10-QPeriod: Q1 FY2023

GENERAL ELECTRIC CO Quarterly Report for Q1 Ended Mar 31, 2023

Filed April 25, 2023For Securities:GE

Summary

General Electric (GE) reported a strong first quarter of 2023, marked by a significant increase in total revenues to $14.5 billion, up 14% year-over-year, primarily driven by robust performance in the Aerospace and Power segments. The company's net earnings attributable to GE common shareholders surged to $7.36 billion, a substantial improvement from a net loss of $1.19 billion in the prior year's quarter. This turnaround was largely influenced by a significant gain on equity securities, notably from the GE HealthCare investment, and the non-recurrence of prior year charges. Operationally, GE Aerospace demonstrated strong growth, with revenues up 25% driven by commercial engine and services demand, reflecting a recovery in air travel. While Renewable Energy segment revenues saw a slight decline, segment losses narrowed due to improved performance in Grid Solutions and cost reduction initiatives. The Power segment also experienced revenue growth and improved profitability, supported by Gas Power services. The company continues to navigate inflationary pressures and supply chain challenges by implementing cost productivity measures and pricing adjustments. GE also made progress on its strategic plan to separate into three independent companies, with the spin-off of GE HealthCare completed in January 2023.

Financial Highlights

46 data points
Beta

Revenue

$7.84B

36.2% Gross Margin

Net Income

$7.51B

95.8% Net Margin

EPS (Diluted)

$6.71

Total Assets

$164.47B

Cash & Equivalents

$12.00B

Free Cash Flow

-$538.00M

Financial Statements
Beta
Revenue$7.84B
Cost of Revenue$5.00B
Gross Profit$2.84B
R&D Expenses$431.00M
SG&A Expenses$2.14B
Operating Expenses$14.07B
Operating Income$6.25B
Net Income$7.51B
EPS (Basic)$6.76
EPS (Diluted)$6.71
Shares Outstanding (Basic)1.09B
Shares Outstanding (Diluted)1.10B

Key Highlights

  • 1Total revenues increased by 14% to $14.5 billion, driven by Aerospace and Power segments.
  • 2Net earnings attributable to GE common shareholders were $7.36 billion, a significant turnaround from a loss of $1.19 billion in Q1 2022, heavily influenced by gains on equity securities.
  • 3Aerospace segment revenues grew by 25% to $7.0 billion, with commercial air travel recovery as a key driver.
  • 4Renewable Energy segment experienced a 1% revenue decrease but narrowed its segment losses.
  • 5Power segment revenues increased by 9% to $3.8 billion, with strong performance in Gas Power services.
  • 6Free Cash Flow (FCF) improved significantly to $0.1 billion from $(1.2) billion in Q1 2022.
  • 7The spin-off of GE HealthCare was completed on January 3, 2023, with GE retaining a 19.9% stake.

Frequently Asked Questions

The substantial increase in net earnings was primarily driven by a gain on equity securities, notably from GE's retained stake in GE HealthCare following its spin-off. The non-recurrence of certain charges from the prior year also contributed to the improved earnings.

The Aerospace segment showed strong performance with a 25% revenue increase, fueled by the recovery in commercial air travel. Key drivers for future growth include increasing global commercial departures, strong military demand, and a large installed base of engines under long-term service agreements. The segment is actively managing inflation and supply chain disruptions through lean initiatives and pricing adjustments.

GE has retained approximately 19.9% of GE HealthCare's common stock and intends to exit this stake over time in an orderly manner. The company has also monetized its stake in AerCap, selling shares and expecting to fully exit its position over time.

GE is facing challenges related to inflation, supply chain constraints, and skilled labor shortages, which impact its ability to convert remaining performance obligations (RPO) into revenue and affect profit margins. The company is addressing these issues through cost productivity initiatives, supplier partnerships, and strategic pricing adjustments. Geopolitical uncertainties also present ongoing challenges.