General Electric Company — FY2023 Form 10-K
Business context and reporting period. Filed February 2, 2024, for the year ended December 31, 2023; quarterly figures below are for Q4 2023. GE reported Aerospace, Renewable Energy and Power. GE HealthCare was spun off on January 3, 2023, and its historical results are presented as discontinued operations. GE said it planned to spin off GE Vernova, combining Renewable Energy and Power, and establish GE Aerospace as a standalone company.
Financial performance and liquidity
| Metric | FY2023 | FY2022 |
|---|---|---|
| Total revenue | $67.95 billion | $58.10 billion |
| Continuing earnings attributable to GE common shareholders | $8.77 billion; diluted EPS $7.98 | Loss of $1.10 billion; diluted EPS $(1.00) |
| GAAP profit margin | 15.0% | (1.4)% |
| Adjusted earnings (non-GAAP) | $3.09 billion; adjusted diluted EPS $2.81 | $0.84 billion; adjusted diluted EPS $0.77 |
| Cash from continuing operating activities | $5.57 billion | $4.04 billion |
| Free cash flow (non-GAAP) | $5.15 billion | $3.06 billion |
| Cash, cash equivalents and restricted cash on balance sheet | $16.97 billion | $15.81 billion |
| Total borrowings | $20.97 billion | $24.06 billion |
Revenue grew 17%, with increases across all three segments. Equipment revenue rose 20% and services revenue 15%. Total remaining performance obligations (RPO) increased 12% to $267.2 billion. Q4 revenue was $19.42 billion, versus $16.83 billion in Q4 2022; continuing earnings were $1.59 billion, versus $1.79 billion.
FY2023 GAAP earnings included $5.78 billion of gains on retained and sold ownership interests, primarily GE HealthCare and AerCap. Thus, GAAP earnings and margin are not directly indicative of ongoing operating performance; adjusted measures exclude specified items and are non-GAAP.
At year-end, total assets were $163.0 billion, total liabilities $134.5 billion and total equity $28.6 billion. GE had $13.5 billion in committed revolving credit facilities, which it said were unused, and reported that it met the facilities’ net-debt-to-EBITDA covenant. Reported cash included amounts held outside the U.S., in currency-controlled jurisdictions and restricted for specific uses.
Segments and changes versus prior year
| Segment | 2023 revenue | 2023 segment profit (loss) | Notable year-over-year change |
|---|---|---|---|
| Aerospace | $31.77 billion | $6.12 billion; 19.2% margin | Revenue +22%; profit +28%, supported by commercial services, spare parts, higher shop-visit volume and pricing. |
| Renewable Energy | $15.05 billion | $(1.44) billion; (9.5)% margin | Revenue +16%; loss narrowed from $2.24 billion. Improvement reflected Onshore Wind pricing and cost actions, IRA benefits and lower prior-year charges; Offshore Wind losses increased. |
| Power | $17.73 billion | $1.45 billion; 8.2% margin | Revenue +9%; profit +19%, driven mainly by Gas Power pricing, services volume and productivity. |
Company adjusted profit was $5.66 billion, up from $3.16 billion; adjusted profit margin improved to 8.8% from 5.7%. These measures exclude specified gains, costs and other items. Continuing earnings also benefited from a $1.2 billion increase in non-operating benefit income and the absence of prior-year debt extinguishment costs and Steam asset-sale impairment.
Outlook, risks and unusual items
- Outlook: The filing does not provide a clear numerical company-wide FY2024 earnings or cash-flow guidance in the supplied text. Management expected commercial aviation departures growth to decelerate to mid-single digits in 2024. GE described the gas-power market as expected to remain stable over the next decade, with generation growing at a low-single-digit pace.
- Execution and supply chain: Inflation, delayed materials, supplier constraints and skilled-labor shortages continued to affect production, delivery, RPO conversion and margins. GE highlighted Renewable Energy product quality and fleet availability, Offshore Wind project costs and timelines, and Aerospace’s production ramp as execution risks.
- Separation: Completion and timing of the planned GE Vernova spin-off remained subject to approvals and other conditions. GE disclosed substantial continuing parent-company credit support for GE Vernova-related obligations; the maximum aggregate exposure could not be reasonably estimated.
- Insurance and legacy exposures: GE expected a final contribution of up to $1.82 billion to its run-off insurance subsidiaries in Q1 2024, subject to statutory reporting. Bank BPH estimated losses for Polish mortgage litigation at $2.67 billion at year-end; future adverse developments could increase losses and require further contributions.
- Project and legal contingencies: GE recorded $379 million of additional losses on certain Haliade-X contracts in 2023 and warned further execution changes could produce additional losses. Environmental, nuclear decommissioning and worker-exposure reserves totaled $2.47 billion. Alstom legacy legal reserves were $393 million; the filing said additional losses beyond that reserve could not be meaningfully estimated.
- Other notable items: GE recorded $978 million in continuing-operations separation expense and paid $1.06 billion of related cash costs in 2023. It recorded a $0.2 billion Russia-related charge. The company reported no known cybersecurity threat that materially affected it during the year, while identifying separation-related cyber risks as potentially material if realized.
Important facts for investors to verify
- How much 2023 GAAP earnings depended on investment gains, and how the adjusted measures reconcile to GAAP results.
- Whether Aerospace can sustain growth and convert its $153.9 billion of RPO into revenue and cash amid supply constraints.
- Whether Renewable Energy can reduce losses, particularly in Offshore Wind, and deliver projects within current cost and schedule estimates.
- The timing, conditions and financial effects of the GE Vernova separation, including treatment of guarantees, debt, pension obligations and standalone costs.
- Future cash needs from run-off insurance and Bank BPH, and developments in litigation, environmental obligations and other contingencies.
- GE reported unqualified audit opinions on its financial statements and internal control over financial reporting; management also concluded controls were effective as of December 31, 2023.