General Electric : 4Q 2021 Press release

GE ANNOUNCES FOURTH QUARTER AND FULL YEAR 2021 RESULTS

Delivered strong margin, earnings, and cash performance in 2021

Fourth quarter 2021 (prior three-column reporting format1; variances on a year-over-year basis)

• Total orders $22.1B, (5)%; organic orders (4)%
• Total revenues (GAAP) $20.3B, (3)%; Industrial organic revenues* $19.6B, (3)%
• Industrial profit margin (GAAP) 1.1%, (1,330) bps; adjusted Industrial profit margin* 9.0%, +280 bps org.*
• Continuing EPS (GAAP) $(3.24), unfavorable; adjusted EPS* $0.92, +$0.34
• GE Industrial CFOA (GAAP) $2.4B, +$0.4B; GE Industrial FCF* $3.8B, $(0.5)B; $3.8B ex disc. factoring*, $(1.9)B

Full year 2021 (prior three-column reporting format1; variances on a year-over-year basis)

• Total orders $79.4B, +10%; organic orders +12%
• Total revenues (GAAP) $74.2B, (2)%; Industrial organic revenues* $70.2B, (2)%
• Industrial profit margin (GAAP) 1.8%, (820) bps; adjusted Industrial profit margin* 6.8%, +390 bps org.*
• Continuing EPS (GAAP) $(3.25), unfavorable; adjusted EPS* $2.12, +$2.07
• GE Industrial CFOA (GAAP) $1.5B, +$2.8B; GE Industrial FCF* $5.1B, +$4.5B; $5.8B ex disc. factoring*, +$1.9B

BOSTON - January 25, 2022 - GE (NYSE:GE) announced its fourth quarter and full year 2021 results.

GE Chairman and CEO H. Lawrence Culp, Jr. said, "2021 was an important year for the GE team, marked by significant strategic, operational, and financial progress. We delivered solid margin, EPS, and free cash flow performance in 2021, exceeding our outlook. Orders for the year were up double digits, supporting faster growth going forward, while supply chain challenges, commercial selectivity, and uncertainty surrounding the U.S. wind production tax credit impacted our top-line."

Culp continued, "We're seeing real momentum and opportunities for sustainable profitable growth from near-term improvements in GE's businesses, especially as Aviation recovers and our end markets strengthen. Our dramatic debt reduction means we can further intensify efforts to strengthen our operations and play offense, setting us up to deliver between $5.5 to $6.5 billion free cash flow in 2022 and more than $7 billion in 2023. As we lay the groundwork to create three independent companies focused on critical global needs, we're encouraged by the support from our customers, employees, and investors. We're confident that our businesses will deliver long-term growth and value."

GE continued to make progress on its transformation:

• Announced plans to form three independent, investment-grade,industry-leading companies focused on the growth sectors of aviation, healthcare, and energy.
• Solidified financial position by completing the GECAS transaction and a $25 billion debt tender in the quarter, reducing gross debt2 by approximately $87 billion over three years. GE has $35 billion of debt, approximately $16 billion of cash, and $13 billion3 in the AerCap equity stake and note and Baker Hughes equity stake.
• Drove innovation and reinvested for growth, delivering technologies that transform lives:
• • Future of Flight:Powered the first passenger flight, on a United Airlines Boeing 737 MAX 8, to use 100% sustainable aviation fuel in one engine. Awarded $1.6 billion contractfor the U.S. Air Force's full F-15EX fleet.
  • Precision Health:Scaled Vscan Air wireless, a pocket-sized handheld ultrasound, to more than 70 countries. Acquired BK Medical, enabling further expansion into surgical and therapy interventions.
  • Energy Transition:Reached financial closeon Dogger Bank C, marking an order for 87 14MW HaliadeTM-X offshore wind turbines. Earned order fromGuangdong Energy Group for the first 9HA.01 gas turbines to run on hydrogen-blended gas in China. GE Digital acquired grid software companyOpus One.

1Based on prior three-column reporting format, which showed Industrial operations separately from financial services operations

2Includes borrowings, after tax pension & principal retiree benefit plan liabilities, operating leases, 50% preferred stock, and factoring 3As of January 21, 2022

*Non-GAAP Financial Measure

Financial Statement Reporting Changes

After completing the GECAS transaction on November 1, GE is transitioning from three-column to one-column financial statement reporting to reflect strategic actions to simplify and strengthen the company. These changes are for all periods presented, and further supplemental materials are available on GE's Investor Relations website.

In the prior three-column format, GE reported financial information for (i) GE on a consolidated basis, (ii) GE's industrial operations, and (iii) Capital, which is now smaller and no longer a separate reporting segment. The new one-column format reports all of GE's remaining businesses on a consolidated basis. Additionally, through this change, GE is revising key performance indicators and non-GAAP financial metrics to provide a clearer view of core operating performance.

Total Company Results

(new one-column reporting format)4

We present both GAAP and non-GAAP measures to provide investors with additional information. We believe that providing these non-GAAP measures along with GAAP measures allows for increased comparability of our ongoing performance from period to period. Please see pages 9 - 19 for explanations of why we use these non-GAAP measures and the reconciliation to the most comparable GAAP financial measures.

	Three months ended December 31		Twelve months ended December 31
Dollars in millions; per-share amounts in dollars, diluted
2021	2020	Year on Year	2021	2020	Year on Year
GAAP Metrics
Cash from Operating Activities (CFOA)	$2,415	$2,901	(17)%	$888	$1,025	(13)%
Continuing EPS	(3.24)	2.05	U	(3.25)	5.46	U
Net EPS	(3.55)	2.20	U	(6.16)	4.63	U
Total Revenues	20,303	21,033	(3)%	74,196	75,833	(2)%
Profit Margin	(17.1)%	12.3 %	(2,940) bps	(5.0)%	7.9 %	(1,290) bps
Non-GAAP Metrics
Free Cash Flow (FCF)-a)	$3,708	$4,392	(16)%	$1,889	$635	F
Adjusted EPS-b)	0.82	0.49	67 %	1.71	(0.07)	F
Organic Revenues	19,586	20,216	(3)%	70,125	71,589	(2)%
Adjusted Profit-c)	1,575	1,232	28 %	4,608	2,246	F
Adjusted Profit Margin-c)	8.1 %	6.1 %	200 bps	6.5 %	3.1 %	340 bps

(a- Includes gross additions to PP&E and internal-use software. Excludes Insurance CFOA, GE Pension Plan funding, CFOA impact from discontinued factoring, CFOA impact from receivables factoring and supply chain finance eliminations and taxes related to business sales

(b- Excludes Insurance, non-operating benefit costs, gains (losses), restructuring & other charges, and debt extinguishment costs

(c- Excludes Insurance, interest and other financial charges, non-operating benefit costs, gains (losses), restructuring & other charges, and debt extinguishment costs, with EFS on net earnings basis

4Basis for financial reporting going forward. Includes remaining Capital within Corporate

* Non-GAAP Financial Measure

2

2021 Performance vs. Outlook

(prior three-column reporting format)1

GE delivered strong financial performance in 2021 and enters 2022 with momentum:

	Investor Outlook	2Q Earnings	3Q Earnings	2021 Actuals
	March 10, 2021	July 27, 2021	October 26, 2021	January 25, 2022
GE Industrial organic revenue*	Low single-digit growth	Low single-digit growth	~Flat	(2)%
Adj. GE Industrial profit margin*	250+ bps expansion	250+ bps expansion	350+ bps expansion	390 bps expansion
Adj. earnings per share*	$1.20-$2.00-a)	$1.20-$2.00-a)	$1.80-$2.10	$2.12
GE Industrial free cash flow*	$2.5-$4.5 billion	$3.5-5.0 billion	$3.75-$4.75 billion	$5.1 billion-b)

(a- EPS outlook given at the time changed from $0.15-$0.25 to $1.20-$2.00 post 1:8 reverse stock split effective close of trading July 30, 2021 (b- $5.8 billion excluding discontinued factoring*

2022 Outlook

(new one-column reporting format)4

GE announced the following total company outlook for full year 2022:

• Organic revenues* to grow in the high-single-digit range
• Adjusted organic profit margin* to expand by 150+ basis points
• Adjusted earnings per share* of $2.80 to $3.50
• Free cash flow* of $5.5 billion to $6.5 billion

GE expects to return to revenue growth in 2022. The company expects Aviation revenue to increase more than 20 percent in 2022, which is dependent on the continued commercial market recovery, as well as low- to mid-single-digit revenue growth in Healthcare, driven by commercial efforts and new product launches. In Renewable Energy, continued operational improvement in Onshore Wind and growth in Offshore Wind will contribute to low-single-digit revenue growth and improved profitability. In Power, continued services strength will drive revenue growth. In 2022, GE is planning for continued inflation challenges, with the most adverse impact expected in Onshore Wind. Better earnings and working capital, especially inventory, along with a lower impact from legacy GE Capital, will enable GE to achieve its free cash flow range in 2022.

GE will hold an Investor Update on Thursday, March 10, 2022, with additional details on its 2022 outlook.

1Based on prior three-column reporting format, which showed Industrial operations separately from financial services operations 4Basis for financial reporting going forward. Includes remaining Capital within Corporate

* Non-GAAP Financial Measure

3

Results by Reporting Segment

(new one-column reporting format)4

The following segment discussions and variance explanations are intended to reflect management's view of the relevant comparisons of financial results.

Aviation

	Three months ended December 31		Twelve months ended December 31
(in millions)	2021	2020	Year on Year	2021	2020	Year on Year
Orders	$7,705	$6,331	22 %	$25,589	$21,590	19 %
Revenues	6,080	5,847	4 %	21,310	22,042	(3)%
Segment Profit/(Loss)	1,218	564	F	2,882	1,229	F
Segment Profit/(Loss) Margin	20.0 %	9.6 %	1,040 bps	13.5 %	5.6 %	790 bps

Orders of $7.7 billion increased 22% reported and organically with both Commercial Engines and Commercial Services up again substantially. Military was down largely due to a difficult prior-year comparison with significant F404 and F414 wins. Revenues of $6.1 billion were up 4% reported and organically* as Commercial Services grew significantly from higher shop visit volume. Commercial Engines and Military were both down, driven by lower unit shipments. Segment margin of 20.0% expanded by 1,040 basis points reported and 1,030 basis points organically*, driven by Commercial Services growth due to higher shop visit volume and Commercial Engines mix.

For the year, revenues of $21.3 billion declined 3% reported and organically* due to fewer Commercial Engine deliveries. Segment margin of 13.5% expanded nearly 800 basis points reported and organically*, driven by a 10% increase in Commercial Services shop visits as well as operational cost reduction. Aviation continues to evaluate and manage the impact of Omicron, and is confident in the business fundamentals.

Healthcare

	Three months ended December 31		Twelve months ended December 31
(in millions)	2021	2020	Year on Year	2021	2020	Year on Year
Orders	$5,303	$4,983	6 %	$19,596	$18,645	5 %
Revenues	4,625	4,823	(4)%	17,725	18,009	(2)%
Segment Profit/(Loss)	762	949	(20)%	2,966	3,060	(3)%
Segment Profit/(Loss) Margin	16.5 %	19.7 %	(320) bps	16.7 %	17.0 %	(30) bps

Orders of $5.3 billion increased 6% reported and 7% organically, and were up 8% versus 4Q'19. Healthcare Systems (HCS) orders increased 8% organically year-over-year and Pharmaceutical Diagnostics (PDx) orders grew 2% organically year-over-year. Revenues of $4.6 billion decreased 4% reported and organically* due to ongoing industry- wide supply shortages. HCS organic revenues* declined 5%, more than offsetting 2% organic growth* in PDx. Segment margin of 16.5% contracted 320 basis points reported and 290 basis points organically* year-over-year, driven by supply chain issues and inflation. Partially offsetting the decline was productivity and higher PDx volume.

For the year, revenues of $17.7 billion decreased 2% reported, but increased 1% organically* despite supply chain impacts. While segment margin of 16.7% contracted 30 basis points reported, it expanded 70 basis points organically* driven by continued operational improvements. Healthcare is well positioned for continued profitable growth targeting 25-75 basis points of margin expansion as GE prepares to stand up the business as an independent company.

4Basis for financial reporting going forward. Includes remaining Capital within Corporate

* Non-GAAP Financial Measure

4

Renewable Energy

	Three months ended December 31		Twelve months ended December 31
(in millions)	2021	2020	Year on Year	2021	2020	Year on Year
Orders	$4,851	$6,292	(23)%	$18,163	$16,328	11 %
Revenues	4,192	4,442	(6)%	15,697	15,666	- %
Segment Profit/(Loss)	(312)	(87)	U	(795)	(715)	(11)%
Segment Profit/(Loss) Margin	(7.4)%	(2.0)%	(540) bps	(5.1)%	(4.6)%	(50) bps

Orders of $4.9 billion decreased 23% reported and 21% organically, driven by production tax credit uncertainty delaying investment in U.S. Onshore Wind equipment. Revenues of $4.2 billion decreased 6% reported and 5% organically* due to lower Onshore Wind equipment deliveries and continued project selectivity at Grid. Offshore Wind also declined driven by project timing. Partially offsetting this was strong services growth. Segment margin of (7.4)% contracted 540 basis points reported and organically*. Onshore Wind margins declined and were negative. At Grid, cost actions were more than offset by continued volume declines and legacy project costs.

For the year, revenues of $15.7 billion were flat reported and down (2)% organically* driven by increased commercial selectivity in Grid and fewer equipment and repower deliveries at Onshore Wind. Partially offsetting this decline was increased revenue at Offshore Wind. Segment margin of (5.1)% contracted 50 basis points reported and 40 basis points organically* driven by lower volume as well as lower margins on new product introductions at Onshore Wind, more than offsetting cost reduction benefits. Long-term, Renewable Energy is firmly positioned to lead the energy transition, building on advanced technologies like the Haliade-X, which GE will begin delivering in 2022.

Power

	Three months ended December 31		Twelve months ended December 31
(in millions)	2021	2020	Year on Year	2021	2020	Year on Year
Orders	$4,306	$5,616	(23)%	$16,412	$15,986	3 %
Revenues	4,661	5,383	(13)%	16,903	17,589	(4)%
Segment Profit/(Loss)	309	306	1 %	726	274	F
Segment Profit/(Loss) Margin	6.6 %	5.7 %	90 bps	4.3 %	1.6 %	270 bps

Orders of $4.3 billion decreased 23% reported and 21% organically with Gas Power declining due to a difficult prior year comparison and customer timing. This was partially offset by Steam growth in equipment and services. Revenues of $4.7 billion decreased 13% reported and 10% organically*. Equipment was down due to fewer unit shipments and continued reduced turnkey scope at Gas Power, as well as Steam Power's continued exit of new build coal. Segment margin of 6.6% expanded 90 basis points reported and 160 basis points organically* with all businesses positive in the quarter. Gas Power expansion was driven by services strength.

For the year, revenues of $16.9 billion decreased 4% reported and organically* due to lower equipment revenues, partially offset by strong services growth. Segment margin of 4.3% expanded 270 basis points reported and 320 basis points organically* driven by Gas Power services mix and productivity. In 2022, there is continued opportunity for margin expansion and improved free cash flow as lean is further embedded and GE exits new build coal.

Other Updates

• GE's run-off insurance operations generated $0.4 billion of net income in the year, up significantly primarily due to strong investment results and favorable claims experience in GE's Long-term care portfolio, partially offset by higher paid claims in its Life portfolio. GE will finalize its annual statutory cash flow test in the first quarter of 2022, and currently expects this will be in line with permitted practice requirements.
• In discontinued operations, GE's run-off Polish BPH mortgage portfolio has a current gross balance of $2.4 billion5. In the fourth quarter, GE recorded charges of approximately $0.2 billion, mainly driven by more adverse results in the ongoing litigation with borrowers. This brings GE's total estimate of losses in connection with this litigation to $0.8 billion.

5Prior to lower of cost or market (LOCOM) adjustment
* Non-GAAP Financial Measure	5