GE releases its 3Q’22 Results

GE released its third quarter results today, and I encourage you to read the full materials and listen to our earnings call at 8:00 AM ET.

Key highlights on GE’s financial performance for 3Q’22:

• Total orders $20.0B, (9)%; organic orders (7)%

• Total revenues (GAAP) $19.1B, +3%; adjusted revenues* $18.4B, +7% organically*

• Profit margin (GAAP) of (0.3)%, (340) bps; adjusted profit margin* 5.8%, (190) bps organically*

• Continuing EPS (GAAP) of $(0.14), $(0.67); adjusted EPS* $0.35, $(0.18)

• Cash from Operating Activities (GAAP) $1.3B, $(0.1)B; free cash flow* $1.2B, $(0.2)B

• Excluding Renewable Energy higher warranty and related reserves of $0.5B, adjusted profit margin* 8.5%, +80 bps organically*; adjusted EPS* $0.75, +$0.22

GE Chairman and CEO H. Lawrence Culp, Jr. said, "Our team is delivering, with strong Aerospace performance in the third quarter, fueled by the improving commercial backdrop and our progress managing operations and the supply chain environment. We are building broad-based momentum with solid revenue and free cash flow results, as well as services growth in all businesses.”

Culp continued, "Within GE Vernova, Power remains on track to grow this year and we are taking significant actions to reset Renewable Energy. External catalysts, like recent U.S. legislation and the energy crisis in Europe, are increasing investment in new decarbonization technologies, helping position GE Vernova for longer-term growth."

Culp concluded, "Our planned spin-offs remain on track with GE HealthCare ready to go in the first week of January. With leading positions in growing, critical sectors, we are excited about our plans to launch three independent, investment-grade companies set up to create long-term shareholder value.”

We continue to focus on delivering strong performance and driving long-term profitable growth. GE Aerospace led the way, with orders, revenue, and margins all up, and operational improvements supported engines growth and drove an increase in sequential LEAP shipments. GE HealthCare improved sequentially with mid-single-digit orders and double-digit organic revenue* growth, driven by positive demand and backlog conversion. In Renewable Energy, orders and revenue continue to be impacted by lower U.S. Onshore volume from the PTC lapse and heightened new business selectivity. We also incurred higher warranty and related reserves of $0.5B this quarter. Excluding this, total company adjusted EPS* would have been $0.75 and organic margin expansion* would have been +80bps. Power orders were up double digits, while revenue was down due to the uneven timing of HA and Aeroderivative unit shipments.

At GE Vernova, we're setting the business up for long-term profitable growth. Power remains on track to grow this year, as a stable generator of earnings and cash. At Renewable Energy, we're taking action to reset the business. Scott and his team are leveraging the Power playbook to transform fundamentals. At Onshore Wind, we are pivoting to simpler, standard, "workhorse" products to improve product quality and reduce cost. Additionally, we plan to initiate a restructuring program across our GE Vernova businesses, primarily at Renewable Energy, expected to deliver $0.5 billion in annualized savings. Looking at the market, the past few months have been game-changing with recent U.S. legislation and increased visibility in Europe increasing investment in decarbonization technologies like ours. These external catalysts won’t factor into our results immediately, but they improve the demand and economic profile for our businesses remarkably over the long-term.

Importantly, our planned spin-offs remain on track. GE HealthCare is preparing to stand alone, with plans to launch the first week of January. In the past few months, we've achieved several key milestones - naming the Board of Directors, publicly filing the Form 10, and announcing the December 8 GE HealthCare Investor Day. Peter Arduini and his team will launch at scale with a powerful mission, and we're confident that this planned spin will lead to a more focused and agile company, enabling top and bottom-line growth acceleration.

Lean and decentralization are key enablers of our momentum. At the same time, innovation remains at the forefront, strengthening our market leadership positions. GE Aerospace recently completed its final test for the XA100 in partnership with the U.S. Air Force. GE HealthCare continued to deliver precision health innovation with an equity investment in AliveCor, provider of remote patient-captured ECGs, supporting patients' cardiac health, and announcement of a collaboration with AMC Health to enable remote patient monitoring. And Power's H-Class power generation equipment order from Kindle Energy will support Louisiana's ongoing energy transition.

As always, we look forward to keeping you updated on our businesses and progress with the spins.

Thank you for your continued interest in GE.

Best,
Steve

*Non-GAAP Financial Measure. The reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable GAAP financial measures are included in our quarterly report on Form 10-Q and our third quarter earnings release.

This document contains "forward-looking statements." For details on the uncertainties that may cause our actual future results to be materially different than those expressed in our forward-looking statements, see here as well as our quarterly report on Form 10-Q for quarter ended September 30, 2022.