General Electric (NYSE: NYSE:GE) has reported robust Q3 2023 performance, leading to an increase in its full-year guidance. The strong performance is attributed to the rapid growth of GE Aerospace and the improving performance of GE Vernova, the company's renewable energy and power segment. The company is also planning to spin off GE Vernova and launch GE Aerospace in Q2 2024.
Key takeaways from the earnings call include:
- GE Aerospace experienced significant growth due to high demand, with orders up 34% and revenue up 25%.
- GE Vernova showed improving performance, driven by lean initiatives and better underwriting.
- GE plans to spin off GE Vernova and launch GE Aerospace in Q2 2024.
- The company is investing in R&D for next-generation technologies, such as hybrid electric systems and sustainable aviation fuel.
- GE has strengthened its balance sheet by redeeming preferred equity and selling a portion of its AerCap shares.
GE has raised its full-year guidance, now expecting low-teens revenue growth, adjusted EPS of $2.55 to $2.65, and free cash flow of $4.7 billion to $5.1 billion. This comes after the company delivered meaningful growth in orders, revenue, and adjusted earnings per share for the quarter.
GE Aerospace's robust demand has contributed to the company's strong Q3 performance, particularly in the commercial engines and services sectors. The company's fleet of commercial engines and rotorcraft engines continues to expand, fueled by investments in R&D for next-generation technologies.
GE Vernova, the renewable energy and power segment, had profitable quarters for Grid and Onshore Wind, although the Offshore Wind sector remains challenging. Despite this, GE expects improved cash performance in the coming year. The company has announced plans to spin off GE Vernova and launch GE Aerospace in Q2 2024, making key hires and promotions to ensure the success of these businesses.
The company has also made strides in improving its operational efficiency, focusing on reducing waste and improving flow. These efforts, coupled with strong pricing discipline and increased work scopes on narrow-bodies and wide-bodies, have contributed to higher spare parts growth in the quarter, exceeding 35%.
GE's CEO, Larry Culp, expressed confidence in the company's future during the earnings call. He highlighted process improvements in their own shops, resulting in fewer delays due to quality issues, and the company's work with suppliers to improve on-time performance. Despite supply chain challenges leading to inventory build-up, the company expects to generate around $4.9 billion of free cash flow this year, with strong working capital performance and progress payments.
Overall, GE is confident in its progress and is committed to creating three independent investment-grade industry leaders. The company expects both Vernova and Aerospace to be investment-grade and for Vernova to spin in a net cash position. The company plans to file the initial public filing for GE Vernova in Q1 2024 and plans to hold investor days for both businesses.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.