Q1 2024 General Electric Co Earnings Call

April 23, 2024

Liz: Good morning, ladies and gentlemen, and welcome to the GE Aerospace first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. My name is Liz, and I will be your conference coordinator today. If you experience issues with the webcast slides refreshing or there appears to be delays in the slide advancement, please hit F5 on your keyboard to refresh. As a reminder, this conference is being recorded. I would now like to turn the program over to your host for today's conference, Steve Winokur, Vice President of Investor Relations. Please proceed.

Good day, ladies and gentlemen, and welcome to the G E Aerospace first quarter 2024 earnings conference call.

Operator: Good day, ladies and gentlemen, and welcome to the GE Aerospace First Quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. My name is Liz, and I will be your conference coordinator today. If you experience issues with the webcast slides refreshing or there appears to be delays in the slide advancement, please hit F5 on your keyboard to refresh. As a reminder, this conference is being recorded. I would now like to turn the program over to your host for today's conference, Steve Winiger, Vice President of Investor Relations. Please proceed.

At this time all participants are in a listen only mode.

Liz: My name is Liz and I will be your conference coordinator today.

Liz: Have you experienced issues with the webcast slides refreshing, where there appears to be delays in the slight advancement. Please hit F. Five on your keyboard to refresh.

Liz: As a reminder, this conference is being recorded.

Liz: 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.

Steven Winoker: Thanks, Liz. Welcome to GE Aerospace's first quarter 2024 earnings call. I'm joined by Chairman and CEO Larry Culp and CFO Rahul Ghai. Many of the statements we're making are forward-looking and based on our best view of the world and our businesses as we see them today. As described in our SEC filing and on our website, those elements may change as the world changes. With a spinoff of GE Vernova successfully completed earlier this month, GE Vernova will report its results separately on April 25th. While included in our consolidated first quarter results, we're focusing today's commentary and Q&A primarily on GE Aerospace. Now, over to Larry. Steve, thank you.

Steve Winiger: Thanks, Liz. Welcome to GE Aerospace's First Quarter 2024 earnings call. I'm joined by Chairman and CEO Larry Culp and CFO Rahul Ghai. Many of the statements we're making are forward-looking and based on our best view of the world and our businesses as we see them today. As described in our SEC filing and website, those elements may change as the world changes. With the spinoff of GE Vernova successfully completed earlier this month, GE Vernova will report its results separately on 25 April 2024. While included in our consolidated first quarter results, we're focusing on today's commentary and Q&A primarily on GE Aerospace. Now, over to Larry.

Steven Winoker: Thanks, Liz welcome to G E Aerospace its first quarter 2024 earnings call I'm joined by Chairman and CEO, Larry Culp and CFO Rahul Guy many of the statements. We're making are forward looking and based on our best view of the world and our businesses as we see them today as described in our SEC filings and website those elements may.

Steven Winoker: Change as the world changes with the spin off of <unk> successfully completed earlier this month GE for Nova will report its results separately on April 25th.

Larry Culp: While included in our consolidated first quarter results were focusing today's commentary in Q&A, primarily on GE aerospace now over to Larry.

Larry Culp: Steve Thank you and good morning, everyone.

Larry Culp: Steve, thank you, and good morning, everyone. Welcome to our first earnings call as GE Aerospace, now a pure-play global leader in propulsion, services, and systems. We're wholly focused on our aerospace and defense customers, serving the 900,000 passengers in the air right now with our technology under wing. It's an incredible responsibility for our teams globally and why we take safety and quality so seriously. We'll come back to GE Aerospace in a moment, but before we do, we'll talk about GE on a consolidated basis, which is how we operated for the first few months of this year. Just three weeks ago, on 2 April 2024, we completed GE Vernova's spin and launched GE Aerospace, ringing the bell at the New York Stock Exchange after the successful spin of GE Healthcare last year. It was a proud moment that we celebrated with our teams around the world.

Steven Winoker: Steve, thank you, and good morning, everyone. Welcome to our first earnings call as GE Aeros. Now a pure play global leader in propulsion services, we're wholly focused on our aerospace and defense customers. Serving the 900,000 passengers in the air right now with our technology under way. It's an incredible responsibility for our teams globally and why we take safety and quality so seriously.

Larry Culp: Welcome to our first earnings call as GE Aerospace, our pure play global leader in propulsion services and systems.

Larry Culp: We are wholly focused on our aerospace and defense customers, serving the 900000 passengers in the air right now with our technology under wing.

Larry Culp: It's an incredible responsibility for our teams globally and why we take safety and quality so seriously.

Larry Culp: We'll come back to GE aerospace in a moment, but before we do, we'll talk about GE on a consolidated basis, which is how we operated for the first few months of this year. Just three weeks ago, on April 2nd, we completed GE Brnova's spin and launched GE Aerospace, ringing the bell at the New York Stock Exchange after the successful spin of GE Healthcare last year. It was a proud moment that we celebrated with our teams around the world.

We'll come back to GE Aerospace in a moment, but before we do, we'll talk about GE on a consolidated basis, which is how we operated for the first few months of this year. Just three weeks ago, on 2 April 2024, we completed GE Vernova's spin and launched GE Aerospace, ringing the bell at the New York Stock Exchange after the successful spin of GE Healthcare last year. It was a proud moment that we celebrated with our teams around the world.

Speaker Change: We'll come back to GE aerospace in a moment, but before we do we will talk about GE on a consolidated basis.

Speaker Change: Which is how we operated for the first few months of this year.

Speaker Change: Just three weeks ago on April the second we completed GE burn over spin and launched GE aerospace ringing the bell at the New York Stock exchange after the successful spin of GE healthcare last year.

Speaker Change: It was a proud moment that we celebrated with our teams around the world.

Larry Culp: This marked a new beginning following the completion of GE's multi-year transformation that strengthened our businesses both financially and operationally. Thanks to the GE team, we significantly improved our financial position, reducing debt by more than $100 billion since 2018, and enhanced our operational execution by embracing lean with a relentless focus on safety, quality, delivery, and cost in order to better serve our customers. Together, we built a strong foundation for our three independent companies that, to date, have increased shareholder value nearly fivefold. Now GE begins again.

Larry Culp: This marked a new beginning following the completion of GE's multi-year transformation that strengthened our businesses both financially and operationally. Thanks to the GE team, we significantly improved our financial position, reducing debt by more than $100 billion since 2018, and enhanced our operational execution by embracing lean with a relentless focus on safety, quality, delivery, and cost in that order to better serve our customers. Together, we built a strong foundation for our three independent companies that to date have increased shareholder value nearly fivefold. Now, GE begins again. Three industry leaders fit for purpose for the next century plus and ready to put their stamps on the world.

This marked a new beginning following the completion of GE's multi-year transformation that strengthened our businesses both financially and operationally. Thanks to the GE team, we significantly improved our financial position, reducing debt by more than $100 billion since 2018, and enhanced our operational execution by embracing lean with a relentless focus on safety, quality, delivery, and cost in that order to better serve our customers.

Speaker Change: This marked a new beginning following the completion of <unk> multi year transformation that strengthened our businesses both financially.

Speaker Change: And operationally.

Speaker Change: Thanks to the <unk> team, we significantly improved our financial position, reducing debt by more than $100 billion since 2018.

Speaker Change: And enhance our operational execution by embracing lean with our relentless focus on safety quality delivery and cost in that order to better serve our customers.

Together, we built a strong foundation for our three independent companies that to date have increased shareholder value nearly fivefold. Now, GE begins again. Three industry leaders fit for purpose for the next century plus and ready to put their stamps on the world.

Speaker Change: Together, we built a strong foundation for our three independent companies that to date have increased shareholder value nearly fivefold.

Speaker Change: Now Jay begins again re industry leaders fit for purpose for the next century plus.

Larry Culp: Three industry leaders fit for purpose for the next century plus, and ready to put their stamps on the world. GE Healthcare, GE Vernova, and GE Aerospace each carry forward GE's innovative spirit, customer focus, and passion to build a world that works. They are fully focused on their respective missions to lead precision health, the energy transition, and the future of flight. None of this would have been possible without the important work of our team. I want to express again my sincere gratitude to our incredible people, whose unmatched passion and talent have made this achievement possible. Thank you.

Speaker Change: And ready to put their stamp on the world.

Larry Culp: GE HealthCare, GE Vernova, and GE Aerospace each carry forward GE's innovative spirit, customer focus, and passion to build a world that works, fully focused on their respective missions to lead precision health, the energy transition, and the future of flight. None of this would have been possible without the important work of our teams. I want to express again my sincere gratitude to our incredible people whose unmatched passion and talent have made this achievement possible. Thank you. We turn to slide four. We had an exceptionally strong last quarter as GE. In the first quarter, orders were up substantially in both GE Aerospace and Power. Revenue was up 10% organically, with all segments contributing to the growth. Equipment and services were up across both GE Aerospace and GE Vernova.

GE HealthCare, GE Vernova, and GE Aerospace each carry forward GE's innovative spirit, customer focus, and passion to build a world that works, fully focused on their respective missions to lead precision health, the energy transition, and the future of flight. None of this would have been possible without the important work of our teams. I want to express again my sincere gratitude to our incredible people whose unmatched passion and talent have made this achievement possible.

Speaker Change: Health care, <unk>, and GE aerospace each carryforward, ge's innovative spirit customer focus and passion to build a world that works.

Speaker Change: Fully focused on their respective missions to lead precision health, the energy transition and the future of flight.

Speaker Change: None of this would've been possible without the important work of our teams.

Speaker Change: I want to express again, my sincere gratitude to our incredible people, whose unmatched passion and talent.

Made this achievement possible.

Thank you. We turn to slide four. We had an exceptionally strong last quarter as GE. In the first quarter, orders were up substantially in both GE Aerospace and Power. Revenue was up 10% organically, with all segments contributing to the growth. Equipment and services were up across both GE Aerospace and GE Vernova.

Speaker Change: Thank you.

Speaker Change: We turn to slide four we had an exceptionally strong last quarter as GE.

Larry Culp: We turn to slide four. We had an exceptionally strong last quarter for GE. And first quarter orders were up substantially in both GER space and power. Additionally, revenue is up 10% organically with all segments contributing to the growth. And equipment and services were up across both GE Aerospace and GE Vernova. Adjusted operating profit was $1.5 billion, up more than $600 million, with 300 basis points of organic margin expansion. This was largely driven by pricing and volume, which more than offset investments in inflation. Adjusted EPS was $0.82, up more than three times year over year.

Speaker Change: In the first quarter orders were up substantially in both GE aerospace and power.

Speaker Change: Revenue was up 10% organically with all segments contributing to the growth.

And equipment and services were up across both GE aerospace and GE burn over.

Speaker Change: Adjusted operating profit was $1 $5 billion up more than $600 million with 300.

Larry Culp: Adjusted operating profit was $1.5 billion, up more than $600 million, with 300 basis points of organic margin expansion. This was largely driven by pricing and volume, which more than offset investments and inflation. Adjusted EPS was 82 cents, up more than three times year over year. And free cash flow was $850 million, up more than five times, or $700 million, driven by higher earnings and a continued reduction in working capital. In all, a very strong performance for GE, reflecting real momentum at both GE Aerospace and GE Vernova. And now, the day has come where we bring our full focus to GE Aerospace. Our commercial propulsion fleet is the industry's largest and youngest, thanks to our world-class engineering and services teams. And in defense, we're proud to be the rotorcraft and combat engine provider of choice, powering 2/3 of these aircraft worldwide.

Adjusted operating profit was $1.5 billion, up more than $600 million, with 300 basis points of organic margin expansion. This was largely driven by pricing and volume, which more than offset investments and inflation. Adjusted EPS was 82 cents, up more than three times year over year. And free cash flow was $850 million, up more than five times, or $700 million, driven by higher earnings and a continued reduction in working capital. In all, a very strong performance for GE, reflecting real momentum at both GE Aerospace and GE Vernova.

Speaker Change: Basis points of organic margin expansion.

Speaker Change: This was largely driven by pricing and volume, which more than offset investments and inflation.

Speaker Change: Adjusted EPS was <unk> 80 <unk>.

Speaker Change: More than three times year over year.

Larry Culp: And free cash flow was $850 million, up more than five times, or $700 million, driven by higher earnings and a continued reduction in working capital. In all, a very strong performance for GE, reflecting real momentum at both GE Aerospace and GE Vernova. And now the day has come when we bring our full focus to GERO.

Speaker Change: And free cash flow was $850 million up more than five times over $700 million driven by higher earnings and a continued reduction in working capital.

Speaker Change: In all a very strong performance for GE.

Speaker Change: Reflecting real momentum at both GE aerospace and <unk>.

And now, the day has come where we bring our full focus to GE Aerospace. Our commercial propulsion fleet is the industry's largest and youngest, thanks to our world-class engineering and services teams. And in defense, we're proud to be the rotorcraft and combat engine provider of choice, powering 2/3 of these aircraft worldwide.

Speaker Change: And now.

Speaker Change: The day has come where we bring our full focus to GE aerospace.

Larry Culp: Our commercial propulsion fleet is the industry's largest and youngest, thanks to our world-class engineering and services team. And in defense, we're proud to be the rotorcraft and combat engine provider of choice, powering two-thirds of these aircraft worldwide. A massive part of our business is in aftermarket services, representing 70% of our $32 billion in revenue. Importantly, as we meet higher levels of demand today, services enable us to better understand how our technologies are performing, and we use that intelligence to help shape our future products.

Speaker Change: Our commercial propulsion fleet as the industry's largest and youngest thanks.

Speaker Change: Thanks to our World class Engineering and services teams.

Speaker Change: And in defense, we're proud to be the rotorcraft and combat engine provider of choice powering two thirds of these aircraft worldwide.

Speaker Change: A massive part of our business is an aftermarket services, representing 70% of our $32 billion in revenue.

Larry Culp: A massive part of our business is in aftermarket services, representing 70% of our $32 billion in revenue. Importantly, as we meet higher levels of demand today, services enable us to better understand how our technologies are performing, and we use that intelligence to help shape our future product roadmaps. Turning to our performance, GE Aerospace had a solid start to the year. In Q1, we delivered double-digit revenue and profit growth, as well as margin expansion in both businesses, with free cash flow doubling year over year. Overall, we have great confidence in our forward trajectory. We're raising our full-year operating profit guidance and see a path to our $10 billion operating profit target by 2028. Turning to slide six.

A massive part of our business is in aftermarket services, representing 70% of our $32 billion in revenue. Importantly, as we meet higher levels of demand today, services enable us to better understand how our technologies are performing, and we use that intelligence to help shape our future product roadmaps. Turning to our performance, GE Aerospace had a solid start to the year.

Speaker Change: Importantly, as we meet higher levels of demand today services enable us to better understand how our technologies are performing and we use that intelligence to help shape, our future product roadmaps.

Speaker Change: Turning to our performance J aerospace had a solid start to the year.

Larry Culp: Turning to our performance, GE Aerospace had a solid start to the year. In the first quarter, we delivered double-digit revenue and profit growth, as well as margin expansion in both businesses, with free cash flow doubling year over year. Overall, we have great confidence in our forward trajectory. We're raising our full-year operating profit guidance and see a path to our $10 billion operating profit target by 2028.

In Q1, we delivered double-digit revenue and profit growth, as well as margin expansion in both businesses, with free cash flow doubling year over year. Overall, we have great confidence in our forward trajectory. We're raising our full-year operating profit guidance and see a path to our $10 billion operating profit target by 2028. Turning to slide six.

Speaker Change: In the first quarter, we delivered double digit revenue and profit growth as well as margin expansion in both businesses with free cash flow doubling year over year.

Speaker Change: Overall, we have great confidence in our forward trajectory, we're raising our full year operating profit guidance and see a path to our 10 billion dollar operating profit target by 2028.

Turning to slide six.

Larry Culp: As you heard from us last month at our Investor Day, we're keeping our strategy simple, focused on today, tomorrow, and the future, with safety and quality first. Enter FlightDeck, our proprietary lean operating model to ensure focused execution as a public company. Fundamentally, it's a systematic approach to running our businesses to deliver exceptional value as measured through the eyes of our customers. And it's the best way we know to operationalize flight safety at GE Aerospace in combination with our safety and quality management systems. Starting with today, we're focused on service and readiness, keeping our customers' fleets flying. We're experiencing a tremendous demand cycle for services as more people fly and fly more often. In the quarter, GE CFM departures were up low double digits, and we're revising our expectations upward for the year.

As you heard from us last month at our Investor Day, we're keeping our strategy simple, focused on today, tomorrow, and the future, with safety and quality first. Enter FlightDeck, our proprietary lean operating model to ensure focused execution as a public company. Fundamentally, it's a systematic approach to running our businesses to deliver exceptional value as measured through the eyes of our customers.

Speaker Change: As you heard from US last month at our Investor Day, we're keeping our strategy simple.

Larry Culp: As you heard from us last month at our Investor Day, we're keeping our strategy simple, focused on today, tomorrow, and the future with safety and quality, and her flight deck, our proprietary lean operating model to ensure focused execution as a public company. Fundamentally, a systematic approach to running our businesses to deliver Exceptional Value as Measured through the Eyes of Our Customers. And it's the best way we know to operationalize flight safety at GE Aerospace in combination with our safety and quality management system.

Speaker Change: Focused on today tomorrow, and the future with safety and quality <unk>.

Speaker Change: Enter flight deck.

Speaker Change: Our proprietary lean operating model to ensure focused execution as a public company.

Speaker Change: Fundamentally it's a systematic approach to running our businesses to deliver exceptional value as measured through the eyes of our customers.

And it's the best way we know to operationalize flight safety at GE Aerospace in combination with our safety and quality management systems. Starting with today, we're focused on service and readiness, keeping our customers' fleets flying. We're experiencing a tremendous demand cycle for services as more people fly and fly more often. In the quarter, GE CFM departures were up low double digits, and we're revising our expectations upward for the year.

Speaker Change: And it's the best way, we know to Operationalized flight safety at GE Aerospace in combination with our safety and quality management systems.

Speaker Change: Starting with today, we're focused on service and readiness, keeping our customers' fleet flying.

Larry Culp: Starting with today, we're focused on service and readiness, keeping our customers' fleets flying. We're experiencing a tremendous demand cycle for services as more people fly and fly more often. In the quarter, GECFM departures were up low double digits, and we're revising our expectations upward for the year. The onus is on us to meet this demand, and with Flight Deck, we're maintaining the highest standards of safety and quality, with greater predictability and speed. It's easy to say, but hard to do.

Speaker Change: We're experiencing a tremendous demand cycle for services as more people fly in fly more often.

In the quarter GE CFM departures were up low double digits.

Speaker Change: And we're revising our expectations upward for the year.

Larry Culp: The onus is on us to meet this demand, and with FlightDeck, we're maintaining the highest standards of safety and quality, with greater predictability and speed. Easy to say, hard to do. A key priority in our services business is improving turnaround times to increase our shop visit output. We're making progress with LEAP, a significant driver of shop visit growth this year. For example, at our Malaysia site, a joint GE Aerospace and Safran team collaborated to reduce average LEAP test cell hours by 30% per engine, and they're working toward a 50% plus improvement by year-end. As a result, the team has closed 95% of a 100-engine gap in test capacity so far, while optimizing LEAP baseline test time, eliminating interruptions, and reducing network variation.

The onus is on us to meet this demand, and with FlightDeck, we're maintaining the highest standards of safety and quality, with greater predictability and speed. Easy to say, hard to do. A key priority in our services business is improving turnaround times to increase our shop visit output. We're making progress with LEAP, a significant driver of shop visit growth this year.

The onus is on us to meet this demand and with flight deck, we're maintaining the highest standards of safety and quality with greater predictability and speed.

Speaker Change: Easy to say.

Speaker Change: Hard to do.

Speaker Change: A key priority in our services business is improving turnaround times to increase our shop visit output.

Larry Culp: A key priority in our services business is improving turnaround times to increase our shop visit out. We're making progress with LEAP, a significant driver of shop visit growth this year. For example, at our Malaysian site, a joint GE Aerospace and Safran team collaborated to reduce average lead test sale hours by 30% per engine, and they're working toward a 50% plus improvement by year end. As a result, the team has closed 95% of a 100 engine gap in test capacity so far, while optimizing LEAP baseline test time, eliminating interruptions, and reducing network variation. Actions like these are improving our shop turnaround time, which for LEAP was down approximately or down to approximately 90 days this quarter, a 10% reduction versus our roughly 100 day average last year.

Speaker Change: We're making progress with leap.

Speaker Change: A significant driver of shop visit growth this year.

For example, at our Malaysia site, a joint GE Aerospace and Safran team collaborated to reduce average LEAP test cell hours by 30% per engine, and they're working toward a 50% plus improvement by year-end. As a result, the team has closed 95% of a 100-engine gap in test capacity so far, while optimizing LEAP baseline test time, eliminating interruptions, and reducing network variation.

Speaker Change: For example, at our Malaysia site or joint GE Aerospace and Safran team collaborated to reduce average leap test cell hours by over 30%.

Speaker Change: For engine and they're working toward a 50% plus improvement by year end.

Speaker Change: As a result, the team has closed 95% of our 100 engine gap in test capacity so far.

Speaker Change: While optimizing leap baseline test time.

Speaker Change: Eliminating interruptions and reducing network variation.

Speaker Change: Actions like these are improving our shop turnaround time, which relief was down approximately are down to approximately 90 days this quarter, a 10% reduction versus our roughly 100 day average last year.

Larry Culp: Actions like these are improving our shop turnaround time, which for LEAP was down to approximately 90 days this quarter, a 10% reduction versus our roughly 100-day average last year. While there's more work to do, we're focused on getting engines back in the hands of our customers faster without compromising safety or quality. For tomorrow, we remain focused on delivering on the ramp. This quarter, total engine deliveries improved up 9% year over year, including defense up over 50%. However, these deliveries were short of our objectives due largely to continued material availability challenges. Thus, we have intensified our efforts working with our suppliers to problem-solve these issues. Here is where FlightDeck is key. Currently, we can track about 80% of our largest delivery challenges back to 15 supplier sites.

Actions like these are improving our shop turnaround time, which for LEAP was down to approximately 90 days this quarter, a 10% reduction versus our roughly 100-day average last year. While there's more work to do, we're focused on getting engines back in the hands of our customers faster without compromising safety or quality. For tomorrow, we remain focused on delivering on the ramp. This quarter, total engine deliveries improved up 9% year over year, including defense up over 50%.

Speaker Change: While there's more work to do we're focused on getting engines back in the hands of our customers faster without compromising safety or quality.

Larry Culp: While there's more work to do, we're focused on getting engines back in the hands of our customers faster without compromising safety or quality. For tomorrow, we remain focused on delivering on the ramp. This quarter, total engine deliveries improved 9% year over year, including defense up over 50%. However, these deliveries were short of our objectives, due largely to continued material availability.

Speaker Change: For Tomorrow, we remain focused on delivering on the ramp.

Speaker Change: This quarter total engine deliveries improved up 9% year over year, including defense up over 50%.

However, these deliveries were short of our objectives due largely to continued material availability challenges. Thus, we have intensified our efforts working with our suppliers to problem-solve these issues. Here is where FlightDeck is key. Currently, we can track about 80% of our largest delivery challenges back to 15 supplier sites.

Speaker Change: However, these deliveries were short of our objectives due largely to continued material availability challenges.

Speaker Change: Thus, we have intensified our efforts working with our suppliers to problem solve these issues.

Larry Culp: Thus, we have intensified our efforts working with our suppliers to problem-solve these issues. Here is where flight deck is key. Currently, we can track about 80% of our largest delivery challenges back.

Speaker Change: Here is where flight deck is key.

Speaker Change: Currently we can track about 80% of our largest delivery challenges back to.

Larry Culp: The 15 supplier sites. We're deploying more than 550 engineers and supply chain resources, up 25% from last year, working with them to improve quality and delivery performance. For example, we're problem solving with one of our tier one suppliers by going to GEMBA at their most constrained site.

Speaker Change: The 15 supplier sites.

Larry Culp: We're deploying more than 550 engineers and supply chain resources, up 25% from last year, working with them to improve quality and delivery performance. For example, we're problem-solving with one of our tier-one suppliers by going to Gemba at their most constrained supplier. We are shoulder to shoulder with them, leveraging FlightDeck, and working together to identify and break constraints such as labor shortfalls, manufacturing yield issues, identifying alternate material types for raw material shortages, and improving flow and lead times. As a result, that constrained supplier recently improved output by more than 25% and is no longer pacing deliveries. We also recently announced we're investing more than $650 million in both our manufacturing facilities and our supply chain this year, reflecting our commitment to strengthening quality and increasing production to better support our customers' long-term needs.

We're deploying more than 550 engineers and supply chain resources, up 25% from last year, working with them to improve quality and delivery performance. For example, we're problem-solving with one of our tier-one suppliers by going to Gemba at their most constrained supplier. We are shoulder to shoulder with them, leveraging FlightDeck, and working together to identify and break constraints such as labor shortfalls, manufacturing yield issues, identifying alternate material types for raw material shortages, and improving flow and lead times.

Speaker Change: We're deploying more than 550 engineers and supply chain resources up 25% from last year.

Speaker Change: With them to improve quality and delivery performance.

Speaker Change: For example, we're problem solving with one of our tier one suppliers by going to gamba at their most constrained supplier.

Larry Culp: We are shoulder to shoulder with them, leveraging flight deck and working together to identify and break constraints such as labor shortfalls, manufacturing yield issues, identifying alternate material types for raw material shortages, and improving flow and lead times. As a result, that constrained supplier recently improved output by more than 25% and is no longer pacing delivery. We also recently announced we're investing more than $650 million in both our manufacturing facilities and our supply chain, reflecting our commitment to strengthening quality and increasing production to better support our customers' long-term needs.

Speaker Change: We are shoulder to shoulder with them leveraging flight deck and working together to identify a break constraints such as labor shortfalls manufacturing yield issues.

Speaker Change: <unk> alternate material types for raw material shortages and improving flow and lead times.

As a result, that constrained supplier recently improved output by more than 25% and is no longer pacing deliveries. We also recently announced we're investing more than $650 million in both our manufacturing facilities and our supply chain this year, reflecting our commitment to strengthening quality and increasing production to better support our customers' long-term needs.

Speaker Change: As a result that constrained supply recently improved output by more than 25% and is no longer pacing deliveries.

Speaker Change: We also recently announced we're investing more than $650 million in both of our manufacturing facilities and our supply chain this year, reflecting our.

Speaker Change: Our commitment to strengthening quality and increasing production to better support our customers' long term needs.

Larry Culp: At the same time, both airlines and our defense customers are expanding and modernizing their fleets and choosing to do so with us, adding to our $150 billion-plus backlog and continuing to build our installed base of engines and services. At the Singapore Airshow, Thai Airways committed to powering its new widebody fleet of Boeing 787 aircraft with our GEnx-1B engines. The GEnx is now a cornerstone of the airline's long-term plan to open new markets and meet surging demand while working to achieve its environmental goals. American Airlines secured 85 new Boeing 737 MAX jets, which will be powered by our LEAP-1B. easyJet made a commitment for more than 300 LEAP-1A engines for its fleet of 157 A320neo aircraft.

At the same time, both airlines and our defense customers are expanding and modernizing their fleets and choosing to do so with us, adding to our $150 billion-plus backlog and continuing to build our installed base of engines and services. At the Singapore Airshow, Thai Airways committed to powering its new widebody fleet of Boeing 787 aircraft with our GEnx-1B engines.

Speaker Change: At the same time, both airlines and our defense customers are expanding and modernizing their fleets and choosing to do so with us adding.

Larry Culp: At the same time, both airlines and our defense customers are expanding and modernizing their fleets and choosing to do so with us, adding to our $150 billion plus backlog and continuing to build our installed base of engines and services. At the Singapore Airshow, Thai Airways committed to powering its new wide-body fleet of Boeing 787 aircraft with our GENX-1B engine. The GENX is now a cornerstone of the airline's long-term plan to open new markets and meet surging demand while working to achieve its environmental goals. American Airlines has secured 85 new Boeing 737 MAX jets, which will be powered by our LEAP-1B. EasyJet made a commitment to more than 300 LEAP-1A engines for its fleet of 157 A320neo aircraft.

Adding to our 150 billion dollar plus backlog.

Speaker Change: And continuing to build our installed base of engines and services.

Speaker Change: At the Singapore Airshow Thai Airways committed to powering its new wide body fleet of Boeing 787 aircraft.

Speaker Change: With our <unk> engines.

The GEnx is now a cornerstone of the airline's long-term plan to open new markets and meet surging demand while working to achieve its environmental goals. American Airlines secured 85 new Boeing 737 MAX jets, which will be powered by our LEAP-1B. easyJet made a commitment for more than 300 LEAP-1A engines for its fleet of 157 A320neo aircraft.

Speaker Change: <unk> is now a cornerstone of the airlines long term plan to open new markets and meet surging demand, while working to achieve its environmental goals.

Speaker Change: American Airlines secured 85, new Boeing 737, Max Jets, which will be powered by our leap one b.

Speaker Change: An easy jet made a commitment for more than 300 leap <unk> engines for its fleet of 157, <unk> hundred 20 Neo aircrafts.

Larry Culp: In our defense and propulsion technologies business, we won a new order for F414 engines to power additional KF-21 fighter jets for the Korean Air Force, continuing to build our international business. For the future, we're advancing the technology building blocks that will define the future of flight with more than $2 billion of R&D spending this year. For example, we're continuing to make progress with testing in our CFM RISE program. We completed our first fan ingestion test with our full-scale RISE fan blade, and the results were extremely encouraging. On the defense side, in partnership with Sikorsky Innovations, our team is finalizing designs for a hybrid electric power systems test bed with a 600-kilowatt electric motor. This will support Sikorsky's plan to build, test, and fly a hybrid electric vertical takeoff and landing demonstrator with a tilt wing configuration.

In our defense and propulsion technologies business, we won a new order for F414 engines to power additional KF-21 fighter jets for the Korean Air Force, continuing to build our international business. For the future, we're advancing the technology building blocks that will define the future of flight with more than $2 billion of R&D spending this year. For example, we're continuing to make progress with testing in our CFM RISE program.

Speaker Change: In our defense and propulsion technologies business, we won a new order for <unk> four engines to power additional K F. 'twenty, one fighter Jets for the Korean Air Force continuing to build our international business.

Larry Culp: In our Defense and Propulsion Technologies business, we want a new order for F-414 engines to power additional KF-21 fighter jets for Korean Air, and we're continuing to build our international business. And for the future, we're advancing the technology that will define the future of flight with more than $2 billion of R&D spending this year. For example, we're continuing to make progress with testing in our CFM RISE program. We completed our first fan ingestion test with our full-scale RISE fan blade, and the results were extremely encouraging.

Speaker Change: And for the future, we're advancing the technology building blocks that will define the future of flight with more than $2 billion of R&D spending this year.

Speaker Change: For example, we're continuing to make progress with testing and our CFM rise program we.

We completed our first fan ingestion test with our full-scale RISE fan blade, and the results were extremely encouraging. On the defense side, in partnership with Sikorsky Innovations, our team is finalizing designs for a hybrid electric power systems test bed with a 600-kilowatt electric motor. This will support Sikorsky's plan to build, test, and fly a hybrid electric vertical takeoff and landing demonstrator with a tilt wing configuration.

Speaker Change: We completed our first span ingestion test with our full scale rise fan blade and the results were extremely encouraging.

Speaker Change: On the defense side in partnership with Sikorsky innovations. Our team is finalizing designs for a hybrid electric power systems Testbed for the 600 kilowatt electric motor.

Larry Culp: On the defense side, in partnership with Serkorsky Innovations, our team is finalizing designs for a hybrid electric power systems testbed with a 600 kilowatt electric motor. This will support Sikorsky's plan to build, test, and fly a hybrid electric vertical takeoff and landing demonstrator with a tiltwing configuration. All together, we're running GER space with customer expectations front and center, while delivering breakthrough innovation that will further shape the future of flight. And Flight Deck ensures we work as one team, utilizing one operating model to implement one strategy, and ultimately achieving one culture. This will help us to lead the industry forward and advance our vision to be the company that defines flight for today, tomorrow, and the future. Now, let me hand it over to Rahul.

Speaker Change: This will support Sikorsky is planned to build test imply a hybrid electric vertical takeoff and landing demonstrator with a tilt wing configuration.

Altogether, we are running GE aerospace with customer expectations front and center.

Larry Culp: Altogether, we're running GE Aerospace with customer expectations front and center while delivering breakthrough innovation that will further shape the future of flight. And FlightDeck ensures we work as one team, utilizing one operating model, implement one strategy, and ultimately yielding one culture. This will help us to lead the industry forward and advance our vision to be the company that defines flight for today, tomorrow, and the future. Now, let me hand it over to Rahul.

Altogether, we're running GE Aerospace with customer expectations front and center while delivering breakthrough innovation that will further shape the future of flight. And FlightDeck ensures we work as one team, utilizing one operating model, implement one strategy, and ultimately yielding one culture. This will help us to lead the industry forward and advance our vision to be the company that defines flight for today, tomorrow, and the future. Now, let me hand it over to Rahul.

Speaker Change: While delivering breakthrough innovation that will further shape.

Speaker Change: Excuse me the future of flight.

Speaker Change: And flight deck insurers, we work as one team utilizing one operating model implement one strategy and ultimately yielding one culture.

This will help us to lead the industry forward.

Speaker Change: And advance our vision to be the company that defines flight for today tomorrow and the future.

Speaker Change: Now, let me hand, it over to Rahul.

Rahul Ghai: Thank you Larry and good morning, everyone Slide again fully share your enthusiasm as we embark on the next chapter of our journey as a Standalone company.

Rahul Ghai: Thank you, Larry, and good morning, everyone. Glad you can fully share your enthusiasm as we embark on the next chapter of our journey as a standalone company. We will cover GE Aerospace's results on a standalone basis, the same as a full-year guide. Also, for simplification, our results will be prepared on a reported basis, and we are limiting non-GAAP free cash flow adjustments to spin-related matters. Overall, GE Aerospace delivered a solid start to the year with all headline metrics up double digits. Demand remained resilient. Orders grew 34%, with similar growth rates in both commercial engines and services, or CES, and defense and propulsion technologies, or DPT. Revenue was up 15% from pricing, spare parts volume, and an increase in widebody and defense engine deliveries. Operating profit was $1.5 billion, up 24%, with margins up 140 basis points to 19.1%.

Rahul Ghai: Thank you, Larry. Good morning, everyone.

Rahul Ghai: Larry, I fully share your enthusiasm as we embark on the next chapter of our journey as a standalone company. We will cover GE Aerospace's results on a stand-alone basis, the same as a Foliar Guide.

Rahul: We will cover GE aerospace results on a standalone basis, the same as our full year guide.

Rahul Ghai: Also, for simplification, our results will be prepared on a reported basis, and we are limiting non-GAAP free cash flow adjustments to SPIN-related matters. Overall, GE Aerospace delivered a solid start to the year, with all headline metrics up double digits. Demand Remains Resilient. Auras grew 34%, with similar growth rates in both commercial engines and services, or CES, and defense and propulsion technologies, or DPT. Revenue was up 15% due to pricing, spare parts volume, and an increase in widebody and defense engine deliveries.

Rahul: Also our simplification a result will be prepared on a reported basis and we're limiting non-GAAP free cash flow adjustments to spin related matters.

Overall, GE Aerospace delivered a solid start to the year with all headline metrics up double digits. Demand remained resilient. Orders grew 34%, with similar growth rates in both commercial engines and services, or CES, and defense and propulsion technologies, or DPT. Revenue was up 15% from pricing, spare parts volume, and an increase in widebody and defense engine deliveries. Operating profit was $1.5 billion, up 24%, with margins up 140 basis points to 19.1%.

Rahul: Overall, GE aerospace delivered a solid start to the year with all headline metrics up double digits.

Rahul: Demand remained resilient.

Rahul: Orders grew 34% with similar growth rates in both commercial engines and services our CES.

Rahul: And defense and propulsion technologies or DPT.

Rahul: Revenue was up 15% from pricing spare parts volume and an increase in wide body and defense engine deliveries.

Rahul: Operating profit was $1 5 billion.

Rahul Ghai: Operating profit was $1.5 billion, up 24%, with margins up 140 basis points to 19.1%. The profit growth was driven primarily by price, growth in services volume, and favorable mix. Profit and margins were up in both CES and DPT. Adjusted Corporate Costs and Elimination, including prior GE corporate costs, were $130 million, down more than 20% year over year.

Rahul: Up 24% with margins up 140 basis points to 19, 1%.

Rahul Ghai: The profit growth was driven primarily by price, growth in services volume, and favorable mix. Profit and margins were up in both CES and DPT. Adjusted corporate cost and elimination, including prior GE corporate cost, were $130 million, down more than 20% year over year. Post the GE Vernova spin-off, we expect to incur roughly $300 million for the remaining wind-down of GE corporate office and close to $250 million to set up standalone infrastructure for GE Aerospace. We will continue to adjust these items from earnings and cash. Free cash flow was $1.7 billion, doubling year over year with higher earnings and working capital improvements offsetting ADNA outflow. Specifically, working capital was a source largely from strong collections and progress payments, while inventory was a headwind. The strength of our operational and financial fundamentals gives us confidence to return 70% to 75% of our available cash to investors.

The profit growth was driven primarily by price, growth in services volume, and favorable mix. Profit and margins were up in both CES and DPT. Adjusted corporate cost and elimination, including prior GE corporate cost, were $130 million, down more than 20% year over year. Post the GE Vernova spin-off, we expect to incur roughly $300 million for the remaining wind-down of GE corporate office and close to $250 million to set up standalone infrastructure for GE Aerospace.

Rahul: The profit growth was driven primarily by price growth and services volume and favorable mix.

Rahul: Profit and margins were up in both CES and DPT.

Rahul: Adjusted corporate costs and elimination, including prior GE corporate cost $130 million down more than 20% year over year.

Rahul Ghai: Post the GE-Vernova spin-off, we expect to incur roughly $300 million for the remaining wind-down of GE Corporate Office and close to $250 million to set up stand-alone infrastructure for GE Aerospace. We will continue to adjust these items from earnings and cash. Pre-cash flow was $1.7 billion.

Rahul: Post the GE, where NOLA spinoff, we expect to incur roughly $300 million for the remaining wind down of GE corporate office and close to $250 million to setup standalone infrastructure for GE aerospace.

We will continue to adjust these items from earnings and cash. Free cash flow was $1.7 billion, doubling year over year with higher earnings and working capital improvements offsetting ADNA outflow. Specifically, working capital was a source largely from strong collections and progress payments, while inventory was a headwind. The strength of our operational and financial fundamentals gives us confidence to return 70% to 75% of our available cash to investors.

We will continue to adjust these items from earnings and cash.

Rahul: Free cash flow was $1 7 billion.

Rahul Ghai: Doubling year over year with higher earnings and working capital improvements offsetting AD&A outflow. Specifically, working capital was a source largely from strong collections and progress payments, while inventory was a headway. The strength of our operational and financial fundamentals gives us confidence to return 70 to 75% of our available cash to investors. Earlier this month, we initiated a quarterly dividend at $0.28.

Rahul: Doubling year over year with higher earnings and working capital improvements offsetting a DNA outflow.

Rahul: Specifically working capital was a source largely from strong collections and progress payments, while inventory was a headwind.

Rahul: The strength of our operational and financial fundamentals gives us confidence to return, 70% to 75% of our available cash to investors.

Rahul Ghai: Earlier this month, we initiated a quarterly dividend at $0.28, a 250% increase. At our Investor Day, we announced a $15 billion share buyback, a testament to the strength of our balance sheet. Through our new capital return framework, we are well-positioned to create significant shareholder value while we continue to invest in growth, innovation, and focused M&A. Now, turning to CES and DPT results. Starting with CES, a $24 billion business with 70% of revenue generated from services. As Larry mentioned, demand continues to be robust. For the year, we now expect departures to grow high single digits. Total departures are off to a stronger start versus our prior expectation, growing 11% in the quarter, with particular strength in China. We continue to expect departure growth to moderate throughout the year. We expect passenger traffic growth in high single-digit range for the year, a slight improvement.

Earlier this month, we initiated a quarterly dividend at $0.28, a 250% increase. At our Investor Day, we announced a $15 billion share buyback, a testament to the strength of our balance sheet. Through our new capital return framework, we are well-positioned to create significant shareholder value while we continue to invest in growth, innovation, and focused M&A. Now, turning to CES and DPT results. Starting with CES, a $24 billion business with 70% of revenue generated from services.

Rahul: Earlier this month, we initiated a quarterly dividend at 28.

Rahul Ghai: 250% increase, and at our investor day, we announced a 15 billion dollar share buyback, a testament to the strength of our balance sheet. Through a new capital return framework, we are well positioned to create significant shareholder value while we continue to invest in growth, innovation, and focused M&A. Now turning to CES and DPT results.

A 250% increase.

Rahul: And at our Investor Day, we announced a $15 billion share buyback.

Rahul: A testament to the strength of our balance sheet.

Rahul: To a new capital return framework, we are well positioned to create significant shareholder value. While we continue to invest in growth innovation and focused M&A.

Rahul: Now turning to CES and DVD results.

Rahul: Starting with CES, a $24 billion business with 70% of revenue generated from services.

Rahul Ghai: Starting with CES, a $24 billion business with 70% of revenue generated from service, As Larry mentioned, demand continues to be robust. For the year, we now expect departures to grow high single digits. Total departures are off to a stronger start versus our prior expectations, growing 11% in the quarter, with particular strength in China. We continue to expect departure growth to moderate throughout the year.

As Larry mentioned, demand continues to be robust. For the year, we now expect departures to grow high single digits. Total departures are off to a stronger start versus our prior expectation, growing 11% in the quarter, with particular strength in China. We continue to expect departure growth to moderate throughout the year. We expect passenger traffic growth in high single-digit range for the year, a slight improvement.

Rahul: As Larry mentioned demand continues to be robust.

For the year, we now expect departure to grow high single digits.

Rahul: Total departures are off to a stronger stock versus our prior expectation.

Rahul: <unk>, 11% in the quarter.

Rahul: With political strength in China.

Rahul: We continue to expect departure growth to moderate throughout the year.

Rahul Ghai: We expect passenger traffic growth in the high single-digit range for the year, a slight improvement. Narrow body remains solid with increased CFM56 fleet utilization and significant lead growth. Further, we now expect freight demand to be up low single digits, versus a prior expectation of down mid-single digit. Heightened geopolitical conflicts have increased the need for air cargo and improved its relative economy.

Rahul: We expect passenger traffic growth and high single digit range for the year a slight improvement.

Rahul Ghai: Narrowbody remains solid with increased CFM56 fleet utilization and significant LEAP growth. Further, we now expect freight demand to be up low single digits versus our prior expectation of down mid-single digits. Heightened geopolitical conflicts have increased the need for air cargo and improved its relative economics. As a result, commercial momentum continues. CES orders were up 34% this quarter. Both services and equipment were up double digits, largely driven by strong demand for LEAP and spare parts across our platforms. Overall, customer dynamics remain positive, with strong order books from both airlines and airframers. On narrowbody platforms, we won more than 300 LEAP-1B engines and a multi-year services agreement from Akasa Air. On widebody platforms, recent key wins included 90 GEnx engines for Thai Airways, 16 GE9X engines for Ethiopian Airlines, and 10 GEnx engines for LATAM Group.

Narrowbody remains solid with increased CFM56 fleet utilization and significant LEAP growth. Further, we now expect freight demand to be up low single digits versus our prior expectation of down mid-single digits. Heightened geopolitical conflicts have increased the need for air cargo and improved its relative economics. As a result, commercial momentum continues. CES orders were up 34% this quarter. Both services and equipment were up double digits, largely driven by strong demand for LEAP and spare parts across our platforms.

<unk> body remains solid with increased CFM, 56% fleet utilization and significant leap growth.

Rahul: Further we now expect freight demand to be up low single digits.

Rahul: Our prior expectation of down mid single digits.

Rahul: Heightened geopolitical conflicts have increased the need for air cargo and improved its relative economics.

As a result commercial momentum continues.

Rahul Ghai: As a result, commercial momentum continues. CES orders were up 34% this quarter. Both services and equipment were up double digits, largely driven by strong demand for LEAP and spare parts across our platform. Overall, customer dynamics remain positive, with strong order books from both airlines and airframers. On narrow body platforms, we won more than 300 LEAP 1B engines and a multi-year services agreement from ACASA Air. And on wide body platforms, recent key wins included 90 GE NX engines for Thai Airways, 16 GE 9X engines for Ethiopian Airlines, and 10 GE NX engines for LATAM Group.

Rahul: <unk> orders were up 34% this quarter.

Rahul: Both services and equipment were up double digits.

Rahul: Largely driven by strong demand for leap and spare parts across our platforms.

Overall, customer dynamics remain positive, with strong order books from both airlines and airframers. On narrowbody platforms, we won more than 300 LEAP-1B engines and a multi-year services agreement from Akasa Air. On widebody platforms, recent key wins included 90 GEnx engines for Thai Airways, 16 GE9X engines for Ethiopian Airlines, and 10 GEnx engines for LATAM Group.

Rahul: Overall customer dynamics remain positive with strong order books from both airlines and air Framers.

Rahul: On narrow body platforms, we won more than 300 leap <unk> engines, and a multi year services agreement from a cost out here.

Rahul: And on wide body platforms. Recent key wins included 90, J Nx engines for Pi Airways <unk> GE NYNEX engines for <unk> Airlines, and 10, GE Nx engines for Latam group.

This improving demand backdrop underscores our confidence in our annual guide and longer term outlook.

Rahul Ghai: This improving demand backdrop underscores our confidence in our annual guide and longer-term outlook. Now, looking at CES's first quarter results, revenue grew 16%, with volume up low double digits and the remainder driven primarily by higher price. Services growth of 12% was driven by pricing and strong spare part volume, which grew faster than internal shop visits that were up 3%, impacted by material input challenges. Equipment growth of 31% was driven by pricing and deliveries, which were up 2%, with higher widebody engine mix. LEAP shipments were roughly flat year over year given the supply chain challenges. As expected, spare engine shipments were down slightly. Profit was $1.4 billion, up 17%, with margins expanding 10 basis points from pricing, spare part sales, and mix.

This improving demand backdrop underscores our confidence in our annual guide and longer-term outlook. Now, looking at CES's first quarter results, revenue grew 16%, with volume up low double digits and the remainder driven primarily by higher price. Services growth of 12% was driven by pricing and strong spare part volume, which grew faster than internal shop visits that were up 3%, impacted by material input challenges.

Rahul Ghai: This improving demand backdrop underscores our confidence in our annual guide and longer-term outcomes. Now, we look at CES's first quarter results. Revenue grew 16% with volume up low double digits and the remainder driven primarily by higher prices. Services growth of 12% was driven by pricing and strong spare part volume, which grew faster than internal shop visits that were up three percent, impacted by material input challenges. Equipment growth of 31% was driven by pricing and deliveries, which were up 2% with higher wide body engine make. Leap shipments were roughly flat year-over-year given the supply chain challenges. As expected, spare engine shipments were down slightly.

Rahul: Now looking at <unk> first quarter results.

Rahul: Revenue grew 16%.

Rahul: With volume up low double double digits and the remainder are driven primarily by higher price.

Rahul: Services growth of 12% was driven by pricing and strong spare part volume.

Rahul: Which grew faster than internal shop visits that were up 3% and.

Rahul: Impacted by material inputs challenges.

Equipment growth of 31% was driven by pricing and deliveries, which were up 2%, with higher widebody engine mix. LEAP shipments were roughly flat year over year given the supply chain challenges. As expected, spare engine shipments were down slightly. Profit was $1.4 billion, up 17%, with margins expanding 10 basis points from pricing, spare part sales, and mix.

Rahul: Equipment growth of 31% was driven by pricing and deliveries, which were up 2% with higher to wide body engine mix.

Leap shipments were roughly flat year over year, given the supply chain challenges.

Rahul: As expected spare engine shipments were down slightly.

Rahul Ghai: Profit was $1.4 billion, up 17%, with margins expanding 10 basis points from pricing, spare part sales, and mix. This more than offset higher inflation, investments, and a change in estimated profitability on long-term service agreements on a mature platform, which negatively impacted both services, revenue, and profit by roughly $200 million. At CES, we are pleased with a strong start to the year, delivering significant growth and profit improvement. Turning to DPT, which includes both defense and systems as well as propulsion and additive technology.

Rahul: Profit was $1 4 billion.

Rahul: Up 17% with margins expanding 10 basis points from pricing spare part sales and mix.

Rahul Ghai: This more than offset higher inflation investments and a change in estimated profitability on long-term service agreements on a mature platform, which negatively impacted both services revenue and profit by roughly $200 million. At CES, we are pleased with a strong start to the year, delivering significant growth and profit improvement. Turning to DPT, which includes both defense and systems and propulsion and additive technologies. This is roughly a $9 billion business where services make up approximately 55% of the revenue. Looking at the sector broadly, national defense budgets are growing, with US spending expected to grow low single digits and international spending up mid-single digits. Our defense customers' ask of us is clear: support their readiness while delivering more and more predictably. Turning to our first quarter results, orders were up 34%, underscoring strong demand and the quality of our franchise, with defense book-to-bill of 1.1x.

This more than offset higher inflation investments and a change in estimated profitability on long-term service agreements on a mature platform, which negatively impacted both services revenue and profit by roughly $200 million. At CES, we are pleased with a strong start to the year, delivering significant growth and profit improvement. Turning to DPT, which includes both defense and systems and propulsion and additive technologies. This is roughly a $9 billion business where services make up approximately 55% of the revenue.

This more than offset higher inflation investments and a change in estimated profitability on long term service agreements on a mature platform.

Rahul: Which negatively impacted both services revenue and profit by roughly $200 million.

Rahul: At CES, we are pleased with our strong start to the year delivering significant growth and profit improvement.

Rahul: Turning to DPT, which includes both defense and systems and propulsion and additive technologies.

Rahul Ghai: This is roughly a $9 billion business where services make up approximately 55% of the revenue. Looking at the sector broadly, national defense budgets are growing, with U.S. spending expected to grow low single digits and international spending up mid-single digits. What our defense customers ask of us is clear.

Rahul: This is roughly a $9 billion business, where services make up approximately 55% of the revenue.

Looking at the sector broadly, national defense budgets are growing, with US spending expected to grow low single digits and international spending up mid-single digits. Our defense customers' ask of us is clear: support their readiness while delivering more and more predictably. Turning to our first quarter results, orders were up 34%, underscoring strong demand and the quality of our franchise, with defense book-to-bill of 1.1x.

Looking at the sector broadly national defense budgets are growing with us spending expected to grow low single digits and international spending up mid single digits.

Rahul: Our defense customers ask of US is clear supported readiness, while delivering more and more predictably.

Rahul Ghai: Support their readiness while delivering more and more predictably. Turning to our first quarter results, Orders were up 34%, underscoring strong demand and the quality of our franchise, with defense book to bill of 1.1 Revenue grew 18% Defense unit deliveries grew by 45 engines on an easier comparison. This, combined with pricing and growth in classified programs, increased defense and systems revenue by 17%. Propulsion and Additive Technologies grew 19%, primarily from growth at Arvio and Unison to support GENX and LEED. Profit was $250 million, up 26%, with margins expanding 80 basis points. Volume and Pricing, Net of Inflation, More than Offset Investments, and Defense Equipment Mitch.

Rahul: Turning to our first quarter results.

Rahul: Orders were up 34%.

Rahul: Underscoring strong demand and the quality of our franchisees.

Rahul: But defense book to Bill of one onex.

Rahul: Revenue grew 18%.

Rahul Ghai: Revenue grew 18%. Defense units deliveries grew by 45 engines on an easier compare. This, combined with pricing and growth in classified programs, increased defense and systems revenue by 17%. Propulsion and additive technologies grew 19%, primarily from growth at Avio and Unison to support GEnx and LEAP. Profit was $250 million, up 26%, with margins expanding 80 basis points. Volume and pricing, net of inflation, more than offset investments and defense equipment mix. In all, improved delivery and pricing drove strong revenue and profit growth this quarter. Given our solid start and constructive outlook for the rest of the year, we are raising our full-year profit and cash guidance as outlined on slide 11. We continue to project at least low double-digit revenue growth. In CES, we still expect revenue growth of mid to high teens.

Revenue grew 18%. Defense units deliveries grew by 45 engines on an easier compare. This, combined with pricing and growth in classified programs, increased defense and systems revenue by 17%. Propulsion and additive technologies grew 19%, primarily from growth at Avio and Unison to support GEnx and LEAP. Profit was $250 million, up 26%, with margins expanding 80 basis points. Volume and pricing, net of inflation, more than offset investments and defense equipment mix.

Defense unit deliveries grew by 45 engines on an easier compare.

Rahul: This combined with pricing and growth in classified programs increased defense and systems revenue by 17%.

Rahul: Propulsion and additive technologies grew 19%.

Rahul: Primarily from growth at Aveo, and unison to support GE Nx and leap.

Rahul: Profit was $250 million up 26% with margins expanding 80 basis points.

Rahul: Volume and pricing net of inflation more than offset investments and defense equipment mix.

In all, improved delivery and pricing drove strong revenue and profit growth this quarter. Given our solid start and constructive outlook for the rest of the year, we are raising our full-year profit and cash guidance as outlined on slide 11. We continue to project at least low double-digit revenue growth. In CES, we still expect revenue growth of mid to high teens.

Rahul Ghai: In all, improved delivery and pricing drove strong revenue and profit growth this quarter. Given our solid start and constructive outlook for the rest of the year, we are raising our full-year profit and cash guidance, as outlined on slide 11. We continue to project at least low double-digit revenue growth. For CES, we still expect revenue growth of the mids to high teens. In services, we continue to expect mid-teens revenue growth with shop visit output growing faster than spare parts sales. We're anticipating reduced LEAP output in the range of 10 to 15% growth but continue to expect overall equipment revenue growth of high teams from improving by body mix.

Rahul: And all improved delivery and pricing drove strong revenue and profit growth this quarter.

Rahul: Given our solid start and constructive outlook for rest of the year, we are raising our full year profit and cash guidance as outlined on slide 11.

Rahul: We continue to project at least low double digit revenue growth.

Rahul: In CES, we still expect revenue growth of mid to high teens.

Rahul Ghai: In services, we continue to expect mid-teens revenue growth, with shop visit output growing faster than spare part sales. We are anticipating reduced LEAP output in the range of 10% to 15% growth, but continue to expect overall equipment revenue growth of high teens from improving widebody mix. In DPT, we continue to expect mid to high single-digit revenue growth, primarily driven by equipment growth. Operating profit is now expected to be in a range of $6.2 to 6.6 billion, up from $6 to 6.5 billion previously. CES operating profit guidance is now expected to be in a range of $6.1 to 6.4 billion, up $100 million at the midpoint from favorable revenue dynamics. DPT profit guidance is unchanged. In corporate, we continue to expect cost and eliminations of about $1 billion, including $600 million of corporate expenses and roughly $400 million of eliminations.

In services, we continue to expect mid-teens revenue growth, with shop visit output growing faster than spare part sales. We are anticipating reduced LEAP output in the range of 10% to 15% growth, but continue to expect overall equipment revenue growth of high teens from improving widebody mix. In DPT, we continue to expect mid to high single-digit revenue growth, primarily driven by equipment growth. Operating profit is now expected to be in a range of $6.2 to 6.6 billion, up from $6 to 6.5 billion previously.

Rahul: In services, we continue to expect mid teens revenue growth with shop visit output growing faster and spare part sales.

Rahul: We are anticipating reduce leap output in the range of 10% to 15% growth, but continue to expect overall equipment revenue growth of high teens from improving by body mix.

Rahul: In <unk>, we continue to expect mid to high single digit revenue growth.

Rahul Ghai: In DPT, we continue to expect mid to high single-digit revenue growth. Primarily driven by equipment growth, operating profit is now expected to be in a range of $6.2 to $6.6 billion, up from $6 to $6.5 billion previously. CES operating profit guidance is now expected to be in a range of $6.1 to $6.4 billion, up $100 million at the midpoint from favorable revenue dynamics. DPT, however, profit guidance is unchanged. In corporate, we continue to expect cost and eliminations of about $1 billion, including $600 million of corporate expenses and roughly $400 million of elimination.

Rahul: Primarily driven by equipment growth.

Rahul: Operating profit is now expected to be in a range of six two to $6 6 billion.

Rahul: Up from six to $6 5 billion previously.

CES operating profit guidance is now expected to be in a range of $6.1 to 6.4 billion, up $100 million at the midpoint from favorable revenue dynamics. DPT profit guidance is unchanged. In corporate, we continue to expect cost and eliminations of about $1 billion, including $600 million of corporate expenses and roughly $400 million of eliminations.

CES operating profit guidance is now expected to be in a range of $6 one to $6 $4 billion.

Rahul: Up $100 million at the midpoint from favorable revenue dynamics.

Rahul: DPT profit guidance is unchanged.

Rahul: In corporate we continue to expect cost and eliminations of about $1 billion includes.

Rahul: Including $600 million of corporate expenses, and roughly $400 million of eliminations.

Rahul Ghai: We now expect margins to expand roughly 50 basis points for the year versus flat previously. Now, as a standalone company, we are initiating adjusted EPS in a range of $3.80 to $4.05, up more than 30% year over year. This includes first quarter adjusted EPS of approximately $0.92, up more than 40% year on year. On free cash flow, we expect higher profit to flow through to cash, delivering more than $5 billion, with conversion well above 100% of net income. Overall, we are encouraged by the strong start and the market environment that gives us confidence to raise our performance expectations for the year. Larry, back to you.

We now expect margins to expand roughly 50 basis points for the year versus flat previously. Now, as a standalone company, we are initiating adjusted EPS in a range of $3.80 to $4.05, up more than 30% year over year. This includes first quarter adjusted EPS of approximately $0.92, up more than 40% year on year. On free cash flow, we expect higher profit to flow through to cash, delivering more than $5 billion, with conversion well above 100% of net income. Overall, we are encouraged by the strong start and the market environment that gives us confidence to raise our performance expectations for the year. Larry, back to you.

We now.

Rahul Ghai: We now expect margins to expand roughly 50 basis points for the year versus flat previous. Now, as a standalone company, we are initiating adjusted EPS in a range of $3.80 to $4.05, up more than 30% year over year. This includes first quarter adjusted EPS of approximately $0.92, up more than 40% year-on-year. And on free cash flow, we expect higher profit to flow through to cash, delivering more than $5 billion with a conversion well above 100% of net income. Overall, we are encouraged by the strong start and the market environment that gives us confidence to raise our performance expectations for the year. Larry, back to you. Rahul: thanks.

Rahul: We expect margins to expand roughly 50 basis points for the year versus flat previously.

Rahul: Now as a Standalone company, we're initiating adjusted EPS in a range of $3 80.

Rahul: The $4 and five.

Up more than 30% year over year.

Rahul: This includes first quarter adjusted EPS of approximately 92.

Rahul: Up more than 40% in the year.

Rahul: And on free cash flow, we expect higher profit to flow through to cash.

Rahul: Delivering more than $5 billion with conversion well above 100% of net income.

Rahul: Overall, we are encouraged by the strong start in a market environment that gives us confidence to raise our performance expectations for the year, sorry back to you for whole banks, we're clearly off to a solid start this year.

Steve Winiger: Rahul, thanks. We're clearly off to a solid start this year. If I close on slide 12, this captures the essence of GE Aerospace and what we take forward with us. We have an excellent franchise with sustained competitive advantages and a compelling value proposition. Our platforms are preferred by customers across narrowbody, widebody, and defense. Excuse me. We're aiming to provide industry-leading reliability and durability, prioritizing safety and quality first, then delivery, finally cost. This means delivering unmatched time on wing and faster turnaround times for our customers. We're doing this across the industry's largest and growing fleets. With our deep domain expertise and talent, commitment to innovation, and capacity to invest, we're poised to deliver the breakthrough technologies of the future.

Larry Culp: Rahul, thanks. We're clearly off to a solid start this year. If I close on slide 12, this captures the essence of GE Aerospace and what we take forward with us. We have an excellent franchise with sustained competitive advantages and a compelling value proposition. Our platforms are preferred by customers across narrowbody, widebody, and defense. Excuse me.

Larry Culp: Rahul, thanks. We're clearly off to a solid start this year. If I close... On slide 12, this captures the essence of GE Aerospace and what we take forward with, We have an excellent franchise with sustained competitive advantages, and a compelling value pr, Our platforms are preferred by customers across narrow body, wide body and defense, excuse me, we're aiming to provide industry leading reliability and durability, prioritizing safety and quality first, then delivery Finally caught, This means delivering unmatched time on wing and faster turnaround times for our customers.

Rahul: If I close.

Rahul: On slide 12, this captures the essence of GE aerospace and what we take forward with us.

Rahul: We have an excellent franchise with sustained competitive advantages.

Rahul: And a compelling value proposition.

Rahul: Our platforms are preferred by customers across narrow body wide body in defense.

Rahul: Excuse me, we're aiming to provide industry, leading reliability and durability prioritizing safety and quality first than delivery.

We're aiming to provide industry-leading reliability and durability, prioritizing safety and quality first, then delivery, finally cost. This means delivering unmatched time on wing and faster turnaround times for our customers. We're doing this across the industry's largest and growing fleets. With our deep domain expertise and talent, commitment to innovation, and capacity to invest, we're poised to deliver the breakthrough technologies of the future.

Rahul: Finally cost.

Rahul: This means delivering unmatched time on wing and faster turnaround times for our customers.

Larry Culp: And we're doing this across the industry's largest and growing fleet. With our deep domain expertise and talent, commitment to innovation, and capacity to invest, we are poised to deliver the breakthrough technologies of the future. And with Flight Deck as our foundation to bring this all together, our team is poised to realize our full potential and deliver exceptional value for our customers and our shareholders. I've never been more confident in our path ahead, SGE Aerosmith.

And we're doing this across the industries largest and growing fleets.

Rahul: With our deep domain expertise and talent commitment to innovation and capacity to invest.

Rahul: We're poised to deliver the breakthrough technologies of the future.

Steve Winiger: And with FlightDeck as our foundation to bring this all together, our team is poised to realize our full potential and deliver exceptional value for our customers and our shareholders. I've never been more confident in our path ahead as GE Aerospace. Before I pass it back to Steve for Q&A, I'd like to take a moment to recognize him and his many contributions to GE. As you know by now, today is Steve's last call with us after more than five years with the company, or put another way, after 22 earnings calls. His dedication and partnership leading the investors' relations team and serving as a trusted strategic advisor to me and the rest of the leadership team here has been invaluable throughout our transformation. On behalf of myself and the entire team, Steve, we thank you and wish you the best of luck in your next chapter.

And with FlightDeck as our foundation to bring this all together, our team is poised to realize our full potential and deliver exceptional value for our customers and our shareholders. I've never been more confident in our path ahead as GE Aerospace. Before I pass it back to Steve for Q&A, I'd like to take a moment to recognize him and his many contributions to GE. As you know by now, today is Steve's last call with us after more than five years with the company, or put another way, after 22 earnings calls.

Rahul: And with flight deck is our foundation to bring this all together our team is poised to realize our full potential and deliver exceptional value for our customers and our shareholders.

Rahul: I've never been more confident in our path ahead.

Rahul: <unk> aerospace.

Larry Culp: Before I pass it back to Steve for Q&A, I'd like to take a moment to recognize him and his many contributions to GE. As you know, by now, today is Steve's last call with us after more than five years with the company, or put another way, after 22 earnings calls. His dedication and partnership leading the investor relations team and serving as a trusted strategic advisor to me and the rest of the leadership team here have been invaluable throughout our transformation. On behalf of myself and the entire team, we thank you and wish you the best of luck in your next chapter. And I know Rahul would like to say a few words. Thanks.

Rahul: Before I pass it back to Steve for Q&A.

Steven Winoker: I'd like to take a moment to recognize him and his many contributions to GE.

Speaker Change: As you know by now today as Steve's last call with us after more than five years with the company.

Speaker Change: Or put another way after 'twenty two earnings calls.

His dedication and partnership leading the investors' relations team and serving as a trusted strategic advisor to me and the rest of the leadership team here has been invaluable throughout our transformation. On behalf of myself and the entire team, Steve, we thank you and wish you the best of luck in your next chapter. I know Rahul would like to say a few words.

Speaker Change: His dedication and partnership leading the investors relations team and serving as a trusted strategic advisor to me and the rest of the leadership team.

Speaker Change: Pierre has been invaluable throughout our transformation.

Speaker Change: On behalf of myself and the entire team we.

Speaker Change: We thank you and wish you the best of luck in your next chapter.

Steve Winiger: I know Rahul would like to say a few words.

Speaker Change: And I know Rahul would like to say a few words.

Larry Culp: Thanks, Larry. Steve, I want to personally thank you for your trusted advice and friendship as I joined the company and as we executed the launches of GE Aerospace and GE Vernova. Your strategic and operating depth and your collaborative style have been instrumental in our transformation. I know many on this call and on the calls in the year past are appreciative of your responsiveness to their questions and the work you have done to simplify our financial disclosures while communicating our transformation with clarity and candor. We wish you all the best, and I'll pass it back to you in the spirit of making you work till the last day for questions.

Rahul Ghai: Thanks, Larry. Steve, I want to personally thank you for your trusted advice and friendship as I joined the company and as we executed the launches of GE Aerospace and GE Vernova. Your strategic and operating depth and your collaborative style have been instrumental in our transformation. I know many on this call and on the calls in the year past are appreciative of your responsiveness to their questions and the work you have done to simplify our financial disclosures while communicating our transformation with clarity and candor. We wish you all the best, and I'll pass it back to you in the spirit of making you work till the last day for questions.

Rahul: Thanks, Larry.

Rahul Ghai: Steve, I want to personally thank you for your trusted advice and friendship as I joined the company and as we executed the launches of GE Aerospace and GE Vernova. Your strategic and operating depth and your collaborative style have been instrumental in our transformation. And I know many on this call and on previous calls are appreciative of your responsiveness to their questions and the work you have done to simplify our financial disclosures while communicating our transformation with clarity and candor.

Rahul: Steve on a personally thank you for your trusted advice and friendship as I joined the company and as we executed the launches of <unk> aerospace and <unk> where NOLA.

Rahul: Your strategic and operating depth and Youre collaborative style have been instrumental in our transformation.

Speaker Change: And I know many on this calls and.

Speaker Change: And on the calls in the past are appreciative of your responsiveness for their questions and the work you have done to simplify our financial disclosures, while communicating our transformation with clarity and candor.

Rahul Ghai: We wish you all the best, and I'll pass it back to you in the spirit of making you work to the last day for questions. Larry, Rahul, thank you. I can't go on just yet without at least one quick comment. It's really been a true honor, a privilege, and a pleasure to serve with you and the rest of the teams at GE and GE Aerospace. A real masterclass for me.

Speaker Change: We wish you all the best.

Speaker Change: Pass it back to you in the spirit of making the work till the last day for questions.

Steve Winiger: Larry, Rahul, thank you. I can't go on just yet without at least one quick comment. It's really been a true honor, privilege, and pleasure to serve with you and the rest of the teams at GE and GE Aerospace, a real masterclass for me. Thank you for always giving our investors and analysts a seat at the table. I'm deeply grateful, proud of the teams, and excited to see what comes next. I know the futures of GE Aerospace, GE HealthCare, and GE Vernova are bright indeed. Now, before we open the line, I'd ask everyone in the queue to consider your fellow analysts again and ask one question so we can get to as many people as possible. If we have extra time, we'll circle back around.

Speaker Change: Larry Rahul. Thank you I can't go on just yet without at least one quick comment it's really been a true honor and privilege.

Larry Culp: And pleasure to serve with you and the rest of the teams at GE and.

Speaker Change: <unk> Aerospace a real master class for me. Thank you for always giving our investors and analysts a seat at the table.

Steven Winoker: Thank you for always giving our investors and analysts a seat at the table. And I'm deeply grateful, proud of the teams, and excited to see what comes next. And I know the futures of GE Aerospace, GE Healthcare, and GE Vernova are bright indeed. So now, before we open the line, I'd ask everyone in the queue to consider your fellow analysts again and ask one question so we can get to as many people as possible. And we have extra time. We'll circle back around. We ask that you please save any GE Vernova questions until their earnings call later this week again. Liz, can you please open the line?

Speaker Change: And I am deeply grateful proud of the teams and excited to see what comes next and I know the futures of GE Aerospace GE healthcare and GE or Nova are bright indeed.

Now, before we open the line, I'd ask everyone in the queue to consider your fellow analysts again and ask one question so we can get to as many people as possible. If we have extra time, we'll circle back around. We ask that you please save any GE Vernova questions until their earnings call later this week again. Liz, can you please open the line?

Speaker Change: So now before we open the line I'd ask everyone in the queue to consider your fellow analysts again and ask one question. So we can get to as many people as possible and we have extra time will circle back around we ask that you. Please save any <unk> or Nova questions until their earnings call. Later this week again.

Steve Winiger: We ask that you please save any GE Vernova questions until their earnings call later this week again. Liz, can you please open the line?

Speaker Change: <unk> can you please open the line.

Liz: 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. Our first question comes from the line of David Strauss with Barclays.

Speaker Change: Ladies and gentlemen, if you wish to ask a question. Please press star one to one on your telephone.

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. Our first question comes from the line of David Strauss with Barclays.

Speaker Change: Wish to withdraw your question or your question has already been answered. Please press star one again.

Speaker Change: Our first question comes from the line of David Strauss with Barclays.

David Strauss: Great. Thanks, Good morning, Congrats Steve.

David Strauss: Great. Thanks. Good morning. Congrats, Steve.

Steve Winiger: Thanks. Good morning.

David Strauss: Good morning.

David Strauss: One to Larry, Rahul, one to ask about the updated LEAP delivery guidance, now 10% to 15% down from 20% to 25%. Could you just dig into that a little bit? What drove that? Is that constraints on the supplier side? Is that Boeing taking down their schedule? What exactly went into that? Thanks.

David Strauss: One two.

David Strauss: Wanted to ask about the updated leap delivery guidance now 10% to 15% down from 2025 can you just dig into that a little bit what drove that is that is that constraint on the supplier side is that Boeing taking them their schedule what exactly went into that.

Larry Culp: Yeah, I would say that that clearly is a change in the update this morning. Dave & Company are going to talk about their rates tomorrow, I'm sure, on their earnings call, so we'll leave that conversation with them. Rest assured, as we are with all of our customers, we're well calibrated and aligned with respect to what we need to do, and what they need from us as we look forward. But I think all of us, particularly at this moment.

Steve Winiger: Yeah, I would say that that clearly is a change here in the update this morning. Dave and company are going to talk about their rates tomorrow, I'm sure, on their earnings call. So we'll lead that conversation with them. Rest assured, as we are with all of our customers, we're well calibrated and aligned with respect to what we need to do, what they need from us as we look forward. But I think all of us, particularly at this moment, before we talk about rates, always come back to make sure we're doing all that we can on the safety and quality fronts to ensure the best possible performance of our products, both as they're being manufactured and then, in turn, deployed in the field.

Larry Culp: Yeah, I would say that that clearly is a change here in the update this morning. Dave and company are going to talk about their rates tomorrow, I'm sure, on their earnings call. So we'll lead that conversation with them. Rest assured, as we are with all of our customers, we're well calibrated and aligned with respect to what we need to do, what they need from us as we look forward. But I think all of us, particularly at this moment, before we talk about rates, always come back to make sure we're doing all that we can on the safety and quality fronts to ensure the best possible performance of our products, both as they're being manufactured and then, in turn, deployed in the field.

Speaker Change: Yeah, I would say that that clearly is a change here in the update this morning.

Speaker Change: David Company Youre going to.

Talk about there are there rates tomorrow I'm sure on their earnings call. So we'll leave that conversation.

Speaker Change: With them.

Assured as we are with all of our customers were well calibrated and aligned with respect to what we need to do what they need from us as we as we look forward.

Speaker Change: But I think all of us, particularly at this moment.

Larry Culp: Before we talk about rates, we always come back to make sure that we're doing all that we can on the safety and quality front to ensure the best possible performance of our products, both as they're being manufactured and then, in turn, deployed in the field.

Speaker Change: Before we.

Speaker Change: Talk about rates always come back to make sure we're doing all that we can.

Speaker Change: On the safety and quality fronts.

Speaker Change: To ensure the best possible performance.

Speaker Change: Of our products.

Speaker Change: Both as they are being manufactured and then in turn deployed in the field.

Speaker Change: Our next question comes from Ron Epstein with Bank of America.

Unknown Executive: Our next question comes from Ron Epstein with Bank of America.

Operator: Our next question comes from Ron Epstein with Bank of America.

Larry Culp: Hey, good morning. If you could talk a little about the orders. I mean, they're up pretty spectacularly, you know, commercial engines and services up 78%, defense propulsion and technologies up 72. How much is that volume versus pricing?

Speaker Change: Sure.

Ron Epstein: Hey, Yeah good morning.

Ron Epstein: Hey, yeah, good morning.

Steve Winiger: Morning, Ron.

Ron Epstein: Morning Rod.

Ron Epstein: If you could talk a little about the orders, I mean, they're up pretty spectacularly. Commercial Engines and Services are up 78%. Defense and Propulsion Technologies is up 72%. How much is that volume versus pricing?

Ron Epstein: Can you talk a little about the.

Ron Epstein: The orders.

There are a pretty spectacular commercial engines and services up 78% defense propulsion technologies up 72, how much of that volume versus pricing.

Sheila Kahyaoglu: Ron, I would say most of that is volume and pricing helping across the board, https://www.youtube.com.au Most of that is coming from base volume growth with price contributing as well.

Larry Culp: Ron, I would say most of that is volume, and pricing helped across the board and showed up in our revenue growth, margin expansion, and in the orders outlook. But off a 34% increase in orders, I would say most of that is coming from base volume growth with price contributing as well.

Rahul Ghai: Ron, I would say most of that is volume, and pricing helped across the board and showed up in our revenue growth, margin expansion, and in the orders outlook. But off a 34% increase in orders, I would say most of that is coming from base volume growth with price contributing as well.

Ron Epstein: Ron I would say most of that is volume and pricing helped across the across the board are.

Ron Epstein: It showed up in our revenue growth.

Ron Epstein: Margin expansion and in the orders outlook, but also 34% increase in orders I would say.

Most of that is coming from base volume growth with price contributing as well.

Larry Culp: Our next question will come from the line of Sheila Kahyaoglu with Jeffreys.

Ron Epstein: Our next question will come from the line of Sheila <unk> with Jefferies.

Operator: Our next question will come from the line of Sheila Kahyaoglu with Jefferies.

Myles Alexander Walton: Thank you. Good morning, Larry and Rahul. And Steve, congratulations on elevating the investor relations game to the next level. So one for Larry or Rahul, you know, with Q1 margins, you guys have done a really great job, 19%, 150 bucks above the prior guide. I'm sorry, the midpoint. You know, Rahul, maybe if you could revisit the two points of margin headwind you pointed out last quarter. You know, you mentioned LEAP is lower in that unit volume, maybe about 40 bits of a tailwind versus your original guide. And then GE9X is probably consistent. So maybe you could talk about the puts and takes along with the investment and timing to get us to that mid-17% range for the year.

Sheila Kahyaoglu: Thank you. Good morning, Larry and Rahul.

Thank you good morning, Larry Good morning, Steve Congratulations on elevating the Investor Relations game to the next level.

Steve Winiger: Good morning.

Sheila Kahyaoglu: And Steve.

Larry Culp: Good morning.

Sheila Kahyaoglu: And Steve.

Steve Winiger: Good morning.

Sheila Kahyaoglu: Congratulations on elevating the investor relations game to the next level. So one for Larry or Rahul. With Q1 margins, you guys have done a really great job, 19%, 150 basis points above the prior guide. Sorry, the midpoint. Rahul, maybe if you could revisit the two points of margin headwind you pointed us to last quarter. You mentioned LEAP is lower on that unit volume, maybe about 40 basis points of a tailwind versus your original guide. And then GE9X is probably consistent. So maybe if you could talk about the puts and takes along with the investment and timing to get us to that mid 17% range for the year.

Steve Winiger: Good morning.

Sheila: One for Larry or of our.

Sheila: Q1 margins you guys have done a really great job, 19% at 150, perhaps about the prior guide I'm sorry.

Sheila: And the plant.

Sheila: Well, maybe if you could revisit that two points of margin headwind you pointed out last quarter.

Sheila: You mentioned libre as a lower unit volume, maybe about 40 bps of tailwind versus your original guide.

Sheila: <unk> is probably consistent so maybe if you could talk about the puts and takes along with investment and timing to get us to that mid 17% range for the year.

Larry Culp: Okay. A couple of things in there, Sheila. So let me start with where you started, which was the two points of margin headwind that we had spoken to on the January call and on our investor day. So if you go back, we had expected two points of margin pressure from LEAP OE ramp, introduction of 9X, and the step-up in R&D to support LEAP durability, introduction of 9X, and develop the future of flight. Now, with the push out of LEAP volume, that headwind of the two points is marginally lower. But now, if you step back and look at our overall guide for the year, listen, strong start to the year. We are pleased with where we are. And that has given us confidence to raise guidance for the full year. And we expect the momentum to fully continue as we get into the second quarter.

Rahul Ghai: Okay. A couple of things in there, Sheila. So let me start with where you started, which was the two points of margin headwind that we had spoken to on the January call and on our investor day. So if you go back, we had expected two points of margin pressure from LEAP OE ramp, introduction of 9X, and the step-up in R&D to support LEAP durability, introduction of 9X, and develop the future of flight.

Sheila: Okay.

Rahul Ghai: Okay, a couple of things here, Sheila. So let me start with where you started, which was the two points of margin headwind that we had spoken about on the January call and on our investor day. If you go back, we had expected two points of margin pressure from LEAP OE ramp, the introduction of 9x, and the step up in R&D to support LEAP durability, introduce 9x, and develop the future of flight. Now with the push out of leap volume, that headwind of the two points is marginally lower.

Speaker Change: A couple of things in there Sheila So let me start with where you started which was.

Speaker Change: The two points of margin headwind that we had spoken to on.

Speaker Change: On the January call and on our Investor Day.

Speaker Change: If you go back we had expected two points of margin pressure from leap OE ramp introduction of Nymex and the step up in R&D to support belief durability introduction of <unk> and what are the future flight.

Now, with the push out of LEAP volume, that headwind of the two points is marginally lower. But now, if you step back and look at our overall guide for the year, listen, strong start to the year. We are pleased with where we are. And that has given us confidence to raise guidance for the full year. And we expect the momentum to fully continue as we get into the second quarter.

Speaker Change: Now with the push out of leap volume that headwind of the two points is marginally lower.

Unknown Executive: But now if you step back and look at our overall guidance for the year, listen. A strong start to the year, you know, we are pleased with where we are. And that has given us confidence to raise guidance for the full year. And we expect the momentum to fully continue as we get into the second quarter. And overall, for the first half, we are expecting, you know, about low double-digit revenue growth and about half-off profit and free cash for the year.

Speaker Change: But now if you step back and look at our overall guide for the year listen <unk> strong start to the year. We are pleased with where we are and that has given us confidence to raise guidance for the full year and we expect the momentum to fully continue as we get into the second quarter and overall for first half we are expecting.

Larry Culp: Overall, for the first half, we are expecting about low double-digit revenue growth and about half of profit and free cash for the year. So, far more linear year than we've done in the past. Overall, as you step back and look at the full year, profit up $150 million at the midpoint of our guide to a range of $6.2 to 6.6 billion. Call it mid-teens profit growth and more than 30% EPS growth. So it'll be a good year if we deliver these numbers.

Overall, for the first half, we are expecting about low double-digit revenue growth and about half of profit and free cash for the year. So, far more linear year than we've done in the past. Overall, as you step back and look at the full year, profit up $150 million at the midpoint of our guide to a range of $6.2 to 6.6 billion. Call it mid-teens profit growth and more than 30% EPS growth. So it'll be a good year if we deliver these numbers.

Speaker Change: About <unk>.

Speaker Change: Low double digit revenue growth and about half of profit and free cash for the year. So far more linear earlier than we've done in the past and overall as you step back and look at the full year.

Unknown Executive: So far, a more linear year than we've done in the past. And overall, as you step back and look at the full year, you know, profit up $150 million at the midpoint of our guide to a range of 6.2 to 6.6 billion. Call it mid-teens profit growth and more than 30 percent EPS growth. So it'll be a good year if you deliver those numbers. Our next question will come from Myles Walton with Wolf Research. Thanks. Good morning. And good luck, Steve. If I adjust CES for the,

Speaker Change: Profit up $150 million at the midpoint of our guide.

Speaker Change: To a range of $6 to $6 6 billion.

Speaker Change: Call it mid teens profit growth and more than 30% EPS growth. So it'll be a good year. If you deliver these numbers.

Speaker Change: Our next question will come from Myles Walton with Wolfe research.

Operator: Our next question will come from Miles Walton with Wolfe Research.

Miles Walton: Thanks. Good morning and good luck, Steve. If I adjust CES for the $200 million long-term contract adjustment, the CES margins are up like 250 basis points year on year, despite this OE growth at 2x aftermarket growth. And I heard what you're saying a little on the spares exceeding shop visits. But is there anything else under the surface that really explains that kind of counterintuitive margin expansion?

Myles Walton: Thanks. Good morning and good luck, Steve. If I adjust CES for the $200 million long-term contract adjustment, the CES margins are up like 250 basis points year on year, despite this OE growth at 2x aftermarket growth. And I heard what you're saying a little on the spares exceeding shop visits. But is there anything else under the surface that really explains that kind of counterintuitive margin expansion?

Thanks, Good morning, and good luck Steve.

Speaker Change: I.

Myles Alexander Walton: Just CES for the $200 million long term contract adjustment.

Seth Seifman: Our next question will come from Myles Walton with Wolf Research.

Myles Alexander Walton: These margins are up 250 basis points year on year. Despite this OE growth at two times of aftermarket growth.

Larry Culp: No, listen, we had a good start in CES, you know, a billion dollars for profit margin expansion despite the CMR or the service profit adjustment that we had to make in the quarter. But, you know, and the big drivers here were pricing and customer mix, both on the equipment and on service. The makeshift from makeshift in OE from LEAP to White Body Mix helped, and also in services. Our spare part volume growth was higher than shop visit growth.

Myles Alexander Walton: I hear what you're saying on the spares exceeding shop visits but is there anything else under the surface that really explains that kind of counterintuitive margin expansion.

Larry Culp: No, listen, we had a good start in CES. $1 billion forward profit, margin expansion despite the CFM or the service profit adjustment that we had to make in the quarter. The big drivers here were pricing and customer mix, both on the equipment and on services. The mix shift in OE from LEAP to widebody mix helped. Also in services, our spare part volume growth was higher than shop visit growth. So that mix shift in services was a contributor as well. Encouraging start. But as you go through the year, keep in mind that the equipment growth will ramp in the second half of the year. Equipment growth will also include 9X shipments. The services mix will skew back towards the shop visit growth, which we still expect to be maybe low- to mid-teens% for the year.

Rahul Ghai: No, listen, we had a good start in CES. $1 billion forward profit, margin expansion despite the CFM or the service profit adjustment that we had to make in the quarter. The big drivers here were pricing and customer mix, both on the equipment and on services. The mix shift in OE from LEAP to widebody mix helped. Also in services, our spare part volume growth was higher than shop visit growth.

Speaker Change: No listen we had a good start in CES.

And for a profit margin expansion despite the CMI.

Speaker Change: The service profit adjustment that we had to make in the quarter, but you know and the big drivers here, where pricing and customer mix, both on the equipment and on services the.

Speaker Change: The mix shift from mix shift in OE from leap to <unk>.

Speaker Change: Wide body mix health and also in services, our spare parts volume growth was higher than chop physical so that mix shift in services was a contributor as well so encouraging start but as you go through the year keep in mind that the.

Larry Culp: So that mixed shift in services was a contributor as well. An encouraging start, but as you go through the year, keep in mind that, you know, the equipment growth will ramp up in the second half of the year, and the equipment growth will also include 9x shipments, and the services mix will skew back towards the shop visit growth, which we still expect to be maybe, you know, low to mid teens for the year.

So that mix shift in services was a contributor as well. Encouraging start. But as you go through the year, keep in mind that the equipment growth will ramp in the second half of the year. Equipment growth will also include 9X shipments. The services mix will skew back towards the shop visit growth, which we still expect to be maybe low- to mid-teens% for the year.

Speaker Change: The equipment growth will ramp in the second half of the year equipment growth growth will also include <unk> shipments and the services mix will skew back towards the shop visit growth, which we still expect to be maybe.

Speaker Change: Low to mid teens for the year.

Larry Culp: So the second half profit growth on a year over year basis will be lower than the profit growth that we'll see in the first half. But overall, listen, a good start in CES gives us confidence to raise the full year for CES's profit by about $100 million. Our next question will come from Robert Stollard with Vertical Research. Thanks so much. Good morning.

Larry Culp: So the second half profit growth on a year-over-year basis will be lower than the profit growth that we'll see in the first half. But overall, listen, good start in CES gives us confidence to raise the full year for CES in profit by about $100 million.

So the second half profit growth on a year-over-year basis will be lower than the profit growth that we'll see in the first half. But overall, listen, good start in CES gives us confidence to raise the full year for CES in profit by about $100 million.

Speaker Change: The second half profit growth on a year over year basis will be lower and the profit growth that we'll see in the first half, but overall listen good start in CES gives us confidence to raise the full year for CES in profit by about $100 million.

Speaker Change: Our next question will come from Robert Stallard with vertical research.

Operator: Our next question will come from Robert Stallard with Vertical Research.

Robert Stallard: Thanks, So much good morning, good morning labor.

Steve Winiger: Thanks so much. Good morning.

Robert Stallard: Thanks so much. Good morning.

Robert Stallard: Good morning. Just following on from David's question on the LEAP, do these issues with ramping up the LEAP have positive implications for the CFM shop visit peak, which I think you've earlier estimated at 2025, and also the height of that peak potentially going forward?

Larry Culp: Good morning.

Robert Stallard: Just following on from David's question on the LEAP, do these issues with ramping up the LEAP have positive implications for the CFM shop visit peak, which I think you've earlier estimated at 2025, and also the height of that peak potentially going forward?

Robert Stallard: Just following on from David's question on the leap do these issues with ramping up the leap have positive implications for the CFM.

Kenneth George Herbert: Our next question will come from Robert Stollard with Vertical Research. Thanks so much. Good morning.

Robert Stallard: Shop visit peak, which I think you've earlier estimated at 2025 and also the at the height of that peak potentially going forward.

Larry Culp: Well, I would say that we do see, I think, some knock-on positive effects in the aftermarket, both here in 24 but also in some of our projections, which I think were even last month. At Investor Day, we talked about how retirements have been lower than we would have anticipated, and thus, that should yield 200 incremental shop visits in 2024 relative to what we anticipated.

Steve Winiger: Well, I would say that we do see, I think, some knock-on positive effects in the aftermarket, both here in 2024, but also in some of our projections. I think it was just even last month at Investor Day, we talked about how retirements have been lower than we would have anticipated. Thus, that should yield 200 incremental shop visits in 2024 relative to what we anticipated. I think as long as capacity demand remains strong, I get a report every morning at 6:00AM. This morning showed our departures on a worldwide basis across all of our platforms up 7.8%. That's part of what Rahul alluded to in our prepared remarks with respect to our more optimistic outlook with respect to passenger demand. We know the airlines are looking to generate as much lift as they possibly can.

Larry Culp: Well, I would say that we do see, I think, some knock-on positive effects in the aftermarket, both here in 2024, but also in some of our projections. I think it was just even last month at Investor Day, we talked about how retirements have been lower than we would have anticipated. Thus, that should yield 200 incremental shop visits in 2024 relative to what we anticipated.

Robert Stallard: Well I would say that we.

Robert Stallard: We do see I think some knock on positive effects in the aftermarket both here in 'twenty four but also in some of our projections I think it was just even last month at Investor Day, we talked about how retirements have been lower than we would've anticipated us that.

Robert Stallard: Should yield 200 incremental shop visits in 2024 relative to what we anticipated.

I think as long as capacity demand remains strong, I get a report every morning at 6:00AM. This morning showed our departures on a worldwide basis across all of our platforms up 7.8%. That's part of what Rahul alluded to in our prepared remarks with respect to our more optimistic outlook with respect to passenger demand. We know the airlines are looking to generate as much lift as they possibly can.

Gautam Khanna: I think as long as capacity demand remains strong. I get a report every morning at 6 a.m. This morning, our departures on a worldwide basis across all of our platforms were up 7.8 percent, right? That's part of what Rahul alluded to in our prepared remarks with respect to a more optimistic outlook with respect to passenger demand. We know the airlines are looking to generate as much lift as they possibly can. And to the extent that they're paced by deliveries, retirements will slow, and that installed base will be worked.

Robert Stallard: I think as long as <unk>.

Robert Stallard: Capacity demand remains strong.

Speaker Change: Right I get a report every morning at six am this morning showed our departures on a worldwide basis across all of our platforms up seven 8% right Thats part of what Rahul alluded to in our prepared remarks with respect to.

Speaker Change: Or a more optimistic outlook with respect to passenger demand. We know the airlines are looking to generate.

Speaker Change: Generate as much lift as they possibly can and to the extent that they are paced by deliveries retirements will will slow and that installed base will be worked unfortunately much of that came from our factories and we're well positioned to support that does that push out the timing of <unk>.

Steve Winiger: And to the extent that they're paced by deliveries, retirements will slow, and that installed base will be worked. And fortunately, much of that came from our factories, and we're well positioned to support that. Does that push out the timing of perhaps peak CFM56? Yes, but it's early. And I don't think we're going to try today to pick a quarter in that timeframe as to when that might occur. But it's a positive dynamic forcing the aftermarket, both with existing platforms and increasingly with the LEAP.

And to the extent that they're paced by deliveries, retirements will slow, and that installed base will be worked. And fortunately, much of that came from our factories, and we're well positioned to support that. Does that push out the timing of perhaps peak CFM56? Yes, but it's early. And I don't think we're going to try today to pick a quarter in that timeframe as to when that might occur. But it's a positive dynamic forcing the aftermarket, both with existing platforms and increasingly with the LEAP.

Gautam Khanna: Unfortunately, much of that came from our factories, and we're well positioned to support that. Does that push out the timing of, perhaps, peak CFM 56? Yes, but it's early, right? And I don't think we're going to try to date it, take a quarter in that time frame as to when that might occur. But it's it's a positive, dynamic force in the aftermarket, both with existing platforms and increasingly with the leap.

Speaker Change: Perhaps peak CFM 56.

Speaker Change: Yes, but it's but it's early right and I don't think we're going to try to data hiccup.

Speaker Change: Pick a quarter in that timeframe as to when that might occur, but it's a it's a positive dynamic for us in the aftermarket both with existing platforms and increasingly with the leap.

Larry Culp: Our next question will come from Seth Seifman, with J.P. Morgan.

Speaker Change: Our next question will come from Seth Sigman with J P. Morgan.

Operator: Our next question will come from Seth Seifman with J.P. Morgan.

Scott Deuschle: Hey, thanks very much. Good morning, everyone. And congratulations, Steve. And thanks for all the help. I wanted to ask about shop visit growth and sort of any challenges around the guidance for the year and the level of visibility that you have sort of starting off with 3% and needing to get to, you know, kind of a mid teens type of number for the year. And, you know, that being constrained by, you know, various challenges in the supply chain and, you know, internal productivity and, you know, kind of how much confidence you have around that ramp and shop visit growth.

Speaker Change: Hey.

Steve Winiger: Hey, thanks very much. Good morning, everyone. And congratulations, Steve. And thanks for all the help. Wanted to ask about shop visit growth and sort of any challenges around the guidance for the year and the level of visibility that you have, sort of starting off with 3% and needing to get to kind of at least a mid-teens type of number for the year. And that being constrained by various challenges in supply chain, and internal productivity, and kind of how much confidence you have around that ramp in shop visit growth.

Seth Seifman: Hey, thanks very much. Good morning, everyone. And congratulations, Steve. And thanks for all the help. Wanted to ask about shop visit growth and sort of any challenges around the guidance for the year and the level of visibility that you have, sort of starting off with 3% and needing to get to kind of at least a mid-teens type of number for the year. And that being constrained by various challenges in supply chain, and internal productivity, and kind of how much confidence you have around that ramp in shop visit growth.

Seth Seifman: Thanks, very much good morning, everyone and congratulations Steve and thanks for all the help.

Seth Seifman: Wanted to ask about shop visit growth and sort of the.

Seth Seifman: And any challenges around the guidance for the year and the level of visibility that you have sort of starting off with with 3% and needing to get to.

Seth Seifman: Kind of at least a mid teens type of number for the year.

Seth Seifman: And that being constrained by.

Seth Seifman: Various.

Seth Seifman: Challenges in supply chain, and internal productivity and kind of how much how much confidence you have around that ramp and shop visit growth.

Speaker Change: Good morning, Seth.

Robert Spingarn: Morning, Seth. Clearly, if we're going to talk about a guide, as we are this morning, there's a high level of conviction. But I think you've put your finger on what we are working on day in, day out here operationally. I think the financial numbers, year over year, are strong. But we know that we could have delivered, we could have executed on more shop visits in the first quarter had we had more reliable, more predictable material flow into our shops. That doesn't impact us as much in terms of spare parts, right? We don't necessarily need everything to move that product to customers, but we do in the case of a shop business.

Steve Winiger: Morning, Seth. Clearly, if we're going to talk about a guide as we are this morning, there's a high level of conviction. But I think you've put your finger on what we are working on day in, day out here operationally. I think the financial numbers year over year are strong. But we know that we could have delivered. We could have executed on more shop visits in Q1 had we had more reliable, more predictable material flow into our shops. That doesn't impact us as much in terms of spare parts. We don't need everything necessarily to move that product to customers, but we do in the case of a shop visit. Some of the FlightDeck examples that I referenced, I think, give us real encouragement that the work we're doing with those top 5 or top 15 supplier sites is yielding progress.

Larry Culp: Morning, Seth. Clearly, if we're going to talk about a guide as we are this morning, there's a high level of conviction. But I think you've put your finger on what we are working on day in, day out here operationally. I think the financial numbers year over year are strong. But we know that we could have delivered. We could have executed on more shop visits in Q1 had we had more reliable, more predictable material flow into our shops.

Speaker Change: Clearly if we're going to talk about our guide.

Seth: As we are this morning.

Seth: A high level of conviction, but I think you've put your finger on what we are working on day in day out here operationally.

Seth: I think the financial numbers.

Seth: Year over year are strong.

Seth: But we know that we.

Seth: We could have delivered we could have executed on more shop visits in the first quarter had we had more reliable more predictable material flow into our shops that doesn't impact us as much in terms of spare parts right, we don't need everything necessarily to move that product to customers, but we do in the case of a shop visit.

That doesn't impact us as much in terms of spare parts. We don't need everything necessarily to move that product to customers, but we do in the case of a shop visit. Some of the FlightDeck examples that I referenced, I think, give us real encouragement that the work we're doing with those top 5 or top 15 supplier sites is yielding progress.

Larry Culp: Some of the flight deck examples that I referenced give us real encouragement that the work we're doing with those top five or top 15 supplier sites is yielding progress. If you look at what we've seen just here in April, we've had a stronger start to the second quarter in terms of shop visit activity and completed outputs than we did in January. That's one comparison that we focus on because we still are not as linear through the course of a quarter as we would like, and making good use of the first two, three, four weeks of a quarter is critical for us to be able to deliver the year over year, let alone the sequential growth that we would like to see that's embedded here.

Seth: Some of the flight deck examples that I referenced I think give us real.

Real encouragement that the work we're doing with those top five or top 15 supplier sites is yielding progress. If you look at what we've seen just here in April.

Steve Winiger: If you look at what we've seen just here in April, we've had a stronger start to the second quarter in terms of shop visit activity, completed outputs than we did in January. That's one comparison that we focus on because we still are not as linear through the course of a quarter as we would like. And making good use of the first two, three, four weeks of a quarter is critical for us to be able to deliver the year-over-year let alone the sequential growth that we would like to see that's embedded here. And most importantly, what our customers need from us, given how active they're working these assets. So the supply chain topic is still relevant. I suspect we'll be talking about it again for the foreseeable future. But I'm very encouraged by the progress that we're making.

If you look at what we've seen just here in April, we've had a stronger start to the second quarter in terms of shop visit activity, completed outputs than we did in January. That's one comparison that we focus on because we still are not as linear through the course of a quarter as we would like. And making good use of the first two, three, four weeks of a quarter is critical for us to be able to deliver the year-over-year let alone the sequential growth that we would like to see that's embedded here.

Seth: We've had a stronger start to the second quarter in terms of shop visit activity completed outputs than we did in January that's one comparison that we focus on because we still are not as linear through the course of a quarter as we would like and making good use of the first 234 weeks of the quarter is critical.

Paul.

Paul: For us to be able to deliver the year over year level on the sequential growth that we would like to see that's embedded here.

And most importantly, what our customers need from us, given how active they're working these assets. So the supply chain topic is still relevant. I suspect we'll be talking about it again for the foreseeable future. But I'm very encouraged by the progress that we're making.We just need to make a whole lot more.

Larry Culp: And most importantly, what our customers need from us given how active they're working these days. So the supply chain topic is still relevant. I suspect we'll be talking about it again for the foreseeable future. But I'm very encouraged by the progress that we're making. We just need to make a whole lot more.

Paul: Importantly, what our customers need.

Paul: From us given.

Paul: How active they are working these assets. So the supply chain topic is still relevant I suspect, we'll be talking about it again for the foreseeable future.

Paul: Very encouraged by the progress that we're making.

Steve Winiger: We just need to make a whole lot more.

Paul: We just need to make a whole lot more.

Noah Popenek: Our next question will come from the line of Ken Herbert with RBC Capital Markets.

Paul: Our next question will come from the line of Ken Herbert with RBC capital markets.

Operator: Our next question will come from the line of Ken Herbert with RBC Capital Markets.

Rahul Ghai: Hi, good morning, and congratulations, Steve. Thanks, Ken.

Kenneth George Herbert: Hi, good morning, and congratulations Steve.

Robert Stallard: Hi, good morning, and congratulations, Steve.

Ken Herbert: Hi, good morning, and congratulations, Steve.

Steve Winiger: Thanks, Ken.

Thanks, Ken.

Kenneth George Herbert: Okay.

Matt Akers: Larry or Rahul, you called out freight as a source of growth in the quarter, and I think you raised your four-year outlook there from sort of previously down maybe low single to now up low single as we think about the impact of CES. Is that just in relation to what we've seen in the Middle East? Are you seeing other fundamental changes that are giving more confidence there? And how do we think about that impact specifically as we think about the CES business and where you're seeing that flow through?

Robert Stallard: Larry or Rahul, you called out freight as a source of growth in the quarter. I think you raised your full-year outlook there from sort of previously down, maybe low single to now up low single as we think about the impact in CES. Is that just in relation to what we've seen in the Middle East? Are you seeing other fundamental changes that are giving more confidence there? How do we think about that impact specifically as we think about the CES business and where you're seeing that flow through?

Ken Herbert: Larry or Rahul, you called out freight as a source of growth in the quarter. I think you raised your full-year outlook there from sort of previously down, maybe low single to now up low single as we think about the impact in CES. Is that just in relation to what we've seen in the Middle East? Are you seeing other fundamental changes that are giving more confidence there? How do we think about that impact specifically as we think about the CES business and where you're seeing that flow through?

Kenneth George Herbert: <unk> or Rockwell you called out freight is a source of growth in the quarter and I think you raised your full year outlook, there from sort of <unk>.

Kenneth George Herbert: Previously down maybe low single to now up low singles as we think about the impact in CES.

Kenneth George Herbert: Just in relation to what we've seen in the Middle East are you seeing other fundamental changes that gives me more confidence there and how do we think about that impact specifically as we think about the CES business and where youre seeing that flow through.

Larry Culp: Ken, you're spot on. We're taking that again from an outlook that had us down mid-singles. This year to now, a positive low single-digit number. I think there is some influence here from what's happening in the Middle East, but I think we're just seeing a higher demand overall from an air cargo perspective that will principally come through our wide body exposure more so than the single aisles. And I don't think we're going to quantify it here, but that's certainly part of it. What is behind the improved service outlook and thus the improved overall outlook for the rest of this year?

Kenneth George Herbert: Well.

Steve Winiger: Well, Ken, you're spot on. We're taking that again, level set everybody, from an outlook that had us down mid-singles this year to now a positive low single-digit number. I think there is some influence here from what's happening in the Middle East. But I think we're just seeing a higher demand overall from an air cargo perspective. That will principally course through our widebody exposure more so than the single aisles. And I don't think we're going to quantify it here, but that's certainly part of what is behind the improved service outlook and thus the improved overall outlook for the rest of this year.

Larry Culp: Well, Ken, you're spot on. We're taking that again, level set everybody, from an outlook that had us down mid-singles this year to now a positive low single-digit number. I think there is some influence here from what's happening in the Middle East. But I think we're just seeing a higher demand overall from an air cargo perspective. That will principally course through our widebody exposure more so than the single aisles. And I don't think we're going to quantify it here, but that's certainly part of what is behind the improved service outlook and thus the improved overall outlook for the rest of this year.

Kenneth George Herbert: Ken Youre spot on we're taking that again.

Kenneth George Herbert: To level set everybody from our outlook had us down mid singles. This year to now a positive low single digit number I think there is some influence here.

Kenneth George Herbert: From what's happening in the middle East, but I think we're just seeing a higher demand overall from an air cargo.

Kenneth George Herbert: Perspective that will principally coursed through our wide body exposure more so than the single aisles.

And I don't think were going to quantify it here, but that's certainly part of.

Kenneth George Herbert: What is behind the improved service outlook and thus the improved overall outlook for the rest of this year.

Jason Gursky: And Ken, just to add to that, you know, the direct impact all depends on the number of shop visits that kind of move into the year. And I think that always takes time.

Larry Culp: Ken, just to add to that, the direct impact all depends on the number of shop visits that kind of move into the year. I think that always takes time. So there's not a direct correlation here that may show up during the year. But overall, as we look over an extended period of time, as you look at 2024, 2025 combined, that will definitely be a positive driver. So we do expect the benefit from the higher freight departures to be in our financials. The question is probably not as much in 2024, more in 2025.

Kenneth George Herbert: And Ken just to add to that.

Rahul Ghai: Ken, just to add to that, the direct impact all depends on the number of shop visits that kind of move into the year. I think that always takes time. So there's not a direct correlation here that may show up during the year. But overall, as we look over an extended period of time, as you look at 2024, 2025 combined, that will definitely be a positive driver. So we do expect the benefit from the higher freight departures to be in our financials. The question is probably not as much in 2024, more in 2025.

Kenneth George Herbert: Direct impact is all depends on the number of shop visits that kind of move into the year and I think that is that always takes time, so there's not a direct correlation here.

Larry Culp: So there's not a direct correlation here that may show up during the year. But overall, as we look over an extended period of time, as we look at twenty four and twenty five combined, that will definitely be a positive driver. So we do expect the benefit from the higher freight departures to be in our financials. The question is probably not as much in twenty four, but more in twenty five.

Kenneth George Herbert: That may show up during the year, but overall as we look over an extended period of time as you look at 'twenty four 'twenty five combined that'll definitely be a positive driver. So we do expect the benefit from the higher freight departures to be in our financials. The question that is probably not as much in 'twenty for more than 25.

Larry Culp: Our next question comes from a line by Gautam Khanna with T.D. Cowan.

Kenneth George Herbert: Our next question comes from the line of Gautam Khanna with TD Cowen.

Operator: Our next question comes from the line of Gautam Khanna with TD Cowen.

Steven Winoker: Hey, good morning, and congrats, Steve. Thanks, Gautam.

Gautam Khanna: Hey, good morning, and congrats Steve Thanks, Ken Good morning.

Gautam Khanna: Hey, good morning. Congrats, Steve.

Steve Winiger: Thanks, Gavin.

Robert Stallard: Good morning.

Larry Culp: Good morning.

Liz: Good morning.

Unknown Speaker: So you guys mentioned the lower LEAP production this year. I assume it's a function of lower 1BOE needs, but I was curious if you could just help us understand how we should think about the LEAP OE versus SPARES provisioning mix this year versus your prior expectations and also wondering, given the lower rate on LEAP. Are you going to be slowing down some of your LEAP suppliers, or given the comments you made on the constraints within the supply chain? Are you still pushing all these guys to continuously raise production, you know, to work as hard as they can?

Gautam Khanna: So you guys mentioned the lower.

Gautam Khanna: So you guys mentioned the lower LEAP production this year. I assume it's a function of lower 1B OE needs. But I was curious if you could just help us understand how we should think about the LEAP OE versus spares provisioning mix this year versus your prior expectations. And also wondering, given the lower rate on LEAP, are you going to be slowing down some of your LEAP suppliers? Or given the comments you made on the constraints within the supply chain, are you still pushing all these guys to continuously raise production, to work as hard as they can?

<unk> production this year I assume it's a function of.

Gautam Khanna: Lower <unk> OE needs, but I was curious if you could just.

Gautam Khanna: Help us understand how we should think about the leap OE versus spares provisioning mix this year versus your prior.

Gautam Khanna: Expectations and also I'm wondering given the lower rate.

Gautam Khanna: On leap are you going to be slowing down some of your lead suppliers or given the comments you made on the constraints within the supply chain.

Gautam Khanna: Are you still pushing all of these guys to continuously.

Gautam Khanna: Production to work as hard as they can.

Unknown Speaker: Well, maybe we'll take those in reverse order. I'll speak to the supply chain, and Rahul can speak to where we are from a SPARISH perspective. As I indicated, we are calibrated with both of our major Narrow Body Air Framers. As we do that, we are always, in turn, calibrating with the supply base.

Speaker Change: So, let's maybe it will take those in reverse order I'll speak to the supply chain.

Steve Winiger: Well, maybe we'll take those in reverse order. I'll speak to the supply chain, and Rahul can speak to where we are from a spares perspective. As I indicated, we're calibrated with both of our major narrowbody airframers. As we do that, we are always, in turn, calibrating with the supply base. And I think what we want to do in that work is make sure we're not overly indexed, if you will, on the next quarter or two. Though important, we want to make sure that we are preparing over the next several years to ramp, given the skylines that both of our major airframer customers enjoy today. A single aisle slot is a scarce commodity. If we were out looking for one today, we might not find it until the next decade.

Larry Culp: Well, maybe we'll take those in reverse order. I'll speak to the supply chain, and Rahul can speak to where we are from a spares perspective. As I indicated, we're calibrated with both of our major narrowbody airframers. As we do that, we are always, in turn, calibrating with the supply base. And I think what we want to do in that work is make sure we're not overly indexed, if you will, on the next quarter or two.

Speaker Change: And Rahul can speak to where we are from a spares perspective.

Speaker Change: As I indicated.

Speaker Change: We're calibrated with.

Speaker Change: Both of our major.

Speaker Change: Narrow body air Framers as we do that we are always.

Speaker Change: In turn calibrating with the supply base.

Unknown Speaker: And I think what we want to do in that work is make sure we're not overly indexed, if you will, for the next quarter or two. So important. We want to make sure that we are preparing over the next several years to ramp up, given the skylines that both of our major Airframe customers enjoy today. A single slot is a scarce commodity. If we were out looking for one today, we might not find it until the next decade.

Speaker Change: And I think what we wanted to do.

Speaker Change: That work is make sure were not overly index. If you will on the next quarter or two so important we wanted to make sure that we are preparing over the next several years.

Though important, we want to make sure that we are preparing over the next several years to ramp, given the skylines that both of our major airframer customers enjoy today. A single aisle slot is a scarce commodity. If we were out looking for one today, we might not find it until the next decade.

Speaker Change: Given the skylines that both of our major airframe or customers enjoy today.

Speaker Change: Right.

Speaker Change: Single hour slot is a scarce commodity.

Speaker Change: If we were out looking for one day, we might not find it until the next decade.

Unknown Speaker: That said, I think every industry, the aerospace included, is primarily focused on making sure, from a safety and a quality perspective, that we are in no way compromising as we think about the wonderful gift we have in the form of these robust skylines. And that's been at the heart of GE's work, the lean transformation for years now. Right here, it's talking about SQDC, safety, and quality before delivering a cost. It's at the core of flight deck and everything that we do. Rahul Spers

Steve Winiger: That said, I think everybody, GE Aerospace included, is primarily focused on making sure from a safety and a quality perspective that we are in no way compromising as we think about the wonderful gift we have in the form of these robust supply lines. And that's been at the heart of the GE work, the lean transformation for years now. You hear us talk about SQDC, safety and quality, before delivery and cost. It's at the core of FlightDeck and everything that we do. Rahul, spares?

That said, I think everybody, GE Aerospace included, is primarily focused on making sure from a safety and a quality perspective that we are in no way compromising as we think about the wonderful gift we have in the form of these robust supply lines. And that's been at the heart of the GE work, the lean transformation for years now. You hear us talk about SQDC, safety and quality, before delivery and cost. It's at the core of FlightDeck and everything that we do. Rahul, spares?

Speaker Change: That said I think every body key aerospace included.

Speaker Change: It's primarily focused on making sure from a safety and a quality perspective.

Speaker Change: That we are in no way compromising as we think about the wonderful gift we have.

Speaker Change: In the form of these robust guidelines and that's been at the heart of the GE work.

Speaker Change: Lean transformation for for years, now right Youre talking about <unk> safety and quality before delivery and cost.

Speaker Change: At the core of flight deck and everything that we do.

Speaker Change: <unk> spares.

Unknown Speaker: Spares. So on the spare engines, Gautam, you know, overall, our spare engine ratio came down slightly in the first quarter on an annual basis. And we do expect the full year spare engine ratio to be down as well versus 2023, kind of as we've communicated before. So really not a lot of change here from the change that we are making in the LEAP install engine output to translating to spare engine.

Larry Culp: So on the spare engines, Gautam, overall, our spare engine ratio came down slightly in Q1 on a year-over-year basis. We do expect the full-year spare engine ratio to be down as well versus 2023, kind of as we've communicated before. So really not a lot of change here from the change that we are making in the LEAP install engine output to translate into spare engine. So we still expect the spare engine ratio to be down year-over-year. It'll keep coming down over the next couple of years, I would say, on a gradual basis, Gautam, just given where LEAP spare engine has been in the past. So we expect a continued decline here in the spare engine ratio over the next couple of years, gradually.

Rahul Ghai: So on the spare engines, Gautam, overall, our spare engine ratio came down slightly in Q1 on a year-over-year basis. We do expect the full-year spare engine ratio to be down as well versus 2023, kind of as we've communicated before. So really not a lot of change here from the change that we are making in the LEAP install engine output to translate into spare engine.

Speaker Change: So on the spare engines gautam.

Speaker Change: Overall, our spare engine ratio came down slightly in the first quarter on a year over year basis, and we do expect.

Speaker Change: The full year spare engine ratio to be down as well versus 2023 kind of as we've communicated before so really not a lot of change here.

Speaker Change:

Speaker Change: From the change that we're making in the leap install engine output to cross leading to spare engine. So we still expect the spare engine ratio to be down year over year and and it will be it will keep coming down over the next couple of years I would say on a gradual basis got them, just given where a leap spare engine has been in the past.

So we still expect the spare engine ratio to be down year-over-year. It'll keep coming down over the next couple of years, I would say, on a gradual basis, Gautam, just given where LEAP spare engine has been in the past. So we expect a continued decline here in the spare engine ratio over the next couple of years, gradually.

Unknown Speaker: So we still expect the spare engine ratio to be down year over year. And, and it'll keep coming down over the next couple of years, I would say on a gradual basis, Gautam, just given where LEAP spare engines have been in the past. So we expect a continued decline here in the spare engine ratio over the next couple of years on a, you know, gradually.

Speaker Change: So we expect a continued decline here in the spare engine ratio over the next couple of years on a.

Speaker Change: So gradually.

Speaker Change: Our next question will come from the line of Scott <unk> with Deutsche Bank.

Operator: Our next question will come from the line of Scott Deuschle with Deutsche Bank.

Speaker Change: Hey, good morning, good morning, Good morning, Scott.

Steve Winiger: Hey, good morning.

Scott Deuschle: Hey, good morning.

Steve Winiger: Morning, Scott.

Larry Culp: Morning, Scott.

Unknown Speaker: Our next question will come from the line of Scott Deuschle with Deutsche Bank. Hey, good morning. Good morning. Good morning, Scott.

Robert Stallard: Morning, Scott.

Rahul Ghai: Morning, Scott.

Steve Winiger: Hey, Rahul. What does the 100% free cash flow conversion target for 2028 assume with respect to the proportion of new engines being sold on CSAs in that timeframe, particularly on LEAP? Mainly, I'm just curious if you're assuming LEAP mostly migrates to TNM by that time. Thanks.

Scott Deuschle: Hey, Rahul. What does the 100% free cash flow conversion target for 2028 assume with respect to the proportion of new engines being sold on CSAs in that timeframe, particularly on LEAP? Mainly, I'm just curious if you're assuming LEAP mostly migrates to TNM by that time. Thanks.

Hey, Rahul what does the 100% free cash flow conversion target for 2028 assume with respect to the proportion of new entrants being sold on CSA. It's in that timeframe, particularly on leap, mainly I'm just curious if youre, assuming late mostly migrates to TNMP by that time.

Unknown Speaker: Our next question will come from the line of Scott Deuschle with Deutsche Bank.

Unknown Speaker: We do expect, Scott, that as we go through the year, as you go through the decade, I should say, that there will be more TNM contracts. Keep in mind, as you know, Russell spoke at Investor Day, you know, our 2030-ish target for LEAP is that we do about 60% or so of the shop visits between us and Safran, and 40% are done externally. And of that 60%, you know, there'll be a mix between CSAs and TNM, but we are actively working to increase the TNM population.

Larry Culp: We do expect, Scott, that as we go through the year, as we go through the decade, I should say, that there will be more TNM contracts. Keep in mind, as Russell spoke at Investor Day, our 2030 target for LEAP is we do about 60% or so of the shop visits between us and Safran, and 40% are done externally. And of that 60%, there will be a mix between CSAs and TNM. But we are actively working to increase the TNM population. Our CBSA partners are standing up. They're helping us as well. So we would see a migration from CSAs to TNM contracts with about 60% of the shop visits done in-house here between Safran and GE Aerospace, and the remaining 40% being done by our channel partners.

Rahul Ghai: We do expect, Scott, that as we go through the year, as we go through the decade, I should say, that there will be more TNM contracts. Keep in mind, as Russell spoke at Investor Day, our 2030 target for LEAP is we do about 60% or so of the shop visits between us and Safran, and 40% are done externally. And of that 60%, there will be a mix between CSAs and TNM.

Rahul: We do expect.

Rahul: Scott that as we go through the year as you go through the decade, I should say that there will be more PNM contracts keep in mind as you know Russell spoke at Investor Day.

Speaker Change: Our 'twenty took the Stargate for leap is we do about 60% or so of the shop visits between us and soft from and 40% are done externally and off that 60% you know there'll be a mix between CSA is in PNM, but we are actively working to increase the <unk>.

But we are actively working to increase the TNM population. Our CBSA partners are standing up. They're helping us as well. So we would see a migration from CSAs to TNM contracts with about 60% of the shop visits done in-house here between Safran and GE Aerospace, and the remaining 40% being done by our channel partners.

Speaker Change: M population are our CBS, a partner's outstanding up they're helping us as well so we would see a migration from <unk> to PNM contracts with about 60% of the shop visits done in house here.

Unknown Speaker: Our CBSA partners are standing up; they're helping us as well. So we would see a migration from CSAs to TNM contracts with about 60% of the shop visits done in-house here between Safran and GE Aerospace, and the remaining 40% being done by our channel partners.

Speaker Change: Between sovereign and GE aerospace and the remaining 40% being done by our channel partners.

Unknown Speaker: Our next question will come from the line of Robert Spingarn with Melius Research.

Speaker Change: Our next question will come from the line of Robert Spingarn with Melius research.

Operator: Our next question will come from the line of Robert Spingarn with Melius Research.

Unknown Speaker: Congratulations to the team for this new chapter and getting through the spins, and congratulations to you, Steve. I wanted to ask you, Larry, about RISE, just to change the topic a little bit, and the potential here to deliver a 20% improvement in fuel consumption versus current engines. Both air framers appear interested in RISE. And if competing engine OEMs aren't providing an open fan architecture, could we find ourselves in a position where RISE or CFM is the only engine provider for the next-gen narrowbody? Or do you think that the need for competition changes that dynamic?

Robert Spingarn: Good morning.

Steve Winiger: Good morning.

Robert Spingarn: Good morning.

Robert Stallard: Good morning, Rob.

Larry Culp: Good morning, Rob.

Robert Spingarn: Congrats to the team for.

Steve Winiger: Congrats to the team for this new chapter and getting through the spins. And congrats to you, Steve. I wanted to ask you, Larry, about RISE, just to change the topic a little bit. And the potential here to deliver 20% improvement in fuel consumption versus current engines. Both airframers appear interested in RISE. And if competing engine OEMs aren't providing an open-fan architecture, could we find ourselves in a position where RISE or CFM is the only engine provider for the next-gen narrowbodies? Or do you think that the need for competition changes that dynamic? Well, I think where we're focused today is really in two areas. One, making sure that we continue to advance the building blocks of the underlying technologies with that engine platform. And that's the work that we're spending a considerable amount of money on as part of that $2 billion R&D budget this year.

Robert Spingarn: Congrats to the team for this new chapter and getting through the spins. And congrats to you, Steve. I wanted to ask you, Larry, about RISE, just to change the topic a little bit. And the potential here to deliver 20% improvement in fuel consumption versus current engines. Both airframers appear interested in RISE. And if competing engine OEMs aren't providing an open-fan architecture, could we find ourselves in a position where RISE or CFM is the only engine provider for the next-gen narrowbodies? Or do you think that the need for competition changes that dynamic?

Robert Spingarn: This new chapter in getting through the spends and congrats to Steve.

Robert Spingarn: I wanted to ask you Larry about rise.

Robert Spingarn: Just to change topic, a little bit the potential here to deliver a 20% improvement in fuel consumption.

Robert Spingarn: Versus current engines bolt air framers appear interested in rise and if competing engine Oems arent, providing an open fan architecture could we find ourselves in a position where rise is or CFM is the only engine provider for the next gen narrow bodies.

Robert Spingarn: Or do you think that the need for competition changes that dynamic.

Unknown Speaker: Well, I think where we're focused today is really two areas. One, making sure that we continue to advance the building block of the underlying technologies with that engine platform. And that's the work that we're spending a considerable amount of money on as part of that $2 billion R&D budget. I'd say the other area is making sure that we are closely aligned with the air framers, not only with respect to giving them visibility on the progress that we're making on our technology roadmap but also working with them as they think about their own product roadmaps into the future so that there is, if you will, that collaborative symbiotic dynamic, how all that plays out.

Larry Culp: Well, I think where we're focused today is really in two areas. One, making sure that we continue to advance the building blocks of the underlying technologies with that engine platform. And that's the work that we're spending a considerable amount of money on as part of that $2 billion R&D budget this year.

Robert Spingarn: Well I think where were focused today is really in two areas one making sure that we continue to advance the building blocks.

Robert Spingarn: Of the underlying technologies with that with that engine platform.

Robert Spingarn: And Thats the work that we are spending a considerable amount of money on as part of that $2 billion of R&D R&D budget. This year I'd say the other area is making sure that we are closely aligned.

Steve Winiger: I'd say the other area is making sure that we are closely aligned with the airframers, not only with respect to giving them visibility on the progress that we're making in our technology roadmap, but also working with them as they think about their own product roadmaps into the future so that there is that collaborative symbiotic dynamic. How all that plays out, time will tell. But as we have done over generations, we want to lead with innovation. We want to lead with technology. We want to be close to the airframers. I think everyone understands that we are going to need to see that type of 20% plus step function in efficiency in a next-gen platform. And as we have in the past, we intend to have GE Aerospace at the forefront.

Robert Spingarn: With the air framers, not only with respect to giving them visibility.

On the progress that we're making in our technology road map, but also.

Robert Spingarn: Working with them as they think about.

Robert Spingarn: Their own product roadmaps into the future. So that there is that if you will that collaborative symbiotic dynamic how all that plays out.

Unknown Speaker: Time will tell, but as we have done for generations, we want to lead with innovation. We want to lead with technology. We want to be close to the air framers. I think everyone understands that we are going to need to see that type of 20% plus step function. In efficiency, the next gen platform, as we have in the past, we intend to have GER space at the forefront.

Robert Spingarn:

Time will tell but as.

But as we have done over generations, we want to lead with innovation. We want to lead with technology. We want to be close to the airframers. I think everyone understands that we are going to need to see that type of 20% plus step function in efficiency in a next-gen platform. And as we have in the past, we intend to have GE Aerospace at the forefront.

Robert Spingarn: We have done over generations, we want to lead with innovation, we want to lead with technology, we want to be close to the air framers.

Robert Spingarn: I think everyone understands that we are going to need to see that type of 20% plus step function.

Robert Spingarn: Inefficiency at our Nexgen platform and as we have in the past, we intend to have GE aerospace at the forefront.

Unknown Speaker: Our next question will come from the line of Noah Popenek with Goldman Sachs.

Robert Spingarn: Our next question will come from the line of Noah <unk> with Goldman Sachs.

Operator: Our next question will come from the line of Noah Poponak with Goldman Sachs.

Unknown Speaker: Good morning. Sorry, it cut out on my end. But good morning, everyone.

Noah: Hello can you hear me, we can't morning, wanting no advocate here hi.

Robert Stallard: Hello. Can you hear me?

Noah Poponak: Hello. Can you hear me?

Steve Winiger: We can.

Robert Stallard: Good morning.

Steve Winiger: Morning to all.

Robert Stallard: Loud and clear. Hi. Sorry, it cut out on my end. Good morning, everyone. Let me add my congratulations to completing the spin. Steve, thanks a lot for all your help getting up to speed.

Noah Poponak: Hi. Sorry, it cut out on my end. Good morning, everyone. Let me add my congratulations to completing the spin. Steve, thanks a lot for all your help getting up to speed.

Noah: Sorry, I cut out on my own but good morning.

Unknown Speaker: And let me add my congratulations on completing the spin. And, Steve, thanks a lot for all your help getting up to speed. Thank you.

Noah: Everyone and let me add my congratulations to completing the spin and Steve. Thanks, a lot for all your help getting up to speed. Thank you.

Steve Winiger: Thank you.

Unknown Speaker: Uh, Rahul, could you spend another minute on the free cash in the quarter and for the full year? Uh..., you know, if you're going to have any seasonality that looks like the company used to or the industry often does through the year, that number in the first quarter would imply a lot of upside to the five. I know you highlighted working capital timing; it didn't look like that big of a number in the quarter on an absolute basis. Maybe it's just normally weaker, Yeah, I guess how much bigger is the greater sign on the five now than it was before? Or did you just truly have pure timing in the quarter? Yeah, so

Noah: Robert could you just spend another minute on the free cash in the quarter and for the full year.

Robert Stallard: Rahul, could you spend another minute on the free cash in the quarter and for the full year? If you're going to have any seasonality that looks like the company used to or the industry often does through the year, that number in Q1 would imply a lot of upside to the five. I know you highlighted working capital timing. It didn't look like that big of a number in the quarter on an absolute basis. Maybe it's just normally weaker. So yeah, I guess how much bigger is the greater sign on the five now than it was before? Or did you just truly have pure timing in the quarter?

Noah Poponak: Rahul, could you spend another minute on the free cash in the quarter and for the full year? If you're going to have any seasonality that looks like the company used to or the industry often does through the year, that number in Q1 would imply a lot of upside to the five. I know you highlighted working capital timing. It didn't look like that big of a number in the quarter on an absolute basis. Maybe it's just normally weaker. So yeah, I guess how much bigger is the greater sign on the five now than it was before? Or did you just truly have pure timing in the quarter?

Noah:

Robert: If youre going to have any seasonality that looks like the company used to or the industry often does through the year that number in the first quarter would imply a lot of upside to the five I know you highlighted working capital timing. It didn't look like that big of a number in the quarter on an absolute basis, maybe it's just.

Robert: Normally weaker.

Speaker Change: Yeah, I guess, how much bigger is the greater sign on the five now than it was before or did you just truly have pure timing in the quarter. Yeah. So no listen good start on cash obviously pleased we doubled our free cash flow at aerospace year over year.

Steve Winiger: Yeah. So Noah, listen, good start on cash. Obviously pleased, we doubled our free cash flow at Aerospace year-over-year. I would say first, let's just talk about the quarter. Two main drivers here. One was earnings growth, and second was working capital improvement, which kind of offset the ADNA headwind. And working capital in the quarter was a source of cash versus a use of cash last year. So that was a good turnaround from what we delivered. And the improvements we saw in the quarter came from our day sales outstanding that were down six days year-over-year, and then progress payments that we got from customers. Inventory continued to be a challenge given all the material availability. So our WIP levels are high, and the trapped inventory that we have increased as well. So overall, earnings growth and working capital kind of drove the first quarter.

Rahul Ghai: Yeah. So Noah, listen, good start on cash. Obviously pleased, we doubled our free cash flow at Aerospace year-over-year. I would say first, let's just talk about the quarter. Two main drivers here. One was earnings growth, and second was working capital improvement, which kind of offset the ADNA headwind. And working capital in the quarter was a source of cash versus a use of cash last year.

Unknown Speaker: Yeah, so, Noah, listen, good start on cash, obviously pleased, you know, we doubled our free cash flow at Aerospace here over a year. I would say first, let's just talk about the quarter. Two main drivers here, one was earnings growth, and the second was working capital improvement, which kind of offset the AD&A headwind. [inaudible] You know, working capital in the quarter was a source of cash versus a use of cash last year.

Speaker Change: I would say first let's just talk about the quarter to two main drivers had one was earnings growth and second was working capital improvement, which kind of offset the <unk> headwind.

Speaker Change: And.

Speaker Change: Working capital in the quarter was was it was a source of cash versus a use of cash last year and so that was a good turnaround from what we delivered.

So that was a good turnaround from what we delivered. And the improvements we saw in the quarter came from our day sales outstanding that were down six days year-over-year, and then progress payments that we got from customers. Inventory continued to be a challenge given all the material availability. So our WIP levels are high, and the trapped inventory that we have increased as well. So overall, earnings growth and working capital kind of drove the first quarter.

Unknown Speaker: So that was a good turnaround from what we delivered. And the improvements we saw in the quarter came from a day sales outstanding that were down six days earlier, and then progress payments that we got from customers. Inventory continued to be a challenge given all the material availability.

Speaker Change: And the improvements we saw in the quarter came from a days sales outstanding that were down six days year over year, and then progress payments that we got from customers inventory continued to be a challenge given all the material availability and service levels are high and the trapped inventory that we have increased as well.

Unknown Speaker: And so our VIP levels are high, and the trapped inventory that we have increased as well. So overall, earnings growth and working capital kind of grew in the first quarter. Now, as you look at the full year, you know, Good to your question on how, you know, what's changed versus a prior guide. We've, we've, as I said in my prepared remarks, we do expect the incremental earnings growth that we are driving to flow through to cash.

Speaker Change: So overall earnings growth and working capital kind of drove the first quarter.

Steve Winiger: Now, as you look at the full year, to your question on what's changed versus our prior guide, as I said in my prepared remarks, we do expect the incremental earnings growth that we are driving to flow through to cash. So we increased the midpoint of our profit by, call it, $150 million. So call it $100 million kind of post-taxes. Our free cash should be up by that. Again, on a full-year basis, same drivers of free cash, earnings growth, and working capital improvement will continue to be the two big drivers. I think the things that we are watching here, Noah, as you go into the second half of the year, is going to be the inventory reduction that we can drive. So that's the one that's just given the supply chain challenges, given the demand dynamics with the airframers.

Now, as you look at the full year, to your question on what's changed versus our prior guide, as I said in my prepared remarks, we do expect the incremental earnings growth that we are driving to flow through to cash. So we increased the midpoint of our profit by, call it, $150 million. So call it $100 million kind of post-taxes. Our free cash should be up by that.

Speaker Change: Now as you look at the full year.

Speaker Change: To go to your question on how you know what's changed versus our prior guidance as I said in my prepared remarks, we do expect the incremental earnings growth that we are driving to flow through to cash. So we increased the midpoint of our op profit by call. It $150 million so call it $100 million kind of post taxes that shows our free cash will be up by that.

Unknown Speaker: So, you know, we increased our midpoint of our, our profit by call it $150 million; we'll call it $100 million kind of post taxes. That should, you know, our free cash should be up by that. Again, on a full year basis, the same drivers of free cash, earnings growth, and working capital improvement will continue to be the two big drivers. I think that the thing that we are watching here, Noah, as you go into the second half of the year, is going to be the inventory reduction that we can drive.

Again, on a full-year basis, same drivers of free cash, earnings growth, and working capital improvement will continue to be the two big drivers. I think the things that we are watching here, Noah, as you go into the second half of the year, is going to be the inventory reduction that we can drive. So that's the one that's just given the supply chain challenges, given the demand dynamics with the airframers.

Speaker Change: Again on a on a full year basis same drivers of free cash earnings growth and working capital improvement will continue to be the two big drivers I think the things that we are watching hair Noah as you go into the second half of the year is going to be the inventory reduction that we can drive. So that's the one that just given the supply chain challenges given the <unk>.

Unknown Speaker: So that's the one that, you know, given the supply chain challenges, given the demanded dynamics with the air framers, so we continue to watch that inventory level. Then can we drive the same level of inventory reduction that we had initially planned when we started the year? So again, good start; we expect about half the full year's cash to be in the first half of the year. And then we do think that the earnings increase that we've driven should flow through our cash flow and greater than 100% conversion, you know, well above 100% for the year. Our next question will come from Matt Akers with Wells Fargo. Yeah, hi, good morning.

Speaker Change: Did the dynamics with the air Framers. So we continue to watch that inventory level than can be drive the same level of inventory reduction that we had initially planned that we started the year. So again good start we expect about half the full year cash to be in the first half of the year and then.

Steve Winiger: So we continue to watch our inventory levels, and can we drive the same level of inventory reduction that we had initially planned that we'd started the year? So again, good start. We expect about half the full-year cash to be in the first half of the year. And then we do think that the earnings increase that we've driven should flow through our cash as well. And greater than 100% conversion, well above 100% for the year.

So we continue to watch our inventory levels, and can we drive the same level of inventory reduction that we had initially planned that we'd started the year? So again, good start. We expect about half the full-year cash to be in the first half of the year. And then we do think that the earnings increase that we've driven should flow through our cash as well. And greater than 100% conversion, well above 100% for the year.

We do think that the earnings increase that you've driven should flow through our cash as well.

Speaker Change: And greater than 100% conversion well above 100% for the year.

Speaker Change: Our next question will come from the line of Matt Akers with Wells Fargo.

Operator: Our next question will come from the line of Matt Akers with Wells Fargo.

Matt Akers: Yes, hi, good morning, guys.

David Strauss: Yeah. Hi, good morning, guys.

Matt Akers: Yeah. Hi, good morning, guys.

Robert Stallard: Good morning.

Larry Culp: Good morning.

Matt Akers: Good morning, Greg.

David Strauss: Yeah, congrats, Steve. Can you touch a little bit more on the $650 million investment, just the benefits you expect to get from that? And it looks like there's a lot of additive manufacturing in there. You can just talk about that opportunity as well.

Matt Akers: Yeah, congrats, Steve. Can you touch a little bit more on the $650 million investment, just the benefits you expect to get from that? And it looks like there's a lot of additive manufacturing in there. You can just talk about that opportunity as well.

Matt Akers: Can you touch a little bit more on the $650 million investment Mr. Benefit do you expect to get from that and it looks like Theres a lot of additive manufacturing in there can you just talk about that opportunity as well.

Unknown Speaker: Our next question will come from the line of Matt Akers with Wells Fargo.

Unknown Speaker: This really is a broad-based enhancement of our existing domestic footprint. I'm sure you've seen some of the line item details that were publicized locally across the country. I think more than anything, what we want to do is make sure we support the fixed capital investments required to operationalize the flight deck to prepare for the capacity expansion. And in some instances, be it additive or, and some other technologies like CMCs, we were getting out ahead of Demand to the fullest extent possible. Again, back to the reality of the skylines we talked about earlier.

Benefit: Well it really is.

Steve Winiger: Well, it really is a broad-based enhancement of our existing domestic footprint. I'm sure you've seen some of the line item details that were publicized locally across the country. I think more than anything, what we wanted to do was make sure we were supporting the fixed capital investments required to operationalize FlightDeck to prepare for the capacity expansions. And in some instances, be it additive or in some other technologies like CMCs, that we were getting out ahead of demand to the fullest extent possible. Again, back to the reality of supply lines we talked about earlier. So that's what we'll do. That's kind of the announcement that we made here recently. I'm sure there will be follow-on announcements as we continue to invest. But the most important investments I think we make are those that we make in our people.

Larry Culp: Well, it really is a broad-based enhancement of our existing domestic footprint. I'm sure you've seen some of the line item details that were publicized locally across the country. I think more than anything, what we wanted to do was make sure we were supporting the fixed capital investments required to operationalize FlightDeck to prepare for the capacity expansions. And in some instances, be it additive or in some other technologies like CMCs, that we were getting out ahead of demand to the fullest extent possible.

Benefit: Broad based enhancement of our existing domestic footprint.

Benefit: I'm sure you've seen some of the the line item details that were publicized locally across the country I think more than anything what we wanted to do was make sure we were supporting.

Benefit: The fixed capital investments required to operationalize flight deck to prepare for the capacity expansions.

Benefit: And in some instances be additive or <unk>.

Benefit: And some other technologies like <unk> that we were.

Benefit: Getting out ahead of.

Benefit: Demand.

To the fullest extent possible again back to the.

Again, back to the reality of supply lines we talked about earlier. So that's what we'll do. That's kind of the announcement that we made here recently. I'm sure there will be follow-on announcements as we continue to invest. But the most important investments I think we make are those that we make in our people.

Benefit: The reality of the Sky lines, we talked about earlier.

Unknown Speaker: So that's what we'll do. That's going to be an announcement that we made here recently. I'm sure there will be follow-on announcements as we continue to invest. But the most important investments I think we make are those that we make in our people. And much of what we do from a training development perspective, especially easy flight deck, is really geared toward making sure that the people who come in every day are able to do great work and put those fixed assets to their highest and

Benefit: So.

Benefit: That's what we'll do he that's gotta be announcement that we made here recently I'm sure there will be follow on announcements as we continue to invest but the most important investments I think we make are those that we make in our people.

Steve Winiger: And much of what we do from a training development perspective, especially vis-à-vis flight deck, is really geared toward making sure that the people who come in every day are able to do great work and put those fixed assets to their highest and best use.

And much of what we do from a training development perspective, especially vis-à-vis flight deck, is really geared toward making sure that the people who come in every day are able to do great work and put those fixed assets to their highest and best use.

Benefit: And much of what we do from a training development perspective, especially vis vis flight deck is really geared toward making sure that the people who come in every day are able to do great work and put those fixed assets.

Unknown Speaker: Hey, Liz, we have time for one last question. This question will come

Benefit: To their highest and.

Benefit: Best use.

Ron Epstein: Hey, Liz, we have time for one last question.

Steve Winiger: Hey, Liz, we have time for one last question.

Speaker Change: Hey, Liz we have we have time for one last question.

Unknown Speaker: This question will come from the line of Jason Gursky with Citi.

Operator: This question will come from the line of Jason Gursky with Citi.

Speaker Change: This question will come from the line of Jason Gursky with Citi.

Unknown Speaker: Yeah, same thing with NOAA.

Yes same thing with no. It can you hear me all we can very well yeah. Good morning, Let's go quiet right before you're allowed to apply.

David Strauss: Yeah. Same thing with Noah. Can you hear me all?

Jason Gursky: Yeah. Same thing with Noah. Can you hear me all?

Unknown Speaker: Hey Steve, thanks for all of the help over the last year or so, and Blair, I look forward to working with you. I'm sure you're listening in.

Ron Epstein: We can.

Larry Culp: We can.

Steve Winiger: Very well.

David Strauss: Yeah. Okay.

Jason Gursky: Yeah. Okay.

Steve Winiger: Good morning.

David Strauss: It does go quiet right before you're allowed to put up the line. Hey, Steve, thanks for all of the help over the last year or so. And Blair, look forward to working with you. I'm sure you're listening in. Larry, a clarification point here, and then just a really quick question. On the clarification side of things, I think in your commentary about volume on LEAP during your prepared remarks, you talked a little bit about supply chain being a bit of a constraint there. So I want to make sure that that's the case in addition to whatever's going on with Boeing. And then on the question side of things, just kind of curious how the customer tone is these days on the narrowbody side with those airlines where you're competing for slots against the Pratt & Whitney engine.

Larry Culp: Good morning.

Jason Gursky: It does go quiet right before you're allowed to put up the line. Hey, Steve, thanks for all of the help over the last year or so. And Blair, look forward to working with you. I'm sure you're listening in. Larry, a clarification point here, and then just a really quick question. On the clarification side of things, I think in your commentary about volume on LEAP during your prepared remarks, you talked a little bit about supply chain being a bit of a constraint there.

Hey, Steve Thanks for all of the help over the last year or so and Blair look forward to talking with you Im sure Youre listening in.

Unknown Speaker: Larry, a clarification point here and then just a really quick question. On the clarification side of things, I think in your commentary about volume on lead during your prepared remarks, you talked a little bit about the supply chain being a bit of a constraint there. So I want to make sure that that's the case in addition to whatever's going on with Boeing. And then on the question side of things, I'm just kind of curious how the customer tone is these days on the narrowbody side with those airlines where you're competing for slots against the Pratt & Whitney engine, whether the tone of those conversations is any more constructive for you in the competitive environment is looking more optimistic.

Speaker Change: Larry a clarification.

Speaker Change: Point here and then just a really quick question on the clarification side of things I think in your commentary about volume on lead during your prepared remarks, you talked a little bit about supply chain being a bit of a constraint. There. So I want to make sure that that's the case. In addition to whatever is going on with with Boeing and then on the question side of things.

So I want to make sure that that's the case in addition to whatever's going on with Boeing. And then on the question side of things, just kind of curious how the customer tone is these days on the narrowbody side with those airlines where you're competing for slots against the Pratt & Whitney engine. Whether the tone of those conversations is any more constructive for you in the competitive environment? Is looking more optimistic for you on head-to-head competition against the Pratt engine. Thanks.

Speaker Change: The gist.

Speaker Change: Curious how the customer tone is these days on.

Speaker Change: On the narrow body side, when those airlines when you're competing.

Speaker Change: For slots against.

Speaker Change: The Pratt and Whitney engine, whether the tone of those conversations as.

David Strauss: Whether the tone of those conversations is any more constructive for you in the competitive environment? Is looking more optimistic for you on head-to-head competition against the Pratt engine. Thanks.

Speaker Change: Any more constructive for you in the competitive environment is looking more optimistic for you on head to head competition against the Pratt engine.

Unknown Speaker: Dead dead competition against the Pratt Engine. Thanks.

Speaker Change: Yeah, I would say is I think both Rahul and I have commented.

Steve Winiger: Yeah. I would say, as I think both Rahul and I have commented, that we're well calibrated with Boeing on the LEAP-1B requirements. We'll leave it to Dave and Brian to speak to the details tomorrow. I think as we look forward, not only with that engine, but others, the supply chain challenge that we've touched on in prior calls continues to be relevant. With respect to new business, I think if you look at our win rates, particularly in the narrowbody space over the last several years, we've been very encouraged by the sequential trend, the upticks that we have seen there. We will continue to work hard to earn the business that ought to come our way. No change in that posture whatsoever.

Larry Culp: Yeah. I would say, as I think both Rahul and I have commented, that we're well calibrated with Boeing on the LEAP-1B requirements. We'll leave it to Dave and Brian to speak to the details tomorrow. I think as we look forward, not only with that engine, but others, the supply chain challenge that we've touched on in prior calls continues to be relevant. With respect to new business, I think if you look at our win rates, particularly in the narrowbody space over the last several years, we've been very encouraged by the sequential trend, the upticks that we have seen there. We will continue to work hard to earn the business that ought to come our way. No change in that posture whatsoever.

Unknown Speaker: I would say, as I think both Rahul and I have commented, that we're well calibrated with Boeing on the LEAP-1B requirements. We'll leave it to Dave and Brian to speak to the details tomorrow. I think as we look forward, not only with that engine but others, the supply chain challenge that we've touched on in prior calls continues to be relevant. With respect to new business, I think if you look at our win rates, particularly in the narrow body space over the last several years, we've been very encouraged by the sequential trend, the upticks that we have seen there, and we will continue to work hard to earn the business that ought to come our No, there has been no change in that posture whatsoever.

Speaker Change: Commented that.

Speaker Change: Where are we.

Speaker Change: We're well calibrated with a.

Speaker Change: With Boeing.

Speaker Change: On the on the leaf one b requirements, we'll leave it to Dave and Brian to speak to the details Tomorrow I think as we look forward not only with that engine, but others. The supply chain challenge that we've touched on in prior calls continues to be relevant.

Speaker Change: With respect to new business.

Speaker Change: If you look at our win rates, particularly in the narrow body space over the last several years, we've been very encouraged by.

Speaker Change: The sequential trend the upticks that we've seen there.

Speaker Change: And we will continue to.

Work hard to earn the business that ought to come our way no no change in that posture whatsoever.

Unknown Speaker: Larry, any, any final comments?

Ron Epstein: Larry, any final comments?

Speaker Change: Larry any any final comments.

Steve Winiger: Larry, any final comments?

Speaker Change: Steve.

Steve Winiger: Steve. Thank you. And again, thanks for everything. Yeah. Let me just close. I hope you see here that the GE Aerospace team is moving forward with a greater focus to invent the future of flight, to lift people up, and bring them home safely. And with FlightDeck as our foundation, I'm confident we will realize our full potential in service of our customers, employees, and shareholders. We appreciate your time today and your interest in GE Aerospace.

Larry Culp: Steve. Thank you. And again, thanks for everything. Yeah. Let me just close. I hope you see here that the GE Aerospace team is moving forward with a greater focus to invent the future of flight, to lift people up, and bring them home safely. And with FlightDeck as our foundation, I'm confident we will realize our full potential in service of our customers, employees, and shareholders. We appreciate your time today and your interest in GE Aerospace.

Unknown Speaker: Thank you. And again, thanks for everything. Yeah, let me just close.

Speaker Change: Thank you and again, thanks for everything Yeah, Let me just close.

Unknown Speaker: I hope you see here that the GE Aerospace team is moving forward, with a greater focus on inventing the future of flight to lift people up and bring them home safely. And with Flight Daggers as our foundation, I'm confident we will realize our full potential in service of our customers, employees, and shareholders. We appreciate your time today and your interest in GE Aerospace.

Speaker Change: I hope you see here that the GE aerospace team is moving forward.

Steven Winoker: With a greater focus to invent the future of flight to lift people up.

Steven Winoker: And bring them home safely.

Steven Winoker: And with flight deck is our foundation I'm confident we will realize our full potential.

And service of our customers employees and shareholders.

Speaker Change: We appreciate your time today.

Speaker Change: Your interest and GE aerospace.

Unknown Speaker: 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 Change: Thank you ladies and gentlemen.

Speaker Change: This concludes today's conference. Thank you for participating you may now disconnect.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change:

Speaker Change: Okay.

Speaker Change: Mhm.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

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