GE Releases 3Q'23 Results

Today 通用电气 released third-quarter 2023 earnings. Below you will find some of the comments I made during the earnings call. To learn more about our results,?click here . For important information about forward-looking statements,?click here .??

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Before we start, I want to reiterate that the GE team stands firmly with our employees, customers and all those impacted by the brutal Hamas attacks on Israel and the subsequent war. Our priority has been the safety of GE employees in the region. We’re doing everything possible to support them and their families.?

Last week, GE announced a half-million dollar contribution to help with the humanitarian efforts for the many people in Israel, Gaza, and the surrounding areas impacted by these horrific events.

Terrorism has no place in our society and, like so many, I’m devastated by the loss of lives, violence and suffering of innocent people.

Turning to the quarter. GE delivered a very strong performance, and we’re raising full-year guidance again.

GE航空 continues to experience rapid growth, driven by robust demand and solid execution, largely in Commercial Engines and Services. Another significant quarter for the team.

Our fleet of 41,000 commercial engines and 26,000 rotorcraft and combat engines continues to expand as we work to define the future of flight.

• Today, we’re navigating a still-challenging supply chain environment to deliver for and support our customers. Year-to-date, commercial engine deliveries are up 30%. Across GE and Safran’s MRO shops this quarter, we’ve improved LEAP quick-turn shop-visits over 30% year-over-year and sequentially.
• For tomorrow, we’re building our backlog and sales pipeline during unprecedented industry growth. Recently, Air Canada ordered 36 GEnx-1B engines, plus four spares , building on GEnx’s rich history as the fastest selling, high-thrust engine with over 50 million flight hours.
• For the future, we’re investing in R&D and developing next-generation technologies. For example, we’re advancing full-system testing for hybrid electric systems at our Electric Power center in Ohio . We’re also collaborating with industry partners and NASA on an eco-demonstrator program to measure sustainable aviation fuel impact on the environment , particularly high-altitude emissions.

And our growth opportunities extend beyond commercial. In Defense, we’re pleased the U.S. Army has accepted the first two T901 flight test engines for the Future Attack Reconnaissance Aircraft prototypes . The T901 will also upgrade the U.S. Army's Apache and Black Hawk helicopters, providing 50% more power, reduced lifecycle costs, and lower fuel consumption. And we’ve been selected for development work on the Cockpit Voice and Flight Data recorder systems for the Future Long-Range Assault Aircraft program .

Next-generation programs like these demonstrate how GE’s rotorcraft programs enable the military and our allies to take on more challenging missions today and in the future. And we’re pleased to see Congress recognizing this important work by including funding for advanced engine development, like the XA100, in both the House and Senate fiscal year ‘24 defense appropriations bills.

However, even with these strong results, we’re far from satisfied. Through our lean transformation, we’re making real progress, improving flow and eliminating waste. For example, our team in Pune, India has increased output of LEAP high pressure turbine manifolds by three times.

But we need to do more – as do our suppliers – given the pace of demand, for both aftermarket services and new engine deliveries. There are pockets of improvement now – material input increased double-digits sequentially, supporting spare parts delivery, which was up significantly year-over-year.? We’re working within our own plants and in partnership with our suppliers to deliver sequential improvements in output and turnaround times day-by-day, week-by-week.

Over to GE Vernova ...where performance is strengthening pre-spin at both Renewable Energy and Power. Customers continue to invest in the energy transition, driving meaningful demand for our products and services.

Grid and now Onshore Wind were both profitable this quarter, and we expect improved performance from here.

Grid customers are increasing their infrastructure investments globally to connect renewables and improve reliability. Year-to-date, orders remain strong at more than 3 times revenue, and with higher margins, which will support profitable growth through this decade. We’ve also increased selectivity, streamlined costs, and rationalized our industrial footprint... tracking toward full-year profitability.

I really like the way the Grid team is using lean to drive this turnaround and deliver profitable growth. For example, across Power Transmission’s 14 sites globally, we’ve reduced lead time by roughly 15% year-to-date, and we’re targeting a 20% reduction by year-end.

Now, at Onshore...

• Our strategy to focus on fewer markets, pivoting more to North America, where GE Vernova is the market leader, is working. And we’re relying more on our workhorse products, representing 70% of equipment volume this quarter. These shifts are translating to 700 basis points of higher margins in backlog this year.
• We’re still driving cost out – fewer layers, reducing headcount and empowering leaders closest to the operator.
• Finally, we’re improving fleet reliability... now halfway through our enhancement program in the field, and expect to be roughly 60% done by year-end.

As expected, Offshore Wind remains difficult this year – with losses of roughly $1 billion in ’23. Next year, we expect Offshore will have similar losses, but substantially improve cash.

So, a tough $6 billion backlog that we’re working our way through, which we expect to largely complete over the next two to three years. In the meantime, we’re seeing rising availability on the 800 installed megawatts of our 6-megawatt platform. We installed our first Haliade-X turbines at Vineyard Wind , and we are now producing electricity at Dogger Bank .

We expanded Vic Abate’s role to CEO of the entire Wind business to leverage our progress in Onshore at Offshore. Looking forward, Scott, now Vic, and the team are taking a disciplined approach to writing new business, like we’ve done over at Gas Power, Onshore, and Grid... with increased rigor on pricing, terms, geographies, and risk.

All in all, given Power’s continued strength... and with our two largest businesses in Renewables, Grid and now Onshore, delivering... plus our plan for Offshore... we’re highly confident in successfully spinning-off GE Vernova early in the second quarter.

Across GE, I’m pleased with how we’re operating as simpler, more focused companies at GE Aerospace and GE Vernova. Another strong quarter with much more to do.

My thanks to the team for their dedication and commitment to serving our customers.

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To learn more about our results,?click here . For important information about forward-looking statements,?click here .?