GE Aerospace (GE) Q3 2024 Earnings Call Highlights: Strong Order Growth and Raised Guidance ...

• Orders: Up 28% overall; CES orders up 29%; DPT orders up 19%.

• Revenue: Increased by 6% driven by growth in services and equipment.

• Operating Profit: Up 14% to $1.8 billion.

• Adjusted EPS: Increased by 25% to $1.15.

• Free Cash Flow: $1.8 billion with conversion over 140%.

• Operating Margins: Expanded by 150 basis points to 20.3%.

• CES Revenue: Up 8%; Services up 10%; Equipment revenue up 5%.

• CES Profit: $1.8 billion, up 16% with margins expanding 180 basis points.

• DPT Revenue: Grew 2%; Defense & Systems revenue down 2%; Propulsion and Additive Technologies grew 9%.

• DPT Profit: $220 million, down 18% year over year.

• Full-Year Guidance: Operating profit expected to be $6.7 billion to $6.9 billion; Adjusted EPS guidance raised to $4.20 to $4.35; Free cash flow guidance raised to $5.6 billion to $5.8 billion.

• Warning! GuruFocus has detected 8 Warning Signs with GE.

Release Date: October 22, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

• GE Aerospace (NYSE:GE) reported a 28% increase in orders, driven by strong demand across its segments.

• Revenue grew by 6% due to growth in services and equipment, with operating profit up 14% and adjusted EPS up 25%.

• Free cash flow was $1.8 billion, with a conversion rate of over 140%, indicating strong cash generation.

• The company raised its full-year guidance based on strong year-to-date performance and fourth-quarter expectations.

• GE Aerospace (NYSE:GE) is making significant progress in expanding its aftermarket capacity and improving LEAP engine durability, which is expected to enhance time on wing by 2.5 times.

• Despite an increase in orders, profit in the Defense & Propulsion Technologies segment declined due to lower engine deliveries year over year.

• Supply chain constraints impacted shipments, with total engine deliveries down 4%, including a 6% decrease in LEAP engine deliveries.

• The company faces ongoing material availability challenges, leading to increased inventory levels.

• There is pressure on margins due to higher inflation and increased investments, particularly in the Defense & Propulsion Technologies segment.

• The delay in Boeing's 777X program presents operational and financial challenges for GE Aerospace (NYSE:GE), impacting future engine deliveries and profitability.

Q: How should we think about the profit growth for 2025 given the updated 2024 EBIT guidance? A: Larry Culp, CEO, mentioned that they are working through the updated 2025 outlook and will have a more defined look at it by the end of the year. Rahul Ghai, CFO, added that commercial services are expected to grow due to a significant backlog and price increases. Equipment growth is slower in 2024, so some volume will move to 2025. Defense programs have strong backlogs, and corporate cost reductions are ongoing. Overall, they expect continued strong earnings and free cash flow outlook for 2025.