GE Aerospace
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals.
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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 orders and services and growth in our 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.
Global material availability and supplier delivery performance continue to cause disruptions and have impacted our production and delivery of equipment and services to our customers. We are investing in our manufacturing facilities, overhaul facilities and our supply chain to increase production and strengthen yield in order to improve delivery to our customers. We continue to partner with our suppliers to improve material input, and work with our customers to calibrate future production rates. 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 and inflation will continue, and we are continuing to take action to mitigate the impacts. However, through FLIGHT DECK and the engagement with our suppliers, 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.
As we operate in a highly dynamic tariff environment, we are focused on continuing to deliver 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). The ruling did not address refunds of tariffs paid. As of March 31, 2026, we have not recorded a benefit for potential refunds of IEEPA tariffs paid. 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 commercial aerospace industry, including lower utilization and increased prices and lower availability of fuel, 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. The conflict did not result in a material impact on our operations in the three months ended March 31, 2026.
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.
4 2026 1Q FORM 10-Q
CONSOLIDATED RESULTS
| REVENUE | Three months ended March 31 | |||||||||||||||
| 2026 | 2025 | |||||||||||||||
| Equipment revenue | $ | 3,268 | $ | 2,653 | ||||||||||||
| Services revenue | 8,346 | 6,347 | ||||||||||||||
| Insurance revenue | 778 | 934 | ||||||||||||||
| Total revenue | $ | 12,392 | $ | 9,935 | ||||||||||||
For the three months ended March 31, 2026, total revenue increased $2.5 billion, or 25%, compared to the three months ended March 31, 2025. Equipment revenue increased, driven by increased engine deliveries and price. Services revenue increased, primarily due to increased internal shop visit volume and workscopes and higher spare parts volume.
| NET INCOME (LOSS) AND EARNINGS (LOSS) PER SHARE (EPS) | Three months ended March 31 | |||||||||||||||
(Per-share in dollars and diluted) | 2026 | 2025 | ||||||||||||||
| Net income (loss) from continuing operations attributable to common shareholders | $ | 1,930 | $ | 1,967 | ||||||||||||
| Continuing EPS | $ | 1.83 | $ | 1.83 | ||||||||||||
For the three months ended March 31, 2026, net income from continuing operations was flat compared to the three months ended March 31, 2025, driven by an increase in segment profit of $0.5 billion, partially offset by a decrease in gains (losses) on retained and sold ownership interests and other equity securities of $0.3 billion, an increase in Adjusted Corporate & Other operating costs* of $0.1 billion and a decrease in insurance profit (loss) of $0.1 billion. Adjusted net income* was $2.0 billion, an increase of $0.4 billion, due to an increase in segment profit of $0.5 billion, partially offset by an increase in Adjusted Corporate & Other operating costs* of $0.1 billion.
Profit of $2.2 billion was flat compared to the three months ended March 31, 2025. Profit margin was 17.7%, a decrease of 490 basis points. Operating profit* was $2.5 billion, an increase of $0.4 billion. Operating profit margin* was 21.8%, a decrease of 200 basis points. Adjusted EPS* was $1.86, an increase of 25%.
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.
| RPO | March 31, 2026 | December 31, 2025 | ||||||||
| Equipment | $ | 31,390 | $ | 27,534 | ||||||
| Services | 179,909 | 163,029 | ||||||||
| Total RPO | $ | 211,299 | $ | 190,564 | ||||||
As of March 31, 2026, RPO increased $20.7 billion, or 11%, from December 31, 2025, primarily at CES, as a result of contract modifications and engines contracted under long-term service agreements that have now been put into service, and at DPT, driven by Defense & Systems equipment orders outpacing revenue recognized.
SEGMENT OPERATIONS
COMMERCIAL ENGINES & SERVICES. In the first quarter of 2026, demand for commercial air travel grew with departures up 1.7%, with Middle East departures decreasing in March. We are in frequent communication with our airline, airframe and maintenance, overhaul and repair (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 quarter, we announced significant new deals with several major customers. United Airlines has selected more than 300 GEnx engines to power their new Boeing 787 Dreamliners. American Airlines announced an agreement that their future deliveries of Airbus A321neo aircraft will continue to be powered by the CFM LEAP-1A engine. Delta has selected GEnx engines to power 30 new Boeing 787-10s with options for 30 more aircraft. Ryanair signed the Memorandum of Understanding (MoU) for a long-term material services agreement to support Ryanair’s entire fleet of about 2,000 CFM56 and LEAP engines powering its Boeing 737 aircraft.
Total engineering investments, both company and partner-funded, increased compared to prior year. In the first quarter, together with the Civil Aviation Authority of Singapore and Airbus, we established the world’s first airport testbed for RISE technologies, focused on Open Fan. Internal shop visit revenue grew in the first quarter and total engine deliveries and LEAP engine deliveries increased primarily due to improved material supply. 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.
*Non-GAAP Financial Measure
2026 1Q FORM 10-Q 5
| Sales in units, except where noted | Three months ended March 31 | |||||||||||||||
| 2026 | 2025 | |||||||||||||||
| Commercial Engines | 640 | 426 | ||||||||||||||
| LEAP Engines(a) | 520 | 319 | ||||||||||||||
| Internal shop visit revenue growth % | 35 | % | 11 | % | ||||||||||||
| (a) LEAP engines, which are in a significant production ramp, are a subset of Commercial Engines. | ||||||||||||||||
| SEGMENT REVENUE AND PROFIT | Three months ended March 31 | |||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||||
| Equipment | $ | 2,102 | $ | 1,749 | ||||||||||||||||||||||||
| Services | 6,817 | 4,915 | ||||||||||||||||||||||||||
| Total segment revenue | $ | 8,920 | $ | 6,663 | ||||||||||||||||||||||||
| Segment profit | $ | 2,356 | $ | 1,910 | ||||||||||||||||||||||||
| Segment profit margin | 26.4 | % | 28.7 | % | ||||||||||||||||||||||||
For the three months ended March 31, 2026, revenue was up $2.3 billion, or 34%, and profit was up $0.4 billion, or 23%, compared to the three months ended March 31, 2025.
Revenue increased due to internal shop visit volume and workscopes, increased spare parts volume, increased install engine deliveries and pricing.
Profit increased primarily due to internal shop visit volume and workscopes, 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 quarter of 2026, we recorded an unfavorable change in estimated profitability on long-term service agreements of less than $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 and higher growth investment.
| RPO | March 31, 2026 | December 31, 2025 | ||||||||
| Equipment | $ | 9,679 | $ | 9,773 | ||||||
| Services | 171,376 | 154,712 | ||||||||
| Total RPO | $ | 181,055 | $ | 164,485 | ||||||
As of March 31, 2026, RPO increased $16.6 billion, or 10%, from December 31, 2025, as a result of contract modifications and engines contracted under long-term service agreements that have now been put into service.
DEFENSE & PROPULSION TECHNOLOGIES. Our results in the first 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.
In the first quarter of 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. GE Aerospace also announced a contract award from Turkish Aerospace Industries (TAI) to continue integrating the GE Aerospace's F404 engine into Türkiye's jet trainer Hurjet.
| Sales in units | Three months ended March 31 | |||||||||||||||
| 2026 | 2025 | |||||||||||||||
| Defense & Systems engines(a) | 185 | 149 | ||||||||||||||
(a) Includes Defense and Aeroderivative units.
| SEGMENT REVENUE AND PROFIT | Three months ended March 31 | |||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||||
| Defense & Systems (D&S) | $ | 2,090 | $ | 1,826 | ||||||||||||||||||||||||
| Propulsion & Additive Technologies (P&AT) | 1,124 | 872 | ||||||||||||||||||||||||||
| Total segment revenue | $ | 3,214 | $ | 2,698 | ||||||||||||||||||||||||
| Equipment | $ | 1,605 | $ | 1,223 | ||||||||||||||||||||||||
| Services | 1,608 | 1,475 | ||||||||||||||||||||||||||
| Total segment revenue | $ | 3,214 | $ | 2,698 | ||||||||||||||||||||||||
| Segment profit | $ | 379 | $ | 325 | ||||||||||||||||||||||||
| Segment profit margin | 11.8 | % | 12.0 | % | ||||||||||||||||||||||||
6 2026 1Q FORM 10-Q
For the three months ended March 31, 2026, revenue was up 19%, and profit was up 17%, compared to the three months ended March 31, 2025.
D&S and P&AT revenue increased primarily due to increased volume including higher engine deliveries in D&S and price.
Profit increased primarily due to volume and price, partially offset by mix, incremental investments to support next-generation products and inflation.
| RPO | March 31, 2026 | December 31, 2025 | ||||||||
| Equipment | $ | 21,711 | $ | 17,762 | ||||||
| Services | 8,316 | 8,094 | ||||||||
| Total RPO | $ | 30,027 | $ | 25,856 | ||||||
As of March 31, 2026, RPO increased $4.2 billion, or 16%, 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.
| REVENUE AND OPERATING PROFIT (COST) | Three months ended March 31 | |||||||||||||||
| 2026 | 2025 | |||||||||||||||
| Insurance revenue (Note 12) | $ | 778 | $ | 934 | ||||||||||||
| Eliminations and other | (519) | (361) | ||||||||||||||
| Corporate & Other revenue | $ | 259 | $ | 573 | ||||||||||||
| Gains (losses) on purchases and sales of business interests | 24 | — | ||||||||||||||
| Gains (losses) on retained and sold ownership interests and other equity securities | (309) | 7 | ||||||||||||||
| Restructuring and other charges (Note 19) | (24) | (1) | ||||||||||||||
| Separation costs (Note 19) | (55) | (51) | ||||||||||||||
| Insurance profit (loss) (Note 12) | 130 | 205 | ||||||||||||||
| U.S. tax equity profit (loss) | (59) | (47) | ||||||||||||||
| Adjusted Corporate & Other operating costs (Non-GAAP) | (206) | (89) | ||||||||||||||
| Corporate & Other operating profit (cost) (GAAP) | $ | (500) | $ | 24 | ||||||||||||
| Less: gains (losses), impairments, Insurance, and restructuring & other | (293) | 113 | ||||||||||||||
| Adjusted Corporate & Other operating costs (Non-GAAP) | $ | (206) | $ | (89) | ||||||||||||
| Corporate & Other profit (costs) | (36) | 25 | ||||||||||||||
| Eliminations | (170) | (114) | ||||||||||||||
| Adjusted Corporate & Other operating costs (Non-GAAP) | $ | (206) | $ | (89) | ||||||||||||
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, March 31, 2026, revenue decreased by $0.3 billion compared to the three months ended March 31, 2025, primarily due to lower run-off insurance operations revenue and higher intercompany eliminations. Corporate & Other operating cost increased by $0.5 billion, primarily due to $0.3 billion of higher losses on retained and sold ownership interests and other equity securities, $0.1 billion of lower run-off insurance operations profit and $0.1 billion of higher Adjusted Corporate & Other operating costs*.
Adjusted Corporate & Other operating costs* increased by $0.1 billion due to higher EHS costs, lower bank interest and 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. See Note 19 for further information on restructuring and separation costs.
*Non-GAAP Financial Measure
2026 1Q FORM 10-Q 7
INTEREST AND OTHER FINANCIAL CHARGES were $0.2 billion for both the three months ended March 31, 2026 and 2025. 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 March 31, 2026, the effective income tax rate was 11.5% compared to 12.6% for the three months ended March 31, 2025. The decrease in the effective tax rate was primarily driven by increased tax benefits on global activities, including the impact of the One Big Beautiful Bill Act (OBBBA), and equity compensation, which were partially offset by a decrease in favorable audit resolutions and benefit from foreign tax credits on the reinsurance transaction that occurred in the prior-year period.
For the three months ended March 31, 2026, the adjusted effective income tax rate* was 14.7% compared to 17.6% for the three months ended March 31, 2025. The decrease in the adjusted effective tax rate was primarily driven by increased tax benefits on global activities, including the impact of the OBBBA, and equity compensation, which were partially offset by a decrease in favorable audit resolutions.
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 and cash equivalents, 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. Total cash, cash equivalents and restricted cash was $11.0 billion at March 31, 2026, of which $8.5 billion was held in the U.S. and $2.5 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 is 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 March 31, 2026 included $0.4 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 $1.0 billion of cash in our discontinued operations held by Bank BPH (see Note 2).
In March 2024, the Company announced that the Board of Directors had authorized the repurchase of up to $15.0 billion of our common stock. Under this program, shares may be repurchased on the open market, via various strategies, including plans complying with rules 10b5-1 and 10b-18 as well as accelerated share repurchases. In the first quarter of 2026, we repurchased 7.2 million shares for $2.2 billion, including repurchases of 4.2 million shares for $1.3 billion using accelerated stock repurchases as a mechanism to achieve planned repurchase volumes within a quarter during closed windows. We have repurchased $14.5 billion in total under this authorization. Repurchases under the program after the first quarter of 2026 will be pursuant to a new authorization for up to $20 billion approved by the Board of Directors in December 2025.
BORROWINGS. Consolidated total borrowings were $20.3 billion and $20.5 billion at March 31, 2026 and December 31, 2025, respectively. The decrease of $0.2 billion is due to maturities and changes in foreign currency exchange rates. The Company also holds a five-year unsecured revolving credit facility, maturing in 2029, in an aggregate committed amount of $3.0 billion, and had zero outstanding at March 31, 2026.
*Non-GAAP Financial Measure
8 2026 1Q FORM 10-Q
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's | S&P | |||||||
| Outlook | Positive | Positive | ||||||
| Short term | P-1 | A-2 | ||||||
| Long term | A2 | A- |
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.
Substantially all of the Company's debt agreements in place at March 31, 2026 do not contain material credit rating covenants. Our unused back-up revolving syndicated credit facility contains a customary net debt-to-EBITDA financial covenant, which we satisfied at March 31, 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 $1.9 billion for the three months ended March 31, 2026, an increase of $0.3 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) primarily driven by CES and an increase in sales discounts and allowances, partially offset by working capital growth and an increase in cash used in All other operating activities.
Cash from sales discounts and allowances was $1.0 billion for the three months ended March 31, 2026, an increase of $0.9 billion compared to 2025, primarily due to increases in allowances on new engine installs and spare parts at CES.
The cash impacts from changes in working capital was $(0.5) billion for the three months ended March 31, 2026, a decrease of $0.6 billion compared to 2025, due to: current receivables of $(0.4) billion, from higher volume partially offset by higher collections, including increased collections from CFM International, primarily in CES; current contract assets, contract liabilities and current deferred income of $(0.3) 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; progress collections of $(0.1) billion, driven by higher liquidations partially offset by higher collections. These decreases were partially offset by inventories, including deferred inventory, of $0.2 billion, driven by lower material purchases. Accounts payable was flat, driven by lower volume offset by lower disbursements.
The components of All other operating activities included:
| Three months ended March 31 | 2026 | 2025 | ||||||||
| Increase (decrease) in employee benefit liabilities | $ | (830) | $ | (550) | ||||||
| Net restructuring and other charges/(cash expenditures) | (11) | (16) | ||||||||
| Other deferred assets | (87) | 12 | ||||||||
| Other | (135) | (192) | ||||||||
| All other operating activities | $ | (1,063) | $ | (746) | ||||||
Cash used for investing activities was $(0.9) billion for the three months ended March 31, 2026, an increase of $0.6 billion compared to 2025, primarily due to: higher net purchases of insurance investment securities of $0.4 billion and higher equity method investments $0.2 billion. Cash used for additions to property, plant and equipment and internal-use software net of dispositions, which are components of free cash flow*, was $0.3 billion and $0.2 billion for the three months ended March 31, 2026 and 2025, respectively.
Cash used for financing activities was $(2.8) billion for the three months ended March 31, 2026, an increase of $0.5 billion compared to 2025, primarily due to: an increase in treasury stock repurchases of $0.4 billion and higher dividends paid to shareholders of $0.1 billion.
*Non-GAAP Financial Measure
2026 1Q FORM 10-Q 9
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
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.
| ADJUSTED REVENUE, OPERATING PROFIT AND PROFIT MARGIN (NON-GAAP) | Three months ended March 31 | ||||||||||||||||||
| 2026 | 2025 | V% | |||||||||||||||||
| Total revenue (GAAP) | $ | 12,392 | $ | 9,935 | 25% | ||||||||||||||
| Less: Insurance revenue (Note 12) | 778 | 934 | |||||||||||||||||
| Adjusted revenue (Non-GAAP) | $ | 11,614 | $ | 9,001 | 29% | ||||||||||||||
| Total costs and expenses (GAAP) | $ | 10,178 | $ | 7,992 | 27% | ||||||||||||||
| Less: Insurance cost and expenses (Note 12) | 648 | 728 | |||||||||||||||||
| Less: U.S. tax equity cost and expenses | 4 | 5 | |||||||||||||||||
| Less: interest and other financial charges(a) | 230 | 210 | |||||||||||||||||
| Less: non-operating benefit cost (income) | (176) | (201) | |||||||||||||||||
| Less: restructuring & other(a) | 24 | 1 | |||||||||||||||||
| Less: separation costs(a) | 55 | 51 | |||||||||||||||||
| Add: noncontrolling interests | 16 | (5) | |||||||||||||||||
| Adjusted costs (Non-GAAP) | $ | 9,410 | $ | 7,192 | 31% | ||||||||||||||
| Other income (loss) (GAAP) | $ | (16) | $ | 302 | U | ||||||||||||||
| Less: U.S. tax equity | (55) | (42) | |||||||||||||||||
| Less: gains (losses) on retained and sold ownership interests and other equity securities(a) | (309) | 7 | |||||||||||||||||
| Less: gains (losses) on purchases and sales of business interests(a) | 24 | — | |||||||||||||||||
| Adjusted other income (loss) (Non-GAAP) | $ | 325 | $ | 337 | (4)% | ||||||||||||||
| Profit (loss) (GAAP) | $ | 2,198 | $ | 2,245 | (2)% | ||||||||||||||
| Profit (loss) margin (GAAP) | 17.7% | 22.6% | (490) bps | ||||||||||||||||
| Operating profit (loss) (Non-GAAP) | $ | 2,528 | $ | 2,146 | 18% | ||||||||||||||
| Operating profit (loss) margin (Non-GAAP) | 21.8% | 23.8% | (200) bps | ||||||||||||||||
| (a) See the Corporate & Other and Other Consolidated Information sections for further information. | |||||||||||||||||||
| We believe that adjusting revenue provides management and investors with a more complete understanding of underlying operating results and trends of established, ongoing operations by excluding the effect of revenue from our run-off insurance operations. We believe that adjusting profit 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. Gains (losses) and restructuring and other items are impacted by the timing and magnitude of gains associated with dispositions, and the timing and magnitude of costs associated with restructuring and other activities. We also use Adjusted revenue* and Operating profit* as performance metrics at the company level for our annual executive incentive plan for 2026. | |||||||||||||||||||
*Non-GAAP Financial Measure
10 2026 1Q FORM 10-Q
| ADJUSTED NET INCOME (LOSS) AND ADJUSTED EFFECTIVE INCOME TAX RATE (NON-GAAP) | Three months ended March 31 | ||||||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||||||
| (Diluted, per-share amounts in dollars) | Income | EPS | Income | EPS | |||||||||||||||||||||||||||||
| Net income (loss) from continuing operations (GAAP) (Note 17) | $ | 1,930 | $ | 1.83 | $ | 1,967 | $ | 1.83 | |||||||||||||||||||||||||
| Insurance net income (loss) (pre-tax) | 133 | 0.13 | 207 | 0.19 | |||||||||||||||||||||||||||||
| Tax effect on Insurance net income (loss)(a) | (28) | (0.03) | 24 | 0.02 | |||||||||||||||||||||||||||||
| Less: Insurance net income (loss) (net of tax) (Note 12) | 104 | 0.10 | 231 | 0.21 | |||||||||||||||||||||||||||||
| U.S. tax equity net income (loss) (pre-tax) | (67) | (0.06) | (55) | (0.05) | |||||||||||||||||||||||||||||
| Tax effect on U.S. tax equity net income (loss) | 75 | 0.07 | 63 | 0.06 | |||||||||||||||||||||||||||||
| Less: U.S. tax equity net income (loss) (net of tax) | 9 | 0.01 | 9 | 0.01 | |||||||||||||||||||||||||||||
| Non-operating benefit (cost) income (pre-tax) (GAAP) | 176 | 0.17 | 201 | 0.19 | |||||||||||||||||||||||||||||
| Tax effect on non-operating benefit (cost) income | (37) | (0.04) | (42) | (0.04) | |||||||||||||||||||||||||||||
| Less: Non-operating benefit (cost) income (net of tax) | 139 | 0.13 | 159 | 0.15 | |||||||||||||||||||||||||||||
| Gains (losses) on purchases and sales of business interests (pre-tax)(b) | 24 | 0.02 | — | — | |||||||||||||||||||||||||||||
| Tax effect on gains (losses) on purchases and sales of business interests | — | — | 3 | — | |||||||||||||||||||||||||||||
| Less: Gains (losses) on purchases and sales of business interests (net of tax) | 24 | 0.02 | 3 | ||||||||||||||||||||||||||||||
Next expected filings
- ~2026-07-20 10-Q expected by 2026-08-06 (in 80 days)
- ~2026-10-20 10-Q expected by 2026-11-06 (in 172 days)
- ~2027-01-28 10-K expected by 2027-02-16 (in 272 days)
- ~2027-04-20 10-Q expected by 2027-05-07 (in 354 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 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
- 2025-10-21 8-K Earnings Release; Financial Statements and Exhibits
- 2025-10-01 8-K Officer/Director Change; Financial Statements and Exhibits
- 2025-07-29 8-K Other Events; Financial Statements and Exhibits
- 2025-07-24 8-K Other Events; Financial Statements and Exhibits
- 2025-07-21 10-Q Quarterly Report
- 2025-07-17 8-K Earnings Release; Financial Statements and Exhibits
- 2025-04-22 10-Q Quarterly Report
- 2025-04-22 8-K Earnings Release; Financial Statements and Exhibits
- 2025-02-03 10-K Annual Report