You might also like
General Electric (GE) is a multinational conglomerate that operates through three main segments: Aerospace, Renewable Energy, and Power. The company is a global leader in propulsion, services, and systems, particularly in the aerospace industry, where it manufactures jet engines for commercial and military aircraft, provides maintenance, and sells spare parts . GE also focuses on renewable energy solutions, offering wind and other renewable energy generation equipment, as well as grid solutions . Additionally, GE provides power generation equipment and services, including gas, steam, and nuclear power solutions . The company emphasizes innovation and sustainability, aiming to develop technologies for a more sustainable future .
- Aerospace - Manufactures jet engines for commercial and military aircraft, provides maintenance, component repair, and overhaul services, and sells spare parts.
- Power - Provides gas, steam, nuclear, and other power generation equipment, along with services to support these products.
- Renewable Energy - Focuses on wind and other renewable energy generation equipment and grid solutions, including onshore and offshore wind, blade manufacturing, grid solutions, hydro, battery storage, hybrid renewables, and digital services offerings.
-
Given the ongoing supply chain constraints impacting engine deliveries, with LEAP deliveries expected to be down approximately 10% year-over-year, can you detail the specific steps you're taking to mitigate these issues and ensure you meet your delivery commitments in both the commercial and defense segments?
-
You mentioned that higher 9X engine shipments in 2025 will put pressure on margins and that program losses are expected to peak later in the decade before becoming profitable by 2030; how do you plan to manage these losses, and what strategies are in place to accelerate the profitability of the 9X program?
-
Despite lower engine deliveries and ongoing supply chain challenges, your financials continue to improve; can you explain how you're achieving strong earnings and cash flow under these circumstances, and what risks could impact this performance moving forward?
-
In the defense segment, profits declined due to lower engine deliveries and higher investments; what are the primary factors contributing to the delivery challenges, and what measures are you implementing to improve performance and meet the evolving needs of your military customers?
-
With equipment growth expected to be faster than services in 2025 due to higher volumes, including 9X shipments, how will you address the potential margin pressures and ensure overall profitability, especially considering that some 2024 equipment volume is moving into 2025?
Recent developments and announcements about GE.
Financial Reporting
- Revenue and Profit: GE Aerospace reported a 16% increase in revenue for Q4 2024, driven by growth in both Commercial Engines & Services (CES) and Defense & Propulsion Technologies (DPT). Profit for the quarter rose by 49% to $2 billion, with margins expanding by 450 basis points to 20.1%.
- Full-Year Results: For 2024, revenue grew by 10%, profit increased by 30% to $7.3 billion, and free cash flow rose by nearly 30% to $6.1 billion. Margins expanded by 330 basis points to 20.7%.
- Earnings Per Share (EPS): EPS for the year increased by 56% to $4.60, supported by profit growth and a reduced tax rate.
- Revenue and Profit Growth: GE Aerospace expects low double-digit revenue growth, with profit projected to range between $7.8 billion and $8.2 billion, representing a 10% increase at the midpoint .
- EPS and Free Cash Flow: EPS is forecasted to be between $5.10 and $5.45, up 15% at the midpoint. Free cash flow is expected to range from $6.3 billion to $6.8 billion, with conversion remaining above 100% .
- LEAP Engine Program: LEAP engine deliveries are anticipated to grow by 15%-20% in 2025, with the program expected to achieve breakeven profitability in 2025 and OE profitability in 2026.
- Supply Chain Improvements: GE highlighted progress in addressing supply chain constraints, with material inputs increasing by 26% in the second half of 2024. The company is embedding over 500 personnel in supplier operations to improve output and reliability .
- Investments in MRO Facilities: GE is investing over $1 billion in its Maintenance, Repair, and Overhaul (MRO) facilities over the next five years to enhance repair technologies and reduce turnaround times.
- Durability Enhancements: The LEAP-1A HPT durability kit, designed to double time on wing, was certified and shipped to customers, supporting operational efficiency and aftermarket growth.
- LEAP Engine Market Share: Analysts inquired about the split between Airbus and Boeing for LEAP engines. While GE did not disclose specific details, it emphasized strong alignment with both manufacturers to support their production ramps.
- Supply Chain Bottlenecks: Management acknowledged ongoing challenges with 15 critical suppliers but expressed confidence in continued sequential improvements throughout 2025.
- Profitability Trajectory: GE expects LEAP services to grow significantly, with external shop visits increasing to 15% in 2025, supporting higher margins and profitability .
- Robust Demand: GE reported strong demand across its commercial and defense segments, with orders up 46% in Q4 2024. Notable wins included contracts with EL AL Israel Airlines, Fly Dubai, and the U.S. Army.
- Shareholder Returns: GE plans to return over 100% of free cash flow to shareholders in 2025 through share repurchases and a 30% dividend increase, subject to board approval .
- Total Orders: $15.5 billion, a 46% increase year-over-year.
- Total Revenue (GAAP): $10.8 billion, up 14%; Adjusted Revenue: $9.9 billion, up 16%.
- Profit (GAAP): $2.3 billion, a 37% increase; Operating Profit: $2.0 billion, up 49%.
- Profit Margin (GAAP): 21.2%, an improvement of 350 basis points (bps); Operating Profit Margin: 20.1%, up 450 bps.
- Continuing EPS (GAAP): $1.75, a 62% increase; Adjusted EPS: $1.32, up 103%.
- Free Cash Flow (FCF): $1.5 billion, a 21% increase.
- Total Orders: $50.3 billion, up 32%.
- Total Revenue (GAAP): $38.7 billion, a 9% increase; Adjusted Revenue: $35.1 billion, up 10%.
- Profit (GAAP): $7.6 billion, down 27%; Operating Profit: $7.3 billion, up 30%.
- Profit Margin (GAAP): 19.7%, a decline of 980 bps; Operating Profit Margin: 20.7%, up 330 bps.
- Continuing EPS (GAAP): $6.09, down 27%; Adjusted EPS: $4.60, up 56%.
- Free Cash Flow (FCF): $6.1 billion, a 28% increase.
- FAA and EASA Certification: Received certification for the upgraded LEAP 1-A high-pressure turbine durability kit, enhancing engine performance.
- Supply Chain Improvements: Addressed constraints using the proprietary FLIGHT DECK model, leading to a 26% increase in material inputs and 17% growth in CES services revenue.
- Major Orders: Secured contracts with EL AL Israel Airlines, Royal Jordanian Airlines, and the U.S. Army (valued up to $1.1 billion).
- Shareholder Returns: Returned over $6 billion to shareholders in 2024 and announced a $7 billion share repurchase plan for 2025, along with a 30% dividend increase (subject to board approval).
- Revenue Growth: Expected to grow in the low double digits.
- Adjusted EPS: Projected between $5.10 and $5.45.
- Free Cash Flow: Anticipated between $6.3 billion and $6.8 billion, with greater than 100% FCF conversion.
- New Auditor: Deloitte & Touche LLP has been selected as GE's independent registered public accounting firm for the fiscal year ending December 31, 2021.
- Previous Auditor: KPMG LLP will continue as the auditor for the fiscal year ending December 31, 2020.
- Selection Date: The decision was made on June 18, 2020.
- Reason for Change: The change follows an extensive evaluation process by GE's Audit Committee .
Earnings Call
GE recently released its earnings call transcript for the fourth quarter and full year 2024, providing key insights into its financial performance, forward guidance, and strategic initiatives. Below is a summary of the key points:
Financial Performance
Forward Guidance for 2025
Strategic Initiatives
Analyst Questions and Management Responses
Market Conditions and Strategic Outlook
Conclusion
GE Aerospace delivered a strong performance in 2024 and is well-positioned for continued growth in 2025. The company’s focus on operational execution, supply chain improvements, and strategic investments underscores its commitment to meeting robust market demand and enhancing shareholder value.
For further details, please refer to the full earnings call transcript.
Earnings Report
GE Aerospace Releases Fourth Quarter and Full-Year 2024 Earnings Results
On January 23, 2025, GE Aerospace announced its financial results for the fourth quarter and full year of 2024, showcasing strong performance and significant growth across key metrics. Below are the highlights:
Fourth Quarter 2024 Highlights
Full-Year 2024 Highlights
Key Business Developments
2025 Guidance
CEO Statement
H. Lawrence Culp, Jr., Chairman and CEO, stated, "GE Aerospace delivered a strong finish to 2024 given robust demand for our services and products... Looking to 2025, we expect double-digit revenue and EPS growth with greater than 100% free cash flow conversion".
Conclusion
GE Aerospace's robust performance in 2024 and optimistic outlook for 2025 highlight its strong market position and operational efficiency. The company continues to focus on innovation, supply chain improvements, and shareholder value creation.
For more details, visit GE Aerospace's Investor Relations page.
Auditor Changes
General Electric (GE) has changed its auditor.