01—Abstract
Summary
Summary of the 8-K filed July 23, 2024. Cited figures are marked; the original filing is the authoritative source.
GE Aerospace (formerly General Electric Company, NYSE: GE) reported second-quarter 2024 results on July 23, 2024, showing strong operating momentum.
Total orders rose 18% to $11.2Ba, and adjusted revenue grew 4% to $8.2B. Operating profit increased 37% to $1.9B, lifting the operating profit margin 560 bps to 23.1%. GAAP profit fell 4% to $1.4B, and GAAP profit margin declined 130 bps to 15.9%, largely reflecting lower gains and the mark-to-market effects of non-operating items.
Free cash flow rose 17% to $1.1Bb, and adjusted EPS more than doubled from $0.74 to $1.20 on a year-over-year basis. The company raised its full-year 2024 guidance. Adjusted revenue growth is now expected to be high-single-digits, up from low-double-digits-plus previously.
Operating profit guidance moved to $6.5Bc-$6.8B from $6.2B-$6.6B, adjusted EPS to $3.95-$4.20 from $3.80-$4.05, and free cash flow to $5.3B-$5.6B from over $5B. Commercial Engines & Services drove the strength, with segment orders up 38% and segment margin expanding 320 bps to 27.4%, supported by services growth of 14%. Equipment revenue fell 11% on lower shipments, a notable offset that management is addressing through its FLIGHT DECK supply-chain initiative.
Capital allocation remained active. GE initiated a quarterly dividend of $0.28d in April and repurchased about 13.9 million shares for $2.3B in the quarter, including $1.9B under its $15B program.
The company also continued exiting non-core assets, completing the sale of Electric Insurance and agreeing to sell GE Licensing. Investors should note that the company is furnishing rather than filing this information under Item 2.02, and that GAAP results include significant non-operating items, so the non-GAAP measures should be reviewed alongside GAAP figures.
02—Key points
Key Highlights
- Total orders of $11.2B, up 18%; Commercial Engines & Services orders up 38% to $9.2B, with services and equipment both up over 30%.
- Operating profit of $1.9B, up 37%, with operating profit margin expanding 560 bps to 23.1% (non-GAAP).
- Adjusted EPS of $1.20, up from $0.74, while GAAP continuing EPS rose 10% to $1.20 from $1.09.
- Full-year 2024 guidance raised: operating profit to $6.5B-$6.8B, adjusted EPS to $3.95-$4.20, and free cash flow to $5.3B-$5.6B.
- Commercial Engines & Services segment margin rose 320 bps to 27.4%, driven by services volume, pricing and mix, though equipment revenue fell 11% on lower shipments.
- Capital returns: initiated a $0.28 quarterly dividend in April and repurchased $2.3B of shares in Q2, including $1.9B under the $15B program.
- Portfolio simplification continued with completion of the Electric Insurance sale and an agreement to sell GE Licensing.
03—Questions
Frequently Asked Questions
Why did GAAP profit decline while operating profit grew strongly?
GAAP profit fell 4% to $1.4B, mainly because of unfavorable gains and losses on retained and sold ownership interests and other equity securities, which were a $393M loss in Q2 2024 versus a $360M gain a year earlier. Operating profit excludes these items, insurance results, restructuring, separation costs and non-operating benefit income, so it grew 37% to $1.9B on core operations.
What changed in the full-year 2024 outlook?
GE Aerospace raised its operating profit guidance to $6.5B-$6.8B (from $6.2B-$6.6B), adjusted EPS to $3.95-$4.20 (from $3.80-$4.05), and free cash flow to $5.3B-$5.6B (from over $5B). Adjusted revenue growth was lifted to high-single-digits from low-double-digits-plus. Commercial Engines & Services operating profit guidance rose to $6.3B-$6.5B, while Defense & Propulsion Technologies guidance was unchanged at $1.0B-$1.3B.
Is the equipment business weakening?
Commercial equipment revenue fell 11% in the quarter due to lower shipments, and equipment profit was pressured by fewer spare engine deliveries and higher investment. Management is addressing supply constraints at its top 15 suppliers through FLIGHT DECK and engineering resources, reporting progress at most of those sites. Strong orders, with equipment orders up over 30%, suggest demand remains robust, so investors will be watching whether supply improvements translate into higher shipments.
How is GE returning capital to shareholders?
GE initiated a quarterly dividend of $0.28 per share in April 2024. In the second quarter it repurchased about 13.9 million shares for $2.3B, of which 11.7 million shares ($1.9B) were under the $15B repurchase program announced in March 2024.
Are these results audited or reported under GAAP?
The earnings release includes both GAAP and non-GAAP measures. Items such as operating profit, adjusted EPS, adjusted revenue and free cash flow are non-GAAP, and the company provides reconciliations to GAAP figures. Under Item 2.02, the information is furnished rather than filed, so it is not subject to Section 18 liability and is not incorporated into Securities Act filings by reference.
04—Continue