Andrew Obin: Okay. So just a question on onshore wind capacity. How close are you to the maximum capacity in onshore wind? I think in the past, we’ve shipped over 1,000 turbines in the quarter, but there have been capacity reductions. Just trying to understand how close you are to maximum throughput at this point.
Larry Culp: With respect to onshore, Andrew?
Andrew Obin: Yes.
Larry Culp: I would say that when you look at the backlog that we have and with what’s in the sales pipeline, I wouldn’t say that we are sold out, but there is a limit to what we’re going to be able to deliver in ’24 and ’25. And I think our customers are mindful of that. It’s a little bit why we have seen, I think, the level of activity thus far this year with an eye to not only deliveries this year, but ’24 and ’25. I’m always hesitant, Andrew, to talk about capacity, particularly in a business like this as truly being fixed because there’s so much underlying process improvement that can unleash capacity. It’s not strictly a function of, if you will, fixed capital investments that we’ve made. Not that we would be averse to that, but I think we wanted to really pare down the overall cost structure, not strictly an effort focused on manufacturing capacity and really put ourselves in position to grow off a lower cost base, do that in ways that will allow delivery to be an advantage and then gradually, smartly add any fixed capital that we might need.
If you look at the underlying performance that the onshore wind team has delivered here in the third quarter, will deliver in the fourth quarter, I think it’s poised to deliver in ’24 and beyond, you see all that coming home, which we’re pleased to see, of course.
Steven Winoker: Let’s try to get a couple more in, Liz, if we can squeeze in.
Operator: Our next question comes from the line of Joe Ritchie with Goldman Sachs.
Joseph Ritchie: Hi. Good morning, guys.
Larry Culp: Hi, Joe.
Joseph Ritchie: Sorry for the multipart question, but I guess just on the timing of the spin, early 2Q or the beginning of 2Q, so is it right to expect it ahead of 1Q earnings? And then secondly, on the profitability dynamics in both onshore and offshore wind, I’d love to hear any more details around the type of profitability you expect to exit on onshore wind this year. And then also with offshore, it seems like you’re shipping more this year, and so that seems to be a good sign that you’re getting through more of your unprofitable backlog. Any comments around that would be helpful as well.
Larry Culp: Sure. I think to your first question, Joe, the answer is pretty simple. Yes, we should be in a position to bring forward Vernova ahead of our typical earnings announcement timeframe early in the second quarter. I would say with respect to onshore wind, again, a lot of improvement. It will be a profitable second half, not unfortunately a profitable full year. We’ve got a shot at doing that at grid, as I mentioned earlier. But I think as we look at ’24 in onshore, we should be in the low single digit range with obviously the intention as we go through the budget cycle here in November and December to see if we can put together a credible plan to do better. But that’s the way I would think about it just given the back half momentum that we’ll have entering into next year.
Rahul Ghai: And, Joe, just to kind of complete that picture on renewables total, we — as Larry said, we expect at least onshore to be at least kind of low single digit margins. Grid would be kind of mid single digit range. Offshore, as Larry said in his prepared remarks, it kind of — we expect kind of similar levels of losses next year. But if you put all that together, it’s still a pretty significant improvement year-over-year on both profit and then even more so on cash. So that’s what we are expecting. So we won’t be too far off from the framework that Scott laid out at Investor Day for the renewables business.
Larry Culp: And, Joe, just to make sure we’re clear about the shipments, the progress that you’re seeing at Dogger Bank and Vineyard, operationally, I think we’re pleased to see that. I know our customers are to see those initial installations and the initial generation of power. However, right, that progress is what triggers the revenue recognition, which in turn carries the losses. So that’s a little bit of what is operationally encouraging, but financially difficult to work our way through. So just wanted to clarify that point.
Steven Winoker: Liz, let’s make time for one last question.
Operator: The next question comes from the line of Chris Snyder with UBS.
Christopher Snyder: Thank you. I’m assuming you can hear me. I wanted to follow up on aviation margins, which continue to outpace expectations. And so I understand the mix headwinds are coming through maybe a bit more muted as the service business is doing better, but it also sounds like price-cost and just efficiency continues to work in the company’s favor. Can you talk about some of the company-specific actions that have been boosting or helping segment margins outside of this mix? And does the current strength you’re seeing change the way you think about the 20% target for 2025? Thank you.
Rahul Ghai: So, you’re right. There’s lots of really good stuff happening in the company. Price is clearly a positive for us. It was a positive — we were price-cost positive in ’22 in Aerospace. We’ll be price-cost positive in ’23 in Aerospace. Not at the — not only at the overall company level, but even at commercial and at defense. So that — the business is doing really well on kind of getting the price increases and managing the inflation. We’ve made progress on productivity as well. So that’s the other part. Not to the extent that we would have liked, but it is progress. And we are encouraged by even the underlying progress on productivity that is currently sitting in our inventory numbers that will roll through next year.
So there is positive momentum on productivity. So all that is a positive. And as you think about kind of the 20% margin number for 2025, obviously, that’s still — we’re still at the end of 2023. So it’s a couple of years away. But as you think about where we’re going to end the year to 2025, we’re going to end the year, call it, at $6 billion of profit. We said between, call it, between $7.6 billion and $8 billion of profit for 2025. So we still have a 1 billion-ish of profit growth every year between ’24 and ’25. So that’s a mid-teens profit growth, which is pretty good. And the benefits of volume, price, productivity will be partially offset by this LEAP headwind that we spoke about. We start shipping 9x as well. So, 9x, that’s going to create some incremental pressure.
And then we’ll continue to invest in R&D. So that’s the construct to get to the 20% margins.
Steven Winoker: Larry, any final comments?
Larry Culp: Steve, thank you. Just to close, appreciate everybody’s time today. Obviously, very strong performance so far this year. A lot of progress toward the launches of both GE Aerospace and GE Vernova. And frankly, I’ve never been more confident in our company’s future. We appreciate your time today and your investment and support of our company.
Operator: Thank you, ladies and gentlemen. This concludes today’s conference. Thank you for participating. You may now disconnect.
