GE Aerospace

    GE ·NYSE ·Electronic & Other Electrical Equipment (No Computer Equip) ·Inc. in NY
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    From 10-Q filed 2026-10-20 (period ending 2026-09-30).

    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A). The consolidated financial statements of GE Aerospace are prepared in conformity with U.S. generally accepted accounting principles (GAAP). Unless otherwise noted, tables are presented in U.S. dollars in millions. Certain columns and rows within tables may not add due to the use of rounded numbers. Percentages presented in this report are calculated from the underlying numbers in millions. Discussions throughout this MD&A are based on continuing operations unless otherwise noted. The MD&A should be read in conjunction with the Financial Statements and Notes to the consolidated financial statements.

    In the accompanying analysis of financial information, we sometimes use information derived from consolidated financial data but not presented in our financial statements prepared in accordance with GAAP. Certain of these data are considered “non-GAAP financial measures” under SEC rules. See the Non-GAAP Financial Measures section for the reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable GAAP financial measures.

    BUSINESS OVERVIEW AND ENVIRONMENT. As a global aerospace company, our worldwide operations can be affected by industrial, economic, and political factors on both a regional and global level. Demand for our equipment and services is demonstrated by our backlog of engine and services orders on our growing installed base, and tends to follow commercial air travel and freight demand and government funding for defense budgets. We expect a significant ramp in our delivery of engine units and services for newer product platforms in the years ahead to meet this demand. Refer to the Segment Operations sections for Commercial Engines & Services (CES) and Defense & Propulsion Technologies (DPT) below for additional detail about these dynamics for our commercial and defense businesses, respectively.

    We are investing in our manufacturing facilities, overhaul facilities and our supply chain, both internally and through business acquisitions, to increase production and strengthen yield in order to improve delivery to our customers. We are leveraging FLIGHT DECK and partnering with suppliers to improve material input while also proactively managing the impact of inflationary pressure by driving cost productivity and adjusting the pricing of our products and services. We expect the impact of supply chain constraints to continue to impact our production and delivery to customers and expect inflationary trends to persist. However, through FLIGHT DECK and the engagement with our suppliers, we are taking actions to mitigate these impacts and our aftermarket output and engine deliveries have continued to improve quarter over quarter.

    We support efforts to revitalize domestic manufacturing and are planning to invest $1 billion in U.S. manufacturing and hire 5,000 U.S. workers in 2026, including both engineering and manufacturing roles. At the same time, we support promoting free and fair trade that ensures the continued strength of the U.S. aerospace industry.

    In a further effort to support and expand our capacity and accelerate new engine technology, during the third quarter of 2026, GE Aerospace signed an agreement to acquire Consolidated Precision Products (CPP), a leading manufacturer of highly engineered castings and sub-assemblies primarily for the commercial aerospace and defense markets, with a purchase price of $11.75 billion. We plan to fund the acquisition with approximately $7 billion in cash and the remainder in new debt. This transaction is expected to close in the second half of 2027 and will be subject to regulatory approvals and other customary closing conditions.

    As we operate in a highly dynamic tariff environment, we remain focused on delivering our products and services to our customers. Given our global business, tariffs result in additional cost for us and our suppliers. In 2025, the U.S. established a zero-for-zero tariff agreement on aerospace equipment with the EU, UK, Japan and Korea, establishing a mutual elimination of tariffs. In 2026, the Supreme Court ruled against tariffs imposed under the International Emergency Economic Powers Act (IEEPA). In the first nine months of 2026, GE Aerospace submitted refund requests and received a portion of previously paid IEEPA tariffs. We will continue to monitor recent developments on tariff policy and evaluate any changes to the applicability of tariffs to our business as they occur.

    We are monitoring recent developments related to the conflict in the Middle East and the potential impact on the global economy and commercial aerospace industry, including lower utilization and increased prices, which can result in adverse effects on our airline customers. As a result, the impacts to our business may include lower volume related to shop visits, spare parts and spare engines and lower profitability of our long term contracts, as well as customer credit implications. We remain confident in our ability to navigate this with our young and diverse fleet, and we are also proactively taking action on costs. This did not result in a material impact on our operations in the nine months ended September 30, 2026.

    4 2026 3Q FORM 10-Q


    On January 15, 2026, we announced that our CES segment will expand to include the entire commercial engine lifecycle, including safety and quality, product management, engineering, supply chain, manufacturing and aftermarket services. In addition, our Aeroderivative business, previously reported in CES, has moved to our DPT segment. See Note 23 for further information.

    CONSOLIDATED RESULTS
    REVENUEThree months ended September 30Nine months ended September 30
    2026202520262025
    Equipment revenue$3,924 $3,163 $10,794 $8,659 
    Services revenue9,361 8,143 26,739 21,798 
    Insurance revenue833 875 2,326 2,681 
    Total revenue$14,118 $12,181 $39,859 $33,138 

    For the three months ended September 30, 2026, total revenue increased $1.9 billion, or 16%, compared to the three months ended September 30, 2025. Equipment revenue increased, driven by increased engine deliveries and improved pricing. Services revenue increased due to growth in internal shop visit volume with heavier workscopes, higher spare parts volume and pricing.

    For the nine months ended September 30, 2026, total revenue increased $6.7 billion, or 20%, compared to the nine months ended September 30, 2025. Equipment revenue increased, driven by increased engine deliveries and improved pricing. Services revenue increased due to growth in internal shop visit volume with heavier workscopes, higher spare parts volume and pricing.

    NET INCOME (LOSS) AND EARNINGS (LOSS) PER SHARE (EPS)Three months ended September 30Nine months ended September 30
    (Per-share in dollars and diluted)
    		2026202520262025
    Net income (loss) from continuing operations attributable to common shareholders$2,412 $2,174 $6,750 $6,149 
    Continuing EPS$2.32 $2.04 $6.44 $5.73 

    For the three months ended September 30, 2026, net income from continuing operations increased $0.2 billion compared to the three months ended September 30, 2025, driven by an increase in segment profit of $0.5 billion, a decrease in Adjusted Corporate & Other operating costs* of $0.2 billion and an increase in gains (losses) on retained and sold ownership interests and other equity securities of $0.1 billion. The increase was partially offset by a decrease in Insurance profit of $0.6 billion. Adjusted net income* was $2.3 billion, an increase of $0.6 billion, due to an increase in segment profit of $0.5 billion and a decrease in Adjusted Corporate & Other operating costs* of $0.2 billion.
    Profit was $2.8 billion, an increase of $0.3 billion and profit margin was 19.9%, a decrease of 80 basis points. Operating profit* was $3.0 billion, an increase of $0.7 billion and operating profit margin* was 22.5%, an increase of 220 basis points. Adjusted EPS* was $2.25, an increase of 36%.

    For the nine months ended September 30, 2026, net income from continuing operations increased $0.6 billion compared to the nine months ended September 30, 2025, driven by an increase in segment profit of $1.6 billion, partially offset by decrease in Insurance profit of $0.6 billion, an increase in Adjusted Corporate & Other operating costs* of $0.1 billion, a decrease in gains (losses) on retained and sold ownership interests and other equity securities of $0.1 billion and an increase in interest and other financial charges of $0.1 billion. Adjusted net income* was $6.4 billion, an increase of $1.3 billion, due to an increase in segment profit of $1.6 billion, partially offset by an increase in Adjusted Corporate & Other operating costs* of $0.1 billion and an increase in interest and other financial charges of $0.1 billion.
    Profit was $7.8 billion, an increase of $0.7 billion and profit margin was 19.6%, a decrease of 200 basis points. Operating profit* was $8.3 billion, an increase of $1.5 billion and operating profit margin* was 22.0%, a decrease of 30 basis points. Adjusted EPS* was $6.13, an increase of 28%.

    Remaining performance obligation (RPO) is unfilled customer orders for products and product services (expected life of contract sales for product services) excluding any purchase order that provides the customer with the ability to cancel or terminate without incurring a substantive penalty. See Note 23 for further information.

    RPOSeptember 30, 2026December 31, 2025
    Equipment$33,337 $27,534 
    Services178,747 163,029 
    Total RPO$212,084 $190,564 

    As of September 30, 2026, RPO increased $21.5 billion, or 11%, from December 31, 2025, primarily at CES, as a result of commercial actions and increases to existing long-term service agreements, and at DPT, driven by Defense & Systems equipment orders outpacing revenue recognized.


    *Non-GAAP Financial Measure
    2026 3Q FORM 10-Q 5


    SEGMENT OPERATIONS
    COMMERCIAL ENGINES & SERVICES. We are in frequent communication with our airline, airframe and maintenance, repair and overhaul (MRO) customers about the outlook for commercial air travel, new aircraft production, fleet retirements and after-market services, including shop visit and spare parts demand. In the first nine months of 2026, there was a strong demand for engines and services, while commercial air travel departures were slightly up.

    In the nine months ended September 30, 2026, we announced significant new deals with several major customers. United Airlines and Delta Airlines selected our GENx engines to power their widebody Boeing 787 Dreamliner orders. American Airlines and Copa Airlines selected LEAP engines for their narrowbody orders. Ryanair signed a long-term material services agreement to support their entire fleet of about 2,000 CFM56 and LEAP engines powering its Boeing 737 aircraft. IndiGo agreed to a historical Memorandum of Understanding (MOU) for more than 1,000 LEAP-1A engines, the largest LEAP agreement, to power its Airbus A320neo aircraft. We also announced an agreement with Turkish Airlines for up to 300 LEAP-1B engines to power its 737MAX fleet.

    To meet the strong demand, we are investing in our manufacturing and overhaul facilities and continue to strengthen our external global MRO network to support LEAP aftermarket demand by adding Iberia as the seventh Premier MRO and expanding Delta TechOps capabilities for both LEAP 1-A and LEAP 1-B engines. We are also deploying engineering and supply chain resources to increase production, expand capacity and strengthen yield.

    These investments combined with improved material availability contributed to internal shop visit revenue growth of 23% in the first nine months of 2026, and total engine deliveries and LEAP engine deliveries increases of 25% and 26%, respectively. In the three months ended September 30, 2026, we delivered GE9X engines with the upgraded midseal, for which the financial impact from these shipments will be recognized post certification from the Federal Aviation Administration (FAA).

    Total engineering investments, both company and partner-funded, increased compared to prior year, and we continue to improve our products and advance our future of flight priorities. We recently completed the certification for the LEAP 1-B durability kit, including the upgraded HPT blade, which is expected to deliver approximately double time-on-wing for that engine. And for future of flight, during the first nine months of 2026, together with the Civil Aviation Authority of Singapore and Airbus, we established the world’s first airport test bed for RISE technologies, focused on Open Fan. In addition, alongside the National Aeronautics and Space Administration (NASA), BETA Technologies and Boeing, we achieved the first high-altitude hybrid electric flight.

    Sales in units, except where notedThree months ended September 30Nine months ended September 30
    2026202520262025
    Commercial Engines6906411,989 1,592
    LEAP Engines(a)5355111,565 1,240
    Internal shop visit revenue growth %12 %33 %23 %22 %
    (a) LEAP engines, which are in a significant production ramp, are a subset of Commercial Engines.

    SEGMENT REVENUE AND PROFITThree months ended September 30Nine months ended September 30
    2026202520262025
    Equipment$2,607 $1,892 $7,006 $5,406 
    Services7,735 6,629 21,986 17,424 
    Total segment revenue$10,342 $8,521 $28,992 $22,830 
    Segment profit$2,887 $2,384 $7,899 $6,501 
    Segment profit margin27.9 %28.0 %27.2 %28.5 %

    For the three months ended September 30, 2026, revenue was up $1.8 billion, or 21%, and profit was up $0.5 billion, or 21%, compared to the three months ended September 30, 2025.
    Revenue increased due to growth in internal shop visit volume with heavier workscope, increased spare parts volume, increased engine deliveries and pricing.
    Profit increased primarily due to higher internal shop visit volume and heavier workscope, increased spare parts volume and price. These increases were partially offset by mix, higher growth investment and inflation.

    For the nine months ended September 30, 2026, revenue was up $6.2 billion, or 27%, and profit was up $1.4 billion, or 21%, compared to the nine months ended September 30, 2025.
    Revenue increased due to growth in internal shop visit volume with heavier workscope, increased spare parts volume, increased engine deliveries and pricing.
    Profit increased primarily due to higher internal shop visit volume and heavier workscope, increased spare parts volume, price and a lower unfavorable change in estimated profitability on long-term service agreements, primarily driven by the absence of charges. In the first nine months of 2026, we recorded an unfavorable change in estimated profitability on long-term service agreements of $0.1 billion, including a $0.1 billion reversal of a majority of the tariff-related charge in the first quarter of 2025. These increases were partially offset by the impact of higher install engine deliveries, higher growth investment and inflation.

    6 2026 3Q FORM 10-Q


    RPOSeptember 30, 2026December 31, 2025
    Equipment$10,201 $9,773 
    Services170,227 154,712 
    Total RPO$180,428 $164,485 

    As of September 30, 2026, RPO increased $15.9 billion, or 10%, from December 31, 2025, as a result of commercial actions and increases to existing long-term service agreements.

    DEFENSE & PROPULSION TECHNOLOGIES. Our results in the third quarter of 2026 reflect domestic and international government defense departments’ focus on modernizing and scaling their forces while maintaining flight operations, driving services demand. A key underlying driver of our business is government funding, as most of the revenue in Defense & Systems is derived from funding that flows through the U.S. Department of War budget or equivalent international budgets. Defense & Systems engine deliveries showed progress in the first nine months of 2026, increasing 11%, supported by improved material supply.

    In the nine months ended September 30, 2026, GE Aerospace was awarded a NAVAIR contract to supply T408-GE-400 engines for the U.S. Marine Corps' Sikorsky CH-53K King Stallion helicopter. We announced a contract award from Turkish Aerospace Industries (TAI) to continue integrating the GE Aerospace F404 engine into Türkiye's jet trainer Hurjet. Defense was also awarded a five-year contract to provide ongoing support for the F414 engines powering U.S. Navy's F/A-18 and EA-18G fleets.

    Sales in unitsThree months ended September 30Nine months ended September 30
    2026202520262025
    Defense & Systems engines(a)202 195 586 530 
    (a) Includes Defense and Aeroderivative units.

    SEGMENT REVENUE AND PROFITThree months ended September 30Nine months ended September 30
    2026202520262025
    Defense & Systems (D&S)$2,259 $2,153 $6,561 $5,960 
    Propulsion & Additive Technologies (P&AT)1,210 1,098 3,564 2,967 
    Total segment revenue$3,469 $3,251 $10,126 $8,927 
    Equipment$1,754 $1,665 $5,103 $4,357 
    Services1,715 1,586 5,022 4,570 
    Total segment revenue$3,469 $3,251 $10,126 $8,927 
    Segment profit$475 $440 $1,329 $1,169 
    Segment profit margin13.7 %13.5 %13.1 %13.1 %

    For the three months ended September 30, 2026, revenue was up $0.2 billion, or 7%, and profit was up less than $0.1 billion, or 8%, compared to the three months ended September 30, 2025.
    D&S and P&AT revenue increased primarily due to increased volume and price, including higher engine deliveries in D&S.
    Profit increased primarily due to volume and price, partially offset by mix and inflation.

    For the nine months ended September 30, 2026, revenue was up $1.2 billion, or 13%, and profit was up $0.2 billion, or 14%, compared to the nine months ended September 30, 2025.
    D&S and P&AT revenue increased primarily due to increased volume and price, including higher engine deliveries in D&S.
    Profit increased primarily due to volume and price, partially offset by incremental investments to support next-generation products, inflation and mix.

    RPOSeptember 30, 2026December 31, 2025
    Equipment$23,137 $17,762 
    Services8,294 8,094 
    Total RPO$31,431 $25,856 

    As of September 30, 2026, RPO increased $5.6 billion, or 22%, from December 31, 2025, primarily due to increases in equipment from orders outpacing revenue recognized.

    CORPORATE & OTHER. Corporate & Other revenue includes our run-off insurance operations revenue and the elimination of intercompany activities. Corporate & Other operating profit includes Corporate functions and operations costs, certain costs of our principal retirement plans, significant, higher-cost restructuring programs, separation costs, profit (loss) of our run-off insurance operations, U.S. tax equity profit (loss), transition services agreements, environmental health and safety (EHS) impacts and other costs, as well as certain amounts that are not included in operating segment results because they are excluded from measurement of their operating performance for internal and external purposes.
    2026 3Q FORM 10-Q 7

    REVENUE AND OPERATING PROFIT (COST)Three months ended September 30Nine months ended September 30
    2026202520262025
    Insurance revenue (Note 12)$833 $875 $2,326 $2,681 
    Eliminations and other(526)(466)(1,585)(1,300)
    Corporate & Other revenue$307 $409 $741 $1,381 
    Gains (losses) on purchases and sales of business interests— 3 24 3 
    Gains (losses) on retained and sold ownership interests and other equity securities117 8 (127)18 
    Restructuring and other charges (Note 19)28 (22)(22)(49)
    Separation costs (Note 19)(3)(53)(93)(150)
    Insurance profit (loss) (Note 12)(210)361 91 714 
    U.S. tax equity profit (loss)(70)(52)(199)(157)
    Adjusted Corporate & Other operating costs (Non-GAAP)(373)(525)(966)(887)
    Corporate & Other operating profit (cost) (GAAP)$(511)$(279)$(1,291)$(509)
    Less: gains (losses), impairments, Insurance, and restructuring & other(137)246 (325)379 
    Adjusted Corporate & Other operating costs (Non-GAAP)$(373)$(525)$(966)$(887)
    Corporate & Other profit (costs)(217)(381)(462)(487)
    Eliminations(156)(144)(504)(400)
    Adjusted Corporate & Other operating costs (Non-GAAP)$(373)$(525)$(966)$(887)

    Adjusted Corporate & Other operating costs* excludes gains (losses) on purchases and sale of business interests, gains (losses) on retained and sold ownership interests and other equity securities, higher-cost restructuring programs, separation costs, our run-off insurance operations, and U.S. tax equity profit (loss). We believe that adjusting Corporate & Other costs to exclude the effects of items that are not closely associated with ongoing operations provides management and investors with a meaningful measure that increases the period-to-period comparability of our ongoing corporate costs.

    For the three months ended, September 30, 2026, revenue decreased by $0.1 billion compared to the three months ended September 30, 2025, primarily due to lower run-off insurance operations revenue and higher intercompany eliminations. Corporate & Other operating cost increased by $0.2 billion due to $0.6 billion of higher insurance losses partially offset by $0.2 billion of lower Adjusted Corporate & Other operating costs,* $0.1 billion of higher gains on retained and sold ownership interests and other equity securities, and $0.1 billion of lower restructuring and separation costs.
    Adjusted Corporate & Other operating costs* decreased by $0.2 billion due to lower functional costs and lower EHS costs.

    For the nine months ended, September 30, 2026, revenue decreased by $0.6 billion compared to the nine months ended September 30, 2025, primarily due to lower run-off insurance operations revenue and higher intercompany eliminations. Corporate & Other operating cost increased by $0.8 billion, primarily due to $0.6 billion of lower run-off insurance operations profit, $0.1 billion of higher losses on retained and sold ownership interests and other equity securities, and $0.1 billion of higher Adjusted Corporate & Other operating costs*.
    Adjusted Corporate & Other operating costs* increased by $0.1 billion due to higher intercompany profit eliminations.

    OTHER CONSOLIDATED INFORMATION
    RESTRUCTURING AND SEPARATION COSTS. Significant, higher-cost restructuring programs, primarily related to the separations, are excluded from measurement of segment operating performance for internal and external purposes; those excluded amounts are reported in Restructuring and other charges for Corporate. In addition, we incur costs associated with separation activities, which are also excluded from measurement of segment operating performance for internal and external purposes. We have completed separation activities, including the transition services agreement with GE Vernova, and expect an insignificant amount of costs for the remainder of 2026. See Note 19 for further information on restructuring and separation costs.

    INTEREST AND OTHER FINANCIAL CHARGES were $0.2 billion for both the three months ended September 30, 2026 and 2025, and $0.7 billion and $0.6 billion for the nine months ended September 30, 2026 and 2025, respectively. The primary components of interest and other financial charges are interest on short-term and long-term borrowings and interest on tax deficiencies.

    POSTRETIREMENT BENEFIT PLANS. Refer to Note 13 for information about our pension and retiree benefit plans.

    INCOME TAXES. For the three months ended September 30, 2026, the effective income tax rate was 13.7% which is consistent with the 13.7% for the three months ended September 30, 2025. The effective tax rate in the current period was impacted by lower tax benefits from business tax credits, which was offset by higher tax benefits related to global activities, including the impact of the One Big Beautiful Bill Act (OBBBA).



    *Non-GAAP Financial Measure
    8 2026 3Q FORM 10-Q

    For the three months ended September 30, 2026, the adjusted effective income tax rate* was 15.2% compared to 15.0% for the three months ended September 30, 2025. The increase in the adjusted effective tax rate* was primarily attributable to lower tax benefits from business tax credits, partially offset by higher tax benefits related to global activities, including the impact of the OBBBA.

    For the nine months ended September 30, 2026, the effective income tax rate was 13.4% compared to 14.2% for the nine months ended September 30, 2025. The decrease in the effective tax rate was primarily attributable to higher tax benefits related to global activities, including the impact of the OBBBA, partially offset by lower tax benefits from business tax credits.

    For the nine months ended September 30, 2026, the adjusted effective income tax rate* was 15.6% compared to 17.1% for the nine months ended September 30, 2025. The decrease in the adjusted effective tax rate* was primarily attributable to higher tax benefits related to global activities, including the impact of the OBBBA, partially offset by lower tax benefits from business tax credits.

    Refer to Note 15 for discussion of the 2016-2020 Internal Revenue Service (IRS) audit status.

    DISCONTINUED OPERATIONS. Our former GE Vernova business, our mortgage portfolio in Poland (Bank BPH) and other trailing assets and liabilities associated with prior dispositions are included in discontinued operations. Results of operations, financial position and cash flows for these businesses are reported as discontinued operations for all periods presented and the notes to the financial statements have been adjusted on a retrospective basis. See Note 2 for further information regarding our businesses in discontinued operations.

    CAPITAL RESOURCES AND LIQUIDITY
    FINANCIAL POLICY. GE Aerospace is committed to maintaining strong investment grade ratings with a disciplined capital allocation strategy. The Company will continue its commitment to investing and developing technologies that improve safety, durability, reliability and efficiency for our current engine products over their lifecycle and for the future of flight, and expanding our manufacturing and MRO capacity through research and development and capital expenditures. We intend to return a portion of our free cash flow* to shareholders through dividends and share repurchases. Merger and acquisition investments will be pursued in a disciplined way and focused on those that offer strategic, operational and financial synergies.

    LIQUIDITY POLICY. We maintain a strong focus on liquidity and define our liquidity risk tolerance based on sources and uses to maintain a sufficient liquidity position to meet our business needs and financial obligations under both normal and stressed conditions. We believe that our consolidated liquidity and availability under our revolving credit facilities will be sufficient to meet our liquidity needs.

    CONSOLIDATED LIQUIDITY. Our primary sources of liquidity consist of cash, cash equivalents, time deposits with maturities greater than three months, free cash flow* from our operating businesses, and access to capital markets. If needed, we can also draw from short-term borrowing facilities, including revolving credit facilities. Cash generation can be subject to variability based on many factors, including receipt of down payments on large equipment orders, timing of billings on long-term contracts, timing of customer allowances and market conditions. At September 30, 2026, our sources of liquidity of $10.3 billion included cash, cash equivalents and restricted cash of $8.8 billion and time deposits with maturities greater than three months classified as All other current assets of $1.5 billion. Of these amounts, $6.6 billion was held in the U.S. and $3.7 billion was held outside the U.S.

    Cash held outside the U.S. has generally been reinvested in active foreign business operations; however, substantially all of our unrepatriated income has been subject to U.S. federal tax and, if there is a change in reinvestment, we would expect to be able to repatriate available cash (excluding amounts held in countries with currency controls) without significant tax cost.

    Cash, cash equivalents and restricted cash at September 30, 2026 included $0.5 billion of cash held in countries with currency control restrictions, which may restrict the transfer of funds to the U.S. or limit our ability to transfer funds to the U.S. without incurring substantial costs. Excluded from cash, cash equivalents and restricted cash is $0.8 billion of cash in our run-off insurance operations, which is classified as All other assets in the Statement of Financial Position, and $0.7 billion of cash in our discontinued operations held by Bank BPH (see Note 2).

    Under the current authorization, we repurchased 11.9 million shares for $4.0 billion in 2026, including repurchases of 5.9 million shares for $2.1 billion using accelerated share repurchases as a mechanism to achieve planned repurchase volumes within a quarter during closed windows.

    During the third quarter of 2026, the Company announced that it signed an agreement to acquire CPP for $11.75 billion. We plan to fund the acquisition with approximately $7 billion in cash and the remainder in new debt. The transaction is expected to close in the second half of 2027 and will be subject to regulatory approvals and other customary closing conditions.

    BORROWINGS. Consolidated total borrowings were $19.3 billion and $20.5 billion at September 30, 2026 and December 31, 2025, respectively. The decrease of $1.2 billion is primarily due to maturities and changes in foreign currency exchange rates, partially offset by $0.5 billion issued under the Company's new commercial paper program. We started the new commercial paper program in lieu of issuing long term debt to help diversify our funding sources. The Company also holds a five-year unsecured revolving credit facility, maturing in 2029, in an aggregate committed amount of $3.0 billion, with zero outstanding at September 30, 2026.


    *Non-GAAP Financial Measure
    2026 3Q FORM 10-Q 9

    CREDIT RATINGS AND CONDITIONS. We have relied, and may continue to rely, on the short- and long-term debt capital markets to fund, among other things, a significant portion of our operations. The cost and availability of debt financing is influenced by our credit ratings. Moody’s Investors Service (Moody’s) and Standard and Poor’s Global Ratings (S&P) currently issue ratings on our short- and long-term debt. On February 2, 2026, Moody's upgraded our long-term rating from A3 to A2, our short-term rating from P-2 to P-1 and maintained our positive outlook. On April 16, 2026, S&P revised our outlook from stable to positive, and affirmed our short-term rating of A-2 and our long-term rating of A-. Our credit ratings as of the date of this filing are set forth in the table below.

    Moody'sS&P
    OutlookPositivePositive
    Short termP-1A-2
    Long termA2A-

    Our ratings may be subject to a revision or withdrawal at any time by the assigning rating organization, and each rating should be evaluated independently of any other rating.

    Our unused back-up revolving syndicated credit facility contains a customary net debt-to-EBITDA financial covenant, which we satisfied at September 30, 2026.

    FOREIGN EXCHANGE RISK. As a result of our global operations, we generate and incur a small portion of our revenue and expenses in currencies other than the U.S. dollar. Such principal currencies include the euro, the British sterling pound and Brazilian real. The effect of foreign currency fluctuations on income was insignificant. See Note 20 for further information about our risk exposures, our use of derivatives, and the effects of this activity on our financial statements.

    STATEMENT OF CASH FLOWS
    CASH FLOWS FROM CONTINUING OPERATIONS. The most significant source of cash flows from operating activities (CFOA) is customer-related activities, the largest of which is collecting cash resulting from product or services sales. The most significant operating use of cash is to pay our suppliers, employees, tax authorities and postretirement plans.

    Cash from operating activities was $7.3 billion for the nine months ended September 30, 2026, an increase of $0.9 billion compared to 2025, primarily due to: an increase in net income (after adjusting for depreciation of property, plant, and equipment, and amortization of intangible assets) driven by all segments, an increase in sales discounts and allowances, partially offset by higher working capital growth.

    Cash from sales discounts and allowances was $1.6 billion for the nine months ended September 30, 2026, an increase of $1.0 billion compared to 2025, primarily due to increases in allowances on new engine installs and spare parts in CES.

    The cash impact from changes in working capital was $(1.8) billion for the nine months ended September 30, 2026, an increase in cash used of $(0.9) billion compared to 2025, due to: current receivables of $(1.1) billion, driven by higher volume, partially offset by higher collections primarily in CES; current contract assets, contract liabilities and current deferred income of $(0.5) billion, driven by higher revenue recognition and a lower unfavorable change in estimated profitability on long-term service agreements, primarily driven by the absence of charges, including a $0.1 billion reversal of a majority of the tariff-related charge from the first quarter of 2025, partially offset by higher billings; and accounts payable of $(0.6) billion, driven by higher disbursements partially offset by higher volume. These increases were partially offset by inventories, including deferred inventory, of $0.8 billion, driven by higher output and lower tariffs, partially offset by higher material input; and progress collections of $0.4 billion, driven by higher collections primarily in CES.

    The components of All other operating activities included:

    Nine months ended September 3020262025
    Increase (decrease) in employee benefit liabilities$(55)$252 
    Net restructuring and other charges/(cash expenditures)(23)(36)
    Other deferred assets(138)127 
    Other117 (162)
    All other operating activities$(100)$180 

    Cash used for investing activities was $(2.9) billion for the nine months ended September 30, 2026, an increase of $1.6 billion compared to 2025, primarily due to purchases of time deposits with maturities greater than three months of $1.5 billion (a component of all other investing activities). Cash used for additions to property, plant and equipment and internal-use software net of dispositions (components of free cash flow*) was $0.8 billion and $0.8 billion for the nine months ended September 30, 2026 and 2025, respectively.

    Cash used for financing activities was $(8.5) billion for the nine months ended September 30, 2026, an increase of $2.6 billion compared to 2025, primarily due to: lower long-term debt issuance of $2.0 billion, higher treasury share repurchases of $1.0 billion and higher dividends paid to shareholders of $0.3 billion, partially offset by commercial paper issuance of $0.5 billion in 2026.


    *Non-GAAP Financial Measure
    10 2026 3Q FORM 10-Q

    CRITICAL ACCOUNTING ESTIMATES. Please refer to the Critical Accounting Estimates and Other Items sections within MD&A and Note 1 to the consolidated financial statements of our Annual Report on Form 10-K for the year ended December 31, 2025 for a discussion of our accounting policies and critical accounting estimates.

    OTHER ITEMS    
    INSURANCE. Our 2026 annual review of future policy benefit reserves cash flow assumptions resulted in an increase in net future policy benefit reserves, after reinsurance recoverables and a pre-tax charge to earnings of $328 million ($259 million, after-tax), primarily related to claims experience and long-term care cost of care inflation, partially offset by premium rate increases. The sensitivities with respect to the impact of changes of key cash flow assumptions underlying our future policy benefit reserves included in our Annual Report on Form 10-K for the year ended December 31, 2025, have not materially changed. See Capital Resources and Liquidity and Notes 3 and 12 for further information related to our run-off insurance operations.

    NEW ACCOUNTING STANDARDS. In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The amendments increase disclosure requirements primarily through enhanced disclosures about types of expenses (including purchases of inventory, employee compensation, depreciation, and amortization) in commonly presented expense captions. The ASU is effective for fiscal years beginning after December 15, 2026, and is required to be applied prospectively with the option for retrospective application. We are currently evaluating the impact that this guidance will have on the disclosures within our consolidated financial statements.

    In December 2025, the FASB issued ASU No. 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities. The amendment establishes a framework for the recognition, measurement, and presentation of government grants received by business entities. The ASU is effective for fiscal years beginning after December 15, 2028 with adoption permitted on a modified prospective, modified retrospective, or retrospective basis. We are currently evaluating the impact that this guidance will have on our consolidated financial statements.

    NON-GAAP FINANCIAL MEASURES. We believe that presenting non-GAAP financial measures provides management and investors useful measures to evaluate performance and trends of the total company and its businesses. This includes adjustments in recent periods to GAAP financial measures to increase period-to-period comparability following actions to strengthen our overall financial position and how we manage our business. In addition, management recognizes that certain non-GAAP terms may be interpreted differently by other companies under different circumstances. In various sections of this report we have made reference to the following non-GAAP financial measures in describing our (1) revenue, specifically, Adjusted revenue, (2) profit, specifically, Operating profit and Operating profit margin; Adjusted net income (loss); Adjusted earnings (loss) per share (EPS) and Adjusted effective income tax rate, and (3) cash flows, specifically free cash flow (FCF). The reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable GAAP financial measures follow.
    2026 3Q FORM 10-Q 11

    ADJUSTED REVENUE, OPERATING PROFIT AND PROFIT MARGIN (NON-GAAP)Three months ended September 30Nine months ended September 30
    2026202520262025
    Total revenue (GAAP)$14,118$12,181$39,859$33,138
    Less: Insurance revenue (Note 12)8338752,326

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    Held by

    holders ( registered funds via N-PORT, institutional investors via 13F). Showing top by dollar value.

    Holder Type ETF MF Position ($) % of holder Δ % of holder Holder AUM

    Recent insider activity

    Last 90 days. Open-market trades (purchases & sales) by directors, officers, and 10%+ owners. 1 transaction across 1 insider. Net: -10,242 shares, -$3,788,752.

    Date Insider Role Action Shares Price Value
    2026-08-11 Giglietti Robert M. Vice President Sell -10,242 ×2 $369.92 -$3,788,752

    Source: SEC Form 4 filings.

    Next expected filings

    • ~2027-01-28 10-K expected by 2027-02-16 (in 92 days)
    • ~2027-04-20 10-Q expected by 2027-05-08 (in 174 days)
    • ~2027-07-15 10-Q expected by 2027-08-02 (in 260 days)
    • ~2027-10-19 10-Q expected by 2027-11-06 (in 356 days)

    Predicted from historical filing cadence; not an SEC commitment.

    Recent SEC filings

    • 2026-10-20 8-K Earnings Release; Financial Statements and Exhibits
    • 2026-10-20 10-Q Quarterly Report
    • 2026-09-22 8-K Officer/Director Change; Other Events; Financial Statements and Exhibits
    • 2026-09-08 8-K Regulation FD Disclosure; Other Events; Financial Statements and Exhibits
    • 2026-07-16 8-K Earnings Release; Financial Statements and Exhibits
    • 2026-07-16 10-Q Quarterly Report
    • 2026-07-16 S-8 Employee Benefit Plan Registration
    • 2026-06-11 8-K Officer/Director Change; Financial Statements and Exhibits
    • 2026-05-07 8-K Officer/Director Change; Shareholder Vote Results
    • 2026-04-21 8-K Earnings Release; Financial Statements and Exhibits
    • 2026-04-21 10-Q Quarterly Report
    • 2026-01-29 10-K Annual Report
    • 2026-01-22 8-K Earnings Release; Financial Statements and Exhibits
    • 2026-01-15 8-K Officer/Director Change; Financial Statements and Exhibits
    • 2025-10-21 10-Q Quarterly Report