GE releases its 4Q'21, FY'21 Results and '22 Outlook

GE released its fourth quarter and full year 2021 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 the 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 organic
• 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

Key highlights on GE’s financial performance for the 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 organic
• 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

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."

Looking across our businesses, we're seeing momentum and opportunities for sustainable, profitable growth from near-term improvements. At Aviation, stronger results this quarter reflect our underlying business fundamentals and a recovering market while we continue to evaluate and manage the impact of Omicron. At Healthcare, demand remains strong despite ongoing supply chain disruptions and the business is well positioned for profitable growth, now under the leadership of Pete Arduini, who assumed the CEO role on January 1st. At Renewables, the PTC is impacting U.S. onshore wind, while offshore wind continues to see demand growth.  Long term, we see the business as firmly positioned to lead the energy transition, building on advanced technologies like the Haliade-X, which we will begin delivering this year. Power is delivering strong performance driven by operational improvements, especially at Gas Power. Looking ahead, we’re focused on driving margin expansion and improved FCF* as lean becomes further embedded and Steam exits new build coal.

Across all the businesses, our strong performance and operational improvements, enabled by lean and decentralization, allow us to play more offense to drive innovation and capture long-term, profitable growth. We’re doing this through commercial wins and services, new product introductions, and future technology innovation, complemented by inorganic growth, such as our recently announced acquisition of Opus One. A few recent examples include Aviation’s $1.6 billion contract to power the full U.S. Air Force F-15EX fleet, Healthcare’s Vscan Air wireless scaling to more than 70 countries, Renewable Energy’s financial close at Dogger Bank C and Power’s Guangdong Energy Group order for the first 9HA.01 hydrogen-blend gas turbines in China.

As a reminder, following the close of the GECAS transaction, we transitioned from three-column to one-column financial reporting. This change will significantly simplify GE’s reporting going forward and better reflect our increased focus on our Industrial core. We have included our financials above on our prior three-column basis, for comparability purposes to our prior Outlook.  Please see our earnings presentation and press release for more detailed financials on the one-column basis.  Additionally, we have posted supplemental one-column information on our GE Investor Relations website. As a reminder, our 10-K usually follows within a few weeks of reporting 4Q earnings, and I expect similar timing this year.

As we move into 2022, we expect continued momentum as we focus on profitable growth and FCF*. Our outlook for the year (on a one-column basis, not comparable to consensus estimates) includes high-single digit organic revenue growth*, 150+ bps organic margin expansion*, $2.80-$3.50 adjusted EPS*, and $5.5B-$6.5B of FCF*. Based on the significant momentum in our businesses, we remain confident in our ability to deliver >$7B of FCF* in 2023.

Our businesses are well positioned in key growth markets as we prepare to create three independent investment-grade, and industry-leading companies focused on critical global needs – shaping the future of flight, delivering precision health and leading the global energy transition. We’re laying the groundwork, starting with Healthcare, and we are confident that this will enable our businesses to realize their full potential, and deliver long-term growth and value.

We appreciate your continued interest in GE, and please take care.
 
For important information about forward-looking statements, please see here.

*Non-GAAP Financial Measure.
¹Based on prior three-column reporting format, which showed Industrial operations separately from financial services operations
²Basis for financial reporting going forward. Includes remaining Capital within Corporate