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GE Reports Q2 Results: Strong Quarter With Order, Revenue, And Profit Growth, Positive Cash; Spins On Track

Stephane Fitch
July 26, 2022

Reporting GE’s second-quarter results, Chairman and CEO of GE and CEO of GE Aerospace Larry Culp said, “The GE team delivered a strong quarter, with growth in orders, revenue, and profit, as well as positive free cash flow. Aerospace was a key driver, and services remained a bright spot of performance. While this remains the toughest operating environment I’ve seen, I am proud of how the GE team is taking action to manage continued pressures.”

Culp noted that orders grew 4% organically year over year, driven by the 26% orders growth in GE’s Aerospace business.

Revenue was up 5% organically*, growing in three of the company’s four segments. Aerospace was up double digits as the market recovery continued, and HealthCare and Power were up mid-single digits. Those gains were partially offset by Renewable Energy, down double digits, reflecting lower U.S. volume resulting from the PTC expiration, as well as the business’s international selectivity strategy.

GE’s adjusted profit margin expanded by 380 basis points organically*. The improvement was “driven largely by higher services growth and focus on pricing, with Aerospace and Power a source of strength,” Culp said. “HealthCare is stabilizing but still faces supply-chain pressures, and Renewables remains challenged.”

Adjusted EPS* was up significantly, driven largely by Aerospace.

Free cash flow* was $200 million, up slightly from a year ago, said Culp, “due to better adjusted earnings. This was offset by higher working capital tied to inventory build as we prepare for the second-half ramp, as well as supply chain challenges.”

Overall, this was a strong quarter for GE, with orders, revenue, profit, and cash all growing.

Notwithstanding these results and progress, Culp shared that “much is still uncertain about the external pressures companies are facing at this moment.”

He said that GE continues to trend toward the low end of our 2022 outlook on all metrics except cash. Working capital will be pressured as we protect customers from the impact of supply-chain challenges as well as timing of Renewable Energy-related orders, which together are likely to push out approximately $1 billion of free cash flow into the future. So a timing dynamic is at play.

Turning to 2023, Culp shared that we are “just starting our annual strategy and budget planning cycle for 2023. We still expect to deliver significant year-over-year improvement in both profit and cash, but below our prior view. With the world evolving so quickly, we have to see how the next six months unfold.” GE expects to provide its 2023 outlook in the usual timeframe at its fourth-quarter earnings. 

Culp credited company-wide efforts to embrace lean management for GE’s solid performance, despite macrodynamics. “The actions we’re taking to improve delivery, price, and cost performance are building meaningfully stronger businesses. And our planned spins are on track,” he said.

Culp cited examples from across GE’s businesses. GE Aerospace is seeing robust customer demand but facing supply-chain challenges that are making it difficult to deliver engines on time. The business is taking action. “We’re partnering with our suppliers, holding kaizens at points of impact in their shops to help them reduce set-up time, eliminate constraints, optimize transportation, and improve overall flow to us,” he said. This work is leading to increased supplier throughput, and there are overall signs of improvement, with engine output up sequentially.

At GE HealthCare, which is also facing supply-chain challenges, Culp noted that when COVID-19 forced a factory shutdown in its Precision Diagnostics (PDx) business in Shanghai, “our PDx team took fast action, and we were able to operate at full capacity within 10 weeks.” In the interim, the Cork, Ireland, PDx team leveraged lean to increase capacity by about five million doses annually. 

Within GE’s portfolio of energy businesses, which together will be branded GE Vernova, Culp said Renewable Energy is leveraging the “Power playbook that has delivered improved profitability and increased cash over the past three years” and is expected “to return to profitable growth over time.” Combined with Power’s progress and enhanced profitability and cash, “we’re excited about the planned future for GE Vernova,” he said.

On Track With Plans To Launch Three Industry Leaders

Culp said GE’s plans to create three companies with leading positions in aerospace, healthcare, and energy are on track. Earlier this month, GE unveiled the new branding of its three planned future public companies: GE Aerospace, GE HealthCare, and GE Vernova. And GE HealthCare achieved several key milestones on its planned spin, which will go first in early 2023. GE HealthCare submitted its request for private letter ruling to the IRS and plans to file its confidential Form 10 shortly. GE HealthCare also completed its comprehensive consultation with its European Works Council. GE HealthCare will trade on the Nasdaq under the GEHC ticker.

“Looking ahead, the story is simple,” said Culp. “We have leading, innovative franchises poised to accelerate in critical growth sectors the world needs. And our solid financial and operational foundation keeps us on track with our plan to launch three companies, each with greater agility, more focus, and future growth opportunities. I’m excited about what’s ahead and confident GE is positioned to create value.”

*Non-GAAP Financial Measure. The reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable GAAP financial measures can be found within GE’s second-quarter 2022 earnings materials posted to

Image credit: Boeing