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GE

GENERAL ELECTRIC CO (GE)·Q4 2024 Earnings Summary

Executive Summary

  • GE Aerospace delivered a strong Q4: GAAP revenue $10.82B (+14% YoY), operating profit $1.99B (+49% YoY), operating margin 20.1% (+450 bps), adjusted EPS $1.32 (+103%), and free cash flow $1.52B (+21%) .
  • Segment performance was robust: CES revenue $7.65B (+19%), profit $2.16B (+44%, margin 28.2%); DPT revenue $2.52B (+4%), profit $241M (+2%, margin 9.6%) .
  • 2025 guidance: low double-digit revenue, adjusted EPS $5.10–$5.45, FCF $6.3–$6.8B, FCF conversion >100%; CES profit $7.6–$7.9B, DPT profit $1.1–$1.3B, corporate costs < $1B .
  • Strategic/catalyst updates: FAA/EASA certification for LEAP‑1A HPT durability kit; priority suppliers now shipping >90% of committed volume; LEAP deliveries expected +15–20% in 2025; expanded $7B buyback and planned 30% dividend increase (subject to Board approval) .
  • 2025 profit growth midpoint trimmed to ~+$750M vs 2024 (prior commentary closer to +$1B) given eliminations and 9X ramp/R&D headwinds; management still expects double-digit EPS growth and >100% FCF conversion .

What Went Well and What Went Wrong

What Went Well

  • “Orders were up 46%, revenue grew 16%, profit up nearly 50%, and EPS more than doubled. Free cash flow was up over 20% with conversion above 100%” (CEO Larry Culp) .
  • LEAP durability progress: FAA/EASA certification of the LEAP‑1A HPT durability kit to increase time-on-wing toward CFM56 parity; first retrofit engines shipped .
  • Supply chain execution improving: priority suppliers now shipping >90% of committed targets; 26% increase in material inputs H2 vs H1; on-wing LEAP support flow redesigned, boosting output +50% in 2024 .

What Went Wrong

  • Internal shop visit volume was lighter than expected due to material constraints; LEAP deliveries down 5% YoY; total deliveries down 2% YoY in Q4 .
  • Inventory increased through 2024 (about $1.5B), with contract assets tailwind moderating in 2025 as shop visits rise; conversion remains >100% but lower vs 2024 .
  • DPT margin down 20 bps in Q4 on next-gen engine investments and inflation; 9X shipments expected to be a few hundred million headwind in 2025 as program ramps .

Financial Results

Total Company – Quarterly Progression

MetricQ2 2024Q3 2024Q4 2024
Total Revenue ($USD Billions, GAAP)$9.09 $9.84 $10.81
Adjusted Revenue ($USD Billions)$8.22 $8.94 $9.88
Operating Profit ($USD Billions, Non-GAAP)$1.90 $1.82 $1.99
Operating Margin (%)23.1% 20.3% 20.1%
Continuing EPS (GAAP) ($)$1.20 $1.56 $1.75
Adjusted EPS ($)$1.20 $1.15 $1.32
Cash from Operating Activities ($USD Billions)$0.96 $1.91 $1.32
Free Cash Flow ($USD Billions, Non-GAAP)$1.10 $1.81 $1.52

Segment Breakdown

SegmentMetricQ2 2024Q3 2024Q4 2024
Commercial Engines & Services (CES)Orders ($USD Billions)$9.15 $9.80 $12.95
CESRevenue ($USD Billions)$6.13 $7.00 $7.65
CESOperating Profit ($USD Billions)$1.68 $1.80 $2.16
CESMargin (%)27.4% 25.7% 28.2%
Defense & Propulsion Tech (DPT)Orders ($USD Billions)$2.33 $3.04 $2.84
DPTRevenue ($USD Billions)$2.40 $2.24 $2.52
DPTOperating Profit ($USD Millions)$344 $220 $241
DPTMargin (%)14.3% 9.8% 9.6%

Operating KPIs

KPIQ2 2024Q3 2024Q4 2024
LEAP Deliveries (YoY %)(29%) (6%) (5%)
Total Engine Deliveries (YoY %)(26%) equipment shipments; total deliveries down 4% (4%) (2%)
Internal Shop Visit Volume (YoY %)Mid-teens growth (services +14%) ~Flat (3%)
DSO Change (YoY, Days)——(5) days
Inventory Change ($USD Billions, 2024)——+$1.5B (annual)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EPS* ($)FY 2025N/A$5.10–$5.45 New issuance
Operating Profit* ($USD Billions)FY 2025N/A$7.8–$8.2 New issuance
Free Cash Flow* ($USD Billions)FY 2025N/A$6.3–$6.8; conversion >100% New issuance
CES Profit* ($USD Billions)FY 2025N/A$7.6–$7.9 New issuance
DPT Profit* ($USD Billions)FY 2025N/A$1.1–$1.3 New issuance
Corporate Costs ($USD Billions)FY 2025< $1.0B (prior view) < $1.0B Maintained
CES Services Growth (%)FY 2025Low double-digits (prior view) Low double-digits to mid-teens Raised
LEAP Deliveries (%)FY 2025N/A+15% to +20% New issuance
DividendFY 2025$0.28/qtr (initiated Apr-2024) Planned +30% (subject to Board) Increased
Share Repurchases ($USD Billions)FY 2025$15B program (Mar-2024) $7B expected in 2025 Increased execution

*Non-GAAP guidance. Reconciliation to GAAP not provided due to uncertainty of gains/losses and restructuring timing .

Earnings Call Themes & Trends

TopicQ2 2024 (Prior-2)Q3 2024 (Prior-1)Q4 2024 (Current)Trend
Supply chain/material inputs15 priority sites constraining; >550 resources deployed; sequential improvements targeted Inputs +18% at key suppliers; HPT blade certification expected; aftermarket capacity expansion Priority suppliers shipping >90%; H2 inputs +26% vs H1; internal on-wing flow redesigned (+50% output) Gradual improvement, non-linear
LEAP durability & aftermarketLEAP to reach CFM56 time-on-wing by year-end; services breakeven in 2024; program breakeven 2025 LEAP 1A durability kit near certification; internal shop visits up; external network scaling LEAP 1A HPT kit certified; external shop visits to ~15% in 2025; LEAP deliveries +15–20% in 2025 Positive durability; aftermarket scaling
9X rampEarly stage; cost-out plan (30% by 50th, +30% by 250th engines) 777X delay; continued testing; ramp in coming years Ramp continues; 2025 shipments headwind of a few hundred million Near-term headwind, long-term value
CES services growth/mixServices +14%; internal shop visits led; price/mix tailwinds Services +10%; shop visit workscopes/pricing; spare parts strong Services +12% YoY; mix skewed to spares; shop visits down 3% on constraints Strong demand; mix variability
Defense & DPTQ2 profit +71%; orders timing Book-to-bill 1.2x FY; backlog $18B; profit down Q3 on investments/inflation Orders +22%; units up; profit +2%; margin (20) bps on investments Backlog strong; investment drag
RISE/Open Fan/TechRISE wind tunnel tests; hybrid electric with DOE Dust ingestion test planning; core tech maturity; XA100 progress NASA contrails tests; >250 RISE tests; continued hybrid electric work Advancing technology pipeline
Capital returnsInitiated $0.28 dividend; buybacks executed Increased FY24 EPS/FCF guide; buybacks/divestments >$6B returned in 2024; plan $7B repurchases 2025; dividend +30% (subject to Board) Accelerating returns

Management Commentary

  • Larry Culp: “GE Aerospace delivered a standout year financially with revenue up double digits, profit up $1.7 billion and free cash flow up $1.3 billion…orders were up 46%, EPS more than doubling, and free cash flow increasing over 20%” .
  • Rahul Ghai: “Profit was $2 billion, up 49%…Margins were up 450 bps to 20.1%. EPS of $1.32 more than doubled…Free cash flow was $1.5 billion, up 21%…DSO down 5 days YoY” .
  • On 2025 guide: “EPS in the range of $5.10 to $5.45…$6.3 to $6.8 billion of free cash flow…share repurchases to $7 billion and planned to raise our dividend by 30%” .

Q&A Highlights

  • LEAP profitability: Services profitable in 2024; program breakeven in 2025; OE profitable in 2026; external shop visits rising to ~15% in 2025; spare parts volumes and pricing supportive .
  • 2025 profit walk: Midpoint +$750M YoY; CES profit +~$700M from services drop-through; headwinds from R&D and 9X deliveries; eliminations up ~$100M with PAT volume .
  • 9X program: Focused on supporting Boeing’s 777X; ~1,000 engines in backlog; extensive testing; shipments begin ramping with near-term losses but cost-out plan over time .
  • Working capital/FCF: 2025 FCF growth primarily from earnings; inventory build less than 2024; contract assets tailwind smaller; higher CapEx and cash taxes offsetting some WC gains .
  • Supply chain trajectory: ~15 critical suppliers under intensive FLIGHT DECK engagement; improvements will be sequential, not step function; aftermarket demands draw on same parts/suppliers .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS/revenue was unavailable due to data access limits; therefore, beats/misses versus consensus cannot be assessed in this report. Values retrieved from S&P Global were unavailable.

Key Takeaways for Investors

  • Services-led operating leverage continues: CES margins expanded to 28.2% on heavier workscopes, pricing, and spare parts mix; this remains the principal earnings driver into 2025 .
  • LEAP milestones de-risk the aftermarket: LEAP‑1A durability kit certification and rising external MRO penetration should support profitability and spare parts growth in 2025 .
  • Near-term headwind from 9X ramp: Expect a few hundred million EBIT drag as 9X shipments increase, partly offset by services strength and pricing; monitor Boeing timing and GE cost-out .
  • Supply chain execution is the swing factor: Material inputs improved and reliability >90% at priority suppliers, but internal shop visits remain constrained; sequential improvement expected .
  • Capital return accelerates: Plan for $7B buybacks and a 30% dividend increase (subject to Board) underpinned by >100% FCF conversion guide; supports shareholder yield while funding R&D .
  • Defense steady with backlog support: DPT revenue growth mid- to high-single digits and margin expansion expected; watch investment cadence vs deliveries .
  • 2025 setup: Double-digit revenue and EPS growth guided; profit growth trimmed to +$750M midpoint versus prior commentary, but multiple levers remain for upside through services and supply chain .

Appendix: Additional Relevant Press Releases (Q4 period and adjacent)

  • GE Aerospace and NASA contrails flight tests to advance non-CO2 impact understanding; RISE program >250 tests (Nov 15, 2024) .
  • T700 order for Poland’s Apache fleet (Jan 8, 2025) and T901 engine ground runs on Black Hawk (Jan 29, 2025), demonstrating defense program traction .
Notes:
- Non-GAAP metrics are defined and reconciled in company materials; guidance reconciliation not provided due to uncertainties **[40545_0000040545-25-000009_ge4q2024earningsrelease.htm:6]** **[40545_0000040545-25-000009_ge4q2024earningsrelease.htm:10]**.
- Consensus from S&P Global was unavailable at time of analysis; beats/misses vs estimates are not assessed in this report.