GE releases its 4Q’23 & full year 2023 results and 2024 guidance

GE released its fourth quarter and full year 2023 financial results today, in addition to our 2024 guidance. I encourage you to read the full materials and listen to our earnings call at 7:30 AM ET.

Key highlights of GE's financial performance for the 2023 fourth quarter:

• Total orders $21.7B, +8%; organic orders +7%
• Total revenues (GAAP) $19.4B, +15%; adjusted revenues* $18.5B, +13% organically*
• Profit margin (GAAP) of 10.3%, +90 bps; adjusted profit margin* 9.6%, +50 bps organically*
• Continuing EPS (GAAP) of $1.44, $(0.09); adjusted EPS* $1.03, +$0.37
• Cash from Operating Activities (GAAP) $3.2B, $(0.4)B; free cash flow* $3.0B, $(0.4)B
  

Key highlights of GE's financial performance for the 2023 full year:

• Total orders of $79.2B, +25%; organic orders +25%
• Total revenues (GAAP) of $68.0B, +17%; adjusted revenues* $64.6B, +17% organically*
• Profit margin (GAAP) of 15.0%, +1,640 bps; adjusted profit margin* 8.8%, +310 bps organically*
• Continuing EPS (GAAP) of $7.98, +$8.98; adjusted EPS* $2.81, +$2.04
• Cash from Operating Activities (GAAP) of $5.6B, +$1.5B; free cash flow* $5.2B, +$2.1B
  

GE Chairman and CEO and GE Aerospace CEO H. Lawrence Culp, Jr. said, "2024 will be a momentous year as GE Aerospace and GE Vernova plan to launch as independent public companies in early April. Both companies will carry forward GE's commitment to innovation and continuous improvement, with even sharper focus on their vital, growing industries. They serve vast and valuable installed bases with enviable service franchises that keep them close to customers, day in and day out. I am proud of what our teams have accomplished and excited for our next chapter as GE Aerospace invents the future of flight and GE Vernova leads the energy transition."

Culp concluded, "In 2023, our teams delivered an excellent year, more than tripling earnings and generating almost 70 percent more free cash flow. At GE Aerospace, we drove solid revenue and operating profit improvement in the fourth quarter and double-digit revenue, profit, and cash growth for the year, reflecting ongoing strength in Commercial Engines and Services. At GE Vernova, Renewable Energy and Power together delivered meaningfully better results, with double-digit revenue growth in the quarter and positive profit and free cash flow for the year. We expect further revenue, profit, and free cash flow growth for both GE Aerospace and GE Vernova in 2024."

For the fourth quarter, organic orders were up 7%, with services up 24%. Organic revenue* increased 13%, with all segments up double-digits. Profit improved considerably, up 20% organically*, margins expanded 50 bps organically*, and adjusted EPS* was up 56% to $1.03. We generated $3B free cash flow* from strong earnings and positive working capital.

GE Aerospace 4Q organic orders were up 10%, driven by services. Revenue grew 12% with profit up 8%, both organically*. In Commercial, services continued to drive profit while equipment volume increased. For the year, LEAP deliveries grew 38%. We're leveraging lean in partnership with our suppliers to drive sequential improvements going forward.

At GE Vernova, Renewable Energy 4Q organic orders increased 1% driven by Onshore Wind partially offset by the cancellation of a large Offshore Wind order originally booked in 2Q'23. Renewable Energy organic revenue* grew double-digits and Grid & Onshore Wind were both profitable. At Power, organic orders grew 4% from Gas Power services growth. Power organic revenue* rose 12% driven by Gas Power and profit was more than $750M.

We've continued to make meaningful progress on our lean transformation, and we plan to launch GE Aerospace and GE Vernova in early April. In November, we announced two extraordinary Boards, bringing together domain expertise, diverse perspectives, and leadership experience. We've also further simplified and strengthened our balance sheet, completing the exit of our AerCap equity stake with proceeds of ~$2B in 4Q.

Given the close proximity to the spin-off, GE's 2024 guidance reflects GE Vernova and GE Aerospace operating independently, incorporating standalone and other costs that each will incur separately.

• GE Aerospace expects to deliver:
  • Adjusted revenue* growth of low double digits or more, operating profit* of $6.0 billion to $6.5 billion, and free cash flow* of greater than $5 billion.
  • Includes incremental ~&0.6B cost … primarily EH&S, standalone cost & run-off corporate expense
• GE Vernova expects to deliver:
  • Revenue of $34 billion to $35 billion; adjusted EBITDA* margin of mid single digits, toward the higher end of the range; and free cash flow* of $0.7 billion to $1.1 billion
  • Expect $0.8B-$0.9B of D&A, includes incremental ~$0.2B of standalone cost and ~$0.1B of other carve-out costs
    

We want to remind folks that GE Aerospace will report GE's first quarter results in late April after the spin with GE Vernova holding a separate call. As a result, like we did with GE HealthCare, we will focus our comments in late April on Aerospace, leaving GE Vernova commentary to Scott and his team.

This is an exciting time for the company and we thank you for your continued interest in GE. As always, we welcome your feedback.

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 annual report on Form 10-K and our fourth quarter and full year earnings release.

This document contains "forward-looking statements." For details on the uncertainties that may cause our actual future results to be materially different than those expressed in our forward-looking statements, see here.