GE's Aerospace and Vernova Sectors Achieve Strong Growth in 2023

2024-01-24

General Electric (GE) recently held its fourth quarter 2023 earnings conference call, with key participants including Steve Winoker, vice president of investor relations, Larry Culp, chairman and CEO, Rahul Ghai, CFO, and Scott Strazik, CEO of GE Vernova. The purpose of the conference call was to discuss GE's fourth quarter 2023 earnings and the progress the company made throughout the year.

In 2023, GE made significant strides, achieving excellent operating results, successfully spinning off GE Healthcare, and continuing its lean transformation. Looking ahead to 2024, GE has upcoming launches for GE Aerospace and GE Vernova in early April.

GE Aerospace, a major player in the industry, reported a growth of 11% in engine deliveries during the fourth quarter, including a 38% growth in LEAP engines. The team at Rutland, Vermont, addressed recurring defects in GEnx low-pressure turbine blades using lean problem-solving fundamentals, resulting in a more than 50% improvement in first-time yield. GE Aerospace also achieved significant milestones, such as receiving over 450 engine commitments and several service agreements at the Dubai Airshow, as well as being selected by NASA for phase 2 of the Hybrid Thermally Efficient Core Program.

Meanwhile, GE Vernova aims to electrify and decarbonize the world. Their technologies help generate approximately 30% of the world's electricity, with profitable businesses in Power, Grid, and Onshore. GE Vernova generated $600 million of cash in 2023 and has plans to host an investor day in the future.

In terms of financial performance, GE saw strong revenue growth driven by volume and price, net of inflation, positive working capital, and robust demand in aerospace and renewables. Adjusted EPS increased by 56%, and free cash flow reached $3 billion. Adjusted operating profit increased by $2.5 billion, and adjusted margin expanded by over 300 basis points.

GE's gas power sector had a strong performance, with revenue growth driven by aeroderivative and heavy-duty gas turbines. Services in the power sector were also strong, with higher contractual outages and upgrades. The gas repairs team in Mexico improved productivity by reducing cycle time and cost.

Looking ahead, GE expects mid-teens revenue growth for GE Aerospace in the first quarter of 2024, with flat to slightly up margins. The profit improvement for renewables will be more back-end loaded, and power is expected to have low single-digit growth and margin expansion. GE's capital allocation priorities for 2024 include debt paydown and potentially share repurchases.

Overall, GE is optimistic about its future prospects, with a focus on improving customer service, delivering value for shareholders, and driving innovation in the aerospace and energy sectors.