GE Releases Its 3Q’23 Results

GE released its third-quarter financial results today, and I encourage you to read the full materials and listen to our earnings call at 7:30 a.m. ET.

Key highlights of GE’s financial performance for the third quarter 2023:

• Total orders: $17.9B, +19%; organic orders +18%

• Total revenues (GAAP): $17.3B, +20%; adjusted revenues:* $16.5B, +18% organically*

• Profit margin (GAAP) of 1.7%, +330 bps; adjusted profit margin*: 9.8%, +760 bps organically*

• Continuing EPS (GAAP) of $0.08, +$0.36; adjusted EPS*: $0.82, +$0.99

• Cash from operating activities (GAAP): $1.9B, +$1.1B; free cash flow*: $1.7B, +$1.0B

GE Chairman and CEO and GE Aerospace CEO H. Lawrence Culp Jr. said, “GE delivered another quarter of very strong results with double-digit growth in revenue, profit, and cash. At GE Aerospace, we continue to experience rapid growth driven by robust demand and solid execution, largely in Commercial Engines and Services. At GE Vernova, our Grid and now Onshore Wind businesses were both profitable this quarter and we expect their performance to continue to improve. With our two largest Renewable Energy businesses delivering and Power’s continued strength, we remain highly confident in GE Vernova’s spin-off next year.”

Culp concluded, “Based on our year-to-date results and continued momentum in the fourth quarter, GE is raising full-year 2023 guidance. We’re well-positioned to launch GE Aerospace and GE Vernova as independent companies in the beginning of the second quarter. I’m more excited than ever about our path ahead."

Overall, we delivered very strong 3Q results with double-digit growth in revenue, profit, and free cash flow.* Orders were up +18% organically, with equipment orders up in all segments and services orders growth driven by GE Aerospace. Organic revenue* was also up +18%, with all segments delivering top-line growth. Profitability and cash improvements were significant, with +760 bps of organic margin* expansion, $0.82 of adjusted EPS*, and $1.7B of free cash flow.*

GE Aerospace is growing rapidly. Orders growth was +34%. Organic revenue* grew +25% and profit improved +33% organically* year over year from robust services growth. Defense revenue was up 8%, driven by strength in services and Edison Works. Notably, margins expanded 120 basis points organically,* reaching 20.4% in the quarter.

At GE Vernova, performance is strengthening pre-spin at both Renewable Energy and Power. Grid and now Onshore Wind were both profitable this quarter and we expect their performance to continue to improve. Orders growth at Renewable Energy was led by Grid and North America Onshore Wind. Revenue grew 14% organically* across Grid and North America Onshore and Offshore Wind. Additionally, profit improved both sequentially and year over year. Power delivered solid growth, with seasonally lower outages in 3Q and 200 basis points of margin expansion.

We’re raising 2023 guidance based on year-to-date results and expectations for continued strength in the fourth quarter:

• Organic revenue* growth in the low-teens range, up from low-double-digit (LDD) growth

• Adjusted EPS* of $2.55 to $2.65, up from $2.10 to $2.30

• Free cash flow* (FCF) of $4.7 to $5.1 billion, up from $4.1 to $4.6 billion

In addition, GE is updating its business-specific guidance and now expects:

• GE Aerospace: organic revenue* growth in the low 20% range, up from high teens to 20%; operating profit of approximately $6.0 billion, up from $5.6 to $5.9 billion; and FCF* is trending even better year over year.

• GE Vernova: high-single-digit organic revenue* growth, up from mid-single digits; operating profit of $(0.3) to $(0.1) billion, up from $(0.4) to $(0.1) billion; FCF* remains flat to slightly improved.
   
  • Renewable Energy: LDD organic revenue* growth, up from HSD, and maintaining the outlook for significantly better operating profit, and flat-to-improving FCF*.
     
  • Power: Continues to expect low-single-digit organic revenue* growth, operating profit better year-over-year, and lower FCF*.

Our businesses have seen very strong performance year-to-date and we’re well positioned as we approach the launch of GE Aerospace and GE Vernova as independent companies. Shares of GE Vernova will be listed on the New York Stock Exchange under the ticker symbol GEV, and shares of GE Aerospace will continue GE’s listing on the New York Stock Exchange under the ticker symbol GE. We also further simplified and strengthened our balance sheet, redeeming the remainder of our preferred equity and selling a portion of our AerCap shares for approximately $2.7B.

We’ve also made key hires, including GE Vernova’s seasoned CFO, Ken Parks, and we expanded Vic Abate’s leadership role, now CEO of the entire Wind business. At GE Aerospace, we named our heads of  Corporate Affairs, Human Resources, Legal, and Treasury, with experienced leaders from within and outside GE.

I personally couldn’t be more excited about what’s ahead.

Thank you for your continued interest in GE.

Best,

Steve & team

*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 from those expressed in our forward-looking statements, see here.