GE Aerospace

Strong Q2 momentum + big first-half finish (core upside) - Q2 orders +17%, revenue +24% (CES +27%, DPT +16%), operating profit +18%, EPS +22%, free cash flow +43% to ~$3B (conversion >140%). - First half recap: orders +49%, revenue +27%, EPS +24%, FCF +31% (conversion 115%). - “Good surprise” element: continued aftermarket strength with strong shop-visit output and deliveries (not just equipment growth).

Guidance raised materially across the board (forecast/upside) - 2026 revenue now high-teens growth (was low double digits). - CES growth now ~20% (was mid-teens); commercial services growth low-20s (was mid-teens). - Operating profit raised to $10.55B–$10.75B (implies both segments improving). - EPS raised to $7.65–$7.85 (+$0.35 midpoint vs prior high end); tax rate expected <16.5% for the year. - Free cash flow raised to $8.9B–$9.2B (+$650M from prior high end), still expecting better working capital.

Aftermarket/services outlook: resilient demand but spare-parts delinquency is a watch item (good + bad) - Management expects a gradual return to modest departures growth in 2H as comparisons toughen; customer behavior not seen as changing. - Services backlog remains very large: commercial services backlog ~ $170B (up ~$30B since end of 2024). - Visibility supports demand fulfillment: ~95% of spare parts revenue in backlog for Q3; planned removals exceed full-year shop visit guide by >40%. - Negative/surprising signal: spare parts delinquencies increased +20% sequentially in Q2 due to material availability constraints (spare parts shipments delayed). This is a key near-term operational risk to monitor.