The GE Brief: January 26, 2021

EARNINGS
 
Reporting GE’s results for 2020 and the fourth quarter today, Chairman and CEO Larry Culp told investors that it was hard to think of a tougher year — but that reflecting on the challenges of 2020 also brought to mind “how the world rose to meet them.” GE, he said, “persevered in the face of great uncertainty,” did what it needed to do and, as a result, is “set up well for the year ahead.” GE reported $4.4 billion of industrial free cash flow* for the quarter, half a billion more than in 2019, and $0.6 billion for the year. Culp said the result reflected improving operations, and strong and improving orders at GE’s Power businesses and GE Renewable Energy, as well as some seasonal tailwind. GE ended the year with a backlog of $387 billion, with approximately 80% geared toward services where the company enjoys strong margins.
 
The road ahead: Culp said as the year progressed, GE’s profitability and cash performance steadily improved “despite a still-difficult macro environment.” Business and financial strength were tied to lean management, which GE has been rolling out across the company (see more below), and also GE’s purpose of rising to the challenge of building a world that works. That includes some of the most notable successes of 2020, like regulatory approvals for the GE9X — the world’s most powerful jet engine — and the Haliade-X, the most powerful offshore wind turbine in operation, as well as GE Healthcare’s acquisition of Prismatic Sensors AB. “I am proud of the GE team and their remarkable resilience,” Culp said. “As our multiyear transformation accelerates, we will unlock upside potential with better cash generation, profit and growth.”
 
Learn more here.

BIG IDEAS
 
2020 was a big year for innovation at GE. The company developed and introduced technologies that help address some of the world’s biggest challenges, including the energy transition, climate change and the pandemic. It did so not just with top-notch engineering, but also artificial intelligence, data analytics and other digital technologies. And GE Reports was there every step of the way.

Edison’s descendants: We’ve pulled together a list of stories covering everything from airplane engines to offshore wind turbines. But powerful things don’t always come in big packages: Engineers at GE Research, along with their colleagues at GE Healthcare and the Swedish startup Prismatic Sensors AB, have found a way to vastly expand computed tomography’s already impressive imaging powers.
 
We could go on and on. In fact, we have — read more here.

WINDS OF CHANGE
 
Lean is at the core of GE’s turnaround and the management strategy is also at the center of a plan to completely overhaul how GE Renewable Energy services a continent-wide network of onshore wind turbines in Europe and Asia.
 
Renewable resources: Focused on continuous improvement, “lean gives you the tools, it slows you down and it forces you to step back and say: What exactly is wasting money and resources that I don’t need to spend?” says Bob Karl, who runs global operations for Digital Services at GE Renewable Energy. The company had a good reason to ask: GE Renewable Energy has grown into a global giant over the last 20 years and now has 49,000 onshore turbines in 35 countries. But as recently as last year, it had an oversupply of expensive inventory spread around the world. Starting at two large warehouses in Spain and the Netherlands, Karl and his colleagues set out to untangle the operations by centralizing inventory. At the end of 2020, the plan was working: The team reduced service inventory by tens of millions of dollars last year. And they’re not slowing down.
 
Learn more here.

— QUOTE OF THE DAY —

 
“We’re leading in some of the world’s most important markets — the energy transition, precision health, and the future of flight — and we’re passionate about delivering for our customers and tackling the world’s biggest problems.”
 
— Larry Culp, chairman and CEO of GE

*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 fourth-quarter 2020 earnings materials posted to ge.com/investor.

For important information concerning our forward-looking statements, please click here.

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Quote: GE Reports. Images: GE Renewable Energy, GE Aviation.