Q2 2024 General Electric Co Earnings Call

July 23, 2024

Operator: Good day, ladies and gentlemen, and welcome to the GE Aerospace Q2 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, Blair Schorr from the GE Aerospace investor relations team. Please proceed.

Operator: Good day, ladies and gentlemen, and welcome to the GE Aerospace Q2 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, Blaire Schoor from the GE Aerospace investor relations team. Please proceed.

Good day, ladies and gentlemen, and welcome to the GE Aerospace second quarter 2024 earnings conference call.

Operator: Order 2020 for the earnings conference call. At this time, all participants are in a listen only mode.

Liz: At this time, all participants are in a listen-only mode. My name is Liz, and I will be your conference coordinator today.

Liz: My name is Liz, and I will be your conference coordinator today. If you experience issues with the webcast slides refreshing or there appears to be delays in the slide advancement, please hit F5 on your keyboard to refresh. As a reminder, this conference is being recorded. I would now like to turn the program over to your host for today's conference, Blair Shore from the GE Aerospace Investor Relations team. Please proceed. Thanks, Liz.

Liz: 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.

Blair Shore: I would now like to turn the program over to your host for today's conference, Blair Shore from the GE Aerospace Investor Relations Team. Please proceed.

Blair Schorr: Thanks Liz. Welcome to GE Aerospace's Q2 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 filings and website. Those elements may change as the world changes. Now over to Larry Culp.

Blaire Shoor: Thanks Liz. Welcome to GE Aerospace's Q2 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 filings and website. Those elements may change as the world changes. Now over to Larry.

Blair Shore: Welcome to GE Aerospace's second 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 filings and website. Those elements may change as the world changes.

Blair Shore: Thanks Liz. Welcome to GE Aerospace's second quarter 2024 earnings call. I'm joined by Chairman and CEO Larry Culp and CFO Rahul Ghai.

Speaker Change: 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 change as the world changes. Now, over to Larry.

Larry Culp: Now over to Larry. Blair, thanks. And hello, everyone, from London, near the Farmboro International Airshow for GE Aerospace's first earnings call as an independent company. GE Aerospace is an exceptional franchise with the industry's largest and growing commercial propulsion fleet and as the rotorcraft and combat engine provider of choice. Our installed base of 70,000 commercial and defense engines supports our aftermarket services business, representing about 70% of our revenues. That's recurring, resilient, and keeps us close to our customers. Our purpose has never been clearer: to invent the future of flight, lift people up, and bring them home safely. Those last four words, bring them home safely, are a serious responsibility.

Larry Culp: Thanks, and hello everyone from London near the Farnborough International Airshow for GE Aerospace's first earnings call. As an independent company, GE Aerospace is an exceptional franchise with the industry's largest and growing commercial propulsion fleet, and is the rotorcraft and combat engine provider of choice. Our installed base is 70,000 commercial and defense engines supports our aftermarket services business representing about 70% of our revenues. That's recurring, resilient, and keeps us close to our customers.

Larry Culp: Blaire thanks, and hello everyone from London near the Farnborough International Airshow for GE Aerospace's first earnings call. As an independent company, GE Aerospace is an exceptional franchise with the industry's largest and growing commercial propulsion fleet, and is the rotorcraft and combat engine provider of choice. Our installed base is 70,000 commercial and defense engines supports our aftermarket services business representing about 70% of our revenues. That's recurring, resilient, and keeps us close to our customers.

Larry Culp: Blair, thanks, and hello, everyone, from London, near the Farnborough International Air Show, where GE Aerospace's first earnings call is an independent company.

Larry: GE Aerospace is an exceptional franchise, with the industry's largest and growing commercial propulsion fleet, and is the rotorcraft and combat engine provider of choice.

Larry: Our installed base of 70,000 commercial and defense engines supports our aftermarket services business, representing about 70% of our revenues.

Larry: That's recurring, resilient, and keeps us close to our customers.

Larry Culp: Our purpose has never been clearer: to invent the future of flight, lift people up, and bring them home safely. Those last four words, bring them home safely, is a serious responsibility at any point. There are 900,000 people in the sky with our technology under wing, which is why safety and quality are at the center of everything that we do. Our teams around the world understand it is our top priority and paramount in Flight Deck, our proprietary lean operating model.

Our purpose has never been clearer: to invent the future of flight, lift people up, and bring them home safely. Those last four words, bring them home safely, is a serious responsibility at any point. There are 900,000 people in the sky with our technology under wing, which is why safety and quality are at the center of everything that we do. Our teams around the world understand it is our top priority and paramount in Flight Deck, our proprietary lean operating model.

Larry: Our purpose has never been clearer, to invent the future of flight, lift people up, and bring them home safely.

Larry: Those last four words, bring them home safely, is a serious responsibility.

Larry Culp: At any point, there are 900,000 people in the sky with our technology underwing, which is why safety and quality are at the center of everything that we do. Our teams around the world understand it is our top priority and paramount in flight deck, our proprietary lean operating model. Here at Farnborough, the conversations we're having are energizing and focused on both the opportunities and the challenges. The industry is expanding as we work together to meet historic demand and build more sustainable solutions.

Larry: At any point, there are 900,000 people in the sky with our technology under wing, which is why safety and quality are at the center of everything that we do. Our teams around the world understand it is our top priority and paramount in flight deck, our proprietary lean operating model.

Larry Culp: Here at Farnborough, the conversations we're having are energizing and focused on both the opportunities and the challenges the industry is facing as we work together to meet historic demand and build more sustainable solutions. We've had a productive few days, including wide-body commitments from Turkish Airlines and National Airlines for GE90 engines and Japan Airlines for GEnx engines. We're also honored to have British Airways, a new GEnx customer, committing to six new Boeing 787s powered by our engines. The GEnx engine offers a 15% lower fuel burn compared to the CF6 and best-in-class time on wing, resulting in a 70% life-of-program win rate on the 787 platform. In narrowbodies, we're pleased the LEAP-powered Airbus A321XLR was certified by the European Union Aviation Safety Agency, or EASA, just last week.

Here at Farnborough, the conversations we're having are energizing and focused on both the opportunities and the challenges the industry is facing as we work together to meet historic demand and build more sustainable solutions. We've had a productive few days, including wide-body commitments from Turkish Airlines and National Airlines for GE90 engines and Japan Airlines for GEnx engines. We're also honored to have British Airways, a new GEnx customer, committing to six new Boeing 787s powered by our engines. The GEnx engine offers a 15% lower fuel burn compared to the CF6 and best-in-class time on wing, resulting in a 70% life-of-program win rate on the 787 platform. In narrowbodies, we're pleased the LEAP-powered Airbus A321XLR was certified by the European Union Aviation Safety Agency, or EASA, just last week.

Speaker Change: Here at Farm Bureau, the conversations we're having are energizing and focused on both the opportunities and the challenges the industry is facing as we work together to meet historic demand and build more sustainable solutions.

Larry Culp: We've had a productive few days, including wide-body commitments from Turkish Airlines and National Airlines for GE90 engines and Japan Airlines for GENX engines. We're also honored to have British Airways, a new GNX customer, commit to six new Boeing 787s powered by our engine. The GENX engine offers a 15% lower fuel burn compared to the CF6 and best-in-class time on wing.

Speaker Change: We've had a productive few days, including wide-body commitments from Turkish Airlines and National Airlines for GE90 engines and Japan Airlines for GENX engines.

Speaker Change: We're also honored to have British Airways, a new GNX customer, committing to six new Boeing 787s powered by our engines.

Speaker Change: The GENX engine offers a 15% lower fuel burn compared to the CF6 and best-in-class time on wing, resulting in a 70% life-of-program win rate on the 8.7 platform.

Larry Culp: Resulting in a 70% life of program win rate on the 8-7 platform. For narrow bodies, we're pleased the LEED-powered Airbus 321XLR was certified by the European Union Aviation Safety Agency, or EASA, just last week. The 320XLR marks the fifth member of the A320neo family aircraft powered by LEAP engines, with expected entry into service later this year. LEAP, the narrow body engine of choice, offers 15% better fuel efficiency than the CFM56 and will deliver mature levels of time on wing later this year.

Speaker Change: In narrow bodies, we're pleased the LEAP-powered Airbus 321XLR was certified by the European Union Aviation Safety Agency, or EASA, just last week.

Larry Culp: The A321XLR marks the fifth member of the A320neo family aircraft powered by LEAP engines with expected entry into service later this year. LEAP, the narrow-body engine of choice, offers 15% better fuel efficiency than the CFM56 and will deliver mature levels of time on wing later this year. In regionals, Embraer and GE Aerospace extended our agreement for new CF34 engine deliveries through the end of this decade. This agreement strengthens our partnership as the sole source engine on the E175 and supports the continued growth of regional jets.

The A321XLR marks the fifth member of the A320neo family aircraft powered by LEAP engines with expected entry into service later this year. LEAP, the narrow-body engine of choice, offers 15% better fuel efficiency than the CFM56 and will deliver mature levels of time on wing later this year. In regionals, Embraer and GE Aerospace extended our agreement for new CF34 engine deliveries through the end of this decade. This agreement strengthens our partnership as the sole source engine on the E175 and supports the continued growth of regional jets.

Speaker Change: The 320XLR marks the fifth member of the A320neo family aircraft powered by LEAP engines, with expected entry into service later this year.

Unknown Executive: Leap, the narrow body engine of choice, offers 15% better fuel efficiency than the CFM-56, and will deliver mature levels of time on wing later this year.

Speaker Change: LEAP, the narrowbody engine of choice, offers 15% better fuel efficiency than the CFM56 and will deliver mature levels of time on wing later this year.

Larry Culp: In regionals, Embraer and GE Aerospace extended our agreement for new CF-34 engine deliveries through the end of this decade. This agreement strengthens our partnership as the sole source engine on the E-175 and supports the continued growth of regional jets. Keeping an eye towards the future, this week at the show, we've shared a number of updates about the CFM RISE program. RISE is the suite of pioneering technologies including open fan, compact core, hybrid electric systems, and alternative fuels.

Unknown Executive: In regionals, Embraer and GE Aerospace extended our agreement for new CF-34 engine deliveries through the end of this decade. This agreement strengthens our partnership as the sole source engine on the E-175 and supports the continued growth of regional jets.

Speaker Change: In regionals, Embraer and GE Aerospace extended our agreement for new CF-34 engine deliveries through the end of this decade. This agreement strengthens our partnership as the sole source engine on the E-175 and supports the continued growth of regional jets.

Larry Culp: Keeping an eye towards the future this week at the show, we've shared a number of updates about the CFM RISE program. RISE is the suite of pioneering technologies including Open Fan, compact core, hybrid electric systems, and alternative fuels. We continue to mature these technologies, moving from component level evaluations to more module level tests. For example, with our partner Safran, we've demonstrated the aerodynamic and acoustic performance of the Open Fan design with more than 200 hours of wind tunnel tests. Additionally, we've announced a new agreement with the US Department of Energy to expand supercomputing capabilities which will further advance Open Fan design. The Open Fan is the most promising engine technology to help the industry reduce emissions, designed to meet or exceed customer expectations for durability and deliver a step change in fuel efficiency.

Keeping an eye towards the future this week at the show, we've shared a number of updates about the CFM RISE program. RISE is the suite of pioneering technologies including Open Fan, compact core, hybrid electric systems, and alternative fuels. We continue to mature these technologies, moving from component level evaluations to more module level tests. For example, with our partner Safran, we've demonstrated the aerodynamic and acoustic performance of the Open Fan design with more than 200 hours of wind tunnel tests. Additionally, we've announced a new agreement with the US Department of Energy to expand supercomputing capabilities which will further advance Open Fan design. The Open Fan is the most promising engine technology to help the industry reduce emissions, designed to meet or exceed customer expectations for durability and deliver a step change in fuel efficiency.

Unknown Executive: Keeping an eye towards the future, this week at the show we've shared a number of updates about the CFM-Rise program. Rises is the suite of pioneering technologies including open-fan, compact core, hybrid electric systems, and alternative fuels. We've continued to mature these technologies, moving from component-level evaluations to more module-level tests. For example, with our partners in front, we've demonstrated the aerodynamic and acoustic performance of the open-fan design with more than 200 hours of wind tunnel tests.

Speaker Change: Keeping an eye towards the future, this week at the show, we've shared a number of updates about the CFM RISE program.

Speaker Change: RISE is the suite of pioneering technologies including open fan, compact core, hybrid electric systems, and alternative fuels.

Larry Culp: We've continued to mature these technologies, moving from component-level evaluations to more module-level evaluations. For example, with our partner Saffron, we've demonstrated the aerodynamic and acoustic performance of the open fan design with more than 200 hours of wind tunnel testing. Additionally, we announced a new agreement with the U.S. Department of Energy to expand supercomputing capabilities, which will further advance the open fan design. The open fan is the most promising engine technology to help the industry reduce emissions designed to meet or exceed customer expectations for durability and deliver a step change in fuel efficiency.

Speaker Change: We've continued to mature these technologies, moving from component-level evaluations to more module-level tests.

Speaker Change: For example, with our partner Saffron, we've demonstrated the aerodynamic and acoustic performance of the open fan design with more than 200 hours of wind tunnel tests.

Unknown Executive: Additionally, we've announced a new agreement with the U.S. Department of Energy to expand supercomputing capabilities, which will further advance open-fan design.

Speaker Change: Additionally, we've announced a new agreement with the U.S. Department of Energy to expand supercomputing capabilities, which will further advance open fan design.

Unknown Executive: The open-fan is the most promising engine technology to help the industry reduce emissions, designed to meet or exceed customer expectations for durability, and deliver a step change in fuel efficiency.

Speaker Change: The open fan is the most promising engine technology to help the industry reduce emissions designed to meet or exceed customer expectations for durability and deliver a step change in fuel efficiency.

Larry Culp: Turning to some of the key takeaways on our second quarter performance, our team delivered double digit growth across orders, operating profit, and free cash flow, while revenue was impacted by lower output. With Flight Deck, we're well positioned to accelerate actions to deliver on our priorities for today, tomorrow, and in the future.

Turning to some of the key takeaways on our second quarter performance, our team delivered double digit growth across orders, operating profit, and free cash flow, while revenue was impacted by lower output. With Flight Deck, we're well positioned to accelerate actions to deliver on our priorities for today, tomorrow, and in the future.

Larry Culp: Turning to some of the key takeaways on our second quarter performance, our team delivered double-digit growth across orders, operating profit, and free cash flow, while revenue was impacted by lower outputs. With Flight Deck, we're well positioned to accelerate actions to deliver on our priorities for today, tomorrow, and in the future. In Commercial Engines and Services, or CES, air traffic trends remain positive, supporting our services growth and overall profit, which was up more than 20%. Profit growth was driven by 14% internal shop visit growth and improved prices.

Unknown Executive: Turning to some of the key takeaways on our second quarter performance. Our team delivered double-digit growth across orders, operating profit, and free cash flow, while revenue was impacted by lower output.

Speaker Change: Turning to some of the key takeaways on our second quarter performance.

Speaker Change: Our team delivered double-digit growth across orders, operating profit, and free cash flow, while revenue was impacted by lower output.

Unknown Executive: With flight deck, we're well positioned to accelerate actions to deliver on our priorities for today, tomorrow, and in the future.

Speaker Change: With Flight Deck, we're well positioned to accelerate actions to deliver on our priorities for today, tomorrow, and in the future.

Larry Culp: In Commercial Engines and Services, or CES. Air traffic trends remain positive, supporting our services growth and overall profit, which was up more than 20%. Profit growth was driven by 14% internal shop visits growth and improved pricing. In Defense and Propulsion Technologies, or DPT. We delivered very strong profit growth, up more than 70%, year over year. Services growth in defense and systems, and profit improvement in propulsion and additive technologies drove this increase. Overall, a very solid quarter and first half. And my thanks go out to the entire global GE Aerospace team.

In Commercial Engines and Services, or CES. Air traffic trends remain positive, supporting our services growth and overall profit, which was up more than 20%. Profit growth was driven by 14% internal shop visits growth and improved pricing. In Defense and Propulsion Technologies, or DPT. We delivered very strong profit growth, up more than 70%, year over year. Services growth in defense and systems, and profit improvement in propulsion and additive technologies drove this increase. Overall, a very solid quarter and first half. And my thanks go out to the entire global GE Aerospace team.

Unknown Executive: In commercial engines and services, or CES, air traffic trends remain positive, supporting our services growth and overall profit, which was up more than 20%. Profit growth was driven by 14% internal shop visits growth and improved pricing.

Speaker Change: In Commercial Engines and Services, or CES, air traffic trends remained positive, supporting our services growth and overall profit, which was up more than 20%.

Speaker Change: Profit growth was driven by 14% internal shop visits growth and improved pricing.

Larry Culp: In Defense and Propulsion Technologies, or DPT, we delivered very strong profit growth, up more than 70% year-over-year. Services Growth in Defense and Systems and Profit Improvement in Propulsion and Additive Technologies drove this increase. Overall, a very solid quarter and first half.

Unknown Executive: In defense and propulsion technologies or DPT, we deliver very strong profit growth, up more than 70% year over year. Services growth and defense and systems and profit improvement in propulsion and additive technologies drove this increase.

Speaker Change: In Defense and Propulsion Technologies, or DPT, we delivered very strong profit growth, up more than 70% year-over-year. Services growth in defense and systems and profit improvement in propulsion and additive technologies drove this increase.

Unknown Executive: Overall, a very solid quarter and first half, and my thanks go out to the entire global GE Aerospace team. Day in, day out, we're focused on delivering for both our airline and airframe or customers, who simply want and need more of our products and services.

Larry Culp: My thanks go out to the entire global GE Aerospace team. Day in, day out, we're focused on delivering for both our airline and airframer customers, who simply want and need more of our products and services. While we've made progress in services this quarter, our new engine output was disappointing, down 20% sequentially. It's a clear challenge that we're facing head on.

Speaker Change: Overall, a very solid quarter and first half. My thanks go out to the entire global GE Aerospace team.

Larry Culp: Day in, day out, we're focused on delivering for both our airline and airframer customers who simply want and need more of our products and services. While we've made progress in services this quarter, our new engine output was disappointing, down 20% sequentially. It's a clear challenge that we're facing head on, accelerating the use of Flight Deck in partnership with our suppliers as we work to solve the ongoing supply chain constraints. Last quarter we shared that the common denominator impacting growth across both services and new engines is constrained material supply. With 80% of material input shortages tied to nine suppliers across 15 supplier sites, this remains our focus today. We've deployed more than 550 of our engineering and supply chain resources into the supply base to use Flight Deck to work hand in hand with our suppliers to identify and resolve constraints.

Day in, day out, we're focused on delivering for both our airline and airframer customers who simply want and need more of our products and services. While we've made progress in services this quarter, our new engine output was disappointing, down 20% sequentially. It's a clear challenge that we're facing head on, accelerating the use of Flight Deck in partnership with our suppliers as we work to solve the ongoing supply chain constraints. Last quarter we shared that the common denominator impacting growth across both services and new engines is constrained material supply. With 80% of material input shortages tied to nine suppliers across 15 supplier sites, this remains our focus today. We've deployed more than 550 of our engineering and supply chain resources into the supply base to use Flight Deck to work hand in hand with our suppliers to identify and resolve constraints.

Speaker Change: Day in, day out, we're focused on delivering for both our airline and airframer customers who simply want and need more of our products and services.

Unknown Executive: While we've made progress and services this quarter, our new engine output was disappointing, down 20% sequentially. It's a clear challenge that we're facing head on; accelerating the use of flight deck and partnership with our suppliers as we worked to solve the ongoing supply chain constraints. Last quarter, we shared that the common denominator impacting growth across both services and new engines is constrained material supply. With 80% of material input shortages tied to 9 suppliers across 15 supplier sites. This remains our focus today.

Speaker Change: While we've made progress in services this quarter, our new engine output was disappointing, down 20% sequentially.

Larry Culp: Accelerating the Use of Flight Deck in Partnership with Our Suppliers as We Work to Solve the Ongoing Supply Chain Constraint Last quarter, we shared that the common denominator impacting growth across both services and new engines is constrained material supply, with 80% of material input shortages tied to nine suppliers across 15 suppliers. This remains our focus today.

Speaker Change: It's a clear challenge that we're facing head-on, accelerating the use of flight deck in partnership with our suppliers as we work to solve the ongoing supply chain constraints.

Speaker Change: Last quarter, we shared that the common denominator impacting growth across both services and new engines is constrained material supply, with 80% of material input shortages tied to nine suppliers across 15 supplier sites.

Larry Culp: We've deployed more than 550 of our engineering and supply chain resources into the supply base to use Flight Deck to work hand-in-hand with our suppliers to identify and resolve constraints. We've made significant improvements in many areas. At more than two-thirds of these sites, material flow more than doubled sequentially and is currently no longer constraining delivery. We're grateful for their collaboration, but there's still more to do in the second half. And we've sharpened our focus on a subset of the remaining priority sites that are still constraining our output.

Speaker Change: This remains our focus today.

Speaker Change: We've deployed more than 550 of our engineering and supply chain resources into the supply base to use Flight Deck to work hand-in-hand with our suppliers to identify and resolve constraints.

Larry Culp: We've made significant improvements in many areas. At more than 2/3 of these sites, material flow more than doubled sequentially and is currently no longer constraining deliveries. We're grateful for their collaboration, but there's still more to do in the second half and we've sharpened our focus on a subset of the remaining priority sites that are still constraining out our output. We're making some progress, but not enough to meet demand. I've personally visited several of these sites and I'm confident we can partner with our suppliers to drive faster progress. For example, earlier this month we partnered with one of the priority suppliers in a joint Kaizen focused on addressing a key constraint. Our supply chain and engineering teams jointly leverage Flight Deck to identify action plans to improve throughput significantly aligned with our needs for second half deliveries.

We've made significant improvements in many areas. At more than 2/3 of these sites, material flow more than doubled sequentially and is currently no longer constraining deliveries. We're grateful for their collaboration, but there's still more to do in the second half and we've sharpened our focus on a subset of the remaining priority sites that are still constraining out our output. We're making some progress, but not enough to meet demand. I've personally visited several of these sites and I'm confident we can partner with our suppliers to drive faster progress. For example, earlier this month we partnered with one of the priority suppliers in a joint Kaizen focused on addressing a key constraint. Our supply chain and engineering teams jointly leverage Flight Deck to identify action plans to improve throughput significantly aligned with our needs for second half deliveries.

Speaker Change: We've made significant improvements in many areas. At more than two-thirds of these sites, material flow more than doubled sequentially and is currently no longer constraining deliveries.

Speaker Change: We're grateful for their collaboration, but there's still more to do in the second half.

Speaker Change: And we've sharpened our focus on a subset of the remaining priority sites that are still constraining our output.

Larry Culp: We're making some progress, but not enough to meet demand. I've personally visited several of these sites, and I'm confident we can partner with our suppliers to drive faster progress. For example, earlier this month, we partnered with one of the priority suppliers and conducted a joint Kaizen focused on addressing a key constraint. Our supply chain and engineering teams jointly leveraged Flight Deck to identify action plans to improve throughput significantly, aligned with our needs for second half delivery. These actions resulted in double-digit material input growth here so far in July versus the second quarter average. So, a promising start.

Speaker Change: We're making some progress, but not enough to meet demand.

Speaker Change: I've personally visited several of these sites and I'm confident we can partner with our suppliers to drive faster progress.

Speaker Change: For example, earlier this month we partnered with one of the priority suppliers in a joint Kaizen focused on addressing a key constraint.

Speaker Change: Our supply chain and engineering teams jointly leveraged Flight Deck to identify action plans to improve throughput significantly, aligned with our needs for second-half deliveries.

Larry Culp: These actions resulted in a double digit material input growth here so far in July versus the second quarter average, so a promising start. Overall, we're not yet at a desired state, but we're counting on these joint action plans and continuous improvement to achieve our second half ramp. So far in July relative to April, we've seen overall higher engine output stability and reduced variability. We're also deploying Flight Deck aggressively in our own operations to improve safety, quality, delivery, and cost. And in that order, we've made solid progress in support of our airline customers. For example, our internal shop visit output improved 15% sequentially, and nowhere has this improvement been more visible than with LEAP. We've continued to decrease our turnaround time for LEAP shop visits to 86 days compared to roughly 100 days in 2023. This yielded a 9% increase in LEAP internal shop visits sequentially.

These actions resulted in a double digit material input growth here so far in July versus the second quarter average, so a promising start. Overall, we're not yet at a desired state, but we're counting on these joint action plans and continuous improvement to achieve our second half ramp. So far in July relative to April, we've seen overall higher engine output stability and reduced variability. We're also deploying Flight Deck aggressively in our own operations to improve safety, quality, delivery, and cost. And in that order, we've made solid progress in support of our airline customers. For example, our internal shop visit output improved 15% sequentially, and nowhere has this improvement been more visible than with LEAP. We've continued to decrease our turnaround time for LEAP shop visits to 86 days compared to roughly 100 days in 2023. This yielded a 9% increase in LEAP internal shop visits sequentially.

Speaker Change: These actions resulted in a double-digit material input growth here so far in July versus the second quarter average. So, a promising start.

Larry Culp: Overall, we're not yet at a desired state, but we're counting on these joint action plans and continuous improvement to achieve our second half ramp. So far in July, relative to April, we've seen overall higher engine output, stability, and reduced variability. We're also deploying Flight Deck aggressively in our own operations to improve safety, quality, delivery, and cost, and in that order. We've made solid progress in support of our airline customers. For example, our internal shop visit output improved 15% sequentially, and nowhere has this improvement been more visible than with LEAP. We've continued to decrease our turnaround time for LEAP shop visits to 86 days compared to roughly 100 days in 2023.

Speaker Change: Overall, we're not yet at a desired state, but we're counting on these joint action plans and continuous improvement to achieve our second half ramp.

Speaker Change: So far in July , relative to April , we've seen overall higher engine output, stability, and reduced variability.

Speaker Change: We're also deploying Flight Deck aggressively in our own operations to improve safety, quality, delivery, and cost, and in that order. We've made solid progress in support of our airline customers.

Speaker Change: For example, our internal shop visit output improved 15% sequentially.

Speaker Change: And nowhere has this improvement been more visible than with LEAP. We've continued to decrease our turnaround time for LEAP shop visits to 86 days, compared to roughly 100 days in 2023.

Larry Culp: This yielded a 9% increase in LEAP internal shop visits sequentially. We're also investing both organically and inorganically to meet the expected growth in shop visits as the fleet doubles by 2030. As we announced last week, over the next five years, we're planning to invest a billion dollars in our MRO facilities around the world to increase capacity and introduce new technologies to further reduce turnaround time and cost. This includes a recent agreement to acquire a dedicated LEAP test cell, unlocking a key constraint in our shop visit output.

Speaker Change: This yielded a 9% increase in LEAP internal shop visits sequentially.

Larry Culp: We're also investing both organically and inorganically to meet the expected growth in shop visits as the LEAP fleet doubles by 2030, as we announced last week. Over the next five years, we're planning to invest $1 billion in our MRO facilities around the world to increase capacity and introduce new technologies to further reduce turnaround time and costs. This includes a recent agreement to acquire a dedicated LEAP test cell, unlocking a key constraint in our shop visit output.

We're also investing both organically and inorganically to meet the expected growth in shop visits as the LEAP fleet doubles by 2030, as we announced last week. Over the next five years, we're planning to invest $1 billion in our MRO facilities around the world to increase capacity and introduce new technologies to further reduce turnaround time and costs. This includes a recent agreement to acquire a dedicated LEAP test cell, unlocking a key constraint in our shop visit output.

Speaker Change: We're also investing both organically and inorganically to meet the expected growth in shop visits as the fleet doubles by 2030.

Speaker Change: As we announced last week, over the next five years, we're planning to invest a billion dollars in our MRO facilities around the world to increase capacity and introduce new technologies to further reduce turnaround time and costs.

Speaker Change: This includes a recent agreement to acquire a dedicated LEAP test cell, unlocking a key constraint in our shop visit output.

Larry Culp: Overall, I am encouraged by our progress, but by no means satisfied. I'm confident that in the second half we'll increase engine delivery significantly and continue to grow shop visits in support of our customers.

Overall, I am encouraged by our progress, but by no means satisfied. I'm confident that in the second half we'll increase engine delivery significantly and continue to grow shop visits in support of our customers.

Larry Culp: Overall, I am encouraged by our progress, but by no means satisfied. I'm confident that in the second half, we'll increase engine delivery significantly and continue to grow shop visits in support of our customers. In the quarter, while output weighed on revenue, GE Aerospace delivered significant profit and free cash flow. Demand remains strong, with orders up 18%.

Speaker Change: Overall, I am encouraged by our progress, but by no means satisfied. I'm confident that in the second half, we'll increase engine delivery significantly and continue to grow shop visits in support of our customers.

Larry Culp: In the quarter. While output weighed on revenue, GE Aerospace delivered significant profit and free cash flow growth. Demand remained strong with orders up 18%. Revenue was up with growth in both segments. Services growth combined with price more than offset the lower engine shipments. Our operating profit was $1.9 billion, up 37% year over year from services growth, price, and favorable mix. Operating margins expanded 560 basis points to 23.1%. Both operating profit and margin were up significantly at CES and DPT.

In the quarter. While output weighed on revenue, GE Aerospace delivered significant profit and free cash flow growth. Demand remained strong with orders up 18%. Revenue was up with growth in both segments. Services growth combined with price more than offset the lower engine shipments. Our operating profit was $1.9 billion, up 37% year over year from services growth, price, and favorable mix. Operating margins expanded 560 basis points to 23.1%. Both operating profit and margin were up significantly at CES and DPT.

Speaker Change: In the quarter, while output weighed on revenue, GE Aerospace delivered significant profit and free cash flow growth.

Larry Culp: Revenue is up with growth in both segments. Services growth combined with price more than offset the lower engine. Our operating profit was $1.9 billion, up 37% year-over-year from services growth, price, and favorable mix.

Speaker Change: The demand remained strong with orders up 18%. Revenue was up with growth in both segments. Services growth combined with price more than offset the lower engine shipments.

Speaker Change: Our operating profit was $1.9 billion, up 37% year-over-year from services growth, price, and favorable mix.

Larry Culp: Operating margins expanded by 560 basis points to 23.1. Both operating profit and margin were up significantly at CES and DPC. Adjusted EPS was $1.20, up more than 60% year-over-year.

Speaker Change: Operating margins expanded 560 basis points to 23.1 percent.

Unknown Executive: Percent, both operating profit and margin were up significantly at CES and DBT.

Speaker Change: Both Operating Profit and Margin were up significantly at CES and DBT.

Larry Culp: Adjusted EPS was $1.20, up more than 60% year over year. This improvement was driven by increased operating profit combined with a lower tax rate. Free cash flow was $1.1 billion, up nearly 20%, driven by higher earnings, which more than offset inventory growth from the supply chain constraints I mentioned a moment ago. Halfway through the year, we're well positioned with earnings and free cash flow both up significantly year over year, and free cash flow conversion of nearly 120%, giving us confidence to raise our full-year profit and cash guidance. This continued profit and free cash flow growth, combined with returning approximately $25 billion of available cash to shareholders, will continue to compound returns. Now over to Rahul for the details on our segment results and our guidance.

Adjusted EPS was $1.20, up more than 60% year over year. This improvement was driven by increased operating profit combined with a lower tax rate. Free cash flow was $1.1 billion, up nearly 20%, driven by higher earnings, which more than offset inventory growth from the supply chain constraints I mentioned a moment ago. Halfway through the year, we're well positioned with earnings and free cash flow both up significantly year over year, and free cash flow conversion of nearly 120%, giving us confidence to raise our full-year profit and cash guidance. This continued profit and free cash flow growth, combined with returning approximately $25 billion of available cash to shareholders, will continue to compound returns. Now over to Rahul for the details on our segment results and our guidance.

Unknown Executive: Adjusted EPS was $1.20, up more than 60% year over year. This improvement was driven by increased operating profit, combined with the lower tax rate. Free cash flow was $1.1 billion, up nearly 20% driven by higher earnings, which more than offset inventory growth from the supply chain constraints I mentioned a moment ago.

Speaker Change: Adjusted EPS was $1.20, up more than 60% year-over-year. This improvement was driven by increased operating profit combined with a lower tax rate.

Larry Culp: This improvement was driven by increased operating profit combined with lower taxes. Free cash flow was $1.1 billion, up nearly 20% driven by higher earnings, which more than offset inventory growth from the supply chain constraints I mentioned a moment ago. Halfway through the year, we're well positioned with earnings and free cash flow both up significantly every year and a free cash flow conversion of nearly 120% giving us confidence to raise our full year profit and cash guidance.

Speaker Change: Free cash flow was $1.1 billion, up nearly 20%, driven by higher earnings, which more than offset inventory growth from the supply chain constraints I mentioned a moment ago.

Unknown Executive: Halfway through the year, we're well positioned with earnings and free cash flow both up significantly over year and free cash flow conversion of nearly 120%, giving us confidence to raise our full year profit and cash guidance. This continued profit and free cash flow growth, combining with returning approximately $25 billion of available cash to shareholders, will continue to compound returns.

Speaker Change: Halfway through the year, we're well-positioned with earnings and free cash flow both up significantly every year, and free cash flow conversion of nearly 120%, giving us confidence to raise our full-year profit and cash guidance.

Speaker Change: This continued profit and free cash flow growth, combined with returning approximately $25 billion of available cash to shareholders, will continue to compound returns.

Unknown Executive: Now, over to our whole for the details on our segment results and our guidance. Thank you, Larry.

Speaker Change: Now, over to Rahul for the details on our segment results and our guidance.

Rahul Ghai: Thank you Larry and good day everyone. Starting with CES, air traffic growth remained robust with departures up 9% year to date, and we continue to expect to be up high single digits for the full year. Passenger departures are expected to be up high single digits as narrowbody remains solid with LEAP up nearly 30% in the second quarter, more than 3x that of overall narrowbody market. Dedicated freight departures are now expected to be up mid single digits versus a prior expectation of low single digits.

Rahul Ghai: Starting with CES, air traffic growth remained robust, with departures up 9% year-to-date, and we continue to expect to be up high single digits for the full year. Passenger departures are expected to be up high single digits, as narrow body remains solid, and would leap up nearly 30% in the second quarter, more than 3x that of the overall narrow body market. Dedicated freight departures are now expected to be up mid-single digits versus a prior expectation of low single digits.

Unknown Executive: I'm good day, everyone. Starting with CES, air traffic growth remained robust, with departures up 9% year to date, and we continue to expect to be up high single digits for the full year. Passengers departure are expected to be up high single digits as narrow body remains solid.

Rahul: Thank You Larry and good day everyone. Starting with CES, air traffic growth remained robust with departures up 9% year-to-date and we continue to expect to be up high single digits for the full year.

Rahul: Passenger departures are expected to be up high single digits as narrow-body remains solid. It would leap up nearly 30% in the second quarter, more than 3x that of overall narrow-body market.

Unknown Executive: The creep up nearly 30% in the second quarter, more than three acts that of overall narrow body market. Dedicated free departures are now expected to be up mid single digits, versus a prior expectation of low single digits.

Rahul: Dedicated freight departures are now expected to be up mid-single digits versus a prior expectation of low single digits.

Rahul Ghai: Moving to CES's second quarter results, sustained commercial momentum drove significant orders, up 38% this quarter. Both services and equipment were up more than 35%, with strong Spare Parts demand. Revenue grew 7%, with service volume and price more than offsetting lower engine delivery. Services grew 14% from mid-teens internal shop visit growth with strength in time and material visits and improved pricing. As expected, ear-on-ear shop visits grew more than spare parts. Equipment Revenue declined 11% from a 26% lower engine ship.

Rahul Ghai: Moving to CES. Q2 results sustained commercial momentum, drove significant orders growth up 38% this quarter. Both services and equipment were up more than 35% with strong spare parts demand. Revenue grew 7% with services volume and price more than offsetting lower engine deliveries.

Moving to CES. Q2 results sustained commercial momentum, drove significant orders growth up 38% this quarter. Both services and equipment were up more than 35% with strong spare parts demand. Revenue grew 7% with services volume and price more than offsetting lower engine deliveries.

Unknown Executive: Moving to CES's second quarter results. Sustained commercial momentum drove significant orders growth, up 38% this quarter. Both services and equipment were up more than 35%, with strong spare parts demand. Revenue grew 7% with services volume and price more than offsetting lower engine deliveries. Services grew 14% from mid-teens internal shopper's growth, with strength in time and material visits and improved pricing. As expected, ear on ear shopper's its grew more than spare parts. Equipment revenue declined 11% from 26% lower engine shipments. This was partially offset by customer mix and price. Supply chain constraints impacted shipments across both narrow body and wide body would leap down 29%.

Speaker Change: Moving to CES's second quarter results, sustained commercial momentum drove significant orders growth, up 38% this quarter. Both services and equipment were up more than 35%, with strong spare parts demand.

Speaker Change: Revenue grew 7% with services volume and price more than offsetting lower engine deliveries.

Rahul Ghai: Services grew 14% from mid teens. Internal shop visit growth with strength in time and material visits and improved pricing. As expected, year on year shop visits grew more than spare parts. Equipment revenue declined 11% from 26% lower engine shipments. This was partially offset by customer mix and price. Supply chain constraints impacted shipments across both narrowbody and widebody with LEAP down 29%. Profit was $1.7 billion, up 21%, with margins expanding 320 basis points driven by improved performance in services from higher volume, pricing, and mix. Lower engine shipments and improving LEAP services profitability were also supported profit and margin expansion. This more than offset the impact of lower spare engine deliveries and increased investments that impacted equipment profit.

Services grew 14% from mid teens. Internal shop visit growth with strength in time and material visits and improved pricing. As expected, year on year shop visits grew more than spare parts. Equipment revenue declined 11% from 26% lower engine shipments. This was partially offset by customer mix and price. Supply chain constraints impacted shipments across both narrowbody and widebody with LEAP down 29%. Profit was $1.7 billion, up 21%, with margins expanding 320 basis points driven by improved performance in services from higher volume, pricing, and mix. Lower engine shipments and improving LEAP services profitability were also supported profit and margin expansion. This more than offset the impact of lower spare engine deliveries and increased investments that impacted equipment profit.

Speaker Change: Services grew 14% from mid-teens internal shop visit growth with strength in time and material visits and improved pricing. As expected, year-on-year shop visits grew more than spare parts.

Speaker Change: Equipment revenue declined 11% from 26% lower engine shipments.

Speaker Change: This was partially offset by customer mix and price.

Rahul Ghai: This was partially offset by customer mix and price. Supply chain constraints impacted shipments across both narrow body and wide body would leap down 29%. Profit was $1.7 billion, up 21%, with margins expanding 320 basis points.

Speaker Change: Supply chain constraints impacted shipments across both narrow-body and wide-body would leap down 29%.

Unknown Executive: Profit was $1.7 billion, up 21% with margins expanding 320 basis points. Driven by improved performance in services from higher volume, pricing, and mix. Lower engine shipments and improving Leap services profitability also supported profit and margin expansion.

Speaker Change: Profit was $1.7 billion, up 21%, with margins expanding 320 basis points.

Rahul Ghai: This was driven by improved performance in services from higher volume, pricing, and mix. Lower engine shipments and improving LEAP services profitability also supported profit and margin expansion. This more than offset the impact of lower spare engine deliveries and increased investments that impacted equipment profit. Taking a step back, at CES, we delivered a strong first half, with services revenue up 13% and overall segment profit up nearly 20%. Turning to DPT, the sector remains resilient.

Speaker Change: Driven by improved performance in services from higher volume, pricing, and mix.

Speaker Change: Lower engine shipments and improving LEAP services profitability also supported profit and margin expansion.

Unknown Executive: This more than offset the impact of lower spare engine deliveries and increase investments that impacted equipment profit.

Speaker Change: This more than offset the impact of lower spare engine deliveries and increased investments that impacted equipment profit.

Unknown Executive: Taking a step back at CES, we delivered a strong first half, with services revenue up 13% and overall segment profit up nearly 20%. President, turning to DPT, the sector remains resilient, with U.S. defense spending expected to grow low-single digits and international up mid-single digits.

Rahul Ghai: Taking a step back at CES, we delivered a strong first half with services revenue up 13% and overall segment profit up nearly 20%. Turning to DPT, the sector remains resilient with US defense spending expected to grow low single digits and international up mid single digits with Flight Deck. We are focused on running this business better to deliver more predictably while continuing to invest in the future of combat. We recently achieved a significant milestone delivering two T901 engines for the US Army's Improved Turbine Engine Program or ITEP for integration and testing on the UH-60 Black Hawk. The T901 engine will ensure that warfighters have the performance, power, and reliability necessary to maintain significant advantage on the battlefield for decades to come. Turning to our results, orders were down 25% primarily due to timing of orders in Defense and systems.

Taking a step back at CES, we delivered a strong first half with services revenue up 13% and overall segment profit up nearly 20%. Turning to DPT, the sector remains resilient with US defense spending expected to grow low single digits and international up mid single digits with Flight Deck. We are focused on running this business better to deliver more predictably while continuing to invest in the future of combat. We recently achieved a significant milestone delivering two T901 engines for the US Army's Improved Turbine Engine Program or ITEP for integration and testing on the UH-60 Black Hawk. The T901 engine will ensure that warfighters have the performance, power, and reliability necessary to maintain significant advantage on the battlefield for decades to come. Turning to our results, orders were down 25% primarily due to timing of orders in Defense and systems.

Speaker Change: Taking a step back, at CES, we delivered a strong first half, with services revenue up 13% and overall segment profit up nearly 20%.

Speaker Change: Turning to DPT, the sector remains resilient, with U.S. defense spending expected to grow low single digits and international up mid-single digits.

Rahul Ghai: Was U.S. defense spending expected to grow low single digits and international up mid-single digits? With Flytec, we are focused on running this business better to deliver more predictably while continuing to invest in the future of combat. We recently achieved a significant milestone, delivering two 901 engines for the U.S. Army's Improved Turbine Engine Program, or ITEP, for integration and testing on the UH-60 Black Hawk. The T901 engine will ensure that warfighters have the performance, power, and reliability necessary to maintain a significant advantage on the battlefield for decades to come.

Unknown Executive: With Fly-Tech, we have focused on running this business better, to deliver more predictably while continuing to invest in the future of combat. We recently achieved a significant milestone, delivering two 901 engines for the U.S. Army's Improved Turbine Engine Program or ICAP for Integration and Testing on the U.H. 60 Black Hawk. The 391 engine will ensure that water fighters have the performance, power, and reliability necessary to maintain a significant advantage on the battlefield for decades to come.

Speaker Change: With Flytec, we are focused on running this business better, to deliver more predictably while continuing to invest in the future of combat.

Speaker Change: We recently achieved a significant milestone delivering two 901 engines for the US Army's Improved Turbine Engine Program or ITAP.

Speaker Change: for integration and testing on the UH-60 Black Hawk.

Speaker Change: The T901 engine will ensure that warfighters have the performance, power, and reliability necessary to maintain significant advantage on the battlefield for decades to come.

Rahul Ghai: Tune in to our results. Orders were down 25%, primarily due to timing of orders in defense and. Defense Book to Bill was 0.9 in the quarter and 1.0 for the first half. Revenue grew 1%. However, defense and systems revenue was down 6%.

Unknown Executive: Turning to our results, orders were down 25%. Primarily due to timing of orders in defense and systems, defense booked to bill was 0.9 in the quarter and 1.0 for the first half. Revenue grew 1%. Defense and systems revenue was down 6%.

Speaker Change: Turning to our results.

Speaker Change: Orders were down 25%.

Speaker Change: primarily due to timing of orders in defense and systems.

Rahul Ghai: Defense book to bill was 0.9 in the quarter and 1.0 for the first half. Revenue grew 1%. Defense and Systems revenue was down 6%. Engine deliveries were down approximately 60% from supply chain challenges and a tough year over year compare when we delivered significantly higher units. This more than offset product pricing and services growth.

Defense book to bill was 0.9 in the quarter and 1.0 for the first half. Revenue grew 1%. Defense and Systems revenue was down 6%. Engine deliveries were down approximately 60% from supply chain challenges and a tough year over year compare when we delivered significantly higher units. This more than offset product pricing and services growth.

Speaker Change: Defense Book to Bill was 0.9 in the quarter and 1.0 for the first half.

Speaker Change: Revenue grew 1%.

Unknown Executive: Engine deliveries were down approximately 60% from supply chain challenges and a tough year-over-year compare when we delivered significantly higher units. This more than offset pricing and services growth. Propulsion and additive technologies grew 16%. With growth across several businesses, from higher output and improved pricing.

Rahul Ghai: Engine deliveries were down approximately 60% from supply chain challenges and a tough year-over-year comparison when we delivered significantly higher units. This more than offset pricing and services growth. Propulsion and additive technologies grew 16%, with growth across several businesses, from higher output and improved price. Profit was $344 million, up more than 70% year-over-year, with margins expanding 580 basis points from higher output, favorable product mix, productivity, price, and the absence of program-related costs.

Speaker Change: Defense and Systems Revenue was down 6%.

Speaker Change: Engine deliveries were down approximately 60% from supply chain challenges and a tough year-over-year compare when we delivered significantly higher units.

Speaker Change: This more than offset pricing and services growth.

Rahul Ghai: Propulsion and additive technologies grew 16% with growth across several businesses from higher output and improved pricing. Profit was $344 million up more than 70% year over year with margins expanding 580 basis points from higher output, favorable product mix, productivity, price, and the absence of program-related costs.

Propulsion and additive technologies grew 16% with growth across several businesses from higher output and improved pricing. Profit was $344 million up more than 70% year over year with margins expanding 580 basis points from higher output, favorable product mix, productivity, price, and the absence of program-related costs.

Speaker Change: Propulsion and additive technologies grew 16%, with growth across several businesses.

Unknown Executive: Profit was 344 million dollars, up more than 70% year-over-year, with margins expanding 580 basis points. From higher output, favorable product mix, productivity, price, and the absence of program-related costs.

Speaker Change: from higher output and improved pricing.

Speaker Change: Profit was $344 million, up more than 70% year-over-year, with margins expanding 580 basis points, from higher output, favorable product mix, productivity, price, and the absence of program-related costs.

Rahul Ghai: Through the first half of the year, DPT delivered high single digit revenue growth and significant operating profit improvement. The business remains well positioned to deliver growth over the medium term with a backlog of nearly $17 billion. Spending a moment on corporate adjusted cost and intercompany eliminations, were roughly $130 million down nearly 40% year over year. This $80 million improvement is from actions taken to streamline our cost structure, accelerate elimination of wind down costs, and favorable interest income that more than offset higher intercompany eliminations. As part of our continued efforts to simplify and focus on our core, this quarter we completed the sale of Electric Insurance. We also reached an agreement to sell the licensing business and a reinsurance agreement to exit a block of our life and health insurance business. Combined, these actions will result in proceeds of roughly $700 million of investing cash flow.

Through the first half of the year, DPT delivered high single digit revenue growth and significant operating profit improvement. The business remains well positioned to deliver growth over the medium term with a backlog of nearly $17 billion. Spending a moment on corporate adjusted cost and intercompany eliminations, were roughly $130 million down nearly 40% year over year. This $80 million improvement is from actions taken to streamline our cost structure, accelerate elimination of wind down costs, and favorable interest income that more than offset higher intercompany eliminations. As part of our continued efforts to simplify and focus on our core, this quarter we completed the sale of Electric Insurance. We also reached an agreement to sell the licensing business and a reinsurance agreement to exit a block of our life and health insurance business. Combined, these actions will result in proceeds of roughly $700 million of investing cash flow.

Rahul Ghai: During the first half of the year, DPT delivered high single-digit revenue growth and significant operating profit improvement. The business remains well positioned to deliver growth over the medium term with a backlog of nearly $17 billion. Spending a moment on cars, Adjusted cost and intercompany eliminations were roughly $130 million, down nearly 40% year over year.

Unknown Executive: To the first half of the year, the APT delivered high single-digit revenue growth and significant operating profit improvement.

Speaker Change: To the first half of the year, DPT delivered high single-digit revenue growth and significant operating profit improvement.

Unknown Executive: The business remains well positioned to deliver growth over the medium-term with a backlog of nearly $17 billion.

Speaker Change: The business remains well positioned to deliver growth over the medium term with a backlog of nearly $17 billion.

Unknown Executive: Spending a moment on corporate, adjusted cost and into company eliminations were roughly $130 million.

Speaker Change: Spending a moment on corporate. Adjusted cost and intercompany eliminations were roughly $130 million.

Unknown Executive: Down nearly 40% year-over-year. This $80 million improvement is from action-staking to streamline our cost structure, accelerate elimination of wind down costs, and favorable interest income that more than offset higher intercompany eliminations.

Rahul Ghai: This $80 million improvement is from actions taken to streamline our cost structure, accelerate the elimination of wind-down costs, and favorable interest income that more than offset higher intercompany elimination. As part of our continued efforts to simplify and focus on our core, this quarter, we completed the sale of electric insurance. We also reached an agreement to sell the licensing business and a reinsurance agreement to exit a block of our life and health insurance business.

Speaker Change: down nearly 40% year-over-year.

Speaker Change: This $80 million improvement is from actions taken to streamline our cost structure, accelerate elimination of wind-down costs,

Speaker Change: and Favorable Interest Income that more than offset higher intercompany eliminations.

Unknown Executive: As part of our continued efforts to simplify and focus on our core, this quarter, we completed the sale of electric insurance. We also reached an agreement to sell the licensing business and a reinsurance agreement to exit a block of our life and health insurance business. Combined, these actions will result in proceeds of roughly $700 million of investing cash flow.

Speaker Change: As part of our continued efforts to simplify and focus on our core, this quarter we completed the sale of electric insurance.

Speaker Change: We also reached an agreement to sell the licensing business and a reinsurance agreement to exit a block of our life and health insurance business.

Rahul Ghai: Combined, these actions will result in proceeds of roughly $700 million of investing cash. Looking ahead, given the strong results and the momentum in our business, we are raising our profit and cash guidance. We are reducing our revenue guidance given lower engine output expectations.

Speaker Change: Combined, these actions will result in proceeds of roughly $700 million of investing cash flow.

Rahul Ghai: Looking ahead. Given the strong results and the momentum in our business, we are raising our profit and cash guidance. We are reducing our revenue guidance given lower engine output expectations.

Looking ahead. Given the strong results and the momentum in our business, we are raising our profit and cash guidance. We are reducing our revenue guidance given lower engine output expectations.

Unknown Executive: Looking ahead, given the strong results and the momentum in our business, we are raising our profit and cash guidance.

Speaker Change: Looking ahead, given the strong results and the momentum in our business, we are raising our profit and cash guidance.

Unknown Executive: We are reducing our revenue guidance given lower engine output expectations. Growth is now projected to be up high single-digit. Due to lower equipment revenue in CES, we now expect CES equipment revenue to be up high single to low double digits, from prior guidance of up high teams. This includes our updated fully elite output expectations of flat to up 5% year over year. We continue to expect CES services to grow mid-teens, putting overall growth of CES at low double digits to mid-teens. Consistent with prior guidance, we expect DPD growth of mid to high single digits. Operating profit is now expected to be in a range of 6.5 to 6.8 billion dollars, up 250 million dollars at the midpoint from prior guidance, with margin expansion year over year.

Speaker Change: We are reducing our revenue guidance given lower engine output expectations.

Rahul Ghai: Growth is now projected to be up high single digits due to lower equipment revenue in CES. We now expect CES equipment revenue to be up high single to low double digits from prior guidance of up high teens. This includes our updated full year LEAP output expectations of flat to up 5% year over year. We continue to expect CES services to grow mid teens, putting overall growth of CES at low double digits to mid teens.

Growth is now projected to be up high single digits due to lower equipment revenue in CES. We now expect CES equipment revenue to be up high single to low double digits from prior guidance of up high teens. This includes our updated full year LEAP output expectations of flat to up 5% year over year. We continue to expect CES services to grow mid teens, putting overall growth of CES at low double digits to mid teens.

Rahul Ghai: Growth is now projected to be up high single digits due to lower equipment revenue in CES. We now expect CES equipment revenue to be up high single to low double digits from prior guidance of up high teens. This includes our updated full-year leap output expectations of flat to up 5% year-over-year. We continue to expect CES services to grow mid-teens, putting overall growth of CES at low double digits to mid-teens. Consistent with prior guidance, we expect DPT growth of mid to high single digits.

Speaker Change: Growth is now projected to be up high single digits.

Speaker Change: Due to lower equipment revenue in CES.

Speaker Change: We now expect CES equipment revenue to be up high single to low double digits from prior guidance of up high teens.

Speaker Change: This includes our updated full-year LEAP output expectations of flat to up 5% year-over-year.

Speaker Change: We continue to expect CES services to grow mid-teens, putting overall growth of CES at low double digits to mid-teens.

Rahul Ghai: Consistent with prior guidance, we expect DPT growth of mid- to high-single-digits. Operating profit is now expected to be in a range of $6.5 to 6.8 billion, up $250 million at the midpoint from prior guidance with margin expansion year over year. This improvement is primarily from CES, with operating profit now expected to be $6.3 to 6.5 billion from $6.1 to 6.4 billion previously, reflecting improved services performance and impact of lower equipment sales. DPT profit guidance is unchanged, and corporate cost and intercompany eliminations are now expected to be below $900 million from approximately $1 billion previously. Our expectations for interest, expense, and tax rate are unchanged, and we are raising our adjusted EPS guidance range to $3.95 to $4.20, up more than 50% year over year at the midpoint from higher profit growth.

Consistent with prior guidance, we expect DPT growth of mid- to high-single-digits. Operating profit is now expected to be in a range of $6.5 to 6.8 billion, up $250 million at the midpoint from prior guidance with margin expansion year over year. This improvement is primarily from CES, with operating profit now expected to be $6.3 to 6.5 billion from $6.1 to 6.4 billion previously, reflecting improved services performance and impact of lower equipment sales. DPT profit guidance is unchanged, and corporate cost and intercompany eliminations are now expected to be below $900 million from approximately $1 billion previously. Our expectations for interest, expense, and tax rate are unchanged, and we are raising our adjusted EPS guidance range to $3.95 to $4.20, up more than 50% year over year at the midpoint from higher profit growth.

Speaker Change: Consistent with prior guidance, we expect DPT growth of mid to high single digits.

Rahul Ghai: Operating profit is now expected to be in a range of $6.5 to $6.8 billion, up $250 million at the midpoint from prior guidance, with margin expansion year-over-year. This improvement is primarily from CES, with operating profit now expected to be $6.3 to $6.5 billion, from 6.1 to 6.4 billion dollars previously, reflecting improved services performance and the impact of lower equipment sales. Deputy Profit Guidance is Unchained, and corporate cost and intercompany eliminations are now expected to be below $900 million from approximately $1 billion previously. Our expectations for interest expense and tax rate are unchanged.

Speaker Change: Operating profit is now expected to be in a range of $6.5 to $6.8 billion.

Speaker Change: Up $250 million at the midpoint from prior guidance.

Unknown Executive: This improvement is primarily from CES, with operating profit now expected to be 6.3 to 6.5 billion dollars, from 6.1 to 6.4 billion dollars previously, reflecting improved services performance and impact of lower equipment sales. DPD profit guidance is unchanged, and corporate cost and intercompany eliminations are now expected to be below 900 million dollars, from approximately one billion dollars previously. Our expectations for interest expense and tax rate are unchanged. And we are raising our adjusted EPS guidance range to three dollars and 95 cents to four dollars and 20 cents, up more than 50% year over year at the midpoint from higher profit growth.

Speaker Change: with margin expansion year-over-year.

Speaker Change: This improvement is primarily from CES, with operating profit now expected to be $6.3-$6.5 billion.

Speaker Change: from $6.1 to $6.4 billion previously.

Speaker Change: Reflecting improved services performance and impact of lower equipment sales.

Speaker Change: Deputy, Profit Guidance is unchanged.

Speaker Change: And corporate cost and intercompany eliminations are now expected to be below $900 million from approximately $1 billion previously.

Speaker Change: Our expectations for interest expense and tax rate are unchanged.

Rahul Ghai: And we are raising our adjusted EPS guidance range to $3.95 to $4.20, up more than 50% year-over-year at the midpoint from higher profit growth. We're also raising our free cash flow guidance to $5.3 to $5.6 billion, with above 100% conversion of net income given profit growth. While we still expect to reduce working capital for the year, the improvement is expected to be lower given the impact of supply chain challenges on inventory.

Speaker Change: And we are raising our adjusted EPS guidance range to $3.95 to $4.20 up more than 50% year-over-year at the midpoint from higher profit growth.

Unknown Executive: We also raising our free cash flow guidance to 5.3 to 5.6 billion dollars, with above 100% conversion of net income given profit growth. While we still expect to reduce working capital for the year, the improvement is expected to be lower, given the impact of supply chain challenges to inventory. Overall, free cash flow is up approximately 700 million dollars per year.

Rahul Ghai: We are also raising our free cash flow guidance to $5.3 to $5.6 billion with above 100% conversion of net income given profit growth. While we still expect to reduce working capital for the year, the improvement is expected to be lower given the impact of supply chain challenges to inventory. Overall free cash flow is up approximately $700 million, year over year, at the midpoint. All in, GE Aerospace is positioned for significant revenue, profit, and free cash flow growth with strong conversion in 2024. Larry, back to you, Rahul. Thanks as we take flight.

We are also raising our free cash flow guidance to $5.3 to $5.6 billion with above 100% conversion of net income given profit growth. While we still expect to reduce working capital for the year, the improvement is expected to be lower given the impact of supply chain challenges to inventory. Overall free cash flow is up approximately $700 million, year over year, at the midpoint. All in, GE Aerospace is positioned for significant revenue, profit, and free cash flow growth with strong conversion in 2024. Larry, back to you.

Speaker Change: We are also raising our free cash flow guidance to $5.3 to $5.6 billion with above 100% conversion of net income given profit growth.

Speaker Change: While we still expect to reduce working capital for the year, the improvement is expected to be lower given the impact of supply chain challenges to inventory.

Rahul Ghai: Overall, free cash flow is up approximately $700 million year over year at the mid. All in, GE Aerospace is positioned for significant revenue, profit, and free cash flow growth with strong conversion in 2024. Larry, back to you.

Speaker Change: Overall, free cash flow is up approximately $700 million year-over-year at the midpoint.

Unknown Executive: This is a great position for significant revenue, profit, and free cash flow growth with strong conversion in 2024.

Speaker Change: All in, GE Aerospace is positioned for significant revenue, profit, and free cash flow growth with strong conversion in 2024.

Unknown Executive: Sorry, that too. Our whole thing is we take flight as GERO Space. We have sustained competitive advantages with a tremendous value proposition. With the industry's largest and growing fleets or platforms, are preferred by customers across the country. We are aiming to provide industry-leading reliability and durability, prioritizing FQDC in that order. This means delivering unmatched time on wing and faster turnaround times for our customers. With our deep domain expertise and engineering talent, commitment to innovation and capacity to invest, we are points to deliver breakthrough technologies in both commercial and defense. And with Flight Deck as our foundation, we'll deliver for customers and create exceptional value for shareholders.

Larry Culp: Rahul. Thanks as we take flight. As GE Aerospace, we have sustained competitive advantages with a tremendous value proposition with the industry's largest and growing fleets. Our platforms are preferred by customers across the narrowbody, widebody, and defense sectors. We're aiming to provide industry-leading reliability and durability, prioritizing SQDC in that order. This means delivering unmatched time on wing and faster turnaround times for our customers with our deep domain expertise and engineering talent, commitment to innovation, and capacity to invest. We're poised to deliver breakthrough technologies in both commercial and defense. And with Flight Deck as our foundation, we'll deliver for customers and create exceptional value for shareholders. All in, we expect to grow operating profit to approximately $10 billion in 2028 and generate free cash flow in excess of net income, creating compounding returns.

Larry Culp: Rahul, thanks. We take flight as GE Aerospace. We have sustained competitive advantages with a tremendous value property. With the industry's largest and growing fleets, our platforms are preferred by customers across narrow body, wide body, and defense. We're aiming to provide industry-leading reliability and durability, prioritizing SQDC in that order.

Larry Culp: As GE Aerospace, we have sustained competitive advantages with a tremendous value proposition with the industry's largest and growing fleets. Our platforms are preferred by customers across the narrowbody, widebody, and defense sectors. We're aiming to provide industry-leading reliability and durability, prioritizing SQDC in that order. This means delivering unmatched time on wing and faster turnaround times for our customers with our deep domain expertise and engineering talent, commitment to innovation, and capacity to invest. We're poised to deliver breakthrough technologies in both commercial and defense. And with Flight Deck as our foundation, we'll deliver for customers and create exceptional value for shareholders. All in, we expect to grow operating profit to approximately $10 billion in 2028 and generate free cash flow in excess of net income, creating compounding returns.

Speaker Change: Larry back to you. Rahul, thanks. As we take flight as GE Aerospace.

Larry Culp: We have sustained competitive advantages with a tremendous value proposition.

Larry Culp: With the industry's largest and growing fleets, our platforms are preferred by customers across the narrow-body, wide-body, and defense sectors.

Speaker Change: We're aiming to provide industry-leading reliability and durability, prioritizing SQDC in that order.

Blair Shore: This means delivering unmatched time on the wing and faster turnaround times for our customers. With our deep domain expertise and engineering talent, commitment to innovation, and capacity to invest, we are positioned to deliver breakthrough technologies, in both commercial and. And with Flight Deck as our foundation, we'll deliver for customers and create exceptional value for shareholders. All in, we expect to grow operating profit to approximately $10 billion in 2028 and generate free cash flow and excessive net income, creating compounding return.

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

Speaker Change: With our deep domain expertise and engineering talent, commitment to innovation, and capacity to invest,

Speaker Change: We're poised to deliver breakthrough technologies.

Speaker Change: in both commercial and defense.

Speaker Change: And with Flight Deck as our foundation, we'll deliver for customers and create exceptional value for shareholders.

Unknown Executive: All in, we expect to grow operating profit to approximately 10 billion dollars in 2028 and generate free cash flow and excessive net income. Creative and compounding returns.

Speaker Change: All in, we expect to grow operating profit to approximately $10 million in 2028 and generate free cash flow and excessive net income.

Larry Culp: We're making meaningful progress to advance our strategic priorities in service of our customers, employees, and shareholders, while keeping an eye towards the future and paving the way with innovation for more sustainable flight.

We're making meaningful progress to advance our strategic priorities in service of our customers, employees, and shareholders, while keeping an eye towards the future and paving the way with innovation for more sustainable flight. Now, Blaire, let's go to questions.

Blair Shore: We're making meaningful progress to advance our strategic priorities in the service of our customers, employees, and shareholders, while keeping an eye toward the future and paving the way with innovation for more sustainable flight. Now, Blair, let's go to questions. Before we open the line, I'd ask everyone in the queue to consider your fellow analysts and ask one question so we can get to as many people as possible. Liz, can you please open the line?

Unknown Executive: We're making a meaningful progress to advance our strategic priorities and service of our customers, employees, and shareholders while keeping an eye towards the future and paving the way with innovation for more sustainable flight.

Speaker Change: Creating Compounding Returns

Speaker Change: We're making meaningful progress to advance our strategic priorities in service of our customers, employees, and shareholders, while keeping an eye towards the future and paving the way with innovation for more sustainable flight.

Larry Culp: Now, Blair, let's go to questions.

Unknown Executive: Now, Blair, let's go to questions. Before we open the line, I'd ask everyone in the queue to consider your fellow analysts and ask one question so we can get to as many people as possible.

Blair Schorr: Before we open the line, I'd ask everyone in the queue to consider your fellow analysts and ask one question so we can get to as many people as possible. Liz, can you please open the line?

Blaire Shoor: Before we open the line, I'd ask everyone in the queue to consider your fellow analysts and ask one question so we can get to as many people as possible. Liz, can you please open the line?

Speaker Change: Now, Blair, let's go to questions.

Speaker Change: Before we open the line, I'd ask everyone in the queue to consider your fellow analysts and ask one question so we can get to as many people as possible. Liz, can you please open the line?

Unknown Executive: Liz, can you please open the line? Ladies and gentlemen, if you wish to ask a question, please press star 1-1 on your telephone. If you wish to withdraw your question or your question has already been answered, please press star 1-1 again.

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.

Blair Shore: 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.

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.

Robert Spingarn: Our first question comes from Robert Spingarn, McMillius Research. Good afternoon. I don't know who wants to take this one, but I wanted to ask you, just given the slower ramp on the narrow-body programs, as well as the durability issues on the gear turbofan, we've seen airlines extending the lives of older aircraft and engines.

Operator: Our first question comes from Robert Spingarn with Melius Research.

Robert Michael Spingarn: Our first question comes from Robert Spingarn with Melius Research. Good afternoon. Morning, Rob. Hey, Rob.

Liz: Our first question comes from Robert Spingarn with Melius Research.

Rahul Ghai: Good afternoon. Morning, Rob.

Robert Spingarn: Good afternoon.

Rahul Ghai: Morning, Rob.

Larry Culp: Hey, Rob.

Robert Michael Spingarn: Good afternoon.

Rahul Ghai: I don't know who wants.

Robert Spingarn: I don't know who wants to take this one, but I wanted to ask you, just given the slower ramp on the narrowbody programs as well as the durability issues on the geared turbofan, we've seen airlines extending the lives of older aircraft and engines, are we getting to the point where some of your CFM56 customers are talking about increasing the work scope of their third shop visits or maybe even doing a fourth shop visit?

Larry Culp: I don't know who wants to take this one, but I wanted to ask you, just given the slower ramp on the narrow body programs, as well as the durability issues on the geared turbofan, we've seen airlines extending the lives of older aircraft and engines. Are we getting to the point where some of your CFM56 customers are talking about increasing the work scope of their third shop visit or maybe even doing a fourth shop visit?

Robert Michael Spingarn: Good morning, Rob. Hey, Rob.

Larry Culp: To take this one, but I wanted to ask you, just given the slower ramp on the narrowbody programs as well as the durability issues on the geared turbofan, we've seen airlines extending the lives of older aircraft and engines, are we getting to the point where some of your CFM56 customers are talking about increasing the work scope of their third shop visits or maybe even doing a fourth shop visit?

Robert Michael Spingarn: I don't know who wants to take this one, but I wanted to ask you, just given the slower ramp on the narrow-body programs, as well as the durability issues on the geared turbofan, we've seen airlines extending the lives of older aircraft and engines.

Unknown Executive: Are we getting to the point where some of your CFM-56 customers are talking about increasing the work scope of their third shop visits, or maybe even doing a fourth shop visit? Well, Rob, I think that you really put your finger on one of the important underlying dynamics here, not only in the quarter, but as we think about the second half and even the next few years. The CFM-56 is clearly still the work course of the industry, right? I mean, we look at utilization in a time when people thought we might begin to see a little bit of a fade. Utilization year over year is consistent with the CFM-56.

Speaker Change: Are we getting to the point where some of your CFM56 customers are talking about increasing the work scope of their third shop visits or maybe even doing a fourth shop visit?

Larry Culp: Well, Rob, I think that you really put your finger on one of the important underlying dynamics here, not only in the quarter, but as we think about the second half and even the next few years, the CFM 56 is clearly still the workhorse of the industry, right? I mean, if we look at utilization, at a time when people thought we might begin to see a little bit of a fade, utilization year over year is consistent with the CFM 56. I'm delighted to see the leap of four points from a share perspective. So overall, GE narrowbody and Howard propulsion is probably north of 70%. So I think the CFM is going to have a longer life in many fleets.

Larry Culp: Well, Rob, I think that you really put your finger on one of the important underlying dynamics here, not only in the quarter, but as we think about the second half and even the next few years. The CFM56 is clearly still the workhorse of the industry. I mean, if we look at utilization at a time when people thought we might begin to see a little bit of a fade, utilization year over year is consistent with the CFM56. Delighted to see the LEAP up 4 points from a share perspective. So overall GE narrow body powered propulsion is probably north of 70%. So I think the CFM is going to have a longer life in many fleets and clearly that's going to help us in the aftermarket, both from a volume and from a scope perspective.

Speaker Change: Well, Rob, I think that you really put your finger on one of the...

Speaker Change: important underlying dynamics here not only in the quarter but as we think about the second half and even the next few years the CFM 56 is clearly still the work at workhorse of the industry right I mean we look at utilization

Speaker Change: In a time when people thought we might begin to see a little bit of a fade, utilization year over year is consistent with the CFM56. Delighted to see the leap up four points from a share perspective. So, overall, GE narrow-body.

Unknown Executive: The light is to see the leap up four points from a share perspective, so overall G-Enerabyte Power Propulsion is probably north of 70%. So I think the CFM is going to have a longer life in many fleets, and clearly that's going to help us in the aftermarket, both from a volume and from a scope perspective.

Speaker Change: Howard propulsion is probably north of 70% so I think the CFM is going to have a longer life and in many fleets and clearly that's going to help us in the aftermarket both from a from a volume and from a scope perspective

Rahul Ghai: Yeah, Rob, just to maybe add a little bit to what Larry said, just given the dynamics that he mentioned and you mentioned earlier, we are expecting that the peak shop visit that we had previously projected in 2025 and then we start to see the sequential downtick in 2026-2027 is what we said at Investor Day. Now, as we sit here today, we do expect that, you know, shop visits probably plateau at that 2025 level for maybe another couple of years and then start declining. So definitely we are seeing that.

Unknown Executive: Rob, just to maybe add a little bit to what Larry said, just given the dynamics that he mentioned and you mentioned earlier, we are expecting that the peak shop visit that we have previously projected in 2025, and then we start to see the sequential down, take in 2627 is what we said it in yesterday. Now, as we sit here today, we do expect that shop visit is probably plateau at that 25 level for maybe another couple of years and then start declining. So definitely we are seeing that the platform is getting used, and the shop visits will be hired for an extended period of time, and we will see third shop visits, and that we are seeing that even with some of the lessons coming out and commenting that the leases are getting extended beyond 14-15 years, for another 4-5 years.

Larry Culp: And clearly, that's going to help us in the aftermarket, both from a volume and from a scope perspective. Well, just to maybe add a little bit to what Larry said, just given the dynamics that he mentioned and you mentioned earlier, we are expecting the peak shop visit that we had previously projected in 2025. And then we start to see the sequential downtick in 26, 27 is what we said it invests today.

Speaker Change: Yeah.

Speaker Change: Rob, just to maybe add a little bit to what Larry said, just given the dynamics that he mentioned and you mentioned earlier, we are expecting that the peak shop visit that we had previously projected in 2025,

Larry Culp: Now, as we sit here today, we do expect that, you know, shoppers will probably plateau at that 25 level for maybe another couple of years and then start declining. So definitely, we are seeing that the program, the platform is getting used, and the shop visits will be higher for an extended period of time. And we will see third shop visits. And we've seen that even with some of the lessons coming out and commenting that they've, you know, the leases are getting extended beyond 14, 15 years for another four or five years. So we will definitely see what you just said. Our next question comes from Myles Walton with Wolf Research. Hey, good morning. I apologize for the background noise. I'm actually here at the show.

Speaker Change: and then we start to see the sequential downtick in 26-27 is what we said it invested a now as we sit here today we do expect that you know shoppers is probably plateau at that 25 level for maybe another couple of years and then start declining

Rahul Ghai: The program, the platform, is getting used and the shop visits will be higher for an extended period of time, and we will see third shop visits and that we're seeing that even with, you know, some of the lessors coming out and commenting that they've, you know, the leases are getting extended beyond 14, 15 years for another four or five years. So we will definitely see what you just said.

The program, the platform, is getting used and the shop visits will be higher for an extended period of time, and we will see third shop visits and that we're seeing that even with, you know, some of the lessors coming out and commenting that they've, you know, the leases are getting extended beyond 14, 15 years for another four or five years. So we will definitely see what you just said.

Speaker Change: So, definitely, we are seeing that, um...

Speaker Change: The program, the platform is getting used.

Speaker Change: and the shop visits will be higher for an extended period of time and we will see third shop visits. And that we're seeing that even with, you know, some of the lessons coming out and commenting that they, you know, the leases are getting extended beyond 14, 15 years for another four or five years. So we will definitely see what you just said.

Unknown Executive: So we will definitely see what you just.

Unknown Executive: Head.

Myles Walton: Our next question comes from Miles Walton, with Wolf Research. Good morning, I'm positive to the background noise. I'm actually here at the show.

Operator: Our next question comes from Myles Walton with Wolfe Research.

Myles Alexander Walton: I was hoping Larry or Rahul, you could comment on the 15 supplier sites and nine suppliers who seem to be the source of the bulk of the delays and parts and where that was last year. And maybe just if you could bucket the types of products we're talking about at those 15 sites. Thanks. Myles, we can hear you loud and clear.

Speaker Change: Our next question comes from Myles Walton with Wolf Research.

Larry Culp: Good morning. Apologies for the background noise. I'm actually here at the show. I was hoping Larry or Rahul, you could comment on the 15 supplier sites and nine suppliers that seem to be the source of the bulk of the delays in parts, and where that was last year. And maybe just if you can bucket the types of products we're talking about at those 15 sites. Thanks, Miles. We could hear you loud and clear. We're not too far away, I suspect. I think if you go back to April, what we said was 3/4 of the challenge with respect to deliveries was really rooted in these 15 supplier sites again with nine different companies. And rather than finger point, our mindset was we're going to problem solve. And we've gone in deeply again with Flight Deck to really try to understand these constraints at the core.

Myles Walton: Good morning. Apologies for the background noise. I'm actually here at the show. I was hoping Larry or Rahul, you could comment on the 15 supplier sites and nine suppliers that seem to be the source of the bulk of the delays in parts, and where that was last year. And maybe just if you can bucket the types of products we're talking about at those 15 sites. Thanks.

Myles Alexander Walton: Good morning. I apologize for the background noise. I'm actually here at the show. I was hoping, Larry or Rahul, you could comment on the 15 supplier sites and 9 suppliers.

Unknown Executive: I was hoping Larry or you could comment on the 15 supplier sites and nine suppliers; it seemed to the source of the bulk of the delays and parts. And where that was last year, and maybe just if you can bucket the types of products we're talking about at those 15 sites. Thanks.

Myles Alexander Walton: We seem to be the source of the bulk of the delays and parts and where that was last year and maybe just if you can bucket the types of products we're talking about at those 15 sites.

Larry Culp: Miles, we could hear you loud and clear. We're not too far away, I suspect. I think if you go back to April, what we said was 3/4 of the challenge with respect to deliveries was really rooted in these 15 supplier sites again with nine different companies. And rather than finger point, our mindset was we're going to problem solve. And we've gone in deeply again with Flight Deck to really try to understand these constraints at the core.

Larry Culp: We're not we're not too far away, I suspect. I think if you go back to April, what we said was three-quarters of the challenge with respect to deliveries was really rooted in these 15 supplier sites again with nine different companies. And rather than finger-point, our mindset was we're going to problem solve, and we've gone in deeply again with the flight deck to really try to understand these constraints at the core, and the slide that you see in the deck is evidence that that approach to collaborative problem solving rather than finger-pointing is really yielding results.

Unknown Executive: Miles, we could hear you loud and clear; we're not too far away, I suspect. I think if you go back to April, what we said was three quarters of the challenge with respect to deliveries was really rooted in these 15 supplier sites, again with nine different companies. And rather than fingerpoint, our mindset was, we're going to problem solve. And we've gone in deeply, again, with Flight Deck to really try to understand these constraints at the core. And the slide that you see in the deck, I think, is evidence that that approach, that collaborative problem solving, rather than finger pointing, is really yielding results.

Speaker Change: Miles, we can hear you loud and clear.

Speaker Change: Three-quarters of the challenge with respect to deliveries was really rooted in these 15 supplier sites again with with nine different companies.

Speaker Change: And rather than finger point, our mindset was, we're going to problem solve.

Speaker Change: And we've gone in deeply, again, with Flight Deck to really try to understand these constraints at the core. And the slide that you see in the deck, I think, is evidence that that approach, that collaborative problem-solving, rather than finger-pointing, is really yielding results.

Larry Culp: The slide that you see in the deck I think is evidence that that approach, that collaborative problem solving rather than finger pointing, is really yielding results. We didn't expect that we would see blanket impact immediately, but to be able to point to 2/3 of those sites showing strong, nearly doubling of their sequential outputs inputs to us, I think really tells us something, right, that this approach is going to have impact. Unfortunately, we didn't have all of the impact that we would have liked across those 15. We need everybody's oar in the water, if you will. We need everybody contributing, particularly with respect to new engine deliveries.

The slide that you see in the deck I think is evidence that that approach, that collaborative problem solving rather than finger pointing, is really yielding results. We didn't expect that we would see blanket impact immediately, but to be able to point to 2/3 of those sites showing strong, nearly doubling of their sequential outputs inputs to us, I think really tells us something, right, that this approach is going to have impact. Unfortunately, we didn't have all of the impact that we would have liked across those 15. We need everybody's oar in the water, if you will. We need everybody contributing, particularly with respect to new engine deliveries.

Larry Culp: We didn't expect that we would see a blanket impact immediately, but to be able to point to two-thirds of those sites, showing strong, nearly doubling of their sequential outputs, and inputs to us, I think really tells us something, right? That this approach is going to have impact. Unfortunately, we didn't have all of the impact that we would have liked across those 50 states. And we need everybody's oar in the water, if you will.

Unknown Executive: We didn't expect that we would see blanket impact immediately, but to be able to point two, two thirds of those sites, showing strong, nearly doubling of their sequential outputs inputs to us. I think really tells us something, right, that this approach is going to have impact. Unfortunately, we didn't have all the impact that we would have liked across those 15. And we need everybody's, or in the water, if you will, we need everybody contributing, particularly with respect to new engine deliveries. But I think given what we have seen here in July, the way that we're working across different commodity classes shows that this approach is a better way to get more, not only here in the third quarter or the second half, but as we think about what is a multi-year ramp, right, the air framers that we talked to here at Farmboro certainly in the airlines as well.

Speaker Change: We didn't expect that we would see a blanket impact immediately, but to be able to point to two-thirds of those sites.

Speaker Change: showing strong, nearly doubling of their sequential outputs, inputs to us, I think really tells us something, right, that this approach is going to have impact. Unfortunately, we didn't have all of the impact that we would have liked across those 15.

Larry Culp: We need everybody contributing, particularly with respect to new engine delivery. But I think given what we've seen here in July, the way that we're working across different commodity classes shows us that this approach is a better way to get more, not only here in the third quarter or the second half but as we think about what is a multi-year wrap, right? The airframers that we talked to here at Farnborough, and certainly the airlines as well, no one loves the fact that a new narrow-body order may not be delivered until 29 or 30.

Speaker Change: And we need everybody's oar in the water, if you will. We need everybody contributing, particularly with respect to new engine deliveries.

Larry Culp: But I think, given what we have seen here in July, the way that we're working across different commodity classes shows us that this approach is a better way to get more, not only here in the third quarter or the second half, but as we think about what is a multi-year ramp, right? The airframers that we talk to here at Farnborough, certainly in the airlines as well, no one loves the fact that a new narrow-body order may not be delivered until 2029 or 2030. So it's all about the ramp. We've got years in front of us, thankfully. What a wonderful business challenge to have. But I really like the way our suppliers have met us here. Embrace the tools.

But I think, given what we have seen here in July, the way that we're working across different commodity classes shows us that this approach is a better way to get more, not only here in the third quarter or the second half, but as we think about what is a multi-year ramp, right? The airframers that we talk to here at Farnborough, certainly in the airlines as well, no one loves the fact that a new narrow-body order may not be delivered until 2029 or 2030. So it's all about the ramp. We've got years in front of us, thankfully. What a wonderful business challenge to have. But I really like the way our suppliers have met us here. Embrace the tools.

Speaker Change: But, I think given what we have seen here in July , the way that we're working across different commodity classes,

Speaker Change: shows this that that this approach is a better way to get more not only here in the third quarter or the second half but as we think about what is a multi-year wrap right the the airframers that we talked to here at Farnborough certainly in the airlines as well

Unknown Executive: No one loves the fact that a new narrow body order may not be delivered until 29 or 30. So it's all about the ramp. We've got years in front of us. Thankfully, what a wonderful business challenge to have, but I really like the way our suppliers have met us here in brace the tools. And we just need, we just need more time working in this fashion in order to have the full effect that we are our framework and our airline customers all desire.

Speaker Change: No one loves the fact that a new narrow-body order may not be delivered until 29 or 30.

Sheila Karin Kahyaoglu: So it's all about the ramp. We've got years in front of us, thankfully. What a wonderful business challenge to have. But I really like the way our suppliers have met us here and embraced the tools. And we just need, we just need more time working in this fashion in order to have the full effect that we are air framers and our airline customers all desire. Our next question comes from Sheila Kahyaoglu with Jeff. Hi. Good morning, Mary and Rahul. How are you?

Speaker Change: So, it's all about the ramp. We've got years in front of us, thankfully. What a wonderful business challenge to have, but I really like the way our suppliers have met us here.

Larry Culp: We just need more time working in this fashion in order to have the full effect that we, our airframer and our airline customers all desire.

We just need more time working in this fashion in order to have the full effect that we, our airframer and our airline customers all desire.

Speaker Change: embrace the tools and we just need we just need more time working in this fashion in order to have the the full effect that we our air framer and our airline customers all desire

Sheila Kahyaoglu: Our next question comes from Sheila Kailu with Jeffries. Hi, I'm good morning, Mary, and how are you? Good, thank you, Sheila.

Operator: Our next question comes from Sheila Kahyaoglu with Jefferies.

Larry Culp: Good. Thank you, Sheila. Um, maybe if I could ask about the CES margins, which were pretty awesome. So just looking at the LEAP deliveries in the quarter, Q1 versus Q2, Q2 had 70 fewer LEAP deliveries in the quarter. So about a 10 million profit swing, depending on your loss assumption there. So CES margins of 27% in Q2 versus Q3 versus Q1 of 23 implies that the core service margin improved about 1000 to 1500 basis points, depending on what you want to choose.

Speaker Change: Our next question comes from Sheila Kahyaoglu with Jeffreys.

Blair Schorr: Hi, good morning, Mary and Rahul. How are you?

Sheila Kahyaoglu: Hi, good morning, Mary and Rahul. How are you?

Larry Culp: Good, thank you.

Larry Culp: Good, thank you Sheila.

Sheila Karin Kahyaoglu: Hi, good morning Mary and Rahul, how are you? Good, thank you, Sheila.

Blair Schorr: Sheila, maybe if I could ask about the CES margins, which were pretty awesome. So just looking at the LEAP deliveries in the quarter, Q1 versus Q2, Q2 had 70 less LEAP deliveries in the quarter, so about a $10 million profit swing, depending upon your loss assumption there. So CES margins of 27% in Q2 versus Q3 versus Q1 of 23% implies that the core service margin improved about 1,000 to 1,500 basis points, depending on what you want to choose. So 25% to 35% plus. So what drove that? Despite shop visits being better than spares, and how do we think about the second half progression?

Unknown Executive: Maybe I could ask about the CES margins, which were pretty awesome. So just looking at the lead deliveries in the quarter, Q1 versus Q2. Q2 had 70 left lead deliveries in the quarters, so about a 10 million top at swing, depending on your loss assumption there. So CES margins of 27% in Q2 versus Q3 versus Q1 of 23 implies that the core service margin improved about 1,000 to 1,500 basis points depending on what you want to choose. So 25 to 35% plus.

Sheila Kahyaoglu: Maybe if I could ask about the CES margins, which were pretty awesome. So just looking at the LEAP deliveries in the quarter, Q1 versus Q2, Q2 had 70 less LEAP deliveries in the quarter, so about a $10 million profit swing, depending upon your loss assumption there. So CES margins of 27% in Q2 versus Q3 versus Q1 of 23% implies that the core service margin improved about 1,000 to 1,500 basis points, depending on what you want to choose. So 25% to 35% plus. So what drove that? Despite shop visits being better than spares, and how do we think about the second half progression?

Sheila Karin Kahyaoglu: Maybe if I could ask about the CES margins, which were pretty awesome. So just looking at the lead deliveries in the quarter Q1 versus Q2.

Speaker Change: Q2 had 70 less lead deliveries in the quarter, so about a $10 million profit swing, depending on...

Speaker Change: Your loss assumption there.

Speaker Change: So CEF margins of 27% in Q2 versus Q1 of 23 implies that the core service margin improved about 1,000 to 1,500 basis points, depending on what you want to choose. So 25 to 35% plus.

Larry Culp: So 25 to 35% plus. What drove that despite shop visits being better than spares? And how do we think about the second half progression? Yeah, now Sheila, it was a good quarter for CES overall. You know, OE volume was weak, as you pointed out.

Unknown Executive: So what drove that despite shop visits being better than stairs and how do we think about the second half progression? Yeah, now Sheila Poofing, it was a good quarter for C.S. Overall, you know, OE volume was weak and you pointed out, but the service revenue recovered really nicely and, you know, the overall services growth was kind of in line with what we had projected for four years. So it kind of came in exactly what we were thinking. And the drop-through from services was very strong. The sharpness, sharpness, skewed towards diamond material, work, and then the workscooks are heavier as well.

Speaker Change: So what drove that despite shop visits being better than spares and how do we think about the second half progression? Transcribed by https://otter.ai

Rahul Ghai: Yes. Now, Sheila, it was a good quarter for CES. Overall OE volume was weak, as you pointed out, but the service revenue recovered really nicely. The overall services growth was kind of in line with what we had projected for full year. So it kind of came in exactly what we were thinking. The drop through from services was very strong. The shop visits skewed towards time and material work, and then the work scopes were heavier as well. That, you know, helped both revenue and the profit on those shop visits. This, along with pricing and customer mix, helped the services profit growth. In equipment, the engine shipments were lower. Within equipment, you know, we also reduced our spare engine deliveries and higher investments.

Rahul Ghai: Yeah. Now, Sheila, it was a good quarter for CES. Overall OE volume was weak, as you pointed out, but the service revenue recovered really nicely. The overall services growth was kind of in line with what we had projected for full year. So it kind of came in exactly what we were thinking. The drop through from services was very strong. The shop visits skewed towards time and material work, and then the work scopes were heavier as well. That, you know, helped both revenue and the profit on those shop visits. This, along with pricing and customer mix, helped the services profit growth. In equipment, the engine shipments were lower. Within equipment, you know, we also reduced our spare engine deliveries and higher investments.

Speaker Change: Yeah, now Sheila, it was a good quarter for CES overall, you know, OE volume was weak as you pointed out, but the service revenue recovered really nicely.

Rahul Ghai: But the service revenue recovered really nicely, and the overall service growth was kind of in line with what we had projected for four years. So it kind of came in exactly as we were thinking.

Speaker Change: And, you know, the overall services growth was kind of in line with what we had projected for four years. So it kind of came in exactly what we were thinking.

Rahul Ghai: And the drop through from services was very strong. The shop visits skewed towards time and material work, and then the work scopes were heavier as well.

Speaker Change: And the drop-through from services was very strong. The shop visits skewed towards time and material, work, and then the work scopes were heavier as well. And that, you know, that helped both revenue and the profit on those shop visits.

Rahul Ghai: And that, you know, that helped both revenue and the profit on those. This, along with pricing and customer mix, helped the services profit growth. And in equipment, the engine shipments were lower. But within equipment, you know, we also reduced our spare engine deliveries and increased investments. So that kind of offsets the impact of the lower engine shipments. So overall, OE profit was, you know, more flattish than anything else. Now, as we look at the trend in the first half, that gave us the confidence here to raise profit expectations for the full year by call it 150 to 200 million at the midpoint of the guide. Now, what's it?

Unknown Executive: And that, you know, that helped both revenue and the profit on those sharp visits. This, along with pricing and customer, makes help to services profit growth. And in equipment, the engine shipments were lower, but within equipment, you know, we also reduced our spare engine deliveries and higher investments. So, and that kind of offset the impact of the lower engine shipments. So overall OE profit was, you know, more flat-ish than anything else.

Speaker Change: This, along with pricing and customer mix, helps the services profit growth.

Speaker Change: And in equipment, the engine shipments were lower. But within equipment, you know, we also reduced our spare engine deliveries and higher investments.

Larry Culp: So.

So that kind of offset the impact of the lower engine shipments. Overall OE profit was more flattish than anything else. Now, as we look at the trends in H1, that gave us the confidence here to raise profit expectations for the full year by call it $150 to 200 million at the midpoint of the guide.

Rahul Ghai: That kind of offset the impact of the lower engine shipments. Overall OE profit was more flattish than anything else. Now, as we look at the trends in H1, that gave us the confidence here to raise profit expectations for the full year by call it $150 to 200 million at the midpoint of the guide.

Speaker Change: So, and that kind of offset the impact of the lower engine shipments. So overall, OE profit was, you know.

Unknown Executive: Now, as we look at the trends in the first half, that gave us the confidence here to raise profit expectations for the full year by call 150 to 200 million at the midpoint of the guide. Now, what's, what's driving that at two things? One, the services growth that we just mentioned, all the things that we are seeing projected at the ability to now flow through into the second half as well, both with, with workscopes. And some of the customer makes being favorable. And then we lowered our OE revenue output by, call it $650 million at the midpoint of the guide.

Speaker Change: more flattish than anything else. Now, as we look at the the the trend in first half that gave us the confidence here to raise profit expectations for the full year by call it 150 to 200 million at the at the midpoint of the guide. Now, what's

Rahul Ghai: Now, what's driving that are two things. One, the services growth that we just mentioned, all the things that we are seeing. We projected that favorability to now flow through into the second half as well, both with work scopes and some of the customer mix being favorable. And then we lowered our OE revenue output, but call it $600, $650 million at the midpoint of the guide. And that is helping profit. So that is where you see our CES profit up for the year $150 to 200 million dollars. And the margins for CES will be kind of at this level, will be flattish for the year. And that is despite this being the first year of 9X shipments. So really, really happy with the way the CES business is coming along.

Now, what's driving that are two things. One, the services growth that we just mentioned, all the things that we are seeing. We projected that favorability to now flow through into the second half as well, both with work scopes and some of the customer mix being favorable. And then we lowered our OE revenue output, but call it $600, $650 million at the midpoint of the guide. And that is helping profit. So that is where you see our CES profit up for the year $150 to 200 million dollars. And the margins for CES will be kind of at this level, will be flattish for the year. And that is despite this being the first year of 9X shipments. So really, really happy with the way the CES business is coming along.

Rahul Ghai: What's driving that are two things. One, the services growth that we just mentioned, all the things that we are seeing, we projected that favorability to now flow through into the second half as well, both with work scopes and some of the customer mix being favorable. And then we lowered our OE revenue output, but call it $600, $650 million at the midpoint of the guide. And that is helping profit.

Speaker Change: What's driving that are two things. One, the services growth that we just mentioned, all the things that we are seeing, we projected that favorability to now flow through into the second half as well, both with work scopes.

Speaker Change: and some of the customer mix being favorable. And then we lowered our OE revenue output, but call it $600, $650 million at the midpoint of the guide. And that is helping profit.

Rahul Ghai: So that is where you see our CES profit up for the year, $150 to $200 million. And the margins for CES will be kind of at this level, or flattish, for the year. And that is despite this being the first year of 9X shipments.

Unknown Executive: And that is helping profit. So that is where you see our, you know, CS profit up for the year, 150 to 200 million dollars. And the profit and the margins all for CS will be, you know, kind of at this level, will be flat-ish for the year. And that is despite this being the first year of 9x shipments. So really, really happy with the way the CS business is coming along.

Speaker Change: So that is where you see our, you know, CES profit up for the year 150 to 200 million dollars. And the profit and the margins are for CES will be, you know, kind of at this level will be flattish for the year. And that is despite this being the first year of 9x shipments.

Rahul Ghai: So really, really happy with the way the CES business is coming along. Our next question comes from David Strouse with Barclays. Thanks. Good morning. Good afternoon.

Speaker Change: So, really, really happy with the way the CES business is coming along.

David Strauss: Our next question comes in the line of David Strauss with Barclays. Thank you. Good afternoon. Thank you.

Operator: Our next question comes from the line of David Strauss with Barclays.

Speaker Change: Our next question comes from the line of David Strouse with Barclays.

Rahul Ghai: Thanks. Good morning. Good afternoon.

David Strauss: Thanks. Good morning. Good afternoon.

Larry Culp: Morning, David.

Mark Wesley Strouse: Morning, David, uh larry can you just maybe dig into this uh you know the lower leap shipments in in the in the quarter i know you're talking about things progressing with these nine suppliers but at the same time obviously deliveries were way down the core i would imagine they were 100 125 short of kind of your internal expectations so can you kind of just square square that things are getting better but you know deliveries were a lot lower than expected thanks David, I don't want to repeat what I, said earlier, I do think one of the things to keep in mind is that there is a timing dynamic, relative to when we receive various input, and when in turn we convert that into an engine that we can deliver, be it to Airbus or to Boeing, right. So, April was was challenging in a number of ways.

David Strauss: Thanks, good morning, good afternoon.

Unknown Executive: Larry, can you just maybe dig into this, you know, the lower weak shipments in, in the quarter. I know you're talking about things progressing with these nine suppliers. But it's the same time; obviously, the liver is way down the square. I would imagine they were 125 short of kind of your internal expectations. So can you kind of just square square that things are getting better, but, you know, deliveries were a lot lower than expected. Thanks.

Rahul Ghai: Larry, can you just maybe dig into this? You know the lower LEAP shipments in the quarter. I know you're talking about things progressing with these nine suppliers, but at the same time, obviously deliveries were way down the quarter. I would imagine they were 100, 125 short of kind of your internal expectations. So can you kind of just square that things are getting better, but deliveries were a lot lower than expected.

David Strauss: Larry, can you just maybe dig into this? You know the lower LEAP shipments in the quarter. I know you're talking about things progressing with these nine suppliers, but at the same time, obviously deliveries were way down the quarter. I would imagine they were 100, 125 short of kind of your internal expectations. So can you kind of just square that things are getting better, but deliveries were a lot lower than expected. Thanks.

David Strauss: Morning, David. Morning.

David Strauss: Larry, can you just maybe dig into this, you know, the lower leap shipments in the in the quarter? I know you're talking about things progressing with these nine suppliers, but at the same time, obviously, deliveries were way down the core, I would imagine they were 100, 125.

Speaker Change: Short of kind of your internal expectations. So can you kind of just square, square that things are getting better, but, you know, deliveries were a lot lower than expected. Thanks.

Larry Culp: Thanks.

Larry Culp: David, I don't want to repeat what I said earlier. I do think one of the things to keep in mind is that there is a timing dynamic relative to when we receive various inputs and when in turn we convert that into an engine that we can deliver.

Unknown Executive: David, I don't want to repeat what I said earlier. I do think one of the things to keep in mind is that there is a timing dynamic. Relative to when we receive various inputs and when in turn, we convert that into an engine that we can deliver. See it to Airboss or to Boeing, right? So April was, was challenging in a number of ways. We didn't have the recovery in May that I think we had hoped we might see underlying. The quarter of those sequentially was the net improvement that I mentioned. And that has only continued to build here in July.

Speaker Change: David, I don't want to repeat what I...

Larry Culp: As I said earlier, I do think one of the things to keep in mind is that there is a timing dynamic.

Speaker Change: relative to when we receive various inputs.

Larry Culp: and when in turn we convert that into an engine that we can deliver.

Larry Culp: Be it to Airbus or to Boeing. Right. So April was challenging in a number of ways. We didn't have the recovery in May that I think we had hoped we might see. Underlying the quarter, though sequentially, was the net improvement that I mentioned, and that has only continued to build here in July. We haven't seen that somewhat typically slow start to a quarter that I was concerned about. So there's really nothing more I can say about why the new unit deliveries, LEAP included, were disappointing.

Be it to Airbus or to Boeing. Right. So April was challenging in a number of ways. We didn't have the recovery in May that I think we had hoped we might see. Underlying the quarter, though sequentially, was the net improvement that I mentioned, and that has only continued to build here in July. We haven't seen that somewhat typically slow start to a quarter that I was concerned about. So there's really nothing more I can say about why the new unit deliveries, LEAP included, were disappointing.

Mark Wesley Strouse: We didn't have the recovery in May that I think we had hoped we might see, underlying. The quarter, though, sequentially, was the net improvement that I mentioned, and that has only continued to build here in July. We haven't seen that somewhat typically slow start to a quarter that I was concerned about. There's really nothing more I can say about why the new unit deliveries, LEAP included, were disappointing. It is what it is, and where we're focused as we think about the rest of the year is, how do we deliver more?

Larry Culp: April was challenging in a number of ways. We didn't have the recovery in May that I think we had hoped we might see underlying

Larry Culp: The quarter though, sequentially, was the net improvement that I mentioned, and that has only continued to build here in July . We haven't seen that somewhat typically slow start to a quarter that I was concerned about.

Unknown Executive: We haven't seen that somewhat typically slow start to a quarter that I was concerned about. So.

Larry Culp: So,

Larry Culp: There's really nothing more I can say about why the new unit deliveries, LEAP included, were disappointing.

Larry Culp: It is what it is. Where we're focused as we think about the rest of the year is how do we deliver more and how do we deliver more reliably. You'll note that we are adjusting our outlook for LEAP deliveries this year on a full year basis. We now think we will be somewhere between flat and up 5%, obviously lower than where we thought, but still showing modest growth. And more importantly, I think given what we're doing with Flight Deck in the supply base, the expectations we have not only for more inputs, but in turn more outputs, positions us to be at a healthier, more stable, higher exit rate come the end of the year. That's where we're focused. That's what we're sharing with our customers. Work to do. Work I think this team knows how to do.

It is what it is. Where we're focused as we think about the rest of the year is how do we deliver more and how do we deliver more reliably. You'll note that we are adjusting our outlook for LEAP deliveries this year on a full year basis. We now think we will be somewhere between flat and up 5%, obviously lower than where we thought, but still showing modest growth. And more importantly, I think given what we're doing with Flight Deck in the supply base, the expectations we have not only for more inputs, but in turn more outputs, positions us to be at a healthier, more stable, higher exit rate come the end of the year. That's where we're focused. That's what we're sharing with our customers. Work to do. Work I think this team knows how to do.

Larry Culp: It is what it is. Where we're focused as we think about the rest of the year is how do we deliver more and how do we deliver more reliably? You'll note that we are adjusting our outlook for LEAP deliveries this year.

Mark Wesley Strouse: And how do we deliver more reliably? You'll note that we are adjusting our outlook for LEAP deliveries this year. On a full year basis, we now think we will be somewhere between flat and up 5%, obviously lower than where we thought, but still showing modest growth. And more importantly, I think, given what we're doing with Flight Deck and the supply base, the expectations we have, not only for more inputs but, in turn, more output, positions us to be at a healthier, more stable, higher exit rate come the end of the year. That's where we're focused.

Larry Culp: On a full year basis, we now think we will be somewhere between flat and up 5%, obviously lower than where we thought, but still showing.

Larry Culp: modest growth. And more importantly, I think, given what we're doing with flight deck in the supply base, the expectations we have, not only for more inputs, but in turn, more outputs.

Larry Culp: positions us to be at a healthier, more stable, higher exit rate come the end of the year. That's where we're focused, that's what we're sharing with our customers, work to do, work I think this team knows how to do.

Larry Culp: That's what we're sharing with our customers, work to do, work I think this team knows how to do. Our next question comes from Seth Seifman with JP Morgan. Thanks very much and good morning.

Operator: Our next question comes from the line of Seth Seifman with JPMorgan.

Larry Culp: Our next question comes from a line of Seth Seifman with J.P. Morgan.

Larry Culp: Thanks very much and good morning. Morning, Seth.

Seth Seifman: Thanks very much and good morning.

Larry Culp: Morning, Seth.

Seth Seifman: Morning, Seth. I wondered, just to kind of follow up on that last question and thinking about the progression on the delivery side, I think, you know, we need a pretty significant increase off of the Q2 equipment revenue level to get to the guide for the year. You know, is it going to be possible to make much progress in Q3? Should we expect much more significant progress in Q4? And any other colors that you can provide about the sequential dynamics across the company?

Seth Seifman: Thanks very much and good morning.

Larry Culp: I wondered just to kind of follow up on that last question and thinking about the progression on the delivery side. I think, you know, need a pretty significant increase off of the Q2 equipment revenue level to get to the guide for the year. You know, is there, is it going to be possible to make much progress in Q3? Should we expect much more significant progress in Q4, and any other color that could you can provide about the sequential dynamics across the company?

Seth Seifman: I wondered just to kind of follow up on that last question and thinking about the progression on the delivery side. I think, you know, need a pretty significant increase off of the Q2 equipment revenue level to get to the guide for the year. You know, is there, is it going to be possible to make much progress in Q3? Should we expect much more significant progress in Q4, and any other color that could you can provide about the sequential dynamics across the company?

Seth Seifman: Morning, Seth.

Seth Seifman: I wonder, just to kind of follow up on that last question and thinking about the progression.

Speaker Change: On the delivery side, I think, you know,

Speaker Change: Need a pretty significant increase off of the Q2 equipment revenue level to get to the guide for the year.

Speaker Change: Is it going to be possible to make...

Speaker Change: Much progress in Q3, should we expect much more significant progress in Q4, and any other colors that you can provide about the sequential dynamics across the company.

Rahul Ghai: Seth, let me start by just kind of maybe talking a little bit about how we think the back half will shape up. And Larry can add if there's anything more on the delivery side. You know, listen, overall as you look at our first half to second half growth. First half, you know, we've delivered about 9% growth, and it's kind of in line with what we are projecting for the full year. So our year over year growth is going to look similar between first half and second half. The year over year growth will be higher in the fourth quarter as both services and OE ramp.

Seth Seifman: Seth, let me start by just kind of maybe talking a little bit about how we think the back half will shape up, and Larry can add if there's anything more on the delivery side. You know, listen, overall, as you look at our first half to second half growth, first half, you know, we've delivered about 9% growth, and it's kind of in line with what we are projecting for the full year.

Speaker Change: Jeff, let me start by just kind of maybe talking a little bit about how we think the back half will shape up and Larry can add if there's anything more on the on the delivery side. You know, listen, overall, as you look at our first half to second half growth, first half, you know, we've delivered about nine percent growth and

Larry Culp: It's kind of in line with what we are projecting for the full year.

Larry Culp: So our year-over-year growth is going to look similar between first half and second half.

Seth Seifman: So our year over year growth is going to look similar between the first half and the second half. However, the year over year growth will be higher in the fourth quarter as both services and OE ramp up. So we'll see that.

Larry Culp: The year-over-year growth will be higher in the fourth quarter as both services and OE ramp.

Rahul Ghai: So we'll see that now in terms of profit and drop through. The margins will be higher in Q3 versus Q4 since the 9X shipment impact is going to be primarily in the fourth quarter, and corporate expenses will be higher in the fourth quarter as well. So we expect the third quarter margins to be kind of flattish.

So we'll see that now in terms of profit and drop through. The margins will be higher in Q3 versus Q4 since the 9X shipment impact is going to be primarily in the fourth quarter, and corporate expenses will be higher in the fourth quarter as well. So we expect the third quarter margins to be kind of flattish.

Speaker Change: So we'll see that.

Larry Culp: Now, in terms of profit and drop through, you know, the margins will be higher in 3Q versus 4Q, since the 9X shipment impact is going to be primarily in the fourth quarter and corporate expenses will be higher in the fourth quarter as well.

Larry Culp: So we expect the third quarter margins to be kind of flattish.

Rahul Ghai: Year over year since we had a strong Q3 last year. So now if you take a look at kind of getting to how Q3 looks operationally, we've had a better start to Q3. I think Larry mentioned that in his prepared remarks. The number of engines we've shipped here in Q3, in the first month of Q3 in July, are significantly higher than what we delivered in the first three weeks in April. So we are seeing sequential progress. And then if you look at the material input and as we compare the material input through the first three weeks in July versus the first three weeks in April, even for these suppliers that have been constraining output in Q2, we've seen a significant improvement. So that's going to allow us to drive the sequential improvement here in Q3.

Year over year since we had a strong Q3 last year. So now if you take a look at kind of getting to how Q3 looks operationally, we've had a better start to Q3. I think Larry mentioned that in his prepared remarks. The number of engines we've shipped here in Q3, in the first month of Q3 in July, are significantly higher than what we delivered in the first three weeks in April. So we are seeing sequential progress. And then if you look at the material input and as we compare the material input through the first three weeks in July versus the first three weeks in April, even for these suppliers that have been constraining output in Q2, we've seen a significant improvement. So that's going to allow us to drive the sequential improvement here in the third quarter

Rahul Ghai: Now, in terms of profit and drop through, you know, the margins will be higher in 3Q versus 4Q since the 9x shipment impact is going to be primarily in the fourth quarter, and corporate expenses will be higher in the fourth quarter as well. So we expect the third quarter margins to be kind of flattish, year over year, since we had a strong 3Q last year. So now if you take a look at, you know, kind of getting to how 3Q looks operationally, we've had a better start with 3Q.

Larry Culp: year-over-year since we had a strong 3Q last year.

Larry Culp: So now if you look at, you know, kind of getting to how 3Q looks, operationally we've had a better start to 3Q. I think Larry mentioned that in his prepared remarks. The number of engines we've shipped here in the third quarter, in the first month of the third quarter in July , are significantly higher than what we delivered in the first three weeks in April .

Rahul Ghai: I think Larry mentioned in his prepared remarks that the number of engines we've shipped here in the third quarter, in the first month of the third quarter in July, are significantly higher than what we delivered in the first three weeks in April. So we are seeing sequential progress.

Speaker Change: So, we are seeing sequential progress.

Speaker Change: And then if you look at the material input, and as we compare the...

Speaker Change: The material input through the first three weeks in July versus the first three weeks in April , even for these suppliers that have been constraining output in the in the in the second quarter, we've seen a significant improvement.

Rahul Ghai: So I think we are off to a good start. We have more work to do here for sure. But you know, July has been encouraging. Anything to add?

So I think we are off to a good start. We have more work to do here for sure. But you know, July has been encouraging.

Speaker Change: So that's going to allow us to drive the sequential improvement here in the third quarter. So I think we are off to a good start, more work to do here for sure. But July has been encouraging.

Larry Culp: Anything to add?

Rahul Ghai: And then if you look at the material input, and as we compare the material input through the first three weeks of July versus the first three weeks of April, even for these suppliers that have been constraining output in the second quarter, we've seen a significant improvement. So that's going to allow us to drive the sequential improvement here in the third quarter. So I think we are off to a good start. There is more work to do here for sure, but, you know, July has been encouraging. Thank you, Anthony. Go ahead.

Larry Culp: Got it.

Seth Seifman: Got it.

Speaker Change: Are you going to do ads?

Speaker Change: Got it.

Gavin Parsons: Our next question comes from the line of Galton Conna with Cowan. Yeah, hey, good morning. Thank you, guys. Good morning. Good results. Thanks, Gotham. Thank you. So, I was curious just to follow up.

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

Anthony: Our next question comes from a line from Gautam Khanna with Calum. Yeah, hey, good morning. Thank you guys. Good morning and good result. Thanks, Gautam. Thank you. So I was curious, just to follow up, could you talk a little bit about how much inventory you're actually absorbing incrementally in the guidance and, maybe if you could speak to, what your strategy is with the supply chain, given, you know, some folks are constrained, but some folks are probably ahead, given the lower lead projection relative to the start of the year? Like, are you in the process of slowing down some folks? If you could just talk about that inventory dynamic and, you know, what you're absorbing incrementally? Any color you can provide.

Speaker Change: Our next question comes from a line of Gautam Kanna with Cowan.

Larry Culp: Yeah. Hey, good morning. Thank you guys. Good morning. Good results.

Gautam Khanna: Yeah. Hey, good morning. Thank you guys.

Larry Culp: Good morning. Good results.

Gautam Kanna: Yeah, hey, good morning. Thank you guys. Good morning and good results.

Rahul Ghai: Thanks Gautam.

Larry Culp: Thank you. So I was curious just to follow.

Larry Culp: Thank you.

Gautam Khanna: So I was curious just to follow. Culp, could you talk a little bit about how much inventory you're actually absorbing incrementally in the guidance, and maybe if you can speak to what your strategy is with the supply chain, given some folks are constrained, but some folks are probably ahead given the lower LEAP projection relative to the start of the year. Are you in the process of slowing down some folks?

Gautam Kanna: Thanks, Gautam. Thank you.

Rahul Ghai: Culp, could you talk a little bit.

Unknown Executive: Could you talk a little bit about how much inventory you're actually absorbing incrementally in the guidance, and maybe if you can speak to what your strategy is with the supply chain, given some folks are constrained, but some folks are probably ahead given the lower lead projection relative to the start of the year. Like, are you in the process of slowing down some folks? If you can talk about that inventory dynamic and, you know, what you're absorbing incrementally in any color you can provide. Thanks.

Larry Culp: About how much inventory you're actually absorbing incrementally in the guidance, and maybe if you can speak to what your strategy is with the supply chain, given some folks are constrained, but some folks are probably ahead given the lower LEAP projection relative to the start of the year. Are you in the process of slowing down some folks?

Gautam Kanna: So I was curious, just to follow up, could you talk a little bit about how much inventory you're actually absorbing incrementally in the guidance?

Speaker Change: Maybe if you can speak to what your strategy is with the supply chain, given, you know, some folks are constrained, but some folks are probably ahead, given the lower

Speaker Change: Leap Projection relative to the start of the year. Like, are you in the process of slowing down some folks? If you could just talk about that inventory dynamic and, you know, what you're absorbing incrementally.

Rahul Ghai: If you could just talk about that.

If you could just talk about that. Inventory dynamics and what you're absorbing incrementally and any color you can provide? Thanks.

Larry Culp: Inventory dynamics and what you're absorbing incrementally and any color you can provide? Thanks. Well, maybe we'll just take those in reverse order and I'll start. I think that.

Larry Culp: Well, maybe we'll just take those in reverse order and I'll start. I think that. We really aren't trying to slow down. In a meaningful way. We're really trying. The way I think about it is we're trying to make sure that we're calibrated with respect to what we need from everybody. Because as you point out, different folks are in different places, as we think about the back half, as we think about 2025, as we think about 2026. I think part of why this has been so challenging, and maybe even head scratchingly so for some, is that the industry was dialed down to almost zero in the pandemic. And what we don't want to do, and the reason we do carry probably more inventory today will at year end than we would like, is we don't want to turn down the folks that are performing well unduly as we calibrate the ramp rates with those that will in all likelihood pace us.

Unknown Executive: Well, maybe we'll just take those in reverse order, and I'll start. I think that we really aren't trying to slow down in a meaningful way. We're really trying; the way I think about it is we're trying to make sure that we're calibrated with respect to what we need from everybody, because, as you point out, different folks are in different places. As we think about the back half, as we think about 25, as we think about 26. I think part of why this has been so challenging and maybe even head scratching, so for some, is that the industry was dialed down almost zero in the pandemic.

Gautam Khanna: Thanks. Well, maybe we'll just take those in reverse order. And I'll start with, I think we really aren't trying to slow down in a meaningful way. We're really trying the way I think about it is we're trying to make sure that we're calibrated, with respect to what we need from everybody. Because, as you point out, different folks are in different places.

Speaker Change: Any color you can provide. Thanks. Well, maybe we'll just take those in reverse order. And I'll start I think that

Larry Culp: We really aren't trying to slow down.

Speaker Change: We really aren't trying to slow down in a

Larry Culp: In a meaningful way. We're really trying. The way I think about it is we're trying to make sure that we're calibrated with respect to what we need from everybody. Because as you point out, different folks are in different places, as we think about the back half, as we think about 2025, as we think about 2026. I think part of why this has been so challenging, and maybe even head scratchingly so for some, is that the industry was dialed down to almost zero in the pandemic. And what we don't want to do, and the reason we do carry probably more inventory today will at year end than we would like, is we don't want to turn down the folks that are performing well unduly as we calibrate the ramp rates with those that will in all likelihood pace us.

Speaker Change: in a meaningful way. We're really trying, the way I think about it, is we're trying to make sure that we're calibrated.

Speaker Change: With respect to what we need from everybody, because as you point out, different folks are in different places. As we think about the back half, as we think about 25, as we think about 26.

Larry Culp: As we think about the back half, as we think about 25, as we think about 26. I think part of why this has been so challenging and maybe even, head-scratchingly so for some, is that the industry was dialed down to almost zero during the pandemic. And what we don't want to do.

Speaker Change: I think part of why this has been so challenging, and maybe even a

Speaker Change: Even head-scratchingly so for some, is that the industry was dialed down to almost zero in the pandemic.

Unknown Executive: And what we don't want to do, and the reason we do carry probably more inventory today, will at your end than we would like, is we don't want to turn down the folks that are performing well on duly as we calibrate the ramp rates with those that will, and don't likely hook paces. So we've taken a view that, in some instances, the inventory is, in effect, an investment with the supply base for ourselves to make sure that we've got a more predictable ramp. Remember, a lot of lead is rooted in flow, and flow really is around availability.

Larry Culp: And the reason we do carry probably more inventory today and at year end than we would like is we don't want to turn down folks that are performing well unduly as we calibrate the ramp rates with those that will, in all likelihood, pace. So we've taken a view that in some instances, the inventory is, in effect, an investment in the supply base for ourselves to make sure that we've got a more predictable ramp. Remember, a lot of lean is rooted in flow, and flow really is around availability. To the extent that we've got some folks that are performing, we don't want to, if you will, penalize them.

Speaker Change: And what we don't want to do...

Will: And the reason we do carry probably more inventory today, Will, at your end, than we would like is we don't want to turn down the folks that are performing well unduly as we calibrate the ramp rates with those that will, in all likelihood, pace us.

Larry Culp: So we've taken a view that in some instances.

So we've taken a view that in some instances. The inventory is in effect an investment. With the supply base for ourselves to make sure that we've got a more predictable ramp. Remember, a lot of lean is rooted in flow and flow really is around availability. To the extent that we've got some folks that are performing, we don't want to, if you will, penalize them as we think about all that we're going to need from them not only over the next six months, but frankly over the coming years.

Larry Culp: The inventory is in effect an investment.

Larry Culp: With the supply base for ourselves to make sure that we've got a more predictable ramp. Remember, a lot of lean is rooted in flow and flow really is around availability. To the extent that we've got some folks that are performing, we don't want to, if you will, penalize them as we think about all that we're going to need from them not only over the next six months, but frankly over the coming years.

Will: The inventory is, in effect, an investment.

Will: with the supply base for ourselves to make sure that we've got a more predictable ramp. Remember, a lot of lean is rooted in flow, and flow really is around availability. To the extent that we've got some folks that are performing, we don't want to, if you will, penalize them.

Unknown Executive: To the extent that we've got some folks that are performing, we don't want to, if you will, penalize them, as we think about all that we're going to need from them, not only the next six months, but frankly, over the coming years. And Gordon, you'll see that in our queue, I think you're spot on. We've seen significant inventory growth here in the first half of the year, you know, close to a billion, two of inventory growth. You know, which is called half a billion dollars higher than what we grew in the first half of last year, so significant headwind air.

Larry Culp: Think about all that we're going to need from them, not only over the next six months but, frankly, over the coming years. And Gautam, you'll see that in our queue, I think you're spot on, we've seen significant inventory growth here in the first half of the year, close to a billion two of inventory growth, which is call it half a billion dollars higher than what we grew in the first half of last year. So, so significant headwind here.

Will: as we think about all that we're going to need from them, not only over the next six months, but frankly, over the coming years.

Rahul Ghai: Gautam, you'll see that in our queue. I think you're spot on. We've seen significant inventory growth here in the first half of the year, close to $1.2 billion of inventory growth, which is, call it, $0.5 billion higher than what we grew in the first half of last year. Significant headwind here. Now with the improvement in output that we are projecting here for the second half of the year, we do think that while inventory will grow in the second half of the year, obviously the pace of growth will slow down significantly here, and then it won't be as much of a headwind as it was last year in the second half of the year.

Rahul Ghai: Now, with the improvement in output that we are projecting here for the second half of the year, we do think that while inventory will grow in the second half of the year, obviously, the pace of growth will slow down significantly here. And then it won't be as much of a headwind as it was last year in the second half of the year. So it has been a challenge.

Will: And Gordon, you'll see that in our queue. I think you're spot on. We've seen significant inventory growth here in the first half of the year, you know, close to a billion two of inventory growth.

Will: You know, which is, call it half a billion dollars higher than what we grew in the first half of last year. So, so significant headwind here.

Unknown Executive: Now, with the improvement in output that we are projecting here for the second half of the year, we do think that while inventory will grow in the second half of the year. Obviously, the pace of growth will slow down significantly here, and then it won't be as much of a headwind as it was last year in the second half of the year. So it has been a challenge, but again, as I said, that is something we've been trying to manage and, you know, manage it as appropriate, yet again. But the good news is, despite the build-in tool of inventory growth in the first half of the year, we still have 120 percent conversion.

Will: Now with the improvement in output that we are projecting here for the second half of the year, we do think that while inventory will grow in the second half of the year, obviously the pace of growth will slow down significantly here, and then it won't be as much of a headwind as it was last year in the second half of the year.

Rahul Ghai: So it has been a challenge, but again, as Larry said, that is something we've been trying to manage, and you know, manage it as appropriately as we can. But the good news is, despite the buildup of inventory growth in the first half of the year, we still had 120% conversion. So strong cash growth; cash was up about $1 billion year over year in the first half. So we kind of absorbed it, we managed it, and.

So it has been a challenge, but again, as Larry said, that is something we've been trying to manage, and you know, manage it as appropriately as we can. But the good news is, despite the buildup of inventory growth in the first half of the year, we still had 120% conversion. So strong cash growth; cash was up about $1 billion year over year in the first half. So we kind of absorbed it, we managed it, and try to do better in the second half.

Will: So, it has been a challenge, but again, as Larry said, that is something we've been trying to manage.

Will: The opinions rendered herein are those of the guests, and not necessarily those of Douglas Goldstein, Profile Investment Services, Ltd., or Israel National News.

Unknown Executive: So strong cash growth; cash was up above a billion dollars year over year in the first half, so we kind of absorb it, we manage it, and, and, and.

Rahul Ghai: Try to do better in the second half.

Speaker Change: you know, try to try to do better in the second half.

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

Rahul Ghai: But again, as Larry said, that's something we've been trying to manage and, you know, manage it as appropriately as we can. But the good news is, despite the billion dollars of inventory growth in the first half of the year, we still had 120% conversion. So strong cash growth cash was up about a billion dollars a year over a year in the first half. So we kind of absorbed it, we managed it, and we tried to try to do better in the second half. Our next question comes from a line from Scott Deuschle with Deutsche Bank. Hey, good afternoon. Good afternoon,

Speaker Change: Our next question comes from a line of Scott Deuschle with Deutsche Bank.

Rahul Ghai: Hey, good afternoon. Good afternoon.

Scott Deuschle: Hey, good afternoon. Good afternoon.

Scott Deuschle: Hey Scott, and Larry, not to beat a dead horse, but just following up on Myles's earlier question, I was wondering if you could offer some more detail on those, I guess, six or so remaining supplier sites that are the key bottlenecks at this point. Basically, you know, trying to understand if we're down to the investment castings and forging suppliers at this point, or if it's a broader set of bottlenecks. And I appreciate not wanting to point fingers, but just trying to get a sense for whether there's something in common undergirding this remaining set of suppliers. Thanks. God, I think I think you've heard me pretty clearly.

Larry Culp: Hey, Scott. Hey, Larry.

Larry Culp: Hey, Scott.

Scott Deuschle: Hey, Larry. Not to beat a dead horse, but just following up on Myles' earlier question, I was wondering if you could offer some more detail on those, I guess six or so remaining supplier sites that are the key bottlenecks at this point. Basically trying to understand if we're down to the investment castings and forging suppliers at this point or if it's a broader set of bottlenecks. And I appreciate not wanting to point any fingers, but just trying to get a sense for whether there's something in common undergirding this remaining set of suppliers. Thanks.

Scott Deuschle: Hey, good afternoon.

Rahul Ghai: Not to beat a dead horse, but just following up on Myles' earlier question, I was wondering if you could offer some more detail on those, I guess six or so remaining supplier sites that are the key bottlenecks at this point. Basically trying to understand if we're down to the investment castings and forging suppliers at this point or if it's a broader set of bottlenecks. And I appreciate not wanting to point any fingers, but just trying to get a sense for whether there's something in common undergirding this remaining set of suppliers.

Scott Deuschle: Good afternoon. Hey, Scott. Hey, Larry, not to beat a dead horse, but just following up on Myles's earlier question, I was wondering if you could offer some more detail on those, I guess, six or so remaining supplier sites that are the key bottlenecks at this point.

Scott Deuschle: And basically, you know, trying to understand if we're down to the investment castings and forging suppliers at this point, or if it's a broader set of bottlenecks, and I appreciate not wanting to point fingers, but just trying to get a sense for whether there's something in common undergirding this remaining set of suppliers. Thanks.

Larry Culp: Thanks.

Larry Culp: Scott. I think you've heard me pretty clearly. I appreciate that. I think the common denominator is frankly, we all need to do better, and we need to be more collaborative and fully in problem solving mode. That's the mindset that we have at GE Aerospace. I'm convinced while that takes different forms at different suppliers, that is where every one of those nine suppliers across those 15 sites are. Some made more progress than others. But it's a long race. This was not a 90-day sprint. This is a marathon. And regardless of where folks are, from a commodity category perspective, from a geography perspective, publicly held, privately held, it just doesn't matter, right? We've got to get the teams in, we've got to go deep, we've got to get into the granular operational detail to solve those problems, unlock those constraints, increase capacity.

Speaker Change: Scott, I think you've heard me pretty clearly. I appreciate that. No, I think the common denominator is, frankly, we all need to do better.

Speaker Change: And we need to be more collaborative and fully in problem-solving mode.

Speaker Change: That's the headset that we have at GE Aerospace. I'm convinced...

Larry Culp: I'm convinced. While that takes different forms from different suppliers, that is where every one of those nine suppliers across those 15 sites is. Some made more progress than others, but it's a long race, right? This was not a 90-day sprint. This is a marathon.

Speaker Change: While that takes different forms of different suppliers, that is where every one of those nine suppliers across those 15 sites are. Some made more progress than others, but it's a long race, right? This was not a 90-day sprint. This is a marathon.

Larry Culp: And regardless of where folks are from a commodity category perspective, from a geography perspective, publicly held, privately held, it just doesn't matter, right? We've got to get the teams in. We've got to go deep. We've got to get into the granular operational detail to solve those problems and unlock those constraints. Raheal, much as I think we have picked up the pace a bit here, I think, in the second quarter, and just need to do a lot more of that broadly in the second half. Our next question comes from the line of Robert Stallard with Vertical Research. Thank you very much.

Speaker Change: And regardless of where folks are from a commodity category perspective, from a geography perspective, publicly held, privately held, it just doesn't matter, right? We've got to get the teams in, we've got to go deep, we've got to get into the granular operational detail.

Speaker Change: to solve those problems, unlock those constraints.

Larry Culp: Raise yields, much as I think we have been doing. Picked up the pace a bit here, I think, in the second quarter and just need to do a lot more of that broadly in the second half.

Raise yields, much as I think we have been doing. Picked up the pace a bit here, I think, in the second quarter and just need to do a lot more of that broadly in the second half.

Speaker Change: [inaudible]

Speaker Change: Much as I think we have been doing, picked up the pace a bit here, I think, in the second quarter, and just need to do a lot more of that broadly in the second half.

Operator: Our next question comes from the line of Robert Stallard with Vertical Research.

Speaker Change: Our next question comes from the line of Robert Stallard with Vertical Research.

Larry Culp: Thanks very much. Good afternoon.

Robert Stallard: Thanks very much. Good afternoon.

Robert Stallard: Good afternoon, Robert. Um, just following on from your earlier comments, Larry, and your question about your confidence in the... Well, I think we'll leave commentary on everything they're managing to our customers. We're focused on what we can manage, right? And I think that the updated guide here, the color around LEAP specifically, is certainly that of high confidence. It wouldn't come out of our mouths; it wouldn't be in our prepared remarks otherwise.

Rahul Ghai: Good afternoon.

Rahul Ghai: Good afternoon Robert.

Larry Culp: Robert.

Speaker Change: Thanks so much. Good afternoon. Good afternoon, Robert.

Larry Culp: Just following on from your earlier comments, Larry, and your confidence in GE's ability to deliver new engines in the second half, what's your confidence in the relative forecasts of the airframers and also their broader supply chain also catching up and delivering the parts?

Robert Stallard: Just following on from your earlier comments, Larry, and your confidence in GE's ability to deliver new engines in the second half, what's your confidence in the relative forecasts of the airframers and also their broader supply chain also catching up and delivering the parts?

Larry Culp: Well, I think we'll leave to our customers' commentary on everything they're managing. We're focused on what we can manage. Right. I think that the updated guide here, the color around LEAP specifically, is certainly that of high confidence. It wouldn't come out of our mouths. It wouldn't be in our prepared remarks otherwise. But again, work to do, work we're encouraged by with respect to the Q2 impact, the start to July as well. We've got a lot of work in front of us. We've got many days to do that work. That's where this team is focused completely, I can assure you.

Larry Culp: But again, work to do, work where we're encouraged by, with respect to the second quarter impact, the start of July as well. But we've got a lot of work in front of us. We've got many days to do that work. That's where this team is focused. Completely, I can assure you.

Larry Culp: Well, I think we'll leave to our customers' commentary on everything they're managing. We'll focus on what we can manage.

Speaker Change: Right, and I think that the updated guide here, the color around LEAP specifically, is certainly that of high confidence.

Speaker Change: It wouldn't come out of our mouths. It wouldn't be in our prepared remarks otherwise. But again, work to do, work we're encouraged by with respect to the second quarter impact, the start to July as well.

Speaker Change: But we've got a lot of work in front of us. We've got many days to do that work. That's where this team is focused.

Speaker Change: Completely, I can assure you.

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

Noah Popenek: Our next question comes from the line of Noah Popenek with Goldman Sachs. Hey, good morning, everyone. Good morning, Noah.

Speaker Change: Our next question comes from the line of Noah Popenek with Goldman Sachs.

Unknown Executive: Hey, good morning everyone. Good morning, Noah. The, you show on slide 17 that the CES services orders are growing much faster than revenue, and the absolute dollar levels are much higher. You know, eventually overall after market has to normalize as we, as we fully recover air travel growth.

Larry Culp: Hey, good morning everyone. Good morning, Noah.

Noah Poponak: Hey, good morning everyone.

Larry Culp: Good morning, Noah.

Noah Popenek: Hey, good morning, everyone.

Larry Culp: You show on slide 17 that CES services orders are growing much faster than revenue, and the absolute dollar levels are much higher. You know, eventually, the overall aftermarket has to normalize as we fully recover air travel growth. What's behind that?

Noah Popenek: Good morning, NOAA.

Larry Culp: You show on slide 17 that the CES services orders are growing much faster than revenue and the absolute dollar levels are much higher.

Noah Poponak: You show on slide 17 that the CES services orders are growing much faster than revenue and the absolute dollar levels are much higher.

Speaker Change: You show on slide 17 that the CES services orders are growing much faster than revenue, and the absolute dollar levels are much higher.

Rahul Ghai: I guess.

Larry Culp: Eventually, overall, aftermarket has to normalize.

Larry Culp: Eventually, overall, aftermarket has to normalize. As we fully recover air travel growth.

Speaker Change: You know eventually overall aftermarket has to normalize as we as we fully recover air travel growth

Larry Culp: As we fully recover air travel growth.

Rahul Ghai: How much of that is the leap and, um... You know, does that suggest that CES services growth can actually accelerate next year versus this year? That no, no, you're right. I mean, we had a good second quarter on orders. We had a good first half.

Unknown Executive: What's behind that? How much of that is the leap? And, you know, does that suggest that CES services growth can actually accelerate next year versus this year? No, Noah, you're right. I mean, we had a good second quarter on orders. We had a good first half. I mean, services orders were, you know, kind of, as you said, mid 30s for the second quarter, up 30% or so from the first half. You know, strong book to bill here, and in the first half of the year, on top of a good book to bill, we saw in, in 2020.

Larry Culp: What's behind that? How much of that is the LEAP? And you know, does that suggest that CES services growth can actually accelerate next year versus this year?

Noah Poponak: What's behind that? How much of that is the LEAP? And you know, does that suggest that CES services growth can actually accelerate next year versus this year?

Speaker Change: What's behind that? How much of that is the leap?

Speaker Change: You know, does that suggest that CS services growth can actually accelerate next year versus this year?

Rahul Ghai: I mean, services orders were, you know, kind of, as you said, mid-thirties for the second quarter, up 30% or so for the first half, a strong book to build here. Um, in the first half of the year, on top of a good book to build, we saw in 2023. So the momentum is definitely there on the services side. You know, as you look at the back half of the year, we are expecting the services growth to be a little bit higher in the second half than in the first half, right, both on shop visits and, you know, on spare parts on a year over year basis.

Rahul Ghai: No, no, you're right. I mean, we had a good second quarter on orders. We had a good first half. I mean, services orders were, you know, kind of, as you said, mid-30s for the second quarter, up 30% or so for the first half. You know, strong book-to-bill here.

Speaker Change: No, no, you're right. I mean, we had a good second quarter on orders. We had a good first half. I mean, services orders were, you know, kind of, as you said, mid thirties for the, for the

Speaker Change: Second quarter, up 30% or so for the first half, you know, strong book to build here in the first half of the year, on top of a good book to build we saw in 2023. So the momentum is definitely there on the services side. And

Rahul Ghai: In the first half of the year, on top of a good book-to-bill we saw in 2023. So the momentum is definitely there on the services side. And you know, as you look at the back half of the year, we are expecting the services growth to be a little bit higher in the second half than in the first half, both on the shop visits and on spare parts, on a year-over-year basis. So we delivered 9% internal shop visit growth in the first half of the year. And if you look at our low to mid teens guidance on shop visits, that would imply that shop visits will be closer to high teens in the second half of the year, on a year-over-year basis. So that's what we are projecting.

In the first half of the year, on top of a good book-to-bill we saw in 2023. So the momentum is definitely there on the services side. And you know, as you look at the back half of the year, we are expecting the services growth to be a little bit higher in the second half than in the first half, both on the shop visits and on spare parts, on a year-over-year basis. So we delivered 9% internal shop visit growth in the first half of the year. And if you look at our low to mid teens guidance on shop visits, that would imply that shop visits will be closer to high teens in the second half of the year, on a year-over-year basis. So that's what we are projecting.

Unknown Executive: So, the momentum is definitely there on the services side. And, you know, as you look at the back half of the year, we are expecting the services growth to be a little bit higher in the second half than in the first half. Right, both on the shop visits and, you know, on spare parts on a year or a year basis. So, you know, be delivered 9% internal shop visit growth in the first half of the year. And if you look at a low to mid teens guidance on shop visits, that would imply that shop visits will be closed.

Rahul Ghai: So, you know, we delivered 9% internal shop visit growth in the first half of the year. And if you look at our low to mid teens guidance on shop visits, that would imply that shop visits will be closer to, you know, high teens in the second half of the year on a year over year basis. So that's what we are projecting.

Speaker Change: You know, as you look at the back half of the year, we are expecting the services growth to be a little bit higher in the second half than in the first half, right, both on the shop visits and, you know, on spare parts on a year-over-year basis.

Speaker Change: So, you know, we delivered 9% internal shop visit growth in the first half of the year. And if you look at our low to mid-teens guidance on shop visits, that would imply that shop visits will be closer to, you know, high teens in the second half of the year on a year-over-year basis.

Unknown Executive: So, you know, high teens in the second half of the year on a year-over-year basis. So, that's what we are projecting. But, you know, overall is in mid-teens services growth. And that is consistent with what we think, you know, the future years will look like. I think that's what we had.

Rahul Ghai: But overall, listen, mid-teens services growth, and that is consistent with what we think the future years will look like. I think that's what we had when we look at our 2025 outlook. We were projecting continued strong services growth. So it's good to see the strong orders growth. Good to see, as Larry said earlier, LEAP gaining share on the overall air traffic departure side as well.

But overall, listen, mid-teens services growth, and that is consistent with what we think the future years will look like. I think that's what we had when we look at our 2025 outlook. We were projecting continued strong services growth. So it's good to see the strong orders growth. Good to see, as Larry said earlier, LEAP gaining share on the overall air traffic departure side as well.

Rahul Ghai: But, you know, overall, it is in the mid teens for service growth. And that is consistent with what we think the future years will look like. I think that's what we had.

Speaker Change: So that's what we are projecting, but, you know, overall isn't...

Speaker Change: Big Team Services growth and that is consistent with what we think you know the future years will look like. I think that's what we had

Unknown Executive: When we look at a 2025 to outlook, you know, we will projection continue strong services growth.

Speaker Change: When we look at our 2025 outlook, you know, we were projecting continued strong services growth. So it's good to see the strong orders growth, good to see, as Larry said earlier, you know, leap gaining share on the overall air traffic departure side as well.

Unknown Executive: So, it's good to see the strong horrors growth; good to see, as Larry said earlier, you know, leap gaining share on the overall air traffic departure side as well.

Unknown Executive: Our next question will come from the line of Gavin Parsons with UBS. Thanks. Good morning. I mean, I guess to Rob's question earlier on, you know, extending the life of the older engines clearly strong demand for, you know, both growth and new aircraft. But it's been a couple of airline profit warnings for the last week or two.

Operator: Our next question will come from the line of Gavin Parsons with UBS.

Gavin Parsons: When we look at our 2025 outlook, you know, we were projecting continuous strong services growth, so it's good to see the strong orders growth. And good to see, as Larry said earlier, leap gaining share on the overall air traffic departure side as well. Our next question will come from the line of Gavin Parsons with UBS. Thanks. Good morning.

Speaker Change: Our next question will come from the line of Gavin Parsons with UBS.

Rahul Ghai: Thanks. Good morning.

Gavin Parsons: Thanks. Good morning.

Larry Culp: Good morning. Good morning.

Larry Culp: Good morning.

Rahul Ghai: Good morning.

Gavin Parsons: Thanks. Good morning.

Larry Culp: I mean, I guess to Rob's question earlier on, you know, extending the life of older engines, clearly strong demand for, you know, both growth and new aircraft. But there have been a couple airline profit warnings over the last week or two. So I just wanted to ask if you've had any early indications from your discussions with customers, whether it be relating to fleet planning, pricing, or any other.

Larry Culp: I mean, I guess to Rob's question earlier on, extending life of older engines, clearly strong demand for both growth and new aircraft. But there's been a couple airline profit warnings over the last week or two. So I just wanted to ask if you've had any early indications from your discussions with customers, whether it be relating to fleet planning, sensitivity to pricing, or any other changes. Thanks, Gavin. As you would imagine.

Gavin Parsons: I mean, I guess to Rob's question earlier on, extending life of older engines, clearly strong demand for both growth and new aircraft. But there's been a couple airline profit warnings over the last week or two. So I just wanted to ask if you've had any early indications from your discussions with customers, whether it be relating to fleet planning, sensitivity to pricing, or any other changes. Thanks.

Gavin Parsons: Good morning.

Speaker Change: I mean, I guess to Rob's question earlier on, you know, extending life of older engines, clearly strong demand for, you know, both growth and new aircraft.

Unknown Executive: So, there's wanted to ask if you've had any early indications from your discussions with customers, whether it'd be relating to fleet planning sensitivity to pricing or any other changes. Gavin, as you would imagine, we follow all of that pretty closely, both in the U.S. here in Europe globally. We really have not seen any effect on our business and the Rebels' comments a moment ago. We'll remain watchable, but don't anticipate that. Again, I think to the to the earlier question with services orders up 36% in CES in the second quarter. Still strong, no real change this year, and the uptake, the upshot of the leap, taking four points of market share.

Gavin Parsons: But there's been a couple airline profit warnings over the last week or two, so I just wanted to ask if you've had any early indications from your discussions with customers, whether it be relating to fleet planning, sensitivity to pricing, or any other changes. Thanks.

Larry Culp: Gavin. As you would imagine we follow all of that pretty closely. Both well in the US, here in Europe, and globally. We really have not seen any effect on our business. Rahul's comments a moment ago. We'll remain watchful but don't anticipate that. Again, I think to the, to the earlier question. With services orders up 36% in CES in the second quarter, that's the way our customers are speaking to us. I look at where we are here in the third quarter just in terms of how much of the spares activity we have in backlog.

Larry Culp: Gavin, as you would imagine, we, uh... We follow all of that pretty closely, both in the US, here in Europe, globally. We really have not seen any effect on our business, and Rahul's comments a moment ago. We will remain watchful, but don't anticipate that. Again, I think to the earlier question, with services orders up 36% in CES in the second quarter. That's the way our customers are speaking. I look at where we are here in the third quarter, just in terms of how much of the spares activity we have in the backlog. I think it's in the 90% range at this,

Larry Culp: We follow all of that pretty closely. Both well in the US, here in Europe, and globally.

Gavin Parsons: Gavin, as you would imagine, we, uh...

Speaker Change: We follow all of that pretty closely, both in the U.S., here in Europe , globally.

Larry Culp: We really have not seen any effect on our business. Rahul's comments a moment ago.

Speaker Change: We really have not seen any effect on our business. Rahul's comments a moment ago.

Larry Culp: We'll remain watchful but don't anticipate that. Again, I think to the, to the earlier question. With services orders up 36% in CES in the second quarter, that's the way our customers are speaking to us. I look at where we are here in the third quarter just in terms of how much of the spares activity we have in backlog. I think it's.

Rahul: We'll remain watchful, but don't anticipate that.

Speaker Change: Again, I think to the earlier question, with services orders up 36% in CES in the second quarter.

Rahul: That's the way our customers are speaking to us.

Speaker Change: I look at where we are here in the third quarter just in terms of how much of the spares activity we have in backlog. I think it's

I think it's in the 90% range at this point. Well positioned very early here in the quarter. Again, I would just also point to the utilization that we see on the CFM56. Still strong, no real change.

Larry Culp: In the 90% range at this point. Well positioned very early here in the quarter. Again, I would just also point to the utilization that we see on the CFM56. Still strong, no real change.

Speaker Change: in the 90% range at this point. So well positioned very early here in the quarter. And again, I would just also point to the utilization that we see on the CFM 56.

Larry Culp: Well positioned very early here in the quarter. And again, I would just also point to the utilization that we see on the CFM 56. Still strong, no real change this year, and the uptake of the upshot of the leap, taking four points of market share. So Powered Neuro Body Activity Remains Strong, take it from the comments that were out here in Europe yesterday; it seemed to be more pricing-oriented than anything else.

Larry Culp: This year, and the uptake, the upshot of the leap, taking four points of market share. So GE-powered narrow body activity remains strong. Just take the comments that were out here in Europe yesterday. It seemed to be more pricing-oriented than anything else. So we'll keep a weather eye out. But right now our challenge, our struggle, is to keep up with this exceptionally strong demand both in the aftermarket and again with new make.

This year, and the uptake, the upshot of the leap, taking four points of market share. So GE-powered narrow body activity remains strong. Just take the comments that were out here in Europe yesterday. It seemed to be more pricing-oriented than anything else. So we'll keep a weather eye out. But right now our challenge, our struggle, is to keep up with this exceptionally strong demand both in the aftermarket and again with new make.

Speaker Change: Still strong, no real change.

Speaker Change: This year, and the uptake, the up...

Speaker Change: upshot of the leap, taking four points of market share. So, GE-powered narrowbody activity remains strong.

Speaker Change: Just take it the comments that were out here in Europe yesterday, it seemed to be more pricing oriented than anything else, so we'll keep a weather eye out, but right now, our challenge, our struggle is to keep up with this exceptionally strong demand, both in the aftermarket, and again, with new make.

Larry Culp: So we'll we'll keep a weather eye out. But right now, our challenge, our struggle is to keep up with this exceptionally strong demand, both in the aftermarket and again, with new. Our next question will come from the line of Jason Gursky with Citi. Hey, good morning, everybody.

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

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

Larry Culp: Good morning, everybody.

Jason Gursky: Good morning, everybody.

Jason Gursky: Good morning, Jason. Hey, Larry, I was wondering if you could just spend a few more minutes on the rise. And maybe provide an update on some development milestones there and, you know, how the customer conversations are going. At this point, you mentioned that you're showcasing the engine there at Farm Bureau. I'm just kind of curious what, you know, you think customer acceptance is going to be shaping up to look like at this point.

Larry Culp: Morning, Jason.

Jason Gursky: Hey, good morning, everybody.

Rahul Ghai: Larry, I was wondering if you could?

Jason Gursky: Larry, I was wondering if you could just spend a few more minutes on the RISE and maybe provide an update on some development milestones there and how the customer conversations are going at this point. You mentioned that you're showcasing the engine there at Farnborough. I'm just curious what?

Larry Culp: Just spend a few more minutes on the RISE and maybe provide an update on some development milestones there and how the customer conversations are going at this point. You mentioned that you're showcasing the engine there at Farnborough. I'm just curious what?

Speaker Change: Good morning, Jason.

Jason Gursky: Larry, I was wondering if you could just spend a few more minutes on the rise, and maybe provide an update on...

Jason Gursky: Some development milestones there and how the customer conversations are going. At this point, you mentioned that you're showcasing the engine there at Farmboro. I'm just kind of curious what...

Larry Culp: You think customer acceptance is shaping up to look like at this point?

You think customer acceptance is shaping up to look like at this point?

Speaker Change: You know, you think customer acceptance is shaping up to look like at this point.

Rahul Ghai: Jason.

Larry Culp: Jason. I would say that customer interest seems to only build with the passage of time. This is now the third air show in a row that I've attended with the RISE engine, the Open Fan engine front and center here. Obviously, when we talk about RISE, we're really talking about an umbrella of different technology programs. Not only the Open Fan, but also our compact core work, our hybrid electric activity, and everything we're doing on SAF. But with respect to Open Fan, I think what we've been sharing with people is that we had a very good first ingestion test with the Open Fan blade. In Q1, we are starting our second endurance campaign.

Jason Gursky: I would say that customer interest seems to only be building. With the passage of time, this is now the third air show in a row that I've attended with The RISE engine, the open fan engine, you know, front and center here. Obviously, when we talk about RISE, we're really talking about an umbrella of different technology programs, not only the open fan, but also our compact core work, our hybrid electric activity, and everything we're doing on SAS.

Larry Culp: I would say that customer interest seems to only build with the passage of time. This is now the third air show in a row that I've attended with the RISE engine, the Open Fan engine front and center here. Obviously, when we talk about RISE, we're really talking about an umbrella of different technology programs. Not only the Open Fan, but also our compact core work, our hybrid electric activity, and everything we're doing on SAF. But with respect to Open Fan, I think what we've been sharing with people is that we had a very good first ingestion test with the Open Fan blade. In Q1, we are starting our second endurance campaign.

Speaker Change: I would say that customer interest seems to only build with the passage of time. This is now the third air show in a row that I've attended with

Speaker Change: The RISE engine, the open fan engine, you know, front and center here, obviously when we talk about RISE, we're really talking about an umbrella of different technology programs, not only

Speaker Change: The Open Fan, but also our compact core work, our hybrid electric activity, and everything we're doing on SAF. But with respect to Open Fan, I think what we've been sharing with people is that we had a very good first ingestion test.

Jason Gursky: But with respect to OpenFAN, I think what we've been sharing with people is that we had a very good first ingestion test. With the open pan blade in the first quarter, we are starting our second endurance campaign, or test with the high-pressure Terman airfoils, and there's been a lot of work with respect to the hybrid electric elements of that architecture. I mentioned earlier the wind tunnel testing that we've done here in Europe and with Airbus. So, there are I think over 200, I think maybe it's 250 component level tests, module level tests that we have behind us. This is still a technology development effort. Make no mistake about it, right?

Speaker Change: With the Open Pan Blade, in the first quarter, we are starting our second endurance campaign.

Larry Culp: Or test with the high pressure turbine airfoils. And there's been a lot of work with respect to the hybrid electric elements of that architecture. Work that, as you may know, we do with NASA. I mentioned, I think, earlier the wind tunnel testing that we've done here in Europe in conjunction with Airbus.

Or test with the high pressure turbine airfoils. And there's been a lot of work with respect to the hybrid electric elements of that architecture. Work that, as you may know, we do with NASA. I mentioned, I think, earlier the wind tunnel testing that we've done here in Europe in conjunction with Airbus.

Speaker Change: or test with the high-pressure termite airfoils.

Speaker Change: And there's been a lot of work with respect to the hybrid electric elements of that architecture work that, as you may know, we we do with NASA. I mentioned, I think, earlier, the wind tunnel testing that we've done here in Europe .

Larry Culp: So there are, I think, over 200. I think maybe it's 250.

So there are, I think, over 200. I think maybe it's 250. Component-level tests, module-level tests that we have behind us. This is still a technology development effort, make no mistake about it right.

Speaker Change: Junction with Airbus

Speaker Change: So.

Speaker Change: There are, I think, over 200, I think maybe it's 250 component-level tests, module-level tests that we have behind us.

Larry Culp: Component-level tests, module-level tests that we have behind us. This is still a technology development effort, make no mistake about it.

Rahul Ghai: Right.

Larry Culp: We've got a long way to go. But what's interesting, particularly here in Europe, virtually every airline CEO that I talk to starts the conversation with sustainability and very keen to get our views on SAF compatibility, but also ahead of SAF capacity being available at scale, what are we going to do to enable the next generation of narrowbodies? And we go hard and fast to RISE, talk about the progress that we're making with Open Fan. And I think that is a story that continues to build enthusiasm and support because we know that the ultimate target, that 20% step up in propulsive efficiency in emissions reduction really is the future of flight.

We've got a long way to go. But what's interesting, particularly here in Europe, virtually every airline CEO that I talk to starts the conversation with sustainability and very keen to get our views on SAF compatibility, but also ahead of SAF capacity being available at scale, what are we going to do to enable the next generation of narrowbodies? And we go hard and fast to RISE, talk about the progress that we're making with Open Fan. And I think that is a story that continues to build enthusiasm and support because we know that the ultimate target, that 20% step up in propulsive efficiency in emissions reduction really is the future of flight.

Speaker Change: This is still a technology development effort. Make no mistake about it, right? We've got a long way to go. But what's interesting, particularly here in Europe , virtually every airline CEO that I talk to starts the conversation with sustainability.

Speaker Change: And we're very keen to get our views on SAF compatibility, but also ahead of SAF capacity being available at scale, what are we going to do to enable the next generation of narrowbodies?

Speaker Change: And we go hard and fast to rise, talk about the progress that we're making with OpenFAB.

Larry Culp: And I think that is a story that continues to build enthusiasm and support because we know that the ultimate target, at 20%, step up in propulsive efficiency in emissions reduction really is the future of flight. We have time for one last question.

Speaker Change: and I think that is a story that continues to build enthusiasm and support because we know that the the ultimate target that 20%

Speaker Change: Step up in propulsive efficiency in emissions reduction really is the future of flight.

Blair Schorr: We have time for one last question.

Operator: We have time for one last question.This question will come from the line of Matt Akers with Wells Fargo.

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

Matt Akers: This question will come from the line of Matt Akers with Wells Fargo. Hi, good morning, guys. Thanks for the question. Matt.

Speaker Change: We have time for one last question.

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

Larry Culp: Hi, good morning, guys. Thanks for the question.

Matt Akers: Hi, good morning, guys. Thanks for the question.

Rahul Ghai: Morning, Matt.

Larry Culp: Good morning, Matt. I wanted to ask you what your latest thoughts are on LEAP, kind of break even timing, you know, just given volumes are running a little bit lower than we thought, and sounds like you're deploying a lot of resources to work through some of these supplier issues. Just curious if that timing has shifted at all. Yeah, you know, Matt, it has not shifted.

Larry Culp: Good morning.

Larry Culp: Good morning Matt.

Rahul Ghai: Matt, I wanted to ask what are kind of your latest thoughts on LEAP?

Matt Akers: Hi, good morning guys. Thanks for the questions.

Matt Akers: I wanted to ask what are kind of your latest thoughts on LEAP? Kind of break-even timing, just given volumes are running a little bit lower than we thought, and it sounds like you're deploying a lot of resources to work through some of these supplier issues. Just curious if that timing has shifted at all.

Matt Akers: Morning, Matt. Morning, Matt. I wanted to ask, uh, what are kind of your latest thoughts on lead?

Larry Culp: Kind of break-even timing, just given volumes are running a little bit lower than we thought, and it sounds like you're deploying a lot of resources to work through some of these supplier issues. Just curious if that timing has shifted at all.

Speaker Change: Scott Strazik, Carolina Happe, Steven Winoker, Larry Culp

Rahul Ghai: So, you know, we expected LEAP to be profitable here in 2024 and the program to be break-even in 2025. And LEAP services, in fact, shaping a little bit better than what we originally thought as we started the year, and we mentioned that in our prepared remarks. So, you know that's how the overall program is shaping up you know we're making the progress on durability that we that we were expecting um it'll be leap tracking better than cfm56 at this stage of the life cycle we are expecting uh leap performance to be in line with cfm56 uh performance on um on the a320s by the end of the year so that is obviously a huge milestone given all the uh improvements we've been driving you know the hpd blade was the last thing that was that's in and we expect that to happen here in in uh in the fourth quarter we've completed more than 3,500 tests from that 3,500 hours of testing on that so that's going really well so all in i think leaps progressing exactly the way we would have liked um services like a little bit better program should break even next year, Larry, any final comments? Blair, thank you.

Rahul Ghai: Yeah, Matt, timing has not shifted. So we expected LEAP to be profitable here in 2024 and the program to be break even in 2025. And LEAP services in fact shaping up a little bit better than what we originally thought as we started the year and we mentioned that in our prepared remarks. So, you know, that's how the overall program is shaping up. You know, we're making the progress on durability that we, that we were expecting, you know, the LEAP stacking better than CFM56 at this stage of the life cycle. We are expecting LEAP performance to be in line with CFM56 performance on the A320s by the end of the year. So that is obviously a huge milestone given all the improvements we've been driving. You know, the HPT blade was the last thing that was in.

Speaker Change: Yeah, Elmat, our timing has not shifted. So, you know, we expected LEAP to be profitable here in 2024 and the program to be break-even in 2025 and LEAP services in fact shaping a little bit better than what we originally thought as we started the year and we mentioned that in our prepared remarks

Matt Akers: So...

Matt Akers: That's how the overall program is shaping up.

Matt Akers: You know, we're making the progress on durability that we that we were expecting, you know, the leap tracking better than CFM 56 at this stage of the life cycle. We are expecting leap performance to be in line with CFM 56.

Matt Akers: performance on

Matt Akers: on the A320s by the end of the year.

Rahul Ghai: We expect that to happen here in Q4. We've completed more than 3,500 tests on that. 3,500 hours of testing on that. So that's going really well. So all in, I think LEAP's progressing exactly the way we would have liked. Services dragging a little bit better. Program should break even next year.

Matt Akers: Improvements we've been driving, you know, the HPT blade was the last thing that was in and we expect that.

We expect that to happen here in Q4. We've completed more than 3,500 tests on that. 3,500 hours of testing on that. So that's going really well. So all in, I think LEAP's progressing exactly the way we would have liked. Services dragging a little bit better. Program should break even next year.

Matt Akers: to happen here in the fourth quarter. We've completed more than 3,500 tests on that, 3,500 hours of testing on that. So that's going really well. So all in, I think Leap's progressing exactly the way you would have liked. Services are getting a little bit better. Program should break even next year.

Blair Schorr: Larry, any final comments?

Blaire Shoor: Larry, any final comments?

Larry Culp: Blair, thank you. I think just to close, the GE Aerospace team is going to stay grounded in our responsibility that we share to live the purpose to invent the future of flight, to lift people up and bring them home safely. So we really appreciate your time today, and of course your interest in GE Aerospace.

Larry Culp: Blaire, thank you. I think just to close, the GE Aerospace team is going to stay grounded in our responsibility that we share to live the purpose to invent the future of flight, to lift people up and bring them home safely. So we really appreciate your time today, and of course your interest in GE Aerospace.

Larry Culp: Larry, any final comments?

Larry Culp: Blair, thank you. I think just to close, the GE Aerospace team is going to stay grounded in our responsibility that we share to live the purpose, to invent the future of flight, to lift people up and bring them home safely.

Speaker Change: So, we really appreciate your time today and, of course, your interest in GE Aerospace.

Operator: Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.

Operator: Thank you ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.

Speaker Change: Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.

Speaker Change: [inaudible]

Unknown Executive: © The Bulletproof Executive 2013

Rahul Ghai: Sa.

Larry Culp: Sam.

Rahul Ghai: Sa.

Larry Culp: Sam.

Larry Culp: Sa.

Larry Culp: Sam.

Blair Schorr: Sa.

Larry Culp: Sa.

Larry Culp: I think just to close, team, we are going to stay grounded in our responsibility that we share to live the purpose, to invent the future of flight, to lift people up and bring them home safely. So we really appreciate your time today and, of course, your interest in GE Aerospace. Thank you, ladies and gentlemen.

Operator: Good day, ladies and gentlemen, and welcome to the GE Aerospace second 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, Blair Schorr from the GE Aerospace Investor Relations team. Please proceed.

Operator: Good day, ladies and gentlemen, and welcome to the GE Aerospace second 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, Blaire Schoor from the GE Aerospace Investor Relations team. Please proceed.

Speaker Change: Good day, ladies and gentlemen, and welcome to the GE Aerospace second quarter 2024 earnings conference call.

Operator: This concludes today's conference. Thank you for participating. You may now disconnect.

Liz: At this time, all participants are in a listen-only mode. My name is Liz, and I will be your conference coordinator today.

Speaker Change: 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.

Liz: Thank you for watching! ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Good day, ladies and gentlemen, and welcome to the GE Aerospace second quarter 2024 earnings conference call. At this time all participants are in a listen only mode.

Speaker Change: As a reminder, this conference is being recorded.

Speaker Change: I would now like to turn the program over to your host for today's conference, Blair Shore from the GE Aerospace Investor Relations Team. Please proceed.

Blair Schorr: Thanks, Liz. Welcome to GE Aerospace's second 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 filings and website. Those elements may change as the world changes. Now over to Larry, Blair.

Blaire Shoor: Thanks, Liz. Welcome to GE Aerospace's second 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 filings and website. Those elements may change as the world changes. Now over to Larry.

Blair Schorr: My name is Liz, and I will be your conference coordinator today. If you experience issues with the webcast slides refreshing or there appears to be delays in the slide advancement, please hit F5 on your keyboard to refresh. As a reminder, this conference is being recorded. I would now like to turn the program over to your host for today's conference, Blair Schorr from the GE Aerospace Investor Relations team. Please proceed. Thanks, Liz.

Blair Shore: Thanks, Liz. Welcome to GE Aerospace's second 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.

Blair Schorr: Welcome to GE Aerospace's second 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 filings and website. Those elements may change as the world changes.

Speaker Change: As described in our SEC filings and website, those elements may change as the world changes. Now over to Larry.

Larry Culp: Now over to Larry. Blair, thanks. And hello, everyone from London.

Larry Culp: Blaire thanks, and hello everyone from London near the Farnborough International Airshow for GE Aerospace's first earnings call as an independent company. GE Aerospace is an exceptional franchise with the industry's largest and growing commercial propulsion fleet and is the rotorcraft and combat engine provider of choice. Our installed base of 70,000 commercial and defense engines supports our aftermarket services business, representing about 70% of our revenues. That's recurring, resilient, and keeps us close to our customers. Our purpose has never been clearer. To invent the future of flight. Lift people up and bring them home safely. Those last four words, bring them home safely, is a serious responsibility at any point. There are 900,000 people in the sky with our technology under wing.

Larry Culp: Thanks, and hello everyone from London near the Farnborough International Airshow for GE Aerospace's first earnings call as an independent company. GE Aerospace is an exceptional franchise with the industry's largest and growing commercial propulsion fleet and is the rotorcraft and combat engine provider of choice. Our installed base of 70,000 commercial and defense engines supports our aftermarket services business, representing about 70% of our revenues. That's recurring, resilient, and keeps us close to our customers. Our purpose has never been clearer. To invent the future of flight. Lift people up and bring them home safely. Those last four words, bring them home safely, is a serious responsibility at any point. There are 900,000 people in the sky with our technology under wing.

Larry Culp: Near the Foreign Bureau International Airshow for GE Aerospace's first earnings call, an independent company. GE Aerospace is an exceptional franchise with the industry's largest and growing commercial propulsion fleet and is the rotorcraft and combat engine provider of choice. Our installed base of 70,000 commercial and defense engines supports our aftermarket services business, representing about 70% of our revenues. That's recurring, resilient, and keeps us close to our customers. Our purpose has never been clearer: to invent the future of flight, lift people up, and bring them home safely. Those last four words, bring them home safely, are a serious responsibility.

Speaker Change: Blair, thanks, and hello, everyone, from London, near the Farnborough International Air Show, where GE Aerospace's first earnings call is an independent company.

Speaker Change: GE Aerospace is an exceptional franchise, with the industry's largest and growing commercial propulsion fleet, and is the rotorcraft and combat engine provider of choice.

Larry Culp: Our installed base of 70,000 commercial and defense engines supports our aftermarket services business, representing about 70% of our revenues.

Speaker Change: That's recurring, resilient, and keeps us close to our customers.

Speaker Change: Our purpose has never been clearer, to invent the future of flight, lift people up, and bring them home safely.

Speaker Change: Those last four words, bring them home safely, is a serious responsibility.

Larry Culp: At any point, there are 900,000 people in the sky with our technology underwing, which is why safety and quality are at the center of everything that we do. Our teams around the world understand it is our top priority and paramount in flight deck, our proprietary lean operating model. Here at Farnborough, the conversations we're having are energizing and focused on both the opportunities and the challenges the industry is facing as we work together to meet historic demand and build more sustainable solutions.

Speaker Change: At any point, there are 900,000 people in the sky with our technology under wing, which is why safety and quality are at the center of everything that we do.

Larry Culp: Which is why safety and quality are at the center of everything that we do. Our teams around the world understand it is our top priority and paramount in Flight Deck, our proprietary lean operating model.

Speaker Change: Our teams around the world understand it is our top priority and paramount in flight deck, our proprietary lean operating model.

Larry Culp: Here at Farnborough. The conversations we're having are energizing and focused on both the opportunities and the challenges the industry is facing as we work together to meet historic demand and build more sustainable solutions. We've had a productive few days, including wide-body commitments from Turkish Airlines and National Airlines for GE90 engines and Japan Airlines for GEnx engines. We're also honored to have British Airways, a new GEnx customer, committing to six new Boeing 787s powered by our engines. The GEnx engine offers a 15% lower fuel burn compared to the CF6 and best-in-class time on wing, resulting in a 70% life-of-program win rate on the 787 platform in narrowbodies. We're pleased the LEAP-powered Airbus A321XLR was certified by the European Union Aviation Safety Agency or EASA just last week.

Larry Culp: We've had a productive few days, including wide-body commitments from Turkish Airlines and National Airlines for GE90 engines and Japan Airlines for GENX engines. We're also honored to have British Airways, a new GNX customer, commit to six new Boeing 787s powered by our engine. The GE NX engine offers a 15% lower fuel burn compared to the CF6 and best in class time on wing.

Speaker Change #102: We've had a productive few days, including wide-body commitments from Turkish Airlines and National Airlines for GE90 engines and Japan Airlines for GENX engines.

Speaker Change: We're also honored to have British Airways, a new GNX customer.

Speaker Change: Committing to six new Boeing 787s powered by our engines.

Speaker Change: The GENX engine offers a 15% lower fuel burn compared to the CF6 and best-in-class time on wing.

Larry Culp: Resulting in a 70% life of program win rate on the 8-7 platform, and Narrowbodies were pleased the LEED-powered Airbus 321XLR was certified by the European Union Aviation Safety Agency, or EASA, just last week. The 320XLR marks the fifth member of the A320neo family aircraft powered by LEAP engines with expected entry into service later this year. LEAP, the narrow body engine of choice, offers 15% better fuel efficiency than the CFM56 and will deliver mature levels of time on wing later this year.

Speaker Change: Resulting in a 70% Life of Program win rate.

Speaker Change: on the 8-7 platform.

Speaker Change: And narrowbodies were pleased the LEAP-powered Airbus 321XLR was certified by the European Union Aviation Safety Agency, or EASA, just last week.

Speaker Change: The 320XLR marks the fifth member of the A320neo family aircraft powered by LEAP engines, with expected entry into service later this year.

Speaker Change: LEAP, the narrow-body engine of choice, offers 15% better fuel efficiency than the CFM56 and will deliver mature levels of time on wing later this year.

Larry Culp: In regionals, Embraer and GE Aerospace extended our agreement for new CF34 engine deliveries through the end of this decade. This agreement strengthens our partnership as the sole source engine on the E175 and supports the continued growth of regional jets.

Speaker Change #100: In regionals, Embraer and GE Aerospace extended our agreement for new CF-34 engine deliveries through the end of this decade.

Speaker Change #101: This agreement strengthens our partnership as the sole source engine on the E-175 and supports the continued growth of regional jets.

Larry Culp: Keeping an eye towards the future this week at the show, we've shared a number of updates about the CFM RISE program. RISE is the suite of pioneering technologies including Open Fan, compact core, hybrid electric systems, and alternative fuels. We've continued to mature these technologies, moving from component level evaluations to more module level tests. For example, with our partner Safran, we've demonstrated the aerodynamic and acoustic performance of the Open Fan design with more than 200 hours of wind tunnel tests. Additionally, we've announced a new agreement with the US Department of Energy to expand supercomputing capabilities which will further advance Open Fan design. The Open Fan is the most promising engine technology to help the industry reduce emissions, designed to meet or exceed customer expectations for durability and deliver a step change in fuel efficiency.

Speaker Change #101: Keeping an eye towards the future, this week at the show, we've shared a number of updates about the CFM RISE program.

Speaker Change #101: RISE is the suite of pioneering technologies including open fan, compact core, hybrid electric systems, and alternative fuels.

Larry Culp: We've continued to mature these technologies, moving from component level evaluations to more module level. For example, with our partner Saffron, we demonstrated the aerodynamic and acoustic performance of the open fan design with more than 200 hours of wind tunnel testing. Additionally, we've announced a new agreement with the U.S. Department of Energy to expand supercomputing capabilities, which will further advance open fan design. The open fan is the most promising engine technology to help the industry reduce emissions designed to meet or exceed customer expectations for durability and deliver a step change in fuel efficiency.

Speaker Change #101: We've continued to mature these technologies, moving from component-level evaluations to more module-level tests.

Speaker Change #101: For example, with our partner Saffron, we've demonstrated the aerodynamic and acoustic performance of the open fan design with more than 200 hours of wind tunnel tests.

Speaker Change #101: Additionally, we've announced a new agreement with the U.S. Department of Energy to expand supercomputing capabilities, which will further advance open fan design.

Speaker Change #101: The open fan is the most promising engine technology to help the industry reduce emissions designed to meet or exceed customer expectations for durability and deliver a step change in fuel efficiency.

Speaker Change #101: Turning to some of the key takeaways on our second quarter performance.

Speaker Change #101: Our team delivered double-digit growth across orders, operating profit, and free cash flow, while revenue was impacted by lower output.

Speaker Change #101: With Flight Deck, we're well positioned to accelerate actions to deliver on our priorities for today, tomorrow, and in the future.

Larry Culp: In commercial engines and services, we're CES. Air traffic trends remained positive, supporting our services growth and overall profit, which was up more than 20%. Profit growth was driven by 14% internal shop visits growth and improved pricing. In defense and propulsion technologies, DPT, we delivered very strong profit growth, up more than 70% year over year. Services growth in defense and systems and profit improvement in propulsion and additive technologies drove this increase. Overall, a very solid quarter and first half, and my thanks go out to the entire global GE Aerospace team.

Speaker Change #101: In Commercial Engines and Services, or CES, air traffic trends remained positive, supporting our services growth and overall profit, which was up more than 20%.

Speaker Change #101: Profit growth was driven by 14% internal shop visits growth and improved pricing.

Larry Culp: In Defense and Propulsion Technologies, or DPT, we delivered very strong profit growth, up more than 70% year over year. Services Growth in Defense and Systems and Profit Improvement in Propulsion and Additive Technologies drove this increase. Overall, a very solid quarter and first half.

Speaker Change #101: In Defense and Propulsion Technologies, or DPT, we deliver very strong profit growth, up more than 70% year over year.

Speaker Change #101: Services growth in defense and systems and profit improvement in propulsion and additive technologies drove this increase.

Larry Culp: My thanks go out to the entire global GE Aerospace team. Day in, day out, we're focused on delivering for both our airline and airframer customers, who simply want and need more of our products and services. While we've made progress in services this quarter, our new engine output was disappointingly down 20% sequentially. It's a clear challenge that we're facing head on.

Speaker Change #101: Overall, a very solid quarter and first half. My thanks go out to the entire global GE Aerospace team.

Larry Culp: Day in, day out, we're focused on delivering for both our airline and airframer customers who simply want and need more of our products and services. While we've made progress in services this quarter, our new engine output was disappointing, down 20% sequentially. It's a clear challenge that we're facing head on, accelerating the use of Flight Deck in partnership with our suppliers as we work to solve the ongoing supply chain constraints. Last quarter, we shared that the common denominator impacting growth across both services and new engines is constrained material supply. With 80% of material input shortages tied to nine suppliers across 15 supplier sites, this remains our focus today. We have deployed more than 550 of our engineering and supply chain resources into the supply base to use Flight Deck to work hand in hand with our suppliers to identify and resolve constraints.

Speaker Change #101: Day in, day out, we're focused on delivering for both our airline and Airframer customers.

Speaker Change #101: who simply want and need more of our products and services.

Speaker Change #101: While we've made progress in services this quarter, our new engine output was disappointing, down 20% sequentially.

Larry Culp: Accelerating the use of flight deck in partnership with our suppliers as we work to solve the ongoing supply chain constraint. Last quarter, we shared that the common denominator impacting growth across both services and new engines is constrained material supply, with 80% of material input shortages tied to nine suppliers across 15 suppliers. This remains our focus today.

Speaker Change #101: It's a clear challenge that we're facing head-on, accelerating the use of flight deck in partnership with our suppliers as we work to solve the ongoing supply chain constraints.

Speaker Change #101: Last quarter, we shared that the common denominator impacting growth across both services and new engines is constrained material supply.

Speaker Change #101: with 80% of material input shortages tied to nine suppliers across 15 supplier sites.

Speaker Change #101: This remains our focus today.

Speaker Change #101: We've deployed more than 550 of our engineering and supply chain resources into the supply base to use Flight Deck to work hand-in-hand with our suppliers to identify and resolve constraints.

Larry Culp: We've made significant improvements in many areas. At more than 2/3 of these sites, material flow more than doubled sequentially and is currently no longer constraining deliveries. We're grateful for their collaboration, but there's still more to do in the second half, and we've sharpened our focus on a subset of the remaining priority sites that are still constraining our output. We're making some progress, but not enough to meet demand. I've personally visited several of these sites, and I'm confident we can partner with our suppliers to drive faster progress. For example, earlier this month we partnered with one of the priority suppliers in a joint Kaizen focused on addressing a key constraint. Our supply chain and engineering teams jointly leverage Flight Deck to identify action plans to improve throughput significantly aligned with our needs for second half deliveries.

Speaker Change #101: We've made significant improvements in many areas. At more than two-thirds of these sites, material flow more than doubled sequentially and is currently no longer constraining deliveries.

Speaker Change #101: We're grateful for their collaboration, but there's still more to do in the second half.

Speaker Change #101: And we've sharpened our focus on a subset of the remaining priority sites that are still constraining our output.

Speaker Change #101: We're making some progress, but not enough to meet demand.

Speaker Change #101: I've personally visited several of these sites and I'm confident we can partner with our suppliers to drive faster progress.

Speaker Change #101: For example, earlier this month we partnered with one of the priority suppliers in a joint Kaizen focused on addressing a key constraint.

Speaker Change #101: Our supply chain and engineering teams jointly leveraged Flight Deck to identify action plans to improve throughput significantly, aligned with our needs for second-half deliveries.

Larry Culp: These actions resulted in a double-digit material input growth here so far in July versus the Q2 average, so a promising start. Overall, we're not yet at a desired state, but we're counting on these joint action plans and continuous improvement to achieve our H2 ramp. So far in July relative to April, we've seen overall higher engine output stability and reduced variability. We're also deploying Flight Deck aggressively in our own operations to improve safety, quality, delivery, and cost. And in that order, we've made solid progress in support of our airline customers. For example, our internal shop visit output improved 15% sequentially, and nowhere has this improvement been more visible than with LEAP. We've continued to decrease our turnaround time for LEAP shop visits to 86 days compared to roughly 100 days in 2023. This yielded a 9% increase in LEAP internal shop visits sequentially.

Speaker Change #101: These actions resulted in a double-digit material input growth here so far in July versus the second quarter average, so a promising start.

Speaker Change #101: Overall, we're not yet at a desired state, but we're counting on these joint action plans and continuous improvement to achieve our second half ramp.

Speaker Change #101: So far in July , relative to April , we've seen overall higher engine output, stability, and reduced variability.

Speaker Change #101: We're also deploying Flight Deck aggressively in our own operations to improve safety, quality, delivery, and cost, and in that order.

Speaker Change #101: We've made solid progress in support of our airline customers.

Speaker Change #101: For example, our internal shop visit output improved 15% sequentially.

Speaker Change #101: And nowhere has this improvement been more visible than with LEAP. We've continued to decrease our turnaround time for LEAP shop visits to 86 days, compared to roughly 100 days in 2023.

Speaker Change #101: This yielded a 9% increase in LEAP internal shop visits sequentially.

Speaker Change #101: We're also investing both organically and inorganically to meet the expected growth in shop visits as the fleet doubles by 2030.

Speaker Change #101: As we announced last week, over the next five years, we're planning to invest a billion dollars in our MRO facilities around the world to increase capacity and introduce new technologies to further reduce turnaround time and costs.

Speaker Change #101: This includes a recent agreement to acquire a dedicated LEAP test cell, unlocking a key constraint in our shop visit output.

Speaker Change #101: Overall, I am encouraged by our progress, but by no means satisfied.

Speaker Change #101: I'm confident that in the second half we'll increase engine delivery significantly and continue to grow shop visits in support of our customers.

Larry Culp: In the quarter, while output weighed on revenue, GE Aerospace delivered significant profit and free cash flow growth. Demand remained strong with orders up 18%. Revenue was up with growth in both segments. Services growth combined with price more than offset the lower engine shipments. Our operating profit was $1.9 billion, up 37% year over year from services growth, price, and favorable mix. Operating margins expanded 560 basis points to 23.1%. Both operating profit and margin were up significantly at CES and DPT.

Speaker Change #101: In the quarter, while output weighed on revenue, GE Aerospace delivered significant profit in free cash flow growth.

Speaker Change #101: The demand remains strong with orders up 18%. Revenue is up with growth in both segments. Services growth combined with price more than offset the lower engine shipments.

Speaker Change #101: Our operating profit was $1.9 billion, up 37% year-over-year from services growth, price, and favorable mix.

Larry Culp: Operating margins expanded by 560 basis points to 23.1. Both operating profit and margin were up significantly at CES and DPC. Adjusted EPS was $1.20, up more than 60% year-over-year.

Speaker Change #101: Operating margins expanded 560 basis points to 23.1 percent.

Speaker Change #101: Both Operating Profit and Margin were up significantly at CES and DPT.

Larry Culp: Adjusted EPS was $1.20, up more than 60% year over year. This improvement was driven by increased operating profit combined with a lower tax rate. Free cash flow was $1.1 billion, up nearly 20% driven by higher earnings, which more than offset inventory growth from the supply chain constraints I mentioned a moment ago. Halfway through the year, we're well positioned with earnings and free cash flow both up significantly year over year, and free cash flow conversion of nearly 120% giving us confidence to raise our full year profit and cash guidance. This continued profit and free cash flow growth, combined with returning approximately $25 billion of available cash to shareholders, will continue to compound returns. Now over to Rahul for the details on our segment results and our guidance.

Speaker Change #101: Adjusted EPS was $1.20 up more than 60% year-over-year. This improvement was driven by increased operating profit combined with a lower tax rate.

Larry Culp: This improvement was driven by increased operating profit combined with a lower tax rate. Free cash flow was $1.1 billion, up nearly 20% driven by higher earnings, which more than offset inventory growth from the supply chain constraints I mentioned a moment ago. Halfway through the year, we're well positioned with earnings and free cash flow both up significantly every year and a free cash flow conversion of nearly 120% giving us confidence to raise our full year profit and cash guidance.

Speaker Change #101: Free cash flow was $1.1 billion, up nearly 20%, driven by higher earnings, which more than offset inventory growth from the supply chain constraints I mentioned a moment ago.

Speaker Change #101: Halfway through the year, we're well-positioned, with earnings and free cash flow both up significantly year-over-year, and free cash flow conversion of nearly 120%, giving us confidence to raise our full-year profit and cash guidance.

Larry Culp: This continued profit and free cash flow growth, combined with returning approximately $25 billion of available cash to shareholders, will continue to compound returns. Now, over to Rahul for the details on our segment results and our guidance. Thank you, Larry, and good day, everyone. Starting with CES, air traffic growth remained robust, with departures up 9% year-to-date, and we continue to expect it to be up high single digits for the full year. Passenger departures are expected to be up high single digits as the narrow body remains solid.

Speaker Change #101: This continued profit and free cash flow growth, combined with returning approximately $25 billion of available cash to shareholders, will continue to compound returns.

Speaker Change #101: Now, over to Rahul for the details on our segment results and our guidance.

Rahul Ghai: Thank you, Larry, and good day, everyone. Starting with CES, air traffic growth remained robust with departures up 9% year to date, and we continue to expect to be up high single digits for the full year. Passenger departures are expected to be up high single digits as narrowbody remains solid with LEAP up nearly 30% in the second quarter, more than 3x that of overall narrowbody market. Dedicated freight departures are now expected to be up mid single digits versus a prior expectation of low single digits.

Rahul: Thank you, Larry, and good day everyone. Starting with CES, air traffic growth remained robust, with departures up 9% year-to-date.

Rahul: and we continue to expect to be up high single digits for the full year.

Rahul: Passenger departures are expected to be up high single digits as narrow body remains solid, would leap up nearly 30% in the second quarter, more than 3x that of overall narrow body market.

Speaker Change #101: Dedicated freight departures are now expected to be up mid-single digits versus a prior expectation of low single digits.

Rahul Ghai: It would leap up nearly 30% in the second quarter, more than 3x that of the overall narrow body market. Dedicated freight departures are now expected to be up mid-single digits versus a prior expectation of low single digits. Moving to CES's second quarter results, sustained commercial momentum drove significant orders, up 38% this quarter. Both services and equipment were up more than 35%, with strong spare parts demand. Revenue grew 7%, with service volume and price more than offsetting lower engine delivery.

Rahul Ghai: Moving to CES's second quarter results, sustained commercial momentum drove significant orders growth up 38% this quarter. Both services and equipment were up more than 35%, with strong spare parts demand. Revenue grew 7% with services volume and price more than offsetting lower engine deliveries.

Speaker Change #101: Moving to CES's second quarter results.

Speaker Change #101: Sustained commercial momentum drove significant orders growth, up 38% this quarter.

Speaker Change #101: Both services and equipment were up more than 35% with strong spare parts demand.

Speaker Change #101: Revenue grew 7%.

Speaker Change #101: With services volume and price more than offsetting lower engine deliveries.

Rahul Ghai: Services grew 14% from mid-teens' internal shop visit growth with strength in time and material visits and improved pricing. As expected, year-on-year shop visits grew more than spare parts. Equipment revenue declined 11% from 26% lower engine shipment, but this was partially offset by customer mix and price. Supply chain constraints impacted shipments across both narrowbody and widebody aircraft would leap down 29%. Profit was $1.7 billion, up 21%, with margins expanding 320 basis points.

Rahul Ghai: Services grew 14% from mid-teens internal shop visit growth, with strength in time and material visits and improved pricing, as expected year on year. Shop visits grew more than spare parts. Equipment revenue declined 11% from 26% lower engine shipments. This was partially offset by customer mix and price. Supply chain constraints impacted shipments across both narrowbody and widebody, with LEAP down 29%. Profit was $1.7 billion, up 21%, with margins expanding 320 basis points, driven by improved performance in services from higher volume, pricing, and mix. Lower engine shipments and improving LEAP services profitability also supported profit and margin expansion. This more than offset the impact of lower spare engine deliveries and increased investments that impacted equipment profit.

Speaker Change #101: Services grew 14% from mid-teens internal shop visit growth with strength in time and material visits and improved pricing.

Speaker Change #101: As expected, ear-on-ear shop visits grew more than spare parts.

Speaker Change #101: Equipment revenue declined 11% from 26% lower engine shipments.

Speaker Change #101: This was partially offset by customer mix and price.

Speaker Change #101: Supply chain constraints impacted shipments across both narrow-body and wide-body would leap down 29%.

Speaker Change #101: Profit was $1.7 billion, up 21%, with margins expanding 320 basis points.

Rahul Ghai: This was driven by improved performance in services from higher volume, pricing, and mix. Lower engine shipments and improving LEAP services profitability also supported profit and margin expansion. This more than offset the impact of lower spare engine deliveries and increased investments that impacted equipment profits. Taking a step back, at CES, we delivered a strong first half, with services revenue up 13% and overall segment profit up nearly 20%. Turning to DPT, the sector remains resilient.

Speaker Change #101: Driven by improved performance in services from higher volume, pricing, and mix.

Speaker Change #101: Lower engine shipments and improving LEAP services profitability also supported profit and margin expansion.

Speaker Change #101: This more than offset the impact of lower spare engine deliveries and increased investments that impacted equipment profit.

Rahul Ghai: Taking a step back at CES, we delivered a strong first half with services revenue up 13% and overall segment profit up nearly 20%. Turning to DPT, the sector remains resilient with US defense spending expected to grow low single digits, and international up mid single digits. With Flight Deck, we are focused on running this business better to deliver more predictably while continuing to invest in the future of combat. We recently achieved a significant milestone delivering two T901 engines for the US Army's Improved Turbine Engine Program or ITEP for integration and testing on the UH-60 Black Hawk. The T901 engine will ensure that warfighters have the performance, power, and reliability necessary to maintain significant advantage on the battlefield for decades to come. Turning to our results, orders were down 25% primarily due to timing of orders in defense and systems.

Speaker Change #101: Taking a step back, at CES, we delivered a strong first half, with services revenue up 13% and overall segment profit up nearly 20%.

Speaker Change #101: Turning to DPT, the sector remains resilient.

Speaker Change #103: Was U.S. defense spending expected to grow low single digits and international up mid-single digits?

Speaker Change #103: With Flytec, we are focused on running this business better, to deliver more predictably while continuing to invest in the future of combat.

Speaker Change #103: We recently achieved a significant milestone, delivering two 901 engines for the U.S. Army's Improved Turbine Engine Program, or ITAP.

Speaker Change #103: for integration and testing on the UH-60 Black Hawk.

Speaker Change #103: The T901 engine will ensure that warfighters have the performance, power, and reliability necessary to maintain significant advantage on the battlefield for decades to come.

Speaker Change #104: Turning to our results. Orders were down 25%.

Rahul Ghai: Defense book-to-bill was 0.9 in the quarter and 1.0 for the first half. Revenue grew 1%. Defense and Systems revenue was down 6%. Engine deliveries were down approximately 60% from supply chain challenges and a tough year-over-year compare when we delivered significantly higher units. This more than offset pricing and services growth.

Speaker Change #104: primarily due to timing of orders in defense and systems.

Speaker Change #105: Defense Book to Bill was 0.9 in the quarter and 1.0 for the first half.

Rahul Ghai: Revenue grew 1%. Defense and systems revenue was down 6%. Engine deliveries were down approximately 60% from supply chain challenges and a tough year-over-year comparison when we delivered significantly higher units. This more than offset pricing and services growth. Propulsion and additive technologies grew 16%, with growth across several businesses from higher output and improved prices.

Speaker Change #105: Revenue grew 1%.

Speaker Change #105: Defense and Systems Revenue was down 6%.

Speaker Change #105: Engine deliveries were down approximately 60% from supply chain challenges and a tough year-over-year compare when we delivered significantly higher units.

Speaker Change #105: This more than offset pricing and services growth.

Rahul Ghai: Propulsion and additive technologies grew 16% with growth across several businesses from higher output and improved pricing. Profit was $344 million, up more than 70% year over year with margins expanding 580 basis points from higher output, favorable product mix, productivity, price, and the absence of program related costs.

Speaker Change #105: Propulsion and additive technologies grew 16%, with growth across several businesses, from higher output and improved pricing.

Rahul Ghai: Profit was $344 million, up more than 70% year-over-year, with margins expanding 580 basis points from higher output, favorable product mix, productivity, price, and the absence of program-related costs. During the first half of the year, DPT delivered high single-digit revenue growth and significant operating profit improvement. The business remains well positioned to deliver growth over the medium term with a backlog of nearly $17 billion. Spending a moment on corporate. Adjusted cost and intercompany eliminations were roughly $130 million, down nearly 40% year over year.

Speaker Change #105: Profit was $344 million, up more than 70% year-over-year, with margins expanding 580 basis points, from higher output, favorable product mix, productivity, price, and the absence of program-related costs.

Rahul Ghai: Through the first half of the year, DPT delivered high single digit revenue growth and significant operating profit improvement. The business remains well positioned to deliver growth over the medium term with a backlog of nearly $17 billion. Spending a moment on corporate adjusted cost and intercompany eliminations, were roughly $130 million, down nearly 40% year over year. This $80 million improvement is from actions taken to streamline our cost structure, accelerate elimination of wind down costs, and favorable interest income that more than offset higher intercompany eliminations. As part of our continued efforts to simplify and focus on our core, this quarter we completed the sale of Electric Insurance.

Speaker Change #105: To the first half of the year, DPT delivered high single-digit revenue growth and significant operating profit improvement.

Speaker Change #105: The business remains well positioned to deliver growth over the medium term with a backlog of nearly $17 billion.

Speaker Change #105: Spending a moment on corporate. Adjusted cost and intercompany eliminations were roughly $130 million.

Speaker Change #105: down nearly 40% year-over-year.

Speaker Change #105: This $80 million improvement is from actions taken to streamline our cost structure, accelerate elimination of wind-down costs,

Speaker Change #105: and Favorable Interest Income that more than offset higher intercompany eliminations.

Speaker Change #105: As part of our continued efforts to simplify and focus on our core, this quarter we completed the sale of electric insurance.

Rahul Ghai: We also reached an agreement to sell the licensing business and a reinsurance agreement to exit a block of our life and health insurance business. Combined, these actions will result in proceeds of roughly $700 million of investing cash flow.

Speaker Change #105: We also reached an agreement to sell the licensing business and a reinsurance agreement to exit a block of our life and health insurance business.

Speaker Change #105: Combined, these actions will result in proceeds of roughly $700 million of investing cash flow.

Speaker Change #105: Looking ahead, given the strong results and the momentum in our business, we are raising our profit and cash guidance.

Speaker Change #106: We are reducing our revenue guidance given lower engine output expectations.

Rahul Ghai: Growth is now projected to be up high single digits due to lower equipment revenue in CES. We now expect CES equipment revenue to be up high single to low double digits from prior guidance of up high teens. This includes our updated full year LEAP output expectations of flat to up 5% year over year. We continue to expect CES services to grow mid teens putting overall growth of CES at low double digits to mid teens.

Rahul Ghai: Growth is now projected to be up high single digits due to lower equipment revenue in CES. We now expect CES equipment revenue to be up high single to low double digits from prior guidance of up high teens. This includes our updated full-year leap output expectations of flat to up 5% year-over-year. We continue to expect CES services to grow mid-teens, putting overall growth of CES at low double digits to mid-teens. Consistent with prior guidance, we expect DPT growth of mid to high single digits.

Speaker Change #106: Growth is now projected to be up high single digits.

Speaker Change #106: Due to lower equipment revenue in CES.

Speaker Change #106: We now expect CES equipment revenue to be up high single to low double digits from prior guidance of up high teens.

Speaker Change #106: This includes our updated full-year LEAP output expectations of flat to up 5% year-over-year.

Speaker Change #106: We continue to expect CES services to grow mid-teens, putting overall growth of CES at low double digits to mid-teens.

Speaker Change #106: Consistent with prior guidance, we expect DPT growth of mid to high single digits.

Rahul Ghai: Operating profit is now expected to be in a range of $6.5 to $6.8 billion, up $250 million at the midpoint from prior guidance, with margin expansion year-over-year. This improvement is primarily from CES, with operating profit now expected to be $6.3 to $6.5 billion, from $6.1 to $6.4 billion previously, reflecting improved services performance and the impact of lower equipment sales. Deputy Profit Guidance is unchanged, and corporate cost and intercompany eliminations are now expected to be below $900 million from approximately $1 billion previously. Our expectations for interest expense and the tax rate are unchanged.

Speaker Change #106: Operating profit is now expected to be in a range of $6.5 to $6.8 billion.

Speaker Change #106: Up $250 million at the midpoint from prior guidance.

Speaker Change #106: with margin expansion year-over-year.

Speaker Change #106: This improvement is primarily from CES, with operating profit now expected to be $6.3-$6.5 billion.

Speaker Change #106: from $6.1 to $6.4 billion previously.

Speaker Change #106: Reflecting improved services performance and impact of lower equipment sales.

Rahul Ghai: DPT profit guidance is unchanged, and corporate cost and intercompany eliminations are now expected to be below $900 million from approximately $1 billion previously. Our expectations for interest expense and tax rate are unchanged, and we are raising our adjusted EPS guidance range to $3.95 to $4.20, up more than 50% year over year at the midpoint from higher profit growth. We are also raising our free cash flow guidance to $5.3 to $5.6 billion with above 100% conversion of net income given profit growth. While we still expect to reduce working capital for the year, the improvement is expected to be lower given the impact of supply chain challenges to inventory. Overall free cash flow is up approximately $700 million year over year. At the midpoint. All in, GE Aerospace is positioned for significant revenue, profit, and free cash flow growth with strong conversion in 2024.

Speaker Change #106: DPT, Profit Guidance is unchanged.

Speaker Change #106: and Corporate Cost and Intercompany Eliminations are now expected to be below $900 million from approximately $1 billion previously.

Speaker Change #106: Our expectations for interest expense and tax rate are unchanged.

Rahul Ghai: And we are raising our adjusted EPS guidance range to $3.95 to $4.20, up more than 50% year-over-year at the midpoint from higher profit growth. We're also raising our free cash flow guidance to $5.3 to $5.6 billion with above 100% conversion of net income given profit growth. While we still expect to reduce working capital for the year, the improvement is expected to be lower given the impact of supply chain challenges on inventory.

Speaker Change #106: And we are raising our adjusted EPS guidance range to $3.95 to $4.20 up more than 50% year-over-year at the midpoint from higher profit growth.

Speaker Change #106: We are also raising our free cash flow guidance to $5.3 to $5.6 billion with above 100% conversion of net income given profit growth.

Speaker Change #106: While we still expect to reduce working capital for the year, the improvement is expected to be lower given the impact of supply chain challenges to inventory.

Speaker Change #106: Overall, free cash flow is up approximately $700 million year-over-year at the midpoint.

Speaker Change #106: All in, GE Aerospace is positioned for significant revenue, profit, and free cash flow growth with strong conversion in 2024.

Rahul Ghai: Larry, back to you.

Larry Culp: Rahul, thanks. As we take flight as GE Aerospace, we have sustained competitive advantages with a tremendous value proposition with the industry's largest and growing fleets. Our platforms are preferred by customers across the narrowbody, widebody, and defense sectors. We're aiming to provide industry-leading reliability and durability prioritizing SQDC in that order. This means delivering unmatched time on wing and faster turnaround times for our customers. With our deep domain expertise and engineering talent, commitment to innovation and capacity to invest, we're poised to deliver breakthrough technologies in both commercial and defense. With Flight Deck as our foundation, we'll deliver for customers and create exceptional value for shareholders. All in, we expect to grow operating profit to approximately $10 billion in 2028 and generate free cash flow in excess of net income, creating compounding returns.

Larry Culp: Rahul, thanks. We take flight as GE Aerospace. We have sustained competitive advantages with a tremendous value proposition. With the industry's largest and growing fleets, our platforms are preferred by customers across narrow body, wide body, and defense. We're aiming to provide industry-leading reliability and durability, prioritizing SQDC in that order.

Speaker Change #106: Larry, back to you. Rahul, thanks. As we take flight as GE Aerospace...

Larry Culp: We have sustained competitive advantages with a tremendous value proposition.

Larry Culp: With the industry's largest and growing fleets, our platforms are preferred by customers across the narrow-body, wide-body, and defense sectors.

Speaker Change #107: We're aiming to provide industry-leading reliability and durability, prioritizing SQDC in that order.

Larry Culp: This means delivering unmatched time on the wing and faster turnaround times for our customers. With our deep domain expertise and engineering talent, commitment to innovation, and capacity to invest, We're poised to deliver breakthrough technologies in both commercial and government, and with Flight Deck as our foundation, we'll deliver for customers and create exceptional value for shareholders. All in, we expect to grow operating profit to approximately $10 billion in 2028 and generate free cash flow and excessive net income, creating compounding return.

Speaker Change #107: This means delivering unmatched time on wing and faster turnaround times for our customers.

Speaker Change #107: With our deep domain expertise and engineering talent, commitment to innovation, and capacity to invest,

Speaker Change #107: We're poised to deliver breakthrough technologies.

Speaker Change #107: in both commercial and defense.

Speaker Change #107: And with Flight Deck as our foundation, we'll deliver for customers and create exceptional value for shareholders.

Speaker Change #107: All in, we expect to grow operating profit to approximately $10 billion in 2028 and generate free cash flow and excessive net income, creating compounding returns.

Larry Culp: We're making meaningful progress to advance our strategic priorities in service of our customers, employees, and shareholders while keeping an eye toward the future and paving the way with innovation for more sustainable flight.

Larry Culp: We're making meaningful progress to advance our strategic priorities in the service of our customers, employees, and shareholders, while keeping an eye toward the future and paving the way with innovation for more sustainable flight. Now, Blair, let's go to questions. Before we open the line, I'd ask everyone in the queue to consider your fellow analysts and ask one question so we can get to as many people as possible. Liz, can you please open the line?

Speaker Change #107: We're making meaningful progress to advance our strategic priorities in service of our customers, employees, and shareholders while keeping an eye towards the future and paving the way with innovation for more sustainable flight.

Larry Culp: Now, Blair, let's go to questions.

Larry Culp: Now, Blaire, let's go to questions.

Speaker Change #107: Now, Blair, let's go to questions.

Speaker Change #107: Before we open the line, I'd ask everyone in the queue to consider your fellow analysts and ask one question so we can get to as many people as possible. Liz, can you please open the line?

Operator: Ladies and gentlemen, if you wish to ask a question, please press star one one on your telephone. If you wish to withdraw your question or your question has already been answered, please press star 11. Again.

Larry Culp: 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.

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.

Operator: Our first question comes from Robert Spingarn with Melius Research.

Robert Michael Spingarn: Our first question comes from Robert Spingarn with Melius Research. Good afternoon. Morning, Rob. Hey, Rob.

Liz: Our first question comes from Robert Spingarn with Melius Research.

Rahul Ghai: Good afternoon. Morning, Rob.

Larry Culp: Hey Rob.

Robert Michael Spingarn: Good afternoon.

Rahul Ghai: I don't know who wants to take.

Robert Michael Spingarn: Good morning, Rob. Hey, Rob.

Larry Culp: This one, but I wanted to ask you, just given the slower ramp on the narrowbody programs as well as the durability issues on the geared turbofan, we've seen airlines extending the lives of older aircraft and engines. Are we getting to the point where some of your CFM56 customers are talking about increasing the work scope of their third shop visits, or maybe even doing a fourth shop visit?

Speaker Change #109: I don't know who wants to take this one, but I wanted to ask you, just give him the slower ramp.

Speaker Change #108: On the narrow body programs, as well as the durability issues on the gear turbofan, we've seen airlines extending the lives of older aircraft and engines.

Speaker Change #110: Are we getting to the point where some of your CFM56 customers are talking about increasing the work scope of their third shop visits or maybe even doing a fourth shop visit?

Larry Culp: Well, Rob, I think that you really put your finger on one of the important underlying dynamics here, not only in the quarter, but as we think about the second half and even the next few years, the CFM 56 is clearly still the workhorse of the industry, right? I mean, we look at utilization, and at a time when people thought we might begin to see a little bit of a fade, utilization year over year is consistent with the CFM 56. I'm delighted to see the leap of four points from a share perspective. So overall, GE and Aerobody, Howard propulsion is probably north of 70%.

Larry Culp: Well, Rob, I think that you really put your finger on one of the important underlying dynamics here, not only in the quarter, but as we think about the second half and even the next few years. The CFM56 is clearly still the workhorse of the industry. I mean, if we look at utilization at a time when people thought we might begin to see a little bit of a fade, utilization year over year is consistent with the CFM56. Delighted to see the LEAP up 4 points from a share perspective. So overall GE narrow body powered propulsion is probably north of 70%. So I think the CFM is going to have a longer life in many fleets, and clearly that's going to help us in the aftermarket, both from a volume, and from a scope perspective.

Speaker Change #111: Well, Rob, I think that you really put your finger on one of the...

Speaker Change #112: important underlying dynamics here not only in the quarter but as we think about the second half and even the next few years the CFM 56 is clearly still the work at workhorse of the industry right I mean we look at utilization

Speaker Change #112: In a time when people thought we might begin to see a little bit of a fade, utilization year over year is consistent with the CFM56. Delighted to see the leap up four points from a shared perspective. So, overall, GE and Aerobody.

Larry Culp: So I think the CFM is going to have a longer life and many fleets. And clearly, that's going to help us in the aftermarket, both from a volume and from a scope perspective. Well, just to maybe add a little bit to what Larry said, just given the dynamics that he mentioned and you mentioned earlier, we are expecting that the peak shop visit that we had previously projected in 2025, and then we start to see the sequential downtick in 2026, and 2027 is what we said it invest today. Now, as we sit here today, we do expect that, you know, shoppers will probably plateau at that 25 level for maybe another couple of years and then start declining.

Speaker Change #113: Howard propulsion is probably north of 70% so I think the CFM is going to have a longer life and in many fleets and clearly that's going to help us in the aftermarket both from a from a volume and from a scope perspective

Rahul Ghai: Yeah, Rob, just to maybe add a little bit to what Larry said, just given the dynamics that he mentioned and you mentioned earlier, we are expecting that the peak shop visit that we had previously projected in 2025 and then we start to see the sequential downtick in 2026, 2027 is what we said at Investor Day. Now as we sit here today, we do expect that, you know, shop visits is probably plateau at that 2025 level for maybe another couple of years and then start declining. So definitely we are seeing that.

Speaker Change #113: Yeah.

Speaker Change #113: Well, just to maybe add a little bit to what Larry said, just given the dynamics that he mentioned and you mentioned earlier, we are expecting that the peak shop visit that we had previously projected in 2025,

Speaker Change #114: and then we start to see the sequential downtick in 26-27 is what we said it invested a now as we sit here today we do expect that you know shoppers is probably plateau at that 25 level for maybe another couple of years and then start declining

Larry Culp: So definitely, we are seeing that the program, the platform is getting used, and the shop visits will be hired for an extended period of time. And we will see third shop visits, and we're seeing that even with some of the lessons coming out and commenting that they've, you know, the leases are getting extended beyond 14, 15 years for another four or five years. So we will definitely see what you just said. Our next question comes from Myles Walton with Wolf Research. Hey, good morning. I apologize for the background noise. I'm actually here at the show.

Rahul Ghai: The program, the platform is getting used, and the shop visits will be higher for an extended period of time, and we will see third shop visits, and that we're seeing that even with, you know, some of the lessors coming out and commenting that they've, you know, the leases are getting extended beyond 14, 15 years for another four or five years. So we will definitely see what you just said.

Speaker Change #114: So definitely we are seeing that

Speaker Change #115: The program, the platform is getting used, and the shop visits will be higher for an extended period of time, and we will see third shop visits, and that we're seeing that even with, you know, some of the lessons coming out and commenting that they, you know, the leases are getting extended beyond 14, 15 years for another four or five years. So we will definitely see what you just said.

Operator: Our next question comes from Myles Walton with Wolfe Research.

Speaker Change #115: Our next question comes from Myles Walton with Wolf Research.

Myles Alexander Walton: I was hoping Larry or Rahul could comment on the 15 supplier sites and nine suppliers seem to be the source of the bulk of the delays and parts and where that was last year. And maybe just if you could bucket the types of products we're talking about at those 15 sites. Thanks. Myles, we can hear you loud and clear.

Larry Culp: Good morning. Apologies for the background noise. I'm actually here at the show. I was hoping, Larry or Rahul, you could comment on the 15 supplier sites and nine suppliers seem to be the source of the bulk of the delays in parts and where that was last year, and maybe just if you can bucket the types of products we're talking about at those 15 sites. Thanks, Myles. We could hear you loud and clear. We're not too far away, I suspect. I think if you go back to April, what we said was 3/4 of the challenge with respect to deliveries was really rooted in these 15 supplier sites, again with nine different companies. Rather than finger point, our mindset was we're going to problem solve. We've gone in deeply again with Flight Deck to really try to understand these constraints at the core.

Speaker Change #116: Myles, we can hear you loud and clear. We're not too far away, I suspect.

Speaker Change #117: Three-quarters of the challenge with respect to deliveries was really rooted in these 15 supplier sites again with with nine different companies.

Speaker Change #118: And rather than finger point, our mindset was, we're going to problem solve.

Speaker Change #118: And we've gone in deeply again with Flight Deck to really try to understand these constraints at the core.

Larry Culp: The slide that you see in the deck I think is evidence that that approach, that collaborative problem solving rather than finger pointing, is really yielding results. We didn't expect that we would see blanket impact immediately, but to be able to point to 2/3 of those sites showing strong, nearly doubling of their sequential output inputs to us, I think really tells us something, right, that this approach is going to have impact. Unfortunately, we didn't have all of the impact that we would have liked across those 15. We need everybody's oar in the water, if you will. We need everybody contributing, particularly with respect to new engine deliveries.

Speaker Change #118: And the slide that you see in the deck, I think, is evidence that that approach, that collaborative problem-solving, rather than finger-pointing,

Larry Culp: Uh, we didn't expect that we would see a blanket impact immediately, but to be able to point to two-thirds of those sites. And we need everybody's oar in the water, if you will, we need everybody contributing, particularly with respect to the new engine. But I think given what we have seen here in July, the way that we're working across different commodity classes shows us that this approach is a better way to get more, not only here in the third quarter or the second half, but as we think about what is a multi-year wrap, right? The airframers that we talked to here at Farnborough, and certainly the airlines as well. No one loves the fact that a new narrow-body order may not be delivered until 29 or 30.

Speaker Change #118: is really yielding results. We didn't expect that we would see a blanket impact immediately, but to be able to point to two-thirds of those sites

Speaker Change #118: showing strong nearly doubling of their sequential outputs inputs to us, I think, really tells us something right that this approach is going to have impact. Unfortunately, we didn't have all of the impact that we would have liked across those 15.

Speaker Change #118: And we need everybody's oar in the water, if you will. We need everybody contributing, particularly with respect to new engine deliveries.

Speaker Change #118: But, I think given what we have seen here in July , the way that we're working across different commodity classes,

Speaker Change #118: shows this that that this approach is a better way to get more not only here in the third quarter or the second half but as we think about what is a multi-year wrap right the the airframers that we talked to here at Farnborough certainly in the airlines as well

Rahul Ghai: Right.

Larry Culp: The airframers that we talk to here at Farnborough, certainly in the airlines as well, no one loves the fact that a new narrow body order may not be delivered until 29 or 30. So it's all about the ramp. We've got years in front of us, thankfully. What a wonderful business challenge to have. But I really like the way our suppliers have met us here, embraced the tools, and we just need more time working in this fashion in order to have the full effect that we, our airframer, and our airline customers all desire.

Speaker Change #118: No one loves the fact that a new narrow-body order may not be delivered until 29 or 30.

Larry Culp: So it's all about the ramp. We've got years in front of us, thankfully. What a wonderful business challenge to have. But I really like the way our suppliers have embraced us here.

Speaker Change #118: So, it's all about the ramp. We've got years in front of us, thankfully. What a wonderful business challenge to have, but I really like the way our suppliers have met us here.

Sheila Karin Kahyaoglu: And we just need, we just need more time working in this fashion in order to have the full effect that we, our air framers, and our airline customers all desire. Our next question comes from Sheila Kahyaoglu with Jeffrey. Hi. Good morning, Mary and Rahul. How are you?

Speaker Change #118: embrace the tools and we just need we just need more time working in this fashion in order to have the the full effect that we our air framer and our airline customers all desire

Operator: Our next question comes from Sheila Kahyaoglu with Jefferies.

Speaker Change #118: Our next question comes from Sheila Kahyaoglu with Jeffreys.

Blair Schorr: Hi, good morning. Mary and Rahul, how are you?

Blaire Shoor: Hi, good morning. Mary and Rahul, how are you?

Larry Culp: Good, thank you.

Sheila Karin Kahyaoglu: Hi. Good morning, Mary and Rahul. How are you?

Blair Schorr: Sheila, maybe if I could ask about the CES margins, which were pretty awesome. So just looking at the LEAP deliveries in the quarter, Q1 versus Q2, Q2 had 70 less LEAP deliveries in the quarter, so about a $10 million profit swing depending upon your loss assumption there. So CES margins of 27% in Q2 versus Q3 versus Q1 of 23 implies that the core service margin improved about 1,000 to 1,500 basis points, depending on what you want to choose. So 25% to 35% plus. So what drove that? Despite shop visits being better than. And how do we think about the second half progression?

Blaire Shoor: Sheila, maybe if I could ask about the CES margins, which were pretty awesome. So just looking at the LEAP deliveries in the quarter, Q1 versus Q2, Q2 had 70 less LEAP deliveries in the quarter, so about a $10 million profit swing depending upon your loss assumption there. So CES margins of 27% in Q2 versus Q3 versus Q1 of 23 implies that the core service margin improved about 1,000 to 1,500 basis points, depending on what you want to choose. So 25% to 35% plus. So what drove that? Despite shop visits being better than. And how do we think about the second half progression?

Sheila Karin Kahyaoglu: Good. Thank you, Sheila.

Speaker Change #119: Maybe if I could ask about the CES margins, which were pretty awesome. So just looking at the lead deliveries in the quarter Q1 versus Q2, Q2 had 70 less lead deliveries in the quarter. So about a 10 million profit swing depending on

Speaker Change #120: Your loss assumption there.

Speaker Change #121: So CEF margins of 27% in Q2 versus Q1 of 23 implies that the core service margin improved about 1,000 to 1,500 BSS times depending on what you want to choose, so 25% to 35% plus.

Larry Culp: So what drove that despite shop visits being better than spares? And how do we think about the second half progression? Yeah, no, Sheila, it was a good quarter for CES overall. You know, OE volume was weak, as you pointed out.

Speaker Change #122: So what drove that despite shop visits being better than spares and how do we think about the second half progression?

Rahul Ghai: Yeah. Now, Sheila, it was a good quarter for CES overall. You know, OE volume was weak, as you pointed out, but the service revenue recovered really nicely. And, you know, the overall services growth was kind of in line with what we had projected for full year. So it kind of came in exactly what we were thinking. And the drop through from services was very strong. The shop visits skewed towards time and material work, and then the work scopes were heavier as well. And that helped both revenue and the.

Rahul Ghai: But the service revenue recovered really nicely. And, you know, the overall service growth was kind of in line with what we had projected for the full year. So it kind of came in exactly as we were thinking.

Speaker Change #123: Yeah, no Sheila, it was a good quarter for CES overall, you know, OE volume was weak as you pointed out, but the service revenue recovered really nicely.

Speaker Change #124: And, you know, the overall services growth was kind of in line with what we had projected for four years. So it kind of came in exactly what we were thinking.

Rahul Ghai: And the drop through from services was very strong. The shop visits skewed towards time and material work, and then the work scopes were heavier as well.

Speaker Change #125: And the drop-through from services was very strong. The shop visits skewed towards time and material, work, and then the work scopes were heavier as well. And that, you know, that helped both revenue and the profit on those shop visits.

Larry Culp: Profit on those shop visits.

Rahul Ghai: This, along with pricing and customer mix, helped the services profit growth. In equipment, the engine shipments were lower. But within equipment, we also reduced our spare engine deliveries and higher investments. So, and that kind of offset the impact of the lower engine shipments. So overall OE profit was more flattish than anything else. Now, as we look at the trends in first half, that gave us the confidence here to raise profit expectations for the full year by, call it, $150 to 200 million at the midpoint of the guide.

Rahul Ghai: And that, you know, that helped both revenue and the profit on those shops. This, along with pricing and customer mix, helped the services profit growth. And in equipment, the engine shipments were lower.

Speaker Change #125: This, along with pricing and customer mix, helps the services profit growth.

Rahul Ghai: But within equipment, you know, we also reduced our spare engine deliveries and increased investments. So that kind of offsets the impact of the lower engine shipments. So overall, OE profit was, you know, more flattish than anything else. Now, as we look at the trend in the first half, that gave us the confidence here to raise profit expectations for the full year by call it 150 to 200 million at the midpoint of the guide. Now, what's it?

Speaker Change #125: And in equipment, the engine shipments were lower, but within equipment, you know, we also reduced our spare engine deliveries and higher investments.

Speaker Change #125: So, and that kind of offset the impact of the lower engine shipments. So overall, OE profit was, you know,

Speaker Change #125: More flattish than anything else. Now, as we look at the trend in first half that gave us the confidence here to raise profit expectations for the full year by call it 150 to 200 million at the at the midpoint of the guide. Now, what's

Rahul Ghai: Now, what's driving that are two things. One, the services growth that we just mentioned, all the things that we are seeing, we projected that favorability to now flow through into the second half as well, both with work scopes and some of the customer mix being favorable. And then we lowered our OE revenue output, but call it $600, $650 million at the midpoint of the guide. And that is helping profit. So that is where you see our CES profit up for the year, $150 to 200 million. And the margins for CES will be kind of at this level, will be flattish for the year. And that is despite this being the first year of 9X shipments. So really, really happy with the way the CES business is coming along.

Rahul Ghai: What's driving that are two things. One, the services growth that we just mentioned, all the things that we are seeing, and we projected that favorability to now flow through into the second half as well, both with work scopes and some of the customer mix being favorable. And then we lowered our OE revenue output, but call it $650 million at the midpoint of the guide, and that is helping profit. So that is where you see our CES profit up for the year, $150 to $200 million. And the margins for CES will be kind of at this level, and they will be flattish for the year. And that is despite this being the first year of 9x shipments.

Speaker Change #125: What's driving that are two things. One, the services growth that we just mentioned, all the things that we are seeing, we projected that favorability to now flow through into the second half as well, both with work scopes.

Speaker Change #125: and some of the customer mix being favorable. And then we lowered our OE revenue output, but call it $600, $650 million at the midpoint of the guide. And that is helping profit.

Speaker Change #125: So that is where you see our, you know, CES profit up for the year 150 to 200 million dollars. And the profit and the margins are for CES will be, you know, kind of at this level will be flattish for the year. And that is despite this being the first year of 9x shipments.

Mark Wesley Strouse: So really, really happy with the way the CES business is coming along. Our next question comes from David Strouse with Barclays. Thanks. Good morning. Good afternoon.

Operator: Our next question comes from the line of David Strauss with Barclays.

Speaker Change #125: Our next question comes from the line of David Strouse with Barclays.

Rahul Ghai: Thanks. Good morning. Good afternoon.

Larry Culp: Morning, David, uh larry can you just maybe dig into this uh you know the lower leap shipments in in the in the quarter i know you're talking about things progressing with these nine suppliers but at the same time obviously deliveries were way down the core i would imagine they were 100 125 uh short of kind of your internal expectations so can you kind of just square square that things are getting better but you know deliveries were a lot lower than expected thanks David, I don't want to repeat what I, said earlier, I do think one of the things to keep in mind is that there is a timing dynamic, relative to when we receive various input, and when in turn we convert that into an engine that we can deliver, be it to Airbus or to Boeing, right. So, April was was challenging in a number of ways.

Rahul Ghai: Morning, David.

David Strauss: Thanks, good morning, good afternoon.

Rahul Ghai: Larry, can you just maybe dig into this? You know the lower LEAP shipments in the quarter. I know you're talking about things progressing with these nine suppliers, but at the same time, obviously deliveries were way down the core. I would imagine they were 100, 125 short of kind of your internal expectations. So can you kind of just square that things are getting better. But deliveries were a lot lower than expected. Thanks.

David Strauss: Good morning, David.

Speaker Change #126: Short of kind of your internal expectations. So can you kind of just square, square that things are getting better, but, you know, deliveries were a lot lower than expected. Thanks.

Speaker Change #126: David I don't want to repeat what I

Larry Culp: said earlier, I do think one of the things to keep in mind is that there is a timing dynamic.

Speaker Change #127: relative to when we receive various inputs.

Speaker Change #127: and when in turn we convert that into an engine that we can deliver.

Larry Culp: Via to Airbus or to Boeing. Right. So April was challenging in a number of ways. We didn't have the recovery in May that I think we had hoped we might see. Underlying the quarter, though sequentially, was the net improvement that I mentioned, and that has only continued to build here in July. We haven't seen that somewhat typically slow start to a quarter that I was concerned about. So there's really nothing more I can say about why the new unit deliveries, LEAP included, were disappointing.

Larry Culp: We didn't have the recovery in May that I think we had hoped we might see, underlying. The quarter, though, sequentially, was the net improvement that I mentioned, and that has only continued to build here in July. We haven't seen that somewhat typically slow start to a quarter that I was concerned about. There's really nothing more I can say about why the new unit deliveries, LEAP included, were disappointing.

Speaker Change #128: April was challenging in a number of ways. We didn't have the recovery in May that I think we had hoped we might see underlying.

Speaker Change #128: The quarter though, sequentially, was the net improvement that I mentioned, and that has only continued to build here in July . We haven't seen that somewhat typically slow start to a quarter that I was concerned about.

Speaker Change #128: So.

Speaker Change #129: There's really nothing more I can say about why the new unit deliveries, LEAP included, were disappointing. Thank you.

Larry Culp: It is what it is. Where we're focused, as we think about the rest of the year, is how do we deliver more and how do we deliver more reliably. You'll note that we are adjusting our outlook for LEAP deliveries this year on a full year basis. We now think we will be somewhere between flat and up 5%, obviously lower than where we thought, but still showing modest growth. And more importantly, I think given what we're doing with Flight Deck in the supply base, the expectations we have not only for more inputs but in turn more outputs positions us to be at a healthier, more stable, higher exit rate come the end of the year. That's where we're focused. That's what we're sharing with our customers. Work to do. Work I think this team knows how to do.

Larry Culp: It is what it is; where we're focused as we think about the rest of the year is how do we deliver more and how do we deliver more reliably. You'll note that we are adjusting our outlook for LEAP deliveries this year. On a full year basis, we now think we will be somewhere between flat and up 5%, obviously lower than where we thought, but still showing modest growth. And more importantly, I think, given what we're doing with Flight Deck in the supply base, the expectations we have, not only for more inputs but, in turn, more outputs, positions us to be at a healthier, more stable, higher exit rate come the end of the year. That's where we're focused.

Speaker Change #130: It is what it is. Where we're focused as we think about the rest of the year is how do we deliver more and how do we deliver more reliably? You'll note that we are adjusting our outlook for LEAP deliveries this year.

Speaker Change #128: On a full year basis, we now think we will be somewhere between flat and up 5%, obviously lower than where we thought, but still showing.

Speaker Change #128: modest growth. And more importantly, I think given what we're doing with flight deck in the supply base, the expectations we have, not only for more inputs, but in turn more outputs.

Speaker Change #128: positions us to be at a healthier, more stable, higher exit rate come the end of the year. That's where we're focused, that's what we're sharing with our customers, work to do, work I think this team knows how to do.

Seth Seifman: That's what we're sharing with our customers, work to do, work I think this team knows how to do. Our next question comes from Seth Seifman with JP Morgan. Thanks very much and good morning.

Operator: Our next question comes from the line of Seth Seifman with JPMorgan.

Speaker Change #128: Our next question comes from a line of Seth Seifman with J.P. Morgan.

Larry Culp: Thanks very much and good morning. Morning Seth.

Rahul Ghai: Morning Seth. Good morning Seth. I wonder, just to kind of follow up on that last question and thinking about the progression on the delivery side, I think, you know, need a pretty significant increase off of the Q2 equipment revenue level to get to the guide for the year. You know, is it going to be possible to make much progress in Q3? Should we expect much more significant progress in Q4? And any other color that you can provide about the sequential dynamics across the company? Seth, let me start by just kind of maybe talking a little bit about how we think the back half will shape up. And Larry can add if there's anything more on the delivery side.

Seth Seifman: Thanks very much and good morning.

Larry Culp: I wondered just to kind of follow up on that last question and thinking about the progression on the delivery side. I think you know, need a pretty significant increase off of the Q2 equipment revenue level to get to the guide for the year. You know, is there, is it going to be possible to make much progress in Q3? Should we expect much more significant progress in Q4, and any other color that could you can provide about the sequential dynamics across the company.

Seth Seifman: Morning, Seth.

Seth Seifman: I wondered, just to kind of follow up on that last question and thinking about the progression.

Speaker Change #131: Um, on the delivery side, I think, um, you know,

Speaker Change #132: Need a pretty significant increase off of the Q2 equipment revenue level to get to the guide for the year.

Speaker Change #133: Is it going to be possible to make...

Speaker Change #134: Much progress in Q3. Should we expect much more significant progress in Q4? And any other colors that you can provide about the sequential dynamics across the company?

Rahul Ghai: Seth, let me start by just kind of maybe talking a little bit about how we think the back half will shape up. And Larry, you can add if there's anything more on the, on the delivery side. You know, listen, overall as you look at our H1 to H2 growth, H1, you know, we've delivered about 9% growth and it's kind of in line with what we are projecting for the full year. So our year over year growth is going to look similar between H1 and H2. The year over year growth will be higher in Q4 as both services and OE ramp.

Speaker Change #135: Seth, let me start by just kind of maybe talking a little bit about how we think the back half will shape up and Larry can add if there's anything more on the on the delivery side. You know, listen, overall, as you look at our first half to second half growth, first half, you know, we've delivered about 9% growth and

Rahul Ghai: You know, listen, overall, as you look at our first half to second half growth, first half, you know, we've delivered about nine percent growth, and it's kind of in line with what we are projecting for the full year. So our year over year growth is going to look similar between the first half and the second half. The year over year growth will be higher in the fourth quarter as both services and OE ramp up.

Larry Culp: That's kind of in line with what we are projecting for the full year.

Larry Culp: So, our year-over-year growth is going to look similar between first half and second half. The year-over-year growth will be higher in the fourth quarter as both services and OE ramp. So, we'll see that. Now, in terms of profit and drop-through, you know, the margins will be higher in 3Q versus 4Q.

Rahul Ghai: So we'll see that now in terms of profit and drop through the margins will be higher in Q3 versus Q4, since the 9X shipment impact is going to be primarily in the fourth quarter, and corporate expenses will be higher in the fourth quarter as well. So we expect the third quarter margins to be kind of flattish.

Rahul Ghai: So we'll see that now, in terms of profit and drop through, you know, the margins will be higher in 3Q versus 4Q since the 9X shipment impact is going to be primarily in the fourth quarter and corporate expenses will be higher in the fourth quarter as well.

Larry Culp: Since the 9x shipment impact is going to be primarily in the fourth quarter and corporate expenses will be higher in the fourth quarter as well. So we expect the third quarter margins to be kind of flattish.

Rahul Ghai: So we expect the third quarter margins to be kind of flattish, year over year, since we had a strong 3Q last year. So now if you take a look at, you know, kind of getting to how 3Q looks, operationally, we've had a better start to 3Q. I think Larry mentioned in his prepared remarks that the number of engines we've shipped here in the third quarter, in the first month of the third quarter in July, are significantly higher than what we delivered in the first three weeks in April.

Rahul Ghai: Year over year since we had a strong Q3 last year. So now if you took a look at, you know, kind of getting to how Q3 looks operationally, we've had a better start to Q3. I think Larry mentioned that in his prepared remarks. The number of engines we've shipped here in the third quarter in the first month of the third quarter in July are significantly higher than what we delivered in the first three weeks in April. So we are seeing sequential progress, and then if you look at the material input and as we compare the material input through the first three weeks in July versus the first three weeks in April, even for these suppliers that have been constraining output in the second quarter, we've seen a significant improvement. So that's going to allow us to drive the sequential improvement here in the third quarter.

Larry Culp: year-over-year since we had a strong 3Q last year.

Larry Culp: So now if you took a look at, you know, kind of getting to how 3Q looks operationally, we've had a better start with 3Q. I think Larry mentioned that in his prepared remarks, the number of engines we've shipped here in the third quarter in the in the first month of the third quarter in July are significantly higher than what we delivered in the in the first three weeks in April .

Rahul Ghai: So we are seeing sequential progress. And then if you look at the material input, and as we compare the material input through the first three weeks of July versus the first three weeks of April, even for these suppliers that have been constraining output in the second quarter, we've seen a significant improvement.

Speaker Change #136: So, we are seeing sequential progress.

Speaker Change #137: And then if you look at the material import, and as we compare the...

Speaker Change #138: The material input through the first three weeks in July versus the first three weeks in April . Even for these suppliers that have been constraining output in the second quarter, we've seen a significant improvement.

Rahul Ghai: I think we are off to a good start. More work to do here for sure. You know, July has been encouraging. Anything to add?

Speaker Change #138: So that's going to allow us to drive the sequential improvement here in the third quarter. So I think we are off to a good start, more work to do here for sure. But July has been encouraging.

Larry Culp: Got it.

Speaker Change #139: Do you have anything to add?

Speaker Change #140: Got it.

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

Rahul Ghai: So that's going to allow us to drive the sequential improvement here in the third quarter. So I think we are off to a good start, more work to do here for sure, but, you know, July has been encouraging. [inaudible] Our next question comes from a line from Gautam Khanna with Calendar. Yeah, hey, good morning.

Speaker Change #140: Our next question comes from a line of Gautam Kanna with Cowan.

Rahul Ghai: Yeah.

Gautam Khanna: Thank you guys. Good morning and good result. Thanks, Autumn.

Larry Culp: Hey, good morning. Thank you guys. Good morning. Good results.

Gautam Kanna: Yeah, hey, good morning. Thank you, guys.

Rahul Ghai: Thanks, Gautam. Thank you.

Larry Culp: Thank you. So I was curious, just to follow up, could you talk a little bit about how much inventory you're actually absorbing incrementally in the guidance and, maybe, if you could speak to what your strategy is with the supply chain, given, you know, some folks are constrained, but some folks are probably ahead, given the lower lead projection relative to the start of the year? Like, are you in the process of slowing down some folks? If you could talk about that inventory dynamic, and you know, what you're absorbing incrementally? Any color you can provide.

Gautam Kanna: Good morning and good results.

Larry Culp: I was curious, just to follow.

Rahul Ghai: Culp, could you talk a little bit?

Speaker Change #141: Thanks, Gautam. Thank you.

Gautam Kanna: So I was curious, just to follow up, could you talk a little bit about how much inventory you're actually absorbing incrementally in the guidance?

Speaker Change #142: Maybe if you can speak to what your strategy is with the supply chain, given, you know, some folks are constrained, but some folks are probably ahead, given the lower

Speaker Change #142: Leap Projection relative to the start of the year. Like, are you in the process of slowing down some folks? If you could just talk about that inventory dynamic and, you know, what you're absorbing incrementally.

Rahul Ghai: If you could just talk about that?

Larry Culp: Inventory dynamics and what you're absorbing incrementally and any color you can provide. Thanks. Well, maybe we'll just take those in reverse order and I'll start. I think that.

Larry Culp: Thanks. Well, maybe we'll just take them in reverse order. And I'll start by saying that we really aren't trying to slow down in a meaningful way. We're really trying. The way I think about it is we're trying to make sure that we're calibrated with respect to what we need from everybody, because, as you point out, different folks are in different places. As we think about the back half, as we think about 25, as we think about 26.

Speaker Change #143: Any color you can provide. Thanks. Well, maybe we'll just take those in reverse order. And I'll start. I think that

Larry Culp: We really aren't trying to slow down in a meaningful way. We're really trying. The way I think about it is we're trying to make sure that we're calibrated with respect to what we need from everybody. Because as you point out, different folks are in different places. As we think about the back half, as we think about 2025, as we think about 2026. I think part of why this has been so challenging, and maybe even head-scratchingly so for some, is that the industry was dialed down to almost zero in the pandemic.

Speaker Change #144: We really aren't trying to slow down in a

Speaker Change #144: in a meaningful way. We're really trying, the way I think about it, is we're trying to make sure that we're calibrated.

Speaker Change #144: With respect to what we need from everybody, because as you point out, different folks are in different places. As we think about the back half, as we think about 25, as we think about 26.

Larry Culp: I think part of why this has been so challenging and maybe even, and head-scratchingly so for some, is that the industry was dialed down to almost zero during the pandemic, and what we don't want to do. And the reason we do carry probably more inventory today and at year end than we would like is we don't want to turn down folks that are performing well unduly as we calibrate the ramp rates with those that will, in all likelihood, pace.

Speaker Change #144: I think part of why this has been so challenging and maybe even a

Speaker Change #144: Even head-scratchingly so for some, is that the industry was dialed down to almost zero in the pandemic.

Larry Culp: What we don't want to do, and the reason we do carry probably more inventory today will at year end than we would like to, is we don't want to turn down the folks that are performing well unduly as we calibrate the ramp rates with those that will in all likelihood pace us. So we've taken a view that in some instances.

Speaker Change #144: And what we don't want to do...

Larry Culp: So we've taken a view that, in some instances, inventory is, in effect, an investment in the supply base for ourselves to make sure that we've got a more predictable ramp. Remember, a lot of lean is rooted in flow, and flow really is around availability. To the extent that we've got some folks that are performing, we don't want to, if you will, penalize them.

Larry Culp: The inventory is in effect an investment with the supply base for ourselves to make sure that we've got a more predictable ramp. Remember, a lot of lean is rooted in flow and flow really is around availability. To the extent that we've got some folks that are performing, we don't want to, if you will, penalize them as we think about all that we're going to need from them, not only over the next six months, but frankly over the coming years.

Will: The inventory is, in effect, an investment.

Will: as we think about all that we're going to need from them, not only over the next six months, but frankly, over the coming years.

Rahul Ghai: Gautam, you'll see that in our queue. I think you're spot on. We've seen significant inventory growth here in the first half of the year, close to $1.2 billion of inventory growth, which is, call it, $500 million higher than what we grew in the first half of last year. So significant headwind here. Now, with the improvement in output that we are projecting here for the second half of the year, we do think that while inventory will grow in the second half of the year, obviously the pace of growth will slow down significantly here, and then it won't be as much of a headwind as it was last year in the second half of the year. So it has been a challenge. But again, as Larry said, that is something we've been trying to manage and manage it as appropriately as we can.

Larry Culp: So, a significant headwind here. Now, with the improvement in output that we are projecting here for the second half of the year, we do think that while inventory will grow in the second half of the year, obviously, the pace of growth will slow down significantly here. And then it won't be as much of a headwind as it was last year in the second half of the year.

Rahul Ghai: Gautam, you'll see that in our queue. I think you're spot on. We've seen significant inventory growth here in the first half of the year, close to $1.2 billion of inventory growth, which is, call it, $500 million higher than what we grew in the first half of last year. So significant headwind here. Now, with the improvement in output that we are projecting here for the second half of the year, we do think that while inventory will grow in the second half of the year, obviously the pace of growth will slow down significantly here, and then it won't be as much of a headwind as it was last year in the second half of the year. So it has been a challenge. But again, as Larry said, that is something we've been trying to manage and manage it as appropriately as we can.

Will: And Gautam, you'll see that in our queue. I think you're spot-on. We've seen significant inventory growth here in the first half of the year, you know, close to a billion two of inventory growth.

Will: You know, which is, call it half a billion dollars higher than what we grew in the first half of last year. So, so significant headwind here.

Rahul Ghai: So it has been a challenge. But again, as Larry said, that's something we've been trying to manage and, you know, manage it as appropriately as we can. But the good news is, despite the billion two of inventory growth in the first half of the year, we still had 120% conversion, so strong cash growth was up about a billion dollars a year over a year in the first half. So we kind of absorbed it, we managed it, and we will try to try to do better in the second half. Our next question comes from Scott Deuschle with Deutsche Bank. Hey, good afternoon. Good afternoon.

Will: So, it has been a challenge, but again, as Larry said, that is something we've been trying to manage.

Rahul Ghai: But the good news is despite the buildup of inventory growth in the first half of the year, we still had 120% conversion. So strong cash growth, cash was up about $1 billion year over year in the first half. So we kind of absorbed it, we managed it and.

Will: [inaudible]

Rahul Ghai: Try to do better in the second half.

Larry Culp: Try to try to do better in the second half.

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

Speaker Change #145: Our next question comes from the line of Scott Deuschle with Deutsche Bank.

Rahul Ghai: Hey, good afternoon. Good afternoon.

Larry Culp: Hey Scott.

Rahul Ghai: Hey Larry. Not to beat a dead horse, but just following up on Myles' earlier question, I was wondering if you could offer some more detail on those, I guess six or so, remaining supplier sites that are the key bottlenecks at this point. Basically, you know, trying to understand if we're down to the investment castings and forging suppliers at this point or if it's a broader set of bottlenecks. And I appreciate not wanting to point any fingers, but just trying to get a sense for whether there's something in common undergirding this remaining set of suppliers. Thanks.

Scott Deuschle: Hey, good afternoon.

Speaker Change #146: Basically, you know, trying to understand if we're down to the investment castings and forging suppliers at this point, or if it's a broader set of bottlenecks. And I appreciate not wanting to point fingers, but just trying to get a sense for whether there's something in common undergirding this remaining set of suppliers. Thanks.

Larry Culp: God, I think you've heard me pretty clearly. I appreciate that. No, I think the common denominator is frankly we all need to do better, and we need to be more collaborative and fully in problem solving mode. That's the headset that we have at GE Aerospace. I'm convinced while that takes different forms at different suppliers, that is where every one of those nine suppliers across those 15 sites are. Some made more progress than others. But it's a long race, right? This was not a 90 day sprint. This is a marathon. And regardless of where folks are, from a commodity category perspective, from a geography perspective, publicly held, privately held, it just doesn't matter. Right.

Larry Culp: I appreciate that. But, I think the common denominator is, frankly, we all need to do better, and we need to be more collaborative and fully in problem-solving mode. That's the headset that we have at GE Aerospace. I'm convinced. While that takes different forms from different suppliers, that is where every one of those nine suppliers across those 15 sites is. Some have made more progress than others, but it's a long race, right? This was not a 90-day sprint. This was a marathon.

Speaker Change #147: Scott, I think you've heard me pretty clearly. I appreciate that. No, I think the common denominator is, frankly, we all need to do better.

Speaker Change #147: and we need to be more collaborative and fully in problem-solving mode.

Speaker Change #148: That's the headset that we have at GE Aerospace. I'm convinced.

Speaker Change #148: While that takes different forms of different suppliers, that is where every one of those nine suppliers across those 15 sites are. Some made more progress than others, but it's a long race, right? This was not a 90-day sprint. This is a marathon.

Larry Culp: And regardless of where folks are from a commodity category perspective, from a geography perspective, publicly held, privately held, it just doesn't matter, right? We've got to get the teams in. We've got to go deep. We've got to get into the granular operational details to solve those problems and unlock those constraints. Increased Capacity. Raheal, much as I think we have picked up the pace a bit here, I think, in the second quarter, and just need to do a lot more of that broadly in the second half. Our next question comes from the line of Robert Stallard with Vertical Research. Thank you very much.

Speaker Change #148: And regardless of where folks are from a commodity category perspective, from a geography perspective, publicly held, privately held, it just doesn't matter, right? We've got to get the teams in, we've got to go deep, we've got to get into the granular operational detail.

Larry Culp: We've got to get the teams in, we've got to go deep, we've got to get into the granular operational detail to solve those problems, unlock those constraints, increase capacity, raise yields, much as I think we have been doing. Picked up the pace a bit here, I think, in the second quarter and just need to do a lot more of that broadly in the second half.

Speaker Change #148: to solve those problems, unlock those constraints.

Speaker Change #148: [inaudible]

Speaker Change #148: Much as I think we have been doing, picked up the pace a bit here, I think, in the second quarter, and just need to do a lot more of that broadly in the second half.

Operator: Our next question comes from the line of Robert Stallard with Vertical Research.

Speaker Change #148: Our next question comes from the line of Robert Stallard with Vertical Research.

Larry Culp: Thanks so much. Good afternoon.

Rahul Ghai: Good afternoon, Robert.

Robert Stallard: Good afternoon, Robert. Um, just following on from your earlier comments, Larry, and your question about your confidence in the relative... Well, I think we'll leave commentary on everything they're managing to our customers. We're focused on what we can manage, right? And I think that the updated guide here, the color around LEAP specifically, is certainly that of high confidence. It wouldn't come out of our mouths; it wouldn't be in our prepared remarks otherwise.

Speaker Change #148: Thanks so much. Good afternoon. Good afternoon, Robert.

Larry Culp: Well, I think we'll leave to our customers commentary on everything they're managing. We're focused on what we can manage. Right. I think that the updated guide here, the color around LEAP specifically, is certainly that of high confidence. It wouldn't come out of our mouths. It wouldn't be in our prepared remarks otherwise. But again, work to do, work I think we're encouraged by with respect to the second quarter impact, the start to July as well. But we've got a lot of work in front of us. We've got many days to do that work. That's where this team is focused completely, I can assure you.

Larry Culp: But again, work to do, work we're encouraged by, with respect to the second quarter impact, and the start of July as well. But we've got a lot of work in front of us. We've got many days to do that work. That's where this team is focused. Completely, I can assure you.

Larry Culp: Well, I think we'll leave to our customers' commentary on everything they're managing. We'll focus on what we can manage.

Speaker Change #150: Right. And I think that the updated guide here, the color around LEAP specifically, is certainly that of high confidence. It wouldn't come out of our mouths. It wouldn't be in our prepared remarks otherwise. But again, work to do. Work, work, work.

Robert Stallard: I think we're encouraged by, with respect to the second quarter impact, the start to July as well. But we've got a lot of work in front of us. We've got many days to do that work. That's where this team is focused completely, I can assure you.

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

Noah Popenek: Our next question comes from the line of Noah Popenek with Goldman Sachs. Hey, good morning, everyone. Good morning, Noah.

Speaker Change #149: Our next question comes from the line of Noah Popenek with Goldman Sachs.

Larry Culp: Hey, good morning, everyone. Good morning, Noah.

Noah Popenek: Hey, good morning, everyone.

Larry Culp: You show on slide 17 that CES services orders are growing much faster than revenue, and the absolute dollar levels are much higher. I guess. You know, eventually, the overall aftermarket has to normalize as we fully recover air travel growth. What's behind that?

Noah Popenek: Good morning, NOAA.

Larry Culp: You show on slide 17 that the.

Noah Popenek: You show on slide 17 that the CES services orders are growing much faster than revenue, and the absolute dollar levels are much higher.

Larry Culp: CES services orders are growing much faster than revenue and the absolute dollar levels are much higher.

Rahul Ghai: I guess.

Larry Culp: You know, eventually overall aftermarket has to normalize.

Speaker Change #152: You know eventually overall aftermarket has to normalize as we as we fully recover air travel growth.

Larry Culp: As we fully recover. Air travel growth.

Rahul Ghai: How much of that is the leap? You know, does that suggest that CES services growth can actually accelerate next year versus this year? No, no, you're right. I mean, we had a good second quarter on orders. We had a good first half.

Larry Culp: What's behind that? How much of that is the LEAP and.

Speaker Change #154: What's behind that? How much of that is the leap?

Larry Culp: Does that suggest that CES services growth can actually accelerate next year versus this year?

Speaker Change #153: You know, does that suggest that CS services growth can actually accelerate next year versus this year?

Rahul Ghai: Noah, you're right. I mean, we had a good second quarter on orders. We had a good first half. I mean, services orders were kind of, as you said, mid-30s for the second quarter, up 30% or so for the first half. Strong book to build here.

Speaker Change #151: No, no, you're right. I mean, we had a good

Speaker Change #151: Second quarter on orders, we had a good first half. I mean, services orders were, you know, kind of, as you said, mid-30s for the

Speaker Change #151: Second quarter, up 30% or so for the first half, you know, strong book to build here in the first half of the year, on top of a good book to build we saw in 2023. So the momentum is definitely there on the services side. And

Rahul Ghai: In the first half of the year on top of a good book-to-bill we saw in 2023. So the momentum is definitely there on the services side. And as you look at the back half of the year, we are expecting the services growth to be a little bit higher in the second half than in the first half, both on the shop visits and on spare parts on a year-over-year basis. So you know, we delivered 9% internal shop visit growth in the first half of the year. And if you look at our low to mid teens guidance on shop visits, that would imply that shop visits will be closer to, you know, high teens in the second half of the year on a year-over-year basis. So that's what we are projecting.

Rahul Ghai: So, you know, we delivered 9% internal shop visit growth in the first half of the year. And if you look at our low to mid-teens guidance for shop visits, that would imply that shop visits will be closer to, you know, high teens in the second half of the year on a year-over-year basis. So that's what we are projecting.

Speaker Change #151: You know, as you look at the back half of the year, we are expecting the services growth to be a little bit higher in the second half than in the first half, right, both on the shop visits and, you know, on spare parts on a year-over-year basis.

Speaker Change #151: So, you know, we delivered 9% internal shop visit growth in the first half of the year. And if you look at our low to mid-teens guidance on shop visits, that would imply that shop visits will be closer to, you know, high teens in the second half of the year on a year-over-year basis.

Rahul Ghai: But you know, overall, listen, mid-teens services growth, and that is consistent with what we think, you know, the future years will look like. I think that's what we had when we look at our 2025-2020 outlook, you know, we were projecting continued strong services growth. So it's good to see the strong orders growth, good to see, as Larry said earlier, you know, LEAP gaining share on the overall air traffic departure side as well.

Rahul Ghai: But, you know, overall, it's mid-teens services growth, and that is consistent with what we think the future years will look like. I think that's what we had when we looked at our 2025 outlook. You know, we were projecting continued strong services growth, so it's good to see the strong order growth. Good to see, as Larry said earlier, you know, gaining share on the overall air traffic departure side as well. Our next question will come from Gavin Parsons with UBS. Thanks, good morning. Good morning.

Speaker Change #151: So that's what we are projecting, but, you know, overall, listen.

Speaker Change #151: Bid Team Services Growth and that is consistent with what we think, you know, the future years will look like. I think that's what we had.

Speaker Change #151: When we look at our 2025 outlook, you know, we are projecting continued strong services growth. So it's good to see the strong orders growth, good to see, as Larry said earlier, you know, leap gaining share on the overall air traffic departure side as well.

Operator: Our next question will come from the line of Gavin Parsons with UBS.

Speaker Change #155: Our next question will come from the line of Gavin Parsons with UBS.

Larry Culp: Thanks.

Rahul Ghai: Good morning.

Larry Culp: Good morning. Good morning.

Gavin Parsons: I mean, I guess to Rob's question earlier on, you know, extending the life of older engines, clearly strong demand for, you know, both growth and new aircraft. But there have been a couple airline profit warnings in the last week or two. So I just wanted to ask if you had any early indications from your discussions with customers, whether it be relating to fleet planning, pricing, or any other.

Gavin Parsons: Thanks. Good morning.

Larry Culp: I mean, I guess, to Rob's question earlier on, extending life of older engines, clearly strong demand for both growth and new aircraft. But there's been a couple airline profit warnings over the last week or two. So I just wanted to ask if you've had any early indications from your discussions with customers whether it be relating to fleet planning, sensitivity to pricing, or any other changes. Thanks Gavin. As you would imagine.

Gavin Parsons: Good morning.

Speaker Change #156: I mean, I guess to Rob's question earlier on, you know, extending life of older engines, clearly strong demand for, you know, both.

Gavin Parsons: Growth and New Aircraft. But there's been a couple airline profit warnings over the last week or two, so I just wanted to ask if you had any early indications from your discussions with customers, whether it be relating to fleet planning, sensitivity to pricing, or any other changes. Thanks.

Larry Culp: Gavin, as you would imagine, we, uh... We follow all of that pretty closely, both in the US, here in Europe, globally. We really have not seen any effect on our business, and Rahul's comments a moment ago. We will remain watchful, but don't anticipate that. Again, I think to the earlier question with services orders up 36% in CES in the second quarter. That's the way our customers are speaking. I look at where we are here in the third quarter, just in terms of how much of the spares activity we have in the backlog. I think it's in the 90% range at this,

Larry Culp: We follow all of that pretty closely. Both, well, in the US here in Europe, globally.

Gavin Parsons: Gavin, as you would imagine, we, uh...

Speaker Change #157: We follow all of that pretty closely, both in the U.S., here in Europe , globally.

Larry Culp: We really have not seen any effect on our business. And Rahul's comments a moment ago.

Speaker Change #157: We really have not seen any effect on our business. And Rahul's comments a moment ago.

Larry Culp: We'll remain watchful but don't anticipate that. Again, I think to the, to the earlier question with services orders up 36% in CES in the Q2, that's the way our customers are speaking to us. I look at where we are here in the Q3 just in terms of how much of the spares activity we have in backlog. I think it's.

Rahul: We'll remain watchful, but don't anticipate that.

Speaker Change #158: Again, I think to the earlier question, with services orders up 36% in CES in the second quarter.

Rahul: That's the way our customers are speaking to us.

Speaker Change #159: I look at where we are here in the third quarter, just in terms of how much of the spares activity we have in backlog. I think it's

Larry Culp: In the 90% range at this point. So well positioned very early here in the quarter. Again I would just also point to the utilization that we see on the CFM56, still strong, no real change.

Speaker Change #159: in the 90% range at this point. So well positioned very early here in the quarter. And again, I would just also point to the utilization that we see on the CFM 56.

Larry Culp: Well positioned very early here in the quarter. And again, I would just also point to the utilization that we see on the CFM 56. Still strong, no real change this year, and the uptake of the upshot of the leap, taking four points of market share. So GE Powered Neuro Body Activity Remains Strong. Take the comments that were out here in Europe yesterday; they seemed to be more pricing-oriented than anything else.

Larry Culp: This year, and the uptake, the upshot of the LEAP taking four points of market share. So GE-powered narrow-body activity remains strong. Just take the comments that were out here in Europe yesterday; it seemed to be more pricing-oriented than anything else. So we'll keep a weather eye out. But right now, our challenge, our struggle is to keep up with this exceptionally strong demand both in the aftermarket and again with newmake.

Speaker Change #159: Still strong, no real change.

Speaker Change #159: This year, and the uptake, the up,

Speaker Change #159: upshot of the leap, taking four points of market share. So GE powered narrowbody activity remains strong.

Unknown Executive: So GE Power, narrow body activity remains strong. You just take it the comments that we're out here in Europe yesterday. It seemed to be more pricing oriented than anything else. So we'll keep a weather eye out, but right now, our challenge, our struggle is to keep up with this exceptionally strong demand, both in the aftermarket and again with new make.

Larry Culp: So we'll keep a weather eye out. But right now, our challenge, our struggle is to keep up with this exceptionally strong demand, both in the aftermarket and again, with new. Our next question will come from the line of Jason Gursky with Citi. Hey, good morning, everybody. Good morning, Jason.

Speaker Change #159: Take the comments that were out here in Europe yesterday. It seemed to be more pricing oriented than anything else. So we'll keep a weather eye out. But right now, our challenge, our struggle is to keep up with this exceptionally strong demand, both in the aftermarket and again, with new make.

Jason Gersky: Our next question will come from the line of Jason Gersky with City. Hey, good morning, everybody. Morning, Jason.

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

Speaker Change #159: Our next question will come from the line of Jason Gursky with Citi.

Larry Culp: Good morning, everybody.

Larry Culp: Morning, Jason.

Jason Gursky: Hey, good morning, everybody.

Jason Gursky: Hey, Larry, I was wondering if you could just spend a few more minutes on the rise and maybe provide an update on some development milestones there and, you know, how the customer conversations are going. At this point, you mentioned that you're, you know, showcasing the engine there at Farm Bureau. I'm just kind of curious what, you know, you think customer acceptance is gonna be shaping up to look like at this point. I would say that customer interest seems to only be building.

Rahul Ghai: Larry, I was wondering if you could?

Unknown Executive: Larry, I was wondering if you could just spend a few more minutes on the rise. And maybe put in up the dawn, some development milestones there, and you know how the customer conversations are going at this point. You mentioned that you're, you know, showcasing the engine there at Farmboro. I'm just kind of curious what, you know, you think customer acceptance is going to, is shaping up to look like at this point. Okay, so I would say that customer interest seems to only build with the passage of time. This is now the third air show in a row that I've attended with the rise engine.

Speaker Change #160: Good morning, Jason.

Jason Gursky: Larry, I was wondering if you could just spend a few more minutes on the rise and maybe provide an update on...

Jason Gursky: Some development milestones there and, you know, how the customer conversations are going at this point. You mentioned that you're, you know, showcasing the engine there at Farm Bureau. I'm just kind of curious what.

Larry Culp: You think customer acceptance is shaping up to look like at this point.

Speaker Change #161: You know, you think customer acceptance is shaping up to look like at this point.

Rahul Ghai: Jason.

Larry Culp: I would say that customer interest seems to only build with the passage of time. This is now the third air show in a row that I've attended with the RISE engine, the Open Fan engine, front and center here. Obviously, when we talk about RISE, we're really talking about an umbrella of different technology programs. Not only the Open Fan, but also our compact core work, our hybrid electric activity, and everything we're doing on SAF. But with respect to Open Fan, I think what we've been sharing with people is that we had a very good first ingestion test with the Open Fan blade. In Q1, we are starting our second endurance campaign.

Speaker Change #162: I would say that customer interest seems to only build with the passage of time. This is now the third air show in a row that I've attended with

Larry Culp: With the passage of time, this is now the third air show in a row that I've attended with The RISE engine, the open fan engine, you know, front and center here. Obviously, when we talk about RISE, we're really talking about an umbrella of different technology programs, not only the open fan, but also our compact core work, our hybrid electric activity, and everything we're doing on SAS. But with respect to OpenFAN, I think what we've been sharing with people is that we had a very good first ingestion test. With the open pan blade in the first quarter, we are starting our second endurance campaign, or tasked with the high-pressure termite airfoils.

Unknown Executive: The open fan engine, you know, front and center here.

Speaker Change #162: The RISE engine, the open fan engine, front and center here, obviously when we talk about RISE, we're really talking about an umbrella of different technology programs, not only

Unknown Executive: Obviously, when we talk about rise, we're really talking about an umbrella of different technology programs, not only the open fan, but also our compact core work, our hybrid electric activity. And everything we're doing on staff. But with respect to open fan, I think what we've been sharing with people is that we had a very good first ingestion test with the, with the open fan blade in the front. First quarter, we are starting our second endurance campaign, or test with the high pressure term and air foils. And there's been a lot of work with respect to the hybrid electric elements of that architecture work that, as you may know, we do with NASA.

Speaker Change #162: The Open Fan, but also our compact core work, our hybrid electric activity, and everything we're doing on SAF. But with respect to Open Fan, I think what we've been sharing with people is that we had a very good first ingestion test.

Speaker Change #162: With the Open Pan Blade, in the first quarter, we are starting our second endurance campaign.

Larry Culp: Our test with the high pressure turbine airfoils, and there's been a lot of work with respect to the hybrid electric elements of that architecture. Work that, as you may know, we do with NASA. I mentioned, I think, earlier the wind tunnel testing that we've done here in Europe in conjunction with Airbus.

Larry Culp: And there's been a lot of work with respect to the hybrid electric elements of that architecture. I mentioned earlier the wind tunnel testing that we've done here in Europe and, Junction with Airbus. So, there are I think over 200, I think maybe it's 250 component level tests, module level tests that we have behind us.

Speaker Change #162: or test with the high pressure termite airfoils. And there's been a lot of work with respect to the hybrid electric elements of that architecture work that, as you may know, we we do with NASA. I mentioned, I think, earlier, the wind tunnel testing that we've done here in Europe and in.

Unknown Executive: I mentioned, I think earlier the wind tunnel testing that we've done here in Europe in, in, there, I think over 200, I think maybe it's 250 component level tests, module level test that we have behind us.

Larry Culp: There are, I think, over 200. I think maybe it's 250.

Speaker Change #162: Juncture with Airbus

Speaker Change #162: So...

Speaker Change #162: There are, I think, over 200, I think maybe it's 250 component-level tests, module-level tests that we have behind us.

Larry Culp: Component level tests, module level tests that we have behind us. This is still a technology development effort, make no mistake about it.

Larry Culp: This is still a technology development effort. Make no mistake about it, right? We've got a long way to go. But what's interesting, particularly here in Europe, virtually every airline CEO that I talk to starts the conversation with sustainability and is very keen to get our views on SAF compatibility, but also, ahead of SAF capacity being available at scale, what are we going to do to enable the next generation of narrowbodies? And we go hard and fast to rise, talking about the progress that we're making with OpenFab.

Unknown Executive: This is still a technology development effort; make no mistake about it, right? We've got a long way to go. But what's interesting, particularly here in Europe, virtually every airline CEO that I talk to starts the conversation with sustainability. And very keen to get our views on staff compatibility, but also ahead of staff capacity being available at scale.

Rahul Ghai: Right.

Speaker Change #162: This is still a technology development effort. Make no mistake about it, right? We've got a long way to go. But what's interesting, particularly here in Europe ,

Speaker Change #162: And virtually every airline CEO that I talk to starts the conversation with sustainability.

Speaker Change #163: And we're very keen to get our views on SAF compatibility, but also ahead of SAF capacity being available at scale, what are we going to do to enable the next generation of narrowbodies?

What are we going to do to enable the next generation of antibodies? And we go hard and fast to rise, talk about the progress that we're making with Open Fan. And I think that is a story that continues to build enthusiasm and support because we know that the ultimate target.

Speaker Change #164: And we go hard and fast to rise, talk about the progress that we're making with OpenFAB.

Speaker Change #164: and I think that is a story that continues to build enthusiasm and support because we know that the the ultimate target

Speaker Change #164: [inaudible]

Speaker Change #164: Step up in propulsive efficiency in emissions reduction really is the future of flight.

Blair Schorr: We have time for one last question.

Blaire Shoor: We have time for one last question.

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

Speaker Change #164: We have time for one last question.

Speaker Change #164: This question will come from the line of Matt Akers with Wells Fargo.

Larry Culp: Hi, good morning guys. Thanks for the question. Morning, Matt. Good morning. Matt, I wanted to ask what are.

Matt Akers: Hi, good morning, guys. Thanks for the question. Matt.

Matt Akers: Hi, good morning guys. Thanks for the questions.

Rahul Ghai: Kind of your latest thoughts on LEAP?

Matt Akers: Good morning, Matt.

Larry Culp: Kind of break-even timing just given volumes are running a little bit lower than we thought, and sounds like you're deploying a lot of resources to work through some of these supplier issues. Just curious if that timing has shifted at all.

Speaker Change #165: Scott Strazik, Carolina Happe, Steven Winoker, Larry Culp

Rahul Ghai: So, you know, we expected LEAP to be profitable here in 2024 and the program to be breakeven in 2025. And LEAP services, in fact, shaping a little bit better than what we originally thought as we started the year. And we mentioned that in our prepared remarks. So, you know that's how the overall program is shaping up you know we're making the progress on durability that we that we were expecting um it'll be leap tracking better than cfm56 at this stage of the life cycle we are expecting uh leap performance to be in line with cfm56 uh performance on um on the a320s by the end of the year so that is obviously a huge milestone given all the uh improvements we've been driving you know the hpd blade was the last thing that was that's in and we expect that to happen here in in uh in the fourth quarter we've completed more than 3500 tests on that 3500 hours of testing on that so that's going really well so all in i think leaps progressing exactly the way we would have liked um services right a little bit better program should break even next year, Larry, any final comments?

Rahul Ghai: Yeah, Matt, timing has not shifted. So we expected LEAP to be profitable here in 2024 and the program to be break even in 2025. And LEAP Services, in fact, shaping up a little bit better than what we originally thought as we started the year. And we mentioned that in our prepared remarks. So, you know, that's how the overall program is shaping up. You know, we're making the progress on durability that we were expecting, you know, the LEAP tracking better than CFM56 at this stage of the lifecycle. We are expecting LEAP performance to be in line with CFM56 performance on the A320s by the end of the year. So that is obviously a huge milestone given all the improvements we've been driving.

Speaker Change #166: Yeah, you know, Matt, timing has not shifted. So, you know, we expected LEAP to be profitable here in 2024 and the program to be break-even in 2025 and LEAP services in fact shaping up a little bit better than what we originally thought as we started the year and we mentioned that in our prepared remarks.

Speaker Change #166: So...

Speaker Change #166: You know, that's how the overall program is shaping up.

Speaker Change #166: You know, we're making the progress on durability that we that we were expecting, you know, the leap striking better than CFM 56 at this stage of the life cycle we are expecting.

Speaker Change #166: Leap Performance to be in line with CFM56 performance on

Speaker Change #166: on the A320s by the end of the year. So that is obviously a huge milestone given all the

Rahul Ghai: You know, the HPT blade was the last thing that was in, and we expect that to happen here in Q4. We've completed more than 3,500 tests on that. 3,500 hours of testing on that. So that's going really well. So all in, I think LEAP's progressing exactly the way we would have liked. Services dragging a little bit better. Program should break even next year.

Speaker Change #166: improvements we've been driving, you know, the HPT blade was the last thing that was in and we expect that.

Speaker Change #166: to happen here in the fourth quarter. We've completed more than 3,500 tests on that, 3,500 hours of testing on that. So that's going really well. So all in, I think Leap's progressing exactly the way we would have liked. Services are getting a little bit better. Program should break even next year.

Blair Schorr: Larry, any final comments?

Blaire Shoor: Larry, any final comments?

Rahul Ghai: Blair, thank you. I think just to close, the GE Aerospace team is going to stay grounded in our responsibility that we share to live the purpose, to invent the future of flight, to lift people up and bring them home safely. So we really appreciate your time today and, of course, your interest in GE Aerospace. Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.

Larry Culp: Larry, any final comments?

Speaker Change #167: So, we really appreciate your time today and, of course, your interest in GE Aerospace.

Operator: Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.

Speaker Change #168: Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.

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