Q3 2023 General Electric Co Earnings Call
Operator: Good day, ladies and gentlemen, and welcome to the General Electric Q3 2023 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, Steve Winoker, Vice President of Investor Relations. Please proceed.
Good day, ladies and gentlemen, and welcome to the General Electric Q3 2023 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, Steve Winoker, Vice President of Investor Relations. Please proceed.
Speaker 1: transcript
Speaker 1: Good day, ladies and gentlemen, and welcome to the General Electric third quarter 2023 earnings conference call.
Good day, ladies and gentlemen, and welcome to the General Electric third quarter 2023 earnings Conference call.
Speaker 1: transcript
Speaker 1: At this time, all participants are in a listen-only mode. My name is Liz, and I will be your conference coordinator today.
At this time all participants are in a listen only mode.
My name is Liz and I'll be your conference coordinator today.
Speaker 1: transcript
Speaker 1: 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.
If you have experienced issues with the webcast slides refreshing or there appears to be delays in the flight advancement. Please sit at five on your keyboard to refresh.
As a reminder, this conference is being recorded.
Speaker 1: transcript
Speaker 1: I would now like to turn the program over to your host for today's conference, Steve Winneker, Vice President of Investor Relations. Please proceed.
I would now like to turn the program over to your host for today's conference, Steve Winokur, Vice President of Investor Relations. Please proceed.
Steve Winoker: Thanks Liz. Welcome to GE's Q3 2023 earnings call. I'm joined by Chairman and CEO Larry Culp and CFO Rahul Ghai. Some 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 on our website, those elements may change as the world changes over to Larry.
Steve Winoker: Thanks Liz. Welcome to GE's Q3 2023 earnings call. I'm joined by Chairman and CEO Larry Culp and CFO Rahul Ghai. Some 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 on our website, those elements may change as the world changes over to Larry.
Speaker 2: transcript
Speaker 2: Thanks Liz. Welcome to GE's third quarter 2023 earnings call. I'm joined by Chairman and CEO Larry Culp and CFO Rahul Ghai. Some 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 on our website, those elements may change as the world changes. Over to Larry. Steve, thank you.
Thanks, Liz and welcome to Ge's third quarter 2023 earnings call I'm joined by Chairman and CEO , Larry Culp and CFO Rahul guide some 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 on our website those elements may change.
As the world changes over to Larry.
Larry Culp: Steve, thank you and good morning everyone. Before we start, I want to reiterate that the GE team stands firmly with.
Larry Culp: Steve, thank you and good morning everyone. Before we start, I want to reiterate that the GE team stands firmly with.Our employees, customers, and all those impacted.By the brutal Hamas attacks on Israel in the subsequent war. Our priority has been the safety ofGE employees in the region. We're doing everything possible to support them and their families.Last week GE announced a $500,000 contribution to help with the humanitarian efforts for the many people in Israel, Gaza, and the surrounding areas impacted.By these horrific events.Terrorism has no place in our society.Like so many, I'm devastated by.The loss of lives, violence, and suffering of innocent people.
Steve Thank you and good morning, everyone.
Speaker 2: transcript
Speaker 2: Before we start, I want to reiterate that the GE team stands firmly with our employees, customers and all those impacted by the brutal Hamas attacks on Israel in the subsequent war.
Before we start I want to reiterate that the GE team stands firmly with our employees customers and all of those impacted by the brutal Hamas attacks on Israel and the subsequent work.
Steve Winoker: Our employees, customers, and all those impacted.
Larry Culp: By the brutal Hamas attacks on Israel in the subsequent war. Our priority has been the safety of.
Speaker 2: transcript
Speaker 2: Our priority has been the safety of GE employees in the region. We're doing everything possible to support them and their families.
Our priority has been the safety of GE employees in the region.
Steve Winoker: GE employees in the region.
Larry Culp: We're doing everything possible to support them and their families.
We're doing everything possible to support them and their families.
Steve Winoker: Last week GE announced a $500,000 contribution to help with the humanitarian efforts for the many people in Israel, Gaza, and the surrounding areas impacted.
Speaker 2: transcript
Speaker 2: Last week, GE announced a half-a-million-dollar contribution to help with the humanitarian efforts for the many people in Israel, Gaza, and the surrounding areas impacted by these horrific events.
Last week, GE announced that half a million dollar contribution to help with the humanitarian efforts for the many people in Israel Gaza and the surrounding areas impacted by these horrific events.
Larry Culp: By these horrific events.
Steve Winoker: Terrorism has no place in our society.
Terrorism has no place in our society.
Larry Culp: Like so many, I'm devastated by.
Speaker 2: transcript
Speaker 2: And like so many, I'm devastated by the loss of lives, violence, and suffering of innocent people.
Steve Winoker: The loss of lives, violence, and suffering of innocent people.
Like so many I'm devastated Michael walks it lives violence and suffering of innocent people.
Larry Culp: Turning to the quarter, GE delivered a.
Turning to the quarter, GE delivered a.Very strong performance and we're raising full-year guidance again.GE Aerospace continues to experience rapid growth driven by robust demand and solid execution largely in commercial engines and services.Another significant quarter for the team Our fleet of 41,000 commercial engines and.26,000 rotorcraft and combat engines continues to expand as we work to define the future of flight.
Speaker 2: transcript
Speaker 2: Turning to the quarter, GE delivered a very strong performance and we're raising full year guidance again.
Turning to the quarter GE delivered a very strong performance and we're raising full year guidance again.
Steve Winoker: Very strong performance and we're raising full-year guidance again.
Larry Culp: GE Aerospace continues to experience rapid growth driven by robust demand and solid execution largely in commercial engines and services.
Speaker 2: transcript
Speaker 2: GER space continues to experience rapid growth, driven by robust demand and solid execution, largely in commercial engines and services, another significant quarter.
<unk> aerospace continues to experience rapid growth driven by robust demand and solid execution largely in commercial engines and services.
Steve Winoker: Another significant quarter for the team.
Other significant quarter for the team.
Larry Culp: Our fleet of 41,000 commercial engines and.
Speaker 2: transcript
Speaker 2: Our fleet of 41,000 commercial engines and 26,000 rotorcraft and combat engines continues to expand as we work to define the future of flight.
Our fleet of 41000 commercial engines, and 26000 rotorcraft and combat engines continues to expand as we work to define the future of flight.
Steve Winoker: 26,000 rotorcraft and combat engines continues to expand as we work to define the future of flight.
Larry Culp: Today we're navigating a still challenging supply chain environment to deliver for and support our customers. Year to date, commercial engine deliveries are.
Today we're navigating a still challenging supply chain environment to deliver for and support our customers. Year to date, commercial engine deliveries are.Up 30% across GE and Safran's MRO shops. This quarter we've improved LEAP quick turn shop visits over 30% year over year.And sequentially.For tomorrow, we're building our backlog and sales pipeline during unprecedented industry growth.
Today, we're navigating a still challenging supply chain environment to deliver for and support our customers.
Speaker 2: transcript
Speaker 2: Today we're navigating a still challenging supply chain environment to deliver for and support our customers. Year to date commercial engine deliveries are off.
Steve Winoker: Up 30% across GE and Safran's MRO shops. This quarter we've improved LEAP quick turn shop visits over 30% year over year.
Year to date commercial engine deliveries are up 30%.
Speaker 2: transcript
Speaker 2: across GE and Safran's MRO shops this quarter. We've approved LEAP quick turn shop visits over 30% year over year and sequential.
Across GE and Safran is MRO shops. This quarter, we've accrued leap quick turn shop visits over 30% year over year and sequentially.
Larry Culp: And sequentially.
Steve Winoker: For tomorrow, we're building our backlog and sales pipeline during unprecedented industry growth.
Speaker 2: transcript
Speaker 2: For tomorrow, we're building our backlog and sales pipeline during unprecedented industry growth.
For Tomorrow, we're building, our backlog and sales pipeline during unprecedented industry growth.
Larry Culp: Recently Air Canada ordered 36 GEnx-1B engines plus four spares. Building on GEnx's rich history is the.
Recently Air Canada ordered 36 GEnx-1B engines plus four spares. Building on GEnx's rich history is the.Fastest selling high thrust engine with over 50 million flight hours.For the future, we're investing in R and D and developing next-generation technologies.
Speaker 2: transcript
Speaker 2: Recently, our Canada ordered 36 GE NX-1B engines, plus four spares. Building on GE NX's rich history is the fastest selling high-trust engine, with over 50...
Recently Air Canada ordered 36, GE Nx, one b engines plus for spares building on <unk> Rich history is the fastest selling high thrust engine.
Steve Winoker: Fastest selling high thrust engine with over 50 million flight hours.
With over 50 million flight hours.
Steve Winoker: For the future, we're investing in R and D and developing next-generation technologies.
Speaker 2: transcript
Speaker 2: For the future, we're investing in R&D and developing next generation technology.
For the future, we're investing in R&D and developing next generation technologies.
Larry Culp: For example, we're advancing full system testing.
For example, we're advancing full system testing.For our hybrid electric systems at our Electric Power Center in Ohio.We're also collaborating with industry partners and.NASA on an EcoDemonstrator program to measure sustainable aviation fuel impact on the environment, particularly high altitude emissions.
Speaker 2: transcript
Speaker 2: For example, we're advancing full system testing for our hybrid electric systems at our electric power center in Ohio.
For example, we are advancing full system testing for our hybrid electric systems at our electric power Center in Ohio.
Steve Winoker: For our hybrid electric systems at our Electric Power Center in Ohio.
Larry Culp: We're also collaborating with industry partners and.
Speaker 2: transcript
Speaker 2: We're also collaborating with industry partners and NASA on an eco demonstrator program to measure sustainable aviation fuel impact on the environment, particularly high altitude emissions.
We're also collaborating with industry partners and NASA on an eco demonstrator program to measure of sustainable aviation fuel impact on the environment, particularly high altitude emissions.
Steve Winoker: NASA on an EcoDemonstrator program to measure sustainable aviation fuel impact on the environment, particularly high altitude emissions.
Larry Culp: Our growth opportunities extend beyond commercial. In defense, we're pleased the US Army.
Our growth opportunities extend beyond commercial. In defense, we're pleased the US Army.Has accepted the first two T901 flight test engines for the Future Attack Reconnaissance Aircraft prototypes.The T901 will also upgrade the US.Army's Apache and Black Hawk helicopters, providing 50% more power, reduced life cycle costs Lower fuel consumption. We've been selected for development work.On the cockpit voice and flight data recorder systems for the Future Long-Range Assault Aircraft program.
Speaker 2: transcript
Speaker 2: And our growth opportunities extend beyond commercial. In defense, we're pleased the U.S. Army has accepted the first two T-901 flight test engines for the future attack reconnaissance aircraft prototype.
And our growth opportunities extend beyond commercial and defense. We're pleased that the U S. Army has accepted the first two T 901 flight test engines for the future attack reconnaissance aircraft prototypes.
Steve Winoker: Has accepted the first two T901 flight test engines for the Future Attack Reconnaissance Aircraft prototypes.
Larry Culp: The T901 will also upgrade the US.
Speaker 2: transcript
Speaker 2: The T-901 will also upgrade the US Army's Apache and Black Hawk helicopters.
The tier one will also upgrade the U S Army's Apache in Black Hawk helicopters, providing 50% more power reduce lifecycle costs and lower fuel consumption.
Steve Winoker: Army's Apache and Black Hawk helicopters, providing 50% more power, reduced life cycle costs.
Speaker 2: transcript
Speaker 2: providing 50% more power, reduced life cycle costs, and lower fuel consumption.
Larry Culp: Lower fuel consumption. We've been selected for development work.
Speaker 2: transcript
Speaker 2: And we've been selected for development work on the cockpit voice and flight data recorder systems for the future long range assault aircraft program.
Steve Winoker: On the cockpit voice and flight data recorder systems for the Future Long-Range Assault Aircraft program.
And we've been selected for development work on the cockpit voice in flight data recorder systems for the future long range assault aircraft program.
Larry Culp: Next generation programs like these demonstrate how.
Next generation programs like these demonstrate how.GE's rotorcraft programs enable the military and our allies to take on more challenging missions today and in the future.We're pleased to see Congress recognizing.This important work by including funding for advanced engine development like the XA100 in both the House and Senate fiscal year 2024 defense appropriation bills.
Speaker 2: transcript
Speaker 2: Next generation programs like these demonstrate how GE's rotorcraft programs enable the military and our allies to take on more challenging missions today and in the future.
Next generation programs like these demonstrate our ge's rotorcraft programs enabled the military and our allies to take on more challenging missions today and in the future.
Steve Winoker: GE's rotorcraft programs enable the military and our allies to take on more challenging missions today and in the future.
Larry Culp: We're pleased to see Congress recognizing.
Speaker 2: transcript
Speaker 2: And we're pleased to see Congress recognizing this important work by including funding for advanced engine development like the XA-100 in both the House and Senate Fiscal Year 24 Defense Appropriations Bill.
And we're pleased to see Congress recognizing this important work by including funding for advanced engine development like the Xa 100 in both the house and Senate fiscal year 'twenty for defense appropriation bills.
Steve Winoker: This important work by including funding for advanced engine development like the XA100 in both the House and Senate fiscal year 2024 defense appropriation bills.
Larry Culp: However, even with these strong results, we're far from satisfied. Through our lean transformation, we're making real.
However, even with these strong results, we're far from satisfied. Through our lean transformation, we're making real.Progress improving flow and eliminating waste.For example, our team in Pune, India.Has increased output of LEAP high pressure turbine manifolds by 3x. But we need to do more, as do our suppliers. Given the pace of demand for both.Aftermarket services and new engine deliveries, there are pockets of improvement now. Material input increased double digits sequentially supportingSpare parts delivery, which was up significantly year over year. We're working within our own plants and in partnership with our suppliers to deliver sequential improvements in output and turnaround times.Day by day, week by week.
However, even with these strong results were far from satisfied.
Speaker 2: transcript
Speaker 2: However, even with these strong results, we're far from satisfied.
Unknown Executive: Good day, ladies and gentlemen, and welcome to the General Electric Third Quarter 2023 earnings conference call. At this time, all participants are in a listen only mode.
Speaker 2: transcript
Speaker 2: Through our lean transformation, we're making real progress improving flow and eliminating weight.
Through our lean transformation, we're making real progress improving flow and eliminating waste for.
Steve Winoker: Progress improving flow and eliminating waste.
Larry Culp: For example, our team in Pune, India.
Speaker 2: transcript
Speaker 2: For example, our team in Pune, India has increased output of high pressure turbine manifolds by three times. But we need to do more.
Steve Winoker: Has increased output of LEAP high pressure turbine manifolds by 3x.
For example, our team in Pune, India has increased output of leap high pressure turbine manifolds by three times.
Liz: 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.
Larry Culp: But we need to do more, as do our suppliers. Given the pace of demand for both.
But we need to do more as do our suppliers given the pace of demand for both aftermarket services and new engine deliveries.
Speaker 2: transcript
Speaker 2: given the pace of demand for both aftermarket services and new engine delivery.
Steve Winoker: Aftermarket services and new engine deliveries, there are pockets of improvement now.
Speaker 2: transcript
Speaker 2: There are pockets of improvement now. Material input increased double digits sequentially, supporting spare parts delivery, which was up significantly year over year.
There are pockets of improvement now material input increased double digits sequentially supporting spare parts delivery, which was up significantly year over year.
Larry Culp: Material input increased double digits sequentially supporting.
Steven Winoker: I would now like to turn the program over to your host for today's conference Steve Winoker, Vice President of Investor Relations. Please proceed. Thanks Liz.
Steve Winoker: Spare parts delivery, which was up significantly year over year. We're working within our own plants and in partnership with our suppliers to deliver sequential improvements in output and turnaround times.
Speaker 2: transcript
Speaker 2: We're working within our own plants and in partnership with our suppliers to deliver sequential improvements in output and turnaround times day by day, week by week.
We're working within our own plants and in partnership with our suppliers to deliver sequential improvements in output and turnaround times day by day week by week.
Larry Kulp: Welcome to GE's third quarter 2023 earnings call. I'm joined by chairman and CEO Larry Kulp and CFO Rahul Gai. Some 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 on our website, those elements may change as the world changes over to Larry. See, thank you and good morning. Before we start, I want to reiterate that the GE team stands firmly with our employees, customers, and all those impacted by the brutal, Hamas attacks on Israel and the subsequent war.
Larry Culp: Day by day, week by week.
Larry Culp: Over to GE Vernova, where performance is.
Over to GE Vernova, where performance is.Strengthening pre-spin at both renewable energy and power. Customers continue to invest in the energy transition, driving meaningful demand for our products and services.Grid and now onshore wind were both profitable this quarter, and we expect improved performance from here. Grid customers are increasing their infrastructure investments.Globally to connect renewables and improve reliability.
Speaker 2: transcript
Speaker 2: Over to GE Vernova, where performance is strengthening pre-spinning both renewable energy and power.
Over to <unk>, where performance is strengthening pre spin at both renewable energy and power.
Steve Winoker: Strengthening pre-spin at both renewable energy and power. Customers continue to invest in the energy transition, driving meaningful demand for our products and services.
Speaker 2: transcript
Speaker 2: Customers continue to invest in the energy transition, driving meaningful demand for our products and services.
Customers continue to invest in the energy transition driving meaningful demand for our products and services.
Larry Culp: Grid and now onshore wind were both profitable this quarter, and we expect improved performance from here. Grid customers are increasing their infrastructure investments.
Speaker 2: transcript
Speaker 2: Bread and now on to our wind, we're both profitable this quarter and we expect improved performance from here.
Fred now onshore wind were both profitable this quarter and we expect improved performance from here.
Larry Kulp: Our priority has been the safety of GE employees in the region. We're doing everything possible to support them and their families. Last week, GE announced to have a million dollar contribution to help with the humanitarian efforts. For the many people, we're going to have a lot of money. And Israel, Gaza and the surrounding areas impacted by these horrific events. Terrorism has no place in our society. And like so many, I'm devastated by the loss of lives, violence, and suffering of innocent people.
Speaker 2: transcript
Speaker 2: grid customers are increasing their infrastructure investments globally to connect renewables and improve reliability.
Grid customers are increasing their infrastructure investments globally to connect renewables and improve reliability.
Steve Winoker: Globally to connect renewables and improve reliability.
Larry Culp: Year to date, orders remain strong at.
Year to date, orders remain strong at.More than three times revenue and with higher margins, which will support profitable growth through the decade. We've also increased selectivity, streamlined cost, and rationalized our industrial footprint, tracking toward full year profitability at GE Vernova.
Speaker 2: transcript
Speaker 2: Year-to-date, orders remain strong at more than three times revenue and with higher margins, which will support profitable growth.
Year to date orders remained strong at more than three times revenue and with higher margins.
Steve Winoker: More than three times revenue and with higher margins, which will support profitable growth through the decade. We've also increased selectivity, streamlined cost, and rationalized our industrial footprint, tracking toward full year profitability at GE Vernova.
Which will support profitable growth through the decade.
Speaker 2: transcript
Speaker 2: We've also increased selectivity, streamlined cost, and rationalized our industrial footprint, tracking toward full-year profitability at GRID.
We've also increased selectivity streamline costs and rationalized our industrial footprint.
Tracking towards full year profitability at grid.
Larry Culp: I really like the way the grid.
I really like the way the grid Team is using Lean to drive this turnaround and to deliver profitable growth.For example, across Power Transmission's 14 sites.Globally, we've reduced lead time by roughly 15% year to date and we're targeting a 20% reduction by year end.
Speaker 2: transcript
Speaker 2: I really like the way the grid team is using Lean to drive this turn around into the liver profitable growth.
Steve Winoker: Team is using Lean to drive this turnaround and to deliver profitable growth.
I really like the way the grid team is using lean to drive this turnaround into deliver profitable growth.
Larry Culp: For example, across Power Transmission's 14 sites.
Speaker 2: transcript
Speaker 2: For example, across power transmission, support team sites globally, we've reduced lead time by roughly 15% year to date, and we're targeting a 20% reduction by year S.
For example across power transmissions 14 sites globally, we've reduced lead time by roughly 15% year to date, and we're targeting a 20% reduction by year end.
Steve Winoker: Globally, we've reduced lead time by roughly 15% year to date and we're targeting a 20% reduction by year end.
Larry Kulp: Turning to the quarter, GE delivered a very strong performance and we're raising full year guidance again. GE aerospace continues to experience rapid growth, driven by robust demand and solid execution, largely in commercial engines and services. Another significant quarter for the team. Our fleet of 41,000 commercial engines and 26,000 rotorcraft and combat engines continues to expand as we work to define the future of flight. Today, we're navigating a still-challenging supply chain environment to deliver four and support our customers.
Larry Culp: Now at onshore, our strategy to focus.
Now at onshore, our strategy to focus.on fewer markets, pivoting more toward North America, where GE Vernova is the market leader, is working, and we're relying more on our workhorse products now representing 70% of equipment volume this quarter.These shifts are translating to 700 basis points of higher margins in backlog this year. We're still driving cost out fewer layers.Reducing headcount and empowering leaders closest to the operators.
Speaker 2: transcript
Speaker 2: Now we're on shore. Our strategy to focus on fewer markets, pivoting more toward North America, where G. E. Vernova is the market leader is working.
Now I would onshore our strategy to focus on fewer markets pivoting more towards North America, where <unk> is the market leader leader is working.
Steve Winoker: on fewer markets, pivoting more toward North America, where GE Vernova is the market leader, is working, and we're relying more on our workhorse products now representing 70% of equipment volume this quarter.
Speaker 2: transcript
Speaker 2: We're relying more on our workhorse products. Now representing 70% of equipment volume this quarter.
And we're relying more on our workhorse products now representing 70% of equipment volume this quarter.
Larry Culp: These shifts are translating to 700 basis points of higher margins in backlog this year. We're still driving cost out fewer layers.
Speaker 2: transcript
Speaker 2: These shifts are translating to 700 basis points of higher margins in backlog this year.
These shifts are translating to 700 basis points of higher margins in backlog this year.
Speaker 2: transcript
Speaker 2: still driving, cost out fewer layers, reducing head count, and empowering leaders closest to the operating.
We're still driving cost out fewer layers, reducing head count and empowering leaders closest to the operators.
Steve Winoker: Reducing headcount and empowering leaders closest to the operators.
Steve Winoker: Finally, we're improving fleet reliability.
Finally, we're improving fleet reliabilityWe're now halfway through our enhancement program.In the field and expect to be roughly 60% complete by year end.As expected, offshore wind remains difficult this.Year with losses of roughly $1 billion in 2023.
Speaker 2: transcript
Speaker 2: Finally, we're improving fleet reliability. We're now halfway through our enhancement program in the field and expect to be roughly 60% complete by year end.
Finally, we're improving fleet reliability, we're now halfway through our enhancement program in the field and expect to be roughly 60% complete by year end.
Larry Kulp: Year-to-date commercial engine deliveries are up 30%. Across GE and saffron's MRO shops this quarter, we've approved leap-quick-turned-shop visits over 30% year-over-year and sequentially. For tomorrow, we're building our backlog and sales pipeline during unprecedented industry growth. Recently, our Canada ordered 36 GE-NX-1B engines, plus four spares, building on GE-NX's rich history is the fastest-selling high-thrust engine with over 50 million flight hours. For the future, we're investing in R&D and developing next-generation technologies. For example, we're advancing full system testing for our hybrid electric systems at our electric power center in Ohio. We're also collaborating with industry partners in NASA on an eco-demonstrator program to measure sustainable aviation fuel impact on the environment, particularly high altitude emissions.
Larry Culp: We're now halfway through our enhancement program.
Steve Winoker: In the field and expect to be roughly 60% complete by year end.
Larry Culp: As expected, offshore wind remains difficult this.
Speaker 2: transcript
Speaker 2: As expected, off-shore wind remains difficult this year with losses of roughly a billion dollars in 2023. Next year, we expect offshore will have similar losses, but substantially improved cash.
As expected offshore wind remains difficult this year with losses of roughly $1 billion. In 2023 next year, we expect offshore will have similar losses, but substantially improved cash performance.
Steve Winoker: Year with losses of roughly $1 billion in 2023.
Larry Culp: Next year we expect offshore will have.
Next year we expect offshore will have.Similar losses but substantially improved cash performance It's a tough $6 billion backlog that we're working our way through, which.We expect to largely complete over the.Next two or three years.
Steve Winoker: Similar losses but substantially improved cash performance.
Steve Winoker: It's a tough $6 billion backlog that we're working our way through, which.
Speaker 2: transcript
Speaker 2: So it's a tough $6 billion backlog that we're working our way through, which we expect to largely complete over the next two or three years.
So it's a tough $6 billion backlog that we're working our way through which we expect to largely complete over the next two or three years, meaning.
Larry Culp: We expect to largely complete over the.
Steve Winoker: Next two or three years.
Larry Culp: Meanwhile, we're making operational progress with rising.
Meanwhile, we're making operational progress with rising Availability on the 800 installed MW of our 6 MW platform.Electricity is now being produced at Dogger.Bank and we recently had the installation of our first Haliade-X turbines at Vineyard Wind.
Speaker 2: transcript
Speaker 2: Meanwhile, we're making operational progress with rising availability on the 800 installed megawatts of our 6 megawatt platform. Electricity is now being.
Meanwhile, we are making operational progress with rising availability on the 800 installed megawatts of our six megawatt platform.
Steve Winoker: Availability on the 800 installed MW of our 6 MW platform.
Larry Culp: Electricity is now being produced at Dogger.
Electricity is now being produced at Dogger Bank.
Steve Winoker: Bank and we recently had the installation of our first Haliade-X turbines at Vineyard Wind.
Speaker 2: transcript
Speaker 2: And we recently had the installation of our first Hollyotics turbines at Vineyard Wind.
And we recently had the installation of our first Hollywood X turbines that vineyard wind.
Steve Winoker: Looking forward, we've expanded Vic Abate's role to CEO of the entire wind business to leverage our progress in onshore and offshore.
Looking forward, we've expanded Vic Abate's role to CEO of the entire wind business to leverage our progress in onshore and offshore.We're taking a similarly disciplined approach to.Writing new business like we've done over at Gas Onshore and Grid, with increased rigor on pricing terms, geographic exposure, and other risks.All in all, given power's continued strength and with our two largest businesses in.Renewables, grid, and now onshore delivering, plus our plan for offshore, we're highly confident.In successfully spinning off GE Vernova early.In Q2.
Speaker 2: transcript
Speaker 2: Looking forward, we've expanded the debate's role to CEO of the entire win business to leverage our progress in onshore at all.
Looking forward, we've expanded Vic abates role to CEO of the entire wind business to leverage our progress in onshore and offshore.
Larry Kulp: Operations. And our growth opportunities extend beyond commercial. In defense, we're pleased the U.S. Army has accepted the first two T901 light test engines for the future attack reconnaissance of aircraft prototypes. The T901 will also upgrade the U.S. Army's Apache and Black Hawk helicopters, providing 50% more power, reduced life cycle costs and lower fuel consumption. And we've been selected for development work on the cockpit voice and flight data recorders systems for the future long range assault aircraft program.
Larry Culp: We're taking a similarly disciplined approach to.
Speaker 2: transcript
Speaker 2: We're taking a similarly disciplined approach to writing new business, like we've done over at gas on tour end grid. With increased rigour on pricing, terms, geographic exposure, and other risks.
We're taking a similarly disciplined approach to writing new business like we've done over at gas onshore and grid.
Steve Winoker: Writing new business like we've done over at Gas Onshore and Grid, with increased rigor on pricing terms, geographic exposure, and other risks.
With increased rigor on pricing terms geographic exposure and other risks.
Larry Culp: All in all, given power's continued strength and with our two largest businesses in.
Speaker 2: transcript
Speaker 2: All in all, given powers continued strength, and with our two largest businesses in renewables, grid, and now on, sure delivering, plus our plan for all of sure, we're...
All in all given Power's continued strength and with our two largest businesses in renewables grid and now one short delivering plus.
Steve Winoker: Renewables, grid, and now onshore delivering, plus our plan for offshore, we're highly confident.
Plus our plan for offshore we're highly confident and successfully spinning off <unk> early in the second quarter.
Larry Culp: In successfully spinning off GE Vernova early.
Speaker 2: transcript
Speaker 2: professionally spinning off GE Bernova early in the second quarter.
Steve Winoker: In Q2.
Steve Winoker: Across GE, I'm pleased with how we're operating as a simpler, more focused business at both GE Aerospace and GE Vernova.
Across GE, I'm pleased with how we're operating as a simpler, more focused business at both GE Aerospace and GE Vernova.Another strong quarter, but plenty more to do.My thanks go out to the team for their dedication and commitment to serving our customers.
Speaker 2: transcript
Speaker 2: Across GE, I'm pleased with how we're operating as a simpler, more focused business at both GE Aerospace and GE Vrenova. Another strong quarter.
Across GE I'm pleased with how we're operating as a simpler more focused business at both GE Aerospace Angie Eva Nova.
Larry Kulp: Next generation programs like these demonstrate how GE's rotor craft programs enable the military and our allies to take on more challenging missions today and in the future. And we're pleased to see Congress recognizing this important work by including funding for advanced engine development like the XA100 in both the House and Senate fiscal year 24 defense appropriation bills.
Larry Culp: Another strong quarter, but plenty more to do.
Another strong quarter, but plenty more to do.
Steve Winoker: My thanks go out to the team for their dedication and commitment to serving our customers.
Speaker 2: transcript
Speaker 2: My thanks go out to the team for their dedication and commitment to serving our customers.
My Thanks go out to the team for their dedication and commitment to serving our customers.
Larry Culp: It's been nearly two years since we.
It's been nearly two years since we.Announced our intention to create three independent.Investment grade industry leaders, and now we're.Closing in on the final step.
Speaker 2: transcript
Speaker 2: It's been nearly two years since we announced our intention to create three independent investment-grade industry leaders. And now we're closing in.
It's been nearly two years since we announced our intention to create three independent investment grade industry leaders and now were closing in on the final step.
Steve Winoker: Announced our intention to create three independent.
Larry Culp: Investment grade industry leaders, and now we're.
Steve Winoker: Closing in on the final step.
Larry Kulp: However, even with these strong results, we're far from satisfied. Through our lean transformation, we're making real progress improving flow and eliminating waste. For example, our team in Pune, India has increased output of leap high pressure turbine manifolds by three times. But we need to do more as do our suppliers given the pace of demand for both aftermarket services and new engine deliveries. There are pockets of improvement now material input increased double digits sequentially supporting spare parts delivery, which was up significantly year over year. We're working within our own plants and in partnership with our suppliers to deliver sequential improvements and output and turnaround times day by day, week by week.
Larry Culp: Today we announced plans to spin off.
Today we announced plans to spin off.GE Vernova and launch GE Aerospace in the beginning of Q2 2024.Both will be listed on the New.York Stock Exchange with GE Vernova as GEV and GE Aerospace carrying forward. Under GE.
Speaker 2: transcript
Speaker 2: Today we announced plans to spin off GE Vrenova and launch the Eero Space in the beginning of the second quarter of 2020.
Steve Winoker: GE Vernova and launch GE Aerospace in the beginning of Q2 2024.
Today, we announced plans to spin off <unk> and launched <unk> aerospace in the beginning of the second quarter of 2024.
Larry Culp: Both will be listed on the New.
Steve Winoker: York Stock Exchange with GE Vernova as GEV and GE Aerospace carrying forward. Under GE.
Speaker 2: transcript
Speaker 2: Both will be listed on the New York Stock Exchange with GE Brnova as GEV.
Both will be listed on the New York stock exchange with <unk> as <unk>.
Speaker 2: transcript
Speaker 2: and GE Aerospace carrying forward under GE.
<unk> aerospace carrying forward under GE.
Larry Culp: We've made some important hires.
We've made some important hires.Promotions to ensure we have the best teams leading these businesses forward At GE Aerospace, we've completed the functional. Leadership team, naming our heads of Corporate Affairs, Human Resources, legal, and treasury with experienced leaders from inside and outside. At GE Vernova, we added seasoned public company CFO Ken Parks. As I mentioned a moment ago, Vic Abate is now CEO of the Wind business.
Steve Winoker: Promotions to ensure we have the best teams leading these businesses forward.
Speaker 2: transcript
Speaker 2: We've made some important hires and promotions to ensure we have the best teams leading these businesses forward.
We've made some important hires and promotions to ensure we have the best teams leading these businesses forward.
Larry Culp: At GE Aerospace, we've completed the functional.
Speaker 2: transcript
Speaker 2: At GE Aerospace, we've completed the functional leadership team, naming our heads of corporate affairs, human resources legal and treasury with experienced leaders from inside and outside GE.
<unk> Aerospace we've completed the functional leadership team naming our heads of corporate affairs, human resources legal and treasury with experienced leaders from inside and outside.
Steve Winoker: Leadership team, naming our heads of Corporate Affairs, Human Resources, legal, and treasury with experienced leaders from inside and outside. At GE Vernova, we added seasoned public company CFO Ken Parks. As I mentioned a moment ago, Vic Abate is now CEO of the Wind business.
Speaker 2: transcript
Speaker 2: edg e vernova we added seasoned public company CFO can park
At <unk>, we added seasoned public company CFO Ken parks.
Speaker 2: transcript
Speaker 2: As I mentioned a moment ago, the debate is now CEO of the wind best.
And as I mentioned, a moment ago Vic abate is now CEO of the wind business.
Larry Kulp: Over to GE vernova, where performances strengthening pre-spinning both renewable energy and power. Customers continue to invest in the energy transition, driving meaningful demand for our products and services. Red and now onshore wind, we're both profitable this quarter and we expect improved performance from here. Red customers are increasing their infrastructure investments globally to connect renewables and improve reliability. Your-to-date orders remain strong at more than three times revenue and with higher margins, which will support profitable growth through the decade.
Larry Culp: We've also further simplified and strengthened our.
We've also further simplified and strengthened our.Balance sheet by redeeming the remainder of our preferred equity and selling a portion of our AerCap shares for $2.7 billion of proceeds.Our balance sheet is well positioned to.Support the launch of two investment grade companies.
Speaker 2: transcript
Speaker 2: We've also further simplified and strengthened our balance sheet by redeeming the remainder of our preferred equity and selling a portion of our air cap shares for $2.7 billion of proceeds.
We are also further simplified and strengthened our balance sheet by redeeming the remainder of our preferred equity and selling a portion of our aercap shares for $2 $7 billion of proceeds.
Steve Winoker: Balance sheet by redeeming the remainder of our preferred equity and selling a portion of our AerCap shares for $2.7 billion of proceeds.
Larry Culp: Our balance sheet is well positioned to.
Speaker 2: transcript
Speaker 2: Our balance sheet is well positioned to support the launch of two investment grade companies.
Steve Winoker: Support the launch of two investment grade companies.
Our balance sheet is well positioned to support the launch of two investment grade companies.
Steve Winoker: We're approaching some key spin milestones.
We're approaching some key spin milestones.GE Vernova will file a confidential Form.10 shortly, with the initial public filing.Expected in Q1.
And we're approaching some key spend milestones.
Larry Culp: GE Vernova will file a confidential Form.
Speaker 2: transcript
Speaker 2: The Evernoma will file a confidential form 10 shortly with the initial public filing expected in the first quarter. Soon we'll...
<unk> will file a confidential form 10, shortly with the initial public filing expected in the first quarter.
Steve Winoker: 10 shortly, with the initial public filing.
Larry Culp: Expected in Q1.
Larry Culp: Soon we'll announce each company's Board of.
Soon we'll announce each company's Board of Directors and in early March, GE Vernova and GE Aerospace plan to hold investor.Days.
Soon we will announce each company's board of directors.
Steve Winoker: Directors and in early March, GE Vernova and GE Aerospace plan to hold investor.
Speaker 2: transcript
Speaker 2: And an early March to E. Bernova and to E.R.A. Space Planned a Whole Investor Day.
And in early March <unk> aerospace planned to hold Investor days.
Larry Kulp: We've also increased selectivity, streamline cost and rationalized our industrial footprint, cracking towards full year profitability and grit. I really like the way the grid team is using lean to drive this turnaround into deliver profitable growth. For example, across power transmission, 14 sites globally, we've reduced lead time by roughly 15% year-to-date and we're targeting a 20% reduction by year-end. Now it onshore, our strategy to focus on fewer markets, pivoting more toward North America where GE vernova is the market leader is working.
Rahul Ghai: Days.
Steve Winoker: Building on our success at GE Healthcare, we're exactly where we want to be at the end of October for both GE Aerospace and GE Vernova.
Steve Winoker: Building on our success at GE Healthcare, we're exactly where we want to be at the end of October for both GE Aerospace and GE Vernova.Now over to Rahul for more detail on our results.
Speaker 2: transcript
Speaker 2: Building on our success at healthcare, we're exactly where we want, where we want to be at the end of October for both aerospace and. Now, over to Rahul for more.
Building on our success at GE, healthcare, where exactly where we want where we want to be at the end of October for both GE Aerospace Angie Eva Nova.
Larry Culp: Now over to Rahul for more detail on our results.
Now over to Rahul for more detail on our results.
Rahul Ghai: Thank you, Larry.
Rahul Gai: Thank you, Larry.
Rahul Ghai: Turning to slide four, I'll speak to the quarter on an organic basis.
Turning to slide four, I'll speak to the quarter on an organic basis. Overall, we delivered meaningful growth across our headline metrics. Orders were up double digits, with services up 15%, driven by commercial aerospace, and equipment up 22%, with growth in all segments. Revenue increased 18%, benefiting from strong market demand, improved execution, and pricing. Aerospace was led by commercial services and engines. Renewables was led by grid and offshore and power from heavy-duty gas turbines, and aeroderivatives.
Speaker 3: transcript
Speaker 3: Thank you, Larry. Turning to slide 4, I'll speak to the quarter on an organic basis.
Thank you Larry turning to slide four I'll speak to the quarter on an organic basis.
Rahul Ghai: Overall, we delivered meaningful growth across our headline metrics.
Speaker 3: transcript
Speaker 3: Overall, we delivered meaningful growth across our headline metrics.
Overall, we delivered meaningful growth across our headline metrics.
Rahul Ghai: Orders were up double digits, with services up 15%, driven by commercial aerospace, and equipment up 22%, with growth in all segments.
Speaker 3: transcript
Speaker 3: Orders were up double digits, which services up 15%
Orders were up double digits, but services up 15%.
Speaker 3: transcript
Speaker 3: driven by commercial aerospace and equipment up 22% with growth in all segments.
Driven by commercial aerospace and equipment up 22% with growth in all segments.
Larry Kulp: If we're relying more on our workhorse products, now representing 70% of equipment volume this quarter. These shifts are translating to 700 basis points of higher margins in backlog this year. We're still driving cost out fewer layers, reducing head count and empowering leaders closest to the operate. Readers.
Rahul Ghai: Revenue increased 18%, benefiting from strong market.
Speaker 3: transcript
Speaker 3: Revenue increased 18%, benefiting from strong market demand, improved execution and price.
Revenue increased 18% benefiting from strong market demand improved execution and pricing.
Rahul Ghai: Demand, improved execution, and pricing. Aerospace was led by commercial services and engines. Renewables was led by grid and.
Speaker 3: transcript
Speaker 3: Aerospace was led by commercial servicers and engines.
Aerospace was led by commercial services and engines.
Speaker 3: transcript
Speaker 3: Renewables was led by grid and offshore and power from heavy duty gas turbines and air-out aerobics.
Rahul Ghai: Offshore and power from heavy-duty gas turbines, and aeroderivatives.
Renewables was led by grid and offshore.
And Butler from heavy duty gas turbines and Edward additives.
Rahul Ghai: All segments contributed to adjusted margin expansion of 760 basis points.
All segments contributed to adjusted margin expansion of 760 basis points. This included the absence of last year's wind-related charges and the benefits of volume, price net of inflation and productivity continued investments in growth.
Larry Kulp: Finally, we're improving fleet reliability. We're now halfway through our enhancement program in the field and expect to be roughly 60% complete by year end. As expected, off-shore wind remains difficult this year with losses of roughly $1 billion in 2023. Next year, we expect offshore will have similar losses, but substantially improved cash performance. So, it's a tough $6 billion backlog that we're working our way through, which we expect to largely complete over the next two or three years.
Speaker 3: transcript
Speaker 3: All segments contributed to adjusted margin expansion of 760 days.
All segments contributed to adjusted margin expansion of 760 basis points.
Rahul Ghai: This included the absence of last year's.
Speaker 3: transcript
Speaker 3: This included the absence of last year's wind-related charges and the benefits of volume, price, net of inflation and productivity and continued investments in growth. Adjusted EPS.
This included the absence of last year's wind related charges and the benefits of volume price net of inflation and productivity.
Rahul Ghai: Wind-related charges and the benefits of volume, price net of inflation and productivity.
Rahul Ghai: Continued investments in growth.
And continued investments in growth.
Rahul Ghai: Adjusted EPS was $0.82, up almost $1 year over year. Excluding last year's wind-related charges. Adjusted margin still expanded 400 basis points, and EPS was up $0.59, or more than triple what we delivered last year. We generated $1.7 billion of free cash flow, up roughly $1 billion, largely driven by earnings. Working capital was a positive $400 million.
Adjusted EPS was $0.82, up almost $1 year over year. Excluding last year's wind-related charges. Adjusted margin still expanded 400 basis points, and EPS was up $0.59, or more than triple what we delivered last year. We generated $1.7 billion of free cash flow, up roughly $1 billion, largely driven by earnings. Working capital was a positive $400 million flow driven by Disciplined Receivables Management, while inventory remained inflated due to continued supply chain challenges.
Adjusted EPS was <unk> 82.
Up almost $1 year over year.
Speaker 3: transcript
Speaker 3: excluding last year's wind-related charges, adjusted margin, still expanded 400 basis points, and EPS was up 59 cents, or more than triple what we delivered.
Excluding last year's wind related charges adjusted margin still expanded 400 basis points and EPS was up 59.
Larry Kulp: Meanwhile, we're making operational progress with rising availability on the 800 installed megawatts of our six megawatt platform. Electricity is now being produced at Daugher Bank, and we recently had the installation of our first hollyotic turbines at Vineyard Wind. Looking forward, we've expanded Vic and Bates' role to CEO of the entire wind business to leverage our progress in onshore and offshore. We're taking a similarly disciplined approach to writing new business, like we've done over at gas, onshore and grid, with increased rigour on pricing, terms, geographic exposure, and other risks.
Our more than triple what we delivered last year.
Speaker 3: transcript
Speaker 3: we generated $1.7 billion of free cash.
We generated $1 7 billion of free cash flow.
Speaker 3: transcript
Speaker 3: up roughly one billion dollars, largely driven by earnings.
Up roughly $1 billion largely driven by earnings.
Speaker 3: transcript
Speaker 3: Working capital was a positive $400 million flow.
Working capital was a positive $400 million flow through.
Rahul Ghai: Flow driven by Disciplined Receivables Management, while inventory remained inflated due to continued supply chain challenges.
Speaker 3: transcript
Speaker 3: driven by the CIPLant Receivables Management, while the inventory remained inflated, due to continued supply chain challenge.
By disciplined receivables management, while inventory remained inflated due to continued supply chain challenges.
Rahul Ghai: Year to date, free cash flow was $2.2 billion, up $2.5 billion, reflecting higher.
Year to date, free cash flow was $2.2 billion, up $2.5 billion, reflecting higher earnings, reduced working capital, and improved linearity. Switching to corporate results, improved significantly due to energy, financial services gain on sale from investments, and higher interest income.
Speaker 3: transcript
Speaker 3: Here to date, free cash flow was $2.2 billion. Up to $2.5 billion, reflecting higher earnings, reduced working capital, and improved linearity.
Year to date free cash flow was $2 $2 billion up to $5 billion, reflecting higher earnings reduced working capital and improved linearity.
Rahul Ghai: Earnings, reduced working capital, and improved linearity. Switching to corporate results, improved significantly due to energy, financial services gain on sale from investments, and higher interest income.
Larry Kulp: All in all, given powers continued strength, and with our two largest businesses and renewables grid and now onshore delivering, plus our plan for offshore, we're highly confident and successfully spinning off GE Vernova early in the second quarter. Across GE, I'm pleased with how we're operating as a simpler, more focused business at both GE Aerospace and GE Vernova. Another strong quarter, but plenty more to do. My thanks go out to the team for their dedication and commitment to serving our customers.
Switching to corporate results.
Speaker 3: transcript
Speaker 3: results improved significantly due to energy financial services gained on sale from investments and higher interest income. Also,
Results improved significantly due to energy financial services gain on sale from investments and higher interest income.
Rahul Ghai: Also, as we prepare to reduce costs.
Rahul Ghai: Also, as we prepare to reduce costs as we prepare to become the standalone businesses for the year, we now expect expenses in the $500 million range at insurance, we completed our annual review of liability cash flow assumptions under the new accounting standard.
Also as we prepare to reduce costs.
Rahul Ghai: As we prepare to become the standalone businesses for the year, we now expect.
Speaker 3: transcript
Speaker 3: as you prepare to become the stand-alone businesses, for the year we now expect expenses in the $500 million range.
As we prepare to become a standalone businesses.
Rahul Ghai: Expenses in the $500 million range at.
For the year, we now expect expenses in the $500 million range.
Rahul Ghai: Insurance, we completed our annual review of.
Speaker 3: transcript
Speaker 3: At Insurance, we completed our annual review of flyability cash flow assumptions under the new accounting stand.
Insurance, we completed our annual review of liability cash flow assumptions under the new accounting standard.
Rahul Ghai: Liability cash flow assumptions under the new accounting standard.
Rahul Ghai: This resulted in an immaterial adjustment to earnings, indicating claims experience is consistent with our models.
This resulted in an immaterial adjustment to earnings, indicating claims experience is consistent with our models. Given GE Aerospace's strength and GE Vernova's improvement, we are raising full year guidance and now expecting revenue growth of low teens up from low double digits, Adjusted EPS of $2.55 to 2.65, up $0.40 at the midpoint, largely from improvement in operating profit that we now expect to be in a range of $5.2 to 5.5 billion and free cash flow of $4.7 to 5.1 billion, up $550 million.
Speaker 3: transcript
Speaker 3: This resulted in an immaterial adjustment to earnings. Indicating claims experience is consistent with a model.
This resulted in an immaterial adjustments to earnings indicating claims experience is consistent with our models.
Larry Kulp: It's been nearly two years since we announced our intention to create three independent investment-grade industry leaders, and now we're closing in on the final step. Today, we announced plans to spin off GE Vernova and launch GE Aerospace in the beginning of the second quarter of 2024. Both will be listed on the New York Stock Exchange with GE Vernova as GEV and GE Aerospace carrying forward under GE. We've made some important hires and promotions to ensure we have the best teams leading these businesses forward.
Rahul Ghai: Given GE Aerospace's strength and GE Vernova's improvement, we are raising full year guidance and now expecting revenue growth of low teens up from low double digits, adjusted.
Speaker 3: transcript
Speaker 3: Given GE Aerospace's strength and GE Wernova's improvement, we are raising full year guidance.
Given G aerospace strength and GE <unk> improvement, we are raising full year guidance.
Speaker 3: transcript
Speaker 3: and now expecting revenue growth of low teens up from low double double
And now expecting revenue growth of low teens up from low double digits.
Larry Kulp: At GE Aerospace, we've completed the functional leadership team, naming our heads of corporate affairs, human resources legal, and treasury, with experience leaders from inside and outside GE. At GE Vernova, we added seasoned public company CFO Ken Parks. As I mentioned a moment ago, Dicabate is now CEO of the wind business. We've also further simplified and strengthened our balance sheet by redeeming the remainder of our preferred equity and selling a portion of our aircraft shares for $2.7 billion of proceeds.
Rahul Ghai: EPS of $2.55 to 2.65, up $0.40 at the midpoint, largely from improvement in operating profit that we now expect to be in a range of $5.2 to 5.5 billion and free cash flow of $4.7 to 5.1 billion, up $550 million.
Speaker 3: transcript
Speaker 3: Adjust the EPS of $2.55 to $2.65 up 40 cents at the mid-
Adjusted EPS of $2 55.
<unk> to $2 65.
Up 40, <unk> at the midpoint largely from improvement in operating profit that we now expect to be in a range of five two to $5 5 billion.
Speaker 3: transcript
Speaker 3: largely from improvement in operating profit that we now expect to be in a range of $5.2 to $5.5 billion.
Speaker 3: transcript
Speaker 3: and free cash flow of $4.7 to $5.1 billion, up $550 million at the mid-term.
And free cash flow of $4 seven to $5 1 billion up $550 million at the midpoint lodged.
Rahul Ghai: At the midpoint, largely from higher earnings and lower AD&A outflow.
At the midpoint, largely from higher earnings and lower AD&A outflow now spending a moment on each business. Starting with GE Aerospace, demand remains robust with GE and CFM deliveries growing mid-teens year-over-year. Orders were up 34% with strong growth in both equipment and services.
Speaker 3: transcript
Speaker 3: largely from higher earnings and lower AD&A outflow. Now spending a moment
Largely from higher earnings and lower <unk> outflow.
Rahul Ghai: Now spending a moment on each business.
Now spending a moment on each business.
Rahul Ghai: Starting with GE Aerospace, demand remains robust with GE and CFM deliveries growing mid-teens year-over-year.
Starting with GE aerospace.
Speaker 3: transcript
Speaker 3: Demand remains robust with GE and CFM departures growing mid-steens year-over-year.
Demand remains robust with GE and CFM departures growing mid teens year over year.
Rahul Ghai: Orders were up 34% with strong growth.
Speaker 3: transcript
Speaker 3: Orders were up 34% with strong growth in both equipment and services.
Orders were up 34% with strong growth in both equipment and services.
Rahul Ghai: In both equipment and services.
Rahul Ghai: Revenue was up 25%, led by commercial.
Rahul Ghai: Revenue was up 25%, led by commercial engines and services up 29% and defense growing 8%. Profit grew over $400 million or more than 30%. Notably margins expanded 120 basis points to reach 20.4%. Higher services volume and pricing net of inflation more than offset investments and adverse mix in our commercial business. Services strength continued to drive profit, with services revenue up 31% from volume, pricing.
Revenue was up 25%.
Rahul Ghai: Engines and services up 29% and defense growing 8%.
Speaker 3: transcript
Speaker 3: led by commercial engines and services up 29% and defense growing 8%.
Led by commercial engines and services up 29% and defense growing 8%.
Larry Kulp: Our balance sheet is well positioned to support launch of two investment-grade companies. And we're approaching some key spin milestones. GE Vernova will file a confidential form 10 shortly with the initial public filing expected in the first quarter. Soon, we'll announce each company's board of directors, and an early March GE Bernova and GE Aerospace plan to hold investor days.
Rahul Ghai: Profit grew over $400 million or more than 30%. Notably margins expanded 120 basis points to reach 20.4%. Higher services volume and pricing net of.
Speaker 3: transcript
Speaker 3: Profit grew over $400 million or more than 30 per
Profit grew over $400 million are more than 30%.
Speaker 3: transcript
Speaker 3: Notably, margins expanded 120 basis points to reach 20.4%.
Notably margins expanded 120 basis points to reach 24%.
<unk> services.
Speaker 3: transcript
Speaker 3: volume and pricing net of inflation more than offset investments and adverse mix.
Rahul Ghai: Inflation more than offset investments and adverse mix in our commercial business. Services strength continued to drive profit, with services revenue up 31% from volume, pricing.
Volume and pricing net of inflation more than offset investments and adverse mix.
Speaker 3: transcript
Speaker 3: In a commercial business, services strength continued to drive profit.
In our commercial business services' strength continued to drive profit.
Larry Kulp: Building on our success in GE Healthcare, we're exactly where we want to be at the end of October for both GE Aerospace and GE Bernova.
Speaker 3: transcript
Speaker 3: with services revenue up 31% from volume, pricing and heavier work scope.
With services revenue up 31% from volume pricing and heavier work scopes.
Rahul Ghai: Heavier work scopes. External spare parts were up more than.
Heavier work scopes. External spare parts were up more than 35% and internal shop visits grew 2% with supply chain constraints impacting growth. Commercial engines revenue grew 23% with LEAP deliveries up 12% year over year.
Speaker 3: transcript
Speaker 3: External spare parts were up more than 35% and internal shop visits grew 2%. With supply chain constraints.
External spare parts were up more than 35% and internal shop visits grew 2%.
Rahul Ghai: 35% and internal shop visits grew 2%.
Rahul Ghai: Now, over to Rahul for more detail on our results.
Rahul Ghai: With supply chain constraints impacting growth.
Rahul Ghai: Thank you, Larry, turning to slide four. I'll speak to the quarter on an organic basis. Overall, we delivered meaningful growth across our headline metrics. Orders were up double digits with services up 15% driven by commercial aerospace and equipment up 22% with growth in all segments. Revenue increased 18% benefiting from strong market demand, improved execution and pricing. Aerospace was led by commercial services and engines. Renewables was led by grid and offshore and power from heavy duty gas turbines and aerodarivatives.
But supply chain constraints impacting growth.
Rahul Ghai: Commercial engines revenue grew 23% with LEAP deliveries up 12% year over year.
Speaker 3: transcript
Speaker 3: The Marshall engines revenue grew 23% with leap deliveries up 12% and 30% and 20% were born.
Commercial engines revenue grew 23% with leap deliveries up 12% year over year.
Rahul Ghai: We are now planning for a 40.
We are now planning for a 40 to 45% increase in LEAP deliveries this year, down from our 50% target at the beginning of the year.We now expect OE revenue to grow low to mid-20s, and services revenue to be up mid to high-20s for the year. In Defense, book-to-build remains strong this quarter, again greater than 1 and 1.3x year to date.
Speaker 3: transcript
Speaker 3: We are now planning for a 40 to 45% increase in leaf deliveries this year. Down from our 50% target at the beginning of the year.
Rahul Ghai: To 45% increase in LEAP deliveries this year, down from our 50% target at the beginning of the year.
We are now planning for a 40% to 45% increase in leap deliveries this year down from our 50% target at the beginning of the year.
Rahul Ghai: We now expect OE revenue to grow low to mid-20s, and services revenue to be up mid to high-20s.
Speaker 3: transcript
Speaker 3: We now expect oil revenue to grow low to mid-20s and services revenue to be up mid to high 20s for the year.
We now expect revenue to grow low to mid twenties and services revenue to be up mid to high <unk> for the year.
Rahul Ghai: For the year in Defense, book-to-build remains strong this quarter, again greater than 1 and 1.3x year to date.
Speaker 3: transcript
Speaker 3: In defense, Book to Build remained strong this quarter, again greater than 1, and 1.3x year-to-date, highlighting the strong demand environment and quality of our franchisees.
And defense book to Bill remains strong.
This quarter again, greater than one and one <unk> year to date.
Rahul Ghai: Highlighting the strong demand, environment, and quality of our franchisees.
Highlighting the strong demand, environment, and quality of our franchisees.Revenue grew high single digits with strength.In Services and Edison Works offsetting lower unit deliveries. Based on GE Aerospace's year to date.Strength, we are raising revenue growth through the low 20s, and profit to be about $6 billion, up roughly $1.2 billion year over year, with free cash flow growth trending better than prior expectations.
Lighting, the strong demand environment and quality of our franchisees.
Rahul Ghai: Revenue grew high single digits with strength.
Rahul Ghai: All segments contributed to adjusted margin expansion of 760 basis points. This included the absence of last years wind-related charges and the benefits of volume, price, net-of-inflation and productivity and continued investments in growth. Adjusted EPS was 82 cents, up almost $1.00 a year. Excluding last year's wind-related charges, adjusted margin still expanded 400 basis points and EPS was up 59 cents or more than triple what we delivered last year. We generated $1.7 billion of free cash flow, up roughly $1 billion, largely driven by earnings.
Speaker 3: transcript
Speaker 3: Revenue grew high single digits with strength in services and Edison works of setting lower unit deliver.
Revenue grew high single digits with strength in services and Edison works offsetting lower unit deliveries.
Rahul Ghai: In Services and Edison Works offsetting lower unit deliveries. Based on GE Aerospace's year to date.
Speaker 3: transcript
Speaker 3: Based on GE Aerospace's year-to-date strength, we are raising revenue growth to the low 20s and profit to be about $6 billion, up roughly $1.2 billion year-over-year.
Based on GE aerospace is year to date strength, we're raising.
Rahul Ghai: Strength, we are raising revenue growth through the low 20s, and profit to be about $6 billion, up roughly $1.2 billion year over year, with free cash flow growth trending better than prior expectations.
The revenue growth to the low twenty's and profit to be about $6 billion up roughly $1 $2 billion year over year.
Speaker 3: transcript
Speaker 3: free cash flow growth, trending better than prior expectations.
With free cash flow growth trending better than prior expectations.
Rahul Ghai: Moving to GE Vernova, Lean along with better underwriting selectivity and productivity is delivering stronger results.
Moving to GE Vernova, Lean along with better underwriting selectivity and productivity is delivering stronger results.We mentioned earlier at grid, and now onshore at renewables. Orders grew again, up 3% this quarter.Up more than 80% year to date to nearly $18 billion.
Moving to <unk>, where NOLA.
Speaker 3: transcript
Speaker 3: Lean, along with better underwriting, selectivity and productivity, is delivering stronger results we mentioned earlier at Grid and now on SharePoint.
Leanne, along with better underwriting selectivity and productivity is delivering stronger results, we mentioned earlier at grid and now onshore.
Rahul Ghai: We mentioned earlier at grid, and now onshore at renewables. Orders grew again, up 3% this quarter.
Speaker 3: transcript
Speaker 3: at renewables, orders grew again, up 3% this quarter, and up more than 80% year to date to nearly 18 billion dollars. Grid orders increased over...
At renewables orders grew again up 3% this quarter and up more than 80% year to date to nearly $18 billion.
Rahul Ghai: Up more than 80% year to date to nearly $18 billion.
Rahul Ghai: Grid orders increased over 50% this quarter, and while primarily an equipment business, today we are starting to grow grid services. That was up double digits this quarter in onshore North American equipment orders for.
Grid orders increased over 50% this quarter, and while primarily an equipment business, today we are starting to grow grid services. That was up double digits this quarter in onshore North American equipment orders for the quarter were up nearly 40%, and year to date are up more than 2.5x over prior year.
Rahul Ghai: Working capital was a positive $400 million flow, driven by disciplined receivables management, while inventory remained inflated due to continued supply chain challenges. Year-to-date free cash flow was $2.2 billion, up $2.5 billion, reflecting higher earnings, reduced working capital and improved linearity. Switching to corporate results improved significantly due to energy financial services gained on sale from investments and higher interest income. Also, as we prepare to reduce coughs, as you prepare to become the standalone businesses, for the year we now expect expenses in the $500 million range. At insurance, we completed our annual review of liability cash flow assumptions under the new accounting standard. This resulted in an immaterial adjustment to earnings, indicating claims experience is consistent with our models.
Grid orders increased over 50% this quarter.
Speaker 3: transcript
Speaker 3: And while primarily an equipment business today, we're starting to grow grid services that was up double digits this quarter.
And while primarily in equipment business today, we are starting to grow grid services.
Was up double digits this quarter.
Speaker 3: transcript
Speaker 3: In onshore, North American equipment orders for the quarter were up nearly 40%.
And onshore North American equipment orders for the quarter were up nearly 40% and.
Rahul Ghai: The quarter were up nearly 40%, and year to date are up more than 2.5x over prior year.
Speaker 3: transcript
Speaker 3: and year to date are up more than 2.5 times over prior year.
And year to date are up more than two five times over prior year.
Rahul Ghai: The IRA continues to be transformative, establishing multi-year US demand visibility for future growth. Internationally, onshore orders were down meaningfully, but.
The IRA continues to be transformative, establishing multi-year US demand visibility for future growth. Internationally, onshore orders were down meaningfully, but at better margins, consistent with our strategy of greater selectivity.
Speaker 3: transcript
Speaker 3: The IRA continues to be transformative, establishing multi-year U.S. demand visibility for future growth.
The IRS continues to be transformative, establishing multi year U S demand visibility for future growth.
Speaker 3: transcript
Speaker 3: internationally, onshore orders were down meaningfully, but at better margins, consistent with our strategy of greater selectivity. Revenue grew 14%.
Internationally onshore orders were down meaningfully, but at better margins consistent with our strategy of greater selectivity.
Rahul Ghai: At better margins, consistent with our strategy of greater selectivity.
Rahul Ghai: Revenue grew 14%, grid increased with double.
Revenue grew 14%, grid increased with double Digit growth at each business. At onshore, North American equipment growth was. More than offset by lower repower and international equipment. At offshore, revenue more than tripled year over year, and grew sequentially with higher nacelle output.Profit improved from our turnaround efforts, excluding.
Revenue grew 14% grid.
Rahul Ghai: Digit growth at each business.
<unk> increased with double digit growth at each business.
Rahul Ghai: At onshore, North American equipment growth was.
Speaker 3: transcript
Speaker 3: at onshore, North American equipment growth was more than offset for lower repower and international
At onshore North American equipment growth was more than offset by lower Repower and international equipment.
Rahul Ghai: More than offset by lower repower and international equipment. At offshore, revenue more than tripled year over year, and grew sequentially with higher nacelle output.
Speaker 3: transcript
Speaker 3: at offshore revenue more than triple year over year and grew sequentially with higher NACEL output. no output.
At offshore revenue more than tripled year over year and grew sequentially with higher nacelle output.
Rahul Ghai: Given GE aerospace's strength and GE were Noah's improvement, we are raising full-year guidance and now expecting revenue growth of low teens, up from low double digits, adjusted EPS of $2.55 to $2.65, up 40 cents at the midpoint, largely from improvement in operating profit that we now expect to be in a range of 5.2 to 5.5 billion dollars, and free cash flow of $4.7 to $5.1 billion up $550 million at the midpoint, largely from higher earnings and lower ADA outflow. Now spending a moment on each business, starting with GE Aerospace, demand remains robust with GE and CFM departures growing mid teens year over year, orders were up 34% with strong growth in both equipment and services.
Rahul Ghai: Profit improved from our turnaround efforts, excluding.
Profit improved from our turnaround efforts.
Rahul Ghai: Last year's elevated reserve.
Last year's elevated reserve.Renewables margin still expanded roughly 600 basis points driven by continued price and productivity.
Speaker 3: transcript
Speaker 3: excluding last year's elevated reserve, renewable margin still expanded roughly 600 basis points. Driven by continuous...
Excluding last year's elevated reserve renewables margin still expanded roughly 600 basis points.
Rahul Ghai: Renewables margin still expanded roughly 600 basis points.
Rahul Ghai: Points driven by continued price and productivity.
Driven by continued price and productivity.
Rahul Ghai: Onshore and grid margins expanded due to.
Onshore and grid margins expanded due to Price and productivity, and grid margins also benefited from additional volume. For the year, Renewables now expects low Double-digit revenue growth.We are maintaining the guidance for significantly. Better year over year profit with onshore and grid improvement more than offsetting the offshore pressure. Turning to power, we delivered solid year over year revenue growth and margin expansion with seasonally lower outages.
Speaker 3: transcript
Speaker 3: Onshore and grid margins expanded due to price and productivity and grid margins also benefited from additional volume.
Onshore and grid margins expanded due to price and productivity and grid margins also benefited from additional volume.
Rahul Ghai: Price and productivity, and grid margins also benefited from additional volume.
Rahul Ghai: For the year, Renewables now expects low.
Speaker 3: transcript
Speaker 3: For the year, renewables now expect low double digit revenue growth. We are maintaining the guidance for significantly better year-over-year profit with onshore and grid improvement, more than offsetting the offshore pressure.
For the year renewables now expect low double digit revenue growth, we are maintaining the guidance for significantly better year over year profit with onshore and grid improvement more than offsetting the offshore pressure.
Rahul Ghai: Double-digit revenue growth.
Rahul Ghai: We are maintaining the guidance for significantly.
Rahul Ghai: Better year over year profit with onshore and grid improvement more than offsetting the offshore pressure. Turning to power, we delivered solid year over year revenue growth and margin expansion with seasonally lower outages.
Speaker 3: transcript
Speaker 3: Turning to power. We delivered solid year-over-year revenue growth and margin expansion with seasonally lower outings.
Turning to power.
We delivered.
Solid year over year revenue growth and margin expansion with seasonally lower outages.
Rahul Ghai: Equipment orders grew slightly as higher heavy.
Equipment orders grew slightly as higher heavy duty gas turbines more than offset lower aeroderivative units. Services declined slightly as high single digit. Growth in gas transactional services was offset.By aeroderivative and steam services. For the year, we still expect total services orders to grow low single digits.Revenue grew 9%, largely on price and Higher scope on heavy-duty gas turbine and aeroderivative equipment. Services grew again, up low single digits. Profit grew roughly 60% with 200 basis points. Points of margin expansion driven by higher volume, pricing, and productivity, which more than offset inflation pressure. Year to date, power orders have grown low single digits.
Speaker 3: transcript
Speaker 3: equipment orders grew slightly as higher heavy duty gas turbines more than offset lower aeroderavative units.
Equipment orders grew slightly as higher heavy duty gas turbines more than offset lower aero derivative units.
Rahul Ghai: Duty gas turbines more than offset lower aeroderivative units.
Rahul Ghai: Services declined slightly as high single digit.
Speaker 3: transcript
Speaker 3: Services declined slightly as high single-digit growth in gas transactional services was offset by aeroderavative and steam service.
Services declined slightly as <unk>.
Rahul Ghai: Growth in gas transactional services was offset.
High single digit growth in gas transactional services was offset by <unk> and steam services.
Rahul Ghai: Revenue was up 25%, led by commercial engines and services up 29% and defense growing 8%. Profit grew over $400 million or more than 30%. Notably, margins expanded 120 basis points to reach 20.4%. Higher services, volume and pricing net of inflation more than offset investments and adverse mix. In a commercial business, services strength continued to drive profit, with services revenue up 31% from volume, pricing and heavier workscopes. External spare parts were up more than 35%, and internal shop visits grew 2%, with supply chain constraints impacting growth.
Rahul Ghai: By aeroderivative and steam services. For the year, we still expect total services orders to grow low single digits.
Speaker 3: transcript
Speaker 3: For the year, we still expect total services orders to grow low single digits.
For the year, we still expect total services orders to grow low single digits.
Rahul Ghai: Revenue grew 9%, largely on price and.
Speaker 3: transcript
Speaker 3: Revenue grew 9%. Largely on price and higher scope on heavy duty gas turbine and aeroderavative equipment. Services grew again.
Revenue grew 9% largely on price and higher scope on heavy duty gas turbine and <unk> equipment.
Rahul Ghai: Higher scope on heavy-duty gas turbine and aeroderivative equipment. Services grew again, up low single digits. Profit grew roughly 60% with 200 basis points.
Services grew again up low single digits.
Speaker 3: transcript
Speaker 3: Profit grew roughly 60% with 200 basis points of margin expansion driven by higher volume, pricing and productivity.
Profit grew roughly 60% with 200 basis points of margin expansion.
Rahul Ghai: Points of margin expansion driven by higher volume, pricing, and productivity, which more than offset inflation pressure. Year to date, power orders have grown low single digits.
Driven by higher volume pricing and productivity, which more than offset inflation pressure.
Speaker 3: transcript
Speaker 3: Here to date, our orders have grown low single digits. Revenue, mid single digits, and margins have expanded over 100 days.
Year to date, our orders have grown low single digits revenue mid single digits and margins have expanded over 100 basis points.
Rahul Ghai: Revenue mid single digits and margins have.
Revenue mid single digits and margins have Expanded over 100 basis points. This was led by services, including higher gas utilization, up low single digits Benefiting from a continued coal to gas switching, we also shipped 9HA units this year and now have more than 47GW of installed capacity.
Rahul Ghai: Expanded over 100 basis points. This was led by services, including higher gas utilization, up low single digits.
Speaker 3: transcript
Speaker 3: This was led by services, including higher gas utilization, upload single digits, benefiting from a continued coal to gas switching. We also shipped 9.
This was led by services, including higher gas utilization up low single digits benefiting from a continued coal to gas switching.
Rahul Ghai: Commercial engines revenue grew 23% with leap deliveries up 12% year over year. We are now planning for a 40 to 45% increase in leap deliveries this year, down from our 50% target at the beginning of the year. We now expect all year revenue to grow low to mid 20s and services revenue to be up mid to high 20s for the year. In defense, book to bill remains strong this quarter, again greater than one, and 1.3X year to date highlighting the strong demand environment and quality of our franchisees. Revenue grew high single digits with strength in services and Edison works offsetting lower unit deliveries.
Rahul Ghai: Benefiting from a continued coal to gas switching, we also shipped 9HA units this year and now have more than 47GW of installed capacity.
We also shipped nine <unk> units this year and now have more than 47 gigawatts of installed capacity.
Speaker 3: transcript
Speaker 3: and now have more than 47 gigawatts of installed capacity.
Rahul Ghai: Continuing to extend our aftermarket services billings.
Continuing to extend our aftermarket services billings.To $1 billion by mid-2020s. In the fourth quarter, power is well.Positioned for sequential profit growth from seasonally higher services volume for the year. Power continues to expect low single-digit revenue growth, with better year-over-year profit. Taken together, for GE Vernova, we are now expecting high single-digit revenue growth.Profit improvement of over $800.Million year over year.At the midpoint, we're raising the low. End of our profit guidance driven by.Both renewables and power now expect negative $300 million to negative $100 million of operating profit.
Speaker 3: transcript
Speaker 3: Continuing to extend our HA Services Billings to $1 billion by mid-20-2.
Continuing to extend our HR services billings to $1 billion by mid 2000 Twenty's.
Rahul Ghai: To $1 billion by mid-2020s. In the fourth quarter, power is well.
Speaker 3: transcript
Speaker 3: In the fourth quarter, power is well positioned for sequential profit growth from seasonally higher services volume.
In the fourth quarter power is well positioned for sequential profit growth from seasonally higher services volume.
Rahul Ghai: Positioned for sequential profit growth from seasonally higher services volume for the year. Power continues to expect low single-digit revenue growth, with better year-over-year profit. Taken together, for GE Vernova, we are now expecting high single-digit revenue growth.
Speaker 3: transcript
Speaker 3: For the year, power continues to expect low single-digit revenue growth with better year-over-year profits.
For the year, our continues to expect low single digit revenue growth with better year over year profit.
Speaker 3: transcript
Speaker 3: Taken together for GE-Wernowa, we are now expecting high single-digit revenue growth and profit improvement of over $800 million a year at the midpoint.
Taken together for GE, where NOLA, we're now expecting high single digit revenue growth and profit improvement of over $800 million year over year at the midpoint.
Rahul Ghai: Profit improvement of over $800.
Rahul Ghai: Million year over year.
Rahul Ghai: At the midpoint, we're raising the low.
Speaker 3: transcript
Speaker 3: We're raising the low end of her profit guidance driven by both renewables and power. And now expect negative 300 million to negative 100 million dollars of operating profit.
Rahul Ghai: End of our profit guidance driven by.
We are raising the low end of our profit guidance driven by both renewables and power and now expect negative 300 million to negative $100 million of operating profit.
Rahul Ghai: Based on GE aerospace's year to date strength, we are raising revenue growth to the low 20s and profit to be about 6 billion dollars up roughly 1.2 billion dollars year over year, with free cash flow growth trending better than prior expectations. Moving to GE or NOAA. Lean, along with better underwriting, selectivity and productivity, is delivering stronger results we mentioned earlier at grid and now on show. At renewables orders grew again up 3% this quarter and up more than 80% year to date to nearly $18 billion.
Rahul Ghai: Both renewables and power now expect negative $300 million to negative $100 million of operating profit.
Rahul Ghai: As we continue to expect flat to slightly improved free cash flow.
As we continue to expect flat to slightly improved free cash flow. Overall, we are really encouraged, proving with grid and onshore that we can deliver better results. This combined with Power's continued strong performance.Will drive meaningful profit and cash flow Improvement at GE Vernova next year.
Speaker 3: transcript
Speaker 3: as we continue to expect flat to slightly improved free cash.
As we continue to expect flat to slightly improved free cash flow.
Rahul Ghai: Overall, we are really encouraged, proving with grid and onshore that we can deliver better results.
Speaker 3: transcript
Speaker 3: Overall, we have really encouraged. Proving with grid and onshore that we can deliver better results.
Overall, we are really encouraged proving with grid and onshore that we can deliver better results.
Rahul Ghai: This combined with Power's continued strong performance.
Speaker 3: transcript
Speaker 3: This combined with powers continued strong performance will drive meaningful profit and cash flow improvement at G. We're no one next year. And with that.
This combined with Power's continued strong performance will drive meaningful profit and cash flow improvement at G Y next year.
Rahul Ghai: Will drive meaningful profit and cash flow.
Rahul Ghai: Improvement at GE Vernova next year.
Rahul Ghai: With that, let me turn it.
With that, let me turn it.Back to Larry, Rahul.
Rahul Ghai: Back to Larry, Rahul.
And with that let me turn it back to Larry.
Steve Winoker: Thank you.
Larry Culp: Thank you. To summarize, GE Aerospace grew rapidly again as GE Vernova Renewables improved sequentially power continued to do well overall. A very strong quarter for GE. One that gives us confidence, and thus.Allows us to raise our full year guide. More importantly, we're poised to launch two innovative, global, service-focused industry leaders in less than six months. I'm proud of our team and even.More excited for what lies ahead. Steve, let's go to Q and A.
Speaker 2: Rahul, thank you to summarize GER Space Group rapidly again.
Larry Culp: To summarize, GE Aerospace grew rapidly again as GE Vernova Renewables improved sequentially.
Rahul Thank you to summarize GE aerospace grew rapidly again at.
Speaker 2: transcript
Speaker 2: At GE, renewables improve sequentially and power continue to perform well.
Rahul Ghai: Grid orders increased over 50% this quarter and while primarily in equipment business today, we are starting to grow grid services that was up double digits this quarter. In onshore, North American equipment orders for the quarter were up nearly 40% and year to date are up more than 2.5 times over prior year. The IRA continues to be transformative establishing multi-year U.S, demand visibility for future growth. Group, Internationally, onshore orders were down meaningfully, but at better margins, consistent with a strategy of greater selectivity.
<unk> for an over renewables improve sequentially empower continue to perform well.
Steve Winoker: Power continued to do well overall. A very strong quarter for GE.
Speaker 2: transcript
Speaker 2: Overall, a very strong quarter for GE, one that gives us confidence, and thus allows us to
Overall, a very strong quarter for GE.
Larry Culp: One that gives us confidence, and thus.
One that gives us confidence.
Steve Winoker: Allows us to raise our full year guide. More importantly, we're poised to launch two innovative, global, service-focused industry leaders in less than six months.
And thus allows us to raise our full year guide.
Speaker 2: transcript
Speaker 2: More importantly, we're poised to launch two innovative global service focused industry leaders in less than six months. I'm proud of our team and even more excited for what lies ahead.
More importantly, we are poised to launch two innovative global service focused industry leaders in less than six months.
Larry Culp: I'm proud of our team and even.
Steve Winoker: More excited for what lies ahead.
I am proud of our team and even more excited for what lies ahead Steve.
Larry Culp: Steve, let's go to Q and A.
Steve Let's go to Q&A.
Steve Winoker: Before we open the line, I'd ask everyone in the queue to consider your fellow analysts and ask one question.
Steve Winoker: Before we open the line, I'd ask everyone in the queue to consider your fellow analysts and ask one question.We can get to as many people as possible.Liz, please open the line.
Speaker 4: transcript
Speaker 4: 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, please open the line.
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 Please open the line.
Rahul Ghai: We can get to as many people as possible.
Rahul Ghai: Liz, please open the line.
Operator: Ladies and gentlemen, if you wish to ask a question, please press star 11 on your telephone. If you wish to withdraw your question, or your question has already been answered, please press star 11 again.
Operator: Ladies and gentlemen, if you wish to ask a question, please press star one one on your telephone. If you wish to withdraw your question, or your question has already been answered, please press star one one again.
Speaker 1: transcript
Speaker 1: Ladies and gentlemen, if you wish to ask a question, please press star 1-1 on your telephone.
Ladies and gentlemen, if you wish to ask a question. Please press star one one on your telephone.
Rahul Ghai: Revenue grew 14%, grid increased with double digit growth at each business. At onshore, North American Equipment Growth was more than offset by lower repower and international Equipment. At Offshore, revenue more than triple year over year and grew sequentially with higher Necel Output. Profit improved from our turnaround efforts, excluding last year's elevated reserve, renewables margin still expanded roughly 600 basis points, driven by continued price and productivity. Onshore and grid margins expanded due to price and productivity and grid margins also benefited from additional volume. For the year, renewables now expects low double digit revenue growth. We are maintaining the guidance for significantly better year over year profit with onshore and grid improvement more than offsetting the offshore pressure.
Speaker 1: transcript
Speaker 1: If you wish to withdraw your question or your question has already been answered, please press star 1, 1 again.
If you wish to withdraw your question or your question has already been answered. Please press star one one again.
Operator: Our first question comes from the line of Scott Deuschle with Deutsche Bank.
Our first question comes from the line of Scott Deuschle with Deutsche Bank.
Speaker 1: transcript
Speaker 1: Our first question comes from a line of Scott Doyschley with Deutsche Bank.
Our first question comes from the line of Scott <unk> with Deutsche Bank.
Steve Winoker: Hey, good morning. Good morning. Rahul, is the lower LEAP delivery guide a function of softer narrow body deliveries at the airframers, or is this more related to challenges to your own production ramp up, and then how should we think about the impact of 2024? Thank you.
Scott Deuschle: Hey, good morning. Good morning. Rahul, is the lower LEAP delivery guide a function of softer narrow body deliveries at the airframers, or is this more related to challenges to your own production ramp up, and then how should we think about the impact of 2024? Thank you.
Hey, good morning.
Good morning.
Speaker 5: transcript
Speaker 5: Rahul is the lower-leap delivery guide, a function of softer and narrow-body deliveries at the air framers, or is this more related to challenges to your own production ramp up? And then how should we think about the impact of 2024? Thank you.
Rahul is the lower leap delivery guide a function of softer in narrow body deliveries that they are framers or is this more related to challenges at your tier one production ramp up and then how should we think about the impact of 2024. Thank you.
Rahul Ghai: Yeah, let me start. Larry, I'm sure can add here.
Rahul Gai: Yeah, let me start. Larry, I'm sure can add here.
Speaker 3: transcript
Speaker 3: Let me start in Laryam Shurkin ad here. It's primarily a function of our own supply chain challenges that we are having internally. You know, as we look at our supply chain environment, while we're working extremely hard, we are seeing an improvement in total material inflow. The supply at the linkancies still remain high, actually we're up sequentially about 25% from 2Q to 3.
Let me start and Larry I'm sure can add here.
Rahul Ghai: It's primarily a function of our own.
It's primarily a function of our own.
It's primarily a function of our own supply chain challenges that we're having internally.
Rahul Ghai: Supply chain challenges that we are having internally. You know, as we look at our supply chain environment, while we're working extremely.
Supply chain challenges that we are having internally. You know, as we look at our supply chain environment, while we're working extremely hard, we are seeing an improvement in total material inflow. Supplier delinquencies still remain high.
As we look at our supply chain environment, while we're working extremely hard we are seeing an improvement in total material inflow. The supplier delinquencies still remain high actually were up sequentially about 25% from <unk> to <unk>. So that is impacting our output on the other end.
Rahul Ghai: Hard, we are seeing an improvement in total material inflow. Supplier delinquencies still remain high.
Rahul Ghai: Actually, we're up sequentially about 25% from Q2 to Q3.
Actually, we're up sequentialy about 25% from Q2 to Q3.
Rahul Ghai: That is impacting our output on the other end. You know, for next year we're.
That is impacting our output on the other end. You know, for next year we're.
Rahul Ghai: Turning to power, we delivered solid year over year revenue growth and margin expansion with seasonally lower outages. Equipment orders grew slightly as higher heavy duty gas turbines more than offset lower aeroderavative units. Services declined slightly as high single-digit growth in gas transactional services was offset by aeroderavative and steam services. For the year, we still expect total services orders to grow low single digits. Revenue grew 9%, largely on price and higher scope on heavy duty gas turbine and aeroderavative equipment.
Speaker 3: transcript
Speaker 3: So that is impacting our output on the other end.
Speaker 3: transcript
Speaker 3: And for next year we're still expecting 40 to 45% improvement in leap deliveries from where we end this year.
And for.
Rahul Ghai: Still expecting 40% to 45% improvement in LEAP deliveries from where we end this year.
Still expecting 40% to 45% improvement in LEAP deliveries from where we end this year.
For next year, we're still expecting 40% to 45% improvement in leap deliveries from where we ended this year.
Okay.
Operator: Our next question comes from the line of Nigel Coe with Wolfe Research.
Operator: Our next question comes from the line of Nigel Coe with Wolfe Research.
Speaker 1: transcript
Speaker 1: Our next question comes from the line of Nigel Coe with Wolf Research.
Our next question comes from the line of Nigel Coe with Wolfe Research.
Steve Winoker: Thanks. Good morning. Morning, Nigel, just one question. Hi guys. I think, Larry, you mentioned offshore losses of about $1 billion this year. I think you mentioned similar next year.
Nigel Coe: Thanks. Good morning. Morning, Nigel, just one question. Hi guys. I think, Larry, you mentioned offshore losses of about $1 billion this year. I think you mentioned similar next year.
Speaker 6: transcript
Speaker 6: Thanks. Good morning. Morning, Nigel. Just one question. Hi, guys. So I think, Larry, you mentioned offshore losses of about a billion this year. I think you mentioned similar next year. Is there still a pathway to break even the profit for Vanova, sorry, for renewables next year?
Thanks, Good morning.
Good morning, Nigel just one question, Yeah, Hi, guys.
So I think Larry you mentioned.
Offshore losses of about $1 billion. This year I think you mentioned similar next year.
Rahul Ghai: Is there still a pathway to breakeven?
Is there still a pathway to breakeven to profit for renewables next year?
Still our pathway to breakeven profits fell for Nova.
Steve Winoker: To profit for.
Rahul Ghai: Services grew again up low single digits. Profit grew roughly 60% with 200 basis points of margin expansion, driven by higher volume pricing and productivity, which more than offset inflation pressure. Year to date, power orders have grown low single digits. Revenue, mid single digits, and margins have expanded over 100 basis points. This was led by services, including higher gas utilization up low single digits, benefiting from a continued cold to gas switching. We also shipped 9 HA units this year, and now have more than 47 gigawatts of installed capacity.
Steve Winoker: Renewables next year?
So for our renewables next year.
Larry Culp: Yeah, you know, I would say, Nigel.
Larry Culp: Yeah, you know, I would say, Nigel.
Yes, I would say Nigel that.
Steve Winoker: We're really pleased overall with renewables again, with onshore turning profitable in the quarter, with grid now profitable two quarters in a row, with the prospect of being profitable, I think, for the full year.
We're really pleased overall with renewables again, with onshore turning profitable in the quarter, with grid now profitable two quarters in a row, with the prospect of being profitable, I think, for the full year.
Speaker 2: transcript
Speaker 2: We're really pleased overall with renewables. Again, with onshore turning profitable in the quarter, with grid now, profitable two quarters in a row with the prospect of being profitable, I think for the full year.
We're really pleased overall with renewables again with onshore turning profitable in the quarter.
With grid now profitable two quarters in a row with the prospect of being profitable I think for the full year.
Speaker 2: transcript
Speaker 2: And that's really, I think sets us up very well. But offshore will be difficult. That's what's behind.
Steve Winoker: That really, I think, sets us up very well.
That really, I think, sets us up very well.
That's really I think sets us up very well, but offshore will be difficult that's what's behind it.
Larry Culp: Offshore will be difficult. That's what's behind those underlying numbers for this year and for next. I do think we're making the operational progress that we talked about, both the 6 MW and the new projects with.
Offshore will be difficult. That's what's behind those underlying numbers for this year and for next. I do think we're making the operational progress that we talked about, both the 6 MW and the new projects with Dogger Bank and with Vineyard.
Speaker 2: transcript
Speaker 2: those those underlying numbers for for this year and for next. I do think we're making the operation progress that we talked about both the six megawatts and the new projects with the Arger Banking with Vineyard. But it is a problematic financial profile. We'll work our way through the $6 billion backlog over the next couple of years as we as we indicated. I think with the
Those are those underlying numbers for for this year and for next I do think we're making the operational progress that we talked about both the six megawatts and the new <unk>.
Steve Winoker: Dogger Bank and with Vineyard.
Projects with Dogger bank and with vineyard, but it is a problematic financial profile, we'll work our way through the $6 billion.
Larry Culp: It is a problematic financial profile. We'll work our way through the $6.
It is a problematic financial profile. We'll work our way through the $6.
Rahul Ghai: Continuing to extend our HA services' willings to $1 billion by mid-2020s. In the fourth quarter, power is well positioned for sequential profit growth from seasonally higher services volume. For the year, power continues to expect low single digit revenue growth with better year over year profit.
Steve Winoker: Billion backlog over the next couple of years as we indicated. I think with the progress and the momentum we've got in grid, and with onshore, with power as well, we should deliver sequential improvement in profitability from here. Offshore will be difficult.
Billion backlog over the next couple of years as we indicated. I think with the progress and the momentum we've got in grid, and with onshore, with power as well, we should deliver sequential improvement in profitability from here. Offshore will be difficult.
Backlog over the next couple of years as we as we indicated.
With the <unk>.
Speaker 2: transcript
Speaker 2: Progress in the momentum we've got in grid and with onshore with power as well. We've got we we should deliver sequential improvement and profitability from here, but offshore will be will be difficult. I think what we're encouraged by though.
Progress and the momentum we've got in grid and with our onshore with tower as well we've got.
We should deliver sequential improvement in profitability from here or offshore it will be will.
Rahul Ghai: Taken together, for GE-Wernowa, we are now expecting high single digit revenue growth and profit improvement of over $800 million year over year at the midpoint. We are raising the low end of our profit guidance driven by both renewables and power, and now expect negative $300 million to negative $100 million of operating profit, as we continue to expect flat to slightly improved free cash flow. Overall, we have really encouraged proving with grid and onshore that we can deliver better results. This combined with powers continued strong performance will drive meaningful profit and cash flow improvement at GE where no law next year.
Larry Culp: I think what we're encouraged by, though.
I think what we're encouraged by, though is that the application of what we've done in the other businesses around selectivity? Is really relevant here.
It will be difficult I think what we're encouraged by though.
Steve Winoker: Is that the application of what we've done in the other businesses around selectivity?
Speaker 2: transcript
Speaker 2: is that the application of what we've done in the other businesses around select.
Is that the application of what we've done in the other businesses.
Around selectivity.
Larry Culp: Is really relevant here.
Speaker 2: transcript
Speaker 2: is really relevant here. We know the industry.
Is is really relevant here, we know the industry is.
Steve Winoker: We know the industry is ready for a reset. You've seen that in the comments from a number of folks in New York State over the last couple of weeks as well. We think we can make a.
We know the industry is ready for a reset. You've seen that in the comments from a number of folks in New York State over the last couple of weeks as well. We think we can make a much better business with offshore wind.
Speaker 2: transcript
Speaker 2: is ready for a reset. You've seen that in the comments from a number of folks, New York State over the last couple of weeks as well. So we think we can make a much better business.
Is ready for a reset.
<unk> seen that in the comments from a number of folks New York State over the last couple of weeks.
As well so.
Larry Culp: Much better business with offshore wind.
We think we can make a much better business.
Speaker 2: transcript
Speaker 2: with offshore wind, but we're staring at some challenges that we need to address here in the fourth quarter and in 24 for sure.
With with offshore wind, but we're staring at some challenges that we need to address here.
Steve Winoker: We're staring at some challenges that we need to address here in the.
We're staring at some challenges that we need to address here in the fourth quarter and in 2024 for sure.
Larry Culp: Fourth quarter and in 2024 for sure.
In the fourth quarter and in 2004 for sure.
Operator: Our next question comes from the line of Seth Seifman with JPMorgan.
Operator: Our next question comes from the line of Seth Seifman with JPMorgan.
Speaker 1: transcript
Speaker 1: Our next question comes from a line of Seth Seifman with JPMorgan.
Our next question comes from the line of Seth Sigman with J P. Morgan.
Larry Kulp: And with that, let me turn it back to Larry. Rahul, thank you. To summarize, GE Aerospace grew rapidly again as GE Renewables improved sequentially and power continued to perform well overall a very strong quarter for GE, one that gives us confidence and thus allows us to raise our full year guide. More importantly, we're poised to launch two innovative global service focused industry leaders in less than six months. I'm proud of our team and even more excited for what lies ahead.
Steve Winoker: Hey, good morning everyone.
Seth Seifman: Hey, good morning everyone.
Speaker 7: transcript
Speaker 7: Hey, uh, good morning, everyone. Morning. Good morning.
Hey, good morning, everyone. Good morning, good morning.
Larry Culp: Morning.
Larry Culp: Morning.
Steve Winoker: Good morning.
Rahul Gai: Good morning.
Larry Culp: I wonder maybe Larry or Rahul.
Seth Seifman: I wonder maybe Larry or Rahul.
Speaker 8: transcript
Speaker 8: I wonder if you could talk about the aftermarket expectations. You said mid to high 20s this year. Maybe how that's changed or if it's changed between
So I wonder, maybe Larry or Hall, if you could talk about the aftermarket expectations. You said mid to high 20%. This year, maybe kind of how thats changed or if its changed between.
Steve Winoker: If you could talk about the aftermarket expectations. You know, you said mid to high 20s this year, maybe kind of how that's changed or if it's changed between internal shop visits and spares, and then kind of, you know, how we interpret the big sequential growth in spares during the quarter? You know, is that a new sustainable level? Was that driven by pre buy ahead of a price increase? Is it mostly, you know, is it driven by the price increase itself? Maybe just to level set expectations on aftermarket?
If you could talk about the aftermarket expectations. You know, you said mid to high 20s this year, maybe kind of how that's changed or if it's changed between internal shop visits and spares, and then kind of, you know, how we interpret the big sequential growth in spares during the quarter? You know, is that a new sustainable level? Was that driven by pre buy ahead of a price increase? Is it mostly, you know, is it driven by the price increase itself? Maybe just to level set expectations on aftermarket?
Speaker 8: transcript
Speaker 8: internal shop visits and spares, and then kind of, you know, how we interpret the big sequential growth in spares during the quarter, you know, was that, is that a new sustainable level? Is that, was that driven by pre-buy ahead of a price increase? Is it mostly, you know, is it driven by the price increase itself? Maybe just to level set expectations on aftermarket.
The internal shop visits and spares and then kind of.
How we interpret the.
<unk> sequential growth and spares during the quarter.
Steven Winoker: Steve, let's go to Q&A. Before we open the line, I'd ask every one in the queue to consider your fellow analysts and ask one question so we can get to as many people as possible. Liz, please open the line. Ladies and gentlemen, if you wish to ask a question, please press star 1-1 on your telephone. If you wish to withdraw your question or your question has already been answered, please press star 1-1 again.
With that is that a new sustainable level is that was that driven by a pre buy ahead of a price increase is it mostly driven by the price increase itself.
Maybe just to level set expectations on aftermarket.
Rahul Ghai: Yeah. Let's start with the second part of the question first, Seth, and we'll go back to where you started. On the spare part revenue, spare part revenue was up about 35% or more than 35% this quarter.
Rahul Gai: Yeah. Let's start with the second part of the question first, Seth, and we'll go back to where you started. On the spare part revenue, spare part revenue was up about 35% or more than 35% this quarter.
Speaker 3: transcript
Speaker 3: Yeah, so let's start with the second part of the question first, Seth, and we'll go back to where you started. So on the spare part revenue, spare part revenue was up about 35 percent or more than 35 percent this quarter. I would say three main things, volume, pricing, and increased work.
Yeah, So let's start with the second part of the question first.
And we will go back to where you started so on the spare parts revenue spare parts revenue was up about 35% more than 35%. This.
Rahul Ghai: I would say three main things: volume, pricing, and increased work scope.
I would say three main things: volume, pricing, and increased work scope.
This quarter I would say three main things volume pricing and increased work scope.
Scott Doishley: Our first question comes from the line of Scott Doysley with Deutsche Bank. Hey, good morning. Good morning.
Speaker 3: transcript
Speaker 3: you know, volume growth continues from mid-teens departures in the quarter, and then stronger departure growth in the first half, which leads to volume in the third quarter. And also keep in mind that it's less of a challenge to kind of ship, you know, spare parts, versus completing a shop, is there an engine? So that also helps with shipping spare parts when the volume is strong.
Rahul Ghai: You know, volume growth continues from mid-teens departures in the quarter, and then.
You know, volume growth continues from mid-teens departures in the quarter, and then.
Volume growth continues from mid teens departures in the quarter and then stronger departure wrote in the first half which leads to volume in the in the third quarter.
Rahul Ghai: Rahul is the lower-leap delivery guide, a function of software and everybody deliveries at the air framers or is this more related to challenges to your own production ramp-up? And then how should we think about the impact of 2024? Thank you.
Rahul Ghai: Stronger departure growth in the first half.
Stronger departure growth in the first half.
Rahul Ghai: Which leads to volume in the third quarter. Also, keep in mind that it's less of a challenge to kind of.
Which leads to volume in the third quarter. Also, keep in mind that it's less of a challenge to kind of.
And also keep in mind that it's less of a challenge to kind of ship.
Rahul Ghai: Ship spare parts versus completing a shop.
Ship spare parts versus completing a shop.
Rahul Ghai: Visitor or an engine.
Visitor or an engine.
Rahul Ghai: Let me start and Larry, I'm sure we're going to add here. It's primarily a function of our own supply chain challenges that we are having internally. You know, as we look at our supply chain environment, while we're working extremely hard, we are seeing an improvement in total material inflow. The supply at delinquencies still remain high, actually we're up sequentially about 25% from 2Q to 3Q. So that is impacting our output on the other end. And you know, for next year, we're still expecting 40 to 45% improvement in leap deliveries from where we end this year.
Their parts versus completing a shop visit or at an engine. So that also helps with <unk>.
Rahul Ghai: That also helps with shipping spare.
That also helps with shipping spare.
Rahul Ghai: Parts when the volume is strong.
Parts when the volume is strong.
Shipping spare parts when the volume is strong.
Rahul Ghai: The second part I would say going.
The second part I would say going.
Speaker 3: transcript
Speaker 3: The second part I would say going back to pricing, we implemented a high single digit price increase this quarter. Now we had pulled forward the price increase from the fourth quarter to the third quarter. So we got a couple of months of incremental price in the quarter.
Rahul Ghai: Back to pricing, we implemented a high single-digit price increase this quarter. We had pulled forward the price increase from the fourth quarter to the third quarter, so we got a couple of months of incremental price in the quarter, and then combine that with what Larry's been pushing for the last 12 to 18 months is just very, very strong pricing discipline.
Back to pricing, we implemented a high single-digit price increase this quarter. We had pulled forward the price increase from the fourth quarter to the third quarter, so we got a couple of months of incremental price in the quarter, and then combine that with what Larry's been pushing for the last 12 to 18 months is just very, very strong pricing discipline.
The second part I would say going back to pricing, we implemented a high single digit price increase this quarter now we had pulled forward the price increase from the fourth quarter to the third quarter. So we got a couple of months of incremental price in the quarter.
Speaker 3: transcript
Speaker 3: And then combine that with what Larry's been pushing for the last 12 to 18 months is just very, very strong pricing discipline. It's not just about implementing a price increase. It's also about managing the implementation of that price increase. So I think we're doing a better job of that.
And then combine that with what Larry has been pushing for the last 12 to 18 months is just very very strong pricing discipline. So it's not just about implementing a price increase it's also about managing.
Rahul Ghai: It's not just about implementing a.
It's not just about implementing a.
Rahul Ghai: Price increase, it's also about managing the implementation of that price increase. I think we're doing a better job of that. The last thing I would say is the work scopes have been heavier both on the narrow bodies and on the wide bodies. Wide bodies, they're coming back to kind of second shop visits.
Price increase, it's also about managing the implementation of that price increase. I think we're doing a better job of that. The last thing I would say is the work scopes have been heavier both on the narrow bodies and on the wide bodies. Wide bodies, they're coming back to kind of second shop visits.
The implementation of that price increase I think we're doing a better job of that the last thing I would say is though the work scopes have been heavier both on the narrow bodies and on the wide bodies. So wide bodies. They are coming back to kind of second shop visit narrow bodies as primarily a phenomenon of.
Speaker 3: transcript
Speaker 3: The last thing I would say is the work scope has been heavier, both on the narrow bodies and on the wide bodies. So wide bodies, you know, they're coming back to kind of second shop visits. narrow bodies is primarily a phenomena of
Nigel Coe: Our next question comes from a line of Nigel Coe with Walls Research. Thank you. Good morning. Morning, Nigel. Just one question. Hi, hi, guys. So I think Larry, you mentioned the offshore losses of about a billion this year. I think you mentioned similar next year.
Rahul Ghai: Narrow bodies is primarily a phenomenon of.
Narrow bodies is primarily a phenomenon of.
Rahul Ghai: Customers kind of trying to constrain spending.
Customers kind of trying to constrain spending.
Speaker 3: transcript
Speaker 3: customers kind of trying to constrain spending in challenging times, especially in China last year. So now as they're a little bit more cash with the barters growing, the workscops are increasing. So obviously, those of the three main levers of IR SPAIR parts growth in the quarter, which was more than 35%, I would not attribute any of that to pre-CLP by.
Customers.
Kind of trying to constrained spending in challenging times, especially in China last year. So now as they're a little bit more cash departures growing they are the work scope side, increasing so obviously those are the three main levers of higher speeds spare parts growth in the quarter, which was more than 35% I would not attribute any of that to <unk>.
Rahul Ghai: In challenging times, especially in China last year, as they're a little bit more cash, the departure is growing, their work scopes are increasing. I would say those are the three main levers of higher speed spare.
In challenging times, especially in China last year, as they're a little bit more cash, the departure is growing, their work scopes are increasing. I would say those are the three main levers of higher speed spare.
Larry Kulp: Is there still a pathway to break even the profit for Bonobo, for Renewables next year? Yeah, you know, I would say Nigel that we're really pleased overall with Renewables. Again, with onshore turning profitable in the quarter with grid now, profitable two quarters in a row with the prospect of being profitable, I think for the full year. You know, that's really, I think sets us up very well, but offshore will be difficult.
Rahul Ghai: Parts growth in the quarter, which was more than 35%.
Parts growth in the quarter, which was more than 35%.
Rahul Ghai: I would not attribute any of that to pre-CLP buy.
I would not attribute any of that to pre-CLP buy.
Rahul Ghai: Now as you look forward to the.
Now as you look forward to the.
Speaker 3: transcript
Speaker 3: Now, as you look forward to the 1st, part of your question between spare parts, growth and shop visits the spare parts, I would say are.
Now as you look forward to the first part of your question between spare parts growth and shop visits now spare parts I would say are strong we expect kind of mid <unk> growth in the fourth quarter here, which will be in line with where the departures are shop visits I think for the year, we in that kind of low teens to mid teens category.
Rahul Ghai: First part of your question between spare parts growth and shop visits, spare parts I would say are strong. We expect kind of mid-20s growth in the fourth quarter here, which will be in line with where the departures are, shop visits. I think for the year we are in that kind of low teens to mid teens category. I think that's what we are thinking right now given how challenging supply chain has been. You know, shop visits were up.
First part of your question between spare parts growth and shop visits, spare parts I would say are strong. We expect kind of mid-20s growth in the fourth quarter here, which will be in line with where the departures are, shop visits. I think for the year we are in that kind of low teens to mid teens category. I think that's what we are thinking right now given how challenging supply chain has been. You know, shop visits were up.
Speaker 3: transcript
Speaker 3: Strong, we expect mid-20s growth in the fourth quarter here, which will be in line with where the departures are.
Speaker 3: transcript
Speaker 3: Shop visits, I think for the year, we're in that kind of low teens to mid teens category. I think that's what we are thinking right now, given how challenging supply chain has been and shop visits were up a couple of points in the third quarter. So we think for the year, we're kind of in the low teens to mid teens range.
Larry Kulp: That's what's behind those those underlying numbers for for this year and for next. I do think we're making the operational progress that we talked about, both the six megawatts and the new projects with the Arger Bank and with Vineyard, but it is a problematic financial profile. We'll work our way through the six billion dollar backlog over the next couple of years as we as we indicated. I think with the progress and the momentum we've got in grid and with onshore, with power as well, we've got we should deliver sequential improvement and profitability from here, but offshore will be difficult.
That's what we're thinking right now given how challenging supply chain has been in the shop visits were up a couple of points in the third quarter. So we think for the year, we are kind of in the in the low teens mid teens range.
Rahul Ghai: A couple of points in the third quarter. We think, you know, for the.
A couple of points in the third quarter. We think, you know, for the.
Rahul Ghai: Year we kind of in the low teens to mid-teens range.
Year we kind of in the low teens to mid-teens range.
Operator: Our next question comes from the line of Julian Mitchell with Barclays.
Operator: Our next question comes from the line of Julian Mitchell with Barclays.
Speaker 1: transcript
Speaker 1: Our next question comes from a line of Julian Mitchell with Barclays.
Our next question comes from the line of Julian Mitchell with Barclays.
Rahul Ghai: Hi, good morning. Morning.
Julian Mitchell: Hi, good morning. Morning.
Speaker 9: transcript
Speaker 9: Hi, good morning. Morning. Morning, you're welcome. Morning, maybe just my question around renewables and sort of fully understand the offshore backlog, but maybe just wanted to focus on a couple of other things. One was, are you seeing any shift in the kind of new orders or new equipment orders picture in renewables, just because it seems a tough environment for projects?
Hi, good morning.
Steve Winoker: Morning, Julian.
Steve Winoker: Morning, Julian.
Good morning, good morning Julien.
Rahul Ghai: Morning.
Rahul Gai: Morning.
Julian Mitchell: Maybe it's my question around.
Julian Mitchell: Maybe it's my question around.
Good morning, maybe just my question around.
Julian Mitchell: Renewables and sort of fully understand the offshore backlog, maybe just wanted to focus on.
Renewables and sort of fully understand the offshore backlog, maybe just wanted to focus on.
Renewables and sort of fully understand the.
Offshore backlog, but maybe just wanted to focus on a couple of other things one was how.
Rahul Ghai: A couple of other things.
A couple of other things.
Julian Mitchell: One was are you seeing any shift in the kind of new orders or new equipment orders picture in renewables just because it seems a tougher environment for project development and financing in general across different industries? Just wondered if your perspective on that had changed for the coming quarters, and sort of allied to that because of the working capital dynamics of renewables with customer advances and so on. Any thoughts around sort of what level of cash balance Vernova should have upon spin, and sort of any mix of GE versus external financing for that or funding for that cash balance?
One was are you seeing any shift in the kind of new orders or new equipment orders picture in renewables just because it seems a tougher environment for project development and financing in general across different industries? Just wondered if your perspective on that had changed for the coming quarters, and sort of allied to that because of the working capital dynamics of renewables with customer advances and so on. Any thoughts around sort of what level of cash balance Vernova should have upon spin, and sort of any mix of GE versus external financing for that or funding for that cash balance?
Larry Kulp: I think what we're encouraged by, though, is that the application of what we've done in the other businesses around selectivity is really relevant here. We know the industry is ready for a reset. You've seen that in the comments from from a number of folks, New York State over the last couple of weeks as well. So we we think we can make a much better business with with offshore wind, but we're staring at some challenges that we need to address here in the fourth quarter and in 24 for sure.
Are you seeing any shift in the kind of a new orders and new equipment orders picture and renewables just because it seems a tougher environment for project development and financing in general across different industries. Just wanted to feel perspective on that had changed for the coming quarters.
Speaker 9: transcript
Speaker 9: development and financing in general across different industries. Just wondered if your perspective on that had changed for the coming quarters and sort of allied to that because of the working capital dynamics of renewables with customer advances and so on. Any thoughts around what level of cash
Sort of allied to that because of the working capital dynamics of renewables with customer advances and so on.
Any thoughts around sort of.
What level of cash.
Speaker 9: transcript
Speaker 9: balance Vanova should have upon spin and sort of any mix of GE versus external financing for that or funding for that cash balance?
The Nova should have.
Upon spin and sort of any mix of <unk> versus external financing for that or funding for that cash balance.
Sheila Kahyaoglu: Our next question comes from a line of sets segment with JP Morgan. Hey, uh, good morning, everyone. Good morning.
Steve Winoker: Sure. Well, to start with, I think what we have seen through the course of the year, again, particularly with onshore and grid, is just.
Larry Culp: Sure. Well, to start with, I think what we have seen through the course of the year, again, particularly with onshore and grid, is just.
Speaker 2: transcript
Speaker 2: Sure. Well, to start with, I think what we have seen through the course of the year, again, particularly with onshore and grid, is just
Sure.
To start with I think what we have seen through the course of the year again, particularly with onshore and grid is just.
Rahul Ghai: Um, so I wonder, um, maybe a liar or, well, if you could talk about the aftermarket expectations, you know, you said mid to high 20s this year, maybe kind of how that's changed or if it's changed between internal shop visits and spares and then kind of, you know, how, how we interpret the big sequential growth. And in spares during the quarter, you know, was that, is that a new sustainable level? Is that was that driven by pre buy ahead of a price increase? Is it mostly, you know, is driven by the price increase itself? Um, maybe just to level set expectations on on aftermarket. Yeah.
Uh huh.
Steve Winoker: Incredibly healthy demand, despite the rate environment. Obviously, the incentives here, the incentives in Europe, the push with respect to the energy transition at large, really has kept us very busy. No change really whatsoever with respect to our commentary in that regard.
Incredibly healthy demand, despite the rate environment. Obviously, the incentives here, the incentives in Europe, the push with respect to the energy transition at large, really has kept us very busy. No change really whatsoever with respect to our commentary in that regard.
Incredibly healthy demand.
Speaker 2: transcript
Speaker 2: despite the rate environment, obviously the incentives here, the incentives in Europe , the push with respect to the energy transition at war, really have.
Despite the rate environment, obviously the incentives.
Here the incentives in Europe , the push with respect to the energy transition at large really has.
Speaker 2: transcript
Speaker 2: Kept us very busy, so no, no change really whatsoever with respect to our commentary in that regard. I think as we look into the 4th quarters, we look into 24.
<unk> very.
Very busy so no no change really whatsoever.
With respect to our commentary in that regard I think as we look into the fourth quarter as we look into 'twenty four.
Larry Culp: I think as we look into the fourth quarter, as we look into 2024, any one project can move for various reasons, but I think we continue to.
I think as we look into the fourth quarter, as we look into 2024, any one project can move for various reasons, but I think we continue to.
Speaker 2: transcript
Speaker 2: Anyone project can move for various reasons.
Any one project can move for various reasons.
Rahul Ghai: Um, so let's start with the second part of the question first, um, set and we'll go back to where where you started. So on the spare part revenue, spare part revenue was up about 35% or more than 35% this quarter, I would say three main things volume pricing and increased work scope. Um, you know, volume growth continues from mid teens departures in the quarter and then stronger departure growth in the first half, which leads to volume in the in the third quarter.
Speaker 2: transcript
Speaker 2: But I think we continue to be quite optimistic about the underlying demand that we see in those businesses. We know offshore has its own dynamics again to the reset comment I made a moment ago. But by and large, I think we're feeling very good about the demand environment.
Steve Winoker: Be quite optimistic about the underlying demand that we see in those businesses. We know offshore has its own dynamics. Again, to the reset comment I made a moment ago, by and large, I think we're feeling very good about the demand environment.
Be quite optimistic about the underlying demand that we see in those businesses. We know offshore has its own dynamics. Again, to the reset comment I made a moment ago, by and large, I think we're feeling very good about the demand environment.
But I think we continue to be quite optimistic about.
The underlying demand that we see in those businesses. We know offshore has its own dynamics again to the reset comment I made a moment ago.
But by and large I think we're feeling very good about the demand environment.
Larry Culp: Right.
Rahul Gai: Right.
Rahul Ghai: Just to add to that, Julian, not only is the demand environment good.
Just to add to that, Julian, not only is the demand environment good.
Speaker 3: transcript
Speaker 3: And just to add to that, Julian, not only is the demand environment good, but as Larry kind of mentioned in his prepared remarks, we are seeing better pricing and the selectivity, the strategy that, you know, Scott, Larry, Vic, or everybody's been pushing come through. Our grid backlog margins were up about three points and onshore backlog margins were up about seven points in the quarter. So that should obviously help with as through the turnaround efforts in 2024.
And just to add to that Julian not only is the demand environment, good but as Larry mentioned in his prepared remarks, we are seeing better pricing and the selectivity to strategy that Scott Larry vehicle everybody's been pushing come through our grid backlog margins were up about three points and onshore backlog margins were up about <unk>.
Rahul Ghai: As Larry kind of mentioned in his prepared remarks, we are seeing better.
As Larry kind of mentioned in his prepared remarks, we are seeing better.
Rahul Ghai: Pricing and the selectivity, the strategy that.
Pricing and the selectivity, the strategy that.
Rahul Ghai: Scott, Larry, Vic, or everybody's been pushing, come through our grid backlog. Margins were up about 3 points, and onshore backlog margins were up about 7 points in the quarter.
Scott, Larry, Vic, or everybody's been pushing, come through our grid backlog. Margins were up about 3 points, and onshore backlog margins were up about 7 points in the quarter.
Rahul Ghai: Um, and also keep in mind that it's less of a challenge to kind of ship, you know, spare parts versus completing a shop visitor or an engine. So that also helps with shipping spare parts when the volume is strong. The second part I would say going back to pricing, we implemented a high single digit price increase this quarter. Now we had pulled forward the price increase from the fourth quarter to the third quarter.
Rahul Ghai: That should obviously help with through.
That should obviously help with through.
Seven points in the quarter, so that should obviously help with us through the turnaround efforts in 2024, so strong demand environment. Good pricing on the renewables orders now switching to your second question on the on the cash balance.
Rahul Ghai: The turnaround efforts in 2024.
The turnaround efforts in 2024.
Rahul Ghai: Strong demand environment, good pricing on the renewables orders. Now switching to your second question on the cash balance. First and foremost, we do expect both.
Strong demand environment, good pricing on the renewables orders. Now switching to your second question on the cash balance. First and foremost, we do expect both.
Speaker 3: transcript
Speaker 3: So, strong demand environment, good pricing on the renewables orders. Now, switching to your second question on the cash balance.
Speaker 3: transcript
Speaker 3: First and foremost, we do expect both Bernouva and Aerospace to be investment grade at spin. Right? So that's kind of priority number one. And as we announce back in September , that we do expect that Bernouva will spin in a net cash.
Rahul Ghai: So we got a couple of months of incremental price in the quarter and then combined that with what Larry's been pushing for the last 12 to 18 months is just very, very strong pricing discipline. It's not just about implementing a price increase. It's also about managing the implementation of that price increase, so I think we're doing a better job of that. The last thing I would say is the the work scopes have been heavier both on the narrow bodies and on the wide bodies.
Rahul Ghai: Vernova Aerospace to be investment grade at spin. Right. That's kind of priority number one. As we announced back in September.
Vernova Aerospace to be investment grade at spin. Right. That's kind of priority number one. As we announced back in September.
First and foremost we do expect both for NOLA and aerospace to be investment grade AD spend right. So that's kind of priority number one and as we announced back in September that we do expect that we'll know what we'll spend in a net cash position. So we're working through our framework on exactly what that number it looks like obviously, what we want to do is you want to.
Rahul Ghai: That we do expect that Vernova will.
That we do expect that Vernova will.
Rahul Ghai: Spin in a net cash position.
Spin in a net cash position.
Rahul Ghai: We're working through our framework on.
We're working through our framework on.
Speaker 3: transcript
Speaker 3: So we're working through our framework on exactly what that number looks like. Obviously what we want to do is you want to make sure that both companies have enough operating cash.
Rahul Ghai: Exactly what that number looks like. Obviously, what we want to do is you want to make sure that both.
Exactly what that number looks like. Obviously, what we want to do is you want to make sure that both.
Rahul Ghai: So wide bodies, you know, they're coming back to kind of second shop visits, narrow bodies is primarily a phenomena of customers kind of trying to constrain spending in challenging times, especially in China last year. So now as they're a little bit more cash, the departure is growing, they are the work scopes are increasing. So obviously those are the three main levers of higher space spare parts growth in the quarter, which was more than 35% I would not attribute any of that to please CLP by.
Rahul Ghai: Companies have enough operating cash at the time of spin.
Companies have enough operating cash at the time of spin.
Make sure that both companies have enough operating cash.
Speaker 3: transcript
Speaker 3: At the time of spin. In addition, what will also happen is, as you probably noticed in our 10-Q , we have about $2 billion of restricted cash.
Rahul Ghai: In addition, what will also happen is, as you probably noticed in our 10-Q, we have about $2 billion of restricted.
In addition, what will also happen is, as you probably noticed in our 10-Q, we have about $2 billion of restricted.
At the time of spin. In addition, what will also happen is as you probably noticed in our 10-Q, we have about $2 billion off our restricted cash and most of that is with Lenovo right now as we think about where that cash balances. So as we think about the cash balances it's been it'll be the restricted cash for both business.
Rahul Ghai: Cash, and most of that is with.
Cash, and most of that is with.
Speaker 3: transcript
Speaker 3: And most of that is with Vernova right now, as we think about where that cash balance is. So as we think about the cash balances at SPIN, it'll be the restricted cash for both businesses, plus the operating needs of that business. And there's enough cash on the balance sheet at GE to make sure that this happens. And we definitely don't need to tap into any external markets to make sure that both companies have enough cash at SPIN.
Rahul Ghai: Vernova right now as we think about where that cash balance is. As we think about the cash balances that spin, it'll be the restricted cash for both businesses, plus the operating needs of that business. There's enough cash on the balance sheet at GE to make sure that this happens.
Vernova right now as we think about where that cash balance is. As we think about the cash balances that spin, it'll be the restricted cash for both businesses, plus the operating needs of that business. There's enough cash on the balance sheet at GE to make sure that this happens.
<unk> lost the operating needs of that business and there is enough cash on the balance sheet at GE to make sure that this happens and we definitely don't need to tap into any external markets to make sure that both companies have enough cash outspend.
Rahul Ghai: We definitely don't need to tap.
We definitely don't need to tap.
Rahul Ghai: Into any external markets to make sure that both companies have enough cash at spending.
Into any external markets to make sure that both companies have enough cash at spending.
Rahul Ghai: Now as you look forward to is the first part of your question between spare parts growth and shop visits. The spare parts I would say are strong, we expect kind of mid 20s growth in the fourth quarter here, which will be in line with where the departures are shop visits, I think for the year we in that, you know, kind of low teens to mid teens category. I think that's what we are thinking right now given how challenging supply chain has been and you know shop visits were up a couple of points in the third quarter. So we think that, you know, for the year we can kind of in the in the low teens mid teens.
Rahul Ghai: We'll give you an update as we get closer to spin.
We'll give you an update as we get closer to spin.
And we will give you an update as we get closer to spin.
Operator: Our next question comes from the line of Sheila Kahyaoglu with Jefferies.
Operator: Our next question comes from the line of Sheila Kahyaoglu with Jefferies.
Speaker 1: transcript
Speaker 1: Our next question comes from a line of Sheila Kailu with Jeff.
Our next.
Next question comes from the line of Sheila <unk> with Jefferies.
Operator: Thank you.
Sheilla Kahyaoglu: Thank you.
Sheila Kahyaoglu: Good morning, Larry and Rahul.
Good morning, Larry and Rahul.
Speaker 10: transcript
Speaker 10: Thank you. Good morning, Mary and Steve. Maybe I could ask about aerospace margins, you know, same as last quarter. Very good. Nineteen four year to date above 20% in the quarter.
Thank you good morning, Mary Ann Bell.
Steve Winoker: Morning.
Larry Culp: Morning.
Sheila Kahyaoglu: Steve, maybe if I could ask about aerospace margins, you know, same as last quarter, very good. 194 year to date above 20% in the quarter just helped lift the guide up, which still implies a sequential step down. You know, the OE mix headwind with the 450 leads in the fourth quarter to hit the 1,650 is I guess a lot of it. Do you still expect 250 basis points of OE headwind this year? How does that filter into 2024 and the break even by 2026?
Sheilla Kahyaoglu: Steve, maybe if I could ask about aerospace margins, you know, same as last quarter, very good. 194 year to date above 20% in the quarter just helped lift the guide up, which still implies a sequential step down. You know, the OE mix headwind with the 450 leads in the fourth quarter to hit the 1,650 is I guess a lot of it. Do you still expect 250 basis points of OE headwind this year? How does that filter into 2024 and the break even by 2026?
And Steve maybe if I could ask about aerospace margin.
Payments last quarter very good 19 for.
About 20% in the quarter.
Speaker 10: transcript
Speaker 10: help lift the guide up, which still implies a sequential step down in Q4.
The download App, which still implies a sequential step down in Q4 so.
Speaker 10: transcript
Speaker 10: you know the OEMix had win with the 450 B. It's in a quarter to hit the 1650. I guess a lot of it.
Yes, the only next heartland with FY <unk>.
Julian Mitchell: Our next question comes from the line of Julian Mitchell with Barclays. Hi, good morning, morning, morning, maybe just my question around renewables and sort of fully understand the offshore backlog but maybe just wanted to focus on a couple of other things. One was, are you seeing any shift in the kind of new orders or new equipment orders picture in renewables just because it seems a tougher environment for project development and financing in general across different industries, just wanted to feel perspective on that had changed for the coming quarters and sort of allied to that because of the working capital dynamics of renewables with customer advances and so on.
Our fourth quarter <unk>.
I guess a lot of that.
Speaker 10: transcript
Speaker 10: Do you still expect you in a 50 basis points of OE headwind this year? How does that filter into 24 and the break even by 26? Thank you.
We still expect 250 basis points of headwind this year, how does that filter into 'twenty four and the breakthrough that by 'twenty. Thank you.
Rahul Ghai: Thank you.
Thank you.
Larry Culp: Okay.
Rahul Gai: Okay.
Rahul Ghai: It's a multipart question, Sheila. I'm going to try to remember everything. If I forget, just please jump in here. You're right, I think we had a good quarter. 25% revenue growth, $400 million of profit growth, 120 basis points of margin expansion in the quarter continue to give us.
It's a multipart question, Sheila. I'm going to try to remember everything. If I forget, just please jump in here. You're right, I think we had a good quarter. 25% revenue growth, $400 million of profit growth, 120 basis points of margin expansion in the quarter continue to give us.
Speaker 3: transcript
Speaker 3: Okay. It's a multi-part question, Sheila. I'm going to try to remember everything. If I forget, just please, please jump in here. So you're right. I think we had a good quarter, you know, 25% revenue growth.
Okay Multipart question, Sheila I'm going to try to remember everything if I forget just please please jump in here. So you're right I think we had a good quarter.
25% revenue growth.
Speaker 3: transcript
Speaker 3: $4 million of the profit growth, 120 basis points of margin expansion in the quarter, continue to give this confidence to raise the year. So what we did in the quarter, as you saw in the guide, we raised the guide for the year, by about $500 million of revenue, slightly more than $250 million of the profit. So about a 50% drop to for the incremental revenue, obviously now part of that is the higher services revenue, lower or even revenue that you reference.
Or among other profit go to 120 basis points of margin expansion.
In the quarter continued to gives us confidence to raise the year. So what we did in the quarter as you saw in the guide you raised the guide for the year by about $500 million of revenue and slightly more than $250 million of profit. So about a 50% drop through for the incremental revenue obviously in a part of that is.
Rahul Ghai: Confidence to raise the year. What we did in the quarter.
Confidence to raise the year. What we did in the quarter.
Rahul Ghai: As you saw in the guide, we raised the guide for the year by about $500 million of revenue, slightly more than $250 million of profit.
As you saw in the guide, we raised the guide for the year by about $500 million of revenue, slightly more than $250 million of profit.
Rahul Ghai: About a 50% drop through for the incremental revenue.
About a 50% drop through for the incremental revenue.
Rahul Ghai: Obviously, part of that is the higher services revenue, lower OE revenue that you referenced. As you kind of think about now what the fourth quarter looks like, as you go from third quarter to the fourth quarter, there is about $200 million of incremental OE revenue.
Obviously, part of that is the higher services revenue, lower OE revenue that you referenced. As you kind of think about now what the fourth quarter looks like, as you go from third quarter to the fourth quarter, there is about $200 million of incremental OE revenue.
Rahul Ghai: Any thoughts around sort of you know what level of cash balance the Nova should have upon spin and sort of any mix of GE versus external financing for that or funding for that cash balance. Sure, well, to start with, I think what we have seen through the course of the year, again, particularly with onshore and grid is just incredibly healthy demand despite the rate environment, obviously the incentives here, the incentives in Europe, the push with respect to the energy transition at large really has kept us very busy so no change really whatsoever with respect to our commentary in that regard.
The higher services revenue lower OE revenue that you referenced.
Speaker 3: transcript
Speaker 3: So, you know, as you kind of think about now, what the fourth quarter looks like, as you go from third quarter to the fourth quarter, there is about $200 million of incremental OE revenue. And even though service is revenue is still strong, kind of mid teens, it is a lower...
So as you kind of think about now what the for the fourth quarter. It looks like as you go from third quarter for the fourth quarter.
There is about $200 million of incremental revenue and even those services revenues still strong kind of mid teens is a lower <unk>.
Rahul Ghai: Even though services revenue is still.
Even though services revenue is still.
Rahul Ghai: Strong kind of mid teens, it is a lower sequential growth just given the.
Strong kind of mid teens, it is a lower sequential growth just given the.
Speaker 3: transcript
Speaker 3: sequential growth, just given the timing of the spare parts shipment so that's impacting the quarterly margin dynamic to a little bit. But, you know, having said all that we still expecting kind of low 20% revenue growth in the, in the year for G aerospace.
Sequential growth just given the timing of the spare part shipments. So that's impacting the quarterly margin dynamic do a little bit, but having said all that we still expecting kind of low 20% revenue growth in the in the year for GE aerospace or 1 billion to 2 billion three of profit close to a point of margin expansion as he is.
Rahul Ghai: Timing of the spare parts shipment. That's impacting the quarterly margin dynamic a little bit. Having said all that, we still.
Timing of the spare parts shipment. That's impacting the quarterly margin dynamic a little bit. Having said all that, we still.
Rahul Ghai: Expecting low 20s% revenue growth in the year for GE Aerospace or a.
Expecting low 20s% revenue growth in the year for GE Aerospace or a.
Rahul Ghai: $1.2 to 1.3 billion of profit.
$1.2 to 1.3 billion of profit.
Speaker 3: transcript
Speaker 3: or a billion two to billion three of profit, you know, close to a point of margin expansion as the as the end of the year. So it'll be a really, really good year.
Rahul Ghai: Close to a point of margin expansion as we end the year. It'll be a really, really good year. Now, as you pointed out, LEAP delivery is a little bit lighter than we had initially expected. Still, a pretty substantial ramp in the fourth quarter. We are expecting, based on the revised guidance that we just provided, about 15% growth from Q3 to Q4.
Close to a point of margin expansion as we end the year. It'll be a really, really good year. Now, as you pointed out, LEAP delivery is a little bit lighter than we had initially expected. Still, a pretty substantial ramp in the fourth quarter. We are expecting, based on the revised guidance that we just provided, about 15% growth from Q3 to Q4.
Embraer, so it'll be a really really good year.
Speaker 3: transcript
Speaker 3: Now, as you as you pointed out, you know leave deliveries, a little bit lighter than we had initially expected still a pretty substantial rat ramp in the fourth quarter we expecting.
Now as you as you pointed out leap deliveries a little bit lighter.
Than we had initially expected it's still a pretty substantial ramp in the fourth quarter. We are expecting now based on the revised guidance that we just provided we expect about a 15% growth from <unk> and a pretty.
Speaker 3: transcript
Speaker 3: Now based on the revised guidance that we just provided, we expect about a 15% growth from 3Q to 4Q. And a pretty...
Rahul Ghai: I think as we look into the fourth quarters, we look into 24, you know, any one project can move for various reasons, but I think we continue to be quite optimistic about the underlying demand that we see in those businesses. We know offshore has its own dynamics again to the reset comment I made a moment ago, but by and orange, I think we feel very good about the demand environment. Right. And just to add to that, Julian, not only is the demand environment good, but as Larry's going to mention in his prepared remarks, we are seeing better pricing and the selectivity to strategy that, you know, Scott, Larry, Vick or everybody's been pushing come to our grid backlog margins. There are about three points and onshore backlog margins were up about seven points in the quarter. So that should obviously help with as through the turnaround efforts in 2024.
Rahul Ghai: A pretty big ramp year over year. Now some of the LEAP deliveries have.
A pretty big ramp year over year. Now some of the LEAP deliveries have.
Speaker 3: transcript
Speaker 3: big ramp year over year. Now, some of the LEAP deliveries have pushed out into 24 and 25. So as we think about the outer year margins, we had guided about a point of margin headwind from LEAP between 23 to 25. So now that would just be marginally higher, just movement of LEAP engine shipments from 23 to 24. I don't know if I covered all the questions.
Big ramp year over year now some of the leap deliveries have pushed out into 2425. So as we think about the outreach margins, we had guided to about a point of margin headwind from leap between 23 to 25. So now that will just be marginally higher just movement of leap engine shipments from <unk>.
Rahul Ghai: Pushed out into 2024 and 2025.
Pushed out into 2024 and 2025.
Rahul Ghai: As we think about the outer.
As we think about the outer.
Rahul Ghai: Year margins, we had guided to about a point of margin headwind from LEAP.
Year margins, we had guided to about a point of margin headwind from LEAP.
Rahul Ghai: Between 23% to 25%.
Between 23% to 25%.
Rahul Ghai: That would just be marginally higher.
That would just be marginally higher.
Rahul Ghai: Just movement of LEAP engine shipments from 2023 to 2024. I don't know if I covered all the questions.
Just movement of LEAP engine shipments from 2023 to 2024. I don't know if I covered all the questions.
322, 24, I don't know if I covered all the questions.
Yeah.
Operator: Our next question comes from the line of Dean Dray with RBC Capital Markets.
Operator: Our next question comes from the line of Deane Dray with RBC Capital Markets.
Our next question comes from the line of Deane Dray with RBC capital markets.
Speaker 1: transcript
Speaker 1: Our next question comes from a line of Dean Dre with RBC Capital Markets.
Rahul Ghai: Thank you. Good morning, everyone.
Deane Dray: Thank you. Good morning, everyone.
Speaker 5: transcript
Speaker 5: Thank you. Good morning, everyone. Morning, Dean. I hope we could get some comments on the upside in free cash flow this quarter and the progress that you're making and having free cash flow more linear through the year looks like that's working. And any comments on the dynamics we should expect for free cash flow in the fourth quarter. And he puts your take.
Rahul Ghai: Good morning, Dean.
Rahul Gai: Good morning, Deane.
Thank you and good morning, everyone. Good morning, Deane. It was hoping we could get some comments on the upside and free cash flow this quarter and the progress that youre, making and.
Rahul Ghai: I was hoping we could get some.
Deane Dray: I was hoping we could get some.
Steve Winoker: Comments on the upside in free cash flow this quarter and the progress that you're making in having free cash flow more linear through the year. Looks like that's working. Any comments on the dynamics we should expect for free cash flow in the fourth quarter, any puts or takes.
Comments on the upside in free cash flow this quarter and the progress that you're making in having free cash flow more linear through the year. Looks like that's working. Any comments on the dynamics we should expect for free cash flow in the fourth quarter, any puts or takes.
Rahul Ghai: So strong demand environment, good pricing on the renewables orders now switching to a second question on the, you know, the cash balance. First and foremost, we do expect both for Nova and aerospace to be investment grade at spin, right. So that's kind of priority number one. And as we announced back in September that we do expect that we're no one will spin in a net cash position. So we're working through our framework on exactly what that number looks like.
Having free cash flow more linear through the year. It looks like that's working and any comments on the dynamics, we should expect for free cash flow in the fourth quarter and it puts her tax.
Larry Culp: Well, Dean, thanks for noticing.
Larry Culp: Well, Dean, thanks for noticing.
Speaker 2: transcript
Speaker 2: Well Dean, thanks for noticing, right? It's to be up a billion dollars in the quarter year or a year to be at what, 22, here, year to date. This was the time of the year and years passed where we were kind of holding our breath.
Well Dean.
Steve Winoker: Right. To be up a billion dollars in the quarter year over year, to be at, what, $2.2 billion here year to date. This was the time of the year in years past where we were kind of holding our breath waiting for all the cash flow in the year to come in, in the fourth quarter. I think what you see again is a much more linear approach to running the business, coupled with obviously steady demand through the course of the year, both at Aero and across Vernova. Much of what we've tried to do in moving away operationally from the year-end dynamics, let alone the.
Right. To be up a billion dollars in the quarter year over year, to be at, what, $2.2 billion here year to date. This was the time of the year in years past where we were kind of holding our breath waiting for all the cash flow in the year to come in, in the fourth quarter. I think what you see again is a much more linear approach to running the business, coupled with obviously steady demand through the course of the year, both at Aero and across Vernova. Much of what we've tried to do in moving away operationally from the year-end dynamics, let alone the.
Thanks for noticing it.
To be up $1 billion in the quarter year over year to be at what two to here year to date.
This was the time of the year than in years past, where we were and are holding our breath waiting for all of our cash flow in the year to come in in the fourth quarter I think what you see.
Speaker 2: transcript
Speaker 2: waiting for all the cash flow in the year to come in, in the fourth quarter. I think what you see.
Rahul Ghai: Obviously what we want to do is you want to make sure that both companies have enough operating cash at the time of spin. In addition, what will also happen is, as you've probably noticed in our 10 queue, we have about $2 billion of restricted cash. And most of that is with Bernouar right now as we think about where that cash balance is. So as we think about the cash balance is at spin, it will be the restricted cash for both businesses, plus the operating needs of that business.
Speaker 2: transcript
Speaker 2: again is a much more linear approach to running the business coupled with obviously
Again is a much more linear.
Our approach to running the business coupled with obviously a steady demand through the course of the year, both at arrow and across burn over so.
Speaker 2: transcript
Speaker 2: steady demand through the course of the year, both at Arrow and across Vernova.
Speaker 2: transcript
Speaker 2: So, much of what we've tried to do in moving away operationally from the, the, the year end dynamics, let alone the quarter end dynamics, I think, has borne some fruit, but we are far from.
So much of what we've tried to do in moving away operationally from the the.
Larry Culp: Quarter-end dynamics, I think, has borne some fruit.
The year end dynamics, let alone the quarter end dynamics I think has.
Quarter-end dynamics, I think, has borne some fruit.
Rahul Ghai: And there's enough cash on the balance sheet at GE to make sure that this happens and we definitely don't need to tap into any external markets to make sure that both companies have enough cash, at Spinn. And we'll give you an update as we get closer to Spinn.
Steve Winoker: We are far from a, shall I say, a perfectly level, loaded business at both Aerospace and Vernova. We know as we continue to make progress there will not only be the positive cash effects that you're pointing at, frankly, there's a lot of cost.
We are far from a, shall I say, a perfectly level, loaded business at both Aerospace and Vernova. We know as we continue to make progress there will not only be the positive cash effects that you're pointing at, frankly, there's a lot of cost.
Borne some fruit, but we are far.
From a.
Speaker 11: transcript
Speaker 11: Do I say I'm perfectly level loaded?
So I would say perfectly level loaded.
Speaker 2: transcript
Speaker 2: business at both aerospace and vernova but we know as we continue to make progress there will not only be the positive cash effects that you're pointing at but frankly there's a lot of cost.
Business.
At both aerospace and <unk>, but we know as we continue to make progress they will not only be the.
Positive cash effects that you're pointing at frankly.
Sheila Kahyaoglu: Our next question comes from the line of Sheila Kyaoglu with Jeffries. Thank you. Good morning Mary and I will, um, and Steve, maybe I could ask about aerospace margins, you know, same as last quarter, very good, 1944 year to date, um, about 20% in the quarter just helped lift the guide up, which still implies the sequential step down in Q4. So, you know, the OEMix had wind with the 450 deeps in the fourth quarter to hit the 1650 is, I guess, a lot of it. Do you still expect 250 basis points of OEM headwind this year? How does that filter into 24 and the break even by 26? Thank you. Okay.
Frankly, there's a lot of cost.
Larry Culp: We think we can pull out over.
We think we can pull out over.
Speaker 2: We think we can pull out over time as well as we drive greater linearity and have less month and quarter and year end sprints, which we know we can do, but we rarely do efficiently.
Steve Winoker: Time as well as we drive greater linearity and have less month-end, quarter-end, year-end sprints, which we know we can do, but we rarely do efficiently.
Time as well as we drive greater linearity and have less month-end, quarter-end, year-end sprints, which we know we can do, but we rarely do efficiently.
We think we can pull out over time as well as we drive greater linearity and have last month and quarter end year end <unk>.
France, which we know we can do but we rarely do efficiently.
Steve Winoker: Yeah. For the fourth quarter, just on that number question, just take the 4,751 midpoint, subtract our year-to-date number that Larry mentioned. Dean, you end up with a few billion.
Steve Winoker: Yeah. For the fourth quarter, just on that number question, just take the 4,751 midpoint, subtract our year-to-date number that Larry mentioned. Dean, you end up with a few billion.
Speaker 4: transcript
Speaker 4: Yeah, and for the fourth quarter, just on that number of questions, just take the 47 to 51 midpoint, subtract our year date number that Larry mentioned, Dean, you end up with.
Yes, and for the fourth quarter on that number question just take the take the 47 to $5 one midpoint subtract our year to date number that Larry mentioned Dean you end up with a few billion dollars.
Operator: Our next question comes from the line of Andrew Kaplowitz with Citigroup.
Operator: Our next question comes from the line of Andrew Kaplowitz with Citigroup.
Speaker 1: transcript
Speaker 1: Our next question comes from the line of Andy Cappellwitz with City.
Our next question comes from the line of Andy Kaplowitz with Citigroup.
Steve Winoker: Good morning, guys.
Andrew Kaplowitz: Good morning, guys.
Rahul Ghai: Multi-part question, Sheila. I'm going to try to remember everything. If I forget to please, please jump in here. So, you know, you're right. I think we had a good quarter, um, you know, 25% revenue growth, quarter amount of the profit growth, 120 basis points of margin expansion in the, in the, in the quarter, continue to, you know, give this confidence to raise the year. So what we did in the, in the quarter, as you saw in the guide, we raised the guide for the year by about $500 million of revenue, slightly more than $250 million of profit.
Speaker 12: transcript
Speaker 12: Good morning, guys. Good morning, Andy. Larry, could you give us more color in how you're thinking about the defense business at this point? It was up high-sembed digits in the corner. It does seem like you're having a better year this year. I've turned the corner toward better operating performance in that business because you talk about the budgeting environment for that business moving forward.
Larry Culp: Good morning, Andy.
Larry Culp: Good morning, Andy.
Good morning, guys.
Rahul Ghai: Larry, could you give us more color on how you're thinking about the defense business at this point? It was up high, some digits in the corner. It does seem like you're having a better year this year. Have you turned the corner toward better operating performance in that business? Could you talk about the budgeting environment for that business moving forward?
Andrew Kaplowitz: Larry, could you give us more color on how you're thinking about the defense business at this point? It was up high, some digits in the corner. It does seem like you're having a better year this year. Have you turned the corner toward better operating performance in that business? Could you talk about the budgeting environment for that business moving forward?
Good morning, Andy.
Could you give us more color on how you're thinking about the defense business at this point it was up high single digits in the corner. It does seem like you are having a better year. This year I'd be turned the corner towards better operating performance in that business could you talk about the budgeting environment for that business moving forward.
Larry Culp: Well, I, Andy, I would say that.
Larry Culp: Well, I, Andy, I would say that.
Well.
Speaker 2: transcript
Speaker 2: Andy, I would say that we have made some progress, but we are far from satisfied.
Steve Winoker: We have made some progress, but we are far from satisfied. You clearly saw the high single-digit growth in the quarter, and now year to date, I think we'll be in that zone for the year. The supply chain challenges that we've talked about have made some of our equipment shipments somewhat lumpy, both with respect to our internal process yields and our material availability from our suppliers.
We have made some progress, but we are far from satisfied. You clearly saw the high single-digit growth in the quarter, and now year to date, I think we'll be in that zone for the year. The supply chain challenges that we've talked about have made some of our equipment shipments somewhat lumpy, both with respect to our internal process yields and our material availability from our suppliers.
Andy I would say that we have made some progress, but we're far from from satisfied.
Speaker 2: transcript
Speaker 2: You clearly saw the high single digit growth in the quarter and now your to date. I think we'll be in that zone for the year. But the supply chain challenges that we've talked about, which has made some of our equipment shipments somewhat lumpy, both with respect to our internal process yields and our material availability from our suppliers.
You clearly saw the high single digit growth in the quarter.
Rahul Ghai: So about, you know, 50% drop through for the incremental revenue. Obviously, now part of that is the higher services revenue, lower OE revenue that you referenced. Um, so, you know, as you kind of think about now what the, what the fourth quarter looks like as you go from third quarter to the fourth quarter, there is about $200 million of incremental OE revenue. And even though services revenue is still strong kind of mid teens, it is a lower sequential growth, just given the timing of the spare parts shipment.
And now year to date I think we'll be in that zone for the for the year.
But the supply chain challenges that we've talked about which has made some of our equipment shipments somewhat lumpy.
Both with respect to our internal process yields and our material availability from our suppliers.
Steve Winoker: Is.
Is. Still, it is still job one in this business.
Larry Culp: Still, it is still job one in this business.
Speaker 2: transcript
Speaker 2: is still job one in this business, right? I think if you look at what we've done inside of our own shops, we're really encouraged by the process.
Is still is still job one in this business right I think if you look at what we've done inside of our own shops, we're really encouraged.
Steve Winoker: Right. I think if you look at what we've done inside of our own shops, we're really encouraged.
Right. I think if you look at what we've done inside of our own shops, we're really encouraged.
Rahul Ghai: So that's impacting the quarterly margin dynamic to a little bit. But, you know, having said all that, we still expecting kind of low 20s percent revenue growth in the, in the year for g aerospace, or a billion two to billion three of profit, you know, close to a point of margin expansion as the, as the end of the year. So it'll be a really, really good year. Now, as you, as you pointed out, you know, leave deliveries a little bit lighter, then we had initially expected still a pretty substantial ramp in the fourth quarter, we expecting, you know, based on the revised guidance that we just provided, we expect about a 15% growth from three Q to four Q and a pretty big ramp or year over year.
Larry Culp: By the process improvements.
By the process improvements.
By the process improvements that we've been able to lay in.
Steve Winoker: That we've been able to lay in. If you look at some of the delays that are a function of quality internally in the third quarter, we were at our lowest level in the last two years.
That we've been able to lay in. If you look at some of the delays that are a function of quality internally in the third quarter, we were at our lowest level in the last two years.
Speaker 2: transcript
Speaker 2: If you look at some of the delays that are a function of quality internally, in the third quarter, we were at our lowest level in the last two years.
If you look at some of the delays that are a function of quality internally in the third quarter, we were at our lowest level in the last two years.
Larry Culp: Still plenty to do, that's a lot of progress.
Still plenty to do, that's a lot of progress.
Speaker 2: transcript
Speaker 2: Still plenty to do, but that's a lot of progress. We're adding capacity, not only in production, but in in our test cells, particularly up the road here in Lynn.
So we're planning to do but that's a lot of progress.
Steve Winoker: We're adding capacity not only in production, but in our test cells, particularly up the road here in Lynn.
We're adding capacity not only in production, but in our test cells, particularly up the road here in Lynn.
We're adding capacity not only production, but in in our test cells, particularly up the road here in Lynn.
Larry Culp: We have put even more people.
We have put even more people.
Speaker 2: transcript
Speaker 2: And we have put even more people into the field with the supply base, Rahul mentioned earlier, some of the delays that we have seen.
And we have put even more people into the field with the supply base Rahul mentioned earlier some of the delays that we have seen.
Steve Winoker: Into the field with the supply base.
Into the field with the supply base.
Larry Culp: Rahul mentioned earlier some of the delays.
Rahul mentioned earlier some of the delays.
Steve Winoker: That we have seen in terms of on time performance by our suppliers, and that covers an array of commodities, be it just general raw materials, castings, forgings, valves, and the like. There's a lot of work to do to create that flow that Dean and I were talking about a moment ago. I think in terms of the top line environment, again, really encouraged by the progress that we're seeing with FARA, I think we are heartened by what the Congress is poised to do with respect to continuing to support the XA100.
That we have seen in terms of on time performance by our suppliers, and that covers an array of commodities, be it just general raw materials, castings, forgings, valves, and the like. There's a lot of work to do to create that flow that Dean and I were talking about a moment ago. I think in terms of the top line environment, again, really encouraged by the progress that we're seeing with FARA, I think we are heartened by what the Congress is poised to do with respect to continuing to support the XA100.
Speaker 2: transcript
Speaker 2: in terms of on-time performance by our suppliers. And that covers an array of commodities, be it just general raw materials, castings, forgings, valves, and the like. There's a lot of work to do to create that flow that Dean and I were talking about a moment ago.
In terms of on time performance by our suppliers and that covers.
Rahul Ghai: Now, some of the leave deliveries have pushed out into 24 and 25. So as we think about the outrear margins, we had guided about a point of margin headwind from leap between 23 to 25. So now that would just be marginally higher, just movement of leap engine shipments from 23 to 24. So I don't know if I covered all the questions.
An array of commodities be it just general raw materials castings forgings.
And the like there's a lot of work to do to create that flow that Dean and I were talking about a moment ago.
Speaker 2: transcript
Speaker 2: I think in terms of the top line environment, again, really encouraged.
I think in terms of the the top line environment again really encouraged.
Speaker 2: transcript
Speaker 2: by the progress that we're seeing with FARA. I think we are heartened by what the Congress is poised to do with respect to continuing to support the XA 100. And we know as we look forward just given the dynamics in the world.
By the progress that we're seeing with <unk> I think we are heartened by what the Congress is poised to do with respect to continuing to support the <unk> 100, and we know as we look forward just given the dynamics in the world.
Larry Culp: We know as we look forward.
We know as we look forward.
Dean Dre: Our next question comes from a line of Dean Dre with RBC capital markets. Thank you.
Steve Winoker: Just given the dynamics in the world.
Just given the dynamics in the world.
Larry Culp: There's going to be plenty of opportunity.
There's going to be plenty of opportunity.
Speaker 2: transcript
Speaker 2: There's going to be plenty of opportunity for us both on Rotorcraft and in combat.
Steve Winoker: For us, both on rotorcraft and in combat, to continue to grow this business. It's a business we don't talk a lot about. It may be a bit overshadowed by commercial, but that's not the way we're operating today.
For us, both on rotorcraft and in combat, to continue to grow this business. It's a business we don't talk a lot about. It may be a bit overshadowed by commercial, but that's not the way we're operating today.
There's going to be plenty of opportunity for us both on rotorcraft and in combat.
Rahul Ghai: Good morning, everyone. Morning, Dean. It was hoping we could get some comments on the upside in free cash flow this quarter and the progress that you're making and having free cash flow more linear through the year looks like that's working and any comments on the dynamics we should expect for free cash flow in the fourth quarter and he puts your take. Thanks. Well Dean, thanks for noticing, right? It, you know, to be up a billion dollars in the quarter year over year to be at what to to here year to date.
Speaker 2: transcript
Speaker 2: to continue to grow this business. And this business we don't talk a lot about. It may be a bit overshadowed by commercial, but that's not the way we're operating today. And I think as we get ready for the Vernova spin, there'll be more time and attention paid externally on defense. And I think the team is very much looking forward to that. Doing a lot of good work, plenty of opportunities, but
To continue to grow this business and it's a business we don't talk a lot about it.
It may be a bit overshadowed by commercial but that's not the way we are operating today and I think as we get ready for the <unk> spin there'll be more time and attention paid externally on defense and I think the team is very much looking forward to that.
Larry Culp: I think as we get ready.
I think as we get ready.
Steve Winoker: For the Vernova spin, there'll be more time and attention paid externally on defense.
For the Vernova spin, there'll be more time and attention paid externally on defense.
Larry Culp: I think the team is very.
I think the team is very.
Steve Winoker: Much looking forward to that.
Much looking forward to that.
Larry Culp: Doing a lot of good work, plenty.
Doing a lot of good work, plenty.
Steve Winoker: Of opportunities.
Of opportunities.
We're doing a lot of good work plenty of opportunities.
But.
Steve Winoker: We need to execute better. Again, we need our suppliers hand in hand in that effort.
We need to execute better. Again, we need our suppliers hand in hand in that effort.
Speaker 2: transcript
Speaker 2: We need to execute better and again, we need our suppliers hand in hand in that.
We need to execute better and again, we need our suppliers hand in hand in that effort.
Rahul Ghai: This was the time of the year and years past where we were kind of holding our breath, waiting for all the cash flow in the year to come in in the fourth quarter. I think what you see again is a much more linear approach to running the business coupled with obviously steady demand through the course of the year, both that arrow and across Bernova. So much of what we've tried to do in moving away operationally from the year end dynamics, let alone the quarter end dynamics, I think has born some fruit, but we are far from a, so I say up, up perfectly level loaded business at both aerospace and Bernova, but we know as we continue to make progress, there will not only be the positive cash effects that you're pointing at, but frankly there's a lot of cost we think we can pull out over time as well as we drive greater linearity and have less month and quarter and year end sprints, which we know we can do, but we rarely do efficiently. Yeah, and for the fourth quarter, I'm just on that number question, just take the take the 4751 midpoint of track, our year date number that Larry mentioned being enough of a few billion.
Operator: Our next question comes from the line of Jeffrey Sprague with Vertical Research Partners.
Operator: Our next question comes from the line of Jeffrey Sprague with Vertical Research Partners.
Speaker 13: transcript
Speaker 13: Our next question comes from the line of Jeffrey Sprague with Vertical Research Partners. Thanks. Thank you. Good morning.
Our next question comes from the line of Jeffrey Sprague with vertical research partners.
Steve Winoker: Thank you. Good morning, everyone.
Jeffrey Sprague: Thank you. Good morning, everyone.
Thank you and good morning, everyone.
Rahul Ghai: Good morning.
Rahul Gai: Good morning.
Steve Winoker: Hey, could we just talk a little bit more about cash flow and kind of what you're thinking into next year? Like, the spirit of my question, Larry or Rahul, was, you know, we're still dealing with, you know, kind of a sizable difference between actual free cash flow and adjusted free cash flow. I think some of this is warranty and other things working through the system. Can you just elaborate a little bit on, you know, the factors in the disconnect, and can we get to maybe a normalization of these factors as we think about the independent companies in 2024?
Jeffrey Sprague: Hey, could we just talk a little bit more about cash flow and kind of what you're thinking into next year? Like, the spirit of my question, Larry or Rahul, was, you know, we're still dealing with, you know, kind of a sizable difference between actual free cash flow and adjusted free cash flow. I think some of this is warranty and other things working through the system. Can you just elaborate a little bit on, you know, the factors in the disconnect, and can we get to maybe a normalization of these factors as we think about the independent companies in 2024?
Ryan.
Speaker 4: transcript
Speaker 4: Good morning. Hey, could we just, uh, puck a little bit more about cash flow and, uh, kind of what you're thinking in the next year that, like a spirit of my question, Larry or Rower was, you know, we're still dealing with, you know, kind of a sizable difference between actual free cash flow and adjusted free cash flow. Um, I think some of this is warranty and other things working through the system. Can you just elaborate a little bit on?
Good morning, Hey, could we just talk a little bit more about cash flow and kind of what youre thinking into next year that like the spirit of my question, Larry a role as we're still dealing with kind of a sizable difference between actual free cash flow and adjusted free cash flow.
I think some of this is warranty and other things working through the system can you just elaborate a little bit on.
Speaker 4: transcript
Speaker 4: you know, the factors in the disconnect, and can we get maybe a normalization of these factors as we think about the independent companies in 2024?
The factors in the disconnect and can we get maybe a normalization of these factors as we think about the independent companies in 2024.
Rahul Ghai: Yeah, let me kind of, let's just spend maybe a minute on our free cash flow here.
Rahul Gai: Yeah, let me kind of, let's just spend maybe a minute on our free cash flow here.
Speaker 3: transcript
Speaker 3: Yeah, let me kind of let's just spend maybe a minute on our free cash flow here. So, you know, first as you look at our cash for the year, it's a really good year. I mean, we're going to generate, you know, 4.90 spooge and dollars of...
Yeah, let me kind of let's just spend maybe a minute on our free cash flow here. So first as you look at our cash for the year.
Rahul Ghai: So you know, first, as you look at our cash for the year, it's a really good year. I mean we're going to generate, you know, $4.9-ish billion of free cash at the midpoint, up from $3.1 billion that we, that we did last year.
So you know, first, as you look at our cash for the year, it's a really good year. I mean we're going to generate, you know, $4.9-ish billion of free cash at the midpoint, up from $3.1 billion that we, that we did last year.
Really good here I mean, we're going to generate.
For <unk>.
Speaker 3: transcript
Speaker 3: pre-cash at the midpoint up from $3.1 billion that we did last year, and a lot of that is coming from earnings growth. Clearly, that is a huge contributor, and that is helped by kind of lower interest payments.
Free cash at the midpoint up from $3 $1 billion that we that we did last year and a lot of that is coming from.
Rahul Ghai: A lot of that is coming from earnings growth. Clearly that is a huge contributor and.
A lot of that is coming from earnings growth. Clearly that is a huge contributor and.
Earnings growth clearly that is a huge contributor and that is helped by a kind of lower interest payments.
Rahul Ghai: You know, that is helped by kind of lower interest payments.
You know, that is helped by kind of lower interest payments.
Rahul Ghai: If you look at our working.
Speaker 3: transcript
Speaker 3: But if you look at our, our working capital performance continues to be really strong this year I mean you've seen our year to date numbers, you've seen, you know, even as you project that into into the fourth quarter.
If you look at our working.
But if you look at our working capital performance continues to be really strong. This year I mean, you've seen our year to date numbers, you've seen even as you project that into into the fourth quarter. We are doing an exceptional job managing our days sales outstanding so despite our.
Rahul Ghai: Capital performance continues to be really strong this year. I mean you've seen our year to date numbers, you've seen, you know, even as you project that into the fourth quarter, we are doing an exceptional job managing our day sales outstanding. So despite our.
Capital performance continues to be really strong this year. I mean you've seen our year to date numbers, you've seen, you know, even as you project that into the fourth quarter, we are doing an exceptional job managing our day sales outstanding. So despite our.
Speaker 3: transcript
Speaker 3: We are doing an exceptional job managing a day sales outstanding. So despite our, you know, top-line revenue growth, we are still expecting that overall our AR balance will be neutral.
Andy Kaplowitz: Our next question comes from the line of Andy Capsowitz with city group. Good morning, guys. Good morning, Andy.
Rahul Ghai: Top line revenue growth, we are still expecting that overall our AR balance will be neutral. Jeff, and the reason I say that it just kind of shows the opportunities that the business has for continued improvement.
Top line revenue growth, we are still expecting that overall our AR balance will be neutral. Jeff, and the reason I say that it just kind of shows the opportunities that the business has for continued improvement.
Top line revenue growth, we are still expecting that overall, our AR balance will be neutral.
Larry Kulp: Larry, could you give us a more color on how you're thinking about the defense business at this point? It was up in the ditches in the corner. It does seem like you're having a better year this year. I've turned the corner toward better operating performance in that business because you talk about the budgeting environment for that business moving forward. Well, Andy, I would say that we have made some progress, but we are far from from satisfied.
Speaker 3: transcript
Speaker 3: Jeff and the reason I say that it just kind of shows the opportunities that the business has for continuing
Jeff and the reason I say that it just kind of shows the opportunities that the business has for continued improvement and then progress payments contract assets continues to be a positive as well given the strong growth environment.
Rahul Ghai: And then progress payments, contract assets continues.
And then progress payments, contract assets continues.
Speaker 3: transcript
Speaker 3: And then, you know, progress payments, contract assets continues to be a positive as well given the strong growth environment.
Rahul Ghai: To be as positive as well, given the strong growth environment.
To be as positive as well, given the strong growth environment.
Rahul Ghai: The part I want to anchor on is a little bit on around inventory.
The part I want to anchor on is a little bit on around inventory.
Speaker 3: transcript
Speaker 3: The path around the anchor on is a little bit on around inventory, given the supply chain challenges that we are having, inventory, as you will see from our queue, was up substantially in the quarter. Now we're expecting it to come down slightly as we get it to the fourth quarter, but it will be a still be a substantial inventory build by the end of the year. So, and as we look forward into 24 and 25, that should start getting liquidated with improved supply chain performance. So that is,
The path that we're on our anchor on is a little bit on ground inventory given the supply chain challenges that we had having inventory as you will see from our Q was up substantially in the quarter now we are expecting it to come down slightly as we get into the fourth quarter, but it'll be still be a substantial inventory build by the end of the year, So and as we look forward into 2000 and 425 that should stop.
Rahul Ghai: Given the supply chain challenges that we are having. Inventory, as you will see from our.
Given the supply chain challenges that we are having. Inventory, as you will see from our.
Rahul Ghai: Queue was up substantially in the quarter. Now we're expecting it to come down.
Queue was up substantially in the quarter. Now we're expecting it to come down.
Larry Kulp: You clearly saw the high single digit growth in the quarter and now year to date. I think we'll be in that zone for the year, but the supply chain challenges that we've talked about, which has made some of our equipment shipments somewhat lumpy. Both with respect to our internal process yields and our material availability from our suppliers is still job one in this business, right? I think if you look at what we've done inside of our own shops, we're really encouraged by the process improvement that we've been able to lay in.
Rahul Ghai: Slightly as we get into the fourth.
Slightly as we get into the fourth.
Rahul Ghai: Quarter, but it will still be a substantial inventory build by the end of the year.
Quarter, but it will still be a substantial inventory build by the end of the year.
Rahul Ghai: So, as we look forward into.
So, as we look forward into.
Rahul Ghai: 2024 and 2025, that should start getting liquidated with improved supply chain performance.
2024 and 2025, that should start getting liquidated with improved supply chain performance.
<unk> getting liquidated with improved supply chain performance.
Rahul Ghai: So that is where I would say.
So that is where I would say.
So that is where.
Rahul Ghai: That is what gives us the confidence that this will be a continued good cash flow story. Now as you look overall, we'll be at about 160% plus of free cash flow to net income.
That is what gives us the confidence that this will be a continued good cash flow story. Now as you look overall, we'll be at about 160% plus of free cash flow to net income.
Speaker 3: transcript
Speaker 3: I would say that is what gives us the confidence that this will be a continued good cash flow story. Now, as you look, you know, overall, we'll be at about 160% plus of free cash flow to net income. All of that is amortization. But even if you take amortization out, it's still 130, 130, you know, 130% free cash flow performance. So it's still very, very strong. Now on your question on, you know, between I think most of that adjustments below the line are related to spin related adjustments. I don't think there's anything
I would say that is what gives us the confidence that this will be a continued good cash flow story now as you look overall, we will be at about 160% plus of free cash flow to net income all of that is amortization, but even if you take amortization out it's still a 130 130, 130% of free cash flow performance.
Rahul Ghai: Part of that is amortization.
Part of that is amortization.
Rahul Ghai: But even if you take amortization out.
But even if you take amortization out.
Rahul Ghai: It's still 130, 130% free cash flow performance.
It's still 130, 130% free cash flow performance.
Rahul Ghai: So it's still very, very strong.
So it's still very, very strong.
Larry Kulp: If you look at some of the delays that are a function of quality internally in the third quarter, we were at our lowest level in the last two years. We're planning to do, but that's a lot of progress. We're adding capacity, not only production, but in our test cells, particularly up the road here in in Lynn. And we have put even more people into the field with the supply base. Rahul mentioned earlier some of the delays that we have seen, in terms of long-time performance by our suppliers.
Rahul Ghai: Now on your question, I think most.
Now on your question, I think most.
Still very very strong now on your question on between I think most of that adjustments below the line are related to spin related adjustments I don't think there's anything.
Rahul Ghai: Of that, adjustments below the line are related to spin-related adjustments. I don't think there's anything and insurance.
Of that, adjustments below the line are related to spin-related adjustments. I don't think there's anything and insurance.
Speaker 3: transcript
Speaker 3: and insurance and
And insurance and.
Rahul Ghai: Spin-related restructuring costs and expenses, and some of that will obviously continue as we go into 2024 and maybe even a little bit into 2025. But after that, at least the spin and the.
Speaker 3: transcript
Speaker 3: and spin-related restructuring costs and expenses. So, and some of that will obviously continue as we go into 24, and maybe even a little bit into 25, but after that, at least the spin and the restructuring costs should end.
Spin-related restructuring costs and expenses, and some of that will obviously continue as we go into 2024 and maybe even a little bit into 2025. But after that, at least the spin and the.
And spin related restructuring costs and expenses, so and some of that will obviously continue as we go into two.
24, and maybe even a little bit into 'twenty, five but offer that at least the spin and the.
Rahul Ghai: Restructuring cost should add.
Restructuring cost should add.
Restructuring cost should add.
Steve Winoker: And.
And.
Rahul Ghai: The insurance is not a big number.
The insurance is not a big number.
Larry Kulp: And that covers an array of commodities, be it just general raw materials, casting sorgings, valves and the like. There's a lot of work to do to create that flow that Dean and I were talking about a moment ago. I think in terms of the top line environment, again, really encouraged by the progress that we're seeing with Farah. I think we are heartened by what the Congress is poised to do with respect to continuing to support the X-Day 100.
And the insurance is not a big number.
Operator: Our next question comes from the line of Andrew Obin with Bank of America.
Operator: Our next question comes from the line of Andrew Obin with Bank of America.
Speaker 1: transcript
Speaker 1: Our next question comes from the line of Andrew Obin with Bank of America.
Our next question comes from the line of Andrew <unk> with Bank of America.
Steve Winoker: Hi, I didn't hear. I assume it's me. Good morning.
Andrew Obin: Hi, I didn't hear. I assume it's me. Good morning.
Speaker 14: transcript
Speaker 14: Hi, it's – I didn't hear. I assume it's me. Good morning. We're on. Good morning. Okay. So, just a question on onshore wind capacity. How close are you to the maximum capacity in onshore wind? I think in the past we've shipped over 1,000 turbines in a quarter, but there have been capacity reductions. Just trying to understand how close you are to maximum throughput at this point.
Hi.
I Didnt hear as I assume it Smith good morning, Ron.
Steve Winoker: Good morning. Okay, so just a question. On onshore wind capacity, how close are you to the maximum capacity in onshore wind? I think in the past we've shipped over 1,000 turbines in a quarter, but there have been capacity reductions. Just trying to understand how close you are to maximum throughput at this point.
Good morning. Okay, so just a question. On onshore wind capacity, how close are you to the maximum capacity in onshore wind? I think in the past we've shipped over 1,000 turbines in a quarter, but there have been capacity reductions. Just trying to understand how close you are to maximum throughput at this point.
Alright.
Okay.
So just a question on <unk>.
Im sure wind capacity, how close are you to the maximum capacity in onshore wind right I think in the past we've shipped over 1000 turbines in a quarter, but there have been capacity reductions just trying to understand how close you are to maximum throughput at this point.
Larry Kulp: And we know as we look forward, just given the dynamics in the world, it's going to be plenty of opportunity for us both on road or craft and in combat to continue to grow this business. And it's a business we don't talk a lot about. It may be a bit overshadowed by commercial. But that's not the way we're operating today.
Larry Culp: With respect to onshore.
Larry Culp: With respect to Onshore Andrew?
Speaker 2: transcript
Speaker 2: With respect to onshore, Andrew, yes, yeah, you know, I would say that when you look at the the backlog that we have and with what's in the sales pipeline, I wouldn't say that we are sold out.
Steve Winoker: Andrew.
With respect to onshore Andrew Yes, yes.
Rahul Ghai: Yes.
Andrew Obin: Yes.
Larry Culp: Yeah. You know, I would say that when.
Larry Culp: Yeah. You know, I would say that when.
Steve Winoker: You look at the backlog that we have and with what's in the sales pipeline.
You look at the backlog that we have and with what's in the sales pipeline.
I would say that when you look at the <unk>.
Larry Kulp: And I think as we get ready for the Renault of a spin, there'll be more time and attention paid externally on defense. And I think the team is very much looking forward to that. Doing a lot of good work, plenty of opportunities, but we need to execute better. And again, we need our suppliers hand in hand in that effort.
Backlog that we have and with whats in the sales pipeline.
Steve Winoker: I wouldn't say that we are sold out, but there is.
I wouldn't say that we are sold out, but there is.
I wouldn't say that we are sold out.
But.
There is a.
Larry Culp: A limit to what we're going to be able.
A limit to what we're going to be able.
Speaker 2: transcript
Speaker 2: a limit to what we're going to be able to deliver in in 24 and 25. And I think our customers are mindful of that. It's a little bit why we have seen, I think, the level of activity thus far this year with an eye to not only deliveries this year, but 24 and 25. I'm always hesitant, Andrew, to talk about capacity, particularly in a business like this, as truly being fixed because there's so much
A limit to what we're going to be able to deliver in 'twenty four and 'twenty five.
Steve Winoker: To deliver in 2024 and 2025. I think our customers are mindful of that. It's a little bit why we have seen, I think, the level of activity thus far this year with an eye to not only deliveries this year, but 2024 and 2025.
To deliver in 2024 and 2025. I think our customers are mindful of that. It's a little bit why we have seen, I think, the level of activity thus far this year with an eye to not only deliveries this year, but 2024 and 2025.
And I think our customers are mindful of that it's a little bit why we have seen I think the level of activity. Thus far this year with an eye to not only deliveries.
Jeffrey Sprague: Our next question comes from a line of Jeffrey Sprague with Vertical Research Partners. Thanks. Thank you.
This year, but by 'twenty, four and 'twenty five.
Rahul Ghai: Good morning, everyone. Good morning. Hey, could we just talk a little bit more about cash flow and kind of what you're thinking in the next year that the spirit of my question, Larry or Raul was, you know, we're still dealing with, you know, kind of a sizable difference between actual free cash flow and adjusted free cash flow. I think some of this is warranty and other things working through the system. Can you just elaborate a little bit on, you know, the factors in the disconnect and can we get to maybe a normalization of these factors as we think about the independent companies in 2024.
Larry Culp: I'm always hesitant, Andrew, to talk about capacity, particularly in a business like this.
I'm always hesitant, Andrew, to talk about capacity, particularly in a business like this.
I'm always hesitant Andrew to talk about capacity, particularly in a business like this.
Steve Winoker: As truly being fixed because there's so much underlying process improvement that can unleash capacity. It's not strictly a function of, if you will, fixed capital investments that we've made. Not that we would be averse to that, but I think we wanted to really pare down the overall cost structure, not strictly an effort focused on manufacturing capacity, and really put ourselves in position.
As truly being fixed because there's so much underlying process improvement that can unleash capacity. It's not strictly a function of, if you will, fixed capital investments that we've made. Not that we would be averse to that, but I think we wanted to really pare down the overall cost structure, not strictly an effort focused on manufacturing capacity, and really put ourselves in position.
Truly being fixed because theres so much.
Speaker 2: transcript
Speaker 2: underlying process improvement that can unleash capacity. It's not strictly a function of, if you will, fixed capital investments that we've made. Not that we would be averse to that, but I think we wanted to really pair down the overall cost structure.
Underlying process improvement that can unleash capacity, it's not strictly a function of if you will fixed capital investments that we are that we've made.
We would be averse to that but I think we wanted to really pair down the overall cost structure.
Speaker 2: transcript
Speaker 2: Not not strictly an effort focused on manufacturing capacity and really put ourselves in position.
Not not strictly a <unk>.
An effort focused on manufacturing capacity and really put ourselves in position.
Rahul Ghai: Yeah, let me kind of let's just spend maybe a minute on our free cash flow here. So, you know, first as you look at our cash for the year, it's a really good year. I mean, we're going to generate, you know, 4.90 billion dollars of free cash at the midpoint up from 3.1 billion dollars that we that we did last year. And a lot of that is coming from earnings growth clearly that is a huge contributor and you know, that is helped by kind of lower interest payments.
Larry Culp: To grow off a lower cost base.
To grow off a lower cost base.
Speaker 2: transcript
Speaker 2: to grow off a lower cost-based, do that in ways that will allow delivery to be an advantage and then gradually, smartly, add any fixed capital that we might need. If you look at the underlying performance that the orange-shore wind team has delivered here in the third quarter, will deliver in the fourth quarter, I think it's poised, deliver in 24 and beyond, you see all that coming home, which we're pleased to see, of course.
To grow off a lower cost base do that in ways that will.
Steve Winoker: Do that in ways that will allow delivery to be an advantage and then gradually, smartly add any fixed capital that we might need. If you look at the underlying performance that the onshore wind team has delivered here in Q3, will deliver in Q4, it is poised to deliver in 2024 and beyond.
Do that in ways that will allow delivery to be an advantage and then gradually, smartly add any fixed capital that we might need. If you look at the underlying performance that the onshore wind team has delivered here in Q3, will deliver in Q4, it is poised to deliver in 2024 and beyond.
Wow it delivery to be an advantage and then gradually smartly add any fixed capital that we might need it.
If you look at the underlying performance that the onshore wind team has delivered here in the third quarter will deliver in the fourth quarter I think is poised to.
Delivering 24 and beyond you see all that coming.
Larry Culp: You see all that coming, coming home, which we're pleased to see, of course.
You see all that coming, coming home, which we're pleased to see, of course.
Coming home, which we're pleased to see of course.
Rahul Ghai: But if you look at our working capital performance continues to be really strong this year. I mean, you've seen our year to date numbers, you've seen, you know, even as you project that into into the fourth quarter. We're doing an exceptional job managing our sales outstanding. So despite our, you know, top line revenue growth, we are still expecting that overall our AR balance will be neutral. Jeff, and the reason I say that it just kind of shows the opportunities that the business has or continued improvement and then you know progress payments contract assets continues to be a positive as well given the strong growth environment.
Steve Winoker: Try to get a couple more in, Liz, if we can squeeze it.
Steve Winoker: Try to get a couple more in, Liz, if we can squeeze it.
Trying to get a couple of more analysts if we can squeeze it.
Operator: Our next question comes from the line of Joe Ritchie with Goldman Sachs.
Operator: Our next question comes from the line of Joe Ritchie with Goldman Sachs.
Speaker 15: transcript
Speaker 15: Our next question comes from the line of Joe Ritchie with Goldman Sachs. Hi, good morning guys.
Our next question comes from the line of Joe Ritchie with Goldman Sachs.
Steve Winoker: Hi, good morning guys. Hey, Joe. Joe. And so just sorry for the multi part question, but I guess just on the timing of the spin, early Q2 or the beginning of Q2. So is it right to expect it ahead of Q1 earnings? And then secondly on the profitability dynamics in both onshore and offshore wind, I'd love to hear any more details around the type of profitability you expect to exit on onshore wind this year. And then also with offshore, it seems like you're shipping more this year and.
Joe Ritchie: Hi, good morning guys. Hey, Joe. Joe. And so just sorry for the multi part question, but I guess just on the timing of the spin, early Q2 or the beginning of Q2. So is it right to expect it ahead of Q1 earnings? And then secondly on the profitability dynamics in both onshore and offshore wind, I'd love to hear any more details around the type of profitability you expect to exit on onshore wind this year. And then also with offshore, it seems like you're shipping more this year and.
Hi, Good morning, guys, Hey, Joe Joe.
And so just that sorry.
Speaker 16: transcript
Speaker 16: Sorry for the multi-part question, but I guess just on the timing of the spin, early 2Q or the beginning of 2Q, so is it right to expect it ahead of 1Q earnings?
Sorry for the multipart question, but I guess just on the timing of the spin early <unk> or at the beginning of <unk>. So is it right to expected ahead of <unk> earnings.
Speaker 16: transcript
Speaker 16: And then secondly, on the profitability dynamic in both onshore and offshore wind, you know, it's lucky here any more details around the type of profitability you expect to exit on onshore wind this year and then also with offshore. It seems like you're shipping more this year and so that seems to be a good sign that you're getting through more of your unprofitable backlog. Any comments around that would be helpful as well.
And then secondly on the profitability dynamic in both onshore and offshore wind.
Rahul Ghai: The path around our anchor on a little bit on around inventory given the supply chain challenges that we are having inventory as you will see from our queue was up substantially in the quarter. Now we expecting it to come down slightly as we get to the fourth quarter, but it will be a still be a substantial inventory build by the end of the year. So and as we look forward into 24 and 25 that should start getting liquidated with improved supply chain performance, are related to spin related adjustments.
Yes, I'd love to hear any more details around the type of profitability you expect to exit on onshore win this year and then also with offshore it seems like Youre shipping more this year and so that seems to be a good sign that youre getting through more of your unprofitable backlog any comments around that would be helpful as well.
Rahul Ghai: So that seems to be a.
So that seems to be a.
Steve Winoker: Good sign that you're getting through more of your unprofitable backlog. Any comments around that would be helpful as well. Sure. I think to your first question, Joe, the answer is pretty simple.
Good sign that you're getting through more of your unprofitable backlog. Any comments around that would be helpful as well. Sure. I think to your first question, Joe, the answer is pretty simple.
Speaker 2: transcript
Speaker 2: Sure, I think to your first question, Joe, the answer's pretty simple. Yeah.
Sure I think to your first question Joe the answer is pretty simple.
Larry Culp: Yes, we should be in a.
Larry Culp: Yes, we should be in a.
Yes.
Speaker 2: transcript
Speaker 2: We should be in a position to bring forward Vernova ahead of our typical earnings announcement time frame in earnest.
Steve Winoker: Position to bring forward Vernova ahead of our typical earnings announcement time frame in early in Q2. I would say with respect to onshore wind, again a lot of improvement. It will be a profitable H2, not, unfortunately, a profitable full year.
Position to bring forward Vernova ahead of our typical earnings announcement time frame in early in Q2. I would say with respect to onshore wind, again a lot of improvement. It will be a profitable H2, not, unfortunately, a profitable full year.
We should be in a position to bring forward for Nova ahead of.
Our typical earnings announcement timeframe in.
Early in the second quarter.
Speaker 2: transcript
Speaker 2: I would say with respect to onshore wind, again, a lot of improvement, it will be a profitable.
I would say with respect to onshore wind again.
A lot of improvement.
It.
It will be a profitable second half.
Speaker 2: transcript
Speaker 2: Not unfortunately a profitable full year. We've got a shot at doing that at grid, as I mentioned earlier. But I think as we look at 24 in onshore.
Unfortunately, a profitable full year, we've got a shot at doing that at grid as I mentioned earlier, but I think as we look at 'twenty four and Orange sure.
Larry Culp: We've got a shot at doing that at grid as I mentioned earlier, but.
We've got a shot at doing that at grid as I mentioned earlier, but.
Rahul Ghai: I don't think this is anything and insurance and and and spin related restructuring cost and expenses so and some of that will obviously continue as we go into 24 and maybe even a little bit into 25 but after that at least the spin and the restructuring cost should end. And the insurance is not a big number.
Steve Winoker: I think as we look at 2024 in onshore, we should be in the low single digit range, with obviously the intention is we go through the budget cycle here in November and December to.
I think as we look at 2024 in onshore, we should be in the low single digit range, with obviously the intention is we go through the budget cycle here in November and December to.
Speaker 2: transcript
Speaker 2: We should be in the low single digit range, with obviously the intention is we go through the budget cycle here in November and December to see if we can't put together a credible plan to do better. But that's the way I would think about it, just given the back half momentum that we'll have entering into next year.
We should be in the low single digit range.
Obviously.
The intention as we go through the budget cycle here in November and December to see if we can't put together a credible plan to do better but that's the way I would think about it just given the back half momentum that will have entering in to next year.
Larry Culp: See if we can't put together a.
See if we can't put together a.
Steve Winoker: Credible plan to do better. But that's the way I would think about it just given the back half.
Credible plan to do better. But that's the way I would think about it just given the back half.
Larry Culp: Momentum that we'll have entering into next year.
Momentum that we'll have entering into next year.
Rahul Ghai: Joe, just to kind of complete.
Rahul Gai: Joe, just to kind of complete.
Speaker 3: transcript
Speaker 3: And so just to kind of complete that picture on Renewables total, we, you know, as Larry said, we expect at least, on should we at least kind of low single digit margins. Great would be kind of mid single digit range. Offshore as Larry said in his prepared remarks.
Rahul Ghai: That picture, on renewables total, as Larry said, we expect at least onshore to be at least kind of low single digit margins.
That picture, on renewables total, as Larry said, we expect at least onshore to be at least kind of low single digit margins.
And so just to kind of complete that picture on renewables total.
Andrew Obin: Our next question comes from the line of Andrew Obin with Bank of America. Hi, it's I didn't hear I assume it's me good morning. Good morning.
As Larry said, we expected pieced onshore will be at least kind of low single digit margins grid would be kind of mid single digit range offshore as Larry said in his prepared remarks.
Rahul Ghai: Grid would be kind of mid single digit range. Offshore, as Larry said in his prepared.
Grid would be kind of mid single digit range. Offshore, as Larry said in his prepared.
Rahul Ghai: Remarks.
Remarks.
Speaker 3: transcript
Speaker 3: You know, it kind of, you know, we expect kind of similar levels of losses next year, but if you put all that together, it's still a pretty significant improvement year over year on both profit and then, you know, even more so on cash. I, so that's what we're expecting. So, you know, we, we won't be too far off from the framework that's got laid out at investor day for the renewables.
Andrew Obin: Okay, so just question on onshore wind capacity, how close are you to the maximum capacity and onshore wind, but I think in the past we've shipped over 1000 turbines in a quarter, but they have been capacity reductions, just trying to understand how close you are to maximum throughput at this point. With respect to onshore, Andrew, yes, yeah, I would say that when you look at the backlog that we have and with what's in the sales pipeline, I wouldn't say that we are sold out, but there is a limit to what we're going to be able to deliver in 24 and 25 and I think our customers are mindful of that. It's a little bit why we have seen I think the level of activity thus far this year with an eye to not only deliveries this year, but 24 and 25.
Rahul Ghai: We expect similar levels of losses next year. But if you put all that together.
We expect similar levels of losses next year. But if you put all that together.
Kind of we expect kind of similar levels of losses next year, but if you put all that together, it's still a pretty significant improvement year over year on both profit and then even more so on cash and so that's what we were expecting so.
Rahul Ghai: It's still a pretty significant improvement year.
It's still a pretty significant improvement year.
Rahul Ghai: over year on both profit and then even more so on cash. So that's what we're expecting. So you know we won't be too far off from the framework that Scott laid out at Investor Day for the renewables business.
over year on both profit and then even more so on cash. So that's what we're expecting. So you know we won't be too far off from the framework that Scott laid out at Investor Day for the renewables business.
We won't be too far off from the framework that Scott laid out at Investor day for the renewables business.
Larry Culp: Joe, just to make sure we're.
Larry Culp: Joe, just to make sure we're.
Speaker 2: transcript
Speaker 2: And Joe, just to make sure we're clear about the shipments.
Steve Winoker: Clear about the shipments, the progress that you're seeing at Dogger Bank and Vineyard Wind, operationally I think we're pleased to see that. I know our customers are to see those initial installations and the initial generation of power, however. Right. That progress is what triggers the revenue recognition, which in turn carries the losses.
Clear about the shipments, the progress that you're seeing at Dogger Bank and Vineyard Wind, operationally I think we're pleased to see that. I know our customers are to see those initial installations and the initial generation of power, however. Right. That progress is what triggers the revenue recognition, which in turn carries the losses.
And Joe just to make sure we're clear about the ship.
Shipments.
Speaker 2: transcript
Speaker 2: the progress that you're seeing at Dogger Bank and Vineyard.
The progress that Youre seeing at Dogger Bank and vineyard.
Speaker 2: transcript
Speaker 2: Operationally, I think we're pleased to see that. I know our customers are to see those initial installations and the initial generation of power. However,
Operationally I think we're pleased to see that I know our customers are to see those initial installations and the initial generation of power. However.
Speaker 2: transcript
Speaker 2: Right? That progress is what triggers the revenue recognition, which in turn carries the losses. So that's a little bit of what is operationally encouraging, but financially difficult to work our way through. So just wanted to clarify that point.
Right that progress is what triggers the revenue recognition, which in turn curious the losses, so that's a little bit of.
Larry Culp: So that's a little bit of what.
So that's a little bit of what.
Steve Winoker: Is operationally encouraging, but financially difficult to work our way through. So just wanted to clarify that point. Liz, let's make time for one last question.
Is operationally encouraging, but financially difficult to work our way through. So just wanted to clarify that point.
What is operationally are encouraging but financially difficult too.
To work our way through.
Steve Winoker: Liz, let's make time for one last question.
So I just wanted to clarify that point.
Let's let's make time for one last question.
Operator: This question comes from the line of Chris Snyder with UBS.
Operator: This question comes from the line of Chris Snyder with UBS.
Next question comes from the line of Chris Snyder with UBS.
Speaker 1: transcript
Speaker 1: Question comes from a line of Chris Snyder with UBS.
Larry Kulp: I'm always hesitant Andrew to talk about capacity, particularly in a business like this as as truly being fixed because there's so much underlying process improvement that can unleash capacity. It's not strictly a function of if you will fix capital investments that we that we've made not that we would be averse to that, but I think we wanted to really pair down the overall cost structure. Not strictly an effort focused on manufacturing capacity and really put ourselves in position to grow off a lower cost based do that in ways that will allow delivery to be an advantage and then gradually smartly add any fixed capital that we might need.
Yes.
Rahul Ghai: Thank you.
Chris Snyder: Thank you.
Speaker 17: transcript
Speaker 17: Thank you. I'm assuming you can hear me. I want to follow up on aviation margins, which continue.
Thank you.
Steve Winoker: I'm assuming you can hear me.
I'm assuming you can hear me.
Rahul Ghai: I wanted to follow up on aviation.
I wanted to follow up on aviation.
I assume you can hear me I wanted to follow up on aviation margins, which continue to outpace expectations. So I understand the mixed headwinds are coming through maybe a bit more muted as the service business is doing better but it also sounds like price cost and just efficiency continues to work in the Companys favor can you talk.
Steve Winoker: Margins, which continue to outpace expectations. So I understand the mix headwinds are coming through maybe a bit more muted as the service business is doing better. But it also sounds like price, cost, and just efficiency continues to work in the company's favor. Can you talk about some of the.
Margins, which continue to outpace expectations. So I understand the mix headwinds are coming through maybe a bit more muted as the service business is doing better. But it also sounds like price, cost, and just efficiency continues to work in the company's favor. Can you talk about some of the.
Speaker 17: transcript
Speaker 17: So, I understand the mix headwinds are coming through maybe a bit more muted as the service business is doing better, but it also sounds like price, cost, and just efficiency continues to work in the company's favor. Can you talk about some of the company-specific actions that have been boosting or helping segment margins outside of just mix, and does the current strength you're seeing change the way you think about that? Yeah.
Rahul Ghai: Company specific actions that have been boosting or helping segment margins outside of just mix.
Company specific actions that have been boosting or helping segment margins outside of just mix.
Some of the company specific actions that had been boosting our hosting segment margins outside of just mix and does the current strength Youre seeing change the way you think about the 20% target for 2025. Thank you.
Steve Winoker: Does the current strength you're seeing change the way you think about the 20% target for 2025?
Does the current strength you're seeing change the way you think about the 20% target for 2025?
Larry Culp: Thank you.
Thank you.
Rahul Ghai: So you're right.
Rahul Gai: So you're right.
Speaker 3: transcript
Speaker 3: So, you're right. I mean, there's lots of really good stuff happening in the company. You know, the price is clearly a positive for us. It was a positive. Your price was positive in 22 in aerospace. The price was positive in 23 in aerospace. Not only at the overall company level, but even at commercial and at defense. So that, you know, the business is doing really well on kind of
So you're.
Rahul Ghai: I mean, there's lots of really good stuff happening in the company. You know, the price is clearly a positive for us. It was a positive price cost positive in 2022 in aerospace will be price.
I mean, there's lots of really good stuff happening in the company. You know, the price is clearly a positive for us. It was a positive price cost positive in 2022 in aerospace will be price.
You're right I mean, there's lots of really good stuff happening.
Larry Kulp: If you look at the underlying performance that the orange or wind team has delivered here in the third quarter will deliver in the fourth quarter angus poised deliver in 24 and beyond, you see all that coming, coming home, which we're pleased to see of course. I'll try to get a couple more in if we can squeeze it.
And the company you know the price is clearly a positive for us. It was a positive price cost positive in 2002 in aerospace will be price cost positive in 2003 in aerospace.
Rahul Ghai: Cost positive in 2023 in Aerospace.
Cost positive in 2023 in Aerospace.
Rahul Ghai: Not.
Not.
Rahul Ghai: Only at the overall company level, but even at commercial and at defense.
Only at the overall company level, but even at commercial and at defense.
None of the all in not only at the overall company level, but even at commercial and defense. So that the business is doing really well.
Rahul Ghai: So that you know, the business is doing really well on kind of getting the price increases and managing the inflation.
So that you know, the business is doing really well on kind of getting the price increases and managing the inflation.
On kind of getting the price increases and managing the inflation, we've made progress on productivity as well. So that's the other part not to the extent that we would have liked but it is progress and we are we are encouraged by even the underlying progress on productivity that is currently sitting in our inventory numbers.
Speaker 3: transcript
Speaker 3: getting the price increases and managing the inflation. We've made progress on productivity as well. So that's the other part, not to the extent that we would have liked, but it is progress. And we are encouraged by even the underlying progress on productivity that is currently sitting in our inventory numbers that will roll through next year. So there is positive momentum on productivity.
Joe Ritchie: Our next question comes from a line of Joe Ritchie with Goldman Sachs. Hi, good morning guys.
Rahul Ghai: We made progress on productivity as well.
We made progress on productivity as well.
Rahul Ghai: So that's the other part.
So that's the other part.
Rahul Ghai: Not to the extent that we would.
Not to the extent that we would.
Rahul Ghai: Have liked, but it is progress and.
Have liked, but it is progress and.
Rahul Ghai: We are encouraged by even the underlying.
We are encouraged by even the underlying.
Joe Ritchie: And so just sorry for the multi part question, but I guess just just on the timing of the spin early to cue or the beginning of to cue. So is it right to expect it ahead of one cue earnings and then secondly on the profitability dynamic in both onshore and offshore wind. You know, it's lucky here anymore details around the type of profitability you expect to exit on onshore wind this year and then also with offshore. It seems like you're shipping more this year and so that seems to be a good sign that you're getting through more of your unprofitable backlog. Any comments around that would be helpful as well.
Rahul Ghai: Progress on productivity that is currently sitting in our inventory numbers that will roll through next year. So there is positive momentum on productivity. So all that is a positive. And as you think about kind of the 20% margin number for 2025, obviously.
Progress on productivity that is currently sitting in our inventory numbers that will roll through next year. So there is positive momentum on productivity. So all that is a positive. And as you think about kind of the 20% margin number for 2025, obviously.
That would roll through next year, so that is positive momentum on productivity.
Speaker 3: transcript
Speaker 3: So all that is a positive. And as you think about kind of the 20% margin number for 2025, obviously, you know, that's still, we still at the end of 2023, so it's a couple of years away. But as you think about where we're gonna end the year, to 2025, you know, we're gonna end the year calling it a $6 billion profit. We said between, you know, call it, between 7, 6, and 8,000 dollars of profit.
All of that is a positive and as you think about kind of the 20% margin number four for 2025, obviously that's still.
Rahul Ghai: We're still at the end of 2023.
We're still at the end of 2023.
Rahul Ghai: So it's a couple of years away. But as you think about where we're going to end the year to 2025, we're going to end the year, call it a $6 billion of profit. We said between, call it between $6 and $8 billion of profit for 2025. So we still have a billion-ish of profit growth every year between 2024 and 2025. So that's a mid-teens profit growth which is pretty good.
So it's a couple of years away. But as you think about where we're going to end the year to 2025, we're going to end the year, call it a $6 billion of profit. We said between, call it between $6 and $8 billion of profit for 2025. So we still have a billion-ish of profit growth every year between 2024 and 2025. So that's a mid-teens profit growth which is pretty good.
At the end of 2023, so it's a couple of years away, but as you think about where are we going to end the year through 2025, it'll be going to end the year call. It a $6 billion of profit.
We said between call it.
It's between $768 billion of profit.
Speaker 3: transcript
Speaker 3: for 2025. So we still have a billionish of profit growth every year between 24 and 25. So that's a mid-teens profit growth, which is pretty good. And the benefits of volume price, productivity, will be partially offset by this leap headwind that we spoke about. We start shipping 9x as well. So 9x, that's going to create some incremental pressure. And then we'll continue to invest in R&D. So that's the construct to get to the 20% margins. 10.
For 2025, so we still have a bill initial profit growth every year between 24 and 25. So that's a mid teens profit growth, which is pretty pretty good and the benefits of volume price productivity will be partially offset by this leap headwind that you spoke about we start shipping NYNEX AR as well.
Larry Kulp: Sure, I think to your first question, Joe, the answer is pretty simple. Yes, we should be at a position to bring forward Vernova ahead of our typical earnings announcement timeframe in early in the second quarter. I would say with respect to onshore wind again, a lot of improvement. It will be a profitable second half, not unfortunately a profitable full year. We've got a shot at doing that at grid, as I mentioned earlier, but I think as we look at 24 in onshore, we should be in the low single digit range.
Rahul Ghai: The benefits of volume, price, productivity.
The benefits of volume, price, productivity.
Rahul Ghai: Will be partially offset by this LEAP.
Will be partially offset by this LEAP.
Rahul Ghai: Headwind that you spoke about.
Headwind that you spoke about.
Rahul Ghai: We start shipping 9X as well. So 9X, that's going to create some incremental pressure, and then we'll continue to invest in R&D. So that's.
We start shipping 9X as well. So 9X, that's going to create some incremental pressure, and then we'll continue to invest in R&D. So that's.
<unk>, that's going to create some incremental pressure and then we'll continue to invest in R&D. So that's the construct to get to the 20% margins.
Rahul Ghai: The construct to get to the 20% margins.
The construct to get to the 20% margins.
Steve Winoker: So, Larry, any final comments?
Steve Winoker: So, Larry, any final comments?
So Larry any final comments.
Larry Culp: Steve, thank you.
Larry Culp: Steve, thank you.
Steve Winoker: Just to close, appreciate everybody's time today.
Just to close, appreciate everybody's time today.
Steve Thank you.
Speaker 2: transcript
Speaker 2: Just to close, appreciate everybody's time today. Obviously, very strong performance so far this year.
Just to close I appreciate everybody's time today, obviously very strong performance so far this year.
Larry Culp: Obviously very strong performance so far this year. A lot of progress toward the launches of both GE Aerospace and GE Vernova.
Obviously very strong performance so far this year. A lot of progress toward the launches of both GE Aerospace and GE Vernova.
Speaker 2: transcript
Speaker 2: A lot of progress toward the launches of both GE Aerospace and GE Vernova, and frankly, I've never been more confident in our company's future. We appreciate your time today and your investment in support of our company.
A lot of progress towards the launches of both <unk> aerospace and <unk> and frankly I have never been more confident in our company's future. We appreciate your time today and your investment in support of our company.
Steve Winoker: And frankly I've never been more confident in our company's future.
And frankly I've never been more confident in our company's future.
Larry Culp: We appreciate your time today and your.
We appreciate your time today and your.
Larry Kulp: With obviously the intention is we go through the budget cycle here in November and December to see if we can't put together a credible plan to do better. But that's the way I would think about it, just given the the back half momentum that we'll have entering in to next year. And so just to kind of complete that picture on renewables total, we, you know, as Larry said, we expect at least onshore to be at least kind of low single digit margins.
Steve Winoker: Investment and support of our company.
Investment and support of our company.
Operator: Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.
Operator: Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.
Speaker 1: transcript
Speaker 1: Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating.
Thank you ladies and gentlemen, this concludes today's conference. Thank you for participating.
You may now disconnect.
[music].
Steve Winoker: Sam sa.
[Audio Playing]
Larry Kulp: Grid would be kind of mid single digit range offshore as Larry said in his prepared remarks. It kind of, you know, we expect kind of similar levels of losses next year, but if you put all that together, it's still a pretty significant improvement year over year on both profit and then, you know, even more so on cash. So that's what we're expecting. So, you know, we won't be too far off from the framework that's got laid out at investor day for the renewables business.
Okay.
Okay.
[music].
Okay.
Okay.
[music].
Yeah.
Yes.
Okay.
Okay.
[music].
Larry Kulp: And Joe, just to make sure we're clear about the shipments, the progress that you're seeing at dog or bank and vineyard operationally, I think we're pleased to see that I know our customers are to see those initial installations and the initial generation of power. However, right, that progress is what triggers the revenue recognition, which in turn carries the losses. So that's a little bit of what is operationally encouraging, but financially difficult to work our way through. So just wanted to clarify that point.
Sure.
Yes.
Okay.
Yes.
Yes.
Sure.
Yes.
Unknown Executive: Let's make time for one last question.
Okay.
Yes.
Okay.
Okay.
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Yeah.
So.
[music].
Chris Knighter: This question comes from the line of Chris Knighter with UBS. Thank you. I'm assuming you can hear me. I wanted to follow up on aviation margins which continue to outpace expectations. Also, I understand the mix headwinds are coming through maybe a bit more muted as the service business is doing better, but it also sounds like price cost and just efficiency continues to work in the company's favor.
Okay.
[music].
Yes.
Okay.
Okay.
[music].
Yes.
Rahul Ghai: Can you talk about some of the company's specific actions that have been boosting or helping segment margins outside of this mix and does the current strength you're seeing change the way you think about the 20% target for 2025. Thank you. So, you're right. I mean, there's lots of really good stuff happening in the company. You know, the price is clearly a positive for us. It was a positive your price cost positive in 22 in aerospace will be price cost positive in 23 in aerospace.
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Rahul Ghai: Sa.
Okay.
Okay.
Okay.
Okay.
[music].
Okay.
Okay.
Rahul Ghai: Not only at the overall company level, but even at commercial and at defense. So that you know, the business is doing really well on kind of getting the price increases and managing the inflation. We've made progress on productivity as well. So that's the other part, not to the extent that we would have liked, but it is progress and we are we are encouraged by even the underlying progress on productivity that is currently sitting in our inventory numbers that will roll through next year.
Rahul Ghai: So there is positive momentum on productivity. So all that is a positive. And as you think about kind of the 20% margin number for for 2025. Obviously, you know, that's still at the end of 2023. So it's a couple of years away. But as you think about where we're going to end the year to 2025. You know, we're going to end the year call it a six billion dollars of profit. We said between you know, call it between seven six and eight dollars of profit for 2025.
Rahul Ghai: So we still have a billionish of profit growth every year between 24 and 25. So that's a mid teens profit growth, which is pretty pretty good. And the benefits of volume price productivity will be partially offset by the sleep headwind that you spoke about. We start shipping nine X as well. The nine X that's going to create some incremental pressure. And then we'll continue to invest in R&D. So that's the construct to get to the 20% margins.
Larry Kulp: So Larry, any final comments? Steve, thank you. Just to close, appreciate everybody's time today. Obviously very strong performance so far this year. A lot of progress toward the launches of both GE Aerospace and GE Vernova. And frankly, I've never been more confident in our company's future. We appreciate your time today and your investment and support of our company. Thank you ladies and gentlemen.
[music].
Unknown Executive: This concludes today's conference. Thank you for participating. You may now disconnect. Thank you very much.
Unknown Executive: [inaudible] Thank you for watching, and don't forget to subscribe to our channel, and press the bell icon to be notified when we get to the end of the video. [inaudible][inaudible] I'll be right back. I'll be right back.
Steve Winoker: Sa.
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Speaker 18: transcript
Speaker 18: St the.
Steve Winoker: Sa.
[music].
Steve Winoker: It.
Steve Winoker: Sam.
Steve Winoker: Sa.
Steve Winoker: Sam.
Operator: Good day, ladies and gentlemen, and welcome to the General Electric Q3 2023 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, Steve Winoker, Vice President of Investor Relations. Please proceed.
Operator: Good day, ladies and gentlemen, and welcome to the General Electric Q3 2023 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, Steve Winoker, Vice President of Investor Relations. Please proceed.
Speaker 1: transcript
Speaker 1: Good day, ladies and gentlemen, and welcome to the General Electric third quarter 2023 earnings conference call.
Good day, ladies and gentlemen.
Welcome to the General Electric third quarter 2023 earnings Conference call.
Speaker 1: transcript
Speaker 1: At this time, all participants are in a listen-only mode. My name is Liz and I will be your conference coordinator today.
At this time all participants are in a listen only mode.
My name is Liz and I'll be your conference coordinator today.
Speaker 1: 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.
If you experience issues with the webcast slides refreshing or there appears to be delays in the flight advancement. Please Finn F. Five on your keyboard to refresh.
As a reminder, this conference is being recorded.
Speaker 1: transcript
Speaker 1: I would now like to turn the program over to your host for today's conference, Steve Winneker, Vice President of Investor Relations. Please proceed.
I would now like to turn the program over to your host for today's conference, Steve Winokur, Vice President of Investor Relations. Please proceed.
Rahul Ghai: Thanks Liz.
Steve Winoker: Thanks Liz.
Speaker 4: transcript
Speaker 4: Thanks Liz. Welcome to GE's third quarter 2023 earnings call. I'm joined by Chairman and CEO Larry Culp and CFO Rahul Ghai. Some 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 on our website, those elements may change as the world changes. Over to Larry. Steve, thank you.
Steve Winoker: Welcome to GE's Q3 2023 earnings call. I'm joined by Chairman and CEO Larry Culp and CFO Rahul Ghai. Some 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 on our website. Those elements may change as the world changes. Over to Larry. Steve, thank you and good morning everyone. Before we start, I want to reiterate.
Welcome to GE's Q3 2023 earnings call. I'm joined by Chairman and CEO Larry Culp and CFO Rahul Ghai. Some 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 on our website. Those elements may change as the world changes. Over to Larry.
Thanks, Liz welcome to Ge's third quarter 2023 earnings call I'm joined by Chairman and CEO , Larry Culp and CFO Rahul guide some 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 on our website those elements may change.
As the world changes over to Larry.
Larry Culp: Steve, thank you and good morning everyone. Before we start, I want to reiterate.
Steve Thank you and good morning, everyone.
Speaker 2: transcript
Speaker 2: Before we start, I want to reiterate that the GE team stands firmly with our employees, customers and all those impacted by the brutal Hamas attacks on Israel in the subsequent war.
Larry Culp: That the GE team stands firmly with.
That the GE team stands firmly with.
Before we start I want to reiterate that the GE team stands firmly with our employees customers and all of those impacted by the brutal Hamas attacks on Israel and the subsequent work.
Steve Winoker: Our employees, customers, and all those impacted.
Our employees, customers, and all those impacted.
Larry Culp: By the brutal Hamas attacks on Israel in the subsequent war. Our priority has been the safety of.
By the brutal Hamas attacks on Israel in the subsequent war. Our priority has been the safety of.
Speaker 2: transcript
Speaker 2: Our priority has been the safety of GE employees in the region. We're doing everything possible to support them and their family.
Our priority has been the safety of GE employees in the region.
Steve Winoker: GE employees in the region.
GE employees in the region.
Larry Culp: We're doing everything possible to support them and their families.
We're doing everything possible to support them and their families.
We're doing everything possible to support them and their families.
Steve Winoker: Last week GE announced a $500,000 contribution to help with the humanitarian efforts for the many people in Israel, Gaza, and the surrounding areas impacted.
Last week GE announced a $500,000 contribution to help with the humanitarian efforts for the many people in Israel, Gaza, and the surrounding areas impacted.
Speaker 2: transcript
Speaker 2: Last week, GE announced a half-a-million-dollar contribution to help with the humanitarian efforts for the many people in Israel, Gaza, and the surrounding areas impacted by these horrific events.
Last week, <unk> announced that half a million dollar contribution to help with the humanitarian efforts for the many people in Israel Gaza and the surrounding areas impacted by these horrific events.
Larry Culp: By these horrific events. Terrorism has no place in our society.
By these horrific events. Terrorism has no place in our society.
Terrorism has no place in our society.
Steve Winoker: Like so many, I'm devastated by the loss of lives, violence, and suffering of innocent people.
Like so many, I'm devastated by the loss of lives, violence, and suffering of innocent people.
Speaker 2: transcript
Speaker 2: And like so many, I'm devastated by the loss of lives, violence, and suffering of innocent people.
Like so many I'm devastated Michael walks it lives violence and suffering of innocent people.
Larry Culp: Turning to the quarter, GE delivered a.
Turning to the quarter, GE delivered a.
Speaker 2: transcript
Speaker 2: Turning to the quarter, GE delivered a very strong performance and we're raising full year guidance again.
Turning to the quarter GE delivered a very strong performance and we're raising full year guidance again.
Steve Winoker: Very strong performance and we're raising full year guidance again.
Very strong performance and we're raising full year guidance again.
Larry Culp: GE Aerospace continues to experience rapid growth driven by robust demand and solid execution largely in commercial engines and services. Another significant quarter for the team.
GE Aerospace continues to experience rapid growth driven by robust demand and solid execution largely in commercial engines and services. Another significant quarter for the team.
Speaker 2: transcript
Speaker 2: GE Aerospace continues to experience rapid growth, driven by robust demand and solid execution, largely in commercial engines and services, another significant quarter.
<unk> aerospace continues to experience rapid growth driven by robust demand and solid execution largely in commercial engines and services.
Other significant quarter for the team.
Larry Culp: Our fleet of 41,000 commercial engines and 26,000 rotorcraft and combat engines continues to.
Our fleet of 41,000 commercial engines and 26,000 rotorcraft and combat engines continues to.
Speaker 2: transcript
Speaker 2: Our fleet of 41,000 commercial engines and 26,000 rotor craft and combat engines continues to expand as we work to define the future of flight.
Our fleet of 41000 commercial engines, and 26000 rotorcraft and combat engines continues to expand as we work to define the future of white.
Steve Winoker: Expand as we work to define the future of flight.
Expand as we work to define the future of flight.
Larry Culp: Today, we're navigating a still challenging supply.
Today, we're navigating a still challenging supply.
Speaker 2: transcript
Speaker 2: Today, we're navigating a still challenging supply chain environment to deliver for and support our customers. Year to date, commercial engine deliveries are
Today, we're navigating a still challenging supply chain environment to deliver for and support our customers.
Steve Winoker: Lean environment to deliver for and support our customers.
Lean environment to deliver for and support our customers.
Larry Culp: Year to date, commercial engine deliveries are.
Year to date, commercial engine deliveries are.
Steve Winoker: Up 30% across GE and Safran's MRO shops.
Up 30% across GE and Safran's MRO shops.
Year to date commercial engine deliveries are up 30%.
Speaker 2: transcript
Speaker 2: Across GE and Saffron's MRO shops this quarter, we've approved LEAP quick turn shop visits over 30% year-over-year and sequential.
Across GE and Safran is MRO shops. This quarter, we've approved leap quick turn shop visits over 30% year over year and sequentially.
Larry Culp: This quarter, we've improved LEAP quick-turn shop visits over 30% year over year and sequentially.
This quarter, we've improved LEAP quick-turn shop visits over 30% year over year and sequentially.
Larry Culp: For tomorrow, we're building our backlog and.
For tomorrow, we're building our backlog and.
Speaker 2: transcript
Speaker 2: where tomorrow we're building our backlog and sales pipeline during unprecedented industry growth.
For Tomorrow, we're building, our backlog and sales pipeline during unprecedented industry growth.
Steve Winoker: Sales pipeline during unprecedented industry growth.
Sales pipeline during unprecedented industry growth.
Larry Culp: Recently, Air Canada ordered 36 GEnx-1B.
Recently, Air Canada ordered 36 GEnx-1B.
Speaker 2: transcript
Speaker 2: Recently, our Canada ordered 36 GE-NX-1B engines, plus four spares. Building on GE-NX's rich history is the fastest-selling high-trust engine, with over 50...
Recently Air Canada ordered 36 G E N X one b engines plus for spares building on <unk> Rich history is the fastest selling high thrust engine.
Steve Winoker: Engines plus four spares. Building on GEnx's rich history, it's the.
Engines plus four spares. Building on GEnx's rich history, it's the.
Larry Culp: Fastest selling high thrust engine with over.
Fastest selling high thrust engine with over.
Steve Winoker: 50 million flight hours.
50 million flight hours.
With over 50 million flight hours.
Steve Winoker: For the future, we're investing in R and D and developing next generation technologies.
For the future, we're investing in R and D and developing next generation technologies.
Speaker 2: transcript
Speaker 2: For the future, we're investing in R&D and developing next generation technology.
For the future, we're investing in R&D and developing next generation technologies.
Larry Culp: For example, we're advancing full system testing.
For example, we're advancing full system testing.
Speaker 2: transcript
Speaker 2: For example, we're advancing full system testing for our hybrid electric systems at our electric power center in Ohio.
For example, we are advancing full system testing for our hybrid electric systems at our electric power Center in Ohio.
Steve Winoker: For our hybrid electric systems at our Electric Power Center in Ohio, we're also collaborating with industry partners and NASA on an EcoDemonstrator program to measure sustainable aviation fuel impact on the environment, particularly high-altitude emissions.
For our hybrid electric systems at our Electric Power Center in Ohio, we're also collaborating with industry partners and NASA on an EcoDemonstrator program to measure sustainable aviation fuel impact on the environment, particularly high-altitude emissions.
Speaker 2: transcript
Speaker 2: We're also collaborating with industry partners in NASA on an eco-demonstrator program to measure sustainable aviation fuel impact on the environment, particularly high altitude emissions.
We're also collaborating with industry partners and NASA on an ego demonstrator program to measure of sustainable aviation fuel impact on the environment, particularly high altitude emissions.
Larry Culp: Our growth opportunities extend beyond commercial. In defense, we're pleased the US Army.
Our growth opportunities extend beyond commercial. In defense, we're pleased the US Army.
Speaker 2: transcript
Speaker 2: And our growth opportunities extend beyond commercial. In defense, we're pleased the U.S. Army has accepted the first two T-901 flight test engines for the future attack reconnaissance aircraft prototype.
And our growth opportunities extend beyond commercial and defense. We're pleased the U S. Army has accepted the first two T 901 flight test engines for the future attack reconnaissance aircraft prototypes.
Steve Winoker: Has accepted the first two T901 flight.
Has accepted the first two T901 flight.
Larry Culp: Test engines for the future attack reconnaissance aircraft prototypes. The T901 will also upgrade the US.
Test engines for the future attack reconnaissance aircraft prototypes. The T901 will also upgrade the US.
Speaker 2: transcript
Speaker 2: T-901 will also upgrade the U.S. Army's Apache and Black Hawk helicopters.
The tier one will also upgrade the U S Army's Apache in Black Hawk helicopters, providing 50% more power reduce lifecycle costs and lower fuel consumption.
Steve Winoker: Army's Apache and Black Hawk helicopters, providing 50% more power, reduced life cycle costs, and lower fuel consumption.
Army's Apache and Black Hawk helicopters, providing 50% more power, reduced life cycle costs, and lower fuel consumption.
Speaker 2: transcript
Speaker 2: Providing 50% more power, reduced life cycle costs, and lower fuel consumption.
Larry Culp: We've been selected for development work.
We've been selected for development work.
Speaker 2: transcript
Speaker 2: And we've been selected for development work on the cockpit voice and flight data recorder systems for the future long range assault aircraft program.
Steve Winoker: On the cockpit voice and flight data recorder systems for the Future Long-Range Assault Aircraft program.
On the cockpit voice and flight data recorder systems for the Future Long-Range Assault Aircraft program.
And we have been selected for development work on the cockpit voice in flight data recorder systems for the future long range assault aircraft program.
Larry Culp: Next generation programs like these demonstrate how.
Next generation programs like these demonstrate how.
Speaker 2: transcript
Next generation programs like these demonstrate our ge's rotorcraft programs enabled the military and our allies to take on more challenging missions today and in the future.
Steve Winoker: GE's rotorcraft programs enable the military and.
GE's rotorcraft programs enable the military and.
Larry Culp: Our allies to take on more challenging.
Our allies to take on more challenging.
Steve Winoker: Missions today and in the future.
Missions today and in the future.
Larry Culp: We're pleased to see Congress recognizing.
We're pleased to see Congress recognizing.
Speaker 2: transcript
Speaker 2: And we're pleased to see Congress recognizing this important work by including funding for advanced engine development like the XA-100 in both the House and Senate Fiscal Year 24 Defense Appropriations.
And we're pleased to see Congress recognizing this important work by including funding for advanced engine development like the <unk> 100 in both the house and Senate fiscal year 'twenty for defense appropriation bills.
Steve Winoker: This important work, by including funding for advanced engine development like the XA100 in both the House and Senate fiscal year 2024 defense appropriation bills.
This important work, by including funding for advanced engine development like the XA100 in both the House and Senate fiscal year 2024 defense appropriation bills.
Larry Culp: However, even with these strong results, we're far from satisfied. Through our lean transformation, we're making real progress improving flow and eliminating waste. For example, our team in Pune, India.
However, even with these strong results, we're far from satisfied. Through our lean transformation, we're making real progress improving flow and eliminating waste. For example, our team in Pune, India.
Speaker 2: However, even with these strong results, we're far from satisfied.
However, even with these strong results were far from satisfied.
Speaker 2: transcript
Speaker 2: Through our lean transformation, we're making real progress, improving flow and eliminating waste.
Through our lean transformation, we're making real progress improving flow and eliminating waste for.
Speaker 2: transcript
Speaker 2: For example, our team in Pune, India has increased output of LEAP high-pressure turbine manifolds by three times. But we need to do more.
Steve Winoker: Has increased output of LEAP high pressure turbine manifolds by 3x.
Has increased output of LEAP high pressure turbine manifolds by 3x.
For example, our team in Pune, India is increased output of high pressure turbine manifolds by three times.
Larry Culp: But we need to do more, as do our suppliers. Given the pace of demand for both.
But we need to do more, as do our suppliers. Given the pace of demand for both.
But we need to do more as do our suppliers.
Speaker 2: transcript
Speaker 2: given the pace of demand for both aftermarket services and new engine delivery.
Steve Winoker: Aftermarket services and new engine deliveries. There are pockets of improvement now.
Aftermarket services and new engine deliveries. There are pockets of improvement now.
The pace of demand for both aftermarket services and new engine deliveries.
Speaker 2: transcript
Speaker 2: There are pockets of improvement now. Material input increased double digits sequentially, supporting spare parts delivery, which was up significantly year over year.
Larry Culp: Material input increased double digits sequentially supporting.
Material input increased double digits sequentially supporting.
There are pockets of improvement now material input increased double digits sequentially supporting spare parts delivery, which was up significantly year over year.
Steve Winoker: Spare parts delivery, which was up significantly year over year. We're working within our own plants and in partnership with our suppliers to deliver sequential improvements in output turnaround times day by day, week by week.
Spare parts delivery, which was up significantly year over year. We're working within our own plants and in partnership with our suppliers to deliver sequential improvements in output turnaround times day by day, week by week.
Speaker 2: transcript
Speaker 2: We're working within our own plants and in partnership with our suppliers to deliver sequential improvements in output and turnaround times day by day, week by week.
We're working within our own plants and in partnership with our suppliers to deliver sequential improvements in output and turnaround times day by day week by week.
Larry Kulp: [inaudible] Ge Aerospace continues to experience rapid growth driven by robust demand and solid execution largely in commercial engines and services. Another significant quarter for the team. Our fleet of 41,000 commercial engines and 26,000 rotorcraft and combat engines continues to expand as we work to define the future of flight. Today, we're navigating a still challenging supply chain environment to deliver four and support our customers. Year-to-date commercial engine deliveries are up 30%. Across GE and Saferin's MRO shops this quarter, we've approved leap-quick-turn shop visits over 30% year-over-year and sequentially.
Larry Culp: Over to GE Vernova where performance is strengthening.
Over to GE Vernova where performance is strengthening.
Speaker 2: transcript
Speaker 2: Over to GE Vernova, where performance is strengthening pre-spin at both renewable energy and power.
Over to <unk>, where performance is strengthening pre spin at both renewable energy and power cut.
Steve Winoker: Pre-spin, at both renewable energy and power, customers continue to invest in the energy transition, driving meaningful demand for our products and services.
Pre-spin, at both renewable energy and power, customers continue to invest in the energy transition, driving meaningful demand for our products and services.
Speaker 2: transcript
Speaker 2: Customers continue to invest in the energy transition, driving meaningful demand for our products and services.
Customers continue to invest in the energy transition driving meaningful demand for our products and services.
Larry Culp: Grid and now onshore wind were both.
Grid and now onshore wind were both.
Speaker 2: transcript
Speaker 2: Red and now onshore wind were both profitable this quarter and we expect improved performance from here.
Grid now onshore wind were both profitable this quarter and we expect improved performance from here.
Steve Winoker: Profitable this quarter, and we expect improved performance from here.
Profitable this quarter, and we expect improved performance from here.
Larry Culp: Grid customers are increasing their infrastructure investments.
Grid customers are increasing their infrastructure investments.
Speaker 2: transcript
Speaker 2: Grid customers are increasing their infrastructure investments globally to connect renewables and improve reliability.
<unk> customers are increasing their infrastructure investments globally to connect renewables and improve reliability.
Steve Winoker: Globally to connect renewables and improve reliability.
Globally to connect renewables and improve reliability.
Larry Culp: Year to date, orders remain strong at.
Year to date, orders remain strong at.
Speaker 2: transcript
Speaker 2: Year-to-date, orders remain strong at more than three times revenue and with higher margins, which will support profitable growth.
Steve Winoker: More than 3x revenue and with higher margins, which will support profitable growth through the decade.
More than 3x revenue and with higher margins, which will support profitable growth through the decade.
Year to date orders remained strong at more than three times revenue and with higher margins.
Which will support profitable growth through the decade.
Larry Culp: We've also increased selectivity, streamlined cost and.
We've also increased selectivity, streamlined cost and.
Speaker 2: transcript
Speaker 2: We've also increased selectivity, streamlined costs, and rationalized our industrial footprint, tracking toward full-year profitability at GRID.
We've also increased selectivity streamlined cost and rationalized our industrial footprint.
Steve Winoker: Rationalized our industrial footprint, tracking toward full year profitability at grid.
Rationalized our industrial footprint, tracking toward full year profitability at grid.
Backing towards full year profitability at grid.
Larry Culp: I really like the way the grid.
I really like the way the grid.
Speaker 2: transcript
Speaker 2: I really like the way the grid team is using Lean to drive this turn around into the liver profitable growth.
Steve Winoker: Team is using Lean to drive this.
Team is using Lean to drive this.
I really like the way the grid team is using lean to drive this turnaround and to deliver profitable growth.
Larry Culp: Turnaround and to deliver profitable growth. For example, across Power Transmission's 14 sites.
Turnaround and to deliver profitable growth. For example, across Power Transmission's 14 sites.
Speaker 2: transcript
Speaker 2: For example, across power transmissions, 14 sites globally, we've reduced lead time by roughly 15% year to date, and we're targeting a 20% reduction by year.
For example across power transmissions 14 sites globally, we've reduced lead time by roughly 15% year to date, and we're targeting a 20% reduction by year end.
Steve Winoker: Globally, we've reduced lead time by roughly 15% year to date, and we're targeting a 20% reduction by year end.
Globally, we've reduced lead time by roughly 15% year to date, and we're targeting a 20% reduction by year end.
Larry Culp: Now, at onshore, our strategy to focus.
Now, at onshore, our strategy to focus.
Speaker 2: transcript
Speaker 2: Now it on sure, our strategy to focus on fewer markets, pivoting more toward North America, where G. E. Vernova is the market leader is working.
Now I would onshore our strategy to focus on fewer markets pivoting more towards North America, where <unk> is the market leader leader is working.
Steve Winoker: On fewer markets, pivoting more toward North America, we're where GE Vernova is the market leader, is working and we're relying more on our workhorse products now representing 70% of equipment volume this quarter.
On fewer markets, pivoting more toward North America, we're where GE Vernova is the market leader, is working and we're relying more on our workhorse products now representing 70% of equipment volume this quarter.
Speaker 2: transcript
Speaker 2: If we're relying more on our workhorse products, now representing 70% of equipment volume this quarter.
And we're relying more on our workhorse products now representing 70% of equipment volume this quarter.
Larry Culp: These shifts are translating to 700 basis points of higher margins in backlog this year. We're still driving cost out, fewer layers, reducing headcount, and empowering leaders closest to the operators.
These shifts are translating to 700 basis points of higher margins in backlog this year. We're still driving cost out, fewer layers, reducing headcount, and empowering leaders closest to the operators.
Speaker 2: transcript
Speaker 2: These shifts are translating to 700 basis points of higher margins in backlog this year.
These shifts are translating to 700 basis points of higher margins in backlog this year.
Speaker 2: transcript
Speaker 2: still driving, cost out, fewer layers, reducing head count, and empowering leaders closest to the operating department.
We're still driving cost out fewer layers, reducing head count and empowering leaders closest to the operators.
Steve Winoker: Finally, we're improving fleet reliability. We're now halfway through our enhancement program in the field and expect to be roughly 60% complete by year end.
Finally, we're improving fleet reliability. We're now halfway through our enhancement program in the field and expect to be roughly 60% complete by year end.
Speaker 2: transcript
Speaker 2: Finally, we're improving fleet reliability. We're now halfway through our enhancement program in the field and expect to be roughly 60% complete by your end.
Finally, we're improving fleet reliability.
We're now halfway through our enhancement program in the field and expect to be roughly 60% complete by year end.
Larry Culp: As expected, offshore wind remains difficult this.
As expected, offshore wind remains difficult this.
Speaker 2: transcript
Speaker 2: As expected, offshore wind remains difficult this year with losses of roughly a billion dollars in 2023. Next year, we expect offshore will have similar losses, but substantially improved cash.
As expected offshore wind remains difficult this year with losses of roughly $1 billion. In 2023 next year, we expect offshore will have similar losses, but substantially improved cash performance.
Steve Winoker: Year with losses of roughly $1 billion in 2023.
Year with losses of roughly $1 billion in 2023.
Larry Kulp: For tomorrow, we're building our backlog and sales pipeline during unprecedented industry growth. Recently, our Canada ordered 36 GE NX-1B engines plus four spares, building on GE NX's rich history is the fastest selling high-trust engine with over 50 million flight hours. For the future, we're investing in R&D and developing next-generation technologies. For example, we're advancing full system testing for our hybrid electric systems at our electric power center in Ohio. We're also collaborating with industry partners in NASA on an eco-demonstrator program to measure sustainable aviation fuel impact on the environment, particularly high altitude emissions.
Larry Culp: Next year we expect Offshore will have.
Next year we expect Offshore will have.
Steve Winoker: Similar losses but substantially improved cash performance.
Similar losses but substantially improved cash performance.
Steve Winoker: It's a tough $6 billion backlog that we're working our way through, which we expect to largely complete over the next two or three years.
It's a tough $6 billion backlog that we're working our way through, which we expect to largely complete over the next two or three years.
Speaker 2: transcript
Speaker 2: So it's a tough $6 billion backlog that we're working our way through, which we expect to largely complete over the next two or three years.
So it's a tough $6 billion backlog that we're working our way through which we expect to largely complete over the next two or three years.
Larry Culp: Meanwhile, we're making operational progress with rising.
Meanwhile, we're making operational progress with rising.
Speaker 2: transcript
Speaker 2: Meanwhile, we're making operational progress with rising availability on the 800 installed megawatts of our six megawatt platform. Electricity is now being...
Meanwhile, we're making operational progress with rising availability on the 800 installed megawatts of our six megawatt platform <unk>.
Steve Winoker: Availability on the 800 installed MW of our 6MW platform.
Availability on the 800 installed MW of our 6MW platform.
Larry Culp: Electricity is now being produced at Dogger.
Electricity is now being produced at Dogger.
Steve Winoker: and we recently had the installation of our first Haliade-X turbines at Vineyard Wind.
Electricity is now being produced at Dogger Bank.
and we recently had the installation of our first Haliade-X turbines at Vineyard Wind.
Speaker 2: transcript
Speaker 2: And we recently had the installation of our first Hollyotics turbines at Vineyard Wind.
And we recently had the installation of our first Hollywood X turbines that vineyard wind.
Steve Winoker: Looking forward, we've expanded Vic Abate's role to CEO of the entire wind business to leverage our progress in onshore and offshore.
Looking forward, we've expanded Vic Abate's role to CEO of the entire wind business to leverage our progress in onshore and offshore.
Speaker 2: transcript
Speaker 2: Looking forward, we've expanded Bicabates role to CEO of the entire wind business to leverage our progress in onshore and off.
Looking forward, we have expanded <unk> role to CEO of the entire wind business to leverage our progress in onshore and offshore.
Larry Culp: We're taking a similarly disciplined approach to.
We're taking a similarly disciplined approach to.
Larry Kulp: And our growth opportunities extend beyond commercial. In defense, we're pleased the US Army has accepted the first two T901 light test engines for the future attack reconnaissance aircraft prototypes. The T901 will also upgrade the US Army's Apache and Black Hawk helicopters, providing 50% more power, reduced life cycle costs, and lower fuel consumption. And we've been selected for development work on the cockpit voice and flight data recorder systems for the future long range assault aircraft program.
Speaker 2: transcript
Speaker 2: We're taking a similarly disciplined approach to writing new business like we've done over at gas, onshore and grid with increased rigor on pricing terms, geographic exposure and other risks.
We're taking a similarly disciplined approach to writing new business like we've done over at gas onshore and grid.
Steve Winoker: Writing new business like we've done over at Gas Onshore and Grid, with increased rigor on pricing terms, geographic exposure, and other risks.
Writing new business like we've done over at Gas Onshore and Grid, with increased rigor on pricing terms, geographic exposure, and other risks.
With increased rigor on pricing terms geographic exposure and other risks.
Larry Culp: All in all, given power's continued strength and with our two largest businesses in.
All in all, given power's continued strength and with our two largest businesses in.
Speaker 2: transcript
Speaker 2: All in all, given powers continued strength, and with our two largest businesses and renewables, grid, and now one, sure delivering, plus our plan for all of sure, we're...
All in all given Power's continued strength and with our two largest businesses in renewables grid and now onshore delivering plus.
Steve Winoker: Renewables, grid, and now onshore delivering, plus our plan for offshore, we're highly confident.
Renewables, grid, and now onshore delivering, plus our plan for offshore, we're highly confident.
Plus our plan for offshore we're highly confident and successfully spinning off GE <unk> early in the second quarter.
Larry Culp: In successfully spinning off GE Vernova early.
In successfully spinning off GE Vernova early.
Speaker 2: transcript
Speaker 2: successfully spinning off GE Vernova early in the second quarter.
Steve Winoker: In Q2.
In Q2.
Steve Winoker: Across GE, I'm pleased with how we're operating as a simpler, more focused business at both GE Aerospace and GE Vernova.
Across GE, I'm pleased with how we're operating as a simpler, more focused business at both GE Aerospace and GE Vernova.
Speaker 2: transcript
Speaker 2: Across GE, I'm pleased with how we're operating as a simpler, more focused business at both GE Aerospace and GE Vernova. Another strong quarter.
Across GE I'm pleased with how we're operating as a simpler more focused business at both GE Aerospace Angie Eva Nova Enel.
Larry Kulp: Next-generation programs like these demonstrate how GE's rotor craft programs enable the military and our allies to take on more challenging missions today and in the future. And we're pleased to see Congress recognizing this important work by including funding for advanced engine development like the XA 100 in both the House and Senate fiscal year 24 defense appropriation bills.
Larry Culp: Another strong quarter, but plenty more to do.
Another strong quarter, but plenty more to do.
Another strong quarter, but plenty more to do.
Steve Winoker: My thanks go out to the team for their dedication and commitment to serving our customers.
My thanks go out to the team for their dedication and commitment to serving our customers.
Speaker 2: transcript
Speaker 2: My thanks go out to the team for their dedication and commitment to serving our customers.
My Thanks go out to the team for their dedication and commitment to serving our customers.
Larry Culp: It's been nearly two years since we.
It's been nearly two years since we.
Speaker 2: transcript
Speaker 2: It's been nearly two years since we announced our intention to create three independent, investment-grade industry leaders, and now we're closing in.
It's been nearly two years since we announced our intention to create three independent investment grade industry leaders.
Steve Winoker: Announced our intention to create three independent.
Announced our intention to create three independent.
Larry Culp: Investment-grade industry leaders, and now we're.
Investment-grade industry leaders, and now we're.
Steve Winoker: Closing in on the final step.
Closing in on the final step.
Larry Kulp: However, even with these strong results, we're far from satisfied. Through our lean transformation, we're making real progress, improving flow and eliminating waste. For example, our team in Pune, India has increased output of leap high pressure turbine manifolds by three times. But we need to do more as do our suppliers, given the pace of demand for both aftermarket services and new engine deliveries. There are pockets of improvement now, material input increased double digits sequentially supporting spare parts delivery, which was up significantly year over year. We're working within our own plants and in partnership with our suppliers to deliver sequential improvements and output and turnaround times day by day, week by week.
And now we're closing in on the final step.
Larry Culp: Today we announced plans to spin off.
Today we announced plans to spin off.
Speaker 2: transcript
Speaker 2: Today we announced plans to spin off GE Vernova and launch GE Aerospace in the beginning of the second quarter of 2020.
Steve Winoker: GE Vernova and launch GE Aerospace in the beginning of Q2 2024.
GE Vernova and launch GE Aerospace in the beginning of Q2 2024.
Today, we announced plans to spin off <unk> and launched <unk> aerospace in the beginning of the second quarter of 2020 for.
Larry Culp: Both will be listed on the New York Stock Exchange.
Both will be listed on the New York Stock Exchange.
Speaker 2: transcript
Speaker 2: Both will be listed on the New York Stock Exchange with GE Bernoba as GEV.
Steve Winoker: York Stock Exchange with GE Vernova as GEV and GE Aerospace carrying forward under GE.
York Stock Exchange with GE Vernova as GEV and GE Aerospace carrying forward under GE.
Both will be listed on the New York stock exchange with <unk> as <unk>.
Speaker 2: transcript
Speaker 2: and GE Aerospace carrying forward under GE.
<unk> aerospace carrying forward under GE.
Larry Culp: We've made some important hires.
We've made some important hires.
Speaker 2: transcript
Speaker 2: We made some important hires and promotions to ensure we have the best teams leading these businesses forward.
Steve Winoker: And promotions to ensure we have the.
And promotions to ensure we have the.
We've made some important hires and promotions to ensure we have the best teams leading these businesses forward.
Larry Culp: Best teams leading these businesses forward.
Best teams leading these businesses forward.
Steve Winoker: At GE Aerospace, we've completed the functional leadership team, naming our heads of Corporate Affairs, Human Resources, Legal, and Treasury with experienced leaders from inside and outside. At GE Vernova, we added seasoned.
At GE Aerospace, we've completed the functional leadership team, naming our heads of Corporate Affairs, Human Resources, Legal, and Treasury with experienced leaders from inside and outside. At GE Vernova, we added seasoned.
Speaker 2: transcript
Speaker 2: At GE Aerospace, we've completed the functional leadership team, naming our heads of corporate affairs, human resources, legal, and treasury with experienced leaders from inside and outside GE.
<unk> Aerospace we've completed the functional leadership team naming our heads of corporate affairs, human resources legal and treasury with experienced leaders from inside and outside.
Speaker 2: transcript
Speaker 2: edg e vernova we added seasoned public company CFO ken park
At <unk>, we added seasoned public company CFO Ken parks.
Larry Culp: Public company CFO Ken Parks.
Public company CFO Ken Parks.
Steve Winoker: As I mentioned a moment ago, Vic Abate is now CEO of the wind business.
As I mentioned a moment ago, Vic Abate is now CEO of the wind business.
Speaker 2: transcript
Speaker 2: As I mentioned a moment ago, Bicka Bate is now CEO of The Wind Business.
And as I mentioned, a moment ago Vic abate is now CEO of the wind business.
Larry Kulp: Over to GE Vernova, where performance is strengthening pre-spinning both renewable energy and power. Work. Customers continue to invest in the energy transition, driving meaningful demand for our products and services. Red and now onshore wind were both profitable this quarter, and we expect improved performance from here. Red customers are increasing their infrastructure investments globally to connect renewables and improve reliability. Your date orders remain strong at more than three times revenue and with higher margins, which will support profitable growth through the decade.
Larry Culp: We've also further simplified and strengthened our balance sheet by redeeming the remainder of.
We've also further simplified and strengthened our balance sheet by redeeming the remainder of.
Speaker 2: transcript
Speaker 2: We've also further simplified and strengthened our balance sheet by redeeming the remainder of our preferred equity and selling a portion of our air cap shares for $2.7 billion of proceeds.
We've also further simplified and strengthened our balance sheet by redeeming the remainder of our preferred equity and selling a portion of our aercap shares for $2 $7 billion of proceeds.
Steve Winoker: Our preferred equity and selling a portion of our AerCap shares for $2.7 billion of proceeds.
Our preferred equity and selling a portion of our AerCap shares for $2.7 billion of proceeds.
Larry Culp: Our balance sheet is well positioned to.
Our balance sheet is well positioned to.
Speaker 2: transcript
Speaker 2: Our balance sheet is well positioned to support launch of two investment grade companies. And we're
Steve Winoker: Support the launch of two investment grade companies.
Support the launch of two investment grade companies.
Our balance sheet is well positioned to support the launch of two investment grade companies.
Steve Winoker: We're approaching some key spin milestones.
We're approaching some key spin milestones.
And we're approaching some key spend milestones.
Larry Culp: GE Vernova will file a confidential Form 10.
GE Vernova will file a confidential Form 10.
Speaker 2: transcript
Speaker 2: Hevernova will file a confidential form 10 shortly with the initial public filing expected in the first quarter. Soon we'll...
<unk> will file a confidential form 10, shortly with the initial public filing expected in the first quarter.
Steve Winoker: 10 shortly, with the initial public filing.
10 shortly, with the initial public filing.
Larry Culp: Expected in Q1.
Expected in Q1.
Larry Culp: Soon we'll announce each company's Board of.
Soon we'll announce each company's Board of.
Soon we will announce each company's board of directors.
Steve Winoker: Directors, and in early March GE Vernova and GE Aerospace plan to hold investor days.
Directors, and in early March GE Vernova and GE Aerospace plan to hold investor days.
Speaker 2: transcript
Speaker 2: And an early March to E. Bernova and to E.R.A. Space Planned a Whole Investor Day.
And in early March <unk> Aerospace plan to hold Investor days.
Larry Kulp: We've also increased selectivity, streamlined cost, and rationalized our industrial footprint, cracking towards full-year profitability at grid. I really like the way the grid team is using Lean to drive this turnaround into the liver profitable growth. For example, across power transmission, 14 sites globally, we've reduced lead time by roughly 15% year-to-date, and we're targeting a 20% reduction by year-end. Now it onshore, our strategy to focus on fewer markets, pivoting more toward North America, where GE Vernova is the market leader is working.
Larry Culp: Building on our success at GE Healthcare. We're exactly where we want to be at the end of October for both.
Building on our success at GE Healthcare. We're exactly where we want to be at the end of October for both.
Speaker 2: transcript
Speaker 2: Building on our success at GE Healthcare, we're exactly where we want to be at the end of October for both GE Aerospace and GE Vernova. Now, over to Rahul for more details.
Building on our success at GE, healthcare, where exactly where we want where we want to be at the end of October for both GE Aerospace Angie Eva Nova.
Steve Winoker: GE Aerospace and GE Vernova.
GE Aerospace and GE Vernova.
Larry Culp: Now over to Rahul for more detail on our results.
Now over to Rahul for more detail on our results.
Now over to Rahul for more detail on our results.
Rahul Ghai: Thank you Larry.
Rahul Gai: Thank you Larry.
Speaker 3: transcript
Speaker 3: Thank you, Larry. Turning to slide 4, I'll speak to the quarter on an organic basis.
Rahul Ghai: Turning to slide four, I'll speak to the quarter on an organic basis.
Turning to slide four, I'll speak to the quarter on an organic basis.
Thank you Larry turning to slide four I'll speak to the quarter on an organic basis.
Rahul Ghai: Overall, we delivered meaningful growth across our headline metrics.
Overall, we delivered meaningful growth across our headline metrics.
Speaker 3: transcript
Speaker 3: Overall, we delivered meaningful growth across our headline max.
Overall, we delivered meaningful growth across our headline metrics.
Rahul Ghai: Orders were up double digits, with services up 15% driven by commercial aerospace, and equipment up 22% with growth in all segments.
Orders were up double digits, with services up 15% driven by commercial aerospace, and equipment up 22% with growth in all segments.
Speaker 3: transcript
Speaker 3: Orders were up double digits, with services up 15%.
Those were up double digits with services up 15%.
Speaker 3: transcript
Speaker 3: driven by commercial aerospace and equipment up 22% with growth in all segments.
Even by commercial aerospace and equipment up 22% with growth in all segments.
Rahul Ghai: Revenue increased 18%, benefiting from strong market demand, improved execution, and pricing.
Revenue increased 18%, benefiting from strong market demand, improved execution, and pricing.
Larry Kulp: If we're relying more on our workhorse products, now representing 70% of equipment volume this quarter. These shifts are translating to 700 basis points of higher margins in backlog this year. We're still driving cost out fewer layers, reducing headcount, and empowering leaders closest to the operators. Finally, we're improving fleet reliability. We're now halfway through our enhancement program in the field and expect to be roughly 60% complete by year-end.
Speaker 3: transcript
Speaker 3: Revenue increased 18%, benefiting from strong market demand, improved execution and price.
Revenue increased 18% benefiting from strong market demand improved execution and pricing.
Rahul Ghai: Aerospace was led by commercial services and engines. Renewables was led by grid and.
Aerospace was led by commercial services and engines. Renewables was led by grid and.
Speaker 3: transcript
Speaker 3: Aerospace was led by commercial services and engines.
Aerospace was led by commercial services and engines.
Speaker 3: transcript
Speaker 3: Renewables was led by grid and offshore, and power from heavy-duty gas turbines and aeroderivatives.
Rahul Ghai: Offshore and power from heavy-duty gas turbines and aeroderivatives.
Offshore and power from heavy-duty gas turbines and aeroderivatives.
<unk> was led by grid and offshore and.
And Butler from heavy duty gas turbines and Aero derivatives.
Rahul Ghai: All segments contributed to adjusted margin expansion of 760 basis points.
All segments contributed to adjusted margin expansion of 760 basis points.
Speaker 3: transcript
Speaker 3: All segments contributed to adjusted margin expansion of 760 days.
All segments contributed to adjusted margin expansion of 760 basis points.
Rahul Ghai: This included the absence of last year's.
This included the absence of last year's.
Speaker 3: transcript
Speaker 3: This included the absence of last year's wind-related charges and the benefits of volume, price, net of inflation, and productivity, and continued investments in growth, adjusted EPS.
This included the absence of last year's wind related charges and the benefits of volume price net of inflation and productivity.
Rahul Ghai: Wind-related charges and the benefits of volume, price, net of inflation, and productivity.
Wind-related charges and the benefits of volume, price, net of inflation, and productivity.
Larry Kulp: As expected, off-shore wind remains difficult this year, with losses of roughly a billion dollars in 2023. Next year, we expect offshore will have similar losses, but substantially improved cash performance. So, it's a tough $6 billion backlog that we're working our way through, which we expect to largely complete over the next two or three years. Meanwhile, we're making operational progress with rising availability on the 800 installed megawatts of our six megawatt platform. Electricity is now being produced at Dogger Bank, and we recently had the installation of our first hollyotic turbines at Vineyard Wind.
Rahul Ghai: Continued investments in growth.
Rahul Ghai: Continued investments in growth.
And continued investments in growth.
Rahul Ghai: Adjusted EPS was $0.82, up almost $1 year over year excluding last year's wind-related charges.
Adjusted EPS was $0.82, up almost $1 year over year excluding last year's wind-related charges.
Adjusted EPS was <unk> 82.
Up almost one dollar year over year.
Speaker 3: transcript
Speaker 3: excluding last year's wind-related charges, adjusted margin still expanded 400 basis points, EPS was up 59 cents. Or more than triple what we deliver
Excluding last year's wind related charges adjusted margin still expanded 400 basis points and EPS was up 59.
Rahul Ghai: Adjusted margin still expanded 400 basis points and EPS was up $0.59 or more.
Adjusted margin still expanded 400 basis points and EPS was up $0.59 or more.
Rahul Ghai: Than triple what we delivered last year.
Than triple what we delivered last year.
Our more than triple what we delivered last year.
Rahul Ghai: We generated $1.7 billion of free cash flow, up roughly $1 billion, largely driven by earnings. Working capital was a positive $400 million.
We generated $1.7 billion of free cash flow, up roughly $1 billion, largely driven by earnings. Working capital was a positive $400 million.
Speaker 3: transcript
Speaker 3: regenerated 1.7 billion dollars of free cash.
We generated $1 $7 billion of free cash flow.
Speaker 3: transcript
Speaker 3: up roughly one billion dollars, largely driven by earnings.
Up roughly $1 billion largely driven by earnings.
Speaker 3: transcript
Speaker 3: Working capital was a positive $400 million dollar flow.
Larry Kulp: Looking forward, we've expanded Dick and Bates' role to CEO of the entire wind business to leverage our progress in onshore and offshore. We're taking a similarly disciplined approach to writing new business, like we've done over at gas, onshore, and grid, with increased rigor on pricing, terms, geographic exposure, and other risks. All in all, given powers continued strength, and with our two largest businesses in renewables, grid, and now onshore delivering, plus our plan for offshore, we're highly confident and successfully spinning off GE-Vernova early in the second quarter.
Working capital was a positive $400 million flow through.
Rahul Ghai: Flow driven by disciplined receivables management, while inventory remained inflated due to continued supply chain challenges.
Flow driven by disciplined receivables management, while inventory remained inflated due to continued supply chain challenges.
Speaker 3: transcript
Speaker 3: driven by the CIPLAND receivable management, while the inventory remained inflated, due to continued supply chain challenge.
Given by disciplined receivables management, while inventory remained inflated due to continued supply chain challenges.
Rahul Ghai: Year to date, free cash flow was.
Year to date, free cash flow was.
Speaker 3: transcript
Speaker 3: Year to date, free cash flow was $2.2 billion, up $2.5 billion, reflecting higher earnings, reduced working capital, and improved linearity.
Year to date free cash flow was $2 $2 billion up to $5 billion, reflecting higher earnings reduced working capital and improved linearity.
Rahul Ghai: $2.2 billion, up $2.5 billion reflecting higher earnings, reduced working capital, and improved linearity.
$2.2 billion, up $2.5 billion reflecting higher earnings, reduced working capital, and improved linearity.
Rahul Ghai: Switching to corporate results, improved significantly due.
Switching to corporate results, improved significantly due.
Switching to corporate results.
Speaker 3: transcript
Speaker 3: Results improved significantly due to energy financial services gain on sale from investments and higher interest income also
Results improved significantly due to energy financial services gain on sale from investments and higher interest income.
Rahul Ghai: To energy financial services, gain on sale from investments, and higher interest income.
To energy financial services, gain on sale from investments, and higher interest income.
Rahul Ghai: Also, as we prepare to reduce costs, as we prepare to become standalone businesses.
Also, as we prepare to reduce costs, as we prepare to become standalone businesses.
Also as we prepare to reduce costs.
Speaker 3: transcript
Speaker 3: as we prepare to become the stand-alone businesses for the year we now expect expenses in the $500 million range.
As you prepare to become a standalone businesses.
Larry Kulp: Across GE, I'm pleased with how we're operating as a simpler, more focused business at both GE Aerospace and GE-Vernova. Another strong quarter, but plenty more to do. My thanks go out to the team for their dedication and commitment to serving our customers, customers. It's been nearly two years since we announced our intention to create three independent investment-grade industry leaders, and now we're closing in on the final step.
Rahul Ghai: For the year, we now expect expenses in the $500 million range.
For the year, we now expect expenses in the $500 million range.
For the year, we now expect expenses in the $500 million range.
Rahul Ghai: At insurance, we completed our annual review of liability cash flow assumptions under the new accounting standard.
At insurance, we completed our annual review of liability cash flow assumptions under the new accounting standard.
Speaker 3: transcript
Speaker 3: At Insurance, we completed our annual review of Liability Cash Lozumptions under the new accounting stance.
At insurance, we completed our annual review of liability cash flow assumptions under the new accounting standard.
Rahul Ghai: This resulted in an immaterial adjustment to earnings indicating claims experience is consistent with our models.
This resulted in an immaterial adjustment to earnings indicating claims experience is consistent with our models.
Speaker 3: transcript
Speaker 3: This resulted in an immaterial adjustment to earnings, indicating claims experience is consistent with a model.
This resulted in an immaterial adjustments to earnings indicating claims experience is consistent with our models.
Rahul Ghai: Given GE Aerospace's strength and GE Vernova's.
Given GE Aerospace's strength and GE Vernova's.
Speaker 3: transcript
Speaker 3: Given GE Aerospace's strength and GE Wernova's improvement, we are raising full year guidance.
Given G aerospace strength and GE, where NOLA is improvement we are raising full year guidance.
Rahul Ghai: Improvement, we are raising full-year guidance.
Improvement, we are raising full-year guidance.
Rahul Ghai: Now expecting revenue growth of low.
Now expecting revenue growth of low.
Speaker 3: transcript
Speaker 3: and now expecting revenue growth of low teens up from low double to a full 10 area.
And now expecting revenue growth of low teens up from low double digits.
Rahul Ghai: Teens up from low double digits, adjusted EPS of $2.55 to $2.65, up $0.40 at the midpoint, largely from improvement in operating profit that we now expect to.
Teens up from low double digits, adjusted EPS of $2.55 to $2.65, up $0.40 at the midpoint, largely from improvement in operating profit that we now expect to.
Larry Kulp: Today, we announced plans to spin off GE Vrenova and launch GE Aerospace in the beginning of the second quarter of 2024. Both will be listed on the New York Stock Exchange with GE Vrenova as GE V and GE Aerospace carrying forward under GE. We've made some important hires and promotions to ensure we have the best teams leading these businesses forward. At GE Aerospace, we've completed the functional leadership team, naming our heads of corporate affairs, human resources legal, and treasury with experienced leaders from inside and outside GE.
Speaker 3: transcript
Speaker 3: Adjusted EPS of $2.55 to $2.65 up 40 cents at the mid
Adjusted EPS of $2 55.
To $2 65.
Up 40, <unk> at the midpoint largely from improvement in operating profit that we now expect to be in a range of five two to $5 $5 billion.
Speaker 3: transcript
Speaker 3: largely from improvement in operating profit that we now expect to be in a range of $5.2 to $5.5 billion.
Rahul Ghai: Be in a range of 5.2 to.
Be in a range of 5.2 to.
Rahul Ghai: $5.5 billion and free cash flow of.
$5.5 billion and free cash flow of.
Speaker 3: transcript
Speaker 3: and free cash flow of $4.7 to $5.1 billion, up $550 million at the mid-term.
Rahul Ghai: $4.7 to $5.1 billion, up $550 million at the midpoint, largely from higher earnings and lower AD&A outflow.
$4.7 to $5.1 billion, up $550 million at the midpoint, largely from higher earnings and lower AD&A outflow.
And free cash flow of $4 seven to $5 1 billion up $550 million at the midpoint larger.
Speaker 3: transcript
Speaker 3: largely from higher earnings and lower ADNA outflow. Now spending a moment
Largely from higher earnings and lower a DNA outflow.
Rahul Ghai: Now spending a moment on each business.
Now spending a moment on each business.
Now I'll spend a moment on each business.
Rahul Ghai: Starting with GE Aerospace, demand remains robust.
Starting with GE Aerospace, demand remains robust.
Larry Kulp: At GE Vrenova, we added seasoned public companies, CFO, Ken Parks, and as I mentioned a moment ago, Vic Abate is now CEO of the wind business. We've also further simplified and strengthened our balance sheet by redeeming the remainder of our preferred equity and selling a portion of our aircraft shares for $2.7 billion of proceeds. Our balance sheet is well positioned to support launch of two investment-grade companies and we're approaching some key spin milestones.
Starting with GE aerospace.
Speaker 3: transcript
Speaker 3: Demand remains robust with GE and CFM departures growing mid-deens year over year.
Rahul Ghai: With GE and CFM departures growing mid.
With GE and CFM departures growing mid.
Demand remains robust with GE and CFM departures growing mid teens year over year.
Rahul Ghai: Teens year over year.
Teens year over year.
Rahul Ghai: Orders were up 34% with strong growth.
Orders were up 34% with strong growth.
Speaker 3: transcript
Speaker 3: Orders were up 34% with strong growth in both equipment and services.
Orders were up 34% with strong growth in both equipment and services.
Rahul Ghai: In both equipment and services.
In both equipment and services.
Rahul Ghai: Revenue was up 25%, led by Commercial.
Revenue was up 25%, led by Commercial.
Revenue was up 25%.
Rahul Ghai: Engines and services up 29% and defense growing 8%.
Engines and services up 29% and defense growing 8%.
Speaker 3: transcript
Speaker 3: led by commercial engine and services up 29% and defense growing 8%.
Led by commercial engines and services up 29% and defense growing 8%.
Rahul Ghai: Profit grew over $400 million or more than 30%. Notably margins expanded 120 basis points to reach 20.4%. Higher services volume and pricing net of.
Profit grew over $400 million or more than 30%. Notably margins expanded 120 basis points to reach 20.4%. Higher services volume and pricing net of.
Speaker 3: transcript
Speaker 3: Profit grew over $400 million or more than 30%.
Profit grew over $400 million are more than 30%.
Speaker 3: transcript
Speaker 3: Notably, margins expanded 120 basis points to reach 20.4%.
Larry Kulp: GE Vrenova will file a confidential form 10 shortly with the initial public filing expected in the first quarter. Soon, we'll announce each company's board of directors and an early launch to GE Vrenova and GE Aerospace plan to hold investor days. Building on our success at GE Healthcare, we're exactly where we want to be at the end of October for both GE Aerospace and GE Vrenova.
Notably margins expanded 120 basis points to reach 24%.
<unk> services.
Speaker 3: transcript
Speaker 3: volume and pricing net of inflation more than offset investments and adverse mix.
Rahul Ghai: Inflation more than offset investments and adverse mix in our commercial business. Services strength continued to drive profit with services revenue up 31% from volume, pricing, and heavier work scopes.
Inflation more than offset investments and adverse mix in our commercial business. Services strength continued to drive profit with services revenue up 31% from volume, pricing, and heavier work scopes.
Volume and pricing net of inflation more than offset investments and adverse mix.
Speaker 3: transcript
Speaker 3: In a commercial business, services strength continued to drive profit.
In our commercial business services' strength continued to drive profit.
Speaker 3: transcript
Speaker 3: with services revenue up 31% from volume, pricing and heavier work scope.
But services revenue up 31% from volume pricing and heavier work scopes.
Rahul Ghai: External spare parts were up more than.
External spare parts were up more than.
Speaker 3: transcript
Speaker 3: External spare parts were up more than 35% and internal shop visits grew 2%. With supply chain constraints
External spare parts were up more than 35% and internal shop visits grew 2%.
Rahul Ghai: 35% and internal shop visits grew 2%. With supply chain constraints impacting growth, Commercial engines revenue grew 23% with LEAP deliveries up 12% year over year. We are now planning for a 40% to 45% increase in LEAP deliveries this year, down from our 50% target at the beginning of the year.
35% and internal shop visits grew 2%. With supply chain constraints impacting growth, Commercial engines revenue grew 23% with LEAP deliveries up 12% year over year. We are now planning for a 40% to 45% increase in LEAP deliveries this year, down from our 50% target at the beginning of the year.
Rahul Ghai: Now over to Rahul for more detail on our results. Thank you, Larry. Turning to slide four, I'll speak to the quarter on an organic basis. Overall, we delivered meaningful growth across our headline metrics. Orders were up double digits with services up 15 percent, driven by commercial aerospace and equipment up 22 percent with growth in all segments. Revenue increased 18 percent, benefiting from strong market demand, improved execution and pricing. Aerospace was led by commercial services and engines.
But supply chain constraints impacting growth.
Speaker 3: transcript
Speaker 3: Commercial engines revenue grew 23% with lead deliveries up 12% year over year.
Commercial engines revenue grew 23% with leap deliveries up 12% year over year.
Speaker 3: transcript
Speaker 3: We are now planning for a 40% to 45% increase in lead deliveries this year, down from our 50% target at the beginning of the year.
We are now planning for a 40% to 45% increase in leap deliveries this year down from our 50% target at the beginning of the year.
Rahul Ghai: We now expect OE revenue to grow low to mid-20s and services revenue.
We now expect OE revenue to grow low to mid-20s and services revenue.
Speaker 3: transcript
Speaker 3: We now expect oil revenue to grow low to mid-20s and services revenue to be up mid to high 20s for the year.
We now expect full year revenue to grow low to mid twenties and services revenue to be up mid to high <unk> for the year.
Rahul Ghai: To be up mid- to high 20s for the year.
To be up mid- to high 20s for the year.
Rahul Ghai: In Defense, book-to-build remains strong this quarter, again greater than 1, and.
In Defense, book-to-build remains strong this quarter, again greater than 1, and.
Speaker 3: transcript
Speaker 3: In defense, book-to-bill remained strong this quarter, again greater than 1, and 1.3x year-to-date, highlighting the strong demand environment and quality of our franchising.
And defense book to Bill remains strong.
This quarter again greater than one.
Rahul Ghai: 1.3x year to date, highlighting the strong demand, environment, and quality of our franchisees. Revenue grew high single digits with strength.
1.3x year to date, highlighting the strong demand, environment, and quality of our franchisees. Revenue grew high single digits with strength.
Rahul Ghai: Renewables was led by grid and offshore and power from heavy-duty gas turbines and aerodarivatives. All segments contributed to adjusted margin expansion of 760 basis points. This included the absence of last year's wind-related charges and the benefits of volume, price, net-of-inflation and productivity and continued investments in growth. Atjusted EPS was 82 cents, up almost $1 a year. Excluding last year's wind-related charges, adjusted margin still expanded 400 basis points and EPS was up 59 cents.
And one <unk> year to date.
Lighting, the strong demand environment and quality of our franchisees.
Speaker 3: transcript
Speaker 3: Revenue grew high single digits with strength in services and Edison works of setting lower unit delivery.
Revenue grew high single digits with strength in services and Edison works offsetting lower unit deliveries.
Rahul Ghai: In services and Edison Works, offsetting lower unit deliveries. Based on GE Aerospace's year-to-date strength, we are raising revenue growth to.
In services and Edison Works, offsetting lower unit deliveries. Based on GE Aerospace's year-to-date strength, we are raising revenue growth to.
Speaker 3: transcript
Based on GE aerospace's ear to date strength, we are raising.
Rahul Ghai: The low 20s and profit to be about $6 billion, up roughly $1.2 billion year over year, with free cash flow growth trending better than prior expectations.
The low 20s and profit to be about $6 billion, up roughly $1.2 billion year over year, with free cash flow growth trending better than prior expectations.
The revenue growth to the low twenty's and profit to be about $6 billion up roughly $1 $2 billion year over year.
Speaker 3: transcript
Speaker 3: free cash flow growth, trending better than prior expectations.
With free cash flow growth trending better than prior expectations.
Rahul Ghai: Moving to GE Vernova, lean, along with.
Moving to GE Vernova, lean, along with.
Moving to GE or NOLA.
Speaker 3: transcript
Speaker 3: Lean, along with better underwriting, selectivity and productivity is delivering stronger results we mentioned earlier at Grid and now on Shell.
Rahul Ghai: Better underwriting selectivity and productivity is delivering stronger results. We mentioned earlier at grid, and now onshore at renewables. Orders grew again, up 3% this quarter.
Better underwriting selectivity and productivity is delivering stronger results. We mentioned earlier at grid, and now onshore at renewables. Orders grew again, up 3% this quarter.
Leanne, along with better underwriting selectivity and productivity is delivering stronger results, we mentioned earlier at grid and now onshore.
Rahul Ghai: Or more than triple what we delivered last year. Regenerated 1.7 billion dollars of free cash. Marshall, up roughly $1 billion, largely driven by earnings. Working capital was a positive $400 million flow, driven by disciplined, receivable management, while inventory remained inflated due to continued supply chain challenges. Here to date, free cash flow was $2.2 billion, up $2.5 billion, reflecting higher earnings, reduced working capital and improved linearity, switching to corporate, results improved significantly due to energy financial services gained on sale from investments and higher interest income.
Speaker 3: transcript
Speaker 3: Adrenuables, orders grew again, up 3% this quarter, and up more than 80% here to date to nearly $18 billion. Grid orders increased over...
At renewables orders grew again up 3% this quarter and up more than 80% year to date to nearly $18 billion.
Rahul Ghai: Up more than 80% year to date to nearly $18 billion.
Up more than 80% year to date to nearly $18 billion.
Rahul Ghai: Grid orders increased over 50% this quarter.
Grid orders increased over 50% this quarter.
Grid orders increased over 50% this quarter.
Rahul Ghai: While primarily an equipment business, today we are starting to grow grid services that was up double digits this.
While primarily an equipment business, today we are starting to grow grid services that was up double digits this.
Speaker 3: transcript
Speaker 3: And while primarily an equipment business today, we're starting to grow grid services that was up double digits this quarter.
And while primarily in equipment business today, we are starting to grow grid services that was up double digits this quarter.
Rahul Ghai: Q1 onshore North American equipment orders for the quarter were up nearly 40%.
Q1 onshore North American equipment orders for the quarter were up nearly 40%.
Speaker 3: transcript
Speaker 3: In onshore, North American equipment orders for the quarter were up nearly 40%.
In onshore North American equipment orders for the quarter were up nearly 40% and.
Rahul Ghai: Year to date are up more than 2.5 times over prior year.
Year to date are up more than 2.5 times over prior year.
Speaker 3: transcript
Speaker 3: and year to date are up more than 2.5 times over prior year.
And year to date are up more than two five times over prior year.
Rahul Ghai: The IRA continues to be transformative, establishing multi year US demand visibility for future growth.
The IRA continues to be transformative, establishing multi year US demand visibility for future growth.
Speaker 3: transcript
Speaker 3: The IRA continues to be transformative, establishing multi-year U.S. demand visibility for future growth.
The IRS continues to be transformative, establishing multi year U S demand visibility for future growth.
Rahul Ghai: Internationally, onshore orders were down meaningfully but at better margins consistent with our strategy of greater selectivity.
Internationally, onshore orders were down meaningfully but at better margins consistent with our strategy of greater selectivity.
Speaker 3: transcript
Speaker 3: internationally, onshore orders were down meaningfully, but at better margins, consistent with our strategy of greater selectivity. Revenue grew 14%.
Internationally onshore orders were down meaningfully, but at better margins consistent with our strategy of greater selectivity.
Rahul Ghai: Also, as we prepare to reduce costs, as we prepare to become the standalone businesses, for the year, we now expect expenses in the $500 million range. At insurance, we completed our annual review of liability cash flow assumptions under the new accounting standard. This resulted in an immaterial adjustment to earnings, indicating claims experience is consistent with our models. Given GE Aerospace's strength and GE were Noah's improvement, we are raising full year guidance, and now expecting revenue growth of low teens, up from low double digits, adjusted EPS of $2.55 to $2.65, up 40 cents at the midpoint, largely from improvement in operating profit that we now expect to be in a range of $5.2 to $5.5 billion, and free cash flow of $4.7 to $5.1 billion, up $550 million at the midpoint, largely from higher earnings and lower ADA outflow.
Rahul Ghai: Revenue grew 14%. Grid increased with double.
Revenue grew 14%. Grid increased with double.
Revenue grew 14% grid.
Rahul Ghai: Digital growth at each business.
Digital growth at each business.
Grid increased with double digit growth at each business.
Rahul Ghai: At onshore, North American equipment growth was.
At onshore, North American equipment growth was.
Speaker 3: transcript
Speaker 3: At onshore, North American equipment growth was more than offset by lower repower and international equipment.
At onshore North American equipment growth was more than offset by lower Repower and international equipment.
Rahul Ghai: More than offset by lower repower and international equipment.
More than offset by lower repower and international equipment.
Rahul Ghai: At offshore, revenue more than tripled year.
At offshore, revenue more than tripled year.
Speaker 3: transcript
Speaker 3: At offshore, revenue more than tripled year over year and grew sequentially with higher nacelle output.
At offshore revenue more than tripled year over year and grew sequentially with higher nacelle output.
Rahul Ghai: over year and grew sequentially with higher nacelle output.
over year and grew sequentially with higher nacelle output.
Rahul Ghai: Profit improved from our turnaround efforts excluding.
Profit improved from our turnaround efforts excluding.
Profit improved from our turnaround efforts.
Rahul Ghai: Last year's elevated reserve.
Last year's elevated reserve.
Speaker 3: transcript
Speaker 3: Excluding last year's elevated reserve, renewables margin still expanded roughly 600 basis points. Driven by continued
Excluding last year's elevated reserve renewables margin still expanded roughly 600 basis points.
Rahul Ghai: Renewables margin still expanded roughly 600 basis points.
Renewables margin still expanded roughly 600 basis points.
Rahul Ghai: Points driven by continued price and productivity.
Points driven by continued price and productivity.
Driven by continued price and productivity.
Rahul Ghai: Onshore and grid margins expanded due to.
Onshore and grid margins expanded due to.
Speaker 3: transcript
Speaker 3: onshore and grid margins expanded due to price and productivity and grid margins also benefited from additional volume.
Onshore and grid margins expanded due to price and productivity and grid margins also benefited from additional volume.
Rahul Ghai: Price and productivity and grid margins also benefited from additional volume.
Price and productivity and grid margins also benefited from additional volume.
Rahul Ghai: For the year, Renewables now expects low.
For the year, Renewables now expects low.
Speaker 3: For the year, renewables now expect low double digit revenue growth. We are maintaining the guidance for significantly better year-over-year profit with onshore and grid improvement, more than offsetting the offshore pressure.
For the year renewables now expect low double digit revenue growth, we are maintaining the guidance for significantly better year over year profit with onshore and grid improvement more than offsetting the offshore pressure.
Rahul Ghai: Double-digit revenue growth.
Double-digit revenue growth.
Rahul Ghai: We are maintaining the guidance for significantly.
We are maintaining the guidance for significantly.
Rahul Ghai: Better year over year profit with onshore and grid improvement more than offsetting the offshore pressure. Turning to power, we delivered solid year over year revenue growth and margin expansion with seasonally lower outages.
Better year over year profit with onshore and grid improvement more than offsetting the offshore pressure. Turning to power, we delivered solid year over year revenue growth and margin expansion with seasonally lower outages.
Speaker 3: transcript
Speaker 3: Turning to power, we delivered solid year-over-year revenue growth and margin expansion with seasonally lower out.
Turning to power we.
Rahul Ghai: Now spending a moment on each business, starting with GE Aerospace, demand remains robust, with E and CFM departures growing mid teens year over year. Orders were up 34%, with strong growth in both equipment and services. Revenue was up 25%, led by commercial engines and services, up 29%, and defense growing 8%. Profit grew over $400 million or more than 30%. Notably, margins expanded 120 basis points to reach 20.4%. Higher services, volume and pricing net of inflation more than offset investments and adverse mix.
We delivered solid year over year revenue growth and margin expansion with seasonally lower outages.
Rahul Ghai: Equipment orders grew slightly as higher heavy.
Equipment orders grew slightly as higher heavy.
Speaker 3: transcript
Speaker 3: equipment orders grew slightly as higher heavy duty gas turbines more than offset lower aeroderavative units.
<unk> orders grew slightly as higher heavy duty gas turbines more than offset lower aero database of units.
Rahul Ghai: Heavy-duty gas turbines more than offset lower aeroderivative units.
Heavy-duty gas turbines more than offset lower aeroderivative units.
Rahul Ghai: Services declined slightly as high single digit.
Services declined slightly as high single digit.
Speaker 3: transcript
Speaker 3: Services declined slightly as high single-digit growth in gas transactional services was offset by aeroderavative and steam services.
Services declined slightly as <unk>.
Rahul Ghai: Growth in gas transactional services was offset by aeroderivative and steam services.
Growth in gas transactional services was offset by aeroderivative and steam services.
High single digit growth in gas transactional services was offset by Aero derivative and steam services.
Rahul Ghai: For the year we still expect total.
For the year we still expect total.
Speaker 3: transcript
Speaker 3: For the year, we still expect total services orders to grow low single digit.
For the year, we still expect total services orders to grow low single digits.
Rahul Ghai: Services orders to grow low single digits. Revenue grew 9% largely on price and higher scope on heavy-duty gas turbine and aeroderivative equipment.
Services orders to grow low single digits. Revenue grew 9% largely on price and higher scope on heavy-duty gas turbine and aeroderivative equipment.
Speaker 3: transcript
Speaker 3: Revenue grew 9%. Largely on price and higher scope on heavy duty gas turbine and aeroderavative equipment. Services grew again.
Revenue grew 9% largely on price and higher scope on heavy duty gas turbine and <unk> equipment.
Rahul Ghai: Services grew again, up low single digits. Profit grew roughly 60% with 200 basis points.
Services grew again, up low single digits. Profit grew roughly 60% with 200 basis points.
Services grew again up low single digits.
Speaker 3: transcript
Speaker 3: Profit grew roughly 60% with 200 basis points of margin expansion, driven by higher volume, pricing, and productivity.
Profit grew roughly 60% with 200 basis points of margin expansion.
Rahul Ghai: Points of margin expansion driven by higher volume, pricing, and productivity which more than offset inflation pressure.
Points of margin expansion driven by higher volume, pricing, and productivity which more than offset inflation pressure.
Rahul Ghai: In a commercial business, services strength continued to drive profit, with services revenue up 31% from volume, pricing, and heavier work scope. External spare parts were up more than 35%, and internal shop visits grew 2%, with supply chain constraints impacting growth. Commercial engines revenue grew 23%, with leap deliveries up 12% year over year. We are now planning for a 40 to 45% increase in leap deliveries this year, down from our 50% target at the beginning of the year.
Driven by higher volume pricing and productivity, which more than offset inflation pressure.
Rahul Ghai: Year to date, power orders have grown low single digits. Revenue mid single digits, and margins have.
Year to date, power orders have grown low single digits. Revenue mid single digits, and margins have.
Speaker 3: transcript
Speaker 3: Year-to-date, power orders have grown low single digits, revenue mid-single digits, and margins have expanded over 100 bases.
Year to date, our orders have grown low single digits revenue mid single digits and margins have expanded over 100 basis points.
Rahul Ghai: Expanded over 100 basis points. This was led by services, including higher gas utilization up low single digits, benefiting from a continued coal to gas switching.
Expanded over 100 basis points. This was led by services, including higher gas utilization up low single digits, benefiting from a continued coal to gas switching.
Speaker 3: transcript
Speaker 3: This was led by services, including higher gas utilization, upload single digits, benefiting from a continued coal to gas switching. We also shipped 9-
This was led by services, including higher gas utilization up low single digits benefiting from a continued coal to gas switching.
Rahul Ghai: We also shipped nine HA units this.
We also shipped nine HA units this.
We also shipped nine <unk> units this year.
Rahul Ghai: Year and now have more than 47GW of installed capacity.
Year and now have more than 47GW of installed capacity.
Speaker 3: transcript
Speaker 3: and now have more than 47 gigawatts of installed capacity.
Now have more than 47 gigawatts of installed capacity.
Rahul Ghai: Continuing to extend our HA services billings to $1 billion by mid-2020s in the.
Continuing to extend our HA services billings to $1 billion by mid-2020s in the.
Speaker 3: transcript
Speaker 3: Continuing to extend our HA services billings to $1 billion by mid-2020.
Continuing to extend our services billings to $1 billion by mid 2000 Twenty's.
Rahul Ghai: We now expect oil revenue to grow low to mid 20s, and services revenue to be up mid to high 20s In defense, Book to Bill remains strong this quarter, again greater than one, and 1.3x year-to-date highlighting the strong demand environment and quality of our franchisees. Revenue grew high single digits with strength in services and Edison works offsetting lower unit deliveries. Based on GE Aerospace's year-to-date strength, we are raising revenue growth to the low 20s and profit to be about $6 billion are roughly $1.2 billion year-over-year, with free cash flow growth trending better than prior expectations.
Rahul Ghai: Fourth quarter, Power is well positioned for sequential profit growth from seasonally higher services volume for the year. Power continues to expect low single digit revenue growth with better year over year profit. Taken together for GE Vernova, we are now expecting high single digit revenue growth.
Fourth quarter, Power is well positioned for sequential profit growth from seasonally higher services volume for the year. Power continues to expect low single digit revenue growth with better year over year profit. Taken together for GE Vernova, we are now expecting high single digit revenue growth.
Speaker 3: transcript
Speaker 3: In the fourth quarter, power is well positioned for sequential profit growth from seasonally higher services volumes.
In the fourth quarter power is well positioned for sequential profit growth from seasonally higher services volume.
Speaker 3: transcript
Speaker 3: For the year, our continues to expect low single digit revenue growth with better year over year.
For the year power continues to expect low single digit revenue growth with better year over year profit.
Speaker 3: transcript
Speaker 3: Taken together, for GE-Wernowa, we are now expecting high single-digit revenue growth and profit improvement of over $800 million year-over-year at the midpoint.
Taken together for GE, where NOLA, we're now expecting high single digit revenue growth and profit improvement of over $800 million year over year at the midpoint.
Rahul Ghai: Profit improvement of over $800 million year over year. At the midpoint we're raising the low.
Profit improvement of over $800 million year over year. At the midpoint we're raising the low.
Speaker 3: transcript
Speaker 3: We're raising the low end of her profit guidance driven by both renewables and power. And now expect negative 300 million to negative 100 million dollars of operating profit.
Rahul Ghai: End of our profit guidance driven by both renewables and power, and now expect.
End of our profit guidance driven by both renewables and power, and now expect.
We are raising the low end of our profit guidance driven by both renewables and power and now expect negative 300 million to negative $100 million of operating profit.
Rahul Ghai: Negative $300 million to negative $100 million of operating profit.
Negative $300 million to negative $100 million of operating profit.
Rahul Ghai: As we continue to expect flat to slightly improved free cash flow.
As we continue to expect flat to slightly improved free cash flow.
Speaker 3: transcript
Speaker 3: as we continue to expect flat to slightly improved free gash.
As we continue to expect flat to slightly improved free cash flow.
Rahul Ghai: Overall, we are really encouraged, proving with grid and onshore that we can deliver better results.
Overall, we are really encouraged, proving with grid and onshore that we can deliver better results.
Speaker 3: transcript
Speaker 3: Overall, we really encouraged. Proving with grid and onshore that we can deliver better results.
Overall, we are really encouraged proving with grid and onshore that we can deliver better results.
Rahul Ghai: Moving to GE or NOAA, Lean, along with better underwriting, selectivity and productivity, is delivering stronger results we mentioned earlier at Grid and now on show. At renewables, orders grew again, up 3% this quarter, and up more than 80% year-to-date to nearly $18 billion. Grid orders increased over 50% this quarter, and while primarily in equipment business today, we are starting to grow grid services that was up double digits this quarter. In onshore, North American equipment orders for the quarter were up nearly 40%.
Rahul Ghai: This combined with Power's continued strong performance will drive meaningful profit and cash flow improvement at GE Vernova next year.
This combined with Power's continued strong performance will drive meaningful profit and cash flow improvement at GE Vernova next year.
Speaker 3: transcript
Speaker 3: This combined with Power's continued strong performance will drive meaningful profit and cash flow improvement at GE Vernova next year.
This combined with Power's continued strong performance will drive meaningful profit and cash flow improvement at G. Learn all about next year.
Rahul Ghai: With that, let me turn it back to Larry and Rahul.
With that, let me turn it back to Larry.
And with that let me turn it back to Larry.
Steve Winoker: Thank you.
Larry Culp: Rahul, Thank you.
Speaker 2: transcript
Speaker 2: Rahul, thank you. To summarize, GER space grew rapidly again.
Larry Culp: To summarize, GE Aerospace grew rapidly again. GE Vernova renewables improved sequentially and power.
To summarize, GE Aerospace grew rapidly again. GE Vernova renewables improved sequentially and power.
Rahul Thank you <unk>.
Summarize GE aerospace grew rapidly again at.
Speaker 2: transcript
Speaker 2: edgy vernova renewables improve sequentially and power continue to perform well
GE renewable renewables improve sequentially empower continue to perform well.
Steve Winoker: Continued to progress well overall. A very strong quarter for GE. One that gives us confidence and thus allows us to raise our full year guide.
Continued to progress well overall. A very strong quarter for GE. One that gives us confidence and thus allows us to raise our full year guide.
Speaker 2: transcript
Speaker 2: overall a very strong quarter for GE, one that gives us confidence, and that allows us to...
Overall, a very strong quarter for GE.
One that gives us confidence.
And thus allows us to raise our full year guide.
Larry Culp: More importantly, we're poised to launch two.
More importantly, we're poised to launch two.
Speaker 2: transcript
Speaker 2: More importantly, we're poised to launch two innovative global service focused industry leaders in less than six months. I'm proud of our team and even more excited for what lies ahead.
More importantly, we are poised to launch two innovative global service focused industry leaders in less than six months.
Steve Winoker: Innovative global service focused industry leaders in less than six months.
Innovative global service focused industry leaders in less than six months.
Rahul Ghai: And year-to-date are up more than 2.5 times over prior year. The IRA continues to be transformative, establishing multi-year U.S, demand visibility for future growth. Internationally, onshore orders were down meaningfully, but at better margins, consistent with our strategy of greater selectivity. Revenue grew 14%, grid increased with double-digit growth at each business. At onshore, North American equipment growth was more than offset by lower repower and international equipment. At offshore, revenue more than triples year-over-year, and grew sequentially with higher missile output.
Larry Culp: I'm proud of our team and even.
I'm proud of our team and even.
Steve Winoker: More excited for what lies ahead.
More excited for what lies ahead.
I am proud of our team and even more excited for what lies ahead Steve.
Larry Culp: Steve, let's go to Q and A.
Steve, let's go to Q and A.
Steve Let's go to Q&A.
Steve Winoker: Before we open the line, I'd ask everyone in the queue to consider your fellow analysts and ask one question so.
Steve Winoker: Before we open the line, I'd ask everyone in the queue to consider your fellow analysts and ask one question so.
Speaker 19: transcript
Speaker 19: Before we open the line, I'd ask every one in the queue to consider your fellow analysts and ask one question so we can get to as many people as possible. Liz, please open the line.
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 Please open the line.
Rahul Ghai: We can get to as many people as possible.
We can get to as many people as possible.
Rahul Ghai: Liz, please open the line.
Liz, please open the line.
Operator: Ladies and gentlemen, if you wish to ask a question, please press star 11 on your telephone. If you wish to withdraw your question or your question has already been answered, please press star 11 again.
Operator: Ladies and gentlemen, if you wish to ask a question, please press star 11 on your telephone. If you wish to withdraw your question or your question has already been answered, please press star 11 again.
Speaker 1: transcript
Speaker 1: Ladies and gentlemen, if you wish to ask a question, please press star 1 1 on your telephone.
Ladies and gentlemen, if you wish to ask a question. Please press star one one on your telephone.
Speaker 1: transcript
Speaker 1: If you wish to withdraw your question or your question has already been answered, please press star 1, 1 again.
If you wish to withdraw your question or your question has already been answered. Please press star one one again.
Operator: Our first question comes from the line of Scott Deuschle with Deutsche Bank.
Our first question comes from the line of Scott Deuschle with Deutsche Bank.
Speaker 1: transcript
Speaker 1: Our first question comes from the line of Scott Doishley with Deutsche Bank.
Our first question comes from the line of Scott <unk> with Deutsche Bank.
Steve Winoker: Hey, good morning.
Scott Deuschle: Hey, good morning.
Hey, good morning.
Larry Culp: Good morning.
Larry Culp: Good morning.
Steve Winoker: Rahul, is the lower LEAP delivery guide a function of softer narrow body deliveries at the airframers? Or is this more related to challenges to your own production ramp up, and then how should we think about the impact of 2024? Thank you.
Scott Deuschle: Rahul, is the lower LEAP delivery guide a function of softer narrow body deliveries at the airframers? Or is this more related to challenges to your own production ramp up, and then how should we think about the impact of 2024? Thank you.
Good morning.
Rahul Ghai: Profit improved from our turnaround efforts, excluding last year's elevated renewables margin still expanded roughly 600 basis points, driven by continued price and productivity. Onshore and grid margins expanded due to price and productivity, and grid margins also benefited from additional volume. For the year, renewables now expect low double-digit revenue growth. We are maintaining the guidance for significantly better year-over-year profit with onshore and grid improvement, more than offsetting the offshore pressure. Turning to power, we delivered solid year-over-year revenue growth and margin expansion with seasonally lower outages.
Speaker 5: transcript
Speaker 5: Rahul, is the lower-leap delivery guide a function of softer, narrow-body deliveries at the airframers, or is this more related to challenges to your own production ramp-up? And then, how should we think about the impact of 2024? Thank you.
Rahul is the lower leap delivery guide a function of softer in narrow body deliveries at the air Framers or is this more related to challenges at your tier one production ramp up and then how should we think about the impact of 2024. Thank you.
Rahul Ghai: Let me.
Rahul Ghai: Let me.
Rahul Ghai: Equipment orders grew slightly as higher heavy-duty gas turbines more than offset lower aeroderative units. Services declined slightly as high single-digit growth in gas transactional services was offset by aeroderative and steam services. For the year, we still expect total services orders to grow low single-digit. Revenue grew 9%, largely on price and higher scope on heavy-duty gas turbine and aeroderavative equipment. Services grew again up low single digits. Profit grew roughly 60% with 200 basis points of margin expansion, driven by higher volume, pricing and productivity, which more than offset inflation pressure.
Rahul Ghai: Here to date, power orders have grown low single digits, revenue, mid single digits and margins have expanded over 100 basis points. This was led by services including higher gas utilization, up low single digits, benefiting from a continued coal to gas switching. We also shipped 9 HA units this year and now have more than 47 gigawatts of installed capacity. Continuing to extend our HA services buildings to $1 billion by mid 2020s. In the fourth quarter, power is well positioned for sequential profit growth from seasonally higher services volume.
Rahul Ghai: For the year, power continues to expect low single digit revenue growth with better year over year profit. Taken together, for GE, we are now expecting high single digit revenue growth and profit improvement of over $800 million year over year at the midpoint. We are raising the low end of our profit guidance driven by both renewables and power and now expect negative $300 million to negative $100 million of operating profit. As we continue to expect flat to slightly improved free cash flow.
Rahul Ghai: Overall, we have really encouraged proving with grid and onshore that we can deliver better results. This combined with power's continued strong performance will drive meaningful profit and cash flow improvement at GE, but no one next year.
Larry Kulp: And with that, let me turn it back to Larry. Rahul, thank you to summarize GE our space grew rapidly again. As GE, Renewables improved sequentially and power continued to perform well. Overall, a very strong quarter for GE, one that gives us confidence and that allows us to raise our full year guide. More importantly, we're poised to launch two innovative global service-focused industry leaders in less than six months. I'm proud of our team and even more excited for what lies ahead.
Steven Winoker: Steve, let's go to Q&A. 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: Liz, please open the line. Ladies and gentlemen, if you wish to ask a question, please press star-1-1 on your telephone. If you wish to withdraw your question or your question has already been answered, please press star-1-1 again.
Scott Doishley: Our first question comes from a line of Scott Doishley with Deutsche Bank. Hey, good morning. Good morning.
Rahul Ghai: Rahul is the lower-leap delivery guide, a function of softer and narrow-body deliveries at the air framers or is this more related to challenges to your own production ramp up? And then how should we think about the impact of 2024? Thank you.