GE Aerospace Launches as Independent, Investment-Grade Public Company Following Completion of GE Vernova Spin-Off

Rhea-AI Summary

GE Aerospace launches as an independent public company, positioned for long-term growth in propulsion, services, and systems. The company generated $32 billion in adjusted revenue in 2023 and aims for $10 billion operating profit in 2028. GE Aerospace completes GE's multi-year transformation, focusing on innovation and shareholder returns.

Insights

Market Research Analyst

The launch of GE Aerospace as an independent entity is a significant event that reshapes the industrial landscape. From a market perspective, this move could potentially unlock value for shareholders by allowing GE Aerospace to focus on its core competencies in propulsion, services and systems. The company's strong installed base and service-driven revenue model are indicators of a stable, recurring income stream, which is attractive to investors looking for long-term holdings.

GE Aerospace's emphasis on lean operations with the introduction of FLIGHT DECK could lead to improved margins and operational efficiency. Investors often favor companies that demonstrate a commitment to continuous improvement and cost management, as this can lead to better financial performance and shareholder returns. The guidance for substantial operating profit growth by 2028 is an ambitious target that, if achieved, would reflect positively on the company's strategic direction and market position.

Financial Analyst

GE Aerospace's financial health appears robust following the spin-off, with a strong balance sheet and a significant reduction in debt, which is a positive indicator for creditworthiness and investment potential. The capital allocation framework suggests a balanced approach between investing in growth and innovation and returning funds to shareholders. A return rate of approximately 70-75% of available funds to shareholders could make GE Aerospace a compelling choice for dividend-seeking investors.

Furthermore, the tax-efficient manner of the spin-off for U.S. shareholders aligns with investor interests in minimizing tax liabilities. However, it's important to monitor how the independent company manages its capital expenditures and R&D investments to ensure long-term competitiveness in the evolving aerospace industry.

Aerospace Industry Analyst

GE Aerospace's strategic positioning as a leader in propulsion, services and systems within the aerospace sector is noteworthy. The company's focus on innovation and growth in the context of a century-long legacy provides a competitive edge. The installed base of commercial and military engines underlines the company's extensive market penetration and potential for aftermarket services revenue.

However, the aerospace industry is subject to cyclical demand and geopolitical risks, which can impact long-term profitability and growth. It will be essential for GE Aerospace to navigate these challenges while capitalizing on emerging trends such as sustainable aviation and digitalization of flight systems. The company's future trajectory will depend on its ability to adapt to industry shifts and maintain technological leadership.

• GE Aerospace launches as an independent public company defining the future of flight
• Positioned to deliver long-term growth as a global leader in propulsion, services and systems
• Launch of GE Aerospace marks successful completion of GE’s multi-year transformation
• GE Aerospace to trade on the New York Stock Exchange (NYSE) under the ticker “GE”

NEW YORK--(BUSINESS WIRE)-- GE Aerospace (NYSE: GE) today announced its official launch as an independent public company defining the future of flight, following the completion of the GE Vernova spin-off. GE Aerospace will trade on the New York Stock Exchange (NYSE) under the ticker “GE”. Today, April 2, 2024, at 9:30 a.m. ET, GE Aerospace and GE Vernova will ring the opening bell together at the NYSE.

GE Aerospace Chairman and CEO H. Lawrence Culp Jr., said, “With the successful launch of three independent, public companies now complete – today marks a historic final step in the multi-year transformation of GE. I am tremendously proud of our team, their resilience, and their dedication to achieving this defining moment.”

Culp continued, “Building on a century of learning and carrying forth GE’s legacy of innovation, GE Aerospace moves forward with a strong balance sheet and greater focus to invent the future of flight, lift people up, and bring them home safely. With FLIGHT DECK, our proprietary lean operating model, as our foundation, I am confident we will realize our full potential in service of our customers, employees, and shareholders.”

With an installed base of approximately 44,000 commercial engines and approximately 26,000 military and defense engines around the world, GE Aerospace launches as an established global leader in propulsion, services, and systems. The company generated approximately $32 billion in adjusted revenue* in 2023, with 70% generated by services and the strong economics of the engine aftermarket.

At the company’s Investor Day in March, GE Aerospace reaffirmed its 2024 guidance and presented a longer-term financial outlook, including expecting to achieve ~$10 billion of operating profit* in 2028. Additionally, GE Aerospace shared a capital allocation framework to invest in growth and innovation, while also returning approximately 70-75% of available funds to shareholders.

The launch of GE Aerospace represents the completion of GE’s multi-year financial and operational transformation. Over the last several years GE has taken steps to significantly strengthen the business, including more than $100 billion in debt reduction since 2018. Simultaneously, the company-wide implementation and adoption of lean and a relentless pursuit of continuous improvement in service of the customer, enabled a deep and sustainable shift in culture. This stronger foundation enabled the successful creation of three independent companies – GE HealthCare, GE Vernova, and GE Aerospace – each of which are now well-positioned to build upon GE’s history of innovation.

Holders of GE common stock were entitled to receive one share of GE Vernova common stock for every four shares of GE common stock held. For United States federal income tax purposes, the distribution has been conducted in a tax-efficient manner for GE shareholders in the United States.

Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as legal counsel. Evercore, Morgan Stanley, and PJT Partners were the lead financial advisors on the transaction. The company also received legal advice from DLA Piper and Gibson, Dunn & Crutcher LLP and financial advice from Citibank, The Consello Group, BNP Paribas, and UBS.

GE Aerospace will issue its first quarter 2024 earnings on April 23, 2024 and will host its earnings call at 7:30 a.m. ET, which can be accessed here.

For additional information, please visit GE Aerospace’s “Spin-off Resources” page here.

Non-GAAP Financial Measures

In this document, we sometimes use information derived from consolidated financial data but not presented in our financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP). Certain of these data are considered “non-GAAP financial measures” under the U.S. Securities and Exchange Commission rules. These non-GAAP financial measures supplement our GAAP disclosures and should not be considered an alternative to the GAAP measure. The reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable GAAP financial measures are included in our earnings releases and the appendix of the GE Aerospace 2024 Investor Day investor presentation, as applicable.

Caution Concerning Forward Looking Statements:

This document contains “forward-looking statements” — that is, statements related to future, not past, events. These forward- looking statements often address GE Aerospace’s expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “estimate,” “forecast,” “target,” “preliminary,” or “range.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain, and are subject to risks, uncertainties and assumptions. For GE Aerospace, particular areas where risks or uncertainties could cause GE’s actual results to be materially different than those expressed in GE Aerospace’s forward-looking statements include: changes in macroeconomic and market conditions and market volatility, including risk of recession, inflation, geopolitical conflict; supply chain constraints or disruptions, interest rates, the value of securities and other financial assets (including GE Aerospace’s equity interest in GE HealthCare), commodity prices and exchange rates, and the impact of such changes and volatility on GE Aerospace’s business operations, financial results and financial position; GE Aerospace’s capital allocation plans, including the timing and amount of dividends, share repurchases, acquisitions, organic investments, and other priorities; and other factors that are described in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2023, as such description may be updated or amended in any future reports that GE Aerospace files with the SEC. These or other uncertainties may cause GE Aerospace’s actual future results to be materially different than those expressed in its forward-looking statements. GE Aerospace does not undertake to update its forward-looking statements.

About GE Aerospace

GE Aerospace (NYSE: GE) is a global aerospace propulsion, services, and systems leader with an installed base of approximately 44,000 commercial and 26,000 military aircraft engines. With a global team of 52,000 employees building on more than a century of innovation and learning, GE Aerospace is committed to inventing the future of flight, lifting people up, and bringing them home safely. Learn more about how GE Aerospace and its partners are defining flight for today, tomorrow and the future at www.geaerospace.com

* Non-GAAP Financial Measure

View source version on businesswire.com: https://www.businesswire.com/news/home/20240402795908/en/

GE Aerospace Investor Contact:

Steve Winoker, 617.443.3400

swinoker@ge.com

GE Aerospace Media Contact:

Nicole Sizemore, 203.945.9783

nicole.sizemore@ge.com

Source: GE Aerospace

FAQ

When did GE Aerospace officially launch as an independent public company?

GE Aerospace officially launched as an independent public company on April 2, 2024.

Under which ticker symbol will GE Aerospace trade on the New York Stock Exchange?

GE Aerospace will trade on the New York Stock Exchange under the ticker symbol 'GE'.

What percentage of GE Aerospace's revenue in 2023 was generated by services?

Approximately 70% of GE Aerospace's revenue in 2023 was generated by services.

What is GE Aerospace's financial outlook for 2028 in terms of operating profit?

GE Aerospace expects to achieve approximately $10 billion of operating profit in 2028.

How many independent companies has GE successfully created as part of its transformation?

GE has successfully created three independent companies: GE HealthCare, GE Vernova, and GE Aerospace.