Latest news with #CommercialEngines&Services
Yahoo
23-04-2025
- Business
- Yahoo
GE Aerospace (GE) Q1 2025 Earnings Call Highlights: Strong Profit Growth Amid Tariff Challenges
Orders Growth: Up 12%. Revenue Growth: Up 11%. Profit: $2.1 billion, up 38%. Margins: 23.8%. Earnings Per Share (EPS): $1.49, up 60% year over year. Free Cash Flow: $1.4 billion. Commercial Engines & Services Revenue Growth: Up 17%. Defense Units Growth: Up 5%. Defense Profit Growth: Up 16%. R&D Spending: Approximately $3 billion annually. Backlog: Over $170 billion. Commercial Services Backlog: Over $140 billion. Spare Parts Revenue Growth: Up more than 20%. Internal Shop Visit Revenue Growth: Up 11%. LEAP External Shop Visits Growth: Over 60%. Guidance for 2025: Revenue growth low double-digit, profit $7.8 billion to $8.2 billion, EPS $5.10 to $5.45, free cash flow $6.3 billion to $6.8 billion. Warning! GuruFocus has detected 5 Warning Sign with GE. Release Date: April 22, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. GE Aerospace (NYSE:GE) reported a strong start to 2025 with orders up 12% and revenue growing 11%, driven by double-digit growth in both services and equipment. The company achieved a significant profit increase of 38% to $2.1 billion, leading to expanded margins of 23.8%. Commercial Engines & Services (CES) saw a 31% increase in orders and a 17% rise in revenue, contributing to a 35% growth in operating profit year over year. Defense & Propulsion Technologies (DPT) experienced a solid quarter with defense units growing 5% and profit increasing 16%. GE Aerospace (NYSE:GE) is investing $1 billion in US manufacturing and hiring over 5,000 US workers, supporting domestic manufacturing revitalization efforts. Heightened tariffs are expected to result in additional costs, with GE Aerospace (NYSE:GE) estimating a $500 million impact despite efforts to mitigate it. Spare parts delinquency has increased over two times year over year, indicating challenges in converting orders to revenue due to supply chain dynamics. The company is taking a cautious approach with a slower second half expected, resulting in departures up low-single digits for the full year. Total engine units were down 6%, with LEAP engine deliveries down 13%, attributed to a slower start to material inputs. The macroeconomic backdrop remains uncertain, with potential impacts from tariffs, a slowdown in airframer delivery schedules, and a global recession not factored into the guidance. Q: Can you comment on the interactions with the administration regarding tariffs and how this might play out over time? A: H. Lawrence Culp, CEO, explained that GE Aerospace has been advocating for a return to a zero-tariff regime, emphasizing the $75 billion trade surplus the sector enjoys due to this approach. While there are many potential scenarios, the company is preparing for a $500 million headwind in 2025 due to tariffs and is taking cost control and pricing actions to mitigate this impact. Q: How should we think about the margin cadence in Q2 and the second half, considering the tariffs? A: Rahul Ghai, CFO, noted that GE Aerospace had a strong start to the year and expects this momentum to continue into Q2, with revenue growth better than Q1 and profit dollars flat to sequentially up. For the second half, they are embedding conservatism due to macroeconomic uncertainties and tariffs, but still expect year-over-year profit growth. Q: What are the assumptions for departures in the second half of the year, and how might this affect spares and shop visits? A: CEO Larry Culp mentioned that while departures held up well in Q1, they are taking a conservative view for the second half, anticipating potential softening in US departures. However, it typically takes two to four quarters for such slowdowns to impact their operations significantly. Q: Can you elaborate on your pricing strategy, especially in light of tariffs? A: CFO Rahul Ghai stated that GE Aerospace plans to implement typical catalog price increases in the summer, aiming for mid to high single-digit increases. Additionally, they are considering a temporary surcharge to recover tariff costs, alongside SG&A cost control actions. Q: Was there any pre-buying of spare parts in Q1, and can you provide details on widebody versus narrowbody dynamics? A: Rahul Ghai confirmed there were no pre-buys in Q1. LEAP engine shop visits are expected to grow over 30%, with the external channel increasing its share. CFM56 shop visits are expected to grow mid-single digits, with LEAP driving higher percentage growth. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.
Epoch Times
23-04-2025
- Business
- Epoch Times
GE Aerospace Reports Strong Sales as It Returns to Manufacturing Roots
News Analysis As GE Aerospace signals a return to its roots in manufacturing, company revenues rose across all business segments. The company's stock rose more than 6 percent on April 22 on better-than-expected first-quarter results. On April 22, the Ohio-based aircraft supplier Orders were strong for both equipment and services. At Commercial Engines & Services (CES), the company secured a significant engine commitment from Japanese airline All Nippon Airways for more than 75 LEAP (Leading Edge Aviation Propulsion) engines to power its fleet of 13 Airbus A321neo and up to 22 Boeing 737 MAX aircraft. Total operating profit was $2.1 billion, up 38 percent and above FactSet's consensus of $1.9 billion. The profit margin reached 22.6 percent, up 40 basis points from a year earlier. 'GE Aerospace had a strong start to 2025 with orders and revenue up double digits, driven by commercial services, and adjusted EPS [earnings per share] up 60 percent,' said GE CEO H. Lawrence Culp, Jr. Related Stories 4/16/2025 4/11/2025 Georgios Koimisis, an associate professor of finance, told The Epoch Times that the solid increase in new orders helped boost GE Aerospace's momentum, especially in its commercial engine business. The company's first-quarter results arrived nearly a year and a half after the company was spun off from the old GE and debuted on Wall Street, suggesting it may be better off as a standalone entity than as part of a conglomerate. This separation allowed GE Aerospace to return to its roots in manufacturing efficiency, quality, and innovation, and to cope with a challenging macroeconomic environment, as management described during the earnings conference call. Culp said the company has taken strategic actions, such as controlling costs and leveraging available trade programs, to cope with the macroeconomic dynamics. The company forecast low double-digit revenue growth and operating profit between $7.8 billion and $8.2 billion for the year. 'Based on what we know today, these actions, along with our solid first quarter and commercial services backlog of over $140 billion, enable us to maintain our full-year guidance,' he The rising backlog highlights the company's reliance on organic growth: the expansion of its core customer base. This business strategy supports and reinforces efficiency, product quality, and innovation. For instance, the company received a commitment from Malaysia Aviation Group for 60 CFM LEAP engines to power 30 Boeing 737 MAX aircraft. In addition, it signed an agreement with Korean Air for up to 30 Boeing 787-10s and 20 777-9s using its GEnx and GE9X engines. GE Aerospace's reliance on organic growth differs radically from the old GE business strategy, which relied on non-organic growth and the acquisition of other companies at inflated prices, sometimes outside its core business. This strategy created a few synergies but also generated plenty of management issues as the conglomerate became too large to be managed effectively. As a result, old GE fell into a value trap: a company with a low valuation that continued to grow, destroying rather than creating shareholder value. Investors fled its shares, which underperformed the broader market. That was a turning point for the GE conglomerate, as its leadership split it into three companies: GE Aerospace, GE Vernova, and GE HealthCare. This move helped lift GE Aerospace's stock. Its shares have risen about 26 percent over the past year, outperforming the S&P 500, which has gained 5.5 percent during the same period. The company's share rose 6.07 percent during the April 22 trading session, boosted by its better-than-expected first-quarter earnings. Koimisis remains optimistic about the future of GE Aerospace. 'GE is also planning to invest heavily in U.S. manufacturing and to hire thousands of new workers, signaling confidence in future growth,' he said. 'It also shows that the company aims at making its supply chain more reliable.' However, he said tariffs are a serious concern, as they could pressure the company's profits later in the year. 'While GE is taking steps to reduce the impact of tariffs by adjusting prices and improving operations, the risk could grow if trade tensions escalate,' he said.
Yahoo
22-04-2025
- Business
- Yahoo
GE Aerospace Expands Q1 Operating Margins, CEO Talks Cost Control To Mitigate Tariff Impact
GE Aerospace (NYSE:GE) shares are trading higher in the premarket on Tuesday after it reported first-quarter 2025 adjusted revenue growth of 11% year-over-year to $9 billion, in line with the consensus of $9 billion. GAAP revenue was $9.935 billion (+11% YoY). Commercial Engines & Services revenue was $6.977 billion (+14% YoY), and Defense & Propulsion Technologies revenue totaled $2.324 billion (+1% YoY). Total orders increased 12% YoY to $12.3 billion, with Commercial Engines & Services +15% YoY and Defense & Propulsion Technologies flat. GE Aerospace's adjusted operating profit margin expanded 460 bps to 23.8%, with an adjusted operating profit of 2.146 billion, up 38% YoY in the quarter. Adjusted EPS for the quarter was $1.49 (+60% Y/Y), beating the consensus of $1.26. Related: During the quarter, GE Aerospace boosted material inputs by 8% through its FLIGHT DECK platform, supporting a 17% increase in Commercial Engine Services and 5% growth in Defense. GE Aerospace Chairman and CEO H. Lawrence Culp, Jr commented, 'The macroeconomic dynamics we are operating in today require us to take a number of strategic actions, such as controlling costs and leveraging available trade programs. Based on what we know today, these actions, along with our solid first quarter and commercial services backlog of over $140 billion, enable us to maintain our full-year guidance.' 2025 Guidance reaffirmed: GE Aerospace expects adjusted revenue growth in the low double digits and adjusted EPS of $5.10 – 5.45 vs. the $5.10 consensus. The company expects adjusted operating profit of $7.8 billion—$8.2 billion and adjusted Free Cash Flow of $6.3 billion—$6.8 billion. GE Aerospace stated that its 2025 guidance now factors in the impact of announced tariffs and delayed spare engine deliveries. The company expects full-year departures to grow in the low single digits, down from its mid-single-digit forecast. The outlook excludes potential changes in airframer schedules, further tariff hikes, or a global recession. The company announced a $1 billion investment in U.S. manufacturing and technology and plans to hire approximately 5,000 workers. It also secured major engine agreements with ANA, Malaysia Aviation, and Korean Air and a U.S. Air Force contract worth up to $5 billion. Price Action: GE shares are up 5.07% at $187.40 premarket at the last check on Tuesday. Photo by Jonathan Weiss via Shutterstock Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today's competitive market. Get the latest stock analysis from Benzinga? GE AEROSPACE (GE): Free Stock Analysis Report This article GE Aerospace Expands Q1 Operating Margins, CEO Talks Cost Control To Mitigate Tariff Impact originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. Sign in to access your portfolio
