01—Abstract
Summary
Summary of the 10-Q filed July 23, 2024. Cited figures are marked; the original filing is the authoritative source.
General Electric Company (GE), now operating as GE Aerospace, reported solid financial results for the second quarter of 2024, demonstrating resilience and strategic progress post-GE Vernova separation.
Total revenues increased to $9.1 billiona, driven by a strong performance in the Commercial Engines & Services (CES) segment, which saw higher shop visit volumes and pricing. The Defense & Propulsion Technologies segment also exhibited growth, supported by government defense spending and increased demand for services. The company's strategic focus on innovation, particularly in sustainable flight technologies through initiatives like the RISE program, remains a key area of investment.
GE Aerospace also continued its capital return program, repurchasing $1.9 billionb in common stock during the quarter under a new $15 billion authorization. While the separation of GE Vernova has simplified the company's structure and allowed for focused operations within aerospace, the financial statements reflect the impact of discontinued operations.
However, ongoing operational improvements and cost management measures are evident, as reflected in the increase in free cash flow to $2.8 billionc for the first six months of the year. The company maintains a strong liquidity position and has received positive outlooks from credit rating agencies, indicating financial stability and confidence in its future strategy.
02—Key points
Key Highlights
- Total revenues for the second quarter of 2024 reached $9.1 billion, an increase of $0.3 billion driven primarily by the Commercial Engines & Services (CES) segment.
- CES segment revenues increased by $0.4 billion (7%) to $6.1 billion, with segment profit growing by $0.3 billion (21%) to $1.7 billion, attributed to higher shop visit volume, pricing, and favorable equipment mix.
- Defense & Propulsion Technologies segment revenues grew 1% to $2.4 billion, with segment profit significantly increasing by $0.1 billion (71%) to $0.34 billion due to higher pricing and services growth.
- Free Cash Flow (FCF) for the first six months of 2024 was $2.8 billion, an increase of $1.0 billion compared to the same period in 2023, reflecting improved operational performance.
- GE Aerospace repurchased approximately $1.9 billion of its common stock during the second quarter of 2024, under a new $15 billion share repurchase authorization.
- Remaining Performance Obligation (RPO) increased by $5.8 billion (4%) from December 31, 2023, to $159.8 billion as of June 30, 2024, indicating a strong future revenue pipeline.
- The company continues to invest in future flight technologies, including its hybrid electric demonstrator engine with NASA, as part of its commitment to innovation and sustainability.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2024, General Electric Co kept $0.14.
- Revenue$9.09B100.0%
- Cost of revenue−$5.57B61.3%
- Gross profit$3.52B38.7%
- Operating costs−$459.0M5.0%
- Operating income$3.06B33.7%
- Interest, other & tax−$1.79B19.7%
- Net income$1.27B13.9%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed July 23, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $9.09B$8.76B | +3.9% |
| Cost of Revenue | $5.57B$5.69B | −2.1% |
| Gross Profit | $3.52B$3.06B | +15.0% |
| R&D Expenses | $300.00M$239.00M | +25.5% |
| SG&A Expenses | $924.00M$913.00M | +1.2% |
| Operating Expenses | $7.58B$7.74B | −2.0% |
| Operating Income | $3.06B$7.96B | −61.5% |
| Net Income | $1.27B$33.00M | +3736.4% |
| EPS (Basic) | $1.16$-0.02 | +5900.0% |
| EPS (Diluted) | $1.15$-0.02 | +5850.0% |
| Shares Outstanding (Basic) | 1.09B1.09B | 0.0% |
| Shares Outstanding (Diluted) | 1.10B1.10B | +0.2% |
05—Questions
Frequently Asked Questions
What is the financial performance of GE Aerospace in Q2 2024, especially after the GE Vernova spin-off?
GE Aerospace reported total revenues of $9.1 billion for Q2 2024, up $0.3 billion from the prior year, primarily driven by growth in the Commercial Engines & Services (CES) segment. CES saw increased revenues and profits due to higher shop visit volumes and pricing. The Defense & Propulsion Technologies segment also showed revenue growth. Free Cash Flow for the first six months of 2024 was strong at $2.8 billion, up significantly from $1.8 billion in the prior year. Adjusted earnings per share (EPS) from continuing operations was $1.20.
How are the segment results trending, particularly for Commercial Engines & Services and Defense & Propulsion Technologies?
The Commercial Engines & Services (CES) segment showed robust performance, with revenues up 7% to $6.1 billion and profit up 21% to $1.7 billion, driven by increased shop visit volume, higher pricing, and a favorable equipment mix, despite lower new engine deliveries. The Defense & Propulsion Technologies segment reported a 1% revenue increase to $2.4 billion, with segment profit surging 71% to $0.34 billion, attributed to higher pricing, services growth, and favorable mix, partially offset by lower new engine deliveries. Remaining Performance Obligations (RPO) remain strong across both segments.
What is the company's capital allocation strategy and shareholder return policy?
GE Aerospace is committed to returning a majority of its free cash flow to shareholders through dividends and share repurchases. During Q2 2024, the company repurchased approximately $1.9 billion of its common stock under a new $15 billion authorization. The company also maintains a strong focus on liquidity and intends to continue investing in future growth and innovation.
What impact has the GE Vernova separation had on the financial statements?
The separation of GE Vernova, completed on April 2, 2024, has resulted in the historical results of GE Vernova being reported as discontinued operations in the consolidated financial statements. While this simplifies GE Aerospace's reporting structure, the financial statements reflect the impact of these discontinued operations. The company also has ongoing involvement with GE Vernova through transition services agreements and guarantees, which are detailed in the notes to the financial statements.
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