Strong performance continues; raises 2021 adjusted EPS* outlook, narrows Industrial free cash flow* range
- Total orders $22.1B, +42%; organic orders +42%
- Total revenues (GAAP) $18.4B, (1)%; Industrial organic revenues* $17.6B, (1)%
- Industrial profit margin (GAAP) of 5.0%, +1,220 bps; adjusted Industrial profit margin* 7.5%, +270 bps
- Continuing EPS (GAAP) of $0.54, +$1.58; adjusted EPS* $0.57, +$0.19
- GE Industrial CFOA (GAAP) $1.7B, +$1.6B; GE Industrial free cash flow* $1.7B, +$1.8B, excluding discontinued factoring programs*
- Updating 2021 outlook for Industrial organic revenue* growth to approximately flat, adjusted Industrial profit margin* expansion to 350+ basis points, adjusted EPS* to $1.80–$2.10, Industrial free cash flow* to $3.75B–$4.75B
BOSTON — October 26, 2021 — GE (NYSE:GE) announced results today for the third quarter ending September 30, 2021.
GE Chairman and CEO H. Lawrence Culp, Jr. said, “The GE team delivered another strong quarter. Orders grew, margins expanded, our overall cash performance was significantly better, and Aviation is building momentum and showing continued signs of recovery. The teams are managing through a challenging operating environment, including global supply chain disruptions and onshore wind market pressure due to the U.S. Production Tax Credit. Against that backdrop, we're raising our 2021 EPS expectations and narrowing our full-year free cash flow outlook."
Culp continued, "Closing the GECAS transaction on November 1 will mark an important milestone in GE’s transformation to a more focused, simpler, stronger high-tech industrial company. Our progress strengthening our balance sheet and operations enables us to drive long-term growth and value in our businesses. With leading positions in our markets, we are serving customers with vital equipment and services that shape the future of flight, advance precision health, and lead the energy transition. We remain on track to deliver high single-digit free cash flow margins over time."
GE continues to make progress in its transformation:
- Solidifying financial position and focusing on industrial core: GE and AerCap obtained all required regulatory clearances for the GECAS transaction and expect to close November 1, subject to other customary closing conditions. GE expects to use the proceeds to further reduce debt, with total reduction since the end of 2018 now expected to reach approximately $75 billion. Following close, the remainder of GE Capital will be reported within Corporate, simplifying the presentation of GE's results and moving from three-column to one-column financial statement reporting.
- Accelerating lean and decentralization: GE's lean transformation continues to scale across the businesses and drive meaningful and sustainable progress in safety, quality, delivery, cost, and cash. The teams are making improvements in both manufacturing and transactional settings, such as 10% faster turnaround time at Aviation's overhaul and component repair shops and 30% average billing cycle time improvement at Steam Power.
- Driving long-term growth and value across our businesses: GE is playing offense through commercial execution, new product introductions, and technology innovation, complemented by inorganic growth:
- Future of Flight: Completed first flight of the CatalystTM engine, the first clean-sheet turboprop design to enter the business and general aviation market in 50 years. Secured an order from Hindustan Aeronautics Limited (HAL) for nearly 100 F404 engines and support services, valued at more than $700 million.
- Precision Health: Will acquire BK Medical for a cash purchase price of $1.45 billion, expanding Healthcare’s ultrasound platform from diagnostics to surgical and therapeutic interventions, as well as patient monitoring. Introduced Edison True Picture Archive and Communication System (TruePACS), an AI-enabled, cloud-based diagnostic imaging and workflow solution for radiologists.
- Energy Transition: Started operating GE’s Haliade-X offshore wind prototype turbine at 14 MW, a first in the industry. Delivered, installed, and commissioned four TM2500 aeroderivative gas turbines to complement renewable power generation in California, helping to enhance reliability and sustainability of the grid.
Please visit our investor website for full information:
Caution Concerning Forward Looking Statements:
This release and certain of our other public communications and SEC filings may contain statements related to future, not past, events. These forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as "expect," "anticipate," "intend," "plan," "believe," "seek," "see," "will," "would," "estimate," "forecast," "target," "preliminary," or "range." Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about the impacts of the COVID-19 pandemic on our business operations, financial results and financial position and on the world economy; our expected financial performance, including cash flows, revenues, organic growth, margins, earnings and earnings per share; macroeconomic and market conditions and volatility; planned and potential business or asset dispositions, including our plan to combine our GE Capital Aviation Services (GECAS) business with AerCap Holdings; our de-leveraging plans, including leverage ratios and targets, the timing and nature of actions to reduce indebtedness and our credit ratings and outlooks; GE's and GE Capital's funding and liquidity; our businesses’ cost structures and plans to reduce costs; restructuring, goodwill impairment or other financial charges; or tax rates.
For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include:
- the continuing severity, magnitude and duration of the COVID-19 pandemic, including impacts of the pandemic, of businesses' and governments' responses to the pandemic and of individual factors such as aviation passenger confidence on our operations and personnel, and on commercial activity and demand across our and our customers' businesses, and on global supply chains;
- the extent to which the COVID-19 pandemic and related impacts, including global supply chain disruptions, will continue to adversely impact our business operations, financial performance, results of operations, financial position, the prices of our securities and the achievement of our strategic objectives;
- our success in executing and completing asset dispositions or other transactions, including our plan to combine our GECAS business with AerCap and our plan to exit our equity ownership position in Baker Hughes, the timing of closing for such transactions, the ability to satisfy closing conditions, and the expected proceeds, consideration and benefits to GE;
- changes in macroeconomic and market conditions and market volatility (including developments and volatility arising from the COVID-19 pandemic), including inflation, interest rates, the value of securities and other financial assets (including our equity ownership position in Baker Hughes and the equity ownership position that we will hold in AerCap after completing our announced plan to combine GECAS with AerCap), oil, natural gas and other commodity prices and exchange rates, and the impact of such changes and volatility on our financial position and businesses;
- our de-leveraging and capital allocation plans, including with respect to actions to reduce our indebtedness, the timing and amount of GE dividends, organic investments, and other priorities;
- further downgrades of our current short- and long-term credit ratings or ratings outlooks, or changes in rating application or methodology, and the related impact on our liquidity, funding profile, costs and competitive position;
- GE's liquidity and the amount and timing of our GE Industrial cash flows and earnings, which may be impacted by customer, supplier, competitive, contractual and other dynamics and conditions;
- GE Capital's capital and liquidity needs, including in connection with GE Capital's run-off insurance operations and discontinued operations such as Bank BPH, the amount and timing of any required capital contributions and any strategic actions that we may pursue; the impact of conditions in the financial and credit markets on GE Capital's ability to sell financial assets; the availability and cost of funding; and GE Capital's exposure to particular counterparties and markets, including through GECAS to the aviation sector and adverse impacts related to COVID-19;
- global economic trends, competition and geopolitical risks, including changes in the rates of investment or economic growth in key markets we serve, or an escalation of sanctions, tariffs or other trade tensions between the U.S. and China or other countries, and related impacts on our businesses' global supply chains and strategies;
- market developments or customer actions that may affect demand and the financial performance of major industries and customers we serve, such as secular, cyclical and competitive pressures in our Power business; pricing, the timing of customer investment and other factors in renewable energy markets; demand for air travel and other dynamics related to the COVID-19 pandemic; conditions in key geographic markets; and other shifts in the competitive landscape for our products and services;
- operational execution by our businesses, including the operations and execution of our Power and Renewable Energy businesses, and the performance of our Aviation business;
- changes in law, regulation or policy that may affect our businesses, such as trade policy and tariffs, regulation and incentives related to climate change (including extension of the U.S. wind Production Tax Credit), and the effects of tax law changes;
- our decisions about investments in new products, services and platforms, and our ability to launch new products in a cost-effective manner;
- our ability to increase margins through implementation of operational changes, restructuring and other cost reduction measures;
- the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks, including the impact of Alstom and other investigative and legal proceedings;
- the impact of actual or potential failures of our products or third-party products with which our products are integrated, and related reputational effects;
- the impact of potential information technology, cybersecurity or data security breaches at GE or third parties; and
- the other factors that are described in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2020 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, as such descriptions may be updated or amended in any future reports we file with the SEC.
These or other uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.
This release includes certain forward-looking projected financial information that is based on current estimates and forecasts, and actual results could differ materially. Refer also to the webcast of our investor conference later this morning for additional discussion of our outlook and uncertainties that could cause our future results to be different than our current expectations.
Our financial services business is operated by GE Capital Global Holdings, LLC (GECGH). In this document, we refer to GECGH and our financial services business as “GE Capital”. We refer to the industrial businesses of the Company as GE Industrial.
GE’s Investor Relations website at www.ge.com/investor and our corporate blog at www.gereports.com, as well as GE’s Facebook page and Twitter accounts, contain a significant amount of information about GE, including financial and other information for investors. GE encourages investors to visit these websites from time to time, as information is updated and new information is posted.
Additional Financial Information
Additional financial information can be found on the Company’s website at: www.ge.com/investor under Events and Reports.
Conference Call and Webcast
GE will discuss its results during its investor conference call today starting at 8:00 a.m. ET. The conference call will be broadcast live via webcast, and the webcast and accompanying slide presentation containing financial information can be accessed by visiting the Events and Reports page on GE’s website at: www.ge.com/investor. An archived version of the webcast will be available on the website after the call.
GE (NYSE:GE) rises to the challenge of building a world that works. For more than 125 years, GE has invented the future of industry, and today the company’s dedicated team, leading technology, and global reach and capabilities help the world work more efficiently, reliably, and safely. GE’s people are diverse and dedicated, operating with the highest level of integrity and focus to fulfill GE’s mission and deliver for its customers. www.ge.com
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