On Grid, the one point I’d make is, although we aren’t going to expect as much in large HVDC orders to the extent we had with tenant in 2023. The reality is, even if you back out the HVDC orders in Grid, our second largest renewables business, our orders in Grid grew by over 20% in 2023. Power transformers as an example, a business we don’t talk about as much grew orders by 40%. And we expect to continue to see that strength. So there may be less headline orders of the magnitude of SunZia or the tenant HVDC projects. But there’s a lot of healthy demand across renewables that we expect to continue into 2024 that contributes towards our free cash generation continue to be greater than 100%. And that’s significant free cash flow growth that we just talked about.
Operator: Our next question will come from the line of Sheila Kahyaoglu with Jefferies.
Sheila Kahyaoglu: Good morning, guys. Thank you. Hey, Larry, this one’s for you. Maybe if you could just offer your perspective on the quality lapses we’ve seen across the industry? How does it change your approach in regards to ensuring the integrity of your own supply chains as the industry grapples with the LEAP challenges, obviously, but you also mentioned initial GE9X production in 2024? How does that flow into your assumptions on free cash flow for things like inventory build?
Larry Culp: Sheila, there’s a lot there. I think from a, let’s take safety first. I’m strongly of the view that the industry not to speak for the industry. But having been close to this business for almost two years. Everybody understands the fallen responsibility we have the world over, I think from a GE Aerospace perspective is you and I’ve talked the operating framework, the lean transformation that’s been underway here is very much rooted in an SQDC approach to safety, first and foremost, before quality before delivery before cost. And we not only talk that way, we work hard to make sure we operate that way day in and day out. Fortunately, at GE Aerospace, we have a long history of being hyper focused on safety. If you go back, for example, to I think 2013, our safety management system was really the first of its kind, we were the first OEM to implement such a scheme well before the FA required the industry to do so.
And we have been building on that. But that approach never assumes perfection, right? So we layer in all sorts of checks and audits, process capabilities to make sure that we’re doing all that we possibly can to deliver safety, to deliver quality over time. And that applies in the commercial realm and applies on the defense side ,legacy, platforms, new platforms like LEAP, and 9X. And I’d also say that when we talk about our leadership behaviors of humility and transparency and focus, that really helps undergird all of that work, because if we have an opportunity to improve if we miss something, we want folks to come forward, share that with us. So we get after it get to the root cause and lay in corrective action. So that’s really the general approach from 9X perspective.
We do know that will be a pressure on us in 2024. We’re assuming EIS May of 25 will begin to ship engines in the back half of ‘24. It’s really the beginning of the lifecycle for that platform. We’re thrilled to be underwing on the 777X. It’s an exciting platform. But it will be a financial headwind for us for the foreseeable future as we ramp not only the volumes, but obviously improve the overall cost structure of that business with an eye toward building the installed base and the service annuities that will come over time.
Rahul Ghai: Sheila just to add to that, on the free cash flow, part of your question ,we’ve, 9X has been a headwind on free cash flow, even in 2023, as we started bringing in inventory to start shipping this year, as Larry said, towards the back half of this year, so it will continue to impact our free cash flow negatively, to some extent, but it’s not a material driver overall, as you’ve seen greater than $5 billion of free cash flow for 2024, including absorption of the corporate pension and the interest expense. So that you saw, so still feel pretty good about the free cash flow for 2024. And the 9X is not a material driver of the free cash flow for the year.
Operator: Our next question will come from the line of Andrew Obin with Bank of America.
Andrew Obin: Good morning. Just one last time for me for GE but yes, question for Rahul. Maybe, just if you gave us an overview for the company into the first quarter, but maybe just detail by business, for GE into the first quarter a little bit more color. Thanks.
Rahul Ghai: Sure, Andrew. So if you look at the first quarter guide, Aerospace is going to start the year strong revenue up mid-teens with the commercial growth rates in the first quarter kind of in line with what we are projecting for full year. And the margins on a business as usual kind of pre all the standalone expenses, we do expect margins to be flat to slightly up for the first quarter on a year-over-year basis for Aerospace. For Renewables, as Scott said there will be profit improvement during the year. But that improvement will be more backend loaded. As we start converting the higher margin Onshore wind orders that Scott referenced in his prepared remarks. We start shipping those orders that we got in ‘23 into the second half of 2024.
So there’s a bit of lag between order to revenue conversion. And so the renewable improvement will be more backend loaded, the first quarter for renewables will look a lot like the fourth quarter for renewables. So think about roughly in the same zone. And for Power, typical seasonality with low single digit growth, some margin expansion year-over-year in the first quarter. But just one other point I want to make on the first quarter is that given the both Vernova and Aerospace themes are fully staffed up to become standalone public companies, and we are operating with a very, very small corporate staff. And the historic corporate expense will now be fully absorbed in the two businesses, and the corporate expense in first quarter will be effectively zero.
So majority of that expense going to Aerospace and the balance to Vernova. But the way to think about first quarter margins for both companies is just as we think to after absorption of incremental cost. And just given in line with the reported margin guidance that we provided for full year. So that’s the way to think about the first quarter margins.
Operator: Our next question will come from the line of Seth Seifman with JPMorgan.
Seth Seifman: Hey, thanks very much, and good morning. I don’t want to kind of, you’ve just given us the 2024 guidance. So I apologize for jumping ahead here. But when we think about the margin cadence in Aerospace, apples to apples kind of flattish as we go from ‘23 to ‘24. When you think about going to kind of the 20 percentage that you talked about, for ‘25. How do we think about the key drivers as we bridge that?
