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GENERAL ELECTRIC CO 8-K Report, Financial Results (Jan 23, 2024)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed January 23, 2024
Period End
January 23, 2024
Security
GE
In the record · 2016–202610-K1110-Q348-K179

GE filed 11 annual reports (10-K), 34 quarterly reports (10-Q) and 179 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Feb ’19Feb ’19
  2. Auditor change8-K · Feb ’21Feb ’21
  3. Deal closed8-K · Jan ’23Jan ’23
  4. Leadership change8-K · Sep ’26Sep ’26

01—Abstract

Summary

Summary of the 8-K filed January 23, 2024. Cited figures are marked; the original filing is the authoritative source.

General Electric reported fourth-quarter and full-year 2023 results on January 23, 2024, capping a year of strong operational momentum ahead of its planned separation into two public companies: GE Aerospace (the existing business, which keeps the GE name) and GE Vernova (energy).

For Q4 2023, total GAAP revenues rose 15% to $19.4Ba, GAAP profit margin expanded 90 bps to 10.3%, and GAAP continuing EPS was $1.44, down 6% year over year, largely because of a much smaller contribution from other income. Adjusted EPS of $1.03 rose 56%, and free cash flow of $3.0B was down $0.4B. For full-year 2023, GAAP continuing EPS swung to $7.98 from $(1.00), GAAP revenue grew 17% to $68.0B, and free cash flow reached $5.2B, up 68%.

Much of the GAAP earnings improvement reflects gains of about $5.8Bb on retained and sold equity stakes, notably AerCap, Baker Hughes and GE HealthCare, so adjusted EPS of $2.81 is the better gauge of operating earnings. Segment performance was mixed but improving. GE Aerospace grew full-year revenue 22% to $31.8B with segment margin up 90 bps to 19.2%, supported by services (about 70% of revenue).

Renewable Energy's loss narrowed sharply, with segment margin improving 780 bps to (9.5)%, though it still generated negative free cash flow of $(1.5)B. Power grew revenue 9% and expanded margin to 8.2%. Liquidity and capital returns were active: GE monetized about $9Bc of stakes in 2023, redeemed $5.8B of preferred stock, and repurchased $1.1B of common shares.

Separation costs were $1.0Bd for the year and are expected to continue as the spin-off approaches. For 2024, management guided Q1 adjusted EPS to $0.60 to $0.65 and expects GE Aerospace operating profit of $6.0B to $6.5B with free cash flow above $5B.

GE Vernova guided to $34B to $35B of revenue and FCF of $0.7B to $1.1B. Investors should weigh the strong services-driven aerospace story against the still-unprofitable wind business and the execution risk and one-time costs tied to the two spin-offs, both targeted for early April 2024.

02—Key points

Key Highlights

  1. FY2023 GAAP continuing EPS of $7.98 versus $(1.00) in 2022, but this was inflated by roughly $5.8B of pre-tax gains on retained and sold equity stakes; adjusted EPS was $2.81, up from $0.77.
  2. FY2023 total revenue grew 17% to $67.95B, and free cash flow rose 68% to $5.15B, with GE Aerospace contributing $5.7B of FCF.
  3. GE Aerospace revenue rose 22% to $31.8B for the year, with segment margin expanding to 19.2%; orders reached $38.1B, up 22%.
  4. Renewable Energy segment losses narrowed to $(1.4)B (margin (9.5)%) from $(2.2)B, but the segment still burned $(1.5)B of free cash flow; Offshore Wind remains a drag.
  5. 2024 guidance: Q1 adjusted EPS of $0.60–$0.65; GE Aerospace operating profit of $6.0–$6.5B and FCF above $5B; GE Vernova revenue of $34–$35B and FCF of $0.7–$1.1B.
  6. Capital allocation: about $9B of stake monetizations in 2023, $5.8B of preferred stock redeemed, and $1.1B of buybacks; $1.0B of separation costs incurred in 2023.
  7. Spin-off milestones: GE Vernova named its board and filed a confidential Form 10; both companies plan to launch as independent public companies in early April 2024, with investor days on March 6 and 7.

03—Questions

Frequently Asked Questions

  1. Why do GAAP and adjusted EPS differ so much for 2023?

    GAAP continuing EPS of $7.98 includes about $5.8B of pre-tax gains from selling or marking to market equity stakes (including AerCap, Baker Hughes and GE HealthCare shares), along with non-operating pension income of about $1.6B. Adjusted EPS of $2.81 strips out these items as well as restructuring and separation costs, and is closer to a measure of recurring operating earnings.

  2. How is GE Aerospace performing relative to GE Vernova?

    GE Aerospace is the stronger performer, with 2023 revenue up 22%, segment margin of 19.2%, and FCF of $5.7B, driven by services at about 70% of revenue. GE Vernova is in turnaround: Power is profitable at an 8.2% margin, but Renewable Energy still posted a $(1.4)B segment loss and negative FCF, so its 2024 FCF guidance of $0.7–$1.1B depends on continued wind improvement.

  3. What should investors expect from the spin-off timing and costs?

    The spin-off is targeted for early April 2024, with investor days on March 6 and 7 and quarterly calls from April onward. GE incurred $1.0B of separation costs in 2023 ($0.3B in Q4), and separation cash spending reduced 2023 FCF by about $1.1B, so one-time costs and standalone cost structures will weigh on near-term results. 2024 guidance reflects both companies operating independently.

  4. Is GE's cash generation improving?

    Yes. Full-year 2023 CFOA was $5.6B, up $1.5B, and FCF was $5.2B, up $2.1B. Q4 FCF was $3.0B, down $0.4B year over year, so the pace slowed at year-end. Management expects Q1 2024 FCF to track net income growth.

  5. What does the 2024 guidance imply for earnings?

    Management guided Q1 2024 adjusted EPS to $0.60–$0.65, with high-single-digit revenue growth. For the full year, GE Aerospace expects low-double-digit or better adjusted revenue growth and operating profit of $6.0–$6.5B. Because the guidance is split across two standalone companies and excludes uncertain gains and restructuring charges, reported GAAP results could differ materially.

04—Continue

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