01—Abstract
Summary
Summary of the 10-K filed February 11, 2022. Cited figures are marked; the original filing is the authoritative source.
General Electric (GE) filed its 2021 10-K on February 10, 2022, detailing a significant strategic transformation.
The company announced plans to split into three distinct, publicly traded companies focused on Aviation, Healthcare, and a combined Renewable Energy, Power, and Digital business. This separation is intended to allow each entity greater focus, tailored capital allocation, and strategic flexibility. For the year ended December 31, 2021, GE reported total revenues of $74.2 billiona, a decrease from the prior year, primarily driven by declines in its Aviation, Power, and Healthcare segments.
The company also reported a net loss attributable to common shareholders of $(6.7) billion, impacted by significant debt extinguishment costs of $6.5 billionb, offset by a gain on equity securities and higher segment profit. Despite revenue and net loss pressures, the company highlighted improvements in segment profit across Aviation, Power, and Healthcare, and a substantial increase in Free Cash Flow (FCF) to $1.9 billion from $0.6 billion in the prior year.
The Aviation segment, while impacted by the pandemic, showed signs of recovery in market fundamentals, with global departures improving from 2020. The company also completed the significant GECAS business combination with AerCap, receiving substantial cash proceeds, and continued its debt reduction efforts, significantly lowering its total borrowings.
02—Key points
Key Highlights
- GE announced a strategic plan to separate into three independent public companies: Aviation, Healthcare, and a combined Renewable Energy, Power, and Digital business.
- Total revenues for 2021 were $74.2 billion, a decrease of $1.6 billion (2%) from 2020, primarily due to lower revenues in Aviation, Power, and Healthcare.
- Net loss attributable to GE common shareholders was $(6.7) billion, compared to a net earnings of $5.2 billion in 2020. This was significantly impacted by $6.5 billion in debt extinguishment costs.
- Free Cash Flow (FCF) improved to $1.9 billion in 2021, up from $0.6 billion in 2020, driven by improved net income and working capital management, partially offset by discontinued factoring programs.
- The Aviation segment saw a revenue decrease of 3% but a significant segment profit increase of $1.7 billion, driven by increased shop visit volume and operational cost reductions.
- The company completed the GECAS business combination with AerCap on November 1, 2021, receiving $22.6 billion in cash and shares.
- Consolidated total borrowings were reduced by $39.7 billion to $35.2 billion in 2021, primarily due to debt repurchases totaling $32.6 billion.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 11, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $56.47B$75.83B | −25.5% |
| R&D Expenses | $1.68B$2.56B | −34.4% |
| SG&A Expenses | $8.18B$12.63B | −35.2% |
| Operating Expenses | $64.86B$81.26B | −20.2% |
| Operating Income | -$4.82B-$6.11B | +21.1% |
| Net Income | -$6.34B$5.70B | −211.1% |
| EPS (Basic) | $-6.00$4.63 | −229.6% |
| EPS (Diluted) | $-6.00$4.63 | −229.6% |
| Shares Outstanding (Basic) | 1.10B1.09B | +0.4% |
| Shares Outstanding (Diluted) | 1.10B1.09B | +0.3% |
05—Questions
Frequently Asked Questions
What is the primary strategic initiative announced by GE in 2021?
GE announced a strategic plan to separate into three independent, publicly traded companies focused on Aviation, Healthcare, and a combined Renewable Energy, Power, and Digital business. This aims to provide greater focus, tailored capital allocation, and strategic flexibility for each business.
How did GE's financial performance change in 2021 compared to 2020?
GE's total revenues decreased by 2% to $74.2 billion in 2021, mainly due to declines in Aviation, Power, and Healthcare. The company reported a net loss attributable to common shareholders of $(6.7) billion, a significant drop from the net earnings of $5.2 billion in 2020, largely due to substantial debt extinguishment costs and the absence of a prior year gain on the sale of its BioPharma business.
What was the impact of the GECAS transaction and debt management on GE's financial position?
GE completed the combination of its GECAS business with AerCap, receiving $22.6 billion in cash and shares. The company also significantly reduced its total borrowings by $39.7 billion to $35.2 billion in 2021 through debt repurchases totaling $32.6 billion, which is expected to lower future interest expenses.
How did the key business segments perform in 2021?
The Aviation segment faced revenue headwinds but showed improved segment profit due to higher shop visit volumes and cost reductions. Healthcare and Power segments also reported higher segment profit. The Renewable Energy segment continued to incur losses, with segment losses increasing slightly due to factors like lower repower volumes and increased costs for new product introductions.
06—Continue