Morning, and welcome to GE Aerospace's 2026 Annual Shareholders Meeting. We do not expect any technical difficulties today. However, in the event we lose audio or webcast connection, please wait in the meeting site until we are able to resolve or provide an update. Please refer to the GE Aerospace Investor Relations website at www.geaerospace.com/investor-relations/annual-meeting for updates. The polls are open. To vote, click on the Vote Here button at the bottom right corner of the webcast screen. If you have not yet voted your shares, you may do so now and do not need to wait until the balloting portion of the meeting. The polls will remain open until the conclusion of the balloting portion of the meeting. With that, I will turn it over to GE Aerospace to begin the meeting.
Thank you to all our shareholders and guests for joining us today. I am Jake Phillips, GE Aerospace's Senior Vice President, General Counsel, and Secretary. Before we begin, I'd like to note that during the meeting today, we may make forward-looking statements about our expectations or predictions about the future. Because these statements are based on current assumptions and factors that involve risks and uncertainties, GE Aerospace's actual performance and results may differ materially from what is said here today. Please refer to our annual report on Form 10-K, our first quarter Form 10-Q, and other SEC filings for detailed discussion of the principal risks and uncertainties that could cause such differences. The agenda for today's meeting is shown on the screen and is also available for download from the meeting website.
The rules of conduct, our proxy statement, and our annual report are also available for download from the bottom of the screen for the webcast. Our rules of conduct are designed to ensure that we have a fair and orderly meeting. We'll start with an update on company operations from our Chairman and Chief Executive Officer, Larry Culp. Following Larry's presentation, we'll move to the formal part of the meeting, including voting on the management and shareholder proposals set forth in the proxy statement. Polls are currently open for voting and will remain open until the conclusion of balloting. If you already submitted a vote, there's no need to enter it again. Next, we will conclude the balloting and hear from the Inspectors of Election with the preliminary vote tallies. Following the formal portion of the meeting, we'll take some shareholder questions in accordance with the meeting rules of conduct.
Questions can be submitted in writing in the lower left-hand corner of the webcast screen. I'd like to welcome Larry to get us started with an update on the company. Larry, over to you.
Jake, thank you. I'd like to welcome everyone to GE Aerospace's 2026 Annual Shareholders Meeting. Every day, our 57,000 employees around the world are proud to come to work and live our purpose. We invent the future of flight, lift people up, and bring them home safely. With nearly a million people in the air right now, with GE Aerospace and our partners' technology on their wing, we know that our work matters, connecting people and goods around the globe while playing a vital role in powering the war fighters who defend our freedom. The weight of this responsibility drives our relentless focus on safety, quality, delivery, and cost, always in that order. Guided by FLIGHT DECK, our proprietary lean operating model, our culture is rooted in the behaviors of respect for people, customer-driven, and continuous improvement.
We're proud of the progress we've made over the past two years as a standalone, GE Aerospace. More importantly, we're proud of how we've done it, working together as one team in service of our customers who are counting on us to deliver. 2025 was an outstanding year, defined by countless small improvements across the company that compounded into meaningful results for our customers, our employees, and ultimately for you, our shareholders. Simply put, we're seeing FLIGHT DECK in action. This has been most evident in the progress we've made to problem solve with our suppliers, airframers, airlines, and lessors to unlock constraints and improve deliveries. In 2025, our work drove a 40% increase year-over-year in material inputs from our priority suppliers, enabling a 25% increase in total engine deliveries.
That included a 25% increase in commercial engine deliveries, a 30% increase in defense deliveries, and a 25% increase in spare part revenues. With momentum in our operational performance, we delivered outstanding financial results as operating profit grew 25% and free cash flow increased 24%. These are excellent outcomes, but ultimately we're not satisfied until our customers are satisfied. From delivery to durability, we know we have more work to do. It starts with seeing ourselves as our customers do, seeing ourselves performing as they want and need us to, not as we might think we are. That is why we remain committed to delivering improved time on wing and lower costs of ownership. With a strong performance in the first quarter, our momentum continues in 2026.
Robust demand grew orders 87% in the first quarter, with CES nearly doubling and DPT up 67%, including record defense orders for this decade. Revenue increased 29%, driven by CES services and double-digit growth in DPT. Operating profit grew 18%, with both segments up double digits. EPS increased 25% to $1.86, with free cash flow up 14%. On the left side of the page, you'll see some of the wins we secured in the first quarter. A part of more than 650 engine wins for over $1 billion. Our commercial services backlog now stands at $170 billion, up nearly $30 billion since the end of 2024, giving us visibility into multi-year demand.
With our strong start to the year, second quarter outlook, and substantial backlog, we are confident in our ability to deliver the high end of our guidance in 2026. As we move forward, our sustained competitive advantages support leadership positions across both commercial and defense. With the industry's largest fleet, 80,000 engines and growing, we've accumulated over 2.3 billion flight hours. This experience keeps us close to our customers through decades-long life cycles, building enduring relationships and making us the partner of choice. This field experience, combined with our nearly $3 billion in annual R&D investments, allows us to drive continuous improvement across our services and products, enhancing time on wing and cost of ownership. As a result, across our narrow body, wide body, regional, and defense platforms, we offer leading performance under wing.
Our world-class engineering teams develop next gen technology to improve durability, efficiency, and turnaround times, along with advanced defense capabilities. Through Flight Deck, we turn strategy into results. Stepping back, the GE Aerospace team is focused and ready to execute consistently. While our financial performance in 2025 was certainly encouraging, our aspirations are not about having a solid quarter, let alone year. It's about having a great decade. With our behaviors and Flight Deck at work at every level of the company, there is no limit to what we can achieve for our customers and shareholders alike. Thank you for your investment and your belief in GE Aerospace. With that, I'd like to start the official business for the meeting by introducing my colleagues on the GE Aerospace Board of Directors who are on the line today.
Our director nominees are Sébastien Bazin, Peg Billson, Wes Bush, Thomas Enders, Isabella Goren, Catherine Lesjak, and Darren McDew. The past year has brought a few changes to our board membership. We welcomed Wes Bush as a new director in December, as Stephen Angel stepped down, and Edward Garden, our director since 2017, is not standing for re-election. I do wanna take a moment to extend our sincere thanks to both Steve and Ed for their valuable contributions and engagement through the company's transformation. I'll now hand it back to Jake to walk us through the formal part of the meeting and the voting matters that are set forth in the proxy.
Larry, thank you. I'm advised that this meeting is properly convened, that we have a quorum, and that the proposed resolutions presented in the proxy statement are filed as part of these proceedings. We have received proxies representing a majority of the outstanding shares eligible to vote, and the Management Proxy Committee has voted those shares in accordance with shareholder wishes. As the operator noted at the beginning of the meeting, the polls are open. If you haven't voted your shares or wish to change your vote, you may do so by clicking on the Vote Here button at the bottom right corner of the webcast screen. The polls will remain open until the conclusion of the balloting portion of the meeting. The independent inspectors of election are representatives of First Coast Results. The inspectors have taken the oath of office required by law.
We'll take up the election of directors and the management proposals first, then we'll turn to the shareholder proposal. There will also be time later in the meeting for some general Q&A on other business matters. First, we'll address the items in the proxy statement. First is the election of directors. I placed before the meeting to serve as directors for the coming year the nine individuals who were introduced at the start of the meeting. The nominees' backgrounds and qualifications are described in more detail in the proxy statement. Your board of directors recommends a vote for each of the director nominees. The next item is the proposal to approve our named executives' compensation. Your board of directors recommends a vote for the approval of our named executives' compensation. The next item is approval of the amendment and restatement of the 2022 Long-Term Incentive Plan.
Your board of directors recommends a vote for this proposal. The next item is approval of the GE Aerospace Global Employee Stock Purchase Plan. Your board of directors recommends a vote for this proposal. We will address any questions on these management proposals in a few minutes after we hear the shareholder proposal and before the conclusion of balloting. The final management proposal is ratification of Deloitte as independent auditor for 2026. We have with us on the line today William Calder, Deloitte's lead audit partner for the GE Aerospace audit, and Joe Ucuzoglu, CEO of Deloitte. Your board of directors recommends a vote for the ratification of Deloitte as independent auditor for 2026. We'll now consider the shareholder proposal listed in the agenda.
Please note that one other shareholder proposal number six as it was listed in the proxy statement, was withdrawn by the proponent and will not be presented or voted on today. The Presbyterian Foundation has submitted a recording by Simon Doong on their behalf to present their shareholder proposal requesting a report on defense-related products. We'll play the recorded presentation now.
Fellow shareholders and members of the board, good morning. My name is Simon Doong, and I am with the Office of Faith-Based Investing and Shareholder Engagement of Presbyterian Life & Witness, an agency of the General Assembly of the Presbyterian Church (U.S.A.). I hereby move Proposal Seven as a representative of and on behalf of lead filer Presbyterian Church (U.S.A.), a long-term shareholder of GE Aerospace through the Presbyterian Foundation. Proposal Seven asks GE Aerospace's board of directors to commission an independent third-party report on our company's due diligence processes to determine whether customers' use of its defense-related products, components, or systems contribute to human rights harms or violations of international humanitarian law in conflict-affected and high-risk areas.
After the company's spin-off from General Electric in 2024, GE Aerospace has continued providing technology, products, and services in support of military activities of states credibly accused of violations of international humanitarian law, including Egypt, India, Israel, Nigeria, Saudi Arabia, Turkey, and the United Arab Emirates. We acknowledge that GE Aerospace primarily sells its products to the U.S. Department of Defense or foreign military agencies with the approval of the U.S. government. Providing these weapon systems to state actors credibly accused of systematic violations of international law continues to expose the company to salient and material risks, including potential criminal or civil liability and operational disruptions.
For example, despite exporting all weapons systems with Department of Defense consent, several weapons manufacturers, including Lockheed Martin, General Dynamics, and RTX, are facing civil litigation based on allegations that their systems were used by Saudi military forces to commit war crimes in Yemen. The company stated in its opposition statement that U.S. government regulations on foreign military sales help our products avoid being redirected and used for unauthorized purposes. Mere compliance with these regulations does not meet the human rights due diligence standards required under the UN Guiding Principles on Business and Human Rights, international humanitarian law, or international human rights norms. The targeting of civilian infrastructure in Iran and public statements made by the Trump administration to escalate this practice, a violation of international humanitarian law, heightens the need for GE Aerospace to conduct due diligence beyond U.S. licensing.
We seek an independent third-party review to ensure all salient and material risks are being properly identified, assessed, and mitigated. To reiterate, basic sanctions compliance should be the floor of corporate action, not the ceiling. Our proposal therefore seeks to protect shareholder value for GE Aerospace from the risks and instability related to human rights abuses in conflict-affected and high-risk areas. We therefore urge shareholders to vote for the passage of our proposal. Thank you.
Thank you, Mr. Doong. The board recommends against this proposal for the reasons set forth on page 68 of the proxy statement. Those are the management and shareholder proposals. If you'd like to ask a question about any of these proposals, please enter it in the portal now. Note that there'll be an opportunity for more general Q&A on matters that are unrelated to these proposals after the formal portion of the meeting and the close of voting, which will be happening soon. We'll answer questions that do not directly relate to the proposals at that time. Let me take a moment now to check for any questions about the voting items to see if there are any aspects that are not addressed in the proxy statement.
Okay, I do not see any questions on the proposals to address here. We'll move on to balloting and the results of the voting. Turning to balloting. For any shareholders who are online and who have not yet voted, the polls will be closing momentarily. Any votes submitted during the meeting will be reflected in the final vote results, which we will report after the meeting. We'll give you a few more moments here for any remaining votes to be cast. All right. The polls are now closed. This concludes the review of the matters to be voted on. I believe the Inspectors of Election are ready to announce the outcome of the voting. Let's go to the inspectors' report. Michael Barbera of First Coast Results is on the line to present the report of the inspectors. Mr. Barbera, do you have a report for us?
Mr. Chairman, the Inspectors of Election have completed an initial count of the votes cast this meeting in person or by proxy. Proxies representing approximately 892.8 million shares, or 85.44% of the total shares eligible to vote, were received. Other shares have been voted at this meeting by ballot or by proxy. On the basis of our initial count, the Inspector of Election announces the following results. All nominees have received at least 95% of votes cast, and all nominees have been elected. On the advisory approval of our named executive compensation, for is 96.46% of shares voted against 3.54%. The approval of the amendment and restatement of the 2022 Long-Term Incentive Plan, for 98.37% of shares voted against 1.63%.
Approval of the GE Aerospace Global Employee Stock Purchase Plan, for 99.71% of shares voted against 0.29%. For the ratification of Deloitte as independent auditor for 2026, for is 99.83% of shares voted against 0.17%. The shareholder proposal requesting report on defense-related products, for 8.33% of shares voted against 91.67%. Mr. Chairman, this initial tally is subject to verification, and the final tabulation may reflect small changes in the vote I have announced. The final tabulation will be set forth in the formal report of the Inspectors of Election to the Secretary of the Company. This will be made after the count has been verified. This concludes our report.
Thank you, Mr. Barbera. That concludes the formal portion of the meeting. Now I'll answer some general shareholder questions that have been submitted in accordance with the rules of conduct. I'll read the questions for Larry to answer, and we'll address a few in the time we have remaining this morning. Let's see. Larry, first up, we've had a few shareholders ask about our capital allocation strategy. Can you speak to that?
Jake, I can. I think what we have said previously on capital allocation holds today. Our first priority has been and will continue to be reinvestment in the business, particularly with respect to R&D, but also the capital required to strengthen not only our footprint, but the footprint of our supply base so that we're in position to execute FLIGHT DECK, to deliver safety, quality, delivery, and cost improvements on a multi-year basis. We often talk about this backlog that has us set into the 2030s. We are gonna have to do more each and every year, and that capital, in addition to the R&D spend, will help us in that regard.
We'll continue to return a significant portion of our annual cash flows to our investors by way of the stock buyback program and dividends. That's been very well-received. We'll still have, I think, on the margin a reserve to do a bit of strategic investing by way of M&A. That will be the third priority as it has been as we go forward, but there'll be some things that we'll look to do that will enhance our overall competitiveness going into the future.
Okay. Thanks, Larry. Let's see. Next up is a multi-part question, it looks like, about our operations, which I'll try to summarize. The question is asking about the nature of our production footprint outside the U.S. and the impact of tariffs on our products produced outside of the U.S.
Well, there's a host of dynamics there, Jake, that are in play. We certainly appreciate the question timely as always. I'd start by saying we're a global aerospace leader. We serve customers in roughly 120 countries. About half of our almost 60,000 employees are here in the U.S., and the rest are positioned around the globe. Our current manufacturing and service operations are carried out at 70 facilities in the U.S. and at 62 facilities across 23 other countries. Our people and our facilities, both at home and abroad, are obviously critical to our future success, and they really allow us to do what we do every day to meet customer needs around the world.
As I mentioned at the beginning of the meeting, we continue to focus on enhancing our U.S. manufacturing and supply chain. You may have seen the recent announcement of our plans to invest another $1 billion here in the U.S., both in manufacturing and the supply chain. That will end up benefiting sites in more than 30 of the communities where we operate across 17 states. In addition to our investment here in the U.S., we're also investing in sites globally to continue to drive safety, higher quality, faster delivery, and affordable costs for our customers. That includes expanding capacity at places like the GE Aerospace Celma plant, a cornerstone of our maintenance repair and overhaul operations in Brazil, and a strong performer for us year in, year out.
It's also our largest MRO site responsible for close to 25% of our global volume, and interestingly, one of the largest aerospace MRO facilities in the world. Just to wrap, to address the part of the question on tariffs, our focus is clearly on delivering services and products to our customers, controlling what we can control. We appreciate that we saw the U.S. establish zero-for-zero tariff agreements on aerospace equipment with the EU, the UK, Japan, and Korea, establishing a mutual elimination of tariffs in 2025. We continue to monitor the impact of developments on tariff policy, and we'll evaluate any changes in how those apply to our businesses as they occur.
Okay. Thanks, Larry. We've got time to work in one more question. The last one I'll pose relates to the conflict in the Middle East. If I could summarize, what is the impact of higher oil prices on the commercial business? If you could comment, Larry, particularly on the aftermarket in the next few years.
Jake, of course, and thank you for that question. I'd say starting with 2026, we continue to expect a solid year for commercial services. Again, our backlog stands at over $170 billion, providing us with visibility and resilience through cycles. We've taken, I think, a measured approach to our second-half expectations given the dynamic environment, but we remain confident in our ability to deliver the high end of our full-year guidance. As we look ahead, the demand trends from the 1st quarter are holding. Spare parts orders are up over 40% year-over-year in March and now April, and have been stable since the start of the conflict. Additionally, for CFM56, the number of parked aircraft are actually down from the 4th quarter of last year to the end of April, and retirements are lower sequentially and year-over-year.
While it's still early days, these are encouraging indicators that retirement rates are holding steady. Based on conversations with customers, airlines will want clarity on longer-term demand trends before making any retirement decisions. We also expect shop visit work scopes will continue to support aftermarket growth. Our newer programs like the LEAP and the GEnx are just beginning to come in for their first shop visits. Mature engines like the GE90 are now coming in for their second shop visit, which has a larger work scope than the first. For CFM56, given the need for lift and lack of used material, work scope also remains stable. I think when we put all this together, we expect departures that are up flat to low single digits in 2026.
When combined with price and work scopes, we expect solid services revenue growth in 2026 and beyond.
Okay. Thank you, Larry. As I mentioned, that's the last question that we have time for today. We will follow up on any remaining questions on topics that we haven't addressed during the meeting with responses on our investor relations website, as described in the meeting rules of conduct. With that, Larry, I'll turn it back to you.
Jake, thank you, and thanks, everyone, for those questions and of course, your time today. We're pleased that you were able to join us. The Board and I remain dedicated to working to protect and grow your investment, and we thank you for your confidence in us. It is a privilege to serve as your Chairman and CEO.
The meeting has now concluded. Thank you for joining, and have a pleasant day.