue recognition and financial performance in specific quarters.
Defense Segment Challenges: While defense units have shown growth, the timing of orders and deliveries remains a challenge, potentially impacting the segment's performance.
Revenue Growth: GE Aerospace expects revenue to grow in the high teens for the full year 2025, up from the prior outlook of mid-teens. CES revenue is projected to grow in the low 20s, driven by higher services revenue, which is now expected to grow in the low to mid-20s.
LEAP Engine Deliveries: LEAP engine deliveries are now expected to grow more than 20% for the full year 2025, up from the prior outlook of 15% to 20%.
Defense and Propulsion Technologies (DPT) Growth: DPT revenue is expected to grow in the high single digits for 2025, up from the prior outlook of mid- to high single digits.
Operating Profit: Operating profit is now expected to be in the range of $8.65 billion to $8.85 billion for 2025, up $400 million at the midpoint from the prior guidance. CES operating profit is projected to be in the range of $8.45 billion to $8.65 billion, while DPT profit is expected to be in the range of $1.2 billion to $1.3 billion.
Free Cash Flow: Free cash flow guidance has been raised to $7.1 billion to $7.3 billion for 2025, up $500 million at the midpoint from the prior guidance.
EPS Guidance: EPS guidance has been raised to $6 to $6.20 for 2025, up $0.40 at the midpoint from the prior guidance.
Future Investments: GE Aerospace is investing nearly $1 billion in its supply chain to expand capacity and support future growth. Additionally, the company is increasing investments in LEAP services technologies and next-generation engine development, including the RISE compact core and Open Fan technology.
Market Trends and Backlog: The company is experiencing significant demand for its services and products, with a backlog of approximately $175 billion. LEAP's fleet size is expected to triple by 2030, and the company is sold out on LEAP and GEnx engines through the rest of the decade.
Operational Improvements: GE Aerospace is accelerating the use of its FLIGHT DECK operating model to improve delivery times, reduce turnaround times, and enhance shop visit output. LEAP internal shop visit output grew by more than 30% in Q3 2025, and the company is expanding its MRO network to support growing fleets.
Stock Buyback: Adjusted EPS was $1.66, up 44% from increased operating profit, a lower tax rate and a reduced share count. Impact from stock buyback actions and reduction in interest expense also contributed to EPS growth.
The earnings call highlights strong financial performance with significant EPS and free cash flow growth, and raised guidance for 2025 and 2028. Despite some order timing issues, revenue and profit growth are robust. The Q&A section confirms strong demand and strategic capital allocation, although some details on future improvements were vague. Overall, positive financial metrics and optimistic guidance suggest a positive stock price movement.
The earnings call indicates a strong financial performance with positive revenue and EPS guidance, robust R&D investments, and strategic initiatives like FLIGHT DECK and U.S. manufacturing investment. Despite some supply chain challenges and cautious outlook, the overall sentiment from management is optimistic, especially with the LEAP program's progress and the RISE program's promising tests. The Q&A section didn't reveal significant risks or uncertainties, and the company's strategic plans and financial metrics suggest a positive stock price movement.
The earnings call highlighted strong financial performance with significant profit and EPS growth, margin expansion, and increased guidance, which are positive indicators. Despite supply chain challenges and tariff concerns, the company is taking proactive measures like pricing strategies and cost controls. The raised guidance and shareholder return plan further boost sentiment. The Q&A revealed management's confidence in overcoming tariffs and maintaining growth. Considering these factors, the overall sentiment is positive, suggesting a stock price increase of 2% to 8% over the next two weeks.
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