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Investor Day: GE Reaffirms $5.5–$6.5 Billion Free Cash Flow* Outlook For 2022, Over $7 Billion In 2023

Stephane Fitch
March 10, 2022

At GE’s 2022 Investor Day meeting today, leaders across the company laid out its strategy to drive innovation and profitable growth for 2022 and beyond.

“We’re running GE’s businesses better, creating value for shareholders today and tomorrow,” Chairman and CEO Larry Culp said at GE’s Power and Aviation facilities in Greenville, South Carolina. “Our talented, resilient team has embedded lean deeply across GE, and we have decentralized how we run the company. As a result, we’re poised to deliver sustainable operational and financial improvements, setting us up to generate between $5.5 and $6.5 billion of free cash flow in 2022 and more than $7 billion in 2023. Our stronger balance sheet positions us to deploy capital to invest in growth.”

During the presentation, the team also reaffirmed GE’s full-year outlook, which includes high-single-digit organic revenue growth,* organic margin* expansion of over 150 basis points, adjusted EPS* of $2.80 to $3.50, and between $5.5 and $6.5 billion of free cash flow.*

The Investor Day meeting is the last before the planned spin-off of GE’s Healthcare business. Three independent companies will eventually emerge, focused on the critical global needs of precision health, the energy transition and the future of flight. “As strong, customer-centric businesses,” Culp said, “each will benefit from greater accountability, team alignment and capital allocation flexibility to enable a more sustainable, healthier and connected future.”

 

Field Core Lean

 

Culp and other executives said that GE’s strategy is built on three legs: strong franchises positioned to create value; being run better; and delivering better results for shareholders, today and tomorrow. Lean management, which is centered on the idea of making continuous improvements in all aspects, from safety and manufacturing to inventory, has been core to GE’s transformation and runs through all the businesses.

Among the many presenters, the heads of the three businesses discussed how each is positioned for success. Peter Arduini, president and CEO of GE Healthcare, explained how the planned spin-off will enable it to move quickly and with customer focus, accelerating growth on the top and bottom lines.

GE Healthcare, with its vast global presence, is at the nexus of most care pathways. In the fast-growing field of precision diagnostics, where physicians tailor treatments to patients, the company last year bought BK Medical, an advanced surgical visualization company whose technology helps clinicians see inside a patient’s body in real time during surgery. The Healthcare business has a strong global presence, serving more than 1 billion patients and delivering more than 2 billion procedures annually, with more than 4 million installations in key global markets. The business expects to further focus on lean fundamentals, ultimately better serving customers and improving its operations.

Scott Strazik, CEO of GE’s global energy business portfolio, detailed how the Renewable Energy and Power businesses are leading the energy transition, investing for growth and decarbonization. The Power business is on track for stable earnings and cash generation, with Gas Power’s turnaround, steady demand and growth in services revenue. The Renewable Energy portfolio is positioned for growth, including heavy demand for the Haliade-X offshore wind turbine, with more than 300 units on order. The turbines will be deployed in what is planned to be the world’s largest offshore wind farm, located in the North Sea some 80 miles off the Yorkshire coast. Meanwhile, lean management is leading to real improvements. For instance, at the GE Renewable Energy wind turbine factory in Pensacola, Florida, lean has allowed the plant to reduce the time a turbine spends on the production line by 12%. In Gas Power, the teams are focused on improving the 7F outage experience for North American customers and have reduced outage cycle time by 30% by standardizing crews, optimizing material flow and digitizing frontline field procedures.

In Aviation, CEO John Slattery noted that as the market recovers, the business is seeing strong equipment and services volume from both commercial and military customers. At the same time, the business is investing in a variety of sustainable technologies, from electrification to sustainable fuels, including hydrogen, to enable the future of flight. Last October, for example, NASA and GE Aviation announced a new partnership to mature a megawatt-class hybrid electric engine that could power a single-aisle aircraft. And last fall, United Airlines flew a passenger flight from Chicago to Washington, D.C., on which one of the two LEAP-1B engines built by CFM International — a 50-50 joint company between GE and Safran Aircraft Engines — used only sustainable aviation fuel. Embracing lean undergirds all operations. In just one example, workers at a GE Aviation plant in Batesville, Mississippi, used lean to reduce the number of parts moving through production before inspection from 50 to just a handful.

Summing up at Investor Day, Culp said, “GE is exceptionally well positioned to create value today, all while staying true to our purpose of building a world that works.”
 

For important information about forward-looking statements, please see here.
*Non-GAAP financial measure.

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