Sign in
GE

GENERAL ELECTRIC CO (GE)·Q1 2025 Earnings Summary

Executive Summary

  • GE Aerospace delivered a strong Q1 2025: total orders $12.3B (+12%), GAAP revenue $9.94B (+11%), adjusted revenue $9.00B (+11%), adjusted EPS $1.49 (+60%), and operating margin 23.8% (+460 bps) .
  • Results beat S&P Global consensus: adjusted EPS $1.49 vs $1.27* and revenue $9.94B vs $9.05B*; strength was driven by commercial services (spare parts >20% growth, shop-visit revenue +11%) and tariff-offset actions noted on the call .
  • 2025 guidance maintained (adjusted EPS $5.10–$5.45; operating profit $7.8–$8.2B; FCF $6.3–$6.8B), but assumptions updated: departures growth cut from mid-single digits to low-single digits and delayed spare engine deliveries amid tariff headwinds (~$500M net after actions) .
  • Key catalysts: pricing actions (catalog increases and temporary surcharge) to offset tariffs , acceleration in supplier material inputs (+8% sequential) , LEAP durability kit already incorporated on Airbus shipments , and marquee orders (Korean Air GE9X/GEnx) supporting backlog .

What Went Well and What Went Wrong

What Went Well

  • Commercial services momentum: CES orders +15% to $9.58B, revenue +14% to $6.98B, operating profit +35% to $1.92B; spare parts revenue grew >20%, internal shop-visit revenue +11% .
  • Execution and supply chain actions: “material input at priority supplier sites was up 8% sequentially… supported services revenue up 17%” and leadership emphasized FLIGHT DECK as the operating model to accelerate deliveries .
  • Strategic wins and technology milestones: Korean Air selected GE9X/GEnx for its 777-9 and 787-10 fleet with associated service agreement ; Catalyst turboprop achieved FAA certification, indicating performance and readiness for entry into service .
  • Management tone: “strong start to 2025… orders and revenue up double digits… adjusted EPS up 60%” and confidence to maintain full-year guidance with a $140B+ commercial services backlog .

What Went Wrong

  • Tariff impact and macro uncertainty: management expects roughly $500M tariff headwind after duty drawback and foreign-trade-zone actions; departures outlook trimmed to low-single digits for the year .
  • Operational constraints: spare parts delinquency “up over 2x YoY,” internal shop slots full, total engine units down 6% with LEAP down 13% due to a slower start in January materials .
  • Cash flow compression: CFOA down 5% YoY to $1.54B and FCF down 14% YoY to $1.44B on timing and investment needs .
  • Defense modest growth: DPT revenue +1% to $2.32B while investment and inflation remain offsetting factors despite margin expansion to 12.7% .

Financial Results

Key Metrics vs Prior Periods

MetricQ3 2024Q4 2024Q1 2025
Total Orders ($B)$12.6 $15.5 $12.3
Revenue (GAAP, $B)$9.84 $10.81 $9.94
Adjusted Revenue ($B)$8.94 $9.88 $9.00
Continuing EPS (GAAP, $)$1.56 $1.75 $1.83
Adjusted EPS ($)$1.15 $1.32 $1.49
Operating Profit ($B)$1.82 $1.99 $2.15
Operating Margin (%)20.3% 20.1% 23.8%
Profit Margin (GAAP, %)19.2% 21.2% 22.6%
CFOA ($B)$1.91 $1.32 $1.54
Free Cash Flow ($B)$1.81 $1.52 $1.44

Estimates vs Actuals (S&P Global)

MetricQ3 2024 EstimateQ3 2024 ActualQ4 2024 EstimateQ4 2024 ActualQ1 2025 EstimateQ1 2025 Actual
EPS ($)1.13*1.15 1.04*1.32 1.27*1.49
Revenue ($B)9.11*9.84 9.47*10.81 9.05*9.94

Values retrieved from S&P Global.*

Segment Breakdown

CES (Commercial Engines & Services)Q3 2024Q4 2024Q1 2025
Orders ($B)$9.80 $12.95 $9.58
Revenue ($B)$7.00 $7.65 $6.98
Operating Profit ($B)$1.80 $2.16 $1.92
Operating Margin (%)25.7% 28.2% 27.5%
DPT (Defense & Propulsion Technologies)Q3 2024Q4 2024Q1 2025
Orders ($B)$3.04 $2.84 $3.03
Revenue ($B)$2.24 $2.52 $2.32
Operating Profit ($M)$220 $241 $296
Operating Margin (%)9.8% 9.6% 12.7%

KPIs and Operating Drivers

KPIQ3 2024Q4 2024Q1 2025
CES services revenue YoY+10% +12% +17%
Spare parts revenue YoYHigher Higher >+20%
Internal shop-visit revenue YoYFlat Double-digit +11%
Total engine units YoYDown 4% Flat to slight down Down 6%
LEAP unit deliveries YoYDown 6% Down 5% Down 13%
Defense units YoY—+20% seq in Q4 +5%
Supplier material inputs (seq)+18% in Q3 Continued improvement +8%
Departures YoYHigh single digits YTD Mid-single digits guided +4% in Q1; full-year now low-single digits

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted Revenue GrowthFY 2025LDD (low double-digit) LDD Maintained
Operating ProfitFY 2025$7.8–$8.2B $7.8–$8.2B Maintained
Adjusted EPSFY 2025$5.10–$5.45 $5.10–$5.45 Maintained
Free Cash FlowFY 2025$6.3–$6.8B; >100% conversion $6.3–$6.8B; >100% conversion Maintained
CES revenue growthFY 2025Mid-teens; services LDD–mid-teens; equipment high-teens Same; CES OP $7.6–$7.9B Maintained
DPT revenue & OPFY 2025Mid- to high-single-digit; OP $1.1–$1.3B Same Maintained
Corporate CostsFY 2025< $1B < $1B Maintained
Departures growthFY 2025Mid-single digits (Jan guide) Low-single digits Lowered
Tariff impact assumptionFY 2025Not emphasized in Jan 8-KIncludes tariffs; ~$500M net cost after actions Added/Updated
Spare engine deliveriesFY 2025Normalized cadenceAssumes delays Updated

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Tariffs/macroRaising 2024 guide; macro noted, no tariff surcharge 2025 outlook strong; no explicit surcharge ~$500M tariff headwind after duty drawback/FTZ; temporary surcharge possible; maintain R&D New headwind; offset via pricing/SG&A
Supply chain & FLIGHT DECKMaterial inputs +18% seq; unlocking capacity Continued actions; tech+ops integration Material inputs +8% seq; accelerating outputs; suppliers shipping >95% committed Improving, but still constraining
LEAP durability & aftermarketDurability kit certification expected; expand MRO LEAP 1A HPT durability kit certified; aftermarket capacity +40% in 2024 All Airbus shipments include kit; external LEAP shop visits +60%; margins supported Positive durability; aftermarket scaling
Pricing strategyPrice helping CES margins Services pricing increases and mix Catalog increases mid- to high-single digit; temp tariff surcharge; share with partners Pricing tailwind; surcharge temporary
Departures & demandHigh single-digit departures YTD Mid-single digits expected in 2025 +4% Q1; full-year low single digits; NA softness risk Moderating
Defense programsOrders strong; profit pressured DPT profit +17% FY; backlog +$1.5B Defense units +5%; margins +160 bps; F110 contract up to $5B Improving units/margins

Management Commentary

  • “GE Aerospace had a strong start to 2025 with orders and revenue up double digits… and adjusted EPS up 60%.” — H. Lawrence Culp, Jr.
  • “We expect to reduce the tariff costs to roughly $500 million… leveraging duty drawbacks and expanding foreign trade zones.” — H. Lawrence Culp, Jr.
  • “Material input at our priority supplier sites was up 8% sequentially… supporting CES services revenue up 17% YoY.” — H. Lawrence Culp, Jr.
  • “We continue to expect low double-digit to mid-teens services growth… and we are holding our guidance across the board.” — Rahul Ghai
  • “All engine shipments to Airbus now incorporate the durability kit… supporting achieving the 15%–20% growth in LEAP deliveries we expect in 2025.” — H. Lawrence Culp, Jr.

Q&A Highlights

  • Tariffs and margins: Management expects Q2 momentum to continue and second-half uncertainty embedded in guidance; tariff net impact ~$500M to be mitigated by SG&A controls and pricing .
  • Pricing actions: Catalog spare pricing mid- to high-single-digit later summer; temporary surcharge to recover tariff costs; aim to remove once tariffs end .
  • Operations cadence: Spare parts backlog ~90% for Q2; conservative departures assumption; shop-visit backlog extends into the fall, supporting services resilience even if departures soften .
  • Cash and duty drawback: Duty drawback recovery cycle ~4–5 months; Q2 cash sequentially up with >100% conversion .
  • Supply chain/rare metals: Alternate sourcing and inventory positions mitigate risks; not a top concern currently .

Estimates Context

  • Q1 2025: Adjusted EPS $1.49 vs $1.27* and revenue $9.94B vs $9.05B* — broad-based beat on services strength and price. Values retrieved from S&P Global.*
  • Prior quarters: Q4 2024 EPS $1.32 vs $1.04* and revenue $10.81B vs $9.47B*; Q3 2024 EPS $1.15 vs $1.13* and revenue $9.84B vs $9.11B*. Values retrieved from S&P Global.*
  • Implications: Street likely needs to raise services growth and margin assumptions for 2025, while incorporating tariff offset dynamics, a slower departures trajectory, and continued OE ramp headwinds late-year .

Key Takeaways for Investors

  • Services-led upside: Strong spare parts and shop-visit revenue, durability improvements, and expanding third-party MRO should sustain margin expansion despite OE mix and tariff headwinds .
  • Tariff overhang manageable: ~$500M net impact is being offset via duty drawback/FTZ, SG&A controls, and pricing surcharges; watch policy developments and customer receptivity .
  • Guidance credible but conservative: Maintaining FY25 guide with trimmed departures growth lowers macro risk; backlog depth and shop-visit pipeline underpin services visibility .
  • Supply chain trajectory improving: Material inputs rising, suppliers shipping >95% of commitments; expect sequential output improvement through 2025, supporting both OE and aftermarket .
  • Defense steady improvement: Units up, margins expanding, and multi-year contract wins (e.g., F110) support DPT revenue and profit trajectory .
  • Near-term trading: Positive revision risk to services, margin, and cash for Q2/Q3; monitor tariff headlines and pricing surcharge execution.
  • Medium-term thesis: LEAP aftermarket scaling, durability gains, and disciplined capital returns alongside ongoing technology investments (RISE, 9X, Catalyst) support compounding cash generation .

Other Relevant Q1 2025 Press Releases

  • Catalyst turboprop engine achieves FAA Part 33 certification; targets up to 18% better fuel consumption vs class peers and supports Textron Denali entry into service .
  • Korean Air selects GE9X and GEnx engines with service agreement to power new Boeing 777-9 and 787-10 orders, reinforcing GE’s widebody franchise .