01—Abstract
Summary
Summary of the 8-K filed April 23, 2024. Cited figures are marked; the original filing is the authoritative source.
General Electric (operating as GE Aerospace) released first-quarter 2024 results on April 23, 2024, and the filing is notable mainly for the restructuring around the April 2, 2024 spin-off of GE Vernova.
The consolidated figures still include GE Vernova: total orders rose 14% to $20.1Ba, GAAP revenue grew 11% to $16.1B, and GAAP continuing EPS fell to $1.38 from $5.56 a year earlier, largely because the prior-year period included large gains on GE HealthCare-related equity interests. Adjusted EPS rose to $0.82 from $0.27, and free cash flow reached $0.9B versus $0.1B. The standalone GE Aerospace figures are the cleaner read on the go-forward business.
Orders were $11.0Bb (+34%), adjusted revenue $8.1B (+15%), operating profit $1.5B (+24%), and operating margin 19.1% (+140 bps), with free cash flow of $1.7B. Growth was driven by pricing, spare parts volume, and widebody and defense deliveries. Management raised its full-year 2024 adjusted EPS outlook to $3.80–$4.05 and its operating profit outlook to $6.2B–$6.6B, from $6.0B–$6.5B.
Free cash flow guidance of over $5Bc was unchanged. Capital allocation and strategy items included $2.6B of proceeds from monetizing part of the GE HealthCare stake, about 1.1 million shares repurchased for $0.1B under a $3B program, and a planned $15B buyback plus a higher dividend announced at Investor Day. Pre-tax separation costs were $0.4B in the quarter.
The company also set a 2028 operating profit target of $10Bd. Note that the Investor Day items are described in the release rather than in the 8-K body, and the GE Aerospace figures are preliminary, unaudited supplemental information.
02—Key points
Key Highlights
- Standalone GE Aerospace orders rose 34% to $11.0B, with Commercial Engines & Services orders up 34% to $8.3B and Defense & Propulsion Technologies orders up 34% to $3.0B.
- GE Aerospace operating profit grew 24% to $1.5B, and operating margin expanded 140 bps to 19.1%, driven mainly by pricing and services volume.
- Full-year 2024 adjusted EPS guidance was set at $3.80–$4.05, and operating profit guidance was raised to $6.2B–$6.6B from $6.0B–$6.5B.
- Free cash flow for GE Aerospace reached $1.7B in Q1 (vs. $0.8B), and full-year FCF guidance of over $5B was maintained.
- GAAP continuing EPS fell 75% to $1.38, mainly because Q1 2023 included about $5.9B of gains on equity interests, notably GE HealthCare; adjusted EPS rose to $0.82 from $0.27.
- The GE Vernova spin-off was completed April 2, 2024, and the Q1 consolidated results still include GE Vernova, which reports separately on April 25, 2024.
- Capital returns included $2.6B of GE HealthCare share monetization proceeds, and a $15B buyback and dividend increase were announced at Investor Day alongside a $10B operating profit target by 2028.
03—Questions
Frequently Asked Questions
Why did GAAP EPS fall so sharply year over year?
Q1 2023 GAAP continuing EPS of $5.56 included roughly $5.9B of pre-tax gains on retained and sold equity interests, mainly GE HealthCare. Q1 2024 had only $0.6B of such gains, so GAAP EPS dropped to $1.38. Adjusted EPS, which excludes these items, rose to $0.82 from $0.27.
How much of the reported Q1 figures reflects the go-forward GE Aerospace business?
The consolidated figures include GE Vernova, which was spun off on April 2, 2024. The standalone GE Aerospace figures (orders $11.0B, adjusted revenue $8.1B, operating profit $1.5B, FCF $1.7B) are a better guide to the post-spin business. They are presented as preliminary, unaudited supplemental information and may change with final separation adjustments.
Did management change its 2024 outlook?
Yes, management raised the operating profit outlook to $6.2B–$6.6B from $6.0B–$6.5B and set adjusted EPS guidance at $3.80–$4.05. Adjusted revenue growth guidance (low-double-digits or better) and free cash flow guidance (over $5B, over 100% conversion) were unchanged.
What capital allocation actions are relevant to shareholders?
The company received $2.6B from monetizing part of its GE HealthCare stake and repurchased about 1.1M shares for $0.1B under a $3B program in Q1. The Investor Day announcement also included a $15B share buyback authorization and a dividend increase (initiated in April at a 250% increase). Investors should weigh these against $0.4B of separation costs in the quarter.
What are the main risks flagged in the filing?
The filing cites macroeconomic and market volatility, supply chain constraints, aerospace demand and the timing of customer investment, geopolitical risks (including the Russia-Ukraine conflict and Middle East tensions), product safety and quality issues, and capital needs tied to the run-off Insurance operations and Bank BPH in Poland. It also points to the Risk Factors section of the Q1 2024 Form 10-Q for further detail.
04—Continue