10-QPeriod: Q2 FY2022

GENERAL ELECTRIC CO Quarterly Report for Q2 Ended Jun 30, 2022

Filed July 26, 2022For Securities:GE

Summary

General Electric (GE) reported mixed results for the second quarter of 2022, with revenue increasing slightly year-over-year but earnings impacted by significant non-cash charges and ongoing macroeconomic pressures. The company's strategic plan to split into three independent public companies (GE Aerospace, GE HealthCare, and GE Vernova) remains a key focus, with new brand names announced. Aerospace demonstrated strong recovery and revenue growth, driven by increased shop visit volume and spare part shipments, reflecting the ongoing rebound in commercial air traffic. Conversely, Renewable Energy faced significant headwinds, including declining wind turbine deliveries and rising costs, leading to increased segment losses. HealthCare saw modest revenue growth but experienced a decline in segment profit due to inflation and logistics costs. The company is actively managing supply chain disruptions and inflationary pressures across its segments.

Financial Highlights

47 data points
Beta

Revenue

$14.13B

25.5% Gross Margin

Net Income

-$882.00M

-6.2% Net Margin

EPS (Diluted)

$-0.86

Total Assets

$185.54B

Cash & Equivalents

$13.19B

Free Cash Flow

$129.00M

Financial Statements
Beta
Revenue$14.13B
Cost of Revenue$10.53B
Gross Profit$3.60B
R&D Expenses$439.00M
SG&A Expenses$1.82B
Operating Expenses$13.87B
Operating Income-$2.36B
Net Income-$882.00M
EPS (Basic)$-0.86
EPS (Diluted)$-0.86
Shares Outstanding (Basic)1.10B
Shares Outstanding (Diluted)1.10B

Key Highlights

  • 1Total revenues increased by 2% to $18.6 billion, primarily driven by growth in Aerospace and HealthCare, partially offset by declines in Renewable Energy and Power.
  • 2Aerospace segment revenue surged by 27% to $6.1 billion, with segment profit increasing significantly due to higher shop visit volumes and spare parts demand, signaling a strong recovery.
  • 3Renewable Energy segment revenue declined by 23% to $3.1 billion, and segment losses widened to $419 million due to lower wind turbine deliveries, cost inflation, and policy uncertainties.
  • 4HealthCare segment revenue grew 1% to $4.5 billion, but profit margin compressed by 3.6 percentage points to 14.4% due to increased material and logistics costs.
  • 5Free Cash Flow (FCF) improved to $(0.7) billion for the six months ended June 30, 2022, from $(3.2) billion in the prior year period, indicating better cash generation.
  • 6GE reported a net loss attributable to common shareholders of $(857) million, compared to $(1,188) million in the prior year, heavily impacted by a net loss on equity securities.

Frequently Asked Questions

The Aerospace segment showed robust performance, with revenues increasing by 27% to $6.1 billion and segment profit rising substantially. This growth was driven by the recovery in commercial air traffic, increased shop visit volumes, and higher spare part shipments, despite ongoing global supply chain disruptions.

The Renewable Energy segment experienced a significant revenue decline of 23% to $3.1 billion, with segment losses widening to $419 million. This was primarily due to a decrease in wind turbine deliveries, continued cost inflation in materials and logistics, and policy uncertainties related to U.S. tax credits, which are impacting customer investments and project timelines.

GE is actively managing inflation and supply chain challenges across its segments. The company is implementing measures such as adjusting pricing, managing discretionary and structural costs, and prioritizing R&D investments. However, these pressures have delayed the conversion of orders to revenue and negatively impacted profit margins, with potential continued effects in future periods.

GE maintains a strong focus on liquidity, with $13.2 billion in cash, cash equivalents, and restricted cash as of June 30, 2022. Consolidated total borrowings decreased by $2.7 billion to $32.5 billion. The company intends to maintain a disciplined financial policy with a sustainable investment-grade credit rating, supporting its ongoing plan to separate into three independent companies.