GE Aerospace (NYSE:GE) released first-quarter financial results and hosted an earnings call on Tuesday. Read the complete transcript below.
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Summary
General Electric Co reported a strong start to 2026, with orders up 87% and revenue increasing by 29%, driven by significant growth in CES services and DPT orders.
Operating profit grew by 18%, and EPS increased by 25% to $1.86, with free cash flow rising by 14%.
The company is reducing its full-year departures outlook due to geopolitical uncertainties, but it maintains its guidance, trending towards the high end of the range.
General Electric Co is actively investing in its U.S. manufacturing sites and supply base, with plans to invest $1 billion for the second consecutive year to accelerate engine deliveries and ramp part production.
The company highlighted a robust commercial services backlog of over $170 billion, with services revenue expected to increase due to strong aftermarket demand.
Management expressed confidence in navigating the current geopolitical and economic challenges, emphasizing the resilience provided by a diverse and young fleet.
Full Transcript
OPERATOR
Good day ladies and gentlemen and welcome to the GE Aerospace first quarter 2026 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, Blair Schorr from the GE Aerospace Investor Relations Team. Please proceed.
Blair Schorr (Investor Relations Team Member)
Thanks, Liz. Welcome to GE Aerospace’s first quarter 2026 earnings call. I’m joined by Chairman and CEO Larry Culp and CFO Rahul Guy. Many of the statements we’re making are forward looking and based on our best view of the world and our business 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 will speak to Total Company and corporate financial Results and guidance today on a non GAAP basis. Now over to Larry.
Larry Culp (Chairman and CEO)
Thanks, Blair. Good morning everyone. I want to start by addressing the conflict in the Middle East and the dynamic geopolitical environment our industry is navigating. While we’re hopeful for a peaceful resolution, we’re also embracing today’s reality. With safety our top priority, we’re focused every day on supporting our teams in the region and our customers globally. At GE Aerospace, we remain committed to our purpose. We invent the future of flight, lift people up and bring them home safely. Right now, nearly 1 million people are in flight with our technology under wing, a responsibility our 57,000 employees take seriously. Turning to our first quarter results, 2026 is off to a strong start. Orders were up 87% with CES nearly doubling and DPT up 67% including record defense orders for this decade. Revenue increased 29% driven by CES services and double digit growth in DPT. Operating profit grew 18% with both segments up double digits and EPS increased 25% to $1.86 with free cash flow up 14%. Flight Deck enabled us to improve output again with commercial services revenue up 39%, total engine deliveries up 43%. All the while, we’re continuously investing to improve time on wing and lower cost of ownership for our customers across our current fleet and for next generation technologies. I want to express a big thank you to both the GE Aerospace team and our supplier partners for their unwavering commitment to deliver for our customers. Turning to slide four and what we’re currently seeing in today’s operating environment. In the first quarter, global departures were up low single digits, including a high single digit decline in the Middle East which represents roughly 5% of our departures and for the balance of the year. We’ve assessed multiple scenarios to develop a range of outcomes with our current assumption that the conflict and its effects continue through the summer. As a result, we’re reducing our full year departures outlook from mid single digit growth to flat to low single digit growth. This includes a low double digit decline in the Middle East for the year with modest reductions to other regions. Based on our experience during the global financial crisis, the impact of services will likely lag changes in air traffic demand by several quarters, to be followed by a period of above average growth. We’re well positioned to navigate cycles with our backlog providing resilience through changes in air traffic, and we have a young and diverse fleet with leading programs in both narrowbody and widebody. For our largest program, the CFM56, about 2/3 of the the fleet is yet to undergo a second shop visit and utilization remains stable, supporting continued demand. Additionally, our defense business is supporting U.S. and allied warfighters. With our engines powering the Blackhawk, the Apache, the B1, the B2, the F15EX, the F16 and the Eurofighter. We’re seeing increased utilization since March, creating future aftermarket demand diving deeper into services and services orders and backlog. Our commercial services business is supported by a robust backlog of over $170 billion, up nearly $30 million since the end of 24, providing visibility into multi year demand and supporting our continued growth. Over the last 12 months, commercial services orders increased over 30%, including 49% growth in the first quarter. Within services, demand remains strong for spare parts which represent roughly 40% of surfaces revenue since the beginning of March, spare parts orders are up over 30% year over year and sequentially flat to the first two months of the first quarter. And even with over 25% revenue growth over the last five quarters, demand continues to exceed supply. As a result, spare parts delinquency, which represents shipments that have been delayed due to material availability constraints, is up roughly 70% since the end of 24. Given the sustained demand environment and our existing delinquency, we’re entering the second quarter with more than 95% of spare parts revenue already in backlog. Turning to internal shop visits, which represent roughly 60% of our service revenue, approximately 2/3 of the engines due for our projected shop visits for all of 26 are currently off wing either in our shops or waiting to be inducted. Additionally, we have high visibility into the engines which will come off wing over the next couple of quarters based on utilization trends and required removal thresholds. In concert with with the airlines, our pipeline of planned engine removals in the second and third quarters combined with engines that are currently off wing, exceeds our Shop Visit guide, providing ample demand to fulfill our outlook and DE risking our 2026 guide. Overall, we expect a limited impact on services, revenue and profit in 26. We’re holding our full year guidance across the board given the macro uncertainty, though, with our strong start to the year, we are trending toward the high end of that range. Shifting to slide 6 flight deck is fundamentally changing the way we operate and in times like these it matters even more. Collaborative problem solving with suppliers, airframers, airlines and lessors are key to this effort. For example, we recently hosted a key supplier at our Terre Haute, Indiana site, leveraging Flight Deck. We worked together to improve flow and reduce waste on their LEAP production line and they’ve since increased output by over 40%. Actions like these contributed to priority supplier material input, increasing double digits both sequentially and year over year again in the first quarter, resulting in the increased outputs I mentioned ago, including engines up 43% across our MRO network. We’re using Flight Deck to increase output, reduce turnaround times and lower the cost of shop visits. Take our McAllen, Texas site where we reduce LEAP high pressure turbine repair time by over 50% by redesigning the cell for better flow and we know AI will be an accelerator for Flight Deck. At our Lafayette, Indiana facility, we expanded the deployment of an AI based material assistant to predict shop visit work scopes for LEAP engines nine months in advance, building on the turnaround time reduction we’ve recognized in both our Selma and Malaysia sites. Collectively, our efforts improved shop visit turnaround times for both narrow body and widebody platforms year over year. With our growing installed base, we’re focused on expanding capacity to fulfill customer demand within the LEAP external network. Delta Tech Ops is now the first North American airline MRO provider licensed for both the LEAP-1A and LEAP-1B. And we just announced Iberia as our seventh premier mro. Supporting Growth in Europe More broadly, the Maintaining US Aerospace leadership requires sustained investment to meet customer demand. We recently announced plans to invest $1 billion in our U.S. manufacturing sites and supply base for the second consecutive year to help accelerate engine deliveries, ramp part production that extends time on wing and strengthen our defense industrial base. Additionally, $100 million will be invested in our external supplier base to provide equipment and tooling to increase capacity. These actions and investments are driving meaningful progress to increase services and equipment output. And while there’s more to do, we’re off to a strong start and position to ramp even further. Shifting to slide 7 our growing backlog reflects our commitment to deliver customer value. We’re investing to improve time on wing and cost of ownership. Nearly $200 million of our $1 billion investment in US manufacturing supports expanding capacity for LEAP durability upgrades and we’re making progress upgrading the fleet with durability kit now on over 30% of the Leap One A installed base. Growing our repair capability is critical to improve turnaround times and lower cost of ownership, as a repaired part can cost 50% less than a new part. At our Singapore repair facility, we’re investing $300 million to support new technologies and repair processes. Our customer driven approach is driving backlog growth with more than 650 commercial engine or over $1 billion in wins in the first quarter alone. This included extending our 50 plus year partnership with American as they celebrate their 100th anniversary this month. American recently committed to more than 300 LEAP-1A engines with options for 200 more to power future A321neo and A321XLR deliveries. United, also celebrating 100 years this month selected 300 GEnx engines for its 787 fleet, making it the largest GENX operator globally. And additionally, Delta committed to 60 GEnx engines with options for 60 more for its new 787 fleet, marking its first GenX selection. In services, we signed an agreement with ryanair covering approximately 2,000 CFM56 and LEAP engines, providing material support and MRO services to scale their in house capabilities consistent with our open MRO strategy and in defense, in support of the CH53K and the critical missions it performs for the US Marine Corps, we were awarded a $1.4 billion contract for additional T408 turboshaft engines. With continued momentum, we’re looking forward to what should be an exciting Farnborough airshow in July. Our experience with our current fleet is also informing next generation technology investment. RISE is central to that strategy and will enable improved efficiency without sacrificing durability this quarter. Together with the Civil Aviation Authority of Singapore and Airbus, we established the world’s first airport testbed for open fan technology as a part of the RISE program. This testing will validate how next gen engine architectures operate in real world airline environments and marks another step forward toward ground and flight tests later this decade in defense and systems. We also continue to execute with speed against high priority military needs in support of US and allied warfighters. This quarter deliveries were up 24% and we continue to receive awards across our family of small engines, a key growth area as programs progress. This included an award from the US Air Force to complete an initial design concept of the GEK 1500 in partnership with Kratos with potential applications across Unmanned Aerial Systems, Collaborative combat aircraft or ccas and missiles. This work is being informed by the maturity of the GEK 800, which completed successful altitude testing last fall. The team designed, built and tested the first GEK 800 in less than 12 months, testing the fifth iteration of the engine last summer. And we’re making progress with high end CCAs through our partnership with Shield AI for the expat Vehicle program, pairing our propulsion development, testing and certification expertise with their autonomous aircraft capabilities to accelerate delivery of mission ready capabilities. We also recently completed a preliminary design review on the Hybrid Electric Turbo Generator engine system for Beta Technologies MB250 VTOL autonomous aircraft. This confirms the engine concept and demonstrates the power of combining our technical expertise, accelerating key programs Stepping back We’re driving measurable progress on what matters most to our customers, ramping output and improving durability while reducing the cost of ownership, which supports their growth and ours. Rahul over to you Larry, thank you
Rahul Guy (Chief Financial Officer)
and good morning everyone. We started the year with over 20% top line and earnings growth. Orders were up 87% with CEs up 93% and TPT up 67%. Revenue increased 29% with CEs up 34% while DPT was up 19%. Operating profit was $2.5 billion, up approximately $380 million driven by services volume and price margins, as expected, decreased 200 basis points to 21.8% from the impact of install engine growth, investments and inflation. EPS was $1.86, up 25% from increased operating profit, a lower tax rate and a reduced share count. Free cash flow was $1.7 billion, up 14%, largely driven by higher earnings. Working capital and ADNA combined was nearly a $500 million source with strong utilization billings partially offset by the expected timing of compensation payments. Going deeper on our 25% EPS growth this quarter, growth in operating profit drove $0.29 or nearly 80% of the improvement in EPS with increased profit in CES and dpt. This was partially offset by higher corporate cost and eliminations which were up around $120 million, roughly half from an increase in eliminations and half from an increase in environmental health and safety expenses off a low base, a lower tax rate and and reduction in share count drove an additional 10 cents of EPS growth. Tax rates decreased 3 points to 14.7% from earnings mix and benefit from recent tax legislation. Share count was down 24 million from our previously announced capital allocation actions. Turning to ces in the first quarter, orders grew 93% with services up 49% and equipment more than tripling to nearly $8 billion. Revenue increased 34%, services grew 39% with internal shop visit revenue up 35% from higher volume including leap internal shop visit growth of over 50% and increased work scopes. Spare parts sales were also up over 25% from improved material availability and growth of external leap shop visits. Equipment revenue grew 20% with engine deliveries up 50% including LEAP up 63%. Widebody deliveries were also up over 25% driven by GenX which was up even more. Profit was $2.4 billion, up nearly $450 million from higher services volume price and the absence of charges related to estimated profitability on long term service agreements taken in first quarter of 2025. As expected, margins were down 230 basis points to 26.4% driven by install engine growth including Minex shipments and investments. Both install engine …
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