GE AEROSPACE GE ANNOUNCES FIRST QUARTER 2023 RESULTS
Double-digit orders and revenue growth with positive free cash flow; raising low end of 2023 guidance
First quarter 2023:
- Total orders $17.6B, +25%; organic orders +26%
- Total revenues (GAAP) $14.5B, +14%; adjusted revenues* $13.7B, +17% organically*
- Profit margin (GAAP) of 44.8%, +5,410 bps; adjusted profit margin* 6.4%, +330 bps organically*
- Continuing EPS (GAAP) of $5.56, +$6.72; adjusted EPS* $0.27, +$0.36
- Cash from Operating Activities (GAAP) $0.2B, +$1.1B; free cash flow* $0.1B, +$1.3B
BOSTON - April 25, 2023 - GE (NYSE:GE) announced results today for the first quarter ending March 31, 2023.
GE Chairman and CEO and GE Aerospace CEO H. Lawrence Culp, Jr. said, "The GE team is off to an encouraging start in 2023, with our results reflecting robust market demand and our progress operating leaner and more focused businesses. In the first quarter, we delivered double-digittop-line growth with all segments up organically and continued strength in services, as well as margin expansion in all segments. And we reported our first positive free cash flow in the first quarter in nearly a decade."
Culp continued, "At GE Aerospace, we are growing rapidly and supporting our customers amidst the pronounced commercial ramp. At GE Vernova, we are seeing continued signs of progress in Renewable Energy while Power is delivering solid growth. Overall, GE is creating significant value today and tomorrow as we prepare to stand up these leading franchises as independent companies sometime in early 2024."
During the quarter, GE continued to take action on its priorities:
- Completed the spin-off of GE HealthCare into an independent publicly traded company, retaining an approximately 19.9% stake of GE HealthCare common stock.
- Named two new members to the GE Board of Directors with deep domain expertise in aerospace and energy, respectively: Darren McDew, retired General, U.S. Air Force, and former Commander of the U.S. Transportation Command, and Jessica Uhl, former Chief Financial Officer of Shell plc.
GE Aerospace
- Delivered double-digit growth in orders, revenue, and operating profit year-over-year driven by commercial momentum and strength in services, as the team improved LEAP output by 53% year-over-year and internal shop visits grew 32%.
- Reachedagreement with Air Indiafor the largest LEAP order to date with 800 engines, as well as 40 GEnx and 20 GE9X engines and related services agreements.
GE Vernova1
- Increased Renewable Energy orders by 94% and revenue* by 5% year-over-year organically led by Grid, as well as improved profit sequentially and year-over-year; and grew revenue* at Power by 11% year-over-year organically.
- Reachedagreements with TenneTto award GE-led consortiums with multi-billion Euro contracts for Grid Solutions' High-Voltage Direct Current offering to support its 2GW programs in the Netherlands and Germany.
* Non-GAAP Financial Measure
- GE's portfolio of energy businesses
Total Company Results
We present both GAAP and non-GAAP financial measures to provide investors with additional information. We believe that providing these non-GAAP financial measures along with GAAP measures allows for increased comparability of our ongoing performance from period to period. Please see pages 5-7 for explanations of why we use these non-GAAP financial measures and the reconciliation to the most comparable GAAP financial measures.
Three months ended March 31 | |||
2023 | 2022 | Year on | |
Dollars in millions; per-share amounts in dollars, diluted | Year | ||
GAAP Metrics | |||
Cash from Operating Activities (CFOA) | $155 | $(924) | F |
Continuing EPS | 5.56 | (1.16) | F |
Net EPS | 6.71 | (1.08) | F |
Total Revenues | 14,486 | 12,675 | 14 % |
Profit Margin | 44.8 % | (9.3)% | 5,410 bps |
Non-GAAP Metrics | |||
Free Cash Flow (FCF)-a) | $102 | $(1,169) | F |
Adjusted EPS-b) | 0.27 | (0.09) | F |
Organic Revenues | 13,929 | 11,919 | 17 % |
Adjusted Profit-c) | 877 | 415 | F |
Adjusted Profit Margin-c) | 6.4 % | 3.5 % | 290 bps |
Adjusted Organic Profit Margin | 6.9 % | 3.6 % | 330 bps |
(a- Includes gross additions to PP&E and internal-use software. Excludes Insurance CFOA, separation cash expenditures, and other items (b- Excludes Insurance, non-operating benefit costs, gains (losses) on equity securities, restructuring & other charges, and other items
(c- Excludes Insurance, interest and other financial charges, non-operating benefit costs, gains (losses) on equity securities, restructuring & other charges, and other items, with EFS on a net earnings basis
In addition, GE:
- Reported GE HealthCare's historical results and certain assets and liabilities included in the spin-off as discontinued operations, in connection with the separation of GE HealthCare.
- Repurchased approximately 3.2 million common shares for $0.3 billion during the first quarter, with $1.7 billion remaining under the GE Board's prior authorization of common share repurchases of up to $3.0 billion. In addition, the company redeemed 3.0 million GE Series D preferred shares for $3.0 billion.
- Completed the monetization of its remaining position in Baker Hughes for $0.2 billion and a portion of its position in AerCap with the sale of $1.8 billion in shares.
- Incurred separation and related tax costs of $0.3 billion in the quarter, primarily related to business separation and employee costs, costs to establish standalone functions and information technology systems, professional fees, and other costs to transition to three standalone companies.
- Allocated certain postretirement benefit plans, effective January 1, 2023. Of the $6.9 billion pre-tax ($5.5 billion post-tax) plan deficit remaining with GE post-separation of GE HealthCare, $1.5 billion ($1.2 billion post-tax) was allocated to the Power and Renewable Energy plans and $5.4 billion ($4.3 billion post-tax) was allocated to the GE Aerospace plans.
- Generated $54 million of net income from its run-off insurance operations in the quarter and completed the annual statutory cash flow test. The company funded $1.8 billion, as expected.
- Implemented the accounting standard for long-duration insurance contracts and converted to first principles models. As of December 31, 2022, the impact of the standard on GE's after-tax equity was negative $2.7 billion. As of March 31, 2023, the impact of a lower discount rate resulted in a $1.1 billion after-tax reduction to equity.
- Recorded charges in discontinued operations of $0.2 billion related to its run-off Polish mortgage portfolio (Bank BPH). GE's total litigation reserves related to this matter at March 31, 2023, were $1.5 billion.
* Non-GAAP Financial Measure
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2023 Guidance
Based on first quarter business performance and market demand, GE is raising the low end of its full-year adjusted EPS* and free cash flow* ranges. The company now expects adjusted EPS* of $1.70 to $2.00 and free cash flow* of $3.6 to $4.2 billion, up from adjusted EPS* of $1.60 to $2.00 and free cash flow* of $3.4 billion to $4.2 billion previously. GE continues to expect high-single-digit revenue growth* for 2023.
* Non-GAAP Financial Measure
3
Results by Reporting Segment
The following segment discussions and variance explanations are intended to reflect management's view of the relevant comparisons of financial results.
GE Aerospace
Three months ended March 31 | |||
(in millions) | 2023 | 2022 | Year on |
Year | |||
Orders | $8,213 | $7,206 | 14 % |
Revenues | 6,981 | 5,603 | 25 % |
Segment Profit/(Loss) | 1,326 | 908 | 46 % |
Segment Profit/(Loss) Margin | 19.0 % | 16.2 % | 280 bps |
Orders of $8.2 billion increased 14% on a reported and organic basis, driven by Commercial Services and Defense. Revenues of $7.0 billion grew 25% on a reported and organic* basis, driven by continued growth in Commercial Services and Commercial Engines, with Defense down slightly. Commercial Services grew with higher internal shop visits and strong external spare part sales. Commercial Engines growth was primarily from significantly higher LEAP deliveries. Segment margin of 19.0% expanded by 280 basis points reported and 240 basis points organically*, driven by higher volume, price and productivity that together more than offset negative engine mix, inflation and continued investment. Overall, GE Aerospace is supporting customers amidst the pronounced ramp, driving continued profit growth and higher cash generation.
Renewable Energy
Part of GE Vernova1
Three months ended March 31 | |||
(in millions) | 2023 | 2022 | Year on |
Year | |||
Orders | $5,352 | $2,792 | 92 % |
Revenues | 2,837 | 2,871 | (1)% |
Segment Profit/(Loss) | (414) | (434) | 5 % |
Segment Profit/(Loss) Margin | (14.6)% | (15.1)% | 50 bps |
Orders of $5.4 billion increased 92% reported and 94% organically driven by higher equipment demand at Grid and Onshore Wind in North America. Revenues of $2.8 billion decreased 1% reported and increased 5% organically* due to higher volume in Grid and Offshore Wind, partially offset by lower Onshore Wind deliveries and repower upgrades, due to the lapse of the U.S. Production Tax Credit (PTC) in 2022. Segment margin of (14.6)% improved by 50 basis points reported and 210 basis points organically*, from cost reduction at Onshore Wind and Grid, price, and favorable Grid volume. Partially offsetting the improvement was negative equipment mix from higher Offshore Wind and lower Onshore Wind units. Renewable Energy is showing continued signs of progress in its multi-year transformation.
Power
Part of GE Vernova1
Three months ended March 31 | |||
(in millions) | 2023 | 2022 | Year on |
Year | |||
Orders | $4,145 | $4,156 | - % |
Revenues | 3,820 | 3,501 | 9 % |
Segment Profit/(Loss) | 75 | 63 | 19 % |
Segment Profit/(Loss) Margin | 2.0 % | 1.8 % | 20 bps |
Orders of $4.1 billion were flat reported and increased 1% organically with higher equipment demand offsetting slightly lower services orders. Revenues of $3.8 billion increased 9% reported and 11% organically* driven by transactional and Aeroderivative service growth at Gas Power. Equipment revenue grew due to higher heavy duty gas turbine shipments. Segment margin of 2.0% expanded 20 basis points reported and 50 basis points organically* driven by higher services volume at Gas Power, favorable price and productivity, partially offset by cost inflation and equipment mix. Overall, Power continues to deliver and is well positioned to drive long-term cash generation.
* Non-GAAP Financial Measure
- GE's portfolio of energy businesses
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GENERAL ELECTRIC COMPANY
Financial Measures That Supplement GAAP
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) revenues, specifically organic revenues by segment; organic revenues, (2) profit, specifically organic profit and profit margin by segment; Adjusted profit and profit margin; Adjusted organic profit and profit margin; Adjusted earnings (loss) and Adjusted earnings (loss) per share (EPS), (3) cash flows, specifically free cash flows (FCF) and, (4) guidance, specifically 2023 Adjusted EPS and 2023 FCF.
The reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable GAAP financial measures follow. Certain columns, rows or percentages within these reconciliations may not add or recalculate due to the use of rounded numbers. Totals and percentages presented are calculated from the underlying numbers in millions.
ORGANIC REVENUES, PROFIT (LOSS) AND PROFIT MARGIN BY SEGMENT (NON-GAAP) | |||||||||||||
(In millions) | Revenues | Segment profit (loss) | Profit margin | ||||||||||
Three months ended March 31 | 2023 | 2022 | V% | 2023 | 2022 | V% | 2023 | 2022 | V bps | ||||
Aerospace (GAAP) | $ 6,981 | $ 5,603 | 25 % | $ | 1,326 | $ | 908 | 46 % | 19.0 % | 16.2 % | 280 bps | ||
Less: acquisitions | - | - | - | - | |||||||||
Less: business dispositions | - | - | - | - | |||||||||
Less: foreign currency effect | (6) | (1) | 30 | 4 | |||||||||
Aerospace organic (Non-GAAP) | $ 6,987 | $ 5,604 | 25 % | $ | 1,295 | $ | 904 | 43 % | 18.5 % 16.1 % | 240 bps | |||
Renewable Energy (GAAP) | $ 2,837 | $ 2,871 | (1)% | $ | (414) | $ | (434) | 5 % | (14.6)% | (15.1)% | 50 bps | ||
Less: acquisitions | - | - | - | - | |||||||||
Less: business dispositions | - | - | - | - | |||||||||
Less: foreign currency effect | (159) | 7 | (22) | - | |||||||||
Renewable Energy organic (Non-GAAP) | $ 2,997 | $ 2,863 | 5 % | $ | (392) | $ | (434) | 10 % | (13.1)% (15.2)% | 210 bps | |||
Power (GAAP) | $ 3,820 | $ 3,501 | 9 % | $ | 75 | $ | 63 | 19 % | 2.0 % | 1.8 % | 20 bps | ||
Less: acquisitions | - | - | - | - | |||||||||
Less: business dispositions | - | - | - | - | |||||||||
Less: foreign currency effect | (67) | (16) | (37) | (20) | |||||||||
Power organic (Non-GAAP) | $ 3,887 | $ 3,517 | 11 % | $ | 112 | $ | 83 | 35 % | 2.9 % | 2.4 % | 50 bps |
We believe these measures provide management and investors with a more complete understanding of underlying operating results and trends of established, ongoing operations by excluding the effect of acquisitions, dispositions and foreign currency, which includes translational and transactional impacts, as these activities can obscure underlying trends.
ORGANIC REVENUES (NON-GAAP) | Three months ended March 31 | ||||
(In millions) | 2023 | 2022 | V% | ||
Total revenues (GAAP) | $ | 14,486 | $ | 12,675 | 14 % |
Less: Insurance revenues | 791 | 764 | |||
Adjusted revenues (Non-GAAP) | $ | 13,695 | $ | 11,910 | 15 % |
Less: acquisitions | - | 1 | |||
Less: business dispositions | - | - | |||
Less: foreign currency effect | (235) | (9) | |||
Organic revenues (Non-GAAP) | $ | 13,929 | $ | 11,919 | 17 % |
We believe these measures provide management and investors with a more complete understanding of underlying operating results and trends of established, ongoing operations by excluding the effect of revenues from our run-off Insurance business, acquisitions, dispositions and foreign currency, which includes translational and transactional impacts, as these activities can obscure underlying trends.
* Non-GAAP Financial Measure
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GE - General Electric Company published this content on 25 April 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 April 2023 10:29:06 UTC.
