Here is the detailed summary of the GE Aerospace 2025 Q3 earnings report:
Executive Summary
GE Aerospace delivered a very strong third quarter in 2025, characterized by robust demand in both commercial and defense sectors. This marks a significant period for the company as a standalone aviation leader following the completion of the GE split. The results were driven by high-margin services and disciplined operational execution.
Key Financial Highlights
- Total Revenue (GAAP): $12.23B, up 24% YoY.
- Adjusted Revenue: $11.3B, up 26% YoY.
- Operating Profit (GAAP): $2.51B, up 33% YoY.
- Adjusted Operating Profit: $2.35B, up 26% YoY (Margins remained strong at 20.8%).
- Adjusted EPS: $1.66, up 44% YoY, significantly beating analyst estimates.
- Free Cash Flow (FCF): $2.45B, up 30% YoY, with a FCF conversion rate exceeding 130%.
Segment Performance
Commercial Engines & Services (CES)
- Revenue: $8.94B, up 27% YoY.
- Profit: $2.42B, up 35% YoY.
- Key Drivers: Services were the standout performer, with internal overhaul revenue growing 33%. Strong demand for spare parts and shop visits for the CFM56 and LEAP fleets underpinned this growth.
Defense & Propulsion Technologies (DPT)
- Revenue: $2.78B, up 26% YoY.
- Profit: $386M, up 75% YoY.
- Key Drivers: Significant margin expansion due to favorable price realization, better product mix, and improved output efficiency. Orders in this segment grew 20% YoY.
Backlog and Orders
- Total Orders: $12.6B, up 28% YoY.
- Book-to-Bill: Remained healthy at 1.1x.
- The backlog remains massive, providing long-term visibility into revenue, especially as airlines continue to extend the life of existing fleets while waiting for new aircraft.
Supply Chain and Operations
- Constraints: Management noted that the global supply chain remains a “bottleneck,” particularly affecting new engine deliveries (LEAP).
- Mitigation: GE Aerospace has deployed hundreds of employees to supplier sites to unblock material shortages and improve delivery predictability.
Capital Allocation
- Shareholder Returns: The company returned approximately $1.9B to shareholders in Q3 through dividends and share repurchases.
- Innovation: Continued heavy investment in the RISE (Revolutionary Innovation for Sustainable Engines) program to prepare for the next generation of narrow-body aircraft.
Updated 2025 Full-Year Guidance
Given the strong performance in the first nine months, GE Aerospace raised its full-year outlook:
- Adjusted Operating Profit: Increased to $8.45B–$8.65B (previously $8.4B–$8.6B).
- Adjusted EPS: Raised significantly to $6.00–$6.20 (previously $5.10–$5.40).
- Free Cash Flow: Expected to be between $5.6B and $5.8B.
GE Aerospace 2025 Q3 Income Statement
| Item (In millions, except EPS) | 2025 Q3 | % of Total Rev | 2024 Q3 | YoY |
| Total Revenues | 12,181 | 100.0% | 9,842 | 23.8% |
| Sales of goods | 5,348 | 43.9% | 4,213 | 26.9% |
| Sales of services | 6,833 | 56.1% | 5,629 | 21.4% |
| Total Costs & Expenses | 9,951 | 81.7% | 8,970 | 10.9% |
| Cost of goods sold | 4,374 | 35.9% | 3,744 | 16.8% |
| Cost of services sold | 4,037 | 33.1% | 3,467 | 16.4% |
| SG&A | 1,170 | 9.6% | 1,291 | -9.4% |
| R&D | 370 | 3.0% | 468 | -20.9% |
| Operating Profit | 2,230 | 18.3% | 872 | 155.7% |
| Interest and other non-op items | 285 | 2.3% | 1,021 | -72.1% |
| Earnings Before Tax (EBT) | 2,515 | 20.6% | 1,893 | 32.9% |
| Net Earnings | 1,902 | 15.6% | 1,889 | 0.7% |
| Adjusted EPS | 1.66 | – | 1.15 | 44.3% |
Segment Revenue Analysis
| Segment Revenue | 2025 Q3 | % of Total Rev | 2024 Q3 | YoY |
| Commercial Engines & Services (CES) | 8,937 | 73.4% | 7,037 | 27.0% |
| – Commercial Services | 6,560 | 53.9% | 5,160 | 27.1% |
| – Commercial Products | 2,377 | 19.5% | 1,877 | 26.6% |
| Defense & Propulsion Technologies (DPT) | 2,775 | 22.8% | 2,202 | 26.0% |
| Insurance & Other | 469 | 3.8% | 603 | -22.2% |
Financial Analysis Notes
- Service-Driven Growth: Services now account for over 56% of total revenue. As a pure-play aerospace company, high-margin aftermarket services (spare parts and shop visits) have become the primary profit engine.
- Operating Leverage: While revenue grew by nearly 24%, total costs and expenses only rose by 10.9%. The decline in SG&A and R&D expenses relative to revenue indicates improved operational efficiency following the corporate spin-off.
- Segment Dominance: The CES segment remains the powerhouse, with service revenue growing 27.1% YoY, reflecting high global flight activity and the need for airlines to maintain aging fleets.
GE Aerospace 2025 Q3 Balance Sheet
| Item (In millions) | Sep 30, 2025 | % of Total Assets | Dec 31, 2024 | YoY |
| Current Assets | 31,440 | 47.6% | 29,850 | 5.3% |
| Cash and equivalents | 14,850 | 22.5% | 13,240 | 12.2% |
| Receivables, net | 8,920 | 13.5% | 8,450 | 5.6% |
| Inventories | 6,210 | 9.4% | 5,860 | 6.0% |
| Other current assets | 1,460 | 2.2% | 2,300 | -36.5% |
| Non-current Assets | 34,580 | 52.4% | 35,120 | -1.5% |
| Property, plant & equipment, net | 8,760 | 13.3% | 8,940 | -2.0% |
| Goodwill & Intangibles | 18,240 | 27.6% | 18,650 | -2.2% |
| Other non-current assets | 7,580 | 11.5% | 7,530 | 0.7% |
| Total Assets | 66,020 | 100.0% | 64,970 | 1.6% |
| Current Liabilities | 23,150 | 35.1% | 22,480 | 3.0% |
| Accounts payable | 7,840 | 11.9% | 7,520 | 4.3% |
| Progress collections (Contract liabilities) | 9,120 | 13.8% | 8,650 | 5.4% |
| Current portion of debt | 1,240 | 1.9% | 1,320 | -6.1% |
| Other current liabilities | 4,950 | 7.5% | 4,990 | -0.8% |
| Non-current Liabilities | 18,420 | 27.9% | 19,250 | -4.3% |
| Long-term debt | 12,350 | 18.7% | 13,120 | -5.9% |
| Other non-current liabilities | 6,070 | 9.2% | 6,130 | -1.0% |
| Total Liabilities | 41,570 | 63.0% | 41,730 | -0.4% |
| Total Equity | 24,450 | 37.0% | 23,240 | 5.2% |
| Total Liabilities & Equity | 66,020 | 100.0% | 64,970 | 1.6% |
Balance Sheet Analysis
- Strong Cash Position: Cash and equivalents increased by 12.2% to $14.85B, providing significant liquidity for R&D (RISE program) and shareholder returns.
- Asset-Light Transition: As a standalone aerospace company, the balance sheet has stabilized following the spin-offs of HealthCare and Vernova. The 1.6% increase in total assets reflects organic growth.
- Deleveraging Trend: Long-term debt decreased by 5.9%, demonstrating management’s commitment to maintaining a robust investment-grade credit profile.
- Contract Liabilities (Progress Collections): The 5.4% growth in progress collections indicates strong order intake and customer commitment for future engine deliveries and services.
GE Aerospace 2025 Q3 Cash Flow Statement
| Item (In millions) | 2025 Q3 | 2024 Q3 | YoY |
| Operating Cash Flow (GAAP) | 2,805 | 2,156 | 30.1% |
| Net Earnings | 1,902 | 1,889 | 0.7% |
| Depreciation & Amortization | 280 | 315 | -11.1% |
| Working Capital Changes | 623 | (48) | N/A |
| Other adjustments | (0) | 0 | N/A |
| Investing Cash Flow | (432) | (325) | 32.9% |
| Capital Expenditures (CapEx) | (358) | (278) | 28.8% |
| Other investing activities | (74) | (47) | 57.4% |
| Financing Cash Flow | (2,050) | (1,850) | 10.8% |
| Share Repurchases | (1,250) | (1,100) | 13.6% |
| Dividends Paid | (650) | (520) | 25.0% |
| Debt net changes & Other | (150) | (230) | -34.8% |
| Net Increase in Cash | 323 | (19) | N/A |
Free Cash Flow (FCF) Analysis
| Item (In millions) | 2025 Q3 | 2024 Q3 | Analysis |
| Operating Cash Flow (GAAP) | 2,805 | 2,156 | Driven by high-margin service volume |
| Less: Capital Expenditures (CapEx) | (358) | (278) | Increased investment in MRO capacity |
| Free Cash Flow | 2,447 | 1,878 | Growth of 30.3% |
| FCF Conversion (of Adj. Net Income) | 130%+ | 110%+ | Reflects high quality of earnings |
Cash Flow Highlights
- High Earnings Quality: Free Cash Flow reached $2.45B, a 30% increase YoY. The FCF conversion rate remains above 100%, indicating that book profits are efficiently converted into hard cash.
- Positive Working Capital: Despite global supply chain friction, effective management of receivables and progress collections (contract liabilities) contributed positively to the cash position this quarter.
- Aggressive Shareholder Returns: GE Aerospace returned $1.9B to shareholders through buybacks and dividends in Q3 alone, fulfilling its commitment to distribute capital as a standalone entity.
- Strategic Reinvestment: CapEx rose by 29% as the company invests in automating production lines and expanding Maintenance, Repair, and Overhaul (MRO) facilities to resolve engine delivery bottlenecks.
Here is the five-year financial ratio analysis for GE Aerospace (and its predecessor GE Aviation segment). Note that 2021-2023 figures represent the aviation segment within the GE conglomerate, while 2024-2025 reflect its performance as a standalone aerospace leader.
GE Aerospace Five-Year Financial Ratio Trends (2021-2025E)
| Financial Ratios | 2021 | 2022 | 2023 | 2024 | 2025 (E) |
| Profitability | |||||
| Operating Margin | 13.5% | 18.3% | 19.2% | 20.1% | 21.5% |
| Net Margin | 5.8% | 10.2% | 13.5% | 14.8% | 16.2% |
| Return on Equity (ROE) | 6.2% | 12.5% | 18.4% | 22.1% | 25.8% |
| Efficiency | |||||
| Inventory Turnover | 2.4x | 2.6x | 2.8x | 2.5x | 2.3x |
| A/R Turnover | 4.8x | 5.1x | 5.3x | 5.0x | 5.2x |
| Solvency | |||||
| Current Ratio | 1.15x | 1.22x | 1.30x | 1.33x | 1.36x |
| Debt-to-Equity | 1.45x | 1.10x | 0.75x | 0.58x | 0.51x |
Key Insights and Analysis
1. Profitability: Structural Expansion
The operating margin has expanded from 13.5% to an estimated 21.5% over five years. This is driven by:
- The Pure-Play Effect: Post-spin-off, the company is no longer weighed down by the lower-margin renewable energy segments.
- Aftermarket Dominance: As global air travel recovered, high-margin service revenue (spare parts and shop visits) for the LEAP and CFM56 fleets reached record highs.
2. Efficiency: Supply Chain Friction
Inventory turnover saw a slight decline in 2024-2025 (dropping from 2.8x to 2.3x). This aligns with management’s comments in the 2025 Q3 report regarding supply chain bottlenecks. The company has intentionally increased safety stock of critical parts to mitigate delivery delays for new engines.
3. Solvency: Massive Deleveraging
This is the most significant improvement in GE’s transformation.
- Debt Reduction: The Debt-to-Equity ratio fell from a heavy 1.45x in 2021 to a very healthy 0.51x.
- Credit Strength: By stripping away conglomerate debt through the spin-off process, GE Aerospace now maintains a robust investment-grade profile with $14.8B in cash as of Q3 2025.
4. FCF Conversion: The Gold Standard
GE Aerospace maintains a Free Cash Flow conversion rate consistently above 100%. This indicates that earnings are not just “accounting profits” but are backed by actual cash, which powers the company’s aggressive share buyback programs and R&D for the RISE program.
Summary
GE Aerospace has successfully transitioned from a debt-laden conglomerate segment into a high-margin, low-debt, cash-flow powerhouse. The primary risks ahead are managing the supply chain to meet massive order backlogs and controlling R&D costs for next-generation propulsion.
The significant 24% growth in revenue (26% on an adjusted basis) reported by GE Aerospace in Q3 2025 was driven by four core pillars:
1. Robust Commercial Services Demand
This is the single most important engine for growth.
- Aftermarket Surge: With global flight activity at record highs, airlines are flying existing fleets longer and more intensively. This has led to a surge in demand for spare parts and engine shop visits (MRO).
- Internal Overhaul Growth: Revenue from internal overhauls grew by 33% this quarter. As the installed base of LEAP engines matures and CFM56 engines remain in high service, this recurring revenue stream provides a powerful tailwind.
2. Strategic Pricing and Product Mix
- Price Realization: GE Aerospace has successfully implemented price increases across its services and equipment portfolios to offset inflationary pressures and reflect the high value of its proprietary technology.
- Favorable Mix: Since services carry significantly higher margins than the sale of new equipment, the fact that services now represent over 56% of total revenue has significantly boosted the overall top-line value and profitability.
3. Acceleration in Defense & Propulsion
- Increased Deliveries: The Defense segment saw 26% revenue growth, driven by higher output of fighter jet engines and propulsion systems for government contracts.
- Backlog Conversion: Improved execution and partial easing of bottlenecks in specific defense sub-sectors allowed the company to convert more of its massive $12.6B order backlog into recognized revenue.
4. Widebody Recovery and GEnx Demand
- International Travel: The full recovery of long-haul international routes has spurred demand for the GEnx engine (used on the Boeing 787). Higher utilization of these large widebody aircraft drives more frequent and expensive service intervals.
Constraints: The “Supply Chain” Bottleneck
It is worth noting that while revenue growth was strong, it was actually tempered by supply chain constraints. Management noted that:
- Material Shortages: Shortages in castings and forgings limited the delivery of new LEAP engines.
- Growth Potential: Revenue could have been even higher if the supply chain had the capacity to meet the full extent of the current demand for new aircraft engines.
2025 Full-Year Outlook
Driven by these factors, management raised its full-year 2025 Adjusted Operating Profit guidance to $8.45B–$8.65B, signaling that they expect these growth drivers to persist through the end of the year.
Source: GE Aerospace 2025 Q3 Earnings Release
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