On July 23, 2024, GE Aerospace (GE, Financial) released its 8-K filing for the second quarter of 2024, showcasing significant profit growth and an increase in full-year profit and cash guidance.
Company Overview
GE Aerospace is a global leader in designing, manufacturing, and servicing large aircraft engines, in partnership with Safran through their CFM joint venture. With a global installed base of nearly 70,000 commercial and military engines, GE Aerospace generates most of its profits from recurring service revenue. The company, originally formed in 1892 with ties to Thomas Edison, has spun off various businesses between 2016 and 2024, focusing now on its core aerospace operations.
Q2 2024 Financial Highlights
GE Aerospace reported total orders of $11.2 billion, an 18% increase year-over-year. Total revenue (GAAP) reached $9.1 billion, a 4% rise, while adjusted revenue stood at $8.2 billion, also up by 4%. The company achieved a GAAP profit of $1.4 billion, a slight decrease of 4%, but operating profit surged by 37% to $1.9 billion. The GAAP profit margin was 15.9%, and the operating profit margin improved significantly to 23.1%.
Income Statement and Key Metrics
| Metric | Q2 2024 | Q2 2023 | Year-over-Year Change |
|---|---|---|---|
| Total Revenue (GAAP) | $9.1B | $8.8B | 4% |
| Adjusted Revenue | $8.2B | $7.9B | 4% |
| Operating Profit | $1.9B | $1.4B | 37% |
| Operating Profit Margin | 23.1% | 17.5% | 560 bps |
| Continuing EPS (GAAP) | $1.20 | $1.09 | 10% |
| Adjusted EPS | $1.20 | $0.74 | 62% |
| Free Cash Flow | $1.1B | $942M | 17% |
Performance Analysis
GE Aerospace's performance in Q2 2024 was marked by robust growth in orders and operating profit, despite ongoing supply chain challenges. The company leveraged its FLIGHT DECK initiative to address supply constraints, resulting in progress at key supplier sites. Additionally, GE Aerospace announced plans to invest $1 billion over the next five years to expand and upgrade MRO facilities globally, reflecting its commitment to meeting growing demand.
Segment Performance
In the Commercial Engines & Services segment, orders increased by 38% to $9.2 billion, driven by strong demand for spare parts. Revenue grew by 7% to $6.1 billion, with a 21% increase in segment profit. The Defense & Propulsion Technologies segment saw a 71% rise in profit, despite a 25% decline in orders, highlighting improved program performance and productivity.
CEO Commentary
"The GE Aerospace team delivered another strong quarter marked by double-digit increases across orders, operating profit, and free cash flow. Given our performance year-to-date and momentum across our businesses, we are raising our full-year profit and free cash flow guidance," said GE Aerospace Chairman and CEO H. Lawrence Culp, Jr.
Updated Full-Year Guidance
Based on its solid performance in the first half of the year, GE Aerospace has updated its full-year 2024 guidance. The company now expects adjusted revenue growth in the high single digits, operating profit between $6.5 billion and $6.8 billion, and adjusted EPS in the range of $3.95 to $4.20. Free cash flow is projected to be between $5.3 billion and $5.6 billion.
For more detailed financial information, visit GE Aerospace's Investor Relations page.
Explore the complete 8-K earnings release (here) from GE Aerospace for further details.
