10-QPeriod: Q2 FY2021

GENERAL ELECTRIC CO Quarterly Report for Q2 Ended Jun 30, 2021

Filed July 27, 2021For Securities:GE

Summary

General Electric (GE) reported its second-quarter 2021 financial results, showing a significant rebound in revenues and improved profitability compared to the prior year period, largely driven by the performance of its industrial segments. Consolidated revenues increased by 9% to $18.3 billion, with GE Industrial revenues up 9% primarily due to strong performance in Aviation, Healthcare, and Renewable Energy. The company also managed its debt effectively, completing a significant debt tender and planning a reverse stock split. While the COVID-19 pandemic continues to impact operations, particularly in the Aviation segment, GE is focused on executing its strategic priorities, including the ongoing GECAS transaction with AerCap, which is expected to provide substantial cash proceeds. Investors should note the company's focus on deleveraging and strengthening its balance sheet. While earnings per share from continuing operations remained negative, adjusted earnings per share showed improvement, indicating operational progress. The company maintained a strong liquidity position with substantial cash reserves and available credit lines.

Financial Highlights

48 data points
Beta

Revenue

$18.25B

25.4% Gross Margin

Net Income

-$1.13B

-6.2% Net Margin

EPS (Diluted)

$-1.08

Total Assets

$237.56B

Cash & Equivalents

$22.46B

Free Cash Flow

$251.00M

Financial Statements
Beta
Revenue$18.25B
Cost of Revenue$13.62B
Gross Profit$4.63B
R&D Expenses$604.00M
SG&A Expenses$2.86B
Operating Expenses$20.02B
Operating Income-$476.00M
Net Income-$1.13B
EPS (Basic)$-1.08
EPS (Diluted)$-1.08
Shares Outstanding (Basic)1.10B
Shares Outstanding (Diluted)1.10B

Key Highlights

  • 1Consolidated revenues increased 9% year-over-year to $18.3 billion, driven by a 9% increase in GE Industrial revenues.
  • 2GE Industrial organic revenues increased by 7% driven by strong performance across Aviation, Healthcare, and Renewable Energy segments.
  • 3The company completed a $7.3 billion debt tender offer in Q2 2021, reducing overall borrowings.
  • 4GE announced plans for a 1-for-8 reverse stock split, effective August 2, 2021.
  • 5The significant GECAS sale to AerCap is progressing, with GE expecting $23.9 billion in cash and other consideration.
  • 6GE maintained a strong liquidity position with $22.5 billion in cash, cash equivalents, and restricted cash, plus $14.9 billion in available credit lines.
  • 7Profitability improved across most industrial segments, with a notable turnaround in Aviation segment profit.

Frequently Asked Questions

GE's industrial segments showed strong performance. GE Industrial revenues increased by 9% to $17.5 billion, with organic revenues up 7%. Aviation revenues grew 10% driven by commercial services and spare part shipments. Healthcare revenues increased 14%, and Renewable Energy revenues rose 16% due to higher wind turbine sales. Power revenues were up 3% driven by services.

GE is actively managing its debt. In Q2 2021, the company completed a debt tender to repurchase $7.3 billion of debt. GE plans to use proceeds from the GECAS transaction to further reduce debt. The company also announced a 1-for-8 reverse stock split. GE aims to maintain a sustainable long-term credit rating in the Single-A range and a GE Industrial net debt-to-EBITDA ratio of less than 2.5x.

GE announced an agreement to combine its GECAS business with AerCap Holdings N.V. The transaction is subject to regulatory approvals and other closing conditions. GE expects to receive approximately $23.9 billion in cash, 111.5 million shares of AerCap common stock (approximately 46% ownership), and $1 billion in AerCap notes and/or cash upon closing.

The ongoing COVID-19 pandemic continues to impact GE's operations, particularly the Aviation segment, affecting air travel and demand for aircraft engines and services. Supply chain challenges are also noted. The company faces risks related to macroeconomic conditions, foreign currency fluctuations, credit ratings, and potential legal and regulatory proceedings, including those related to past acquisitions and business practices.