GE Aerospace Q4 FY2025 earnings call

2025 was an outstanding year for GE Aerospace with operational progress, strong financial commitments, and continued investment. The T&O team made a meaningful impact with supplier partnerships growing over 40% year over year in 2025. The company is customer-driven, with progress on engine durability such as the GE NX achieving milestones and the LEAP 1A durability kit improving time on wing. At the Dubai Air Show, over 500 engine wins were recorded. The MRO network saw improvements like converting to flow production to improve turnaround times.

In the fourth quarter, GE Aerospace's CES segment saw orders up 76% and revenue increase 24%. For the full year, CES orders were up 35% and revenue grew 24%, with services orders up 27% and revenue up 26%. The DPT segment had orders up 61% in the fourth quarter and 19% for the full year, with revenue up 13% in the fourth quarter and 11% for the full year.

GE Aerospace expects low double-digit revenue growth in 2026. Operating profit is projected to be between $9.85 billion and $10.25 billion. EPS is expected to be in the range of $7.10 to $7.40. Free cash flow is anticipated to be from $8 billion to $8.4 billion, with conversion well above 100%.

Q: Elaborate on the commercial aftermarket backdrop and mid-teen services growth guidance for 2026 A: Larry Culp and Rahul Ghai mentioned continued momentum in the aftermarket, with spare parts growth driven by narrow body, and mid-teen services growth expected due to factors like increased work scopes and price. Rahul also noted spare parts delinquency was up 50% from 2024 and retirements trending better.

Q: About LEAP breakeven or profitability in 2026 A: Larry Culp and Rahul Ghai stated that LEAP original equipment is expected to be profitable in 2026 as per prior plans.

Q: Turnaround times improvement for engines like CFM56 and GE90 A: Douglas Harnett was told turnaround time improvement is driven by material availability and efficient shop floor execution. It shows in top line growth and productivity, as idle time due to waiting for parts is reduced.

Q: GE9X headwind and quarterly earnings cadence in 2026 A: Rahul Ghai said GE9X losses in 2026 will double year over year, and the first quarter is expected to have strong revenue growth with engine and shop visit output growing substantially.

Q: CES profit guidance and margin trajectory A: Rahul Ghai discussed that CES profit guidance is affected by services growth, OEM shipments, spare engine ratio, and NINEX shipments, with margins expected to be flattish but on a good trajectory.

Q: R&D spending and investments A: Larry Culp mentioned R&D is spent on engine improvement like durability kits and future flight programs such as the RISE program, with a focus on innovation and technology.

Q: CFM56 retirements and shop visit peak A: Larry Culp said CFM56 retirements are trending lower than expected, with shop visits expected to be in the 2,300 to 2,400 range through 2028 and no big decline expected by 2030.

Q: Eptai agreement and free cash flow bridge A: Larry Culp talked about the Eptai agreement supporting third-party aftermarket optionality, and Rahul Ghai said there's nothing abnormal in 2026 free cash flow expectations with slower inventory growth and less contract asset favorability offsetting each other.

Q: Customer behavior in aftermarket and pricing A: Larry Culp said there's no major pricing pushback, with robust demand post-pandemic leading to expanded workscopes while maintaining safety and quality