Q3 2024 General Electric Co Earnings Call

October 22, 2024

Blair Shore: Relations team. Please proceed.

Operator: Relations team. Please proceed.

Blair Shore: Thanks, Liz. Welcome to GE Aerospace's Q3 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.

Blaire Shoor: Thanks, Liz. Welcome to GE Aerospace's Q3 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.

Third Quarter, 2024 Earnings Call. I'm joined by Chairman and CEO Larry Kulp and CFO Rahul Gai. 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.

Larry Culp: As described in our SEC filings and website, those elements may change as the world changes. Now, over to Larry. Blair, thank you, and good morning. We're pleased to be joining you from GERA Space's headquarters in Evendale, Ohio.

Larry Culp: Larry, thank you, and good morning. We're pleased to be joining you from GE Aerospace's headquarters in Evendale, Ohio. For more than a century, GE Aerospace employees have been inventing the future of flight, lifting people up, and bringing them home safely. Those last four words, "bringing them home safely," are an incredible responsibility and will always be our top priority and core to our culture. We're motivated each day by our purpose and guided by Flight Deck, our proprietary lean operating model. Our team is dedicated to safety, quality, delivery, and cost in that order. That focus will enable us to meet the significant demand of today while building the innovative solutions of tomorrow. It is because of the shared commitment of our 52,000 employees around the world that we have the privilege to continue to advance flight for today, tomorrow, and the future.

Larry Culp: For more than a century GE aerospace employees have been inventing the future of flight, lifting people up and bringing them home safely.

Larry: Those last four words, bringing them home safely, are an incredible responsibility and will always be our top priority and core to our culture.

Larry: We're motivated each day by our purpose and guided by flight deck, our proprietary lean operating model. Our team has dedicated to safety, quality, delivery, and cost in that order.

Larry: That focus will enable us to meet the significant demand of today, while building the innovative solutions of tomorrow.

Larry: It is because of the shared commitment of our 52,000 employees around the world that we have the privilege to continue to advance flight for today tomorrow in the future.

Larry Culp: Turning to our Q3 performance, orders were up 28%, driven by robust demand, and we delivered strong earnings and cash. Revenue was up 6% from growth in services and equipment, while operating profit was up 14% and adjusted EPS up 25%. Free cash flow was $1.8 billion, with conversion of more than 140%. In Commercial Engines and Services, or CES, orders were up 29%, with more than 20% growth in both services and equipment. Our recent wins in wide bodies and narrow bodies build on our considerable backlog of $149 billion, greater than 90% of which is in services. Services revenue grew 10% and supported total operating profit, which was up 16% year over year. Our priority continues to be servicing and growing the industry's most extensive commercial installed base.

Turning to our Q3 performance, orders were up 28%, driven by robust demand, and we delivered strong earnings and cash. Revenue was up 6% from growth in services and equipment, while operating profit was up 14% and adjusted EPS up 25%. Free cash flow was $1.8 billion, with conversion of more than 140%. In Commercial Engines and Services, or CES, orders were up 29%, with more than 20% growth in both services and equipment. Our recent wins in wide bodies and narrow bodies build on our considerable backlog of $149 billion, greater than 90% of which is in services. Services revenue grew 10% and supported total operating profit, which was up 16% year over year. Our priority continues to be servicing and growing the industry's most extensive commercial installed base.

Larry: Turning to our third quarter performance, orders were up 28%, driven by Robust demand and we delivered strong earnings and cash.

Larry: Revenue was up 6% from growth and services and equipment while operating profit was up 14% and adjusted EPS up 25%.

Larry: 3 cash flow with a billion eight with conversion of more than 140%.

Larry: In commercial engines and services, or CES, orders were up 29%, with more than 20% growth in both services and equipment.

Larry: Our recent wins and wide bodies and narrow bodies built on our considerable backlog of $149 billion.

Larry: Brader, the 90% of which is in services.

Larry: Services revenue route 10% and supported total operating profit, which was up to 16% year over year.

Larry: Our priority continues to be servicing and growing, the industry's most extensive, commercial, and stalled base.

Larry Culp: We made progress with the step-up in OE deliveries quarter over quarter, with higher spare part sales to support our external MRO network while also expanding aftermarket capacity. Progress to be sure, but more work lies ahead. In Defense and Propulsion Technologies, or DPT, orders increased 19% while profit declined. Engine deliveries were up sequentially but down year over year. We're focused on improving delivery of our leading defense programs while developing mission-critical technology for the future. Many thanks to our team for their work and dedication this quarter, and a specific thank you this morning goes out to our teams impacted by Hurricanes Helene and Milton. You worked around the clock to support each other and minimize the impact to our customers. You are GE Aerospace at its finest.

We made progress with the step-up in OE deliveries quarter over quarter, with higher spare part sales to support our external MRO network while also expanding aftermarket capacity. Progress to be sure, but more work lies ahead. In Defense and Propulsion Technologies, or DPT, orders increased 19% while profit declined. Engine deliveries were up sequentially but down year over year. We're focused on improving delivery of our leading defense programs while developing mission-critical technology for the future. Many thanks to our team for their work and dedication this quarter, and a specific thank you this morning goes out to our teams impacted by Hurricanes Helene and Milton. You worked around the clock to support each other and minimize the impact to our customers. You are GE Aerospace at its finest.

Larry: We made progress with the step-up in OE Delivery's quarter or a quarter with higher spare parts sales to support our external MRO network while also expanding aftermarket capacity.

Larry: Progress to be sure, but more work, why the head.

Larry: and Defense and Propulsion Technologies or DPT, orders increase 19% while profit declined.

Larry: and Jim Delivery's reps, sequentially, but down you're over year.

Larry: We're focused on improving delivery of our leading defense programs, while developing mission critical technology for the future.

Larry: Many thanks to our team for their work and dedication this quarter and a specific thank you this morning goes out to our teams impacted by Hurricanes Haleen and Milton.

Larry: You worked around the clock to support each other and minimize the impact to our customers.

Larry: You are GE Aerospace at its finest.

Larry Culp: Given the strength of our results, growing both profit and cash more than $1 billion here to date, combined with our Q4 expectations, we're raising our full-year guidance. We also continue to coordinate closely with Boeing and are committed to supporting them as they navigate their current dynamics. Moving to slide 5, demand for our services and products remains robust, highlighted by departures up high single digits year to date and LEAP share of global Narrow Body departures increasing over 20%. We're taking steps with our suppliers to increase inputs and within our own operations to expand capacity, ensuring we're positioned to meet this historic demand. We're making progress with engine output increasing 22% quarter over quarter, including commercial up 25% and defense up 8%. We also grew spare parts sales sequentially, supporting shop visits completed by our third-party network.

Given the strength of our results, growing both profit and cash more than $1 billion here to date, combined with our Q4 expectations, we're raising our full-year guidance. We also continue to coordinate closely with Boeing and are committed to supporting them as they navigate their current dynamics. Moving to slide 5, demand for our services and products remains robust, highlighted by departures up high single digits year to date and LEAP share of global Narrow Body departures increasing over 20%. We're taking steps with our suppliers to increase inputs and within our own operations to expand capacity, ensuring we're positioned to meet this historic demand. We're making progress with engine output increasing 22% quarter over quarter, including commercial up 25% and defense up 8%. We also grew spare parts sales sequentially, supporting shop visits completed by our third-party network.

Larry: Given the strength of our results growing both profit and cash more than a billion dollars here today, combined with our fourth quarter expectations, we're raising our full year guidance.

Larry: We also continue to coordinate closely with Boeing and are committed to supporting them as they navigate their current dynamics.

Larry: Moving to slide five, demand for our services and products remains robust, highlighted by the purchase of high single digits here today, and leaps share of global narrowbody and the purchase increases over 20%.

Larry: We're taking steps with our suppliers to increase inputs and within our own operations to expand capacity, ensuring we're positioned to meet this historic demand.

Larry: We're making progress with engine output increasing 22% quarter of a quarter, including commercial up 25% in defense up 8%.

Larry: We also grew spare parts sales sequentially supporting shop visits completed by our third party network.

Larry Culp: As we've discussed over the last nine months, we're using Flight Deck to unlock key constraints, increase material inputs, and drive sustainable improvements. We're working hand in hand with suppliers, and we're grateful for their strengthening partnerships. As a result of that work, a key subset of priority supplier sites increased output 18% in the Q3, supporting our deliveries. As one example, a joint Kaizen with one supplier in the Q2 led to a double-digit improvement in material receipts in the Q3, demonstrating that these efforts are yielding results. We expect inputs to increase again in the Q4, supporting a sequential step-up in output. We're also making progress on LEAP durability with the LEAP-1A durability kit, including our upgraded HPT blade, and we're expecting it to be certified in the coming weeks. The new HPT blade is easier to manufacture, which will also help increase output.

As we've discussed over the last nine months, we're using Flight Deck to unlock key constraints, increase material inputs, and drive sustainable improvements. We're working hand in hand with suppliers, and we're grateful for their strengthening partnerships. As a result of that work, a key subset of priority supplier sites increased output 18% in the Q3, supporting our deliveries. As one example, a joint Kaizen with one supplier in the Q2 led to a double-digit improvement in material receipts in the Q3, demonstrating that these efforts are yielding results. We expect inputs to increase again in the Q4, supporting a sequential step-up in output. We're also making progress on LEAP durability with the LEAP-1A durability kit, including our upgraded HPT blade, and we're expecting it to be certified in the coming weeks. The new HPT blade is easier to manufacture, which will also help increase output.

Larry: As we've discussed over the last nine months, raising flight deck to unlock key constraints, increase material inputs and drive sustainable improvements.

Larry: We're working hand in hand with suppliers and we're grateful for their strengthening partnerships.

Larry: As a result of that work, a key subset of priori supplier sites increased output 18% in the third quarter, supporting our deliveries.

Larry: As one example, the joint chizen with one supplier in the second quarter led to a double-digit improvement in material recedes in the third quarter, demonstrating that these efforts are yielding results.

Larry: We expect input to increase again in the fourth quarter, supporting a sequential step up and output.

Larry: We're also making progress on leaf durability with the one-aid durability kit, including our upgraded HPT blade, and we're expecting it to be certified in the coming weeks.

Larry: The new HPT blade is easier to manufacture, which will also help increase output.

Larry Culp: Combined with the three durability enhancements that are currently performing well in the field, we expect this will give LEAP a 2.5x improvement in time on wing, in line with current CFM56 levels. With LEAP's fleet size projected to double by 2030, we're expanding capacity to support aftermarket growth. We're preparing for this growth in three complementary ways to improve shop visit output and reduce turnaround times. First, we're leveraging Flight Deck to eliminate waste, to increase capacity, and reduce TAT. At our MRO facility in Celma, Brazil, we use value stream mapping and problem-solving to reduce LEAP's test cycle time, a key constraint in shop visit output. We identified waste and improved standard work, reducing lead times there by nearly 50%. Actions like this enabled over 20% more LEAP shop visits in the Q3 year over year. Second, we're expanding internal capacity.

Combined with the three durability enhancements that are currently performing well in the field, we expect this will give LEAP a 2.5x improvement in time on wing, in line with current CFM56 levels. With LEAP's fleet size projected to double by 2030, we're expanding capacity to support aftermarket growth. We're preparing for this growth in three complementary ways to improve shop visit output and reduce turnaround times. First, we're leveraging Flight Deck to eliminate waste, to increase capacity, and reduce TAT. At our MRO facility in Celma, Brazil, we use value stream mapping and problem-solving to reduce LEAP's test cycle time, a key constraint in shop visit output. We identified waste and improved standard work, reducing lead times there by nearly 50%. Actions like this enabled over 20% more LEAP shop visits in the Q3 year over year. Second, we're expanding internal capacity.

Larry: Combined with the three durability enhancements that are currently performing well in the field, we expect this will give leap a two and a half times improvement in time on wing, in line with current CFM56 levels.

Larry: With Leap's fleet size projected to double by 2030, we're expanding capacity to support after market growth. We're preparing for this growth in three complementary ways to improve shop visit output and reduce turnaround times.

Larry: First, we're leveraging flight deck to eliminate waste to increase capacity and reduce tap.

Larry: At our Emero facility in Selma, Brazil, we use values-stream mapping and problem-solving to reduce weak test cycle time, a key constraint and shop-missed output.

Larry: We identified waste and improved standard work, reducing lead times there by nearly 50%.

Larry: Ashen's like this enabled over 20% more leap shop visits in the third quarter year over year.

Larry Culp: We're investing $1 billion in MRO over the next five years to create that capacity, add enhanced inspection techniques, and expand repair capabilities. We've partnered with Lufthansa Technik to add a dedicated LEAP MRO shop in Poland, and we'll induct the first engine there later in the Q4. And third, we're developing our global network, which provides customers flexibility and competitive options to ensure the best cost of ownership. Global MROs inducted a record number of LEAP shop visits in the Q4. We're also pleased that Akasa Air recently announced the selection of ST Engineering to provide exclusive performance restoration shop visits for their fleet over the next 15 years. While there's more work to do, we're focused on servicing and delivering our engines faster without compromising safety and quality. I'm confident our actions will enable us to increase output meaningfully into the Q4 and 2025.

We're investing $1 billion in MRO over the next five years to create that capacity, add enhanced inspection techniques, and expand repair capabilities. We've partnered with Lufthansa Technik to add a dedicated LEAP MRO shop in Poland, and we'll induct the first engine there later in the Q4. And third, we're developing our global network, which provides customers flexibility and competitive options to ensure the best cost of ownership. Global MROs inducted a record number of LEAP shop visits in the Q4. We're also pleased that Akasa Air recently announced the selection of ST Engineering to provide exclusive performance restoration shop visits for their fleet over the next 15 years. While there's more work to do, we're focused on servicing and delivering our engines faster without compromising safety and quality. I'm confident our actions will enable us to increase output meaningfully into the Q4 and 2025.

Larry: Second, we're expanding internal capacity, we're investing a billion dollars in MRRO over the next five years to create that capacity, add enhanced inspection techniques and expand repair capabilities.

Larry: We've partnered with Luke Tons of Technique to add a dedicated Leaf MRO shop in Poland, and we'll induct the first engine there during the fourth quarter.

Larry: And third, we're developing our third party network, which provides customers, flexibility, and competitive options to ensure the best cost of ownership.

Larry: 3rd Party Amaros inducted a record number of leap shop visits in the 3rd quarter.

Larry: We're also pleased that Akasa Airlines recently announced the selection of ST engineering to provide exclusive performance restoration shop visits for their fleet over the next 15 years.

Larry: While there's more work to do, we're focused on servicing and delivering our engines faster without compromising safety and quality.

Larry: I'm confident our actions will enable us to increase output meaningfully into the fourth quarter and 2025.

Larry Culp: We're also growing our install base with airlines and defense customers expanding and modernizing their fleets with our engines under wing. During the quarter, we won multiple services contracts for our customers' growing fleets. Avolon will add 75 new LEAP-1A-powered A320 aircraft to their existing fleet of over 300 CFM-powered aircraft. In wide bodies, we secured commitments from EVA Air for GEnx engines and Qatar Airways for GE9X engines. In defense, the Polish Ministry of National Defense will add over 200 of our T700 engines to power their anticipated acquisition of 96 Boeing Apache Guardian helicopters. We were also selected to overhaul and upgrade the GEnx-2B engines powering the US Air Force's SAOC, the Survivable Airborne Operations Center, Boeing 747-8. Turning to the future, RISE accelerates the development of new technologies that will pave the way for the next generation of aircraft and a more sustainable future.

We're also growing our install base with airlines and defense customers expanding and modernizing their fleets with our engines under wing. During the quarter, we won multiple services contracts for our customers' growing fleets. Avolon will add 75 new LEAP-1A-powered A320 aircraft to their existing fleet of over 300 CFM-powered aircraft. In wide bodies, we secured commitments from EVA Air for GEnx engines and Qatar Airways for GE9X engines. In defense, the Polish Ministry of National Defense will add over 200 of our T700 engines to power their anticipated acquisition of 96 Boeing Apache Guardian helicopters. We were also selected to overhaul and upgrade the GEnx-2B engines powering the US Air Force's SAOC, the Survivable Airborne Operations Center, Boeing 747-8. Turning to the future, RISE accelerates the development of new technologies that will pave the way for the next generation of aircraft and a more sustainable future.

Larry: i

Larry: We're also growing our install base with airlines and defense customers expanding and modernizing their fleets with our engines underway.

Larry: During the quarter-we won multiple services contracts where our customers growing fleets.

Larry: Avalon, will add 75 new leaked 1A powered A320 aircraft of their existing fleet, above 300 CFM powered aircraft. In wide bodies, we secured commitments from Eva Air for GNX engines and Qatar Airways for GE9X engines.

Larry: In defense, the Polish Ministry of National Defense will add over 200 of our T700 engines to power their anticipated acquisition of 96 Boeing Apache Guardian helicopters.

Larry: We were also selected overhauling up grade the GENX 2B engines powering the US Air Force's Seyork, the Survival Airborne Operations Center, Boeing 747-8.

Larry: Turning to the future, Rice accelerates the development of new technologies that will pave the way for the next generation of aircraft and a more sustainable future.

Larry Culp: We recently began planning for dust ingestion tests on the open fan design earlier than ever before. This reflects key durability learnings from our engines operating in higher temperature environments. We're also advancing a new era of turboprop technology with the Catalyst engine, completing engine-level testing and certification expected in the coming months. Our defense products remain in demand for critical platforms globally. Our T901 engine is key to the modernization of Black Hawk and Apaches and has been progressing towards the next milestone of power-on and ground runs. The maturity of our digital backbone for Bell's future long-range assault aircraft was critical for the US Army to pass Milestone B and enter the next phase of development. We're also delivering continued success with our advanced technologies. Our XA100 engine completed a fourth round of testing, and we are nearing completion of the detailed design for the US.

We recently began planning for dust ingestion tests on the open fan design earlier than ever before. This reflects key durability learnings from our engines operating in higher temperature environments. We're also advancing a new era of turboprop technology with the Catalyst engine, completing engine-level testing and certification expected in the coming months. Our defense products remain in demand for critical platforms globally. Our T901 engine is key to the modernization of Black Hawk and Apaches and has been progressing towards the next milestone of power-on and ground runs. The maturity of our digital backbone for Bell's future long-range assault aircraft was critical for the US Army to pass Milestone B and enter the next phase of development. We're also delivering continued success with our advanced technologies. Our XA100 engine completed a fourth round of testing, and we are nearing completion of the detailed design for the US.

Larry: We recently began planning for dust ingestion tests on the open fan design earlier than ever before.

Larry: This reflects key durability learnings from our engines operating at higher temperature environments.

Larry: We're also advancing a new era of turbo-prope technology with a catalyst engine, completing engine level testing and certification, expected in the coming months.

Larry: Our defense products remain in demand for critical platforms globally. Our T901 engine is key to the modernization of black-locking a patchy's and has been progressing towards the next milestone of power on and ground runs.

Larry: The maturity of our digital backbone for bells, future long range of salt aircraft, was critical for the U.S. Army to pass milestone B and enter the next phase of development.

Larry: We're also delivering continued success with our advanced technologies.

Larry: Our XA100 engine completed a fourth round of testing, and we are nearing completion of the detailed design for the U.S. Air Force's end-gap program.

Larry Culp: Air Force's NGAP program. Stepping back, our path forward is clear, and we're confident we'll meet our customers' expectations today while developing the technologies of the future. Rahul, over to you.

Air Force's NGAP program. Stepping back, our path forward is clear, and we're confident we'll meet our customers' expectations today while developing the technologies of the future. Rahul, over to you.

Larry: Dating back our path forward as clear and we're confident we'll meet our customers' expectations today while developing the technologies of the future.

Rahul Ghai: Thank you, Larry, and good morning, everyone. GE Aerospace delivered another strong quarter with double-digit orders and profit growth, improving delivery and over 140% free cash flow conversion. Revenue was up 6%, with growth in both segments. Services growth, combined with price, more than offset the impact of lower engine shipments year over year. Operating profit was $1.8 billion, up 14%. Services volume, favorable mix, and price were partially offset by higher inflation and investments. Operating margins expanded 150 basis points to 20.3%. Adjusted EPS was $1.15, up 25%, from increased operating profit and the benefit of preferred equity redemption. Free cash flow was $1.8 billion, up 5% from higher earnings. Working capital was roughly a $600 million use. Billings on higher sequential engine deliveries was partially offset with favorable ADNA. Given the ongoing material availability challenges, inventory increased, although at a lower rate than prior quarters.

Rahul Ghai: Rahul, over to you.

Rahul Ghai: Thank you, Larry, and good morning, everyone. GRSpace delivered another strong quarter, with double digit orders and profit growth, improving delivery and over 140% free cash flow conversion.

Rahul Ghai: Revenue was up to 6% with growth in both segments.

Rahul Ghai: Services Growth combined with price more than offset the impact of lower engine shipments year over year.

Rahul Ghai: Operating Profit was $1.8 billion up 14%. Services volume, favorable mix and price were partially offset by higher inflation and investments.

Rahul Ghai: Operating margins expanded 150 basis points to 20-3%.

Rahul Ghai: adjusted EPS was $1.15 up 25% from increased operating profit and the benefit of preferred equity redemption.

Rahul Ghai: Free cash flow was $1.8 billion, up 5% from higher earnings. Working capital was roughly a $600 million use. Belinks on higher sequential engine deliveries was partially offset with favorable ADNA.

Rahul Ghai: Given the ongoing material of a liability challenges, inventory increased, although at a lower rate than prior quarters.

Rahul Ghai: Cash inflows from long-term service contracts continued to be favorable. These results build on the momentum we had from the first half, with year-to-date revenue up 8%, and operating profit up more than $1 billion, or 25%, from commercial services strength. We have delivered $4.6 billion of free cash flow, also up more than $1 billion year over year at nearly 130% conversion. This sets us up well to close out a strong year. Turning to CES, in the Q4, revenue was up 8%. Services up 10% from higher spare part sales, increasing shop visit work scopes, and improved pricing. Internal shop visits were roughly flat year over year. Equipment revenue grew 5%, with customer mix, and price more than offsetting lower units. Supply chain constraints impacted shipments across Narrow Body, and Wide Body, with total engine deliveries down 4%, including LEAP down 6%.

Cash inflows from long-term service contracts continued to be favorable. These results build on the momentum we had from the first half, with year-to-date revenue up 8%, and operating profit up more than $1 billion, or 25%, from commercial services strength. We have delivered $4.6 billion of free cash flow, also up more than $1 billion year over year at nearly 130% conversion. This sets us up well to close out a strong year. Turning to CES, in the Q4, revenue was up 8%. Services up 10% from higher spare part sales, increasing shop visit work scopes, and improved pricing. Internal shop visits were roughly flat year over year. Equipment revenue grew 5%, with customer mix, and price more than offsetting lower units. Supply chain constraints impacted shipments across Narrow Body, and Wide Body, with total engine deliveries down 4%, including LEAP down 6%.

Rahul Ghai: Gashin flows from long-term service contract continued to be favorable.

Rahul Ghai: These results build on the momentum we had from the first half. With 80% revenue up 8% and operating profit up more than $1 billion or 25% from commercial services strength.

Rahul Ghai: We have delivered 4.6 billion dollars of free cash flow. Also up more than $1 billion year over year, at nearly 130% conversion.

Rahul Ghai: This sets us up well to close out a strong year.

Rahul Ghai: Turning to CES. In the third quarter, revenue was up 8%, services up 10% from higher-spare part sales, increasing shop visit workshops and improved pricing. Internal shop visits were roughly flat year-over-year.

Rahul Ghai: Equipment revenue grew 5% with customer mix and price more than offsetting lower units.

Rahul Ghai: Supply chain constraints impacted shipments across narrow body and wide body. We totaled an engine deliveries down 4% including leap down 6%.

Rahul Ghai: Profit was $1.8 billion, up 16%, with margins expanding 180 basis points from higher services, volume, and price. Equipment losses increased year over year from lower spare engine deliveries and higher investments, partially offset by improved pricing. Overall, CES has delivered solid year-to-date results, with double-digit revenue growth, $4.9 billion of profit, up about $750 million year over year and 170 basis points of margin expansion. Moving to DPT, orders were up 19% from strong demand at defense and systems. Defense book-to-bill was 1.6 in the quarter and 1.2 year to date. Our total DPT backlog is now $18 billion, up $1 billion year over year. Revenue grew 2% in the quarter. Defense and systems revenue was down 2%. Improved pricing was more than offset by engine deliveries, down 1%, and unfavorable engine mix. Propulsion and additive technologies grew 9%, primarily driven by Avio Aero.

Profit was $1.8 billion, up 16%, with margins expanding 180 basis points from higher services, volume, and price. Equipment losses increased year over year from lower spare engine deliveries and higher investments, partially offset by improved pricing. Overall, CES has delivered solid year-to-date results, with double-digit revenue growth, $4.9 billion of profit, up about $750 million year over year and 170 basis points of margin expansion. Moving to DPT, orders were up 19% from strong demand at defense and systems. Defense book-to-bill was 1.6 in the quarter and 1.2 year to date. Our total DPT backlog is now $18 billion, up $1 billion year over year. Revenue grew 2% in the quarter. Defense and systems revenue was down 2%. Improved pricing was more than offset by engine deliveries, down 1%, and unfavorable engine mix. Propulsion and additive technologies grew 9%, primarily driven by Avio Aero.

Rahul Ghai: Profit was $1.8 billion, up 16% with margins expanding 180 basis points from higher services, volume and price.

Rahul Ghai: Equipment losses increase year-over-year from lower-spare engine deliveries and higher investments partially offset by improved pricing.

Rahul Ghai: Overall, CES has delivered solid year-to-date results, with double-digit revenue growth, $4.9 billion of profit up about $750 million, year-over-year, and 170 basis points of margin expansion.

Rahul Ghai: Moving to the APT, orders were up 19 percent from strong demand at defense and systems.

Rahul Ghai: Defense Booktubell was 1.6 in the quarter and 1.2 year-old date. Our total VPD backlog is now $18 billion. Up $1 billion, year-over-year.

Rahul Ghai: Revenue grew 2% in the quarter

Rahul Ghai: Defense and System System's revenue was down 2%. Improved pricing was more than offset by engine deliveries down 1% and unfavorable engine mix.

Rahul Ghai: Propulsion and Adaptive Technologies grew 9% primarily driven by AVIO Arrow.

Rahul Ghai: Profit of $220 million was down 18% year over year on a tough compare. Inflation, adverse engine mix, and investments to support next-gen products more than offset price improvement. While we had a challenging quarter, year-to-date revenue and profit are up 6% and 22%, respectively, with margins expanding 150 basis points. We continue to work towards improving delivery while providing solutions that meet the evolving needs of our military and allies. Spending a moment on corporate. Since becoming an independent company, we've made considerable progress to ensure our operations reflect the needs of GE Aerospace. Year-to-date, total corporate cost is down about 25%, or $150 million. We're also on track with our post-spin separation and restructuring plans. Additionally, this quarter, we had non-GAAP adjustments from the gain on sale of our licensing business, agreement to settle a legacy lawsuit, and impairment of Colibrium Additive goodwill.

Profit of $220 million was down 18% year over year on a tough compare. Inflation, adverse engine mix, and investments to support next-gen products more than offset price improvement. While we had a challenging quarter, year-to-date revenue and profit are up 6% and 22%, respectively, with margins expanding 150 basis points. We continue to work towards improving delivery while providing solutions that meet the evolving needs of our military and allies. Spending a moment on corporate. Since becoming an independent company, we've made considerable progress to ensure our operations reflect the needs of GE Aerospace. Year-to-date, total corporate cost is down about 25%, or $150 million. We're also on track with our post-spin separation and restructuring plans. Additionally, this quarter, we had non-GAAP adjustments from the gain on sale of our licensing business, agreement to settle a legacy lawsuit, and impairment of Colibrium Additive goodwill.

Rahul Ghai: Profit of $220 million was down 18% year-over-year on a tough compare. Inflation, adverse engine mix and investments to support next-gen products more than offset price improvement.

Speaker Change: While we had a challenging quarter, here today's revenue and profit are up 6% and 22% respectively, with margins expanding 150 basis points.

Speaker Change: We continued to work towards improving delivery while providing solutions that meet the evolving needs of a military and allies.

Speaker Change: Spending a moment in corporate.

Speaker Change: Since becoming an independent company, we made considerable progress to ensure our operations reflect the needs of GE aerospace.

Speaker Change: Eidulade, total corporate cost is down about 25% or $150 million. We'll also on track with our post-spin separation and restructuring plans.

Speaker Change: Additionally, this quarter, we had non-gap adjustments from the gain on sale of a licensing business, agreement to serve a legacy lawsuit, an impairment of equilibrium additive and a good book.

Rahul Ghai: Colibrium Additive is a critical business for us, as it is utilized on several key components for Leap and 9X, and it will be a key enabler for our future of flight as we continue to focus on where it can create the most value. Given the strong year-to-date performance and the trajectory entering the Q4, we are raising our earnings and cash guidance. Revenue remains the same across our businesses. At CES, we continue to expect low double digits to mid-teens growth. This includes continued sequential growth in Leap deliveries in the Q4, but the full year will now be down approximately 10% year over year. This guidance assumes ongoing deliveries to Boeing. We also continue to expect DPT growth of mid to high single digits, in line with their year-to-date performance of 6% growth.

Colibrium Additive is a critical business for us, as it is utilized on several key components for Leap and 9X, and it will be a key enabler for our future of flight as we continue to focus on where it can create the most value. Given the strong year-to-date performance and the trajectory entering the Q4, we are raising our earnings and cash guidance. Revenue remains the same across our businesses. At CES, we continue to expect low double digits to mid-teens growth. This includes continued sequential growth in Leap deliveries in the Q4, but the full year will now be down approximately 10% year over year. This guidance assumes ongoing deliveries to Boeing. We also continue to expect DPT growth of mid to high single digits, in line with their year-to-date performance of 6% growth.

Speaker Change: Colibrium additive is a critical business for us, as it is utilized on several key components for leap and nine-x.

Speaker Change: and it will be a key enable for a future of flight as we continue to focus on where it can create the most value.

Speaker Change: Given the strong year-to-date performance and the trajectory entering the fourth quarter, we are raising our earnings and cash guidance.

Speaker Change: Revenue remains the same across our businesses, as CES, we continue to expect low double digits to mid-teens growth.

Speaker Change: This includes continued sequential growth in leap deliveries in the fourth quarter, but the full year will now be down approximately 10% year over year.

Speaker Change: This guidance is used on going deliveries to Boeing.

Speaker Change: We also continue to expect Deputy Growth of mid to high-singual digits, in line with their immediate date performance of 6% growth.

Rahul Ghai: Operating profit is now expected to be in a range of $6.7 to 6.9 billion, up $150 million at the midpoint from the prior guide, implying over 200 basis points of margin expansion year over year. CES operating profit is now expected to be $6.6 to 6.8 billion, up $300 million at the midpoint from the prior guide, reflecting improved services mix. Internal shop visit growth will be lower than our prior estimate, offset by higher spare part sales, work scope, and mix. We expect DPT to be at the lower end of the current profit range of $1 to 1.3 billion. This reflects Q3 performance, increased investment in next-gen programs, and some pressure in P and AT. Corporate costs and eliminations are now expected to be around $850 million, down from below $900 million previously and a $150 million reduction year over year.

Operating profit is now expected to be in a range of $6.7 to 6.9 billion, up $150 million at the midpoint from the prior guide, implying over 200 basis points of margin expansion year over year. CES operating profit is now expected to be $6.6 to 6.8 billion, up $300 million at the midpoint from the prior guide, reflecting improved services mix. Internal shop visit growth will be lower than our prior estimate, offset by higher spare part sales, work scope, and mix. We expect DPT to be at the lower end of the current profit range of $1 to 1.3 billion. This reflects Q3 performance, increased investment in next-gen programs, and some pressure in P and AT. Corporate costs and eliminations are now expected to be around $850 million, down from below $900 million previously and a $150 million reduction year over year.

Speaker Change: Operating Profit is now expected to be in a range of 6.7 to 6.9 billion dollars, up 150 million dollars at the midpoint in the prior guide.

Speaker Change: In flying over 200 basis points of margin expansion year over year.

Speaker Change: CES Operating Profit is now expected to be 6.6 to 6.8 billion dollars. Up, $300 million at the midpoint from the prior guide.

Speaker Change: Reflecting improved services mix.

Speaker Change: In turn, sharpnessed growth will be lower than a prior estimate, offset by higher-spare part sales, work scope and mix.

Speaker Change: We expect DPT to be at the lower end of the current profit range of $1.3 billion.

Speaker Change: This reflects three coup performance, increased investment in nexian programs and some pressure in P and A T.

Speaker Change: Corporate cost and eliminations are now expected to be around $850 million.

Speaker Change: Down from below $900 million previously and $150 million reduction year over year.

Rahul Ghai: We now expect a tax rate of around 20%, lower than our prior expectation of low 20s. Interest expense is unchanged. We are raising our adjusted EPS guidance to $4.20 to $4.35, up $0.20 at the midpoint from the prior guide, from improved profit and lower tax rate. We are also raising our free cash flow guidance to $5.6 to 5.8 billion, up $250 million at the midpoint, primarily from higher earnings. All in, we are positioned to deliver significant revenue, profit, and free cash flow growth in 2024, and that provides us a solid foundation for 2025. Larry, back to you.

We now expect a tax rate of around 20%, lower than our prior expectation of low 20s. Interest expense is unchanged. We are raising our adjusted EPS guidance to $4.20 to $4.35, up $0.20 at the midpoint from the prior guide, from improved profit and lower tax rate. We are also raising our free cash flow guidance to $5.6 to 5.8 billion, up $250 million at the midpoint, primarily from higher earnings. All in, we are positioned to deliver significant revenue, profit, and free cash flow growth in 2024, and that provides us a solid foundation for 2025. Larry, back to you.

Speaker Change: We now expect tax rate of around 20%.

Speaker Change: Lower the prior expectation of low 20s.

Speaker Change: Interest Expense is on change.

Speaker Change: We are raising our adjusted EPS guidance to 4 dollars and 20 cents to 4 dollars and 35 cents, up 20 cents at the midpoint from the prior guide from improved profit and lower tax rates.

Speaker Change: We're also raising our free cash flow guidance to 5.6 to 5.8 billion dollars, up 250 million dollars at the midpoint, primarily from higher earnings.

Speaker Change: All in, we have positioned to deliver significant revenue, profit, and free cash flow growth in 2024 And that provides us a solid foundation for 25. Sorry, back to you.

Larry Culp: Rahul, thanks. GE Aerospace is positioned to deliver a solid year in our first as a standalone company with enhanced profitability and cash supporting over $4 billion that we've returned to shareholders year to date. This performance is underpinned by our sustainable competitive advantages. Our platforms are preferred by customers across the narrow body, wide body, and defense sectors. Our focus is on providing industry-leading services and technology with safety, quality, delivery, and cost in that order at the core of everything we do. We support our customers, and we will deliver greater efficiency, reliability, and time on wing, as well as faster turnaround times to them. We continue to keep an eye towards the future to deliver breakthrough technologies in commercial and defense to pave the way with innovation for a more sustainable flight.

Rahul Ghai: Rahul Thanks.

Rahul Ghai: G. E. R. Spaces position to deliver a solid year in our first as a standalone company with enhanced profitability and cash supporting over $4 billion that we've returned to shareholders year today.

Rahul Ghai: This performance is underpin by our sustainable competitive advantages.

Rahul Ghai: Our platforms are preferred by customers across the narrow body wide body and defense sectors.

Rahul Ghai: Our focus is on providing industry-leading services and technology with safety, quality, delivery, and cost in that order at the core of everything we do. We support our customers.

Rahul Ghai: and we will deliver greater efficiency, reliability and time on-wing as well as faster turnaround times to them.

Rahul Ghai: We continue to keep an eye towards the future to deliver breakthrough technologies and commercial end-of-ends to pave the way with innovation for more sustainable flight and flight deck connects our strategy to our results enabling GERO space to deliver for our customers, create exceptional value for shareholders and to define our culture.

Larry Culp: Flight Deck connects our strategy to our results, enabling GE Aerospace to deliver for our customers, create exceptional value for shareholders, and to define our culture. Looking ahead, we're poised to continue to deliver meaningful profit and free cash flow growth in 2025 and beyond. Combined with our capital allocation strategy, including returning approximately $25 billion of available cash to shareholders, we'll drive compounding shareholder returns. Now, we'll go to questions. Blair?

Flight Deck connects our strategy to our results, enabling GE Aerospace to deliver for our customers, create exceptional value for shareholders, and to define our culture. Looking ahead, we're poised to continue to deliver meaningful profit and free cash flow growth in 2025 and beyond. Combined with our capital allocation strategy, including returning approximately $25 billion of available cash to shareholders, we'll drive compounding shareholder returns. Now, we'll go to questions. Blair?

Rahul Ghai: Looking ahead, we're poised to continue to deliver, meaningful profit and free cash flow growth in 2025 and beyond.

Speaker Change: Good morning with our capital allocation strategy.

Speaker Change: including returning approximately $25 billion of available cash to shareholders. We'll drive compounding shareholder returns.

Blair Shore: 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 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 as possible. Liz, can you please open the line?

Speaker Change: Now, we'll go to questions. Clear?

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 as possible. Liz, can you please open the line?

Operator: Ladies and gentlemen, if you wish to ask a question, please press star 11 on your telephone. If you wish to withdraw your question or your question has already been answered, please press star 11 again. Our first question comes from David Strauss with Barclays.

Liz: Our first question comes from David Straz with Barclays.

David Strauss: Thanks. Good morning.

Larry Culp: Good morning, David.

David Strauss: So I wanted to ask Larry about 2025. So back at the investor day, you talked about $1 billion in profit growth in 2025 relative to 2024. Obviously, the 2024 EBIT guidance has come up, I think, about $550 million. So how should we think about the walk to 2025? Are we still looking at roughly $1 billion in EBIT growth off of a higher baseline now? Thanks.

Liz: Thanks for watching, good morning David.

Speaker Change: So one desk, Larry, about 2025, so that could be investor day, you know, you talked about a billion dollars in profit growth in 2025 growth to 2024, obviously the 2024 EBIT.

David Straz: Guynts have come up, I think, about 550 million, so how shall we think about the walk to 2025, or are we still looking at roughly a billion dollars in the epic growth off of a higher base line now? Thanks.

Larry Culp: David, we're really working through the update in 2025 outlook. We're in the midst of our annual strategic planning reviews. A good bit of our time, actually, here in the third quarter was dedicated to that work. That really transitions us now to the budget prep process. We'll have a more defined look at 2025 as we get closer. We'll review that with the board at the end of the year. Then I think when we're together in January, we'll go through that in detail. Rahul may want to just frame up how we are thinking about that vis-à-vis where we were back in March.

David Straz: David, the War Robb.

Speaker Change: We're really working through the update, 25 outlook, we're in the midst of our annual strategic planning reviews.

Speaker Change: Good bit of our time, Ashley here in the third quarter was dedicated to that work. And that really transitions us now to the budget prep process, so we'll have a...

Speaker Change: I'm more defined, look at 25 as we get closer. We'll review that with the board at the end of the year and then I think when we're together in January, we'll go through that in detail. Rahul may want to just frame up how we are thinking about that, these are B, where we were back in March.

Rahul Ghai: Yeah. No, sure, Larry. And David, thanks for the question. As you said, we are sitting at about $500 to $550 million higher than where we were in March. So that is a higher starting point. And just as we kind of take through the segments here a little bit, we expect commercial services to stay strong, grow low double digits given the significant backlog of shop visits that we have, and the price increases that we've implemented. And the two other trends that are kind of working in our favor are CFM56 and GE90 kind of holding their share of departures with extremely low levels of retirement. On CFM56, the retirements this year have been lower than even where they were in 2023. And then LEAP services is trending nicely. So all those things are going to help support the 2025 outlook.

Rahul Ghai: Yeah, no sure, sorry, and thanks for the question. As you said, we are sitting at about $550 higher than where we were in March. That is a higher starting point.

Rahul Ghai: And just as we kind of take through the segment here a little bit, we expect commercial services to stay strong. Grow low double digits. Given the significant backlog of shopplaces that we have and the price increases that we've implemented.

Rahul Ghai: and the two other friends that are kind of working on our favor are CFM-56 and G90 kind of holding their share of departures with extremely low levels of retirement. On CFM-56 the dryments this year have been lower than even where they were in 2023.

Rahul Ghai: and then Leap Services is trending nicely so that all those things are going to help support the 2025 outlook.

Rahul Ghai: On the equipment side, the equipment's growth is slower in 2024 than we had expected. So some of that volume will move through 2025. We are working those volume assumptions as we sit here today with the airframers to safely say that equipment growth will be faster than that of services and will include higher 9X shipments. So that'll likely put some pressure on margins, but it is important to keep this flywheel going over the longer term. On the DPT side, the book-to-bill, as we just shared, has been very strong. So we're entering 2025 with a very strong backlog, mid to high single-digit growth for next year, and with profit growing faster than margins. On the corporate side, we've done a really good job this year taking cost out, 25% to 30% cost reduction based on the guide.

On the equipment side, the equipment's growth is slower in 2024 than we had expected. So some of that volume will move through 2025. We are working those volume assumptions as we sit here today with the airframers to safely say that equipment growth will be faster than that of services and will include higher 9X shipments. So that'll likely put some pressure on margins, but it is important to keep this flywheel going over the longer term. On the DPT side, the book-to-bill, as we just shared, has been very strong. So we're entering 2025 with a very strong backlog, mid to high single-digit growth for next year, and with profit growing faster than margins. On the corporate side, we've done a really good job this year taking cost out, 25% to 30% cost reduction based on the guide.

Rahul Ghai: On the equipment side, the equipment's growth is slower than we expected, so some of that volume will move to 2025.

Rahul Ghai: We are working those volumes assumptions as we sit here today with the air framerers to save to say that equipment growth will be faster than that of services And will include higher 9-exhibments So they are likely put some pressure on margins but it is important to keep this 5-year going over the longer term

Rahul Ghai: On the DPD side, the book to Bill as we just shared has been very strong, so we entering 25 at a very strong backwall, mid to high single digit growth for next year and with profit going faster than margins.

Rahul Ghai: And on the corporate side we've done a really good job this year taking cost out 25 to 30 percent cost reduction based on the guide And then that is accelerated some of these actions from next year into this year but still plenty of opportunity in front of us

Rahul Ghai: And then that has accelerated some of these actions from next year into this year, but still plenty of opportunity in front of us. So all in, we'll work through our guidance here and provide the detail in January. But we see continued strong earnings and free cash flow outlook, which should stay above 100% for next year. And we continue to work the shareholder returns through what we're doing on dividend and share buyback.

And then that has accelerated some of these actions from next year into this year, but still plenty of opportunity in front of us. So all in, we'll work through our guidance here and provide the detail in January. But we see continued strong earnings and free cash flow outlook, which should stay above 100% for next year. And we continue to work the shareholder returns through what we're doing on dividend and share buyback.

Rahul Ghai: To all in, we'll work through our guidance here and provide the detail in Jan.

Rahul Ghai: But...

Operator: Our next question comes from a line of Doug Harned with Bernstein.

Speaker Change: Our next question comes from a line of Doug Harnett with Bernstein, Bernstein.

Doug Harned: Yes, good morning. Thank you.

Larry Culp: Good morning, Doug.

Doug Harned: I wanted to continue a little bit on 2025, though, and specifically around your expectations for LEAP output. You're up quarter over quarter in Q3, but you've got the Boeing strike. You've got the supply chain constraints that you've talked before about, HPT blades in particular. And then you've got the transition to the new HPT blades. So when you're trying to project those numbers for next year on LEAP output, how do you trade those different things off, and where do you see yourself in terms of mitigating some of these issues?

Doug Harnett: Yes, good morning. Thank you. I'm really glad.

Doug Harnett: I wanted to continue a little bit on 2025 though, and specifically around your expectations for leap output and your up quarter of a quarter in Q3, but you've got the Boeing strike, you've got the supply chain constraints that you've talked before about, HPT blades, in

Speaker Change: So, when you're trying to project those numbers for next year on Leap Output.

Speaker Change: How do you trade those different things off and where do you see yourself in terms of mitigating some of these issues?

Larry Culp: Well, Doug, I would just expand it a little bit more broadly than all of the items that you touched on there because in addition to thinking about the Leap ramp, right, hand in hand with both Airbus and Boeing, we've got growing demand in the aftermarket. And we want to make sure we're taking care of the airlines and the airframers. And that's what the operating challenge is about. It's not one of demand. We know we've got an incredible backlog here. Airbus, obviously, aiming to hit rate 75 down the road. We want to be with them each step of the way. Boeing in a different situation, but they're going to be ramping on the other side of resolving the work stoppage as well. And fortunately, they're both going to do that with our engines under wing.

Speaker Change: Well Doug, I would just expand it a little bit more broadly than all of the items that you touched on there. Because...

Speaker Change: In addition to thinking about the leap ramp, right, hand in hand with both airbus and Boeing, we've got growing demand in the aftermarket, and we want to make sure we're taking care of the airlines and the airframors, and that's what the operating challenge is about. It's not one of demand. We know we've got an incredible backlog here.

Speaker Change: Airbus, obviously aiming to hit rate 75 down the road, we want to be with them each step of the way, following in a different situation. But they're going to be ramping on the other side of resolving the workstoppics as well. Unfortunately, they're both going to do that with our engines under wing.

Larry Culp: I think that what we saw in Q3, what we saw in Q2 in terms of the work we are doing with Flight Deck, with the supply base, really is what will determine how much of that aftermarket activity we can support and what we're going to be able to do in terms of new engines as well. I'm encouraged by what we saw in Q3. I think in the prepared remarks, you saw that we had an 18% increase sequentially. And I think sequentially is really where it is operationally on the handful of critical suppliers that paced us a bit in Q2, paced us a bit here in Q3. But I really like not only the underlying collaboration, but the on-site problem-solving that we're doing.

I think that what we saw in Q3, what we saw in Q2 in terms of the work we are doing with Flight Deck, with the supply base, really is what will determine how much of that aftermarket activity we can support and what we're going to be able to do in terms of new engines as well. I'm encouraged by what we saw in Q3. I think in the prepared remarks, you saw that we had an 18% increase sequentially. And I think sequentially is really where it is operationally on the handful of critical suppliers that paced us a bit in Q2, paced us a bit here in Q3. But I really like not only the underlying collaboration, but the on-site problem-solving that we're doing.

Speaker Change: I think that what we saw on the third quarter, what we saw on the second quarter, in terms of the work we are doing with flight deck with the supply base.

Speaker Change: Really is what will determine how much of that aftermarket activity we can support and what we're going to be able to do in terms of new engines as well. I'm encouraged by what we saw in the third quarter. I think in the prepared remarks.

Speaker Change: You saw that we had an 18% increase sequentially and I think sequentially is really where it is operationally.

Speaker Change: On the handful of critical suppliers, it paced us a bit in the second quarter of a year in the third, but I really like not only the underlying collaboration, but the...

Larry Culp: I think we're unlocking capacity as a result, and that helps us deliver more to all of our customers. That's what we're geared up to do here in the fourth quarter as well. As we said, LEAP will be down, unfortunately, year over year in terms of new engine deliveries. But I think we're poised, I think, as Rahul just touched on, to deliver good growth going into 2025. That's the goal. You mentioned the new HPT blade. That, Doug, as you know, is really the fourth of four durability enhancements that we're excited about. We expect approval for the 1A version of that here shortly. That'll be a real step function improvement in the field performance of the engine. And it's a twofer because we also know that it's an easier blade to make. That will unlock capacity, which will help us in 2025 in earnest as well.

I think we're unlocking capacity as a result, and that helps us deliver more to all of our customers. That's what we're geared up to do here in the fourth quarter as well. As we said, LEAP will be down, unfortunately, year over year in terms of new engine deliveries. But I think we're poised, I think, as Rahul just touched on, to deliver good growth going into 2025. That's the goal. You mentioned the new HPT blade. That, Doug, as you know, is really the fourth of four durability enhancements that we're excited about. We expect approval for the 1A version of that here shortly. That'll be a real step function improvement in the field performance of the engine. And it's a twofer because we also know that it's an easier blade to make. That will unlock capacity, which will help us in 2025 in earnest as well.

Speaker Change: on site.

Speaker Change: Problem Solving that we're doing, we're unlocking capacity.

Speaker Change: As a result, and that helps us deliver more to all of our customers. That's what we're geared up to do here in the fourth quarter as well.

Speaker Change: As we said, Leap will be down, unfortunately, year over year in terms of new engine deliveries. But I think we're poised, I think, as Rahul just touched on to deliver good growth going in to 2025. That's the goal. You mentioned...

Speaker Change: The new HPT blade, that, you know, is really the fourth of for durability and enhancements that we're excited about. We expect approval for the one aversion of that.

Speaker Change: Here shortly, that will be a real step function improvement in the field performance in the engine. And it's a two-fer, because we also know that it's an easier...

Speaker Change: Blade to Make, that will unlock the capacity which will help us in 2025 in earnest as well. So, still work to do, I like the travel that we're seeing and...

Larry Culp: Still work to do. I like the travel that we're seeing. Our team and our supplier teams know that we're fortunate to have this incredible backlog to service for the airframers and for the airlines. That's what 2025 will largely be about.

Still work to do. I like the travel that we're seeing. Our team and our supplier teams know that we're fortunate to have this incredible backlog to service for the airframers and for the airlines. That's what 2025 will largely be about.

Speaker Change: Our team and our supplier teams know that we're fortunate to have this incredible back walk to service for the Air Frameers and for the airlines and that's what 2025 will largely be about.

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

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

Robert Stallard: Thanks so much. Good morning.

Larry Culp: Good morning.

Robert Stallard: I'm not sure this is a question for, but since we last spoke, Boeing announced another delay on the 777X program. I was wondering what sort of financial and practical implications this might have for GE Aerospace. Thank you.

Speaker Change: Thanks so much for coming. Good morning.

Robert Stowler: I'm not sure if there's a question for but since we last spoke, Boeing announced another delay on the Tribal 7X program. I was wondering what sort of financial and practical implications this might have for G-Eres.

Larry Culp: Well, maybe I'll speak to the operational. Rahul can touch on the financial. We heard what you heard. I'm sure Kelly and company will talk a little bit more about that tomorrow. But from an operational perspective, really no change whatsoever at GE Aerospace with respect to what we're doing to continue to test the engine and prepare for a production ramp going forward. And I think it's really that simple. We're excited about that engine. We know that aircraft is late, but every customer that I talked to and had the opportunity to spend time with a few of them just this past weekend, they love the airplane. They want the airplane. It's really, at this point, a matter of time.

Robert Stowler: Space. Thank you.

Speaker Change: Well, maybe I'll speak to the operation Rahul can touch on the financial.

Speaker Change: We heard what you heard, I'm sure Kelly and Company will talk a little bit more about that tomorrow, but from an operational perspective, really no change whatsoever at GE.

Speaker Change: Aerospace with respect to what we're doing.

Speaker Change: to continue to...

Speaker Change: Test the engine and prepare for a production ramp going forward.

Speaker Change: I think it's really that simple. We're excited about that engine. We know that aircraft is late but every customer that I talked to and had the opportunity spend time with a few of them just this past weekend. They love the airplane. They want the airplane. It's really at this point a matter of time.

Rahul Ghai: Rob, from our guidance perspective, we do have a few rev rec units here in Q4. We've already started delivering the engines to Boeing. Some of them have already gone. More will go out here in the remaining two months of the quarter. For 2025, we're working with Boeing on exactly how many engines would they need based on their demand profile. So that is work that we need to do in the next couple of months. We expect that the program will obviously ramp here over the decade. The key for us is just to continue to work the cost out. As we shared at investor day, we expect about 30% of the cost to come out by the 50th engine and an additional 30% as we get to the 250th engine. That's what's in our plan.

Speaker Change: and Rob from our guidance perspective, we do have a few revrec units here in the fourth quarter. We've already started delivering the engines to...

Speaker Change: to Boeing.

Speaker Change: Some of them already gone more will go out here in the remaining two months of the quarter. For 25, we're working with Boeing with exactly how many engines will they need based on their demand profile. So that is work that we need to do in the next couple of months.

Speaker Change: But we expect that the program will obviously ramp over the decade and the key for us is just to continue to work the cost out. And as we shared at the invested AB, we expect about 30% of the cost to come out by the 50th engine and additional 30% as we get to the 250th engine.

Rahul Ghai: We'll move past the peak losses towards later in the decade, and the program should be profitable by 2030. That's what we've built into both our near-term and long-term outlook.

We'll move past the peak losses towards later in the decade, and the program should be profitable by 2030. That's what we've built into both our near-term and long-term outlook.

Speaker Change: So that's what's in our plan and we'll move past the peak losses towards lives in the decade and the program should be profitable by 2030. So that's what we built into both our near-term and long-term outlook.

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

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

Miles Walton: Thanks. Good morning.

Myles Walton: Thanks. Good morning.

Larry Culp: Good morning, Miles.

Miles Walton: Sorry. I was hoping you can comment. I was hoping you can comment on the customer concessions or penalties that might be associated with delinquency of deliveries, both on the commercial side and the military side, which are obviously below your plan and expectation. We get asked the question a lot. How do the financials at GE keep getting better if the underlying deliveries keep getting worse? I'm just curious if you can elucidate some of the penalties you might be absorbing under the surface for the delinquencies. Thanks.

Myles Walton: Sorry. I was hoping you can comment. I was hoping you can comment on the customer concessions or penalties that might be associated with delinquency of deliveries, both on the commercial side and the military side, which are obviously below your plan and expectation. We get asked the question a lot. How do the financials at GE keep getting better if the underlying deliveries keep getting worse? I'm just curious if you can elucidate some of the penalties you might be absorbing under the surface for the delinquencies. Thanks.

Speaker Change: Thanks for your time.

Speaker Change: Sorry, I was hoping you can comment on the customer concessions or penalties that might be associated with the link one see of deliveries both on the

Speaker Change: The commercial side and the military side which are obviously below your plan and expectation, we get asked a question a lot, how do the financials, GE keep getting better if the underlying deliveries keep getting worse, and just curious if you can elucidate some of the penalties you might be absorbing under the surface for the link with these, thanks. Myles, let me start and let me jump in here, on.

Rahul Ghai: Miles, let me start and let me jump in here. Miles, as you know, kind of typical contracts with the customers. But everything that we need to accrue for, we're obviously accruing for, and that's kind of built into the guidance. But I want to say that it's not been a material number for us here as we sit in here in 2024. So we're working through and trying to support the customers as best as we know how. And as you saw, the deliveries are sequentially better in Q3. They'll get better in Q4, and we'll continue to improve as we work past these supply chain challenges. But nothing major on the liquidated damages or penalty side on either side, on either commercial or military. Larry, anything to add?

Speaker Change: We know the truth, you know, kind of...

Speaker Change: Typical contracts with the customers, but everything that...

Speaker Change: We that we need to accrue for we're obviously accruing for and that's kind of built into the guidance, but I want to say that it's not been a material number for us here as we sit in as we sit in here in 2024. So we're working through and trying to support the customers as best as we know how and as you saw, the deliveries are sequentially better in the third quarter will get better in the fourth quarter and will continue to improve as you work past these supply chain challenges, but nothing major in on the liquidity damages or penalty side on either side on either commercial or or military.

Larry Culp: No.

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

Speaker Change: Our next question comes the line of Sheila Kailu with Jeffries.

Sheila Kahyaoglu: Good morning, guys. Thank you very much, Larry, Rahul. Good morning. Maybe we could talk about DPT. Orders and backlog continue to be very strong despite the softness in profitability. I assume some of that is coming from the combat engine shortfalls, but you also mentioned pressure across propulsion and additive plus the charge today. So when we think about the low end of the 2024 guide, it would suggest Q4 margins step down again sequentially. How do we think about what happens into 2025 and what's driving some of that margin pressure?

Speaker Change: Good morning, guys. Thank you very much. Larry Rahul.

Sheila Kailu: Good morning. Maybe we can talk about that DPP. Orders and backlog continue to be very strong despite the softness and profitability. I assume some of that is coming from the combat engine shortfalls, but you also mentioned pressure across propulsion and additive plus the charge today. So when we think about the low end of 2024 guide, it would suggest Q4 margins set down again sequentially. How do we think about what happens into 2025 and what's driving some of that margin pressure?

Rahul Ghai: So Sheila, I think you touched on it. The biggest pressure point here in the fourth quarter is our investment in R&D to support the next-gen programs. So that is the biggest driver here. Given the budget uncertainty, we are continuing to invest from our side to make sure that we meet the timelines that the customers need from us. So that's the biggest point. There's a little bit of product mix in Avio Aero that is putting a little bit of pressure on propulsion additive technologies that we referenced. But the biggest driver here is the R&D increase in the fourth quarter. Now, as you go into 2025, as you mentioned, the backlog is strong at $18 billion, up about $1 billion year over year for the segment. So that supports the mid to high single-digit growth that I mentioned earlier in response to David's question.

Speaker Change: So she's I think you touched on it. The biggest pressure point here in the fourth quarter is our investment in R&D to support the next-gen programs.

Speaker Change: So, that is the biggest driver here, given the budget uncertainty, we are continuing to invest from our side to make sure that we need the timelines that the customers need from us. So, that's the biggest point, you know, a little bit of a...

Speaker Change: Product Mix in Avio Arrow, that is putting a little bit of pressure on proportionate additive technologies that we referenced. But the biggest driver here is the R&D increase in the fourth quarter. Now as you go into 25, as you mentioned, you know, the backlog is strong up, you know, at 18 billion dollars up about a billion dollars a year over year for the segment. So that supports the mid to high single digit growth that I mentioned earlier in response to David's question.

Rahul Ghai: We do expect that as we get into 2025, our profit should grow faster than revenue, and that should drive continued margin expansion on the DPT segment. Keep in mind, the results on a year-to-date basis have been very strong as well. We'll continue that into 2025.

We do expect that as we get into 2025, our profit should grow faster than revenue, and that should drive continued margin expansion on the DPT segment. Keep in mind, the results on a year-to-date basis have been very strong as well. We'll continue that into 2025.

Speaker Change: and we do expect that as we get into 25, our profit should grow faster than revenue, and that should drive continued margin expansion on the DPPT segment and keep in mind that results on a year to date basis have been very strong as well. So we'll continue that into 25.

Operator: Our next question comes from a line of Ronald Epstein with Bank of America.

Speaker Change: Our next question comes from a line of Ronald Epstein with Bank of America.

Ronald Epstein: Yeah. Hey, good morning, Larry and Rahul.

Larry Culp: Morning, Ron.

Ronald Epstein: Hey, good morning. I'm Aranya Maho. Good morning Rahul.

Ronald Epstein: Can you maybe peel back the onion a little bit more on shop visits in the quarter? LEAP was up, but other things were down. If you can go into that in a little more detail, that might be helpful for everybody.

Ronald Epstein: Can you feel back the onion a little bit more on shop visiting your quarter? Hey, really put it up, but other things were down, if you can go into that in a little more detail, that might be helpful for everybody.

Larry Culp: Ron, I think it's very much what we have been touching on here this morning, what we've talked about previously, just in terms of the various supply chain challenges that we're seeing really across the board. We talk a lot about Leap, given the ramp there and what's happening in the aftermarket. But these same suppliers support us across virtually every one of our programs. So what we're trying to do is make sure that the Flight Deck improvements that we're seeing, that we've highlighted here this morning, are broad-based. That's why we've got over 550 engineers in the field working with the supply base to really enable us to have more flow into our facilities, whether they support new make of an engine, let alone the aftermarket. When that flow is not constant, when that flow is not improving, that's when things are delayed.

Speaker Change: Ron, I think it's very much what we have been.

Speaker Change: I'm touching on here this morning when we talked about previously just in terms of the various supply chain challenges that we're seeing really across the board. We talk a lot about leaving given the ramp there and what's happening in the aftermarket, but these...

Speaker Change: Same suppliers support us across virtually every one of our programs. So what we're trying to do is make sure that the flight deck improvements that we're seeing that we that we've highlighted here this morning are our broad base. That's why we've got over 550 engineers in the field working with the supply base to really enable us to have more flow into our facilities, whether they support new make of an engine. Let alone the the aftermarket when that flow is not constant when that flow is not improving. Thank you very much.

Larry Culp: Depending on where we are in a particular facility or on a particular product line, you may see that present itself in one area, in one quarter, perhaps in another elsewhere. It's not something we're particularly pleased with, but again, I think we're focused on the problem-solving, not the finger-pointing. On balance, we're encouraged by what we have seen here in Q3. You saw the results of it, I think, more pronounced in new engine deliveries and in spare parts growth than necessarily in our internal shop visits, which were lower sequentially. On balance, what we need to do in concert with our suppliers is underway. I think we're developing momentum with them. That is what gives us the optimism embedded in the guidance raise here for Q4 and some of the commentary that Rahul provided with respect to next year.

Speaker Change: That's when things...

Depending on where we are in a particular facility or on a particular product line, you may see that present itself in one area, in one quarter, perhaps in another elsewhere. It's not something we're particularly pleased with, but again, I think we're focused on the problem-solving, not the finger-pointing. On balance, we're encouraged by what we have seen here in Q3. You saw the results of it, I think, more pronounced in new engine deliveries and in spare parts growth than necessarily in our internal shop visits, which were lower sequentially. On balance, what we need to do in concert with our suppliers is underway. I think we're developing momentum with them. That is what gives us the optimism embedded in the guidance raise here for Q4 and some of the commentary that Rahul provided with respect to next year.

Speaker Change: Are delayed and depending on where we are in a particular facility on a particular product line, you may see that present itself in one area in one quarter perhaps in another elsewhere. It's not something we're particularly pleased with, but again, I think we're focused on the problem solving, not the finger pointing and on balance are encouraged by what we have seen here in the third quarter. You saw the results that I think more pronounced. . . . . . .

Speaker Change: in New Engine deliveries and in spare parts growth than necessarily in our internal shop visits, which were lower sequentially. But I think on balance, what we need to do in concert with our suppliers is underway. I think we're developing momentum with them. And that is what gives us the optimism embedded in the guidance raised here for the fourth quarter and some of the commentary that Rahul provided with respect next year. Thank you.

Larry Culp: That's the financial framing. Operationally, we know we have customers, airlines, and airframers that want more from us, and that's job one.

That's the financial framing. Operationally, we know we have customers, airlines, and airframers that want more from us, and that's job one.

Speaker Change: That's the financial framing operationally. We know we have customers, airlines and air frammers that want more from us. And that...

Rahul Ghai: And Ron, if I may add, one thing that you did see in the quarter is that the spare parts sales are up. So as Larry spoke about the material availability challenges, we constantly balance the needs of both our external and the internal network and prioritize the delivery of parts to reduce the turnaround time for our airline customers, be it in our own network or in the external network. So there's a little bit of fungibility of those same parts between spare parts sales and shop visits. And this quarter, what you saw was the spare parts sales were higher. Shop visits were flat on a year-over-year basis in Q3. But now, as we're getting into Q4, our inductions for shop visits were higher than our output.

Speaker Change: That's job one.

Rahul Ghai: And Ron, if I may add, you know, one thing that you did see in the quarter is that the spare part sales are up.

Speaker Change: So as Larry spoke about the material availability challenges, you know we constantly balance the needs of both our external and the internal network and prioritize the delivery of parts to reduce the turnaround time for our airline customers be it in our own network or in the external network. So there's over a fungibility of those same parts between spare parts sales and shop visits and this quarter what you saw was the spare parts sales were higher shoppers were flat that uh...

Speaker Change: on a year-over-year basis in the third quarter. But now as we're getting to the fourth quarter, we have, you know, our inductions for shop visits were higher than at the output. So we're getting to the fourth quarter with a fairly high backlog of shop visits that we need to complete. And even on a spare part space is more than 80% of the spare part sales that we're projecting are already in the backlog. . . . . .

Rahul Ghai: So we're getting into the fourth quarter with a fairly high backlog of shop visits that we need to complete. And even on a spare parts basis, more than 80% of the spare part sales that we are projecting are already in the backlog. So good strength on both sides on the spare parts and shop visits. And with the price increases that we implemented in the third quarter, you put all that together, and that is where we felt very comfortable holding our services growth outlook for the year.

So we're getting into the fourth quarter with a fairly high backlog of shop visits that we need to complete. And even on a spare parts basis, more than 80% of the spare part sales that we are projecting are already in the backlog. So good strength on both sides on the spare parts and shop visits. And with the price increases that we implemented in the third quarter, you put all that together, and that is where we felt very comfortable holding our services growth outlook for the year.

Speaker Change: So, good strength on both sides on the spare parts and shoppeded, and you know, with the price increases that be implemented in the third quarter, all that you put all that together, and that is where we felt very comfortable holding our services growth outlook for the year.

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

Speaker Change: Our next question comes from Seth Scythman with JB Morgan.

Seth Seifman: Hey. Thanks very much, and good morning.

Larry Culp: Good morning, Seth.

Seth Scythman: Thanks for a much and a good morning.

Seth Seifman: Good morning. I guess at the risk of getting ahead of things a little bit, maybe to dig in a little bit more on some of the comments that you made about 2025. When we think about next year versus the way that you talked about 2025 in March, I mean, I would assume that the engine deliveries are a headwind year on year. But probably starting from where we're starting from, maybe the engines are not maybe not reaching the same level of deliveries that were expected at that time. And so relative to the dollars at that time, maybe the OE losses are not quite as big. I was wondering if we should think about it that way.

Seth Scythman: Good morning, great to see you.

Seth Scythman: I guess, you know, at the risk of getting ahead of things a little bit, maybe to dig in a little bit more on some of the comments that you made about about 2025.

Seth Scythman: When we think about next year versus the way that you talked about 20, 25 and in March, I mean, I would assume that the engine deliveries are ahead when you're on year.

Speaker Change: Probably starting from where we're starting from, maybe the engines are not maybe not reaching the same level of deliveries that we're expected at that time. And so relative to the dollars at that time, maybe the OE losses are not quite as big. I was wondering if we should think about it that way. And then also just in terms of thinking about not just the volume of work on leap in the aftermarket, but leap profitability, is that something that we should have been expected to improve next year.

Seth Seifman: And then also just in terms of thinking about not just the volume of work on LEAP in the aftermarket, but LEAP profitability, is that something that we should expect to improve next year?

And then also just in terms of thinking about not just the volume of work on LEAP in the aftermarket, but LEAP profitability, is that something that we should expect to improve next year?

Rahul Ghai: I think, Seth, you are accurate on both counts, right? Our engine output perhaps is not at the level that we expected back in March. So that should minimize or reduce our engine losses. But keep in mind, there are other dynamics that go in as well. The number of spare engines we have to deliver, R&D investments, all those other things. So that's just one data point, which you're accurate on. Again, we'll provide more guidance as we get into 2025. On the Leap side, I think that is definitely shaping up to be a lot better than what we expected at the beginning of the year. Obviously, Larry spoke about the durability improvements that are coming in and the fact that we are expecting Leap durability to be at CFM56 levels in 2025. So that's a huge plus.

Speaker Change: I think that you are accurate on both counts, right? Our engine output perhaps is not at the level that we expected back in March.

Speaker Change: Uh, so that should minimize our, or reduce our, our, uh, engine losses, but keep in mind there are other dynamics that go in as well, uh, you know, the number of spare engines we have to deliver R&D investments, all those other things. So that's just one data point, uh, which you, you're accurate on again, we'll provide more guidance as we get into into 2025. . . .

Speaker Change: On the leap side, I think that is definitely shaping up to be a lot better than what we expected at the beginning of the year. Obviously, that is spoke about the durability improvements that are coming in and the fact that we are expecting leap, durability to be at CSM-56 levels in 2025.

Rahul Ghai: But also what we've started to see is that our spare part sales to our external network is growing. So this year, north of 10% of the shop visits that we completed were by external third-party network. And that is obviously a very profitable business. And if you look on a sold basis, about 25% of the shop visits that are sold are with an external third-party network. So that's an important data point because that means that spare part sales for LEAP should grow over time. So that should be a positive hit for 2025, and we'll reflect that in our guidance as we provide that in January.

But also what we've started to see is that our spare part sales to our external network is growing. So this year, north of 10% of the shop visits that we completed were by external third-party network. And that is obviously a very profitable business. And if you look on a sold basis, about 25% of the shop visits that are sold are with an external third-party network. So that's an important data point because that means that spare part sales for LEAP should grow over time. So that should be a positive hit for 2025, and we'll reflect that in our guidance as we provide that in January.

Speaker Change: That's a huge plus. But also what we've started to see is that our spare parts sales to our external network is growing. So this year, north of 10% of the shoppers that we that shoppers that we completed were by external third party network. And that is obviously very profitable business. And if you look at a sold basis, you know, about 25% of the shoppers that are sold are with an external third party network. So those are that's an important data point because that means that you know spare parts sales for leap should grow over time. So that is should be a positive hit for 2025. And we'll reflect that in a guidance as we provide that in January .

Larry Culp: Seth, two other things I would just add that we want to keep in mind. One, the 9X delay in EIS is important to understand. But as I said earlier, we really haven't changed what we're doing. We'll be ramping deliveries of that engine next year, maybe at a slower rate than was anticipated, but nonetheless, we'll be ramping. That will create a bit of a headwind. But also, perhaps as a bit of an offset, maybe and then some, recall we said last quarter relative to the CFM56 utilization. It'll be higher for longer. That obviously helps us as it's helping us this year.

Speaker Change: To have two other things I would just add that we want to keep in mind one, the 9X, the way any I.S.

Speaker Change: is important to understand but...

Speaker Change: As I said earlier, we really haven't changed what we're doing. We'll be ramping deliveries of that engine next year, maybe at a slower rate than was anticipated. But nonetheless, we'll be ramping that we'll create a bit of a headwind. But also perhaps there's a bit of an offset maybe in then some recall we said last quarter relative to the CFM 56 utilization. It'll be it'll be higher for longer. That obviously helps us as it's helping us this year.

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

Speaker Change: Our next question comes from Scott Dorishley with Richard Bank.

Scott Deuschle: Hey, good morning.

Larry Culp: Good morning, Scott.

Scott Deuschle: Larry, has CES already received a large quantity of these new HPT blades for the LEAP-1A ahead of the certification? And then just to clarify, is that specific certification event, is it that event which allows the company to drive this improvement in LEAP output in the fourth quarter, or is it more multifaceted than that alone? Thank you.

Scott Dorishley: Hey, good morning. Good morning Scott. Larry has seen us already received a large quantity of these new HPT blades for the leap one ahead of the certification and then just to clarify, is that specific certification event? Is it that event which allows the company to drive this improvement and leap output in the fourth quarter or is it more multifaceted than that alone? Thank you.

Larry Culp: The new blade is in production. So it's not as if we're going to turn on that supply chain the moment we get the cert, right? That work is underway. When that component, that part is certified, we'll be able to begin deliveries, but we really can't do that ahead of time. But again, without trying to put anyone in a box, we think that will happen in the relatively near future. That is an unlock, Scott, but please don't think that it is the unlock, right? It'll help, most importantly, because it is part of that durability kit. That matters far more in the spirit of safety and quality than it does delivery. But because it is an easier blade to make upstream in the manufacturing processes, that will help us.

Speaker Change: The New Blade is...

Speaker Change: in production.

Speaker Change: We're next.

Speaker Change: Component that part is certified, we'll be able to begin deliveries, but we really can't do that ahead of time. But again, without trying to put anyone in a box, we think that...

Speaker Change: will happen in the relative, relatively near future.

Scott Dorishley: That is an unlocked, Scott, but please don't think that it is beyond lock, right? It'll help.

Scott Dorishley: Most importantly, because it is part of that durability kit, that matters far more in the spirit of safety and quality than it does delivery. But because it is an easier blade to make upstream in the manufacturing processes, that will help us.

Larry Culp: But most of what we will deliver in the fourth quarter will really be on the back of the existing designs, ditto, what we supply into the aftermarket. So there are a host of things that have to happen and are happening in that regard. If there was a silver bullet here, we would have used it some time ago. It's multifaceted. But again, I'm encouraged by the progress that we're seeing. The certification of the new blade just helps on top of all that.

But most of what we will deliver in the fourth quarter will really be on the back of the existing designs, ditto, what we supply into the aftermarket. So there are a host of things that have to happen and are happening in that regard. If there was a silver bullet here, we would have used it some time ago. It's multifaceted. But again, I'm encouraged by the progress that we're seeing. The certification of the new blade just helps on top of all that.

Scott Dorishley: But most of what we will deliver in the fourth quarter will really be on the back of the existing designs.

Speaker Change: Dido, what we supply into the aftermarket, so there are a host of things.

Speaker Change: that have to happen in that regard. If there was a silver bullet here, we would have used it some time ago. It's multifaceted, but again, I'm encouraged by the progress that we're seeing. The certification of the new blade just helps.

Speaker Change: on TopicalBad.

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

Speaker Change: Our next question comes from Galton Kana with TD Cowan.

Gautam Khanna: Hey, good morning, guys.

Larry Culp: Morning.

Speaker Change: Hey, good morning, guys. On Morning.

Gautam Khanna: I was wondering if you could frame up for us your expectations now for CFM shop visits over the next couple of years versus maybe that of Wide Body. Maybe if you could just tease that out a bit.

Galton Kana: I was wondering if you could frame up for us.

Galton Kana: Your expectations now for CFM Shop visits.

Galton Kana: You know, over the next couple of years, versus maybe that of wide body.

Galton Kana: Um...

Galton Kana: Maybe it just teaser out of that.

Rahul Ghai: So Gautam, as we said, I think on the last earnings call, we had expected the peak of shop visits to be in 2025 and then start declining in 2026 and 2027, right? Given what we are seeing now, we still expect the peak of shop visits in 2025, but now to stay at that level through 2027 and then start declining from that point on, again, at a gradual pace, right? So that's what our expectation is. Now, keep in mind that revenue growth will continue to grow for longer, just given as we go into the second and third shop visits with price increases, everything else. So revenue still continues to grow. On the Wide Body side, GE90 is getting into the second shop visit. Keep in mind that 75% of that fleet has not seen the second shop visit.

Speaker Change: So, got them as we said a thing on the last learnings call, we hear expected the peak of shop visits to be in 2025 and then start declining in 26 and 27, right?

Speaker Change: Given what we are seeing now, we still expect the people of shop that it's in 25, but now to stay at that level, 227 and then start declining from that point on.

Speaker Change: Again, at a gradual pace, so that's what our expectation is. Now, keep in mind that revenue growth will continue to grow for longer, just given as we go into the second and third shop visits, the price increases, everything else, or revenue still continues to grow.

Speaker Change: On the wide-body side, GE 90 is getting into the second shot for that. Keep in mind that 75% of that fleet has not seen the second shot for this. So that's what we are beginning to see now. And that spoke to the heavier workscopes that we've also previously discussed which helped our revenue here in 2024 and will continue to grow over time as we transition to the second shot for GE 90.

Rahul Ghai: So that's what we are beginning to see now. And that spoke to the heavier work scopes that we've also previously discussed, which helped our revenue here in 2024 and will continue to grow over time as we transition to the second shop visits for GE90. So again, no change in outlook on GE90. I think the engine is performing well. Things are coming in well. On the GEnx side, the shop visits are roughly on a volume basis. We are expecting that to be flat over the next three to four years. And the primary reason for that is, even as the installed base is growing, the time on wing is doing a lot better than what we had initially expected. So the shop visits that were in the 2025 to the 2028 timeframe have now moved out later in the decade. Again, that's good news for us.

So that's what we are beginning to see now. And that spoke to the heavier work scopes that we've also previously discussed, which helped our revenue here in 2024 and will continue to grow over time as we transition to the second shop visits for GE90. So again, no change in outlook on GE90. I think the engine is performing well. Things are coming in well. On the GEnx side, the shop visits are roughly on a volume basis. We are expecting that to be flat over the next three to four years. And the primary reason for that is, even as the installed base is growing, the time on wing is doing a lot better than what we had initially expected. So the shop visits that were in the 2025 to the 2028 timeframe have now moved out later in the decade. Again, that's good news for us.

Speaker Change: So, again, no change in Outlook on G90, it's in the engine performing well, things are coming in well. On the NX side, um...

Speaker Change: The shop visit are roughly on a volume basis, we expecting that to be flat over the next three to four years. And the primary reason for that is even as they're installed base is growing, but time on wing is doing a lot better than would be initially expected.

Speaker Change: So the shop visits that were in the 25 to the 28 timeframe have now moved out later in the decade. Again, that's good news for us as you know about you know 60% north of that portfolio is serviced by us and is in a long term service contract. So fewer shop visits on the NXI improves the profitability of that program. So that's what our expectation is on NX the shop visits are all going to happen, but given the time on wing improvement they've kind of moved out of the the 25 to the 28 timeframe to more 28 to 31.

Rahul Ghai: As you know, about 60% north of that portfolio is serviced by us and is in a long-term service contract. So fewer shop visits on the NX side improves the profitability of that program. So that's what our expectation is on NX. The shop visits are all going to happen, but given the time on wing improvement, they've kind of moved out of the 2025 to the 2028 timeframe to more 2028 to 2031.

As you know, about 60% north of that portfolio is serviced by us and is in a long-term service contract. So fewer shop visits on the NX side improves the profitability of that program. So that's what our expectation is on NX. The shop visits are all going to happen, but given the time on wing improvement, they've kind of moved out of the 2025 to the 2028 timeframe to more 2028 to 2031.

Operator: Our next question comes from Ken Herbert with RBC Capital Markets.

Speaker Change: Our next question comes from Can Herbert with RBC Capital Markets.

Larry Culp: Yeah. Hi, good morning, Larry and Rahul.

Ken Herbert: Yeah. Hi, good morning, Larry and Rahul.

Larry Culp: Good morning.

Speaker Change: Yeah, good morning, Larry and Roeville. Good morning.

Larry Culp: Hey, I wanted to just follow up, Larry, specifically on your comment around the subset of priority sites grew material output or input, I guess, 18% sequentially. Was that in line with your expectations? I'm just curious, as you think about sort of applying Flight Deck to the situation, how should that maybe improve as we think about Q4 and into 2025?

Ken Herbert: Hey, I wanted to just follow up, Larry, specifically on your comment around the subset of priority sites grew material output or input, I guess, 18% sequentially. Was that in line with your expectations? I'm just curious, as you think about sort of applying Flight Deck to the situation, how should that maybe improve as we think about Q4 and into 2025?

Can Herbert: Hey, what did this follow-up Mary specifically in your comment around the subset of priority sites, room material output, or input, I guess, 18%, sequentially, was that in line with your expectations and I'm just curious, as you think about sort of applying flight deck to the situation, how should that maybe improve as we think about fourth quarter and into 2025?

Larry Culp: Ken, I think we were very pleased with the 18%, but we could have used more, right? Again, just in light of where demand is in the aftermarket and from a new make, from a ramp perspective. But I think the underlying approach is exactly what we're doing broadly. You've heard us talk before about the larger set of suppliers where we're particularly focused, our so-called top 15. And it goes beyond that over time, ultimately, to all of our suppliers. I think what we're finding is by really collaborating, again, not finger pointing, but going in, putting our best technical, our best operational people at the shop floor to identify the constraints, really understand root cause, and drive corrective actions, both permanent and temporary where appropriate, we're able to unlock capacity.

Speaker Change: Can I think we were very pleased with the 18%, but we could have used more. Right, again, just in light of where demand is in the after market and from a new make from our ramp perspective.

Speaker Change: But I think the underlying approach is exactly what we're doing broadly. You've heard us talk before about the larger set of suppliers where we're particularly focused are our so-called top 15.

Speaker Change: It goes beyond that over time, ultimately, to all our suppliers. I think what we're finding is...

Speaker Change: by really collaborating, again, not finger-pointy, but going in.

Speaker Change: Putting our best technical, our best operational people at the stove phase to identify the constraints really understand root cause.

Speaker Change: and SRI's corrective actions, both permanent and temporary were appropriate.

Larry Culp: Now, given what we need to do between here and 2030 to support the aftermarket, to support new make, we're going to need to do more than that. But that Flight Deck effort, I think, is what will help us deliver a better fourth quarter here, and it's really the foundation for 2025. We're clearly going to also need to complement that with fixed capacity investments. You've heard us talk about the $1 billion, for example, over the next five years that we intend to invest in our MRO network. That will be part of improving these deliveries. In turn, the development of a third-party network is also an important part of satisfying customer demand. But by going in and really understanding these issues, not arguing about them, not negotiating, but solving the problems, we know we're going to unlock that capacity. We're going to be better partners.

Now, given what we need to do between here and 2030 to support the aftermarket, to support new make, we're going to need to do more than that. But that Flight Deck effort, I think, is what will help us deliver a better fourth quarter here, and it's really the foundation for 2025. We're clearly going to also need to complement that with fixed capacity investments. You've heard us talk about the $1 billion, for example, over the next five years that we intend to invest in our MRO network. That will be part of improving these deliveries. In turn, the development of a third-party network is also an important part of satisfying customer demand. But by going in and really understanding these issues, not arguing about them, not negotiating, but solving the problems, we know we're going to unlock that capacity. We're going to be better partners.

Speaker Change: We're able to unlock capacity, now given what we need to do between here and 2030.

Speaker Change: to support the aftermarket, to support new make. We're going to need to do more than that, but that that flight deck effort I think is what will help us deliver a better fourth quarter here. And it's really the foundation for 2025. We're clearly going to also need to complement that.

Speaker Change: with fixed capacity investments, you've heard us talking about the billion dollars for example over the next five years that we intend to invest in our MRO network. That will be part of improving these deliveries.

Speaker Change: In turn, the development of a third party network is also an important part of satisfying customer demand. But by going in and really understanding these issues.

Speaker Change: Not arguing about them, not negotiating, but solving the problems.

Speaker Change: We know we're going to unlock.

Larry Culp: In turn, it'll allow us to serve our customers ultimately.

In turn, it'll allow us to serve our customers ultimately.

Speaker Change: That capacity we're going to be better partners.

Speaker Change: and in turn that'll allow us to serve our customers ultimately.

Operator: Question. Our last question comes from Noah Poponak with Goldman Sachs.

Speaker Change: Our last question comes from Noah Popinak, Rick Olman's Acts.

Larry Culp: Hey, good morning, everyone.

Noah Poponak: Hey, good morning, everyone.

Larry Culp: Morning, Noah.

Rahul Ghai: Morning, Noah.

Larry Culp: Good morning, Noah.

Speaker Change: Hey, good morning, everyone. Why you know it?

Larry Culp: Rahul, was there, I guess, is there a specific 777X, 9X headwind that was in the 71 to 75 for 2025 that we should think about lifting up and moving beyond 25, or is it more spread out than that? And can you quantify, put numbers on that? And then I guess just at the CES total margin, if I go to the high end of your new EBIT range for 2024, the fourth quarter margin would be basically flat from the third, which I guess is a little surprising despite mix, but maybe there's more services catch up and there isn't as much mix headwind there as I was thinking.

Noah Poponak: Rahul, was there, I guess, is there a specific 777X, 9X headwind that was in the 71 to 75 for 2025 that we should think about lifting up and moving beyond 25, or is it more spread out than that? And can you quantify, put numbers on that? And then I guess just at the CES total margin, if I go to the high end of your new EBIT range for 2024, the fourth quarter margin would be basically flat from the third, which I guess is a little surprising despite mix, but maybe there's more services catch up and there isn't as much mix headwind there as I was thinking.

Speaker Change: Rowl, was there a specific triple 7x 9x headwind that was in the 7175 or 2025 that we should think about.

Speaker Change: Lifting up and moving beyond 25, or is it more spread out than that and can you quantify puts it put numbers on that. And then I guess just at the CS total margin, if I go to the high end of your new EBIT range for 24, the fourth quarter margin would be basically flat from the third.

Speaker Change: I guess it's a little surprising despite Max, but maybe there's more services catch up in there as in as much Max had when there as I was thinking.

Rahul Ghai: So let me take that maybe in reverse order here, Noah, and just tell me if I don't get there. So as we think about the Q3 to Q4 transition in CES, a few things, right? The services, as we discussed, obviously, strong services growth here in the fourth quarter. Just we had 12% year to date, projecting 15% for the full year. So stronger growth here in the fourth quarter. Same thing with the OE growth as well. OE growth ramps. We do have the 9X shipments here in the fourth quarter. So that puts a little bit of pressure on the CES margins. And then we've got step-up in R&D in the CES number as well. So those are the various puts and takes in the fourth quarter for 2024.

Speaker Change: We are 12% here today, you know, projecting 15% for the year, so stronger growth here in the fourth quarter. Same thing with the OE growth as well, OE growth lamps. We do have the 9x shipments here in the fourth quarter. So that puts a little bit of pressure on the CES margins. And then you've got step up in R&D in the CES number as well. So those are the various puts and takes in the fourth quarter for 2024. . . .

Rahul Ghai: Now, on your 9X questions, there was a specific headwind in that 71 to 75 number that we had provided. As Larry just said a minute ago, there will be a 9X headwind in 2025. We are not able to quantify that just yet because we need to work the exact volume assumptions for 2025 with Boeing. So we'll come back to it in January. Then as you think about that 9X headwind, it will grow for a period of time beyond that because as engine deliveries ramp, that headwind will grow. That specific headwind will grow until we start getting the cost out and all that. As I said a minute ago, we expect the program losses to peak here later in this decade, and the program to be profitable by 2030. But again, that's one specific number.

Now, on your 9X questions, there was a specific headwind in that 71 to 75 number that we had provided. As Larry just said a minute ago, there will be a 9X headwind in 2025. We are not able to quantify that just yet because we need to work the exact volume assumptions for 2025 with Boeing. So we'll come back to it in January. Then as you think about that 9X headwind, it will grow for a period of time beyond that because as engine deliveries ramp, that headwind will grow. That specific headwind will grow until we start getting the cost out and all that. As I said a minute ago, we expect the program losses to peak here later in this decade, and the program to be profitable by 2030. But again, that's one specific number.

Speaker Change: Now, on your 9x questions, there was a specific headwind in that 7-1-7-5 number that we had provided. And as Larry said a minute ago, there will be a 9x headwind in 2025.

Speaker Change: Not able to quantify that just yet because we need to work the exact volume assumptions for 25 with Boeing. So we'll come back to it in January . And then as you think about that 9x headwind, it will grow for a period of time beyond that because as engine deliveries ramp, the that headwind will grow that specific headwind will grow. Until we start getting the cost out and all that and it is a set of minute ago, we expect the program losses to peak here, you know.

Speaker Change: Later in this decade in the program to be profitable, come by 2030. So, but again, that's one specific number, obviously there are many different posts and takes in the overall outlook for the business, including the strong services outlook that we've just discussed.

Rahul Ghai: Obviously, there are many different puts and takes in the overall outlook for the business, including the strong services outlook that we've just discussed.

Obviously, there are many different puts and takes in the overall outlook for the business, including the strong services outlook that we've just discussed.

Operator: Larry, any final comments?

Larry Culp: Larry, thank you. And just to close here, thanks to everybody for being with us here the last hour. We take great pride at GE Aerospace and our heritage of innovation. And I'm confident the team is ready to deliver for our customers and rise to the challenge of creating a more sustainable future of flight. Again, we appreciate your time today and your interest in GE Aerospace.

Speaker Change: Larry any final comment?

Larry Culp: Blair, thank you and just to close here, thanks to everybody for being with us here the last hour. We take great pride at GERO space in our heritage of innovation and I'm confident the team is ready to deliver for our customers and rise to the challenge of creating a more sustainable future of light.

Speaker Change: Again, we appreciate your time today and your interest in GE Aerospace.

Blair Shore: Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect. Good day, ladies and gentlemen, and welcome to the GE Aerospace third 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 Shore, from the GE Aerospace Investor Relations team. Please proceed.

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.

Speaker Change: Thank you for participating. You may now disconnect.

Speaker Change: Good day, ladies and gentlemen, and welcome to the GE Aerospace 3rd Quarter 2024 earnings conference call.

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

Speaker Change: 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.

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.

Operator: Thanks, Liz. Welcome to GE Aerospace's Q3 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.

Blaire Shoor: Thanks, Liz. Welcome to GE Aerospace's Q3 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.

Speaker Change: Thanks Liz. Welcome to GE Aerospace' third quarter 2024 earnings call. I'm joined by Chairman and CEO Larry Kulp and CFO Rahul Gai. 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: Blair, thank you, and good morning. We're pleased to be joining you from GE Aerospace's headquarters in Evendale, Ohio. For more than a century, GE Aerospace employees have been inventing the future of flight, lifting people up and bringing them home safely. Those last four words, bringing them home safely, are an incredible responsibility and will always be our top priority and core to our culture. We're motivated each day by our purpose and guided by Flight Deck, our proprietary lean operating model. Our team is dedicated to safety, quality, delivery, and cost in that order. That focus will enable us to meet the significant demand of today while building the innovative solutions of tomorrow. It is because of the shared commitment of our 52,000 employees around the world that we have the privilege to continue to advance flight for today, tomorrow, and the future.

Larry Culp: Blair, thank you, and good morning. We're pleased to be joining you from GERA Space's headquarters in Evendale, Ohio.

Larry Culp: For more than a century GE Aerospace employees have been inventing the future of flight, lifting people up and bringing them home safely.

Larry Culp: Those last four words, bringing them home safely, are an incredible responsibility and will always be our top priority and core to our culture.

Larry Culp: We're motivated each day by our purpose and guided by flight deck, our proprietary lean operating model.

Larry Culp: Our team is dedicated to safety, quality, delivery, and cost in that order.

Larry Culp: That focus will enable us to meet the significant demand of today while building the innovative solutions of tomorrow.

Larry Culp: It is because of the shared commitment of our 52,000 employees around the world, that we have the privilege to continue to advance flight for today tomorrow in the future.

Larry Culp: Turning to our third quarter performance, orders were up 28%, driven by robust demand, and we delivered strong earnings and cash. Revenue was up 6% from growth in services and equipment, while operating profit was up 14% and adjusted EPS up 25%. Free cash flow was $1.8 billion, with conversion of more than 140%. In commercial engines and services, or CES, orders were up 29%, with more than 20% growth in both services and equipment. Our recent wins in wide bodies and narrow bodies build on our considerable backlog of $149 billion, greater than 90% of which is in services. Services revenue grew 10% and supported total operating profit, which was up 16% year over year. Our priority continues to be servicing and growing the industry's most extensive commercial installed base.

Turning to our third quarter performance, orders were up 28%, driven by robust demand, and we delivered strong earnings and cash. Revenue was up 6% from growth in services and equipment, while operating profit was up 14% and adjusted EPS up 25%. Free cash flow was $1.8 billion, with conversion of more than 140%. In commercial engines and services, or CES, orders were up 29%, with more than 20% growth in both services and equipment. Our recent wins in wide bodies and narrow bodies build on our considerable backlog of $149 billion, greater than 90% of which is in services. Services revenue grew 10% and supported total operating profit, which was up 16% year over year. Our priority continues to be servicing and growing the industry's most extensive commercial installed base.

Larry Culp: Turning to our third quarter performance.

Larry Culp: Order's rupt 28% driven by robust demand and we deliver strong earnings and cash.

Larry Culp: Revenue was up 6% from growth and services and equipment while operating profit was up 14% and adjusted DPS up 25%

Larry Culp: 3 cash flow with a billion eight, with conversion of more than 140%.

Larry Culp: In commercial engines and services or CES orders rupt 29%, with more than 20% growth in both services and equipment.

Larry Culp: Our recent wins and wide bodies and narrow bodies have built on our considerable backlog of $149 billion.

Larry Culp: Greater than 90% of which is in services.

Larry Culp: Services revenue grew 10% and supported total operating profit, which was up to 16% year over year.

Larry Culp: Our priority continues to be servicing and growing the industry's most extensive commercial installed base.

Larry Culp: We made progress with the step-up in OE deliveries quarter over quarter, with higher spare part sales to support our external MRO network while also expanding aftermarket capacity. Progress to be sure, but more work lies ahead. In defense and propulsion technologies, or DPT, orders increased 19% while profit declined. Engine deliveries were up sequentially, but down year over year. We're focused on improving delivery of our leading defense programs while developing mission-critical technology for the future. Many thanks to our team for their work and dedication this quarter. A specific thank you this morning goes out to our teams impacted by Hurricanes Helene and Milton. You worked around the clock to support each other and minimize the impact to our customers. You are GE Aerospace at its finest.

We made progress with the step-up in OE deliveries quarter over quarter, with higher spare part sales to support our external MRO network while also expanding aftermarket capacity. Progress to be sure, but more work lies ahead. In defense and propulsion technologies, or DPT, orders increased 19% while profit declined. Engine deliveries were up sequentially, but down year over year. We're focused on improving delivery of our leading defense programs while developing mission-critical technology for the future. Many thanks to our team for their work and dedication this quarter. A specific thank you this morning goes out to our teams impacted by Hurricanes Helene and Milton. You worked around the clock to support each other and minimize the impact to our customers. You are GE Aerospace at its finest.

Larry Culp: We made progress with the step-up in OE Delibery's quarter of a quarter with higher spare part sales to support our external MRO network while also expanding aftermarket capacity.

Larry Culp: Progress to be sure, but more work lies ahead.

Larry Culp: and Defense and Propulsion Technologies, or DPT, orders increase 19% while profit declined.

Larry Culp: and Jim Delivery's reps, sequentially, but down you're over year.

Larry Culp: We're focused on improving delivery of our leading defense programs, while developing mission critical technology for the future.

Larry Culp: Many thanks to our team for their work and dedication this quarter and a specific thank you this morning goes out to our teams impacted by hurricanes, halene and milson.

Larry Culp: You worked around the clock to support each other and minimize the impact to our customers.

Larry Culp: You are GE Aerospace at its finest.

Larry Culp: Given the strength of our results, growing both profit and cash more than $1 billion year to date, combined with our fourth quarter expectations, we're raising our full-year guidance. We also continue to coordinate closely with Boeing and are committed to supporting them as they navigate their current dynamics. Moving to slide five, demand for our services and products remains robust, highlighted by departures of high single digits year to date and LEAP share of global narrow body departures increasing over 20%. We're taking steps with our suppliers to increase inputs and within our own operations to expand capacity, ensuring we're positioned to meet this historic demand. We're making progress with engine output increasing 22% quarter over quarter, including commercial up 25% and defense up 8%. We also grew spare part sales sequentially, supporting shop visits completed by our third-party network.

Given the strength of our results, growing both profit and cash more than $1 billion year to date, combined with our fourth quarter expectations, we're raising our full-year guidance. We also continue to coordinate closely with Boeing and are committed to supporting them as they navigate their current dynamics. Moving to slide five, demand for our services and products remains robust, highlighted by departures of high single digits year to date and LEAP share of global narrow body departures increasing over 20%. We're taking steps with our suppliers to increase inputs and within our own operations to expand capacity, ensuring we're positioned to meet this historic demand. We're making progress with engine output increasing 22% quarter over quarter, including commercial up 25% and defense up 8%. We also grew spare part sales sequentially, supporting shop visits completed by our third-party network.

Larry Culp: Given the strength of our results growing both profit and cash more than a billion dollars here today, combining with our fourth quarter expectations we're raising our full year guidance.

Larry Culp: We also continue to coordinate closely with Boeing and are committed to sporting them as they navigate their current dynamics.

Larry Culp: Moving to slide five.

Larry Culp: Demand for our services and products remains robust, highlighted by departures up high single digits here today, and leaps share of global narrowbody departures increasing over 20%.

Larry Culp: We're taking steps with our suppliers to increase inputs and within our own operations to expand capacity.

Larry Culp: Ensuring we're positioned to meet this historic demand.

Larry Culp: We're making progress with engine output increasing 22% quarter of a quarter, including commercial up 25% in defense up 8%.

Larry Culp: We also grew spare parts sales sequentially supporting shop visits completed by our third party network.

Larry Culp: As we've discussed over the last nine months, we're using Flight Deck to unlock key constraints, increase material inputs, and drive sustainable improvements. We're working hand in hand with suppliers, and we're grateful for their strengthening partnerships. As a result of that work, a key subset of priority supplier sites increased output 18% in Q3, supporting our deliveries. As one example, a joint Kaizen with one supplier in Q2 led to a double-digit improvement in material receipts in Q3, demonstrating that these efforts are yielding results. We expect inputs to increase again in Q4, supporting a sequential step-up in output. We're also making progress on LEAP durability with the LEAP-1A durability kit, including our upgraded HPT blade, and we're expecting it to be certified in the coming weeks. The new HPT blade is easier to manufacture, which will also help increase output.

As we've discussed over the last nine months, we're using Flight Deck to unlock key constraints, increase material inputs, and drive sustainable improvements. We're working hand in hand with suppliers, and we're grateful for their strengthening partnerships. As a result of that work, a key subset of priority supplier sites increased output 18% in Q3, supporting our deliveries. As one example, a joint Kaizen with one supplier in Q2 led to a double-digit improvement in material receipts in Q3, demonstrating that these efforts are yielding results. We expect inputs to increase again in Q4, supporting a sequential step-up in output. We're also making progress on LEAP durability with the LEAP-1A durability kit, including our upgraded HPT blade, and we're expecting it to be certified in the coming weeks. The new HPT blade is easier to manufacture, which will also help increase output.

Larry Culp: As we've discussed over the last nine months, raising flight deck to unlock key constraints, increase material inputs and drive sustainable improvements.

Larry Culp: We're working hand in hand with suppliers.

Larry Culp: and were grateful for their strengthening partnerships.

Larry Culp: As a result of that work, a key subset of priori supplier sites increased output 18% in the third quarter supporting our deliveries.

Larry Culp: As one example, he joined Kaisen with one supplier in the second quarter led to a double-digit improvement in material recedes in the third quarter, demonstrating that these efforts are yielding results.

Larry Culp: We expect input to increase again in the fourth quarter, supporting a sequential step up and output.

Larry Culp: We're also making progress on leaf durability with the one-a durability kit, including our upgraded HPT blade, and we're expecting it to be certified in the coming weeks.

Larry Culp: The new HPT blade is easier to manufacture, which will also help increase output.

Larry Culp: Combined with the three durability enhancements that are currently performing well in the field, we expect this will give LEAP a 2.5x improvement in time on wing, in line with current CFM56 levels. With LEAP's fleet size projected to double by 2030, we're expanding capacity to support aftermarket growth. We're preparing for this growth in three complementary ways to improve shop visit output and reduce turnaround times. First, we're leveraging Flight Deck to eliminate waste, to increase capacity, and reduce TAT. At our MRO facility in Celma, Brazil, we use value stream mapping and problem-solving to reduce LEAP test cycle time, a key constraint in shop visit output. We identified waste and improved standard work, reducing lead times there by nearly 50%. Actions like this enabled over 20% more LEAP shop visits in Q3 year over year. Second, we're expanding internal capacity.

Combined with the three durability enhancements that are currently performing well in the field, we expect this will give LEAP a 2.5x improvement in time on wing, in line with current CFM56 levels. With LEAP's fleet size projected to double by 2030, we're expanding capacity to support aftermarket growth. We're preparing for this growth in three complementary ways to improve shop visit output and reduce turnaround times. First, we're leveraging Flight Deck to eliminate waste, to increase capacity, and reduce TAT. At our MRO facility in Celma, Brazil, we use value stream mapping and problem-solving to reduce LEAP test cycle time, a key constraint in shop visit output. We identified waste and improved standard work, reducing lead times there by nearly 50%. Actions like this enabled over 20% more LEAP shop visits in Q3 year over year. Second, we're expanding internal capacity.

Larry Culp: Combined with the three durability enhancements that are currently performing well in the field, we expect this will give leap a two and a half times improvement in time on wing, in line with current CFM56 levels.

Larry Culp: With Leap's fleet size projected to double by 2030, we're expanding capacity to support after market growth.

Larry Culp: We're preparing for this growth in three complementary ways to improve shop visit output and reduce turnaround times.

Larry Culp: First, we're leveraging flight deck to eliminate waste to increase capacity and reduce tap.

Larry Culp: At our Emerald Facility in Selma Brazil, we use values-free mapping and problem-solving to reduce leaps of test cycle time.

Larry Culp: a key constraint and shop visit output.

Larry Culp: We identified waste and improved standard work, reducing lead times there by nearly 50%.

Larry Culp: Ashen's like this enabled over 20% more leap shop visits in the third quarter year over year.

Larry Culp: We're investing $1 billion in MRO over the next five years to create that capacity, add enhanced inspection techniques, and expand repair capabilities. We've partnered with Lufthansa Technik to add a dedicated LEAP MRO shop in Poland, and we'll induct the first engine there here in Q4. And third, we're developing our third-party network, which provides customers flexibility and competitive options to ensure the best cost of ownership. Third-party MROs inducted a record number of LEAP shop visits in Q3. We're also pleased that Akasa Air recently announced the selection of ST Engineering to provide exclusive performance restoration shop visits for their fleet over the next 15 years. While there's more work to do, we're focused on servicing and delivering our engines faster without compromising safety and quality. I'm confident our actions will enable us to increase output meaningfully into Q4 and 2025.

We're investing $1 billion in MRO over the next five years to create that capacity, add enhanced inspection techniques, and expand repair capabilities. We've partnered with Lufthansa Technik to add a dedicated LEAP MRO shop in Poland, and we'll induct the first engine there here in Q4. And third, we're developing our third-party network, which provides customers flexibility and competitive options to ensure the best cost of ownership. Third-party MROs inducted a record number of LEAP shop visits in Q3. We're also pleased that Akasa Air recently announced the selection of ST Engineering to provide exclusive performance restoration shop visits for their fleet over the next 15 years. While there's more work to do, we're focused on servicing and delivering our engines faster without compromising safety and quality. I'm confident our actions will enable us to increase output meaningfully into Q4 and 2025.

Larry Culp: Second Work Spending Internal Capacity

Larry Culp: We're investing a billion dollars in MRRO over the next five years to create that capacity add enhanced inspection techniques and expand repair capabilities.

Larry Culp: We've partnered with Luke Tons of Techniques to add a dedicated leaf MRO shop in Poland and we'll induct the first engine there here in the fourth quarter.

Larry Culp: And third, we're developing our third party network, which provides customers, flexibility and competitive options to ensure the best cost of ownership.

Larry Culp: 3rd party Amaros inducted a record number of leap shop visits in the 3rd quarter.

Larry Culp: We're also pleased that Akasa Airlines recently announced the selection of ST engineering to provide exclusive performance restoration shop visits for their fleet over the next 15 years.

Larry Culp: While there's more work to do, we're focused on servicing and delivering our engines faster without compromising safety and quality.

Larry Culp: I'm confident our actions will enable us to increase output meaningfully into the fourth quarter and 2025.

Larry Culp: We're also growing our install base with airlines and defense customers expanding and modernizing their fleets with our engines under wing. During the quarter, we won multiple services contracts for our customers' growing fleets. Avolon will add 75 new LEAP-1A powered A320 aircraft to their existing fleet of over 300 CFM powered aircraft. In wide bodies, we secured commitments from EVA Air for GEnx engines and Qatar Airways for GE9X engines. In defense, the Polish Ministry of National Defense will add over 200 of our T700 engines to power their anticipated acquisition of 96 Boeing Apache Guardian helicopters. We were also selected to overhaul and upgrade the GEnx-2B engines powering the US Air Force's SAOC, the Survivable Airborne Operations Center, Boeing 747-8.

We're also growing our install base with airlines and defense customers expanding and modernizing their fleets with our engines under wing. During the quarter, we won multiple services contracts for our customers' growing fleets. Avolon will add 75 new LEAP-1A powered A320 aircraft to their existing fleet of over 300 CFM powered aircraft. In wide bodies, we secured commitments from EVA Air for GEnx engines and Qatar Airways for GE9X engines. In defense, the Polish Ministry of National Defense will add over 200 of our T700 engines to power their anticipated acquisition of 96 Boeing Apache Guardian helicopters. We were also selected to overhaul and upgrade the GEnx-2B engines powering the US Air Force's SAOC, the Survivable Airborne Operations Center, Boeing 747-8.

Larry Culp: We're also growing our install base with airlines and defense customers expanding and modernizing their fleets with our engines under wing.

Larry Culp: During the quarter-we won multiple services contracts where our customer's growing fleets.

Larry Culp: Avalon will add 75 new leaked 1A powered A320 aircraft of their existing fleet of over 300 CFM powered aircraft. In wide bodies, we secured commitments from Eva Air for GN to ENX engines and Qatar Airways for GE9X engines.

Larry Culp: In defense, the Polish Ministry of National Defense will add over 200 of our T700 engines to power their anticipated acquisition of 96 Boeing Apache Guardian helicopters.

Larry Culp: We were also selected overhauling up grade the GENX-2B engines powering the US Air Force's SAOC, the Survival Airborne Operations Center, Boeing 747-8.

Larry Culp: Turning to the future, RISE accelerates the development of new technologies that will pave the way for the next generation of aircraft and a more sustainable future. We recently began planning for dust ingestion tests on the open fan design earlier than ever before. This reflects key durability learnings from our engines operating in higher temperature environments. We're also advancing a new era of turboprop technology with the Catalyst engine, completing engine-level testing and certification expected in the coming months. Our defense products remain in demand for critical platforms globally. Our T901 engine is key to the modernization of Black Hawk and Apaches and has been progressing towards the next milestone of power-on and ground runs. The maturity of our digital backbone for Bell's future long-range assault aircraft was critical for the US Army to pass Milestone B and enter the next phase of development.

Turning to the future, RISE accelerates the development of new technologies that will pave the way for the next generation of aircraft and a more sustainable future. We recently began planning for dust ingestion tests on the open fan design earlier than ever before. This reflects key durability learnings from our engines operating in higher temperature environments. We're also advancing a new era of turboprop technology with the Catalyst engine, completing engine-level testing and certification expected in the coming months. Our defense products remain in demand for critical platforms globally. Our T901 engine is key to the modernization of Black Hawk and Apaches and has been progressing towards the next milestone of power-on and ground runs. The maturity of our digital backbone for Bell's future long-range assault aircraft was critical for the US Army to pass Milestone B and enter the next phase of development.

Larry Culp: Turning to the future, Rice Accelerates the Development of new technologies that will pave the way for the next generation of aircraft and a more sustainable future.

Larry Culp: We recently began planning for dust ingestion tests on the open fan design earlier than ever before.

Larry Culp: This reflects key durability learnings from our engines operating in higher temperature environments.

Larry Culp: We're also advancing a new era of turbo-prope technology with a catalyst engine.

Larry Culp: Completing engine level testing and certification, expected in the coming months.

Larry Culp: Our Defense Products remain in demand for critical platforms globally.

Larry Culp: Our T901 engine is key to the modernization.

Larry Culp: of Black Hawk and Apache's, and it's been progressing towards the next milestone of power on and ground runs.

Larry Culp: The maturity of our digital backbone for Bell's future long range of salt aircraft was critical for the U.S. Army to pass milestone B and enter the next phase of development.

Larry Culp: We're also delivering continued success with our advanced technologies. Our XA100 engine completed a fourth round of testing, and we are nearing completion of the detailed design for the US Air Force's NGAP program. Stepping back, our path forward is clear, and we're confident we'll meet our customers' expectations today while developing the technologies of the future. Rahul, over to you.

We're also delivering continued success with our advanced technologies. Our XA100 engine completed a fourth round of testing, and we are nearing completion of the detailed design for the US Air Force's NGAP program. Stepping back, our path forward is clear, and we're confident we'll meet our customers' expectations today while developing the technologies of the future. Rahul, over to you.

Larry Culp: We're also delivering continued success with our advanced technologies.

Larry Culp: RXA100 Engine completed a fourth round of testing and we are nearing completion of the detailed design for the U.S. Air Force's end-gap program.

Larry Culp: Stepping back our path forward as clear and we're confident we'll meet our customers' expectations today while developing the technologies of the future.

David Strauss: Thank you, Larry. Good morning, everyone. GE Aerospace delivered another strong quarter with double-digit orders and profit growth, improving delivery, and over 140% free cash flow conversion. Revenue was up 6%, with growth in both segments. Services growth combined with price more than offset the impact of lower engine shipments year over year. Operating profit was $1.8 billion, up 14%. Services volume, favorable mix, and price were partially offset by higher inflation and investments. Operating margins expanded 150 basis points to 20.3%. Adjusted EPS was $1.15, up 25% from increased operating profit and the benefit of preferred equity redemption. Free cash flow was $1.8 billion, up 5% from higher earnings. Working capital was roughly a $600 million use. Billings on higher sequential engine deliveries was partially offset with favorable ADNA. Given the ongoing material availability challenges, inventory increased, although at a lower rate than prior quarters.

Rahul Ghai: Thank you, Larry. Good morning, everyone. GE Aerospace delivered another strong quarter with double-digit orders and profit growth, improving delivery, and over 140% free cash flow conversion. Revenue was up 6%, with growth in both segments. Services growth combined with price more than offset the impact of lower engine shipments year over year. Operating profit was $1.8 billion, up 14%. Services volume, favorable mix, and price were partially offset by higher inflation and investments. Operating margins expanded 150 basis points to 20.3%. Adjusted EPS was $1.15, up 25% from increased operating profit and the benefit of preferred equity redemption. Free cash flow was $1.8 billion, up 5% from higher earnings. Working capital was roughly a $600 million use. Billings on higher sequential engine deliveries was partially offset with favorable ADNA. Given the ongoing material availability challenges, inventory increased, although at a lower rate than prior quarters.

Rahul Ghai: Rahul, over you.

Rahul Ghai: Thank you, Larry, and good morning, everyone. GRO space delivered another strong quarter, with double digit orders and profit growth, improving delivery and over 140% free cash flow conversion.

Rahul Ghai: Revenue was up to 6% with growth in both segments.

Rahul Ghai: Services Growth combined with price more than offset the impact of lower engine shipments year over year.

Rahul Ghai: Operating profit was $1.8 billion up 14%.

Rahul Ghai: Services Volume, favorable mix and price were partially offset by higher inflation and investments.

Rahul Ghai: Operating Modions, expanded 150 basis points to 20-3%.

Rahul Ghai: adjusted the EPS was $1.15 up 25% from increased operating profit and the benefit of preferred equity redemption.

Rahul Ghai: Free cash flow was $1.8 billion, up 5% from higher earnings.

Rahul Ghai: Working Capital was roughly a $600 million use.

Rahul Ghai: Billings on higher sequential engine deliveries was partially offset with favorable ADNA.

Rahul Ghai: Given the ongoing material availability challenges, inventory increased, although at a lower rate than prior quarters.

David Strauss: Cash inflows from long-term service contracts continued to be favorable. These results build on the momentum we had from the first half, with year-to-date revenue up 8% and operating profit up more than $1 billion, or 25%, from commercial services strength. We have delivered $4.6 billion of free cash flow, also up more than $1 billion year over year at nearly 130% conversion. This sets us up well to close out a strong year. Turning to CES, in the third quarter, revenue was up 8%. Services up 10% from higher spare part sales, increasing shop visit work scopes, and improved pricing. Internal shop visits were roughly flat year over year. Equipment revenue grew 5%, with customer mix and price more than offsetting lower units. Supply chain constraints impacted shipments across narrow-body and wide-body, with total engine deliveries down 4%, including LEAP down 6%.

Cash inflows from long-term service contracts continued to be favorable. These results build on the momentum we had from the first half, with year-to-date revenue up 8% and operating profit up more than $1 billion, or 25%, from commercial services strength. We have delivered $4.6 billion of free cash flow, also up more than $1 billion year over year at nearly 130% conversion. This sets us up well to close out a strong year. Turning to CES, in the third quarter, revenue was up 8%. Services up 10% from higher spare part sales, increasing shop visit work scopes, and improved pricing. Internal shop visits were roughly flat year over year. Equipment revenue grew 5%, with customer mix and price more than offsetting lower units. Supply chain constraints impacted shipments across narrow-body and wide-body, with total engine deliveries down 4%, including LEAP down 6%.

Rahul Ghai: Gashin flows from long-term service contract continued to be favorable.

Rahul Ghai: These results build on the momentum we had from the first half. With 80% revenue up 8% and operating profit up more than $1 billion or 25% from commercial services strength.

Rahul Ghai: We have delivered $4.6 billion of free cash flow.

Rahul Ghai: Also up more than $1 billion year over year, at nearly 130% conversion.

Rahul Ghai: This sets us up well to close out a strong year.

Rahul Ghai: Turning to CES, in the third quarter revenue was up 8%.

Rahul Ghai: Services are 10% from higher-spare-pad sales, increasing shop visit workshops and improved pricing.

Rahul Ghai: Internal Shoppersets were roughly flat year a year.

Rahul Ghai: Equipment revenue grew 5% with customer mix and price more than offsetting lower units.

Rahul Ghai: Supply chain constraints impacted shipments across narrow body and wide body. We totaled an engine deliveries down 4% including leap down 6%.

David Strauss: Profit was $1.8 billion, up 16%, with margins expanding 180 basis points from higher services, volume, and price. Equipment losses increased year over year from lower spare engine deliveries and higher investments, partially offset by improved pricing. Overall, CES has delivered solid year-to-date results, with double-digit revenue growth, $4.9 billion of profit, up about $750 million year over year, and 170 basis points of margin expansion. Moving to DPT, orders were up 19% from strong demand at defense and systems. Defense book-to-bill was 1.6 in the quarter and 1.2 year-to-date. Our total DPT backlog is now $18 billion, up $1 billion year over year. Revenue grew 2% in the quarter. Defense and systems revenue was down 2%. Improved pricing was more than offset by engine deliveries, down 1%, and unfavorable engine mix. Propulsion and additive technologies grew 9%, primarily driven by Avio Aero.

Profit was $1.8 billion, up 16%, with margins expanding 180 basis points from higher services, volume, and price. Equipment losses increased year over year from lower spare engine deliveries and higher investments, partially offset by improved pricing. Overall, CES has delivered solid year-to-date results, with double-digit revenue growth, $4.9 billion of profit, up about $750 million year over year, and 170 basis points of margin expansion. Moving to DPT, orders were up 19% from strong demand at defense and systems. Defense book-to-bill was 1.6 in the quarter and 1.2 year-to-date. Our total DPT backlog is now $18 billion, up $1 billion year over year. Revenue grew 2% in the quarter. Defense and systems revenue was down 2%. Improved pricing was more than offset by engine deliveries, down 1%, and unfavorable engine mix. Propulsion and additive technologies grew 9%, primarily driven by Avio Aero.

Rahul Ghai: Profit was $1.8 billion, up 16% with margins expanding 180 basis points from higher services, volume and price.

Rahul Ghai: Equipment losses increased year-over-year from lower-spare engine deliveries and higher investments partially offset by improved pricing.

Rahul Ghai: Overall, CES has delivered solid air today results, with double-digit revenue growth, $4.9 billion of profit up about $750 million, year over year, and 170 basis points of margin expansion.

Rahul Ghai: Moving to the APT, orders were up 19% from strong demand at defence and systems.

Rahul Ghai: Defense Booktubell was 1.6 in the quarter and 1.2 year-old date. Our total DPD backlog is now $18 billion, up $1 billion year-over-year.

Rahul Ghai: Revenue grew 2% in the quarter.

Rahul Ghai: Defense and System System's revenue was down 2%. Improved pricing was more than offset by engine deliveries down 1% and unfavorable engine mix.

Rahul Ghai: Propulsion and Adaptive Technologies grew 9% primarily driven by audio error.

David Strauss: Profit of $220 million was down 18% year over year on a tough compare. Inflation, adverse engine mix, and investments to support next-gen products more than offset price improvement. While we had a challenging quarter, year-to-date revenue and profit are up 6% and 22%, respectively, with margins expanding 150 basis points. We continue to work toward improving delivery while providing solutions that meet the evolving needs of our military and allies. Spending a moment on corporate. Since becoming an independent company, we made considerable progress to ensure our operations reflect the needs of GE Aerospace. Year-to-date, total corporate cost is down about 25%, or $150 million. We're also on track with our post-spin separation and restructuring plans. Additionally, this quarter, we had non-GAAP adjustments from the gain on sale of our licensing business, agreement to settle a legacy lawsuit, and impairment of Colibrium Additive goodwill.

Profit of $220 million was down 18% year over year on a tough compare. Inflation, adverse engine mix, and investments to support next-gen products more than offset price improvement. While we had a challenging quarter, year-to-date revenue and profit are up 6% and 22%, respectively, with margins expanding 150 basis points. We continue to work toward improving delivery while providing solutions that meet the evolving needs of our military and allies. Spending a moment on corporate. Since becoming an independent company, we made considerable progress to ensure our operations reflect the needs of GE Aerospace. Year-to-date, total corporate cost is down about 25%, or $150 million. We're also on track with our post-spin separation and restructuring plans. Additionally, this quarter, we had non-GAAP adjustments from the gain on sale of our licensing business, agreement to settle a legacy lawsuit, and impairment of Colibrium Additive goodwill.

Rahul Ghai: Profit of $220 million was down 18% year-over-year on a tough compare. Inflation, adverse engine mix and investments to support next-gen products more than offset price improvement.

Rahul Ghai: While we had a challenging quarter, here today at Revenue and Profit are up 6% and 22% respectively with margins expanding 150 basis points.

Rahul Ghai: We continue to work towards improving delivery while providing solutions that meet the evolving needs of a military and allies.

Rahul Ghai: Spending a moment in corporate.

Rahul Ghai: Since becoming an independent company, we made constable progress to ensure our operations reflect the needs of GE aerospace.

Rahul Ghai: EURLAD, total corporate cost is down about 25% or $150 million. We'll also on track with our post-spin separation and restructuring plans.

Rahul Ghai: Additionally, this quarter, we had non-GAAP adjustments from the gain on sale of our licensing business, agreement to set up a legacy lawsuit, an impairment of equilibrium additive goodwill.

David Strauss: Colibrium Additive is a critical business for us, as it is utilized on several key components for Leap and 9X, and it will be a key enabler for our future of flight as we continue to focus on where it can create the most value. Given the strong year-to-date performance and the trajectory entering Q4, we are raising our earnings and cash guidance. Revenue remains the same across our businesses. At CES, we continue to expect low double digits to mid-teens growth. This includes continued sequential growth in Leap deliveries in Q4, but the full year will now be down approximately 10% year over year. This guidance assumes ongoing deliveries to Boeing. We also continue to expect DPT growth of mid to high single digits, in line with their year-to-date performance of 6% growth.

Colibrium Additive is a critical business for us, as it is utilized on several key components for Leap and 9X, and it will be a key enabler for our future of flight as we continue to focus on where it can create the most value. Given the strong year-to-date performance and the trajectory entering Q4, we are raising our earnings and cash guidance. Revenue remains the same across our businesses. At CES, we continue to expect low double digits to mid-teens growth. This includes continued sequential growth in Leap deliveries in Q4, but the full year will now be down approximately 10% year over year. This guidance assumes ongoing deliveries to Boeing. We also continue to expect DPT growth of mid to high single digits, in line with their year-to-date performance of 6% growth.

Rahul Ghai: Colibrium additive is a critical business for us, as it is utilized on several key components for leap and nine-x.

Rahul Ghai: and it will be a key inabler for a future of flight as we continue to focus on where it can create the most value.

Rahul Ghai: Given the strong year-to-date performance, and the trajectory entering the fourth quarter, we are raising our earnings and cash guidance.

Rahul Ghai: Revenue remains the same across our businesses.

Rahul Ghai: At CES, we continue to expect low double digits to mid-teens growth.

Rahul Ghai: This includes continued sequential growth in leap deliveries in the fourth quarter, but the full year will now be down approximately 10% year over year.

Rahul Ghai: This guidance is used on going deliveries to Boeing.

Rahul Ghai: We also continue to expect Deputy Growth of mid to high single digits, in line with their year-to-date performance of 6 percent growth.

David Strauss: Operating profit is now expected to be in a range of $6.7 to 6.9 billion, up $150 million at the midpoint from the prior guide, implying over 200 basis points of margin expansion year over year. CES operating profit is now expected to be $6.6 to 6.8 billion, up $300 million at the midpoint from the prior guide, reflecting improved services mix. Internal shop visit growth will be lower than our prior estimate, offset by higher spare part sales, work scope, and mix. We expect DPT to be at the lower end of the current profit range of $1 to 1.3 billion. This reflects Q3 performance, increased investment in next-gen programs, and some pressure in P and AT. Corporate costs and eliminations are now expected to be around $850 million, down from below $900 million previously and a $150 million reduction year over year.

Rahul Ghai: Operating Profit is now expected to be in a range of 6.7 to 6.9 billion dollars, up $150 million at the midpoint in the prior guide.

Rahul Ghai: In flying over 200 basis points of margin expansion year over year.

Rahul Ghai: CS Operating Profit is now expected to be 6.6 to 6.8 billion dollars, up $300 million at the midpoint from the prior guide.

Rahul Ghai: Reflecting improved services mix.

Rahul Ghai: Internal shop visit growth will be lower than a prior estimate, offset by higher-spare part sales, work scope and mix.

Rahul Ghai: We expect DPT to be at the lower end of the current profit range of $1.3 billion.

Rahul Ghai: This reflects three coup performance, increased investment in nexian programs and some pressure in P and A T.

Rahul Ghai: Corporate cost and eliminations are now expected to be around $850 million.

Rahul Ghai: Down from below $900 million previously and $150 million reduction year over year.

David Strauss: We now expect tax rate of around 20%, lower than our prior expectation of low 20s. Interest expense is unchanged. We are raising our Adjusted EPS guidance to $4.20 to $4.35, up $0.20 at the midpoint from the prior guide, from improved profit and lower tax rate. We are also raising our Free Cash Flow guidance to $5.6 to $5.8 billion, up $250 million at the midpoint, primarily from higher earnings. All in, we are positioned to deliver significant revenue, profit, and Free Cash Flow growth in 2024, and that provides us a solid foundation for 2025. Larry, back to you.

We now expect tax rate of around 20%, lower than our prior expectation of low 20s. Interest expense is unchanged. We are raising our Adjusted EPS guidance to $4.20 to $4.35, up $0.20 at the midpoint from the prior guide, from improved profit and lower tax rate. We are also raising our Free Cash Flow guidance to $5.6 to $5.8 billion, up $250 million at the midpoint, primarily from higher earnings. All in, we are positioned to deliver significant revenue, profit, and Free Cash Flow growth in 2024, and that provides us a solid foundation for 2025. Larry, back to you.

Rahul Ghai: We now expect tax rate of around 20%.

Rahul Ghai: Lower than a prior expectation of low 20s.

Rahul Ghai: Interest Expense is on Change.

Rahul Ghai: We are raising our adjusted EPS guidance to $4.20 to $4.35 up 20 cents at the midpoint from the prior guide from improved profit and lower tax rates.

Rahul Ghai: We are also raising a free cash flow guidance to $5.6 to $5.8 billion. Up, $250 million at the midpoint, primarily from higher earnings. All in, we have positioned to deliver significant revenue, profit, and free cash flow growth in 2024. And that provides us a solid foundation for 25. Larry, back to you.

Blair Shore: Rahul, thanks. GE Aerospace is positioned to deliver a solid year in our first as a standalone company with enhanced profitability and cash supporting over $4 billion that we've returned to shareholders year-to-date. This performance is underpinned by our sustainable competitive advantages. Our platforms are preferred by customers across the narrow body, wide body, and defense sectors. Our focus is on providing industry-leading services and technology with safety, quality, delivery, and cost in that order at the core of everything we do. We support our customers, and we will deliver greater efficiency, reliability, and time on wing, as well as faster turnaround times to them. We continue to keep an eye towards the future to deliver breakthrough technologies in commercial and defense to pave the way with innovation for a more sustainable flight.

Larry Culp: Rahul, thanks. GE Aerospace is positioned to deliver a solid year in our first as a standalone company with enhanced profitability and cash supporting over $4 billion that we've returned to shareholders year-to-date. This performance is underpinned by our sustainable competitive advantages. Our platforms are preferred by customers across the narrow body, wide body, and defense sectors. Our focus is on providing industry-leading services and technology with safety, quality, delivery, and cost in that order at the core of everything we do. We support our customers, and we will deliver greater efficiency, reliability, and time on wing, as well as faster turnaround times to them. We continue to keep an eye towards the future to deliver breakthrough technologies in commercial and defense to pave the way with innovation for a more sustainable flight.

Larry Culp: Rahul Thanks.

Larry Culp: G. E. R. Spaces position to deliver a solid year in our first as a standalone company with enhanced profitability and cash supporting over $4 billion that we've returned to shareholders year today.

Larry Culp: This performance is underpin by our sustainable competitive advantages.

Larry Culp: Our platforms are preferred by customers across the narrow body wide body and defense sectors.

Larry Culp: Our focus is on providing industry-leading services and technology with safety, quality, delivery, and cost in that order at the core of everything we do. We support our customers.

Larry Culp: and we will deliver greater efficiency, reliability and time on-wing as well as faster turnaround times to them.

Larry Culp: We continue to keep an eye towards the future to deliver breakthrough technologies in commercial and defense to pave the way with innovation for more sustainable flight and flight deck connects our strategy to our results, enabling GE Aerospace to deliver for our customers, create exceptional value for shareholders, and to define our culture. [inaudible]

Blair Shore: And Flight Deck connects our strategy to our results, enabling GE Aerospace to deliver for our customers, create exceptional value for shareholders, and to define our culture. Looking ahead, we're poised to continue to deliver meaningful profit and free cash flow growth in 2025 and beyond. Combined with our capital allocation strategy, including returning approximately $25 billion of available cash to shareholders, we'll drive compounding shareholder returns. Now, we'll go to questions. Blair?

And Flight Deck connects our strategy to our results, enabling GE Aerospace to deliver for our customers, create exceptional value for shareholders, and to define our culture. Looking ahead, we're poised to continue to deliver meaningful profit and free cash flow growth in 2025 and beyond. Combined with our capital allocation strategy, including returning approximately $25 billion of available cash to shareholders, we'll drive compounding shareholder returns. Now, we'll go to questions. Blair?

Larry Culp: Looking ahead, we're poised to continue to deliver, meaningful profit and free cash flow growth in 2025 and beyond.

Speaker Change: Good morning with our capital allocation strategy.

Speaker Change: including returning approximately $25 billion of available cash shareholders will drive compounding shareholder returns.

Rahul Ghai: 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 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 as possible. Liz, can you please open the line?

Speaker Change: Now, we'll go to questions. Clear?

Doug Harned: Ladies and gentlemen, if you wish to ask a question, please press star 11 on your telephone. If you wish to withdraw your question or your question has already been answered, please press star 11 again. Our first question comes from David Strauss with Barclays.

Liz: Ladies and gentlemen, if you wish to ask a question, please press star 1-1 on your telephone.

Robert Stallard: Thanks. Good morning.

David Strauss: Thanks. Good morning.

Blair Shore: Good morning, David.

Larry Culp: Good morning, David.

Robert Stallard: I wanted to ask Larry about 2025. Back at the investor day, you talked about $1 billion in profit growth in 2025 relative to 2024. Obviously, the 2024 EBIT guidance has come up, I think, about $550 million. How should we think about the walk to 2025? Are we still looking at roughly $1 billion in EBIT growth off of a higher baseline now? Thanks.

Speaker Change: Thanks for watching, good morning David.

David Strauss: I wanted to ask Larry about 2025. Back at the investor day, you talked about $1 billion in profit growth in 2025 relative to 2024. Obviously, the 2024 EBIT guidance has come up, I think, about $550 million. How should we think about the walk to 2025? Are we still looking at roughly $1 billion in EBIT growth off of a higher baseline now? Thanks.

Speaker Change: So one desk, Larry, about 2025, so back at the investor day, you know, you talked about a billion dollars in profit growth in 2025, relative to 2024, obviously the 2024 EBIT, guidance has come up, I think, about 550 million. So how should we think about, you know, the, the walk to 2025, or we still looking at roughly a billion dollars in EBIT growth off of a, you know, higher baseline now. Thanks.

Blair Shore: David, we're really working through the update 2025 outlook. We're in the midst of our annual strategic planning reviews. A good bit of our time, actually, here in the Q3 was dedicated to that work. That really transitions us now to the budget prep process. We'll have a more defined look at 2025 as we get closer. We'll review that with the board at the end of the year. Then I think when we're together in January, we'll go through that in detail. Rahul, maybe I want to just frame up how we are thinking about that vis-à-vis where we were back in March?

David Strauss: David, we're really working through the update 2025 outlook. We're in the midst of our annual strategic planning reviews. A good bit of our time, actually, here in the Q3 was dedicated to that work. That really transitions us now to the budget prep process. We'll have a more defined look at 2025 as we get closer. We'll review that with the board at the end of the year. Then I think when we're together in January, we'll go through that in detail. Rahul, maybe I want to just frame up how we are thinking about that vis-à-vis where we were back in March.

David Straz: David, the War Rav.

Speaker Change: We're really working through the update 25 outlook. We're in the midst of our annual strategic planning reviews.

Speaker Change: Good bit of our time actually here in the third quarter was dedicated to that work. And that really transitions us now to the budget prep process we'll have a...

Speaker Change: A more defined look at 25 as we get closer. We'll review that with the board at the end of year and then I think when we're together in January we'll go through that in detail. Rahul may want to just frame up how we are thinking about that vis-a-vis where we were back in March.

Rahul Ghai: Yeah. No, sure, Larry. Larry and David, thanks for the question. As you said, we are sitting at about $500 to $550 million higher than where we were in March. So that is a higher starting point. And just as we kind of take through the segments here a little bit, we expect commercial services to stay strong, grow low double digits, given the significant backlog of shop visits that we have and the price increases that we've implemented. And the two other trends that are kind of working in our favor are CFM56 and GE90 kind of holding their share of departures with extremely low levels of retirement. On CFM56, the retirements this year have been lower than even where they were in 2023. And then LEAP services is trending nicely. So all those things are going to help support the 2025 outlook.

Rahul Ghai: Now sure, Larry and David, thanks for the question. As you said, we are sitting at about $550 higher than where we were in March. That is a higher starting point.

Rahul Ghai: And just as we kind of take through the segments here a little bit, we expect commercial services to stay strong, you know, grow low, low double digits. Given the significant backlog of shop visits that we have and the price increases that we've implemented. And the two other trends that are kind of working on our favor are CFM 56 and G 90 kind of holding their share of departures with extremely low levels of retirement on CFM 56, the diamonds this year have been, you know, lower than even where they were in 2023. And then lead services is trending nicely so that all those things are going to help support the 2025 outlook.

Rahul Ghai: On the equipment side, the equipment's growth is slower in 2024 than we had expected. So some of that volume will move through 2025. We are working those volume assumptions as we sit here today with the airframers to safely say that equipment growth will be faster than that of services and will include higher 9X shipments. So that'll likely put some pressure on margins, but it is important to keep this flywheel going over the longer term. On the DPT side, the Book-to-Bill, as we just shared, has been very strong. So we're entering 2025 with a very strong backlog, mid- to high single-digit growth for next year, and with profit growing faster than margins. And on the corporate side, we've done a really good job this year taking cost out, 25% to 30% cost reduction based on the guide.

On the equipment side, the equipment's growth is slower in 2024 than we had expected. So some of that volume will move through 2025. We are working those volume assumptions as we sit here today with the airframers to safely say that equipment growth will be faster than that of services and will include higher 9X shipments. So that'll likely put some pressure on margins, but it is important to keep this flywheel going over the longer term. On the DPT side, the Book-to-Bill, as we just shared, has been very strong. So we're entering 2025 with a very strong backlog, mid- to high single-digit growth for next year, and with profit growing faster than margins. And on the corporate side, we've done a really good job this year taking cost out, 25% to 30% cost reduction based on the guide.

Rahul Ghai: On the equipment side, the equipment's growth is slower in 24 than we expected. So some of that volume will move through 2025. We are working those volume assumptions as we sit here today with the air framers to save to say that equipment growth will be faster than that of services and will include higher 9x shipments. So that likely put some pressure on margins, but it is important to keep this 5U going over the longer term.

Speaker Change: On the DPD side, the book to bill, as we just shared, has been very strong, so we entered in 25 with a very strong backlog, mid to high single-digit growth for next year, and with profit growing faster than margins. Another corporate side, we've done a really good job this here, taking cost out 25 to 30% cost reduction, based on the guide. And then that is accelerated, some of these actions from next year into this year, but still plenty of opportunity in front of us. So all in, we'll work through our guidance here, and provide the detail in Jan.

Rahul Ghai: And then that has accelerated some of these actions from next year into this year, but still plenty of opportunity in front of us. So all in, we'll work through our guidance here and provide the detail in January. But we see continued strong earnings and Free Cash Flow outlook, which should stay above 100% for next year. And we continue to work the shareholder returns through what we're doing on dividend and share buyback.

And then that has accelerated some of these actions from next year into this year, but still plenty of opportunity in front of us. So all in, we'll work through our guidance here and provide the detail in January. But we see continued strong earnings and Free Cash Flow outlook, which should stay above 100% for next year. And we continue to work the shareholder returns through what we're doing on dividend and share buyback.

Speaker Change: But...

Doug Harned: Our next question comes from a line of Doug Harned with Bernstein.

Operator: Our next question comes from a line of Doug Harned with Bernstein.

Speaker Change: Our next question comes from a line of Doug Harnett with Bernstein, Bernstein.

Robert Stallard: Yes, good morning. Thank you.

Doug Harned: Yes, good morning. Thank you.

Blair Shore: Good morning, Doug.

Larry Culp: Good morning, Doug.

Robert Stallard: I wanted to continue a little bit on 2025, though, and specifically around your expectations for LEAP output. You're up quarter over quarter in Q3, but you've got the Boeing strike. You've got the supply chain constraints that you've talked before about, HPT blades in particular. And then you've got the transition to the new HPT blades. So when you're trying to project those numbers for next year on LEAP output, how do you trade those different things off, and where do you see yourself in terms of mitigating some of these issues?

Doug Harnett: Yes, good morning. Thank you. I'm really good.

Doug Harnett: I wanted to continue a little bit on 2025 though and specifically around your expectations for leap output, your up quarter of a quarter in Q3, but you've got the Boeing strike, you've got the supply chain constraints that you've talked before about HPT blades in particular, and then you've got the transition to the new HPT blades.

Doug Harnett: So, when you're trying to project those numbers for next year on Leap Output.

Speaker Change: How do you trade those different things off and where do you see yourself in terms of mitigating some of these issues?

Blair Shore: Well, Doug, I would just expand it a little bit more broadly than all of the items that you touched on there because in addition to thinking about the Leap ramp, right, hand in hand with both Airbus and Boeing, we've got growing demand in the aftermarket. We want to make sure we're taking care of the airlines and the airframers. That's what the operating challenge is about. It's not one of demand. We know we've got an incredible backlog here. Airbus, obviously, aiming to hit rate 75 down the road. We want to be with them each step of the way. Boeing in a different situation, but they're going to be ramping on the other side of resolving the work stoppage as well. Fortunately, they're both going to do that with our engines under wing.

Larry Culp: Well, Doug, I would just expand it a little bit more broadly than all of the items that you touched on there because in addition to thinking about the Leap ramp, right, hand in hand with both Airbus and Boeing, we've got growing demand in the aftermarket. We want to make sure we're taking care of the airlines and the airframers. That's what the operating challenge is about. It's not one of demand. We know we've got an incredible backlog here. Airbus, obviously, aiming to hit rate 75 down the road. We want to be with them each step of the way. Boeing in a different situation, but they're going to be ramping on the other side of resolving the work stoppage as well. Fortunately, they're both going to do that with our engines under wing.

Speaker Change: Well Doug, I would just expand it a little bit more broadly than all of the the items that you touched on there because in addition to thinking about the leap ramp, right hand in hand with with both Airbus and Boeing, we've got growing demand in the aftermarket. And we want to make sure we're taking care of the airlines and the air framers and that's what the operating challenge is about. It's not one of demand. We know we've got an incredible backlog here.

Speaker Change: Airbus, obviously aiming to hit rate 75 down the road. We want to be with them each step of the way, going in a different situation, but they're going to be ramping on the other side of resolving the other work stoppage as well. Unfortunately, they're both going to do that with with our engines under wing.

Blair Shore: I think that what we saw in the third quarter, what we saw in the second quarter in terms of the work we are doing with Flight Deck, with the supply base, really is what will determine how much of that aftermarket activity we can support and what we're going to be able to do in terms of new engines as well. I'm encouraged by what we saw in the third quarter. I think in the prepared remarks, you saw that we had an 18% increase sequentially. I think sequentially is really where it is operationally on the handful of critical suppliers that paced us a bit in the second quarter, paced us a bit here in the third. But I really like not only the underlying collaboration, but the on-site problem-solving that we're doing.

I think that what we saw in the third quarter, what we saw in the second quarter in terms of the work we are doing with Flight Deck, with the supply base, really is what will determine how much of that aftermarket activity we can support and what we're going to be able to do in terms of new engines as well. I'm encouraged by what we saw in the third quarter. I think in the prepared remarks, you saw that we had an 18% increase sequentially. I think sequentially is really where it is operationally on the handful of critical suppliers that paced us a bit in the second quarter, paced us a bit here in the third. But I really like not only the underlying collaboration, but the on-site problem-solving that we're doing.

Speaker Change: I think that what we saw in the third quarter, what we saw in the second quarter, in terms of the work we are doing with flight deck with the supply base.

Speaker Change: You saw that we had an 18% increase sequentially and I think sequentially is really where it is operationally.

Speaker Change: On the handful of critical suppliers, it paced us a bit in the second quarter of the third, but I really like not only the underlying collaboration, but the...

Blair Shore: I think we're unlocking capacity as a result, and that helps us deliver more to all of our customers. That's what we're geared up to do here in Q4 as well. As we said, LEAP will be down, unfortunately, year over year in terms of new engine deliveries. But I think we're poised, I think, as Rahul just touched on, to deliver good growth going into 2025. That's the goal. You mentioned the new HPT blade. That, Doug, as you know, is really the fourth of four durability enhancements that we're excited about. We expect approval for the 1A version of that here shortly. That'll be a real step function improvement in the field performance of the engine. And it's a twofer because we also know that it's an easier blade to make. That will unlock capacity, which will help us in 2025 in earnest as well.

I think we're unlocking capacity as a result, and that helps us deliver more to all of our customers. That's what we're geared up to do here in Q4 as well. As we said, LEAP will be down, unfortunately, year over year in terms of new engine deliveries. But I think we're poised, I think, as Rahul just touched on, to deliver good growth going into 2025. That's the goal. You mentioned the new HPT blade. That, Doug, as you know, is really the fourth of four durability enhancements that we're excited about. We expect approval for the 1A version of that here shortly. That'll be a real step function improvement in the field performance of the engine. And it's a twofer because we also know that it's an easier blade to make. That will unlock capacity, which will help us in 2025 in earnest as well.

Speaker Change: on site.

Speaker Change: Problem Solving that we're doing, we're unlocking capacity.

Speaker Change: As a result, and that helps us deliver more to all of our customers, that's what we're geared up to do here.

Speaker Change: in the fourth quarter as well.

Speaker Change: As we said, Leaf will be down unfortunately year or year in terms of new engine deliveries.

Speaker Change: But I think we're poised, I think, is Rahul just touched on to deliver.

Speaker Change: Good growth going in to 2025. That's the goal.

Speaker Change: You mentioned.

Speaker Change: the new HPT blade.

Speaker Change: That Doug Huno is really the fourth for durability enhancements that work excited about.

Speaker Change: We expect approval for the one aversion of that. Here shortly, that will be a real step function improvement in the field performance of the engine. And it's a tupper because we also know that it's an easier...

Speaker Change: Blade to Make, that will unlock the capacity which will help us in 2025 in earnest as well. So still work to do. I like the travel that that we're seeing and our team and our supplier teams know that we're fortunate to have this incredible backlaw of the service for the air framers and for the airlines and that's what 2025 will largely be about.

Blair Shore: Still work to do. I like the travel that we're seeing. Our team and our supplier teams know that we're fortunate to have this incredible backlog to service for the airframers and for the airlines. That's what 2025 will largely be about.

Doug Harned: Our next question comes from a line of Robert Stallard with Vertical Research.

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

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

Miles Walton: Thanks so much. Good morning.

Robert Stallard: Thanks so much. Good morning.

Blair Shore: Good morning.

Larry Culp: Good morning.

Miles Walton: I'm not sure there's a question for, but since we last spoke, Boeing announced another delay on the 777X program. I was wondering what sort of financial and practical implications this might have for GE Aerospace. Thank you.

Robert Stallard: I'm not sure there's a question for, but since we last spoke, Boeing announced another delay on the 777X program. I was wondering what sort of financial and practical implications this might have for GE Aerospace. Thank you.

Robert Stollard: Thanks for coming. Good morning.

Robert Stollard: I'm not sure if there's a question for but since we last spoke, bowing announced another delay on this

Robert Stollard: Tribal 7X program. I was wearing what sort of financial and practical implication this might have for G-Earers.

Blair Shore: Well, maybe I'll speak to the operational. Rahul can touch on the financial. We heard what you heard. I'm sure Kelly and company will talk a little bit more about that tomorrow. But from an operational perspective, really no change whatsoever at GE Aerospace with respect to what we're doing to continue to test the engine and prepare for a production ramp going forward. And I think it's really that simple. We're excited about that engine. We know that aircraft is late, but every customer that I talked to and had the opportunity to spend time with a few of them just this past weekend, they love the airplane. They want the airplane. It's really, at this point, a matter of time.

Speaker Change: Thanks. Well, maybe I'll speak to the operation Rahul can touch on the financial. We heard what you heard. I'm sure Kelly and Company will talk a little bit more about that tomorrow, but from an operational perspective, really no change whatsoever at GE Aerospace with respect to what we're doing.

Robert Stollard: to continue to.

Robert Stollard: Test the engine and prepare for a production ramp going forward.

Robert Stollard: I think it's really that simple. We're excited about that engine. We know that aircraft is late but every customer that I talk to and have the opportunity to spend time with a few of them just this past weekend. They love the airplane. They want the airplane. It's really at this point a matter of time.

Rahul Ghai: Rob, from our guidance perspective, we do have a few rev rec units here in Q4. We've already started delivering the engines to Boeing. Some of them have already gone. More will go out here in the remaining two months of the quarter. For 2025, we're working with Boeing on exactly how many engines would they need based on their demand profile. That is work that we need to do in the next couple of months. We expect that the program will obviously ramp here over the decade. The key for us is just to continue to work the cost out. As we shared at investor day, we expect about 30% of the cost to come out by the 50th engine and an additional 30% as we get to the 250th engine. That's what's in our plan.

Speaker Change: and Rob from our guidance perspective, we do have a few revrec units here in the fourth quarter. We've already started delivering the engines too.

Speaker Change: To Boeing.

Speaker Change: Some of them have already gone. More will go out here in the remaining two months of the quarter. For 25, we're working with going on exactly how many engines would they need based on their demand profile. So that is work that we need to do in the next couple of months. But we expect that, you know, the program will obviously ramp over the over the decade and the key for us is just to continue to work the cost out. And you know, as we shared that investor day, we expect about 30% from the cost. To come out by the 50th engine and additional 30% as we get to the 250th engine.

Rahul Ghai: We'll move past the peak losses towards later in the decade, and the program should be profitable by 2030. That's what we built into both our near-term, and long-term outlook.

We'll move past the peak losses towards later in the decade, and the program should be profitable by 2030. That's what we built into both our near-term, and long-term outlook.

Speaker Change: So that's what's in our plan and we'll move past the peak losses towards lives in the decade and the program should be profitable by 2030 So that's what we built into both our near-term and long-term outlook.

Doug Harned: Our next question comes from Miles Walton with Wolfe Research.

Our next question comes from Miles Walton with Wolfe Research.

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

Robert Stallard: Thanks. Good morning.

Myles Walton: Thanks. Good morning.

Blair Shore: Good morning, Miles.

Larry Culp: Good morning, Miles.

Robert Stallard: Sorry. I was hoping you can comment. They're hoping you can comment on the customer concessions or penalties that might be associated with delinquency of deliveries, both on the commercial side and the military side, which are obviously below your plan and expectation. We get asked the question a lot. How do the financials at GE keep getting better if the underlying deliveries keep getting worse? I'm just curious if you can elucidate some of the penalties you might be absorbing under the surface for the delinquencies. Thanks.

Myles Walton: Sorry. I was hoping you can comment. They're hoping you can comment on the customer concessions or penalties that might be associated with delinquency of deliveries, both on the commercial side and the military side, which are obviously below your plan and expectation. We get asked the question a lot. How do the financials at GE keep getting better if the underlying deliveries keep getting worse? I'm just curious if you can elucidate some of the penalties you might be absorbing under the surface for the delinquencies. Thanks.

Miles Walton: Thanks. Good morning. Sorry, I was hoping you can comment on the customer concessions or penalties that might be associated with the frequency of deliveries both on the commercial side and the military side, which are obviously below your plan and expectation. We get asked a question a lot. How do the financials and GE keep getting better if the underlying deliveries keep getting worse? I'm just curious if you can elucidate some of the penalties you might be absorbing under the surface for the link with these. Thanks.

Rahul Ghai: Miles, let me start and let you jump in here. Miles, as you know, kind of typical contracts with the customers. But everything that we need to accrue for, we're obviously accruing for, and that's kind of built into the guidance. But I want to say that it's not been a material number for us here as we sit here in 2024. So we're working through and trying to support the customers as best as we know how. And as you saw, the deliveries are sequentially better in Q3. They'll get better in Q4, and we'll continue to improve as we work past these supply chain challenges. But nothing major on the liquidity damages or penalty side, on either side, on either commercial or military. Larry, anything to add?

Speaker Change: Let me start and let me jump in here

Speaker Change: the verm as you know it kind of

Speaker Change: Typical contracts with the customers. But everything that we need to accrue for, we're obviously accruing for and that's kind of built into the guidance. But I want to say that it's not been a material number for us here as we sit in as we sit in here in 2024. So we're working through and trying to support the customers as best as we know how and as you saw, the deliveries are sequentially better in the third quarter, we'll get better in the fourth quarter. And we'll continue to improve as we work past these supply chain challenges, but nothing major in on the liquidity damages or penalty side on either side on either commercial or or military.

Blair Shore: No. That's.

Larry Culp: No. That's.

Doug Harned: Our next question comes from a line of Sheila Kahyaoglu with Jefferies.

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

Speaker Change: Our next question comes the line of Sheila Kailu with Jeffries.

Larry Culp: Good morning, guys. Thank you very much, Larry, Rahul. Good morning. Maybe we could talk about DPT. Orders and backlog continue to be very strong despite the softness in profitability. I assume some of that is coming from the combat engine shortfalls, but you also mentioned pressure across propulsion and additive, plus the charge today. So when we think about the low end of the 2024 guide, it would suggest Q4 margins step down again sequentially. How do we think about what happens into 2025 and what's driving some of that margin pressure?

Sheila Kahyaoglu: Good morning, guys. Thank you very much, Larry, Rahul. Good morning. Maybe we could talk about DPT. Orders and backlog continue to be very strong despite the softness in profitability. I assume some of that is coming from the combat engine shortfalls, but you also mentioned pressure across propulsion and additive, plus the charge today. So when we think about the low end of the 2024 guide, it would suggest Q4 margins step down again sequentially. How do we think about what happens into 2025 and what's driving some of that margin pressure?

Sheila Kailu: Good morning, guys. Thank you very much. Larry Waul.

Doug Harned: Our next question comes from a line of Ronald Epstein with Bank of America.

Operator: Our next question comes from a line of Ronald Epstein with Bank of America.

Larry Culp: Yeah. Hey, good morning, Larry and Rahul.

Ronald Epstein: Yeah. Hey, good morning, Larry and Rahul.

Blair Shore: Morning, Ron.

Larry Culp: Morning, Ron.

Larry Culp: Can you maybe peel back the onion a little bit more on shop visits in the quarter? LEAP was up, but other things were down. If you can go into that in a little more detail, that might be helpful for everybody.

Blair Shore: Ron, I think it's very much what we have been touching on here this morning, what we've talked about previously, just in terms of the various supply chain challenges that we're seeing really across the board. We talk a lot about LEAP given the ramp there and what's happening in the aftermarket. But these same suppliers support us across virtually every one of our programs. So what we're trying to do is make sure that the Flight Deck improvements that we're seeing that we've highlighted here this morning are broad-based. That's why we've got over 550 engineers in the field working with the supply base to really enable us to have more flow into our facilities, whether they support new make of an engine, let alone the aftermarket. When that flow is not constant, when that flow is not improving, that's when things are delayed.

Larry Culp: Ron, I think it's very much what we have been touching on here this morning, what we've talked about previously, just in terms of the various supply chain challenges that we're seeing really across the board. We talk a lot about LEAP given the ramp there and what's happening in the aftermarket. But these same suppliers support us across virtually every one of our programs. So what we're trying to do is make sure that the Flight Deck improvements that we're seeing that we've highlighted here this morning are broad-based. That's why we've got over 550 engineers in the field working with the supply base to really enable us to have more flow into our facilities, whether they support new make of an engine, let alone the aftermarket. When that flow is not constant, when that flow is not improving, that's when things are delayed.

Blair Shore: Depending on where we are in a particular facility or on a particular product line, you may see that present itself in one area, in one quarter, perhaps in another elsewhere. It's not something we're particularly pleased with.

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