Industrials
Aerospace & Defense
$178.39B
125K
General Electric is a high-tech industrial company operating through three segments: Aerospace, Renewable Energy, and Power. They manufacture products such as commercial and military aircraft engines, wind turbines, and power generation equipment. GE has a significant global presence with manufacturing and service operations in over 160 countries and is considered a leader in most of the major industries in which they participate.
Key insights and themes extracted from this filing
Total revenues increased by $1.6 billion, or 11%, year-over-year, reaching $16.1 billion, with growth across all segments and Corporate. Equipment revenues increased, primarily at Aerospace, Renewable Energy, and Power, while services revenues increased, primarily at Aerospace and Power.
Profit margin decreased to 11.6% from 44.8% year-over-year, with profit down $4.6 billion, primarily due to a decrease in gains on retained and sold ownership interests of $5.3 billion, mainly related to GE HealthCare equity position, and an increase in separation costs of $0.2 billion.
Adjusted organic profit increased by $0.6 billion, with adjusted profit margin increasing 300 basis points organically to 10.2%. This was driven by increases at Aerospace, Renewable Energy, and Power, indicating underlying operational improvements despite margin pressures.
GE Aerospace's results reflect strong demand for commercial air travel and continued strength in services, with global commercial departures growing 11% during the first quarter of 2024 compared to the first quarter of 2023. The company is in frequent dialogue with customers about the outlook for commercial air travel, new aircraft production, fleet retirements, and after-market services.
The Onshore and Offshore Wind businesses continue the effort of simplifying the portfolio of product offerings, focusing on fewer and more reliable workhorse products. More than 70% of Onshore Wind's equipment RPO is associated with U.S. projects where the company expects to receive IRA benefits.
The Power segment is focused on underwriting discipline and risk management to ensure deals meet financial hurdles. The company signed an agreement with a customer for the deployment of small modular nuclear reactor technology, the first commercial contract in North America.
Aerospace is proactively managing the impact of inflationary pressure by deploying FLIGHT DECK to drive cost productivity, partnering with suppliers, and adjusting the pricing of products and services. The company expects the impact of inflation will continue and is taking actions to mitigate it.
Renewable Energy is continuing its restructuring program to reduce operating costs and is seeing the benefits both operationally and financially. The company is also realizing the favorable impact of the Inflation Reduction Act of 2022 (IRA) through a reduction in product costs.
Power has proactively managed the impact of inflationary pressure by deploying lean initiatives to drive cost productivity measures, partnering with suppliers and adjusting the pricing of products and services. The company remains focused on underwriting discipline and risk management to secure deals that meet its financial hurdles.
The company's financial performance and growth are subject to risks related to global economic, political, and geopolitical developments or other disruptions to the economy or its business sectors. Increased geopolitical tensions and outbreaks of armed conflict can adversely impact the businesses.
The company's financial performance is dependent on the condition of the commercial aviation sector and its partners and customers in that sector. Capital spending and demand for aircraft engines, aviation products, and component aftermarket parts and services are influenced by a wide variety of factors, including current and predicted traffic levels, load factors, and aircraft fuel prices.
The company is facing supply-chain shortages, inflationary pressures, shortages of skilled labor, transportation and logistics challenges, and manufacturing disruptions that impact revenues, profitability, and timeliness in fulfilling customer orders. The company expects supply chain pressures to continue to challenge and adversely affect operations and financial performance for some period of time.
The markets in which the company operates are highly competitive in terms of pricing, product and service quality, product development and introduction time, customer service, financing terms, and the ability to attract and retain skilled talent. The company's long-term operating results and competitive position also depend substantially upon its ability to continually develop, introduce, and market new and innovative technology, products, and services.
The company is dependent on the maintenance of existing product lines and service relationships, market acceptance of new product and service introductions, competitive pricing and other terms, and technology and innovation leadership for revenue and earnings growth. The company also faces competition from new entrants from outside traditional industries, such as digital technology companies.
The company has dependencies on its partners for commercial engine programs to develop, manufacture, and service their share of an engine, and on the major airframers that it supplies to timely and successfully develop, certify, and commercialize aircraft that utilize its engines as well as to successfully sell those aircraft against aircraft powered by competitors.
The company is deploying lean initiatives to drive cost productivity measures, partnering with suppliers, and adjusting the pricing of products and services. The company is also focused on improving overall quality and fleet availability and reducing product variants.
The company faces operational risks in connection with launching or ramping newer product platforms. Risks related to engineering, supply chain, availability of skilled labor, product quality, and timely delivery can adversely affect the ability to achieve cost reductions and meet contract obligations.
Increased cybersecurity requirements, vulnerabilities, threats, and more sophisticated and targeted computer crime, as well as cybersecurity failures, pose risk to the company's systems, networks, products, solutions, services, and data. The company has experienced and expects to continue to experience cyberattacks of varying degrees of sophistication.
The company remains committed to investing in developing and maturing technologies that enable a more sustainable future of flight. Notably, CFM International's Revolutionary Innovation for Sustainable Engines (RISE) program represents the company's single largest efficiency step change.
The company continues to invest in new product development, including small modular nuclear reactor technology in the Nuclear business. In Gas Power, the company continues to invest for the long-term, including decarbonization pathways that will provide customers with cleaner, more reliable power.
The company is subject to technological change and advances, such as growth in industrial automation and increased digitization of the operations, infrastructure and solutions that customers demand. The company's use of emerging and evolving technologies, such as artificial intelligence and machine learning, presents business, reputational, legal, and compliance risks.
The company intends to return a majority of its free cash flow to shareholders through dividends and share repurchases. The Board of Directors authorized a new share repurchase program of up to $15.0 billion of its common stock.
Merger and acquisition investments will be pursued in a disciplined way and focused on those that offer strategic, operational, and financial synergies. The company will continue to invest in future growth and innovation through research and development and capital expenditures.
On April 5, 2024, the Board of Directors declared a $0.28 per share dividend on the outstanding common stock of the Company, payable on April 25, 2024, to shareholders of record at close of business on April 15, 2024.
The company is focused on transitioning to lower emission technologies, including low to no carbon products and services, the use of alternative energy sources and other sustainable aviation technologies, and climate adaptation products and services. Customers, shareholders, and institutional investors also continue to increase their focus on environmental, social, and governance issues.
The company faces increasing demand for transitioning to lower emission technologies and climate adaptation products and services. Changes in environmental and climate-related laws or regulations could increase operational and compliance expenditures.
The company faces the risk of climate-related litigation and government investigations that could be costly to defend and could adversely affect its business. The company's reputation may also be damaged if it or others in its sector fail to achieve sustainability goals or to comply with evolving climate-related regulations.
The company's operations and performance are affected by global economic trends, geopolitical risks, and demand or supply shocks from events such as war or international conflict. The company is also affected by local and regional economic environments, supply chain constraints, and policies in the U.S. and other markets.
The company's financial performance is dependent on the condition of the commercial aviation sector, which is cyclical in nature. Demand for aircraft engines, aviation products, and component aftermarket parts and services are influenced by a wide variety of factors, including current and predicted traffic levels and aircraft fuel prices.
Political changes and trends such as populism, protectionism, and economic nationalism, as well as tariffs, export controls, and sanctions, have been and may continue to be disruptive and costly to the company's businesses. These can interfere with the company's global operating model, supply chain, production costs, customer relationships, and competitive position.