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2,300 | DIS | 2 | 2,025 | 2025-05-07 08:30:00 | The Walt Disney Company | 191,564 | Hugh Johnston: Right. And hey, Ben, this is Hugh. Obviously, the guide that we announced for this year, which was $5.30, we've now taken to $5.75. The long-term guide remains intact. What we announced before, no change to that.
Carlos Gomez: Thanks, Ben. Operator, next question, please.
Operator: Yes, sir. And our next question comes from Stephen Khong with Wells Fargo. Please go ahead.
Stephen Khong: Yeah. First, just congratulations on Abu Dhabi. I was wondering, if you could speak a little more on how you settled specifically on this location and this partner. I mean, Yas Island is really exciting already with the track and Ferrari World and the Emirate has a lot in infrastructure, but there are a lot of choices in the region. So, maybe you could just think about what audience you're going after and how this particular location is best suited for those purposes? And then just a second question on parks. I think domestic park margins were up 110 basis points in the quarter. I think you said that cruise is margin accretive. I was just wondering if you could help us think through the margin improvement you saw at domestic. Was that mostly due to cruise mix? Were underlying domestic park margins up as well? Just thinking about that as we forecast this longer-term? Thank you.
Hugh Johnston: Yeah. Hi. This is Hugh. So in terms of the margins on the Parks business, that's a combination of all of the businesses. So we had certainly seen margin accretion in the Parks and Experiences side as well, not just the impact of cruise. |
2,301 | DIS | 2 | 2,025 | 2025-05-07 08:30:00 | The Walt Disney Company | 191,564 | Bob Iger: And then, on the Abu Dhabi question, which is a good question, Stephen, because we did study the region very carefully and we know that we had many opportunities. Obviously, building a theme park in a location is a huge endorsement of that location speaks volumes in terms of the ability of that location to sustain the Disney theme park. I should start really with an overview of the Middle East. It was very obvious to us that there were many people -- basically hundreds of millions in the world that are income qualified where a trip to one of our six locations was pretty lengthy in nature and expensive. And so, we felt the best way obviously to reach those people is to basically bring our product to them. Interestingly enough, as an aside, when we decided to build a cruise ship and put it in Singapore, which will not launch until the end of the year, we put it on sale just a few months ago and the first quarter sold out in a matter of days as a for instance. So there's clearly a desire to engage -- consumers to engage with Disney in a wide region that is actually distance enough from our other locations so that we don't really view this as in any way cannibalistic to the places we already operate. Then when you look at Abu Dhabi and the UAE, I mentioned these statistics earlier today. We talk about it being at crossroads of the world, 500 million income qualified people live within 4 hours, 120 million people will come through Dubai and Abu Dhabi this year alone. Abu Dhabi estimates that 39 million tourists will visit Abu Dhabi by 2030, that says a lot. Then as we started to really dig deeper into Abu Dhabi specifically and engage with our partners, obviously, capital was not an issue. But in addition to that, they've demonstrated a number of things that were really important to us. One, a real appreciation of quality and innovation and appreciation of the arts and creativity and a huge commitment to new technology. And we were impressed with all of that. We also looked at what they've already built |
2,302 | DIS | 2 | 2,025 | 2025-05-07 08:30:00 | The Walt Disney Company | 191,564 | and a huge commitment to new technology. And we were impressed with all of that. We also looked at what they've already built between the Louvre that's already built, the Guggenheim which is going up and incredible other experiences, the architecture here as well. And everywhere we look, we basically were convinced that this was a perfect place for us. And then in Miral, our partners, we immediately bonded with them in many respects, spoke the same language and basically, we both have a real appreciation of our history and our legacy, but moving forward and being forward thinking and innovating is also part of our basically our DNA. And so, it was very, very clear to us that of all of the places that we could choose from, there didn't seem to be any place that was better than this. And one of the reasons why I came together so quickly is because of how convinced we became, particularly after engaging with our partners that this was the right choice. |
2,303 | DIS | 2 | 2,025 | 2025-05-07 08:30:00 | The Walt Disney Company | 191,564 | Carlos Gomez: Thanks, Steve. Operator, next question, please.
Operator: Thank you. And our next question today comes from Robert Fishman with MoffettNathanson. Please go ahead.
Robert Fishman: Thank you. Bob, the studio has clearly delivered many hits over the past year. I'm wondering, if you could just share a little bit more about your excitement for the upcoming theatrical slate and how that will generate the additional long-term value for Disney and the multiplier effect that you talked about in your prepared comments? And on a related note with the Thunderbolts opening, what is your confidence that Marvel can still be a significant driver to that Disney flywheel with its renewed focus on theatrical and putting out less scripted series on Disney+? |
2,304 | DIS | 2 | 2,025 | 2025-05-07 08:30:00 | The Walt Disney Company | 191,564 | Bob Iger: Thanks, Robert. I have a lot of confidence in our upcoming slate. Let me just list some of the films that are coming out. We have Lilo & Stitch coming out on Memorial Day weekend, that's the live action version. Tracking is enormous. I've seen the movie a few times. I can endorse it wholeheartedly. I have a lot of confidence there. Pixar, Elio in June, then we have Fantastic Four in July, and then Tron, Zootopia and Avatar to finish out the calendar year, that's quite a lineup. And then next year, Avengers, Mandalorian, Toy Story and Moana live action. So, we have a slate in the next year-and-a-half that not only have a lot of confidence in, but it's as strong as any slate that I've seen in a long time since, well, in 2019, I think was our best year. It's as strong as anything I've seen since then, so great confidence. And look, I've talked about Marvel a lot. We all know that in our Zeal to Flood our streaming platform with more content that we turn to all of our creative engines, including Marvel and had them produce a lot more. We've also learned over time that quantity does not necessarily beget quality. And frankly, we've all admitted to ourselves that we lost a little focus by making too much and by bringing Marvel -- by consolidating a bit and having Marvel focus much more on their films, we believe it will result in better quality. And I think the first and best example is Thunderbolts. So feel very good about that. Thank you.
Carlos Gomez: Thanks, Robert. Operator, next question, please.
Operator: Absolutely. And our next question today comes from Jessica Reif Ehrlich with BofA Securities. Please go ahead. |
2,305 | DIS | 2 | 2,025 | 2025-05-07 08:30:00 | The Walt Disney Company | 191,564 | Operator: Absolutely. And our next question today comes from Jessica Reif Ehrlich with BofA Securities. Please go ahead.
Jessica Reif Ehrlich: Thank you. And maybe switching gears to advertising. Bob, you mentioned in your prepared remarks that you're optimistic regarding the Upfront. So, can you give us like some comments on what you're seeing in the market, the move to programmatic? Is it having an impact on your share of markets, sports? And then, I think the advertising was lower in Disney+. So maybe you could give us some color on what's going on? And then, just a follow-up on Abu Dhabi. Since you're not putting capital in, is there any ownership or is this simply a royalty?
Bob Iger: I'll start on the Abu Dhabi question and I'll have Hugh pick up your question on advertising. It is all their capital and we will get a royalty. So there isn't an ownership. We own our IP and license it to them is essentially the arrangement. We're responsible for design and development and we will be involved significantly in oversight of their operations basically to ensure that the Disney experience going -- meaning the Disney theme park experience is up to the level that we offer in the other six locations that we operate. By the way, we're not concerned about that at all. They've already demonstrated a commitment to quality in that regard. But this is essentially a license arrangement, but with considerable involvement of us. So although, they will operate it, we will have employees embedded in the organization with them to help them operate a Disney theme park basically at the quality level that everybody is used to. |
2,306 | DIS | 2 | 2,025 | 2025-05-07 08:30:00 | The Walt Disney Company | 191,564 | Hugh Johnston: Yeah. Hey, Jessica. It's Hugh. Just to follow up on the advertising question. Right now, the advertising market is quite healthy for us. Live sports, as you know, is doing extremely well. And you see that in the ESPN numbers where advertising for the quarter was up over 20%. In addition to that, we continue as we go into the Upfront season to see robust demand for our advertising. So I know there's lots of concern from a consumer perspective and what that might mean for advertisers. But right now, in particular, restaurants and healthcare are -- have considerable demand for advertising. The one place that obviously is -- continues to be a bit more challenged is on the DTC side, not driven by demand, but driven by supply as we have new entrants into that marketplace. But that said, there's still strong demand there for Disney advertising as well. Overall, you may recall back at the beginning of the year, we indicated that our advertising growth would be up consistent with what we saw last year, which was 3%. We now expect it to be in excess of what we indicated back at the beginning of the year. So overall, the advertisers are certainly demanding what we can offer.
Carlos Gomez: Thanks, Jessica. Operator, next question, please.
Operator: Absolutely. And our next question today comes from David Karnovsky with J.P. Morgan. Please go ahead.
David Karnovsky: Hi. Thank you. Bob, just on ESPN flagship, as you move towards the launch, interested to understand better the approach from a programming standpoint, how you view the necessary critical mass of both sports rights and shoulder programming in a more tech driven interface, how is that different from linear? And then just given the importance of some of the features you'll rollout like betting and fantasy, how do you think about wanting to keep subscribers in that ecosystem versus giving them the option of consuming their flagship subscription through Disney+? Thanks. |
2,307 | DIS | 2 | 2,025 | 2025-05-07 08:30:00 | The Walt Disney Company | 191,564 | Bob Iger: First of all to the last point, if you are a subscriber of linear ESPN, you will automatically get what I know we've been referring to as ESPN flagship. By the way, it will not be called that. And next week, Jimmy Pitaro plans to reveal not only the name, but will also talk about our pricing strategy. But the plan would be to basically be somewhat agnostic from a subscriber perspective, so that we can still do our best to preserve the multichannel ecosystem, but at the same time, obviously want to grow our DTC business. The difference is that the ESPN linear service will -- if that's all this consumer chooses to watch, will not have the bells and whistles and those additional features that the DTC service will have. But again, we're giving the consumer the option of consuming both. From a critical mass perspective, we have obviously an unrivaled portfolio of licensed sports on ESPN and an unrivaled portfolio of studio programming and shoulder programming. The bulk of which will be on the linear service and of course on flagship, flagship. At some point, I've got to stop using that word. That said, what we've already been doing and what we'll continue to do is give consumers of Disney+ and Hulu a taste of live sports on that service so that we have an opportunity to upsell them on the Disney DTC service, which obviously is a priority of ours. And again, that service will have many more features than the linear service will have. So I know -- and this will when we launch will be much simpler perhaps that I'm even describing. We're going to limit the number of SKUs. We're going to make it very, very clear what is what, meaning what you get when you just watch Linear, what you get when you sign up to Disney DTC. And I think the most important thing is that if you are a subscriber of Disney+ and Hulu and ESPN DTC, I should have said ESPN, not Disney, if you're a subscriber of all three, you'll have a seamless experience there. They'll be completely ultimately integrated or embedded into the service. And |
2,308 | DIS | 2 | 2,025 | 2025-05-07 08:30:00 | The Walt Disney Company | 191,564 | three, you'll have a seamless experience there. They'll be completely ultimately integrated or embedded into the service. And that I think is a real plus from a consumer experience perspective. |
2,309 | DIS | 2 | 2,025 | 2025-05-07 08:30:00 | The Walt Disney Company | 191,564 | Carlos Gomez: Thanks, David. Operator, next question, please.
Operator: Thank you. And our next question today comes from Michael Morris of Guggenheim. Please go ahead.
Michael Morris: Thank you. Good morning. I wanted to ask a couple more questions about the Experiences segment and specifically about the outlook there. So, you had a strong fiscal second quarter. You didn't change the full year growth guidance. So, can you provide an update on what you're seeing in the demand environment in the U.S. in particular, and whether that changed from the end of the last quarter? Also, the growth rate, the implied growth rate in the back half of the year is for double-digit operating income growth. As you look into fiscal '26, is there a reason that double-digit growth isn't something that can continue? I know you've spoken to high-single digits in the past in '26. So wondering if there's any upside there? And then just finally, on international, you noted the some softness in demand in China and the question is, is that getting worse and how much of a headwind may that be going forward? Thank you.
Hugh Johnston: Okay. Hey, Michael. Hugh here . That's -- I think that was three questions, but I'll do my best to remember them all and answer them. In terms of the first piece, the outlook, the outlook is actually still quite strong for the experiences business. Bookings right now for Walt Disney World for the third quarter are up 4% and that's with about what we would say is about 80% in. And then for the fourth quarter, bookings are up 7%, that's probably somewhere between 50% and 60% at this point. So certainly looking very optimistic and that was part of what factored into our change in the guidance going forward. In terms of your question on international, it's not getting any worse. And again, just to reiterate what Josh mentioned on the CNBC attendance is actually still quite good. It's just per cap spending isn't quite as high.
Bob Iger: That's China. |
2,310 | DIS | 2 | 2,025 | 2025-05-07 08:30:00 | The Walt Disney Company | 191,564 | Bob Iger: That's China.
Hugh Johnston: In China, correct. Because the Chinese consumer, as we know is a bit challenged. So from that perspective, I certainly feel good about the fact that we still have the engagement. Consumers are tightening their belts a little bit in that particular market, and that's what you're seeing flow through there. In terms of expectations for '26 and for first '25, the only thing I would say, is we guided to 6% to 8%. Given the numbers that we're seeing, we're probably going to be at the higher end of that for the experiences business for this year. And then for '26 and beyond, I'm not going to comment on that at this point. We'll do guidance on '26 when we get to '26. So I'm not going to provide any further color on that until we get to that point other than what I had mentioned earlier, which is the guidance in terms of growth rates remains intact.
Carlos Gomez: Thanks, Mike. Operator, next question, please.
Operator: Absolutely. Our next question today comes from Michael Ng with Goldman Sachs. Please go ahead.
Michael Ng: Hi. Good morning. Thank you very much for the question. Just two on Experiences. First, just with Disney Treasure hitting the second full quarter or excuse me, second quarter of operations, I was wondering, if you could talk about key learnings from the Cruise launch so far and anything there that helps to inform expectations or strategy around the upcoming launch of Disney Adventure and Disney Destiny? And just as a Parks follow-up. I was just wondering, if you could talk a little bit about the international visitation to domestic parks and if you're seeing any changes there? Thank you very much. |
2,311 | DIS | 2 | 2,025 | 2025-05-07 08:30:00 | The Walt Disney Company | 191,564 | Bob Iger: I'll take the cruise ship, you take the rest. On the cruise ship side, as we've expanded, we've embedded in our ships even more Disney intellectual property and at a higher quality level. And the ratings for the treasure are just sky high. People just love that ship and for good reason. And obviously, the ships that are coming will take full advantage of everything that the treasure has taken advantage of and then some. And so, we feel great about that business. It has been a great way for us to bring the Disney Experience to more consumers around the world. As noted earlier on the call, the experience we've had in putting the ship that will sail out of Singapore up on sale as a for instance. And so, we see that business becoming a growth driver for the segment over the next three to four years as more ships are deployed.
Hugh Johnston: Yeah. And Michael, in terms of the attendance -- international attendance at the domestic parks, we've indicated in the past that number has not gotten back to pre-COVID levels, but it is still in the double-digits. We've seen a bit of an impact, but it's literally like in terms of the mix 1% to 1.5% and what I would expect going forward is something similar to that. The good news is, we're clearly more than making up for it with domestic attendance. So attendance at the parks has been terrific.
Carlos Gomez: Thanks, Michael. Operator, next question, please.
Operator: Thank you. And our next question today comes from Kannan Venkateshwar with Barclays. Please go ahead. |
2,312 | DIS | 2 | 2,025 | 2025-05-07 08:30:00 | The Walt Disney Company | 191,564 | Operator: Thank you. And our next question today comes from Kannan Venkateshwar with Barclays. Please go ahead.
Kannan Venkateshwar: Thank you. Maybe to Bob, on the Park side, with the Abu Dhabi Parks announcement and you also have a long-term plan in place for the segment as a whole. Are there other opportunities in other locations around the world? I mean, now you have a presence in Singapore, you will now have a presence in Abu Dhabi. So is there more opportunity for you to expand that footprint further as you look out longer-term? So some thoughts on that would be great. And then Hugh, on the streaming side, when we think about operating leverage going forward, is that largely a function of revenue growth or is there also cost opportunity as you align these platforms? And as Bob mentioned, there might be fewer SKUs going forward. And so does that also provide some kind of a cost opportunity maybe see margins inflect? Thanks. |
2,313 | DIS | 2 | 2,025 | 2025-05-07 08:30:00 | The Walt Disney Company | 191,564 | Bob Iger: Kannan, thanks for your question. We just announced Abu Dhabi and now you're asking for more already, so thank you. With this as our seventh location, we feel that once it opens, it gives us the ability to be far more effective at reaching basically the world's population than we've been before. And while I'm not going to rule out the possibility of another location, there's nothing that's really being planned near-term to actually build another park in what would be an eighth location. However, I want to remind you that when we talked about a year ago about turbocharging that business with investment in capital because the return on invested capital has been so stellar. We are continuing on that trajectory. And to remind everyone and it's tied to the kind of deal that we made in Abu Dhabi, we're planning to invest approximately $30 billion to expand Florida and California, which obviously is a vote of confidence in those locations. But in addition, those will be highly accretive from a job perspective as well. And we're also investing to expand in every other location that we operate. So obviously, a bullish belief in the business itself with Abu Dhabi, as I said, and with the addition of the cruise ships, we're making ourselves very accessible to hundreds of millions of more people than we were in the past. And so, we're going to focus on this right now and the other investments that we're making. And as I said, I'm not ruling out the possibility of another location, but it's not exactly something that's a priority right now for us. |
2,314 | DIS | 2 | 2,025 | 2025-05-07 08:30:00 | The Walt Disney Company | 191,564 | Hugh Johnston: Yeah. And hey, Kannan, I'll handle the streaming question. While your point is exactly right, with a business that is going to have the growth that we have expectations for in the streaming business, there will clearly be leverage that just comes out of the revenue growth itself. But in addition to that, we absolutely have opportunities to reduce costs. So the answer is both, we can certainly do it on the G&A side and especially as we start to add more to the product, both in terms of the technology side of the product where we will be investing and in terms of the content that's delivered, whether it's bringing ESPN on and the additional content that we've been bringing in through bundling, we certainly expect to get operating leverage out of marketing over time. I wouldn't say that initially, especially as we launch ESPN. But over time, we would expect to get leverage out of the marketing line as well. So put those two together, yeah, I do expect some flow from top to bottom. We will use some of that to invest back in the business, perhaps in some international content, but I would also expect some of those cost reductions to go straight to the bottom line as well to give us accelerated margin growth.
Carlos Gomez: Thanks, Kannan. Operator, we have time for one last question.
Operator: Thank you. And our final question today will come from Peter Zaffino with Wolfe Research. Please go ahead.
Peter Zaffino: Hi. Good morning. Thank you. Question back on Experiences. You mentioned $30 billion of expansion capital for Florida and California. And I wondered if that is -- if we're defining expansion in terms of attendance, is that capital that will enable more people to visit the park? And more broadly, how do you think about your incremental return on capital on expansions in your experiences segment? Thanks. |
2,315 | DIS | 2 | 2,025 | 2025-05-07 08:30:00 | The Walt Disney Company | 191,564 | Bob Iger: The guest experience is obviously paramount to us. It's very, very critical. And with that in mind, we actually put a governor, we actually limit the number of people that we let in because we don't want to decrease the guest experience. So as we look to expand, not only do we look to take advantage of the property that we have and the intellectual property that we have, but we look to add capacity so that we can let more people in without in any way impacting negatively the guest experience. And that's true really every place that we operate. It's really important to us. And we're blessed with the fact that we have more available land and we certainly have a lot of intellectual property to be mined. And we've made announcements that are pretty specific about what we're building, a villain’s land and a car's land in Florida as a for instance, Pandora in California, a Coco in California, I could go on and on. And in terms of the return on invested capital, we've actually hit record levels in terms of return on invested capital in the business. And actually, when I returned to Disney back in 2022 and talked to Josh Damaro, who runs the segment about this, and he showed me what the returns on invested capital had been -- in the then recent past, but more like pre-COVID. It was extremely impressive. And as we look to -- as we determine how we allocate our capital as a company, obviously, we want to allocate it in direction that where the returns are stellar and this is one way that we do that. So, I think that says it all really.
Carlos Gomez: Thanks, Peter, and thanks everyone for your questions today. We want to thank you for joining us and wish everyone a good rest of the day.
Operator: Thank you. This concludes today's conference call. We appreciate your attendance today. You may now disconnect your lines. Thank you. |
2,316 | DIS | 1 | 2,025 | 2025-02-05 08:30:00 | The Walt Disney Company | 191,564 | Operator: Good day, and welcome to The Walt Disney Company's First Quarter 2025 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Carlos Gomez, Executive Vice President, Treasurer and Head of Investor Relations. Please go ahead, sir. |
2,317 | DIS | 1 | 2,025 | 2025-02-05 08:30:00 | The Walt Disney Company | 191,564 | Carlos Gomez: Good morning. It's my pleasure to welcome everyone to The Walt Disney Company's First Quarter 2025 Earnings Call. Our press release, Form 10-Q and management's posted prepared remarks were issued earlier this morning and are available on our website at www.disney.com/investors. Today's call is being webcast, and a replay and transcript will be made available on our website after the call. Before we begin, please take note of our cautionary statement regarding forward-looking statements on our Investor Relations website. Certain statements on this call, including those regarding our expectations, beliefs, plans, financial estimates and prospects, trends, outlook and guidance and other statements that are not historical may be forward-looking statements under the securities laws. We make these statements on the basis of our assumptions regarding the future at the time we make them, and do not undertake any obligation to provide updates. Forward-looking statements are subject to risks and uncertainties. Actual results may differ materially from the results expressed or implied in light of a variety of factors. These factors include, among others, economic or industry conditions, competition, execution risks, the market for advertising, our future financial performance and legal and regulatory developments. Refer to our IR website, the press release issued today and the risks and uncertainties described in our Form 10-K, Form 10-Q and other filings with the SEC for more information about key risk factors. A reconciliation of certain non-GAAP measures referred to on this call to most comparable GAAP measures can be found on our IR website. Joining me this morning are Bob Iger, Disney's Chief Executive Officer; and Hugh Johnston, Senior Executive Vice President and Chief Financial Officer. Following introductory remarks from Bob, we will be happy to take your questions. So with that, I will now turn the call over to Bob. |
2,318 | DIS | 1 | 2,025 | 2025-02-05 08:30:00 | The Walt Disney Company | 191,564 | Robert Iger: Good morning. Before we turn to our results this quarter, I want to take a moment to express our continued sympathies to all those affected by the devastating wildfires across Southern California, including our own employees, creative partners and so many others that we know and love. Our company's roots run deep in Los Angeles, and we feel a strong sense of obligation to support the community that has helped make this company what it is today. I'm proud of the many ways our employees have stepped up to assist their neighbors in need, and Disney remains committed to helping with recovery efforts while our community rebuilds from this tragedy. Moving on to the quarter. Our results in Q1 demonstrate our creative and financial strength and they reflect the success of our strategic initiatives that we set in motion over the past 2 years. Clearly, one of the great highlights of the quarter was the performance of our film studios. We had the top 3 movies of 2024 at the global box office, and I want to thank and congratulate our creative teams on such an incredible year. Looking at the rest of the calendar year, we have a lot more to come with an exciting slate of theatrical releases tied to some of our most popular IP. On top of our studio's outstanding performance, we saw growth in streaming profitability, historic ratings at ESPN and the strong and enduring appeal of Disney's Experiences business. Overall, we're very encouraged by our results this quarter, and we'll be happy to take your questions.
Carlos Gomez: Thanks, Bob. [Operator Instructions]. And with that, operator, we are ready to take the first question.
Operator: [Operator Instructions] Our first question today comes from Ben Swinburne with Morgan Stanley. |
2,319 | DIS | 1 | 2,025 | 2025-02-05 08:30:00 | The Walt Disney Company | 191,564 | Operator: [Operator Instructions] Our first question today comes from Ben Swinburne with Morgan Stanley.
Benjamin Swinburne: You guys have a lot going on in terms of platform enhancements this year at Disney+. I'm wondering, as Adam builds out his team, you work on password sharing, bundling ESPN in, what do you think will be the most impactful to driving that business? And what's realistic for investors to sort of -- in terms of time line to expect kind of tangible results playing out in what we see in your reported numbers? And then I thought I would at least ask Hugh, if you could comment on the outlook for Experiences and Parks, in particular, around the opening of Epic, there's probably no other question I get more than your ability to deliver on your guidance on the domestic parks front for the year. So any update there would be greatly appreciated. |
2,320 | DIS | 1 | 2,025 | 2025-02-05 08:30:00 | The Walt Disney Company | 191,564 | Robert Iger: Thanks for your question, Ben. Regarding the timing of the different technological advances that Adam and his team are working on, they're actually starting to roll out already and will continue to throughout the next 12 months, but we're not going to obviously stop at the end of the year. I wouldn't really call out any one of them in terms of -- one of them having a greater impact than the others because it's a collection of them. You mentioned paid sharing, that's certainly one. Using technology more and more for personalization and essentially upping our game from an algorithm perspective, getting less out of our control or curation and more basically into the business of serving the consumer what the consumer wants. We've got some work to do internationally, particularly on the ad tier. AdTech is also something that we're working on, a variety of different AI initiatives going on. And these -- we're also developing flagship. I'd say that of all of them, one of the things that we are very, very mindful of is that home screen or front screen or the first experience that consumers have has to be more dynamic. Ours was elegant looking, but fairly static in nature. The more dynamic it is, the more people are drawn into it, the more people use it and the more people don't basically close the app out and go elsewhere. That's a big deal. But a lot going on. We're still building his team out. And I'd say that by the end of the year, there will be significant progress made, but we've already made some progress -- we've made some progress already. |
2,321 | DIS | 1 | 2,025 | 2025-02-05 08:30:00 | The Walt Disney Company | 191,564 | Hugh Johnston: Yes, Ben, and I'll handle the Experiences question. Obviously, no change to the guide that we had previously provided. We had said Experiences would be up 6% to 8% on the year. The strong Q1 increases our level of confidence in the guide, for sure. It's obviously quite early, but we certainly feel good about the fact that we were able to power through with stronger performance than our expectations were for Q1. In terms of the balance of the year, recall the easier comps for the Experiences business occur in the back half of the year, particularly in Q4. In addition to that, we obviously have lots going on in terms of our ships coming -- or our ship coming on as of this quarter, which will support the results from Q2 going forward. And in addition to that, as we built our plans, we did anticipate some small impact. I think we have it effectively hedged in the guides that we've given to you. So overall, level of confidence in the Experiences guide is high.
Operator: Our next question today comes from Robert Fishman with MoffettNathanson.
Robert Fishman: Bob, now that DirecTV and Comcast have launched their skinnier bundles and Hulu + Live, Fubo planning their own, do you expect these skinnier bundles at current pricing to change the trajectory of cord-cutting? And if not, what else on the pricing or product side do you plan with Fubo that you couldn't accomplish with just Hulu + Live? And then if I could just take a step back, after the Fubo deal and shutting down Venu, can you discuss Disney's overall sports or broader streaming strategy with the potential for consumer confusion from all the different options, including the upcoming ESPN Flagship launch? |
2,322 | DIS | 1 | 2,025 | 2025-02-05 08:30:00 | The Walt Disney Company | 191,564 | Robert Iger: The goal all along, Robert, as it relates to ESPN is to make ESPN as accessible as possible and in as many ways as possible to the consumer. Some will want to consume it just through an app, some will want to consume it as part of, I'll call it, the more traditional expanded basic bundle. Some will migrate in the direction of skinnier bundles or sports bundles only. I can't predict whether the emergence of these skinnier bundles is going to have a material impact on cord-cutting or not except to say that we plan to take advantage of the emergence of these bundles because it is a great way to distribute ESPN. And look, what essentially happened is after the decision was made and we started to implement the launch of Venu, the emergence of these skinnier bundles surfaced and Venu basically looked redundant to us. And so this was a great opportunity for us to make ESPN available to multiple skinny bundles and then to actually merge the Hulu + Live and the Fubo essentially channel business as one because, frankly, while we like being in that business, it wasn't a core business to Hulu. This gives us the ability to actually enhance the Hulu + Live experience because the combination -- the combined entity when it's approved will spend more time, put more resources into the user interface and essentially making the former Hulu + Live experience better for consumers. In terms of our Sports strategy, I've touched on some of it and that is make ESPN available however the consumer wants it, wherever the consumer wants it. Some will want to consume it as part of a linear channel. But we're obviously leaning into the development of what is now called Flagship, which is essentially ESPN with multiple, multiple elements to it or multiple essentially enhancements, and of course, the inclusion ultimately of some form of betting and fantasy and a high degree of customization and personalization and essentially a much bigger offering in terms of product programming than the linear channels currently offer. The plan |
2,323 | DIS | 1 | 2,025 | 2025-02-05 08:30:00 | The Walt Disney Company | 191,564 | and essentially a much bigger offering in terms of product programming than the linear channels currently offer. The plan will be to launch it sometime toward the -- in the fall of this year. And we're actually quite excited about it because, first of all, it gives us an opportunity to bundle it with Disney+ and Hulu, and then we will get really smart and strategic about pricing there, but it gives consumers the option of basically just staying in a sports-only experience or combining it with their other services. And if they happen to subscribe to Disney+ and Hulu, then they can experience ESPN Flagship in a 1-app experience, which will be both convenient from a subscription perspective and also convenient from a user perspective. So we're bullish. The other thing I want to mention about ESPN because I know that others have gotten -- other streamers are getting into the sports game, is we have the advantage of not only a menu of sports and sports programming that no one else has, but we're on 365 days a year, 24 hours a day. So if you're a sports fan, it's not about 1 day of -- 1 boxing event or 1 day of football, it's about sports every single day of the year and every hour of the day. And that's a pretty compelling consumer proposition. |
2,324 | DIS | 1 | 2,025 | 2025-02-05 08:30:00 | The Walt Disney Company | 191,564 | Operator: And our next question today comes from John Hodulik with UBS.
John Hodulik: Great. And maybe some questions for Hugh. Hugh, can you update us on the cost-cutting initiatives and how far along you are? And along with that, it looks like from the Q that you guys trimmed the content budget to $23 billion from $24 billion. Just what's behind that? And was that -- is that related to the fires in L.A. or just some changes to the overall budget? And then lastly, I have to ask, you have guidance for high single-digit earnings growth for the year, started out with earnings growth of over 40% in the first quarter here. Can you just talk a little bit about cadence of earnings growth as we look out through the rest of the year? |
2,325 | DIS | 1 | 2,025 | 2025-02-05 08:30:00 | The Walt Disney Company | 191,564 | Hugh Johnston: Sure. Happy to. That's quite a few questions, but I'll take a good whack at them. First, in terms of cost-cutting. As a company, we're focused constantly on identifying opportunities that -- where we're spending money perhaps less efficiently and looking for opportunities to do it more efficiently. That's not a once-a-year thing, that's not a once-a-month thing, that's something that we do every day of the year. It's part of what a good management team does, and we do think we're a good management team in that regard. So we're going to continue to identify opportunities to redeploy money in order to make the company both higher growth and ultimately more profitable. Regarding your question on the guide overall, obviously, the results were certainly in excess of expectations in the first quarter. It certainly gives us confidence, an even higher level of confidence than we probably even had before as we get into the balance of the year. At the same time, given the rapidly evolving macro environment, we think it would be premature at this point to change the guidance. That said, to the degree that the business momentum and the business performance justifies it, we're certainly not a management team that's afraid of over-delivering if, in fact, that is where the business takes us. So generally speaking, feel better about the balance of the year and when we started out the year feeling very, very positive way about it.
Operator: Our next question comes from Jessica Reif Ehrlich with Bank of America. |
2,326 | DIS | 1 | 2,025 | 2025-02-05 08:30:00 | The Walt Disney Company | 191,564 | Operator: Our next question comes from Jessica Reif Ehrlich with Bank of America.
Jessica Reif Cohen: I guess, two things. One, on the NBA, can you talk about how you view the path to profitability in the new contract given the weaker season to-date ratings and obviously the step-up next season? And then on DTC, maybe we could drill down a little bit on how you're thinking about subscriber drivers. Bob, you mentioned password-sharing crackdown. How do you think about the TAM with the potential subscriber impact? Obviously, some great films coming onto the platform later this year. And then how important is news to the overall product offer? |
2,327 | DIS | 1 | 2,025 | 2025-02-05 08:30:00 | The Walt Disney Company | 191,564 | Robert Iger: In the NBA, we don't talk about profitability for any one of our licensed sports packages. We obviously believe in the NBA long term. It's a great sport. We think it's a growth sport. We don't really look at ratings year-to-year that carefully. First of all, it's not even -- we haven't even seen half a season, but we're not distracted by it at any sense what's happening ratings-wise in the NBA this season at all. We're happy to have it for now 11 more years including the final 10 of those years. And it will be -- it is and will continue to be a marquee part of ESPN's offering. In terms of subscribers, we believe that in order for us to grow subscribers, it's really a combination of things. We have to continue to make great product, films and television series. We clearly have demonstrated over the last couple of years the ability to do that. and we are confident that we will deliver on a consistent basis high-quality films and television over the long run. Second, you need really strong technology and this is where we have -- as we have said very publicly, we had a lot of work to do. And while we've made progress already, in some ways, we're just getting started. The only way you succeed in global streaming, both from a subscription perspective and a profitability perspective, is with a great combination of high-quality product with volume and technology. And we feel if you look at all the competitors that are in that space, we're very well positioned to both grow subs and grow profits over the long run and actually over the next few years where we've already demonstrated the ability to make this a much more economically attractive business. And with the technology that we've got in place, combined with the success of our content, we actually are bullish about our ability to grow subs, too. |
2,328 | DIS | 1 | 2,025 | 2025-02-05 08:30:00 | The Walt Disney Company | 191,564 | Hugh Johnston: And Jessica, the only thing I would add to Bob's comments are we gave you guidance in terms of ESPN for next year, we knew all of the aspects of the NBA contract when we made that deal and there is nothing that is changing in our mind in that regard.
Robert Iger: And one last thing, you asked about news. We like the opportunity to make room for our news output, both the ABC News output and the output of our local stations as part of the app experience. With improved technology, we're now offering live -- or streams on the Disney+ Hulu app and news will -- does occupy one of those streams and it will continue to be a feature of our overall Disney+ and Hulu offering, and it's also something that differentiates us from some of the others in the space.
Operator: Our next question today comes from Michael Ng with Goldman Sachs.
Michael Ng: I just wanted to follow up on your comments, Bob, about streaming and news. Could you talk a little bit about your decision to add the SportsCenter Daily Show to Disney+ instead of ESPN flagship? And with streams and SC+, the investments in live content, what have you found to be the benefit of live as it relates to gross adds and churn and streaming? And could you expand a little bit about the competitive advantage that Disney has in producing and distributed live relative to some other streaming services? |
2,329 | DIS | 1 | 2,025 | 2025-02-05 08:30:00 | The Walt Disney Company | 191,564 | Robert Iger: Well, I think we've all seen the benefit of live. Just look at ESPN's ratings as for instance or talk to anyone in the advertising business, Live is extremely attractive. And we have the benefit, as I said earlier, of having live programming every day of the week, every day of the year or every week of the year. And so I think that as we provide our consumers with a one-app experience, live will be a major component of basically our growth -- the growth in that business. It will contribute to the growth in that business for us. What we did with ESPN and the SportsCenter show that you mentioned is we put us in ESPN tile, as we call it, or presence on the home screen of Disney+ that was in part designed to increase engagement for Disney+ Hulu subscribers, gives them something to see on a daily basis. And obviously, as we've talked today, engage -- growing engagement is critical, particularly to lowering churn. It also gives us the ability to use it as an introductory offer, sort of an introductory ESPN digital offer. And ultimately, when Flagship is launched, people who use the ESPN tile will have an opportunity to subscribe to Flagship right from that tile. And if they do subscribe to it, then it becomes a completely integrated app experience with Disney+ and Hulu. So it's there to improve, but to do 2 things: to benefit Disney+ Hulu and it's also there to ultimately benefit ESPN Flagship.
Operator: Our next question comes from David Karnovsky with JPMorgan.
David Karnovsky: With Experiences, wanted to see if you could provide any color on the Disney Treasure launch, how the early returns look relative to expectations and the read-throughs for the launches later this calendar year? And then just sticking with Parks, maybe you could discuss the rollout of Lightning Lane Premier, which I think you recently expanded access for. What type of take rates are you observing on the product? And how is that impacting other spending buckets or the overall experience? |
2,330 | DIS | 1 | 2,025 | 2025-02-05 08:30:00 | The Walt Disney Company | 191,564 | Hugh Johnston: Yes. Disney Treasure is off to a spectacular start. Certainly, in terms of selling out the rooms, we've done terrifically well. The feedback and guest experience, high percentage of people are rating it excellent, very much in line with the rest of our ships. And this is just sort of in the initial cruises. So feel terrific about that. As we've said before, our expectation is for the ship to be profitable in the first quarter and the first quarter, it's in the water. And frankly, that is very much our expectation from here going forward. So feel great about that one. Lighting Lane, we're launching that product. But remember, it is a premium product, it is a product that we are learning how to use. So we are marketing it very gently initially. It's very much in line with our expectations, but we are moving slowly with that product in order to make it a great experience both for the purchasers of Lightning Lane and for the rest of our guests in the park. So feel great about it. It's going to build over time, but it's certainly very much early days.
Operator: And our next question today comes from Michael Morris with Guggenheim.
Michael Morris: Two questions about your outlook. First, at Experiences, Hugh, on the fourth quarter call, you mentioned that bookings in the back half of the year were positive at that point in time. I'm wondering if you can give us an update there? Are they still positive? Do you have any more visibility? How has that trended? And then my second question is on direct-to-consumer. You had a really strong first quarter. I think you grew about $400 million year-over-year on operating profit, and your guide only implies about $100 million a quarter for the next 3 quarters. So can you talk a little bit about what goes into that outlook, what the puts and takes are maybe on investment that would have that growth slower for the balance of the year? |
2,331 | DIS | 1 | 2,025 | 2025-02-05 08:30:00 | The Walt Disney Company | 191,564 | Hugh Johnston: Yes, happy to cover both of those. Hitting on DTC first. As I mentioned, it's obviously an evolving environment. Our expectations are for the business to do terrifically well. We made $300 million in the quarter. For the full year, our expectation is to be a little over $1 billion. So we obviously still have some work to do, but we're out of the blocks very, very quickly. As I mentioned earlier in this call, we're certainly not afraid to over-deliver if the business momentum gives us that, but that's something to be seen. It's premature to be thinking about raising guidance, in my opinion, after just 1 quarter results. And the second question was in terms of...
Michael Morris: The bookings.
Hugh Johnston: The bookings, I'm sorry. I should have written that down. Basically, we are further into the curve, but the messaging is exactly the same as I gave you last quarter. Bookings are up in the summer right now. So certainly feeling positive. And obviously, we have more of them in given that we're 90 days later. So certainly, the outlook is good in that regard. But as always, we're going to take a view at this point that it's premature to be changing guide in that regard, but off to a great start in Experiences.
Operator: Our next question comes from Bryan Kraft with Deutsche Bank. |
2,332 | DIS | 1 | 2,025 | 2025-02-05 08:30:00 | The Walt Disney Company | 191,564 | Operator: Our next question comes from Bryan Kraft with Deutsche Bank.
Bryan Kraft: So I had one on Sports and then just a follow-up. So first, on Sports, you're obviously going to see a step-up in rights costs for the NBA next year, but you've guided to low single-digit OI growth in fiscal '26 on top of 13% growth this year. So I just wanted to ask if we should be thinking about some offset and other sports rights coming out of the business to offset the NBA increase or if the fiscal '26 growth is more a function of the OI growth from Flagship or a big improvement in pay TV sub declines because of smaller priced -- excuse me, lower-priced, small sports and news packages? So just trying to get underneath of the drivers of that strength. And then secondly, just on Disney+, if you could talk about the outlook for Disney+ subscriber growth this year, I think you're guiding to essentially flat subs through the end of 2Q. What are you expecting in the second half of the year directionally? And what are some of the key factors that are shaping the outlook for the rest of the year? |
2,333 | DIS | 1 | 2,025 | 2025-02-05 08:30:00 | The Walt Disney Company | 191,564 | Hugh Johnston: Yes. So in terms of ESPN and the NBA, obviously, there are a lot of variables that go into ESPN's P&L, including the advertising market for live sports, which is obviously very, very strong. It's also in terms of aggregate cost management, not just rights costs for the entire business and Jimmy and the team do a phenomenal job managing their costs and that's a tailwind. And then in addition to that, we're going to look at everything else that's out there, and we'll make decisions that are reflective of the discipline that I think this team has shown in terms of what we're looking at in rights going forward. So I'll leave it at that. But as I said earlier in the call, we mentioned low single digits next year. We're still very much committed to that based on the aggregate of all of those inputs. In terms of outlook for DTC subscribers, our expectation is to grow them for the year. So given we're basically sort of slightly up in the first quarter, we'll be similar in the second quarter. Our expectation is, particularly as paid sharing starts to take hold and as we add more of the movie slate that we produced in the back half of '24 into the streaming service in '25, we think that content will drive sub growth as well. |
2,334 | DIS | 1 | 2,025 | 2025-02-05 08:30:00 | The Walt Disney Company | 191,564 | Robert Iger: And I'll add to what Hugh said. We actually are very pleased with where we are sub-wise for Disney+ and Hulu. As you know, we took prices up significantly fairly recently and expected the churn would be significantly greater. And it turned out we delivered numbers that were better than we had expected. So the combination of Disney+ and Hulu, actually, we grew subs modestly in the quarter. Now while we did that, we also are implementing, as we talked earlier, these technological advances or enhancements that will enable us to lower churn and continue to grow subs. And we also have a great product pipeline coming. So we're bullish about our ability to turn streaming not just into the profitable business than it is today, but into a growth business for the company due to the combination of all these things and that includes the ability to successfully bundle both for the consumer and for our shareholder Disney+, Hulu and ultimately, ESPN.
Operator: And our final question today comes from Kannan Venkateshwar with Barclays.
Kannan Venkateshwar: Maybe on ESPN flagship, Bob. Just in terms of the vision that you have for the product and the objectives with that service, is this to basically further grow the Sports business relative to where it is today? Or is it more to preserve existing profitability and preserve the ecosystem as it is today? Would be great to get your thoughts on that. And then maybe another one on just the industry-wide consolidation efforts that we are seeing. If there is an effort to roll up cable networks across the industry, would there be any interest from your end potentially to participate in that with some of your smaller networks? |
2,335 | DIS | 1 | 2,025 | 2025-02-05 08:30:00 | The Walt Disney Company | 191,564 | Robert Iger: Let me just make a quick comment about the linear networks. We actually are at a point where the linear networks in our company are not a burden at all. They're actually an asset. We are programming them and we are funding them at levels that actually give us the ability to enhance our overall television business, that obviously includes and leans into streaming, which, let's face it, is really the future of the television business. So while I won't rule out the possibility of some of the smaller networks in some form or another being configured differently in terms of how we bring them to market, maybe even ownership. But we're not -- right now, we actually feel good about the hand that we have and the manner in which we're managing both the linear and the streaming businesses across the board at Disney. Regarding Flagship, look, it's pretty clear that young viewers, I guess you call them, or young consumers, are leaning more and more into streaming experiences, both fixed televisions on walls and mobile devices. And the more ESPN can be present for a new generation of consumers with a product that serves them really well, the better off ESPN's business is. So Flagship is not really designed to preserve a business, it's designed to grow a business in a market that's evolving or changing right before our eyes. So we're extremely, extremely excited by what's coming and bullish about it because we think it's not only a good business proposition, but it's a sports fans dream.
Carlos Gomez: Thanks, Kannan, and thanks, everyone, for your questions this morning. We want to thank you for joining us and wish everyone a good rest of the day.
Operator: Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day. |
2,336 | GE | 4 | 2,024 | 2025-01-24 07:30:00 | General Electric Company | 177,031 | Operator: Good day, ladies and gentlemen, and welcome to the GE Aerospace Fourth Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. My name is Liz, and I will be your conference coordinator today. If you experience issues with the webcast slides refreshing or there appears to be delays in the slide advancement, please hit F5 on your keyboard to refresh. As a reminder, this conference is being recorded. I would now like to turn the program over to your host for today's conference, Blaire Shoor, Head of Investor Relations. Please proceed.
Blaire Shoor: Thanks, Liz. Welcome to GE Aerospace's fourth quarter and full-year 2024 earnings call. I'm joined by Chairman and CEO, Larry Culp; and CFO, Rahul Ghai. Many of the statements we're making are forward looking and based on our best view of the world and our businesses as we see them today. As described in our SEC filings and website, those elements may change as the world changes. Additionally, Larry and Rahul, consistent with prior quarters, will speak to total company and corporate financial results and guidance today on a non-GAAP basis. Now, over to Larry. |
2,337 | GE | 4 | 2,024 | 2025-01-24 07:30:00 | General Electric Company | 177,031 | Larry Culp: Blaire, thank you. And good morning, everyone. Head of Investor Relations, that has a nice ring to it, Blaire. I hope everybody saw our announcement last week relative to Blaire's promotion. She's excited. We're excited. 2024 was a year for the history books at GE Aerospace. In April, we became a standalone public company, the culmination of GE's multi-year transformation. Nothing has been more front and center than our purpose: inventing the future of flight, lifting people up, and bringing them home safely. Those last four words remain our top priority with nearly 1 million passengers in flight at this very moment with our technology underwing. We launched FLIGHT DECK, our proprietary lean operating model, to better serve our customers through a relentless focus on safety, quality, delivery, and cost in that order. Seeing our teams in action through the year with FLIGHT DECK from Malaysia to Wales to Asheville and elsewhere truly was energizing. Commercial momentum continued as we signed several key services agreements and received orders for more than 4,600 commercial and defense engines. In narrow-bodies, this included American Airlines' commitment for 85 new Boeing 737 MAX jets powered by our LEAP-1B. In wide-bodies, we were honored to add a new GEnx customer, British Airways. And in defense, we received an order from the Polish Armed Forces for 210 T700 engines to power the 96 Boeing AH-64E Apache Guardian helicopters. To close the year, we received certification of the LEAP-1A HPT durability kit. Combined with the three prior durability enhancements that are performing well in the field, it's designed to increase LEAP time on wing by more than two-fold current levels and achieve parity with the CFM56's performance today. Just this week, in fact, we shipped our first retrofit engines to customers with the new hardware. It's also easier to produce supporting our output trajectory going forward. At the same time, we've advanced significant technology milestones that will propel GE Aerospace into |
2,338 | GE | 4 | 2,024 | 2025-01-24 07:30:00 | General Electric Company | 177,031 | trajectory going forward. At the same time, we've advanced significant technology milestones that will propel GE Aerospace into the future. Our RISE program with CFM completed more than 250 tests on our way to developing a full-scale open-fan engine. We recently announced that in collaboration with Boeing, NASA, and the Oak Ridge National Laboratory, we will model the integration of an open-fan engine design on an aircraft wing. And our defense team successfully demonstrated a hybrid electric propulsion system rated at 1 megawatt with the U.S. Army. This represents a meaningful increase in power generation, enabling us to advance hybrid electric propulsion applications. But perhaps more important than what we accomplished in 2024 is how we did it. And my thanks this morning go out to our entire team for their unwavering commitment to delivering for our customers. 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. And we finished strong, surpassing our most recent guide. In the fourth quarter, robust demand continued. Orders were up 46%, and revenue grew 16%, with double-digit growth in services and equipment for both orders and revenue. Profit was up nearly 50%, and EPS more than doubled. Free cash flow was up over 20%, with conversion above 100%. At Commercial Engines & Services, our fourth quarter orders were up 50%, revenue was up 19%, and profit increased 44% while deliveries progressed. And for the full year, demand remained robust, with services orders up 30%, total revenue up double digits, and profit up 25% to $7.1 billion. In Defense & Propulsion Technologies, fourth quarter orders were up 22%, and defense units nearly doubled sequentially. For the full year, revenue was up 6% and profit increased 17% to $1.1 billion. Looking ahead to 2025, we're maintaining this momentum as we aim to deliver another year of substantial revenue, EPS, and cash growth. We expect departures growth of mid-single digits and increased |
2,339 | GE | 4 | 2,024 | 2025-01-24 07:30:00 | General Electric Company | 177,031 | another year of substantial revenue, EPS, and cash growth. We expect departures growth of mid-single digits and increased military spending. This supports solid low double-digit revenue growth, including growth in CES and DPT. We expect profit in the range of $7.8 billion to $8.2 billion. This, combined with a lower share count, will translate to EPS in the range of $5.10 to $5.45, up 15% at the midpoint. For free cash flow, we expect to generate $6.3 billion to $6.8 billion, with conversion remaining robust above 100%. And given the strength of our balance sheet, we're increasing our share repurchases to $7 billion and planning to raise our dividend by 30%, subject, of course, to Board approval. Overall, GE Aerospace is, I believe, an exceptional franchise with a tremendous financial profile. Stepping back, between 2023 and 2025, taking the midpoint of our guide, we expect to grow profit $2.5 billion and free cash flow nearly $2 billion over this two-year period. Today, we're focused on keeping our customers' fleets flying and delivering on our new engine backlog. Our team is using FLIGHT DECK to tackle supply chain constraints head on. From the first half to the second half of 2024, we delivered meaningful improvement as material inputs increased 26% across our priority supplier sites. This, in turn, supported CES services revenue growth of 17% and engine unit growth of 18%, with defense and commercial both up double digits, including LEAP up 12%. We're encouraged by our progress more recently in the fourth quarter, where CES services revenue increased 12% year over year, supported by expanded shop visit workscope and spare parts growth. But this was lighter than we expected due to lower internal shop visit volume, given material constraints. Total engine units improved up 3%, with defense up 20%. But commercial was roughly flat, with LEAP down 5%. We'll need to drive further sustainable improvements to meet '25's demand, and this is exactly where FLIGHT DECK is so important. Earlier last year, our priority |
2,340 | GE | 4 | 2,024 | 2025-01-24 07:30:00 | General Electric Company | 177,031 | improvements to meet '25's demand, and this is exactly where FLIGHT DECK is so important. Earlier last year, our priority suppliers shipped only half of their committed targets to us. Today, they're shipping over 90% of the committed volume. At a recent joint Kaizen with a priority supplier, we focused on eliminating waste, achieving a 50% increase in output, 50%. And throughout 2024, we deployed over 550 of our supply chain and engineering resources into that same supply base, demonstrating that we're at our best when we're operating as one team. Building off this momentum, we're bringing together our engineering and supply chain teams into one new organization, Technology & Operations, which will be led by Mohamed Ali. With shared accountability across the full value chain, this cross-functional team will enable faster problem solving to help improve deliveries. These actions, combined with our close alignment on demand schedules, will enable higher material inputs in 2025 and, importantly, beyond. Finally, we've expanded LEAP aftermarket capacity by approximately 40% in 2024. This will support the growing fleet of 3,300 LEAP-powered aircraft with now 10,000 engines in backlog. Here's how. First, we're eliminating waste and reducing turnaround time using FLIGHT DECK. For example, our on-wing support team redesigned the LEAP engine flow, increasing output by 50% for the year. This contributed to LEAP internal shop visit growth of more than 20% in the fourth quarter alone. Second, we're investing more than $1 billion in our internal MRO facilities over the next five years. We're growing our repair technologies, which will help lower the cost of ownership and provide faster turnaround times. Our recently opened Services Technology Acceleration Center here in Ohio will be a key enabler in deploying repairs across our global MRO network. And third, we're strengthening our LEAP third-party network. Last year, five premier MROs completed around 10% of total LEAP shop visits. This is critical experience for them as |
2,341 | GE | 4 | 2,024 | 2025-01-24 07:30:00 | General Electric Company | 177,031 | network. Last year, five premier MROs completed around 10% of total LEAP shop visits. This is critical experience for them as their volume increases further in 2025. Overall, we're entering 2025 with a stronger foundation to service and deliver our engines faster with the highest possible levels of safety and quality. Turning to Slide 7, demand for our services and products remains robust, highlighted by orders up 46% in the fourth quarter. At CES and narrow-bodies, El Al Israeli Airlines confirmed its commitment for 20 737 MAXs with LEAP-1B engines underwing. We've also extended service contracts, including a 10-year engine maintenance agreement with flydubai for their CFM56-powered aircraft. And notably, the Airbus 321XLR, powered by our LEAP-1A engines, completed its inaugural commercial long-haul flight. Our engines are providing airlines with greater route flexibility and overall operational efficiency. In wide-bodies, Royal Jordanian announced an order for 18 GEnx-1Bs, plus spares to power their expanded Boeing 787-9 fleet. And China Airlines also announced an agreement for 10 Boeing 777-9s with the GE9X under wing. In DPT, we're building on our leading defense programs. We received orders under a contract with the U.S. Army valued up to $1.1 billion for the continued production of T700 engines through 2029. The new T700s will power the Sikorsky H-60, the Bell H-1, and the Boeing AH-64 platforms. In addition to expanding our extensive install base, we're enhancing our customer solutions. We signed an agreement to acquire Northstar Aerospace, a leading manufacturer of mission-critical gears and shafts. Northstar will be highly complementary to our Avio Aero business, providing a U.S.-based presence in this market and adding new programs and capabilities to deliver complex flight-critical parts. Stepping back, I couldn't be prouder about what we're building as GE Aerospace as we advance flight for today, tomorrow, and the future. Rahul, over to you. |
2,342 | GE | 4 | 2,024 | 2025-01-24 07:30:00 | General Electric Company | 177,031 | Rahul Ghai: Thank you, Larry. Good morning, everyone. We closed out 2024 with another strong quarter. Orders were up 46%, with significant demand for both services and equipment. Revenue was up 16%, with growth in CES and DPT. Profit was $2 billion, up 49%, driven by services volume, favorable mix, and price. Margins were up 450 basis points to 20.1%. EPS of $1.32 more than doubled from profit growth and a reduced tax rate. Free cash flow was $1.5 billion, up 21% from higher earnings. Working capital was a source, primarily from long-term service contract billings. While accounts receivables increased, day sales outstanding were down five days year over year. Given the ongoing material availability challenges, inventory increased, although at a lower rate than prior quarters. For the year, orders were up 32%, including services orders up 30%. Revenue was up 10%, with growth in both segments. Profit increased 30% to $7.3 billion, with margins expanding 330 basis points to 20.7%, driven by commercial services. EPS increased 56% to $4.60 from significant profit growth, a lower tax rate, and the absence of preferred dividend. Free cash flow was up almost 30% to $6.1 billion, with conversion over 120%. Taken together, we delivered significant growth across all key metrics, both in the quarter and the year. Looking closer at our businesses, starting with CES. In the quarter, orders were up 50%, as services demand remained robust while equipment accelerated. Our recent wins build on our backlog of $154 billion, with about 90% of that backlog in services. Revenue was up 19%, with services up 12%, driven by shop visit revenue, higher spare parts, and price. Internal shop visit revenue, representing around 60% of services revenue, grew double digits. Increased work scopes, higher pricing, and engine mix more than offset shop visit volume that was down 3% due to material constraints. Spare parts revenue, representing roughly the other 40%, was up from higher volume and price. Equipment grew 38%. While we made progress, |
2,343 | GE | 4 | 2,024 | 2025-01-24 07:30:00 | General Electric Company | 177,031 | revenue, representing roughly the other 40%, was up from higher volume and price. Equipment grew 38%. While we made progress, supply chain constraints impacted total deliveries, down 2%, including LEAP, down 5%. For the year, LEAP deliveries were down 10%, in line with our latest expectations. Lower volume was more than offset by customer mix and price. In addition, given our growing fleets with high utilization, we caught up on spare engine deliveries to support airline fleet stability. Although the spare engine ratio was elevated in the fourth quarter, overall LEAP life of program ratio through 2024 remains in low double digits. Profit was $2.2 billion, up 44%, as spare parts volume, increased shop visit workscope, mix, and price, more than offset inflation and investments. Margins expanded 490 basis points to 28.2%. Overall, CES delivered strong full-year results, with orders up 38%, revenue up 13%, and profit growing 25% to $7.1 billion. Margins expanded 250 basis points to 26.2%. Moving to DPT, orders were up 22%, primarily driven by Defense & Systems. Demand remains strong here as well, with defense book-to-bill of 1.2x for the quarter and the full year. Our backlog for the segment is now at $18 billion, up more than $1.5 billion year over year. Revenue grew 4%. Defense & Systems revenue was up 6%, driven by higher engine deliveries and price, partially offset by lower services. Defense units were up 20% year over year, with more than 90% quarter over quarter. Propulsion & Additive Technologies, or PAT, grew 2%, as lower commercial volume at Avio was more than offset by growth in other PAT businesses. Profit was up 2%, driven by improved pricing and productivity, partially offset by investments in next-gen engines and inflation. Margins were down 20 basis points. Overall, a strong finish, as full-year orders were up 10%, revenue grew 6%, and profit was up 17% to $1.1 billion, with margin expansion of 110 basis points. A moment on Corporate. We made substantial progress to ensure our operations reflect the |
2,344 | GE | 4 | 2,024 | 2025-01-24 07:30:00 | General Electric Company | 177,031 | margin expansion of 110 basis points. A moment on Corporate. We made substantial progress to ensure our operations reflect the needs of GE Aerospace as a standalone company. Corporate cost, including eliminations, was about $860 million for the year. Eliminations increased by $100 million to approximately $470 million from higher internal volume in PAT. Excluding eliminations, cost was down over a third to roughly $400 million, driven by lower functional expenses and higher interest income. We also fully exited our remaining stake in GE Healthcare this quarter. And for the year, we returned more than 100% of our free cash flow to our shareholders, including $5 billion of share buyback and a dividend of around 30% of net income. Based on the strength of our performance and balance sheet, GE Aerospace is well positioned to compound shareholder returns for the long term. Switching to our 2025 guide. Starting with CES, we expect mid-teens revenue growth for the segment. We are now expecting services to be up low-double digits to mid-teens, up from our prior view of low-double digits. At the midpoint, we expect internal shop visit revenue to be up from higher workscope, improved pricing, and high single-digit shop visit volume growth, which is pushed to the right from 2024. We continue to expect low double-digit spare parts revenue growth from mid-single-digit air traffic growth and pricing. We expect equipment up high teens from growth in engine volume, including LEAP deliveries up 15% to 20% and pricing, more than offsetting negative engine mix. We expect $7.6 billion to $7.9 billion of profit at CES, reflecting the benefit of services growth. This will be partially offset by the impact from increased R&D investments and higher GE9X deliveries in the second half of the year. We also expect a lower spare engine ratio. In DPT, we expect mid- to high-single digits revenue growth with increased defense units and profit in the range of $1.1 billion to $1.3 billion. Higher defense deliveries are partially offset by |
2,345 | GE | 4 | 2,024 | 2025-01-24 07:30:00 | General Electric Company | 177,031 | defense units and profit in the range of $1.1 billion to $1.3 billion. Higher defense deliveries are partially offset by self-funded investments in the first half. Corporate costs are expected to be less than $1 billion. Eliminations are expected to grow as internal PAT volume grows. In total, we expect another year of low double-digit revenue growth for the Company, with profit in the range of $7.8 billion to $8.2 billion, up about $750 million or 10% at the midpoint over 2024. Turning to Slide 12, we expect EPS to be in the range of $5.10 to $5.45, up roughly 15% at the midpoint. About 80% of the improvement will be from higher profit. The balance will come through a reduction in the tax rate, which is expected to improve to below 20%, and the benefit from share repurchases, including the $5 billion executed in 2024 and an additional $7 billion expected in 2025. We expect to generate $6.3 billion to $6.8 billion of free cash flow, with year-over-year growth primarily from higher earnings. Contributions from working capital and AD&A combined year over year will be more than offset by higher CapEx and cash tax payments. Overall, we expect another year of conversion that is solidly above 100%. Taken together, GE Aerospace is poised for another year of growth ahead. With that, Larry, I'll turn it back to you. |
2,346 | GE | 4 | 2,024 | 2025-01-24 07:30:00 | General Electric Company | 177,031 | Larry Culp: Perfect. Thank you. 2024 clearly was a strong first year for us as GE Aerospace. We grew revenue, earnings, and cash significantly, along with returning over $6 billion to shareholders. That performance was underpinned by our competitive advantages. Our platforms are preferred by customers across the narrow-body, wide-body, and defense sectors. Our industry-leading services and technologies provide the highest levels of operational reliability, including greater efficiency, time on wing, and faster turnaround times. At the core of everything we do is safety, quality delivery -- in that order. And we're focused on unrivaled customer service and flight support across the industry's most extensive install base with 70,000 engines. Our breakthrough innovations in both commercial and defense paved the way for more sustainable flight. And FLIGHT DECK, which connects our strategy to our results, enables us to deliver and create exceptional value for our customers and our shareholders. We believe our path forward is clear. We're well positioned to deliver another year of substantial growth and deploy over 100% of our free cash flow to shareholders. Before we wrap our prepared remarks, I'd like to take a moment to express our support for all of those impacted by the fires in Southern California. Seeing our CF6, CFM56, and T700 engines powering many of the planes battling the fires, we feel a deep connection to our commitment to safety and hope that those fires can be contained soon. Blaire, shall we go to Q&A?
Blaire Shoor: Before we open the line, I'd ask everyone in the queue to consider your fellow analysts and ask one question so we can get to as many people as possible. Liz, can you please open the line?
Operator: [Operator Instructions] Our first question comes from Scott Deuschle with Deutsche Bank. |
2,347 | GE | 4 | 2,024 | 2025-01-24 07:30:00 | General Electric Company | 177,031 | Operator: [Operator Instructions] Our first question comes from Scott Deuschle with Deutsche Bank.
Scott Deuschle: Rahul, can you refresh us on what the 2025 guide is assuming with respect to LEAP OE profitability? And then, when LEAP OE achieves breakeven, do you foresee the profit trajectory flatlining from there? Or is it reasonable to think that LEAP OE could be a profit center in its own right as time goes on and you benefit from some of these recent pricing gains and operational efficiency initiatives? |
2,348 | GE | 4 | 2,024 | 2025-01-24 07:30:00 | General Electric Company | 177,031 | Rahul Ghai: Yes. Absolutely, Scott. So let me start and Larry can add. Obviously, it's been a really good year for LEAP overall. I can start with answering your question, and Larry can comment on the operational improvements that we've driven here in LEAP. So first, Scott, it was a milestone year for LEAP. LEAP services became profitable in 2024, and the program becomes breakeven in 2025, with OE following a year later in 2026. So that was our prior expectation that continues to be our expectation today. And as we look at LEAP, how it performed during the year, the profitability for the program tended to be better than our initial expectations, from higher external spare parts volume, better pricing, lower warranty expenses as some of those fixtures are going in, and more shop visits than we had initially expected. So that's our expectation. And the key milestone for 2025 is that our profitability and margins for the program are getting better from increasing shop visits and higher external spare parts volume. And the OE performance improves despite more engines that we're going to ship. And just to comment on the external services volume, in 2024, shop visits -- external shop visits were just north of 10%, and we expect that to increase to 15% in 2025. And on a sold basis, the shop visits that we have sold, about 25% of the shop visits are non-GE/Safran shop visits, and that will help future profitability. So overall, the program is on the right trajectory. And as the program kind of breaks even this year, OE becomes profitable next year, I think the services growth trajectory that the program has with the installed base is just going to power the program. So, we expected LEAP to be kind of in CFM56 levels by 2028. Maybe CFM is performing a little bit better. But that's the trajectory that the program is on that, sometime in -- late towards the end part of this decade, LEAP and CFM are delivering the same amount of profit for the Company. Larry, anything you want to add here? |
2,349 | GE | 4 | 2,024 | 2025-01-24 07:30:00 | General Electric Company | 177,031 | Larry Culp: I think you've covered the landscape there. Clearly, much of what we've talked about, Scott, just already this morning with respect to managing the supply base sets us up, particularly as we think about the ramps with LEAP. We would expect LEAP new units to be up 15% to 20% this year, more to come after that. So, that installed base growth, that aftermarket opportunity that Rahul was really talking about, is really a function of what we're doing currently with the installed base -- the supply base. That, of course, coupled with the progress that we made with the HPT at the end of the year on the LEAP-1A sets us up, I think, even more strongly in the marketplace. And we know the engine's performing well in the market. I think we increased our share of cycles 300 basis points in 2024. So, we have a lot of good things in front of us. It's still, in many respects, early days for LEAP.
Operator: Our next question comes from Myles Walton with Wolfe Research.
Myles Walton: Congrats, Blaire, well deserved. At the start of '24, you were looking for about $1 billion of operating profit growth in '25 versus 2024. The new guidance, Rahul, as you mentioned, is $750 million of growth. I'm not oblivious to the fact that you blew away the 2024 base number. But curious, just as you look at that sequential climb to '25, what in the base profit of '24 didn't translate into '25? |
2,350 | GE | 4 | 2,024 | 2025-01-24 07:30:00 | General Electric Company | 177,031 | Rahul Ghai: So, Myles, if you step back and you look at the numbers that you alluded to, we were sitting in March of 2024 expecting to get to about $7.2 billion to $7.3 billion of profit by the end of 2025. And that was up quite a bit -- $1.5 billion to $1.6 billion from where we ended 2023. Now, as we sit here today, as Larry said in his prepared remarks, we're going to add about $2.5 billion of profit in the two-year period. So that's about a third better than what we thought just nine months ago. So, the business is performing extremely well. Now, as you think about the 2025 profit, call it $800 million year over year at midpoint of $750 million and $1 billion dollars at the high end, so first, we spoke about the corporate eliminations up about $100 million from higher PAT volume. So that's one thing, but put that aside. We expect CES profit to be up about $700 million at the midpoint. And the biggest driver of profit growth within CES is the drop through that we're getting from the services revenue that we expect to be up about $3 billion up year over year at the midpoint of the guide. And we expect services margins to be flat, despite with LEAP getting to be a greater share of that services revenue as other things -- productivity, pricing -- all that is offsetting the LEAP mix impact. And to offset the services within CES will be the impact from OE, about split 50-50 between the R&D step-up and the increase in GE9X shipments. We expect GE9X to be about a couple of hundred million dollars headwind in 2025 as we ramp the number of engines that we're shipping. And the spare engine ratio is expected to come down gradually as well here in '25. So that's the CES landscape. And in DPT, given the growth in backlog, $1.5 billion, so call it close to about 10% backlog growth in 2024, we expect mid to high single-digit revenue growth. That's going to translate into profit and with margins expanding about 70 basis points at the midpoint of the guide. So overall, should be a good year. And to get to the high end of $1 |
2,351 | GE | 4 | 2,024 | 2025-01-24 07:30:00 | General Electric Company | 177,031 | about 70 basis points at the midpoint of the guide. So overall, should be a good year. And to get to the high end of $1 billion that you referenced, I think we just need services to be a little bit better and perform at the high end of the guidance. |
2,352 | GE | 4 | 2,024 | 2025-01-24 07:30:00 | General Electric Company | 177,031 | Operator: Our next question comes from Ron Epstein with Bank of America.
Ron Epstein: Good morning. Question for you on the GE9X. When we think about that, I mean, 777X is back in-flight test. Are there other opportunities for that engine beyond the 777X?
Larry Culp: Ron, I would say that, at this point in time, we're fully focused on helping our friends in Seattle get this plane launched. So, we're obviously proud to be under wing. We think it's going to be a great wide-body program over time. Delighted to see, as you mentioned, flight testing resume. We've started to ship engines to Boeing. So, we've got work to do clearly, but the customer feedback relative to that aircraft and that engine continues to be quite strong. We've got nearly, what, 1,000 engines now in backlog. And I'd like to think that with the delays, we've made good use of that time with respect to just additional testing, probably going to end up being the most tested engine in our history. We're approaching 2,500 cycles. In fact, we've got a second dust test engine, critical and harsh and hot environments underway. And we're already on our second iteration of HPT blades, let alone the CMC nozzle designs. So, we're focused on that at the moment, but excited about that backlog and, ultimately, EIS.
Operator: Our next question comes from Sheila Kahyaoglu with Jefferies.
Sheila Kahyaoglu: Congrats, Blaire. I wanted to focus back on CES margins in Q4, just given the performance was so stellar at 28%. And even on slower expected services growth, given the internal shop visit volume hasn't quite turned the corner. So, when we think about the 2025 outlook, and Rahul, I know you talked about this a little bit, services, you raised the guidance here from just one month ago to low to mid-teens. Can you talk about the moving pieces as you think about just the mix of spares, parts versus internal, and how the different engines are contributing to that? And maybe if you could just talk about the cadence throughout the year as well. |
2,353 | GE | 4 | 2,024 | 2025-01-24 07:30:00 | General Electric Company | 177,031 | Rahul Ghai: All right. So, Sheila, let me start, and obviously, if I don't hit anything, come back and make sure we answer the question. CES had a good quarter, better than what we had expected. Favorable services mix, Sheila, as you mentioned, the shop visit volume wasn't exactly where we needed to be, but spare parts did better. And again, as we're trying to manage the supply chain challenges that we're encountering, those parts are fungible and we kind of move them around every quarter to make sure that we are supporting our airline customers. So, there's always a little bit of tension between external spare parts volume and internal shop visits. So, the mix skewed towards the spare parts in the quarter. And then engine mix was favorable as well. As we said in our prepared remarks, we caught up on the spare engines that we had not delivered in the first three quarters. So, we caught up here in the fourth quarter, but overall, as we expect, spare engine ratio for LEAP is in low double digits. So, it'll gradually come down, but we're not expecting a steep drop-off here. So, as you think about '25, Sheila, within CES, we do expect spare parts to remain strong here, given where the external market is. We expect the departures to be up kind of mid-single digits, and then all the pricing changes that we implemented last year, that they'll be thinking about the summer, get spare parts to be kind of up low double digits. And the shop visit revenue, we're expecting shop visit revenue to be up mid-teens. And that's going to come from high single-digit shop visit volume growth. And you combine that with the work scopes that are increasing, be it the wide-body programs like GE90 going for the second shop visit, and GEnx’s coming for the first shop visits versus a quick turn earlier, and then LEAP. So, work scopes are increasing, and then modest price increases baked into that service portfolio. So that's kind of the landscape of the CES revenue growth. And then that is going to drive the profit in response to Myles' |
2,354 | GE | 4 | 2,024 | 2025-01-24 07:30:00 | General Electric Company | 177,031 | So that's kind of the landscape of the CES revenue growth. And then that is going to drive the profit in response to Myles' question earlier. Now, we're going to come out of the gate strong here, Sheila, within CES especially. And the primary driver for that is the 9X shipments are more towards the back end of the year. But we are entering the year for spare parts with about 90% of that revenue in our backlog. So, we'll have a strong quarter here to start with in our spare part sales. We expect shop visits to grow as well. And then we had the CMR of over $200 million in 1Q of last year; we're not expecting that to repeat. So, we'll start the year strongly on profit. And revenue for the quarter for CES should be kind of in line with what we're expecting for full year. Hopefully that answers the question, Sheila. |
2,355 | GE | 4 | 2,024 | 2025-01-24 07:30:00 | General Electric Company | 177,031 | Operator: Our next question comes from the line of Doug Harned with Bernstein.
Doug Harned: I want to just follow up a little more on the commercial services growth. Because when you talk about low double-digit to mid-teens next year, that's a little better than you were talking about before or this year. But can you talk about where that's coming from? Because wide-body versus narrow-body, in other words, could you go higher if you can resolve these supply chain issues?
Larry Culp: Doug, as you would imagine, it's a broad-based demand strengthening that we see. Could we go higher? We've got work to do with the supply chain to execute on what Rahul just walked everybody through. But there is more pent-up demand there. We've got the backlog. An unhelpful level of that is, in many respects, delinquent. So, if we could continue to deliver the sequential improvements in inputs, combined with the progress I know we're making in our own shops, I wouldn't say no. But we've got work to do to deliver what we just outlined. But again, it won't be a demand challenge for us in 2025, we believe. We don't want to take it all for granted. But given the environment, given the backlog, it really is about operational execution. That's where we're focused.
Operator: Our next question comes from Robert Stallard with Vertical Research.
Robert Stallard: Just a question on the LEAP. You're expecting 15% to 20% growth this year, and Rahul said that you expect the spares ratio in that to come down. So, looking at the remnant of those engines, how are you expecting the split to go between Airbus and Boeing in 2025?
Larry Culp: Well, we don't get into that level of detail publicly. But I think we are, as you would imagine, in frequent contact with all of our customers, particularly those two vis-à-vis the intentions they have for 2025. I think we are well aligned to support both of them as they step up production this year.
Operator: Our next question comes from Seth Seifman with JPMorgan. |
2,356 | GE | 4 | 2,024 | 2025-01-24 07:30:00 | General Electric Company | 177,031 | Operator: Our next question comes from Seth Seifman with JPMorgan.
Seth Seifman: I wanted to ask about the -- in terms of spares growth, you kind of talked about departures and price. One of the other things I'm kind of curious about is provisioning of third-party shops to do more LEAP maintenance over time, the degree to which that's happened, the degree to which that's still in front of us and affects kind of the spares growth trajectory, and maybe also the CapEx that you're doing and how you think, over time, that plays into the amount of LEAP work that will be done internally versus externally? |
2,357 | GE | 4 | 2,024 | 2025-01-24 07:30:00 | General Electric Company | 177,031 | Rahul Ghai: So, Seth, let me start and Larry can jump in here. Obviously, as we're coming out of the gate here, most of the shop visits have been internal. As we said, about 90%, give or take, were shop visits that we performed within Safran and GE. The external network is beginning to step up. We have five external partners. They're beginning to get volume. We spoke about the Akasa win with one of the third-party MRO partners that we have last quarter. So, those visits are stepping up, and they've been stepping up sequentially as the year has gone on. So, as we think about 2025, we expect about, call it, 15%-ish of our shop visits to be external. And then, as I said earlier, about 25% of the shop visits that we have sold are going to be performed by our third-party MRO partners. And then, that will gradually grow up as we get into 2030 and beyond. So that's the trajectory we are on. And within that, obviously, spare parts will grow. Spare parts sales will grow as more shop visits are performed externally. So, the margins on the program will get better because of that dynamic. But overall, even on the services side, on our internal service contract, just given all the durability improvements that Larry just mentioned, our margins on our internal work that we are performing are very stable. I mean, we've had a couple of good years of service profitability results here on our own service contract. So, we feel good about that as well.
Operator: Our next question comes from David Strauss with Barclays.
David Strauss: I just wanted to touch on the free cash flow forecast for 2025, Rahul. Maybe if you could go into -- it looks like you're assuming neutral-ish overall working capital, maybe a slight tailwind. How are you thinking that kind of breaks out between inventory, LTSA cash, AD&A, just those moving pieces within working capital? |
2,358 | GE | 4 | 2,024 | 2025-01-24 07:30:00 | General Electric Company | 177,031 | Rahul Ghai: Yes. So David, most of the cash growth in '25 is going to be driven by our earnings. Working capital and AD&A combined should be a positive contributor. And within working capital, the inventory buildup should be less than what we had in 2024. I mean, in inventory, we added about $1.5 billion of inventory in 2024. We're obviously not expecting to add the same level. Now, again, our primary objective is to increase our deliveries, and we will do what it takes. But with the improvement in deliveries, we do expect that some of the inventory that we've built up will start getting liquidated. The flip side of that is the contract assets, which was a very favorable contributor in '24, will not be as favorable in '25, just given the increase in shop visits. So still a positive, but not as much of a positive. So that's kind of within the working capital. Now, AD&A, overall, we ended at about $300 million of outflow in '24, which was consistent with what we thought at the beginning of the year, a little bit more skewed towards the fourth quarter, but expect overall AD&A outflow to be at the same level, maybe marginally higher. So that's kind of the expectation on AD&A. And then, the positive contributions from working capital and AD&A will be offset by the expected higher cash tax payments next year and a step-up in CapEx. So, conversion, still solidly above 100%, maybe a little bit lower than what we had in 2024.
Operator: Our next question comes from Jason Gursky with Citi.
Jason Gursky: And Blaire, congratulations on the elevated role, well deserved. Rahul and Larry, I was wondering if you could just spend a few minutes on labor productivity across the Company and where you think you are relative to pre-pandemic levels. And what you think it's going to take for the Company to get back to the productivity that we're seeing prior to the pandemic? And just how much of that is actually in your control and how much of it is dependent on external suppliers getting you what you need on time? |
2,359 | GE | 4 | 2,024 | 2025-01-24 07:30:00 | General Electric Company | 177,031 | Larry Culp: Jason, I think that as I look back on 2024, everything that we saw come through the financials, everything we saw visiting a number of our operations, just ample evidence that the FLIGHT DECK principles and tools really are helping us go in, put the operators at the center of all put the operators at the center of all we do and just drain the waste out of their daily work. That, to me, is the heart of labor productivity. Unfortunately, that work that we see with our own eyes hasn't fully translated into either better on-time delivery performance or labor productivity for the very reason that you touched on. And I don't want this to sound in any way defensive, the progress that we're making with those material inputs that we referenced in the prepared remarks, the sequential first half, second half, up 26%, coupled with the higher predictability, the higher reliability of those inputs, north of 90% now for the critical suppliers, will enable us to have more predictable, more linear flow through our factories, through our repair shops, such that I think we'll actually do better from a labor productivity. It's hard to quantify how much, if you will, labor lack of productivity comes as a result of our delivery challenges on the inbound side. But as we work those, I think we sit here fully expecting to be able to deliver better labor productivity in '25 and certainly from there.
Operator: Our next question comes from Gavin Parsons with UBS.
Gavin Parsons: I'd love to just kind of go further into supply chain a little bit. It sounds like it's getting better. You've got the LEAP-1A blade certified, but internal shop visits were still down in the fourth quarter. Just maybe if you could go into where the bottlenecks or the pain points still are and if that's a linear improvement through '25 or if that's a step function at some point on an unlock? |
2,360 | GE | 4 | 2,024 | 2025-01-24 07:30:00 | General Electric Company | 177,031 | Larry Culp: Well, I don't think we have much by way of new news in that regard. The challenge remains as it has with 15 or so critical suppliers that we're working intensely with. I think we mentioned yet again today that we've got well over 500 of our own people embedded in the supply base working to identify and eliminate constraints, thus unlocking the output that we need. I think as we look at '24, the progress that we made in hindsight is significant, but it came in fits and starts. It was a game of inches, if you will. I think that will continue to be the case in 2025. There's no step function improvement necessarily sitting out there on the HPT blade. Certainly, the LEAP-1A durability kit will help. But more broadly speaking, it really is working through the entirety of the supply base to make sure they're clear on our demand signals that those are being properly deployed and that we're working through whatever capacity constraints, bottlenecks, and the like that they may have in their own operations. And that, to me, is really what's so critical. And that'll be fundamental to how we support Boeing this year as they ramp, particularly on the 737 MAX. The same goes with Airbus. We know we're working very hard, well aligned with Airbus as we both march toward their rate 75. So, a lot to do. It won't be linear, but I think we have tremendous confidence that we're coming into 2025 far better prepared for the ramp than we were coming into 2024. And the final thing I'll say is that we often talk about the ramp wholly focused on new make. The work we do with our supply base helps us support the air framers, but it's often the same parts and the same suppliers that feed into the aftermarket. I would just caution anyone about over-indexing on that, say that 15% to 20% increase in LEAP new make in 2025, the demands on the supply base are going to be in excess of that, again, because we also need to support the aftermarket with those same partners. |
2,361 | GE | 4 | 2,024 | 2025-01-24 07:30:00 | General Electric Company | 177,031 | Rahul Ghai: And Gavin, just to add to what Larry just said, just as we think about 2025 here and as we're coming out of the gate, you saw the sequential improvement in our engine output in 4Q. We expect that continuously sequential improvement as we go through the year. But what that translates into a little bit more growth on a year-over-year basis as we get into the second and third quarters, because that's where we had some challenging quarters last year, because we started out well coming out of the gate in 1Q. So how that translates for our overall business, and just to add to what I said to Sheila's question earlier about how CES is going to perform, I think the same applies to DPT as well. DPT is going to have a little softer start here in 1Q, given the first quarter was pretty strong for DPT, but a little slower start in DPT, plus some of the internal investments that we are making in the business to support the new programs. So, if you step back and look at the Company overall, we expect overall full-year revenue for the first quarter to line up with what we are expecting for full year for the Company. Our profit will be flat, maybe sequentially down a little bit versus what we did in the fourth quarter. As we go from 4Q to 1Q, profit could be flat to be slightly down, but strong growth on a year-over-year basis and margins should expand in the quarter as well.
Blaire Shoor: Liz, we have time for one last question.
Operator: This question comes from Robert Spingarn with Melius Research. |
2,362 | GE | 4 | 2,024 | 2025-01-24 07:30:00 | General Electric Company | 177,031 | Blaire Shoor: Liz, we have time for one last question.
Operator: This question comes from Robert Spingarn with Melius Research.
Robert Spingarn: Larry, maybe I can finish off with a high-level strategic question. Some would argue that RTX's ability to bundle Pratt's propulsion technology with Collins' offering in avionics and structures could provide them with a competitive advantage when bidding for work packages on future aircraft programs. Your balance sheet is in great shape. This is evidenced by your updated cash deployment plans this morning. And since you are going to generate a lot of cash over the next five years, is there any desire to expand the business beyond propulsion through organic or more particularly inorganic means?
Larry Culp: I think we will stand by our capital allocation framework that we shared almost a year ago now with respect to how we think we will deploy not only our cash flows and our cash reserves in '25, but going forward. We certainly have ample resources. But again, just to reiterate, we are going to have a strong bias toward shareholder returns. It doesn't mean that we will exclude M&A, but as you saw with the Northstar announcement, much of what we will do will be small tuck-ins and adjacencies. I don't think I have ever, in this role at this company or elsewhere, publicly commented on specific situations, and I think I will hold to that again here this morning. But we appreciate and understand the question.
Blaire Shoor: Larry, any final comments?
Larry Culp: Blaire, I would just wrap up to say the team all around the world delivered standout results in 2024. And clearly, the finish there in the fourth quarter was no exception. I hope everybody on the call heard how excited we are about the year ahead as we work to meet what we believe to be historic industry demand and deliver for our customers. We certainly appreciate your time today and your interest in GE Aerospace. |
2,363 | GE | 4 | 2,024 | 2025-01-24 07:30:00 | General Electric Company | 177,031 | Operator: Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect. |
2,364 | GE | 3 | 2,024 | 2024-10-22 07:30:00 | General Electric Company | 177,031 | Operator: Good day, ladies and gentlemen, and welcome to the GE Aerospace Third Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. My name is Liz, and I will be your conference coordinator today. [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn the program over to your host for today's conference, Blaire Shoor, from the GE Aerospace Investor Relations team. Please proceed.
Blaire Shoor: Thanks, Liz. Welcome to GE Aerospace's third quarter 2024 earnings call. I'm joined by Chairman and CEO, Larry Culp; and CFO, Rahul Ghai. Many of the statements we're making are forward-looking and based on our best view of the world and our businesses as we see them today. As described in our SEC filings and website, those elements may change as the world changes. Now over to Larry. |
2,365 | GE | 3 | 2,024 | 2024-10-22 07:30:00 | General Electric Company | 177,031 | Lawrence Culp: Blaire, thank you, and good morning. We're pleased to be joining you from GE Aerospace's headquarters in Evendale, Ohio. For more than a century, GE Aerospace employees have been inventing the future of flight, lifting people up and bringing them home safely. Those last four words, bringing them home safely, are an incredible responsibility and will always be our top priority and core to our culture. We're motivated each day by our purpose and guided by FLIGHT DECK, our proprietary lean operating model. Our team is dedicated to safety, quality, delivery, and cost in that order. That focus will enable us to meet the significant demand of today, while building the innovative solutions of tomorrow. It is because of the shared commitment of our 52,000 employees around the world that we have the privilege to continue to advance flight for today, tomorrow, and the future. Turning to our third quarter performance. Orders were up 28%, driven by robust demand, and we delivered strong earnings and cash. Revenue was up 6% from growth in services and equipment, while operating profit was up 14% and adjusted EPS up 25%. Free cash flow was $1.8 billion, with conversion of more than 140%. In Commercial Engines & Services, or CES, orders were up 29%, with more than 20% growth in both services and equipment. Our recent wins in widebodies and narrowbodies build on our considerable backlog of $149 billion, greater than 90% of which is in services. Services revenue grew 10% and supported total operating profit, which was up 16% year-over-year. Our priority continues to be servicing and growing the industry's most extensive commercial installed base. We made progress with the step-up in OE deliveries quarter-over-quarter, with higher spare part sales to support our external MRO network, while also expanding aftermarket capacity. Progress to be sure, but more work lies ahead. In Defense & Propulsion Technologies, or DPT, orders increased 19%, while profit declined. Engine deliveries were up sequentially, but down |
2,366 | GE | 3 | 2,024 | 2024-10-22 07:30:00 | General Electric Company | 177,031 | Propulsion Technologies, or DPT, orders increased 19%, while profit declined. Engine deliveries were up sequentially, but down year-over-year. We're focused on improving delivery of our leading defense programs, while developing mission-critical technology for the future. Many thanks to our team for their work and dedication this quarter, and a specific thank you this morning goes out to our teams impacted by Hurricanes Helene and Milton. You worked around the clock to support each other and minimize the impact to our customers. Your GE Aerospace at its finest. Given the strength of our results, growing both profit and cash more than $1 billion year-to-date, combined with our fourth quarter expectations, we're raising our full-year guidance. We also continue to coordinate closely with Boeing and are committed to supporting them as they navigate their current dynamics. Moving to Slide 5. Demand for our services and products remains robust, highlighted by departures up high-single digits year-to-date and LEAP share of global narrowbody departures increasing over 20%. We're taking steps with our suppliers to increase inputs, and within our own operations to expand capacity, ensuring we're positioned to meet this historic demand. We're making progress with engine output increasing 22% quarter-over-quarter, including commercial up 25% and defense up 8%. We also grew spare parts sales sequentially, supporting shop visits completed by our third-party network. As we've discussed over the last nine months, we're using flight deck to unlock key constraints, increased material inputs and drive sustainable improvements. We're working hand-in-hand with suppliers, and we're grateful for their strengthening partnerships. As a result of that work, a key subset of priority supplier sites increased output 18% in the third quarter, supporting our deliveries. As one example, a joint Kaizen with one supplier in the second quarter led to a double-digit improvement in material receipts in the third quarter, demonstrating that these |
2,367 | GE | 3 | 2,024 | 2024-10-22 07:30:00 | General Electric Company | 177,031 | in the second quarter led to a double-digit improvement in material receipts in the third quarter, demonstrating that these efforts are yielding results. We expect inputs to increase again in the fourth quarter, supporting a sequential step-up in output. We're also making progress on LEAP durability with the 1A durability kit, including our upgraded HPT blade, and we're expecting it to be certified in the coming weeks. The new HPT blade is easier to manufacture, which will also help increase output. Combined with the three durability enhancements that are currently performing well in the field, we expect this will give LEAP a 2.5x improvement in time on wing, in line with current CFM56 levels. With LEAP's fleet size projected to double by 2030, we're expanding capacity to support aftermarket growth. We're preparing for this growth in three complementary ways to improve shop visit output and reduce turnaround times. First, we're leveraging FLIGHT DECK to eliminate waste, to increase capacity and reduce TAT. At our MRO facility in Selma, Brazil, we use value stream mapping and problem solving to reduce LEAP test cycle time, a key constraint in shop visit output. We identified waste and improved standard work, reducing lead times there by nearly 50%. Actions like this enabled over 20% more LEAP shop visits in the third quarter year-over-year. Second, we're expanding internal capacity. We're investing $1 billion in MRO over the next five years to create that capacity, add enhanced inspection techniques and expand repair capabilities. We've partnered with Lufthansa Technik to add a dedicated LEAP MRO shop in Poland, and we'll induct the first engine there here in the fourth quarter. And third, we're developing our third-party network, which provides customers flexibility and competitive options to ensure the best cost of ownership. Third-party MROs inducted a record number of LEAP shop visits in the third quarter. We're also pleased that Akasa Airlines recently announced the selection of ST Engineering to provide |
2,368 | GE | 3 | 2,024 | 2024-10-22 07:30:00 | General Electric Company | 177,031 | in the third quarter. We're also pleased that Akasa Airlines recently announced the selection of ST Engineering to provide exclusive performance restoration shop visits for their fleet over the next 15 years. While there's more work to do, we're focused on servicing and delivering our engines faster without compromising safety and quality. I'm confident our actions will enable us to increase output meaningfully into the fourth quarter and 2025. We're also growing our installed base with airlines and defense customers expanding and modernizing their fleets with our engines under wing. During the quarter, we won multiple services contracts for our customers' growing fleets. Avalon will add 75 new LEAP-1A-powered A320 aircraft to their existing fleet of over 300 CFM-powered aircraft. In widebodies, we secured commitments from Eva Air or GN GEnx engines and Qatar Airways or GE9X engines. In Defense, the Polish Ministry of National Defense will add over 200 of our T700 engines to power their anticipated acquisition of 96 Boeing Apache, Guardian helicopters. We were also selected to overhaul and upgrade the GEnx 2B engines powering the U.S. Air Force's SAOC, the Survivable Airborne Operations Center, Boeing 747-8. Turning to the future. RISE accelerates the development of new technologies that will pave the way for the next generation of aircraft and a more sustainable future. We recently began planning for dust ingestion tests on the open fan design earlier than ever before. This reflects key durability learnings from our engines operating in higher temperature environments. We're also advancing a new era of turboprop technology with a catalyst engine, completing engine level testing and certification expected in the coming months. Our defense products remain in demand for critical platforms globally. Our T901 engine is key to the modernization of Blackhawk and Apaches and has been progressing towards the next milestone of power-on and ground runs. The maturity of our digital backbone for Bell's Future Long Range |
2,369 | GE | 3 | 2,024 | 2024-10-22 07:30:00 | General Electric Company | 177,031 | towards the next milestone of power-on and ground runs. The maturity of our digital backbone for Bell's Future Long Range Assault Aircraft was a critical for the U.S. Army to pass Milestone B and enter the next phase of development. We're also delivering continued success with our advanced technologies. Our XA100 engine completed a fourth round of testing, and we are nearing completion of the detailed design for the U.S. Air Force's NGAD program. Stepping back, our path forward is clear, and we're confident we'll meet our customers' expectations today, while developing the technologies of the future. Rahul, over to you. |
2,370 | GE | 3 | 2,024 | 2024-10-22 07:30:00 | General Electric Company | 177,031 | Rahul Ghai: Thank you, Larry, and good morning, everyone. GE Aerospace delivered another strong quarter with double-digit orders and profit growth, improving delivery and over 140% free cash flow conversion. Revenue was up 6%, with growth in both segments. Services growth, combined with price more than offset the impact of lower engine shipments year-over-year. Operating profit was $1.8 billion, up 14%. Services volume, favorable mix and price were partially offset by higher inflation and investments. Operating margins expanded 150 basis points to 20.3%. Adjusted EPS was $1.15, up 25% from increased operating profit and the benefit of preferred equity redemption. Free cash flow was $1.8 billion, up 5% from higher earnings. Working capital was roughly a $600 million use. Billings on higher sequential engine deliveries was partially offset with favorable AD&A. Given the ongoing material availability challenges, inventory increased, although at a lower rate than prior quarters. Cash inflows from long-term service contract continued to be favorable. These results build on the momentum we had from the first half, with year-to-date revenue up 8% and operating profit up more than $1 billion or 25% from commercial services strength. We have delivered $4.6 billion of free cash flow, also up more than $1 billion year-over-year at nearly 130% conversion. This sets us up well to close out a strong year. Turning to CES. In the third quarter, revenue was up 8%. Services up 10% from higher spare part sales, increasing shop visit work scopes and improved pricing. Internal shop visits were roughly flat year-over-year. Equipment revenue grew 5% with customer mix and price more than offsetting lower units. Supply chain constraints impacted shipments across narrowbody and widebody with total engine deliveries down 4%, including LEAP, down 6%. profit was $1.8 billion, up 16%, with margins expanding 180 basis points from higher services, volume and price. Equipment losses increased year-over-year from lower spare engine deliveries |
2,371 | GE | 3 | 2,024 | 2024-10-22 07:30:00 | General Electric Company | 177,031 | points from higher services, volume and price. Equipment losses increased year-over-year from lower spare engine deliveries and higher investments, partially offset by improved pricing. Overall, CES has delivered solid year-to-date results with double-digit revenue growth, $4.9 billion of profit, up about $750 million year-over-year and 170 basis points of margin expansion. Moving to DPT. Orders were up 19% from strong demand at Defense & Systems. Defense book-to-bill was 1.6% in the quarter and 1.2% year-to-date. Our total DPT backlog is now $18 billion, up $1 billion year-over-year. Revenue grew 2% in the quarter. Defense & System systems revenue was down 2%. Improved pricing was more than offset by engine deliveries, down 1%, and unfavorable engine mix. Propulsion and Additive Technologies grew 9%, primarily driven by Avio Aero. Profit of $220 million was down 18% year-over-year on a tough compare. Inflation, adverse engine mix and investments to support NexGen products more than offset price improvement. While we had a challenging quarter, year-to-date revenue and profit are up 6% and 22%, respectively, with margins expanding 150 basis points. We continue to work towards improving delivery, while providing solutions that meet the evolving needs of our military and allies. Spending a movement on corporate. Since becoming an independent company, we made considerable progress to ensure our operations reflect the needs of GE Aerospace. Year-to-date, total corporate cost is down about 25% or $150 million. We are also on track with our post-spin separation and restructuring plans. Additionally, this quarter, we had non-GAAP adjustments from the gain on sale of our licensing business, agreement to settle a legacy lawsuit and impairment of Colibrium Additive goodwill. Colibrium Additive is a critical business for us as it is utilized on several key components for LEAP and 9X, and it will be a key enabler for a future of flight as we continue to focus on where it can create the most value. Given the strong |
2,372 | GE | 3 | 2,024 | 2024-10-22 07:30:00 | General Electric Company | 177,031 | it will be a key enabler for a future of flight as we continue to focus on where it can create the most value. Given the strong year-to-date performance, and the trajectory entering the fourth quarter, we are raising our earnings and cash guidance. Revenue remains the same across our businesses. At CES, we continue to expect low-double digits to mid-teens growth. This includes continued sequential growth in LEAP deliveries in the fourth quarter, but the full-year will now be down approximately 10% year-over-year. This guidance assumes ongoing deliveries to Boeing. We also continue to expect DPT growth of mid-to-high single digits, in line with the year-to-date performance of 6% growth. Operating profit is now expected to be in a range of $6.7 billion to $6.9 billion, up $150 million at the midpoint in the prior guide, implying over 200 basis points of margin expansion year-over-year. CES operating profit is now expected to be $6.6 billion to $6.8 billion, up $300 million at the midpoint from the prior guide, reflecting improved services mix. Internal shop visit growth will be lower than our prior estimate, offset by higher spare part sales, work scope and mix. We expect DPT to be at the lower end of the current profit range of $1 billion to $1.3 billion. This reflects 3Q performance, increased investment in next-gen programs and some pressure in P&AT. Corporate costs and eliminations are now expected to be around $850 million, down from below $900 million previously and $150 million reduction year-over-year. We now expect a tax rate of around 20%, lower than our prior expectation of low 20s. Interest expense is unchanged. We are raising our adjusted EPS guidance to $4.20 to $4.35, up $0.20 at the midpoint from the prior guide from improved profit and lower tax rate. We are also raising our free cash flow guidance to $5.6 billion to $5.8 billion, up $250 million at the midpoint, primarily from higher earnings. All in, we are positioned to deliver significant revenue, profit and free cash flow growth in 2024, and |
2,373 | GE | 3 | 2,024 | 2024-10-22 07:30:00 | General Electric Company | 177,031 | from higher earnings. All in, we are positioned to deliver significant revenue, profit and free cash flow growth in 2024, and that provides us a solid foundation for '25. Larry, back to you. |
2,374 | GE | 3 | 2,024 | 2024-10-22 07:30:00 | General Electric Company | 177,031 | Lawrence Culp: Rahul, thanks. GE Aerospace is positioned to deliver a solid year in our first as a stand-alone company with enhanced profitability and cash supporting over $4 billion that we've returned to shareholders year-to-date. This performance is underpinned by our sustainable competitive advantages. Our platforms are preferred by customers across the narrowbody, widebody, and defense sectors. Our focus is on providing industry-leading services and technology with safety, quality, delivery, and cost in that order at the core of everything we do. We support our customers, and we will deliver greater efficiency, reliability and time on wing as well as faster turnaround times to them. We continue to keep an eye towards the future to deliver breakthrough technologies in commercial and defense to pave the way with innovation for a more sustainable flight and FLIGHT DECK connects our strategy to our results, enabling GE Aerospace to deliver for our customers, create exceptional value for shareholders and to define our culture. Looking ahead, we're poised to continue to deliver meaningful profit and free cash flow growth in 2025 and beyond, combined with our capital allocation strategy, including returning approximately $25 billion of available cash to shareholders will drive compounding shareholder returns. Now we'll go to questions. Blair?
Blaire Shoor: Before we open the line, I'd ask everyone in the queue to consider your fellow analysts and ask one question, so we can get to as many as possible. Liz, can you please open the line?
Operator: [Operator Instructions]. Our first question comes from David Strauss with Barclays.
David Strauss: Thanks. Good morning.
Lawrence Culp: Good morning, David. |
2,375 | GE | 3 | 2,024 | 2024-10-22 07:30:00 | General Electric Company | 177,031 | David Strauss: Thanks. Good morning.
Lawrence Culp: Good morning, David.
David Strauss: So I wanted to ask, Larry, about 2025. So back at the Investor Day, you talked about $1 billion in profit growth in 2025 relative to 2024. Obviously, the 2024 EBIT guidance has come up, I think, about $550 million. So how should we think about the walk to 2025. Are we still looking at roughly $1 billion in EBIT growth off of a higher baseline now? Thanks.
Lawrence Culp: David, we're really working through the updated '25 outlook. We're in the midst of our annual strategic planning reviews. Good bit of our time actually here in the third quarter was dedicated to that work. And that really transitions us now to the budget prep process will have a more defined look at '25 as we get closer. We'll review that with the Board at the end of the year. And then I think when we're together in January, we'll go through that in detail. Rahul, may want to just frame up how we are thinking about that vis-à-vis where we were back in March. |
2,376 | GE | 3 | 2,024 | 2024-10-22 07:30:00 | General Electric Company | 177,031 | Rahul Ghai: Yes. No, sure. Larry and David, thanks for the question. As you said, we are sitting at about $500 million, $550 million higher than where we were in March. So that is a higher starting point. And just as we kind of take through the segments here a little bit, we expect commercial services to stay strong, grow low-double digits given the significant backlog of shop visits that we have and the price increases that we've implemented. And the two other trends that are kind of working in our favor are the CFM56 and GE90 kind of holding their share of departures with extremely low levels of retirement. On CFM56, the retirements this year have been lower than even where they were in 2023. And then LEAP services is trending nicely. So that all those things are going to help support the 2025 outlook. On the equipment side, the equipments growth is slower in '24 than we had expected. So some of that volume will move to 2025. We are working those volume assumptions as we sit here today with the airframers to safe to say that equipment growth will be faster than that of services and will include higher 9X shipments. So that'll likely put some pressure on margins, but it is important to keep this flywheel going over the longer term. On the DPT side, the book-to-bill, as we just shared, has been very strong. So we're entering '25 with a very strong backlog, mid-to-high single-digit growth for next year and with profit growing faster than margins. And on the corporate side, we've done a really good job this year, taking cost out, 25% to 30% cost reduction based on the guide. And then that has accelerated some of these actions from next year into this year, but still plenty of opportunity in front of us. So all in, we'll work through our guidance here and provide the detail in Jan. But we see continued strong earnings and free cash flow outlook, which should stay above 100% for next year. And we continue to work for shareholder returns through what we're doing on dividend and share buyback. |
2,377 | GE | 3 | 2,024 | 2024-10-22 07:30:00 | General Electric Company | 177,031 | Operator: Our next question comes from the line of Doug Harned with Bernstein.
Douglas Harned: Yes, good morning. Thank you.
Lawrence Culp: Good morning, Doug.
Douglas Harned: I wanted to continue a little bit on 2025, though, and specifically around your expectations for LEAP output. You're up quarter-over-quarter in Q3, but you've got the Boeing strike. You've got the supply chain constraints that you've talked before about HPT blades in particular, and then you've got to transition to the new HPT blades. So when you're trying to project those numbers for next year on LEAP output, how do you trade those different things off? And where do you see yourself in terms of mitigating some of these issues? |
2,378 | GE | 3 | 2,024 | 2024-10-22 07:30:00 | General Electric Company | 177,031 | Lawrence Culp: Well, Doug, I would just expand it a little bit more broadly than all of the items that you touched on there, because in addition to thinking about the LEAP ramp, right, hand-in-hand with both Airbus and Boeing, we've got growing demand in the aftermarket. And we want to make sure we're taking care of the airlines and the airframers, and that's what the operating challenge is about. It's not one of demand. We know we've got an incredible backlog here. Airbus, obviously, aiming to hit rate 75 down the road. We want to be with them each step of the way. Boeing in a different situation, but they're going to be ramping on the other side of resolving the work stoppage as well. And fortunately, they're both going to do that with our engines under wing. I think that what we saw in the third quarter, what we saw in the second quarter in terms of the work we are doing with FLIGHT DECK with the supply base really is what will determine how much of that aftermarket activity we can support, and what we're going to be able to do in terms of new engines as well. I'm encouraged by what we saw in the third quarter. I think in the prepared remarks, you saw that we had an 18% increase sequentially. And I think sequentially is really where it is operationally on the handful of critical suppliers that paced us a bit in the second quarter, paced is a bit here in the third, but I really like not only the underlying collaboration, but the on-site problem solving that we're doing. I think we're unlocking capacity as a result, and that helps us deliver more to all of our customers. That's what we're geared up to do here in the fourth quarter as well. As we said, LEAP will be down, unfortunately, year-over-year in terms of new engine deliveries. But I think we're poised, I think, as Rahul just touched on to deliver good growth going into 2025. That's the goal. You mentioned the new HPT blade. That, Doug, as you know, is really the fourth of four durability enhancements that we're excited about. We expect approval for the |
2,379 | GE | 3 | 2,024 | 2024-10-22 07:30:00 | General Electric Company | 177,031 | Doug, as you know, is really the fourth of four durability enhancements that we're excited about. We expect approval for the 1A version of that here shortly. That will be a real step function improvement in the field performance of the engine, and it's a twofer because we also know that it's an easier blade to make. That will unlock capacity, which will help us in 2025 in earnest as well. So still work to do. I like the travel that we're seeing, and our team and our supplier teams know that we're fortunate to have this incredible backlog to service for the airframers and for the airlines, and that's what 2025 will largely be about. |
2,380 | GE | 3 | 2,024 | 2024-10-22 07:30:00 | General Electric Company | 177,031 | Operator: Our next question comes from the line of Robert Stallard with Vertical Research.
Robert Stallard: Thanks so much. Good morning.
Lawrence Culp: Good morning.
Robert Stallard: I'm not sure if there's a question for, but since we last spoke, Boeing announced another delay on the 777X program, I was wondering what sort of financial and practical implications this might have for GE Aerospace? Thank you.
Lawrence Culp: Well, maybe I'll speak to the operation, Rahul can touch on the financial. We heard what you heard. I'm sure Kelly and company will talk a little bit more about that tomorrow. But from an operational perspective, really no change whatsoever at GE Aerospace with respect to what we're doing to continue to test the engine and prepare for a production ramp going forward. And I think it's really that simple. We're excited about that engine. We know that aircraft is late, but every customer that I talk to and have the opportunity to spend time with a few of them just this past weekend, they love the airplane. They want the airplane. It's really, at this point, a matter of time.
Rahul Ghai: And Rob, from our guidance perspective, we do have a few rev rec units here in the fourth quarter. We've already started delivering the engines to Boeing. Some of them are already gone, more will go out here in the remaining two months of the quarter. For '25, we're working with Boeing on exactly how many engines would they need based on their demand profile. So that is work that we need to do in the next couple of months. But we expect that the program will obviously ramp here over the decade. And the key for us is just to continue to work the cost out. And as we shared at Investor Day, we expect about 30% of the cost to come out by the 50th engine, an additional 30% as we get to the 250th engine. So that's what's in our plan. And we'll move past the peak losses towards later in the decade and the program should be profitable by 2030. So that's what we built in into both our near-term and long-term outlook. |
2,381 | GE | 3 | 2,024 | 2024-10-22 07:30:00 | General Electric Company | 177,031 | Operator: Our next question comes from Myles Walton with Wolfe Research.
Myles Walton: Thanks, good morning.
Lawrence Culp: Good morning, Myles.
Myles Walton: I was hoping you can comment on the customer concessions or penalties that might be associated with delinquency of deliveries, both on the commercial side and the military side, which are obviously below your plan and expectation. We get asked the question a lot, how do the financials that GE keep getting better if the underlying deliveries keep getting worse? I'm just curious if you can elucidate some of the penalties you might be absorbing under the surface for the delinquencies? Thanks.
Rahul Ghai: Myles, let me start and Larry jump in here. Myles, as you know, kind of typical contracts with the customers. But everything that that we need to accrue for we're obviously accruing for, and that's kind of built into the guidance. But I want to say that it's not been a material number for us here as we sit here in 2024. So we're working through and trying to support the customers as best as we know how. And as you saw, the deliveries are sequentially better in the third quarter. They'll get better in the fourth quarter, and will continue to improve as we work past these supply chain challenges. But nothing major on the liquidity damages or penalty side on either side on either commercial or military.
Operator: Our next question comes from the line of Sheila Kahyaoglu with Jefferies.
Sheila Kahyaoglu: Good morning guys. Thank you very much, Larry, Rahul.
Lawrence Culp: Good morning. |
2,382 | GE | 3 | 2,024 | 2024-10-22 07:30:00 | General Electric Company | 177,031 | Sheila Kahyaoglu: Good morning guys. Thank you very much, Larry, Rahul.
Lawrence Culp: Good morning.
Sheila Kahyaoglu: Good morning. Maybe we could talk about DPT. Orders and backlog continue to be very strong despite the softness in profitability. I assume some of that is coming from the combat engine shortfalls, but you also mentioned pressure across propulsion and additive plus the charge today. So when we think about the low end of 2024 guide, it would suggest Q4 margins step down again sequentially. How do we think about what happens into 2025 and what's driving some of that margin pressure?
Rahul Ghai: So Sheila, I think you touched on it. The biggest pressure point here in the fourth quarter is our investment in R&D to support the next-gen programs. So that is the biggest driver here. Given the budget uncertainty, we are continuing to invest from our side to make sure that we meet the time lines that the customers need from us. So that's the biggest point. There's a little bit of product mix in Avio Aero that is putting a little bit of pressure on propulsion and additive technologies that we referenced. But the biggest driver here is the R&D increase in the fourth quarter. Now as you go into '25, as you mentioned, the backlog is strong, it's $18 billion, up about $1 billion year-over-year for the segment. So that supports the mid- to high-single-digit growth that I mentioned earlier in response to David's question. And we do expect that, as we get into '25, our profit should grow faster than revenue, and that should drive continued margin expansion on the DPT segment. And keep in mind, the results on a year-to-date basis have been very strong as well. So we'll continue that into '25.
Operator: Our next question comes from the line of Ronald Epstein with Bank of America.
Ronald Epstein: Hey, good morning, Larry and Rahul.
Lawrence Culp: Good morning, Ron. |
2,383 | GE | 3 | 2,024 | 2024-10-22 07:30:00 | General Electric Company | 177,031 | Ronald Epstein: Hey, good morning, Larry and Rahul.
Lawrence Culp: Good morning, Ron.
Ronald Epstein: Can you maybe peel back the onion a little bit more on shop visits in the quarter. LEAP was up, but other things were down. If you can go into that in a little more detail that might be helpful for everybody. |
2,384 | GE | 3 | 2,024 | 2024-10-22 07:30:00 | General Electric Company | 177,031 | Lawrence Culp: Ron, I think it's very much what we have been touching on here this morning, what we've talked about previously just in terms of the various supply chain challenges that we're seeing really across the board, right? We talk a lot about LEAP, given the ramp there and what's happening in the aftermarket. But these same suppliers support us across virtually every one of our programs. So what we're trying to do is make sure that the FLIGHT DECK improvements that we're seeing, that we've highlighted here this morning are broad-based. That's why we've got over 550 engineers in the field working with the supply base to really enable us to have more flow into our facilities, whether they support new make of an engine, let alone the aftermarket. When that flow is not constant, when that flow is not improving, that's when things are delayed. And depending on where we are in a particular facility or a particular product line, you may see that present itself in one area in one quarter, perhaps in another elsewhere. It's not something we're particularly pleased with, but I think we're focused on the problem solving, not the finger pointing. And on balance, are encouraged by what we have seen here in the third quarter. You saw the results of it, I think, more pronounced in new engine deliveries and in spare parts growth than necessarily in our internal shop visits, which were lower sequentially. But I think on balance, what we need to do in concert with our suppliers is underway. I think we're developing momentum with them that I think is what gives us the optimism embedded in the guidance raise here for the fourth quarter and some of the commentary that Rahul provided with respect to next year. That's the financial framing operationally. We know we have customers, airlines and airframers that want more from us, and that's job one. |
2,385 | GE | 3 | 2,024 | 2024-10-22 07:30:00 | General Electric Company | 177,031 | Rahul Ghai: And Ron, if I may add one thing that you did see in the quarter is that the spare part sales are up. So as Larry spoke about the material availability challenges, we constantly balance the needs of both our external and the internal network and prioritize the delivery of parts to reduce the turnaround time for our airline customers, be it in our own network or in the external network. So there's a little bit of fungibility of those same parts between spare parts sales and shop visits. And this quarter, what you saw was the spare part sales were higher, shoppers were flat on a year-over-year basis in the third quarter. But now as we're getting into the fourth quarter, we have -- our inductions for shop visits were higher than our output. So we're getting to the fourth quarter with a fairly high backlog of shop visits that we need to complete. And even on a spare parts basis, more than 80% of the spare part sales that we are projecting are already in the backlog. So good strength on both sides on the spare parts and shop visits. And with the price increases that we implemented in the third quarter, all that -- you put all that together, and that is where we felt very comfortable holding our services growth outlook for the year.
Operator: Our next question comes from Seth Seifman with JPMorgan.
Seth Seifman: Thanks very much and good morning.
Lawrence Culp: Good morning, Seth.
Rahul Ghai: Good morning, Seth. |
2,386 | GE | 3 | 2,024 | 2024-10-22 07:30:00 | General Electric Company | 177,031 | Seth Seifman: Thanks very much and good morning.
Lawrence Culp: Good morning, Seth.
Rahul Ghai: Good morning, Seth.
Seth Seifman: I guess at the risk of getting ahead of things a little bit, maybe to dig in a little bit more on some of the comments that you made about 2025. When we think about next year versus the way that you talked about 2025 in March, I mean, I would assume that the engine deliveries are a headwind year-on-year. But probably starting from where we're starting from, maybe the engines are not a -- maybe not reaching the same level of deliveries that were expected at that time. And so relative to the dollars at that time, maybe the OE losses are not quite as big. I was wondering if we should think about it that way. And then also just in terms of thinking about, not just the volume of work on LEAP in the aftermarket, but LEAP profitability, is that something that we should expect to improve next year? |
2,387 | GE | 3 | 2,024 | 2024-10-22 07:30:00 | General Electric Company | 177,031 | Rahul Ghai: I think, Seth, you are accurate on both counts, right? Our engine output perhaps is not at the level that we'd expected back in March. So that should minimize or reduce our engine losses. But keep in mind, there're other dynamics that go in as well, the number of spare engines we have to deliver, R&D investments, all those other things. So that's just one data point. which you're accurate on Again, we'll provide more guidance as we get into 2025. On the LEAP side, I think that is definitely shaping up to be a lot better than what we expected at the beginning of the year. Obviously, Larry spoke about the durability improvements that are coming in and the fact that we're expecting LEAP durability to be at CFM56 levels in 2025. So that's a huge plus. But also what we've started to see is that our spare part sales to our external network is growing. So this year, north of 10% of the shop visits that we -- that shoppers that we completed were by external third-party network. And that is obviously a very profitable business. And if you look on a sold basis, about 25% of the shop visits that are sold are with an external third-party network. So those are -- that's an important data point because that means that spare part sales for LEAP should grow over time. So that should be a positive here for 2025, and we'll reflect that in our guidance as we provide that in January.
Lawrence Culp: Seth, two other things I would just add that we want to keep in mind. One, the 9X delay in EIS is important to understand. But as I said earlier, we really haven't changed what we're doing. We'll be ramping deliveries of that engine next year, maybe at a slower rate than was anticipated. But nonetheless, we'll be ramping. That will create a bit of a headwind, but also perhaps there's a bit of an offset, maybe and then some. Recall what we said last quarter relative to the CFM56 utilization, it will be higher for longer. That obviously helps us as it's helping us this year. |
2,388 | GE | 3 | 2,024 | 2024-10-22 07:30:00 | General Electric Company | 177,031 | Operator: Our next question comes from Scott Deuschle with Deutsche Bank.
Scott Deuschle: Hey, good morning.
Lawrence Culp: Good morning, Scott.
Scott Deuschle: Larry, has CES already received a large quantity of these new HPT blades for the LEAP 1A ahead of the certification? And then just to clarify, is that specific certification event, is it that event, which allows the company to drive this improvement in LEAP output in the fourth quarter? Or is it more multifaceted than that alone? Thank you.
Lawrence Culp: The new blade is in production. So it's not as if we're going to turn on that supply chain the moment we get served, right? That work is underway. If we had that component that part is certified, we'll be able to begin deliveries, but we really can't do that ahead of time. But again, without trying to put anyone in a box, we think that will happen in the relatively near future. That is an unlock, Scott, but please don't think that it is the unlock, right? It will help, most importantly, because it is part of that durability kit. That matters far more in the spirit of safety and quality than it does delivery. But because it is an easier blade to make upstream in the manufacturing processes, that will help us. But most of what we will deliver in the fourth quarter will really be on the back of the existing designs, what we supply into the aftermarket? So there are a host of things that have to happen and are happening in that regard. If there was one -- if there was a silver bullet here, we would have used it some time ago. It's multifaceted, but again, I'm encouraged by the progress that we're seeing the certification of the new blade just helps on top of all that.
Operator: Our next question comes from Gautam Khanna with TD Cowen.
Gautam Khanna: Hey, good morning guys.
Lawrence Culp: Good morning.
Rahul Ghai: Good morning. |
2,389 | GE | 3 | 2,024 | 2024-10-22 07:30:00 | General Electric Company | 177,031 | Gautam Khanna: Hey, good morning guys.
Lawrence Culp: Good morning.
Rahul Ghai: Good morning.
Gautam Khanna: I was wondering if you could frame up for us your expectations now for CFM shop visits over the next couple of years versus maybe that widebody, maybe if you could just tease that out a bit. |
2,390 | GE | 3 | 2,024 | 2024-10-22 07:30:00 | General Electric Company | 177,031 | Rahul Ghai: So Gautam, as we said, I think, on the last earnings call, we had expected the peak of shop visits to be in 2025 and then start declining in '26 and '27, right? Given what we are seeing now, we still expect the peak of shop visits in '25, but now to stay at that level to '27 and then start declining from that point on, again, at a gradual pace, right? So that's what our expectation is. Now keep in mind that our revenue growth will continue to grow for longer just given as we go into the second and third shop visits with price increases, everything else, so revenue still continues to grow. On the widebody side, GE90 is getting into the second shop visit. Keep in mind that 75% of that fleet has not seen the second shop visit. So that's what we are beginning to see now. And that spoke to the heavier work scopes that we've also previously discussed, which helped our revenue here in 2024 and will continue to grow over time as we transition to the second shop visits for GE90. So again, no change in outlook on GE90, I think the engine is performing well, things are coming in well. On the NX side, the shop visit are roughly, on a volume basis, we're expecting that to be flat over the next three to four years. And the primary reason for that is, even as the installed base is growing, the time on wing is doing a lot better than what you had initially expected. So the shop visits that were in the '25 to the '28 time frame have now moved out later in the decade. Again, that's good news for us. As you know, about 60% north of that portfolio is serviced by us and is in a long-term service contract. So fewer shop visits on the NX side improves the profitability of that program. So that's what our expectation is on NX. The shop visits are all going to happen. But given the time on wing improvement, they've kind of moved out of the '25 to the '28 time frame to more '28 to '31.
Operator: Our next question comes from Ken Herbert with RBC Capital Markets.
KenHerbert: Yes, hi. Good morning, Larry and Rahul. |
2,391 | GE | 3 | 2,024 | 2024-10-22 07:30:00 | General Electric Company | 177,031 | KenHerbert: Yes, hi. Good morning, Larry and Rahul.
Lawrence Culp: Good morning.
Ken Herbert: I wanted to just follow-up, Larry, specifically on your comment around the subset of priority sites grew material output or input, I guess, 18% sequentially, was that in line with your expectations? And I'm just curious, as you think about sort of applying FLIGHT DECK to the situation, how should that maybe improve as we think about fourth quarter and into 2025? |
2,392 | GE | 3 | 2,024 | 2024-10-22 07:30:00 | General Electric Company | 177,031 | Lawrence Culp: Ken, I think we were very pleased with the 18%, but we could have used more, right? Again, just in light of where demand is in the aftermarket and from a new make, from a ramp perspective. But I think the underlying approach is exactly what we're doing broadly. You've heard us talk before about the larger set of suppliers where we're particularly focused, our so-called top 15. And it goes beyond that over time, ultimately, to all of our suppliers. I think what we're finding is by really collaborating, again, not finger-pointing, but going in, putting our best technical, our best operational people at the store face to identify the constraints, really understand root cause and drive corrective actions, both permanent and temporary where appropriate, we're able to unlock capacity. Now given what we need to do between here and 2030 to support the aftermarket, to support new make, we're going to need to do more than that. But that that FLIGHT DECK effort, I think is what will help us deliver a better fourth quarter here and is really the foundation for 2025. We're clearly going to also need to complement that with fixed capacity investments. You've heard us talk about the $1 billion, for example, over the next five years that we intend to invest in our MRO network. That will be part of improving these deliveries. In turn, the development of the third-party network is also an important part of satisfying customer demand. But by going in and really understanding these issues, not arguing about them, not negotiating, but solving the problems, we know we're going to unlock that capacity. We're going to be better partners and, in turn, that will allow us to serve our customers ultimately.
Operator: Our last question comes from Noah Poponak with Goldman Sachs.
Noah Poponak: Hey, good morning everyone.
Rahul Ghai: Good morning, Noah.
Lawrence Culp: Good morning, Noah. |
2,393 | GE | 3 | 2,024 | 2024-10-22 07:30:00 | General Electric Company | 177,031 | Noah Poponak: Hey, good morning everyone.
Rahul Ghai: Good morning, Noah.
Lawrence Culp: Good morning, Noah.
Noah Poponak: Rahul, was there -- I guess is there a specific 777X 9x headwind that was in the 7.1 to 7.5 for 2025 that we should think about lifting up and moving beyond '25? Or is it more spread out than that? And can you quantify, put numbers on that? And then, I guess, just at the CES total margin, if I go to the high end of your new EBIT range for '24, the fourth quarter margin would be basically flat from the third, which I guess is a little surprising despite mix, but maybe there's more services catch-up in there and isn't as much mix headwind there as I was thinking? |
2,394 | GE | 3 | 2,024 | 2024-10-22 07:30:00 | General Electric Company | 177,031 | Rahul Ghai: So let me take that maybe in reverse order here, Noah, and just tell me if I don't get there. So as we think about the third to the fourth quarter transition in CES, a few things, right, the services, as you -- as we've discussed, obviously, strong services growth here in the fourth quarter. Just we had 12% year-to-date, projecting 15% for the full-year. So stronger growth here in the fourth quarter. Same thing with the OE growth as well, OE growth lamps. We do have the 9X shipments here in the fourth quarter, so that puts a little bit of pressure on the CES margins. And then we've got a step-up in R&D in the CES number as well. So those are the various puts and takes in the fourth quarter for 2024. Now on your 9X question, there was a specific headwind in that 7.1 to 7.5 number that we had provided. And as Larry just said a minute ago, there will be a 9X headwind in 2025. We are not able to quantify that just yet because we need to work the exact volume assumptions for '25 with Boeing. So we'll come back to it in January. And then as you think about that 9X headwind, it will grow for a period of time beyond that because as engine deliveries ramp, that headwind will grow, that specific headwind will grow. And until we start getting the cost out and all that and as I said a minute ago, we expect the program losses to peak here later in this decade in the program to be profitable by 2030. But again, that's one specific number. Obviously, there're many different puts and takes in the overall outlook for the business, including the strong services outlook that we've just discussed.
Blaire Shoor: Larry, any final comments? |
2,395 | GE | 3 | 2,024 | 2024-10-22 07:30:00 | General Electric Company | 177,031 | Blaire Shoor: Larry, any final comments?
Lawrence Culp: Blaire, thank you. And just to close here, thanks to everybody for being with us here the last hour. We take great pride at GE Aerospace and our heritage of innovation, and I'm confident the team is ready to deliver for our customers and rise to the challenge of creating a more sustainable future flight. Again, we appreciate your time today and your interest in GE Aerospace.
Operator: Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect. |
2,396 | GE | 2 | 2,024 | 2024-07-23 07:30:00 | General Electric Company | 177,031 | Operator: Good day, ladies and gentlemen, and welcome to the GE Aerospace Second Quarter 2024 Earnings Conference Call. At this time all participants are in a listen-only mode. My name is Liz, and I will be your conference coordinator today. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the program over to your host for today's conference, Blaire Shoor from the GE Aerospace Investor Relations team. Please proceed.
Blaire Shoor: Thanks, Liz. Welcome to GE Aerospace's second quarter 2024 earnings call. I'm joined by Chairman and CEO, Larry Culp; and CFO, Rahul Ghai. Many of the statements we are making are forward-looking and based on our best view of the world and our businesses as we see them today. As described in our SEC filings and website, those elements may change as the world changes. Now over to Larry. |
2,397 | GE | 2 | 2,024 | 2024-07-23 07:30:00 | General Electric Company | 177,031 | Lawrence Culp: (Audit Start) Blaire, thanks, and hello, everyone, from London near the Farnborough International Airshow for GE Aerospace's first earnings call as an independent company. GE Aerospace is an exceptional franchise with the industry's largest and growing commercial propulsion fleet and is the rotorcraft and combat engine provider of choice. Our installed base of 70,000 commercial and defense engine supports our aftermarket services business, representing about 70% of our revenues that's recurring, resilient and keeps us close to our customers. Our purpose has never been clearer. To invent the future of flight, lift people up and bring them home safely. Those last four words, bring them home safely, is a serious responsibility. At any point, there are 900,000 people in the sky with our technology under wing, which is why safety and quality are at the center of everything that we do. Our teams around the world understand it is our top priority in Paramount and FLIGHT DECK, our proprietary lean operating model. Here at Farnborough, the conversations we are having are energizing and focused on both the opportunities and the challenges the industry is facing as we work together to meet historic demand and build more sustainable solutions. We've had a productive few days, including widebody commitments from Turkish Airlines and National Airlines for GE90 engines and Japan Airlines for GEnx engines. We are also honored to have British Airways, a new GEnx customer, committing to six new Boeing 787s powered by our engines. The GEnx engine offers a 15% lower fuel burn compared to the CF6 and best-in-class time on wing, resulting in a 70% life of program win rate on the 87 platform. In narrowbody's, we are pleased, the LEAP-powered Airbus 321XLR was certified by the European Union Aviation Safety Agency, or EASA, just last week. The 320XLR marks the fifth member of the A320neo Family Aircraft powered by LEAP engines with expected entry into service later this year. LEAP, the narrowbody engine of choice offers |
2,398 | GE | 2 | 2,024 | 2024-07-23 07:30:00 | General Electric Company | 177,031 | Aircraft powered by LEAP engines with expected entry into service later this year. LEAP, the narrowbody engine of choice offers 15% better fuel efficiency than the CFM56 and will deliver mature levels of time on wing later this year. In regionals, Embraer and GE Aerospace extended our agreement for new CF34 engine deliveries through the end of this decade. This agreement strengthens our partnership as the sole-source engine on the E175 and supports the continued growth of regional jets. Keeping an eye towards the future, this week at the show, we've shared a number of updates about the CFM RISE program. RISE is the suite of pioneering technologies, including Open Fan, Compact Core, hybrid electric systems and alternative fuels. We've continued to mature these technologies, moving for component-level evaluations to more module level tests. For example, with our partner, Safran, we've demonstrated the aerodynamic and acoustic performance of the Open Fan design with more than 200 hours of wind tunnel tests. Additionally, we've announced a new agreement with the U.S. Department of Energy to expand supercomputing capabilities, which will further advance Open Fan design. The Open Fan is the most promising engine technology to help the industry reduce emissions, designed to meet or exceed customer expectations for durability and deliver a step change in fuel efficiency. Turning to some of the key takeaways on our second quarter performance. Our team delivered double-digit growth across orders, operating profit and free cash flow, while revenue was impacted by lower output. With FLIGHT DECK, we are well positioned to accelerate actions to deliver on our priorities for today, tomorrow and in the future. In Commercial Engines & Services, or CES, air traffic trends remain positive, supporting our services growth and overall profit, which was up more than 20%. Profit growth was driven by 14% internal shop visits growth and improved pricing. In Defense & Propulsion Technologies, or DPT, we delivered very strong profit |
2,399 | GE | 2 | 2,024 | 2024-07-23 07:30:00 | General Electric Company | 177,031 | internal shop visits growth and improved pricing. In Defense & Propulsion Technologies, or DPT, we delivered very strong profit growth, up more than 70% year-over-year. Services growth in Defense & Systems and profit improvement in Propulsion & Additive Technologies drove this increase. Overall, a very solid quarter and first half. And my thanks go out to the entire global GE Aerospace team. Day in, day out, we are focused on delivering for both our airline and airframer customers who simply want and need more of our products and services. While we've made progress in services this quarter, our new engine output was disappointing, down 20% sequentially. It's a clear challenge that we are facing head on, accelerating the use of FLIGHT DECK in partnership with our suppliers as we work to solve the ongoing supply chain constraints. Last quarter, we shared that the common denominator impacting growth across both services and new engines is constrained material supply with 80% of material input shortages tied to nine suppliers across 15 supplier sites. This remains our focus today. We have deployed more than 550 of our engineering and supply chain resources into the supply base to use FLIGHT DECK to work hand-in-hand with our suppliers to identify and resolve constraints. We've made significant improvements in many areas and more than two-thirds of these sites, material flow more than doubled sequentially and is currently no longer constraining deliveries. We are grateful for their collaboration, but there is still more to do in the second half. And we've sharpened our focus on a subset of the remaining priority sites they are still constraining our output. We are making some progress, but not enough to meet demand. I've personally visited several of these sites, and I'm confident we can partner with our suppliers to drive faster progress. For example, earlier this month, we partnered with one of the priority suppliers in a joint Kaizen focused on addressing a key constraint. Our supply chain and engineering teams |
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