Earnings call transcript Q4 2022

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Operator

Good day, ladies and gentlemen and welcome to the General Electric Fourth Quarter 2022 Earnings Conference Call. [Operator Instructions] My name is Liz and I will be your conference coordinator today.

If you experience issues with the webcast slides refreshing or there appears to be delays in the slide advancement, please hit F5 on your keyboard to refresh.

As a reminder, this conference is being recorded. I would now like to turn the program over to your host for today’s conference, Steve Winoker, Vice President of Investor Relations. proceed. Please

Steve Winoker

Happe. to am and CEO, them we joined and and Carolina as Welcome earnings year Larry businesses are fourth that our view CFO, I mind of and today. call. by Dybeck our making GE’s are Liz. the see based full quarter XXXX Culp some forward-looking Thanks, of in in statements best Keep we Chairman world and the

may on described the change our elements filings website, As as and changes. our in world those SEC

As this GE completed January report healthcare a the reminder, separation month. separately our of XX. will business GE Healthcare on

while primarily XXXX on So our results, commentary and Aerospace focusing GE Vernova, today’s businesses. our in GE energy portfolio we included of are

the more now we Our remarks will to also quickly be reflecting we will and company simpler move today, and Q&A. are shorter

hand I call Larry. to over will now the

Larry Culp

good separated strengthened billion marked era strategic thank everyone. retiring on successfully We for Steve, debt We in to debt, January approximately GE total X. an following XXXX. shareholders $XXX foundation, XX% beginning new reduction and X bringing GE, since morning and billion years of of a spin-off, $XX GE of our transformation. a over additional distributing our you XXXX Healthcare operational the

executed margin and our embedding unprecedented more to improve strong, of today, higher led our cash revenues Aerospace and on revenue which resilient, generation. and We XX% part And continue of our we expansion We ramp. better represented way larger the portfolio of better operations, as lean an the delivering about and backlog. our Services, to finished growth, margin both XX% year are GE customers. further even serve decentralization excluding Healthcare GE

to catalysts actions are and stability companies. on U.S. power electrification progressing investment-grade work, delivered focus our GE accelerating industry and like future to investment are decarbonization External positioned us create climate to to launch public increasing Vernova, profitability. has took significant new GE continued at independent well. our in plans progress and legislation European Thanks renewable leading energy Vernova for team’s Aerospace the position technologies. This Within GE high-quality gas with we

filling both we two and positions standalone for key are businesses. We are leadership for preparing

our more planned for timeline details GE our with Vernova at will and you, in investor March. including share ongoing spin progress We the conference

I to could not deliver more the call customers a external GE through before and turn the challenging be Carolina, partners environment And proud our managed my XXXX, how for over of in to to of reflection. a everyone. I moment thanks team

along exemplary team I, service of Carter. attended member Defense, for leadership Ash U.S. and Secretary memorial ago, many weeks with our of two a our Just GE Board former

remarkable We Ash counsel. humble miss and and his leader, incredibly was him stage clear a headed.

take will through you Carolina our Now, results.

Carolina Dybeck Happe

Larry. Thanks,

do basis was with double-digits, commercial up price revenue partially and performance. improving lower top line volume continued heightened offset will Turning all to selectivity. and U.S. across by of to resulting driven the it services By lapse was grew will I at Power This XX%. renewables market and and XX%, significantly Slide X, our Healthcare. key momentum GE the as segments. on In I an including organic Revenue drivers speak fourth quarter, our Aerospace, to demand, up delivery. Healthcare up due realization by PTC largely segment, from orders was

a revenue in Free All working were growth. which expected, earnings inflation. Overall, growth Power capital. price growth. resulted our over margin renewables. as EPS XX% cash Revenue Adjusted flow $X.X was except improving primarily use driven particularly offsetting profit basis cost-out source and expanded of cash, accounts points. a and XXX from robust, by receivables, was outpaced and billion, was strong actions

was pressures supporting again with orders Aerospace, XX% supply services growth up chain XXXX. were XX%. performance and in about revenue Power. equipment up and X%, year, higher the were were double-digits, XX% Revenue largely decreased to up orders growth Total macro total growth Aerospace full XX% margin services our X%, by headwinds X%. Moving in in profitable points. while Collectively, More driven impacted up broadly, up by X

all and Importantly, above recent line improved year-over-year October. in EPS we or free significantly margins, cash and in flow, outlook most finished shared the

pressure over out Operating points Adjusted especially drove was EPS of growth has improvement. Aerospace earnings and more than contract capital up margin or inflationary and up of profit pressures $X.X offset XX% businesses debt led cash services expanded almost XXX reduced to over This a payable, assets by at and XX% solid was the shorter basis Power. In for full cycle $X driven billion accounts collections billion, working contributed partially Robust source debt. by all cash growth, by pricing performance. year. and the from flow drove and billion progress $X.X renewables. improvement, as reduction was cost our Free actions XXXX,

costs. Now, on a $X.X of In the we moment with corporate. billion year XXXX, ended

dollars costs. reduce including flow, half XXXX, of market-driven roughly $XXX XXXX favorability. now million to expect our few Free linear the in costs XXXX, with reduction a significantly smaller, million line. And of a of structure. we to given progress cost continued improve expect or cost debt in hundred We about and have cash we lower We sales

are cost-out and the fit-for-purpose, our growth drive XXXX. back, execute in GE significant post We standalone Aerospace the This reduce our our Stepping by restructuring will pricing improved structures continue actions to us for spin, GE exiting help cost structure continued healthcare volume quarter. and encouraged and we Vernova. our up plans setting and

Now back to businesses. our you, to Larry, discuss

Larry Culp

XXXX, conviction business a months highly differentiated that franchise we with Carolina, leading positions in have you. this priority and I positions product today starts and and technology am thank Entering and right for across premier services, Starting with our higher are X growth customers. my attractive predictability delivering critically on is even Aerospace, in leading engines and the This military our commercial significant stability where sectors. the was with and team. both important

perspective nearly fresh with this their and experience half our unparalleled year. to new of balance a have leaders We roles

major two We changes. are also driving operational

to progress Lean rigor we more our seen accelerating supply with real where delivery. and to with have improve improvements chain, operating is First Take come.

about center through standard turbine multiple increased over they Lean and With Haute And and team’s our are about XX actions Terre in on XX% XX%. we for output work and productivity XXXX today, flows, with Working the use ‘XX need frames this started lead daily in schedule. implementing improved kaizens, management, delinquent. to team Lean demand, our to by continue produces pieces deliver will customers. to way Our

The decentralization. second is

real our running customer to make in cross-functional the closer more product example, are customers work helps we better. commercial own with our time us in as how us, their business, our For line lines P&Ls, with in engines increasingly collaboration

both and revenue the over military with and almost visits XX%. quarter, XX% were external and to revenue internal about was XX% in were more part up engines sales about Turning Commercial up services were now were shop XX%. robust, orders backlog. up XX%. services grew equipment LEAP and than revenue up Equipment And orders XX,XXX

In equipment, commercial units almost LEAP were up up with nearly units, XX%. XX%

units both units up Looking about sequentially, commercial XX%. military but visits shop were flat, were internal and

a and While availability year. our material to tools this continues our we sequential engines challenge, accelerate a help Lean output for improvement, us key services, to using are be across

more expected, cost although pressures. Fourth above mix and by negative better than the support commercial were other business driven than equipment investment shipments, to year-over-year. growth down offset and were price quarter increased margins slightly by we continued volume Higher XX%,

While inflation continue XXXX. in be still cost we will expect positive, to net challenging price

cash For up growth up XX%. internal points solid. sales Services driven shop the year-over-year. basis XX%, by Margins the were visits XX.X%, year, over flow offset was and revenue than from more was costs investments and negative XXX commercial capital. up cash impact with Profitability were price by $X.X positive of and billion mix engine and deliveries. of LEAP driven Free earnings increased working higher

quarter, AD&A flow close of came last As we year, to zero billion pressure. in versus shared $X.X in-year last total

single-digit ahead to sales plus we year. XX% to ‘XX. visits departures aerospace LEAP we GE XX% part in to at With grow to to spare at CFM rate, growing Looking about grow ‘XX, and XX% and are increase. about total about internal expect deliveries commercial expected services engines ‘XX the about this growing expect shop we revenue later levels and expected at be a ‘XX to to are military expect and high-teens in high In XX% engine mid of high-teens today, be levels back are to external to and XX% close

free We to expect also flow. Aligned delivery be to higher about current in $X.X cash profit to schedules, airframe deliver or aircraft and $X.X outflow billion XXXX. of expected $X.X billion to billion is AD&A

define post of current while fleet technologies We lessors they continuing pandemic. that flying Today, keeping all customers airframers, airlines are the new to fleet, as for our and and providing ramp our growing flight. that will means predictability our stability the future in supporting laser-focused on invest our and

capabilities Overall, Adaptive wrote franchise XAXXX included future Transition members XXXX with military funding leader. bipartisan in million Appropriations our Congress continued the the Notably, the the with to includes needed the encouraged we engine The of XX of technology, nearly is at from as Engine support industry in Aerospace received of program, exceptional cutting-edge standalone XAXXX $XXX F-XX. of bright show for by air U.S. continuing momentum the an are GE who our engine superiority. strong support The Omnibus with recently which next-generation a bill. a including ensure Program offers

at real power year to delivered performance making are GE Turning similar a a Vernova renewables. portfolio, strategy solid this we the and running progress

our impacted is results dropped and While XXXX, industry to Act renewables forward. Reduction going real the PTC significantly the in changer lapse a the due game Inflation for us demand the

orders encouraging rebound implementation. the quickly sign. hinge began our lower we demand inflationary of up the fact, will how in Onshore IRA potential a on America X%. and administration But continue North weigh In through volumes doubled pressures on performance. with to moves the than see quarter, more this unlocking very to Meanwhile, renewables full a orders in

$X.X XX% gains. year quarter due lower pricing earnings. and and due offset declined onshore and contracted volumes inflation revenue cash flow productivity was to lower free Fourth down as billion over margins to Full

XX% the to XXXX was regard since savings million lost are restructuring our saw on while this quarter. controlling Grid, in await the first rules, clarity team quarter progress in efforts. close business we that onshore, and in decreasing XXXX. So, deliver action we profitable will are that taking Scott and executing almost IRA and controllable, Orders restructuring reflecting a selectivity significantly. which we sequentially, XXXX, $XXX the grew At for our with also headcount a the

flow. and but expect we XXXX, Our with we mid will work to orders Across flat and actions strategy businesses, free next to X and grew. that yielding improve are variance There and continued inflationary repower, backlog better onshore remain improve the our focus excluding will reducing more growth, pipeline. continue urgency. are single-digit sales revenues, on months profitable to despite product selectivity certainly Service pricing profit improving strategic and costs our In and with sourcing the pressures. product cash do orders is challenging, more acting significantly a

Taking based half it more this half X,XXX hand, we the in America in in North And Onshore, more units we delivering of orders orders by second than volume the the on the doubling year. the XX% have expect over with American are businesses. we of globally confident growth than first North year. versus

We and warranty shift growth linked expect strong to size also this by billion which payments of large and This won, we in customer $X later to benefits. we tech better related commitments, orders reserves, $X $X.X cash are cash the to significant could significant With billion includes lower driven down quarters. orders a have year. complexity, billion expect selects but this across These step restructuring convert up profit project somewhat comes given year. timing roughly and this to price of

In to revenue more offshore, in than $X.X XXXX. billion about expect double from we

projects rising be However, our the will new Haliade-X resulting inflation in product between typical margins margins on tranche challenging and of first losses.

a Associated down pressured also delivery in be growth mostly in timing payments, offshore, will the limited and expect cash we XXXX dynamic. with significantly

given Grid, orders small and growth. structure productivity. taken to robust continued cost we progress, offset our our our expected we are – inflation growth, The on expect continue actions at And make and smaller pressures, including we’ve price to

I’m improvements Overall, enable the we’re throughout deliver our confident external together, a will the modestly longer-term profile in economic and help catalysts year improve renewables Taken key this seeing year will grid in profitable XXXX. operating IRA here. to like

our by Moving cash to growth. demonstrated profit Power. is and We’ve significantly improved power continued

assets HAs services well shipped our a expanded source we’ve reliable for date, fleet. units XXX positioned utilization the providing in XX our We’re growth in roughly future cash continued now of with To fleet. COD, the HA as highest with growth

also robust. grew and quarter, and by at solid Gas Looking all businesses double in aero orders with transactional digits, was gas Services derivative the were gains. power revenue we demand Orders gas and Power. through challenging significant largely up momentum productivity remained to at continued points price remain Similar by inflation expect XXXX. Margins up favorable over by revenue driven services. again will Aerospace, driven expanded XXX cost basis volume, driven

orders basis but underwriting. were with digits achieve In double as gas Moving taking significantly single-digit to expanded selectivity led line our year, across XXX steam. disciplined the high off by not outlook, grew digits, low up single service, Margins our enabling points, billings utilization fleet eye flow power services. and were up with and the free full importantly, improved single our digits. cash revenue At for we’re margin to strong both gas low was year,

gas, and Gas more help At Equipment gains anticipate will well to as driven XXXX HAs equipment rising growth inflation Looking we as wind services should at as Difficulty] the expect build team, Power, [Technical Power services. by despite new both year-over-year. offset low volume for single-digit deliver we price productivity and and revenue pressure. we revenue grow down

We important an earnings world vast the flow to expect offset cash energy the made back, conversion to in disbursements, the a is we challenge year-over-year, and and play transition. will these to businesses strategic solid. strong GE collections meet. the free Stepping role growth cash our decarbonize their existing were portfolio imperative lower expect flow It’s with in continued technologies are electrify bases by remain installed but services Vernova free

now XXXX. outlook the to Let’s GE turn overall for

adjusted is aviation includes recovery. profit the adjusted expecting industry, our portfolio $X.X confidence range $X.X range, in is like post-pandemic of outlook $X.X our higher free and this Underpinning well as continues to single-digit for of the to worldwide revenue strength billion the airlines flow. concentration EPS, growth a cash GE services a in high its billion We’re which billion to and as airframers $X.XX in Aerospace commercial of $X billion organic $X.X for about

revenue profit anticipate thus for yielding also military growth, GE Aerospace significant We ‘XX. growth in

low to slight of million down planned improvement This we including expect cash, For and mid-single-digit $XXX payments to to driven by onshore profit profitability growth and On flat GE largely better across in GE, to turn, increasing businesses. million, both Vernova, negative expect negative $XXX at for we earnings free higher shift us improvements in improvement. from Across we cash offset continued could some quarters timing drive working offshore management. higher this In deliveries. expect flow ‘XX. and GE with deliver help capital where improved operational will is

more March looking We Bowl Aerospace us. X come home forward teams to you’ll Champion Vernova. Please Bangs, in our about at leadership sharing during then, Investor Conference Aerospace to Cincinnati GE GE our are more from hopefully, both hear and by Super of detail see the where GE

to GE I our positioning up Slide fleet. longer-term close renewables an drive our is hope Power largest continuous strong At setting and story and exciting our X, results, cash, technology Vernova, growth. simpler results youngest while unique delivering see: and our our portfolio’s the is you solid To earnings and and we’re industry’s see profitable is GE improvement what on I mantra, Aerospace future. a team, reflect

plans moving well the to industry I’m energy for We’re customers the will create our ahead. leaders positioned greater of and are investment-grade shareholders confident flight value unlock we our two we our in with independent growth transition. that year launch the long-term future lead forward shape to And and as that

for ready questions. Steve? we’re Now

Steve Winoker

please questions open can save their Liz, line? any you call We until the next week. earnings that Thanks, Larry. please Instructions] [Operator ask GE Healthcare you

Operator

[Operator Instructions] with Sachs. comes question from Ritchie Our first Goldman Joe

Joe Ritchie

Good congrats executing on the morning, everybody, spin. and

Larry Culp

Thanks, you. Joe. Thank

Joe Ritchie

Yes.

the I AD&A, rest about cash you know being for million that $XXX this free free Aviation up the be of of to you. So versus grow I’m earnings really to in what the talked second flow going in segment you renewables. Thank flow cash threw specifically the in my kind And And what and did bridge consistently large XXXX. half year And focused cash XXXX? the is cash XX%. impact out but has the on you with Aviation question free in question curious flow segments, for of the is just on payments XXXX? free impact my flow then that are around anticipating on GE second the

Carolina Dybeck Happe

Okay, Joe.

of a questions. So couple

So for free XXXX flow start the cash guide with the company. let me for whole

that at numbers our look just XXXX printed we if X.X%. we So

New jumping house point, $X.X billion. is healthcare, excluding

midpoint profit. are guide, that flow And million. about basically, with of profit. $XXX majority So will in growing we improve assuming billion that the of we cash about op improvement our of is Midpoint free the comes of $X.X from

tailwinds that headwinds couple of $X.X million that we that are single-digit growth. then made couple to AD&A a of as for cash some add capital as offsetting the we You a have cash restructuring about working hundred things well you A money. lower more improvement interest, since the that, of billion, partially higher tax out despite and mentioned, high

earnings taking improvement. the all expect driver of to be together, So the biggest we

overall, working confident in our cash We continue our guide. from to benefit that’s us And total capital flow management. free what leaves

You also segments asked specifically the and on aerospace. about

in So improvement at is said strong the aerospace, in a profit Larry cash really what big comes expecting see. if aerospace you, driver free it mind clearly, capital, the to working When about that flow. growth to improved you we’re look

growth. will from growth, be capital capital of working of partly of kind working we the But course, $X.X of billion. AD&A headwind and receivables more expect So management do offset inventory than profit will pressured that combination also that the

Vernova where then power to as said, we here, renewables cash be improve Larry will improving improve. to cash for we as at look on to if basically slightly So down the you have expect flat also would be And we it well. aerospace. businesses, And expect slightly you

Larry Culp

$X remarks formal Down range. that said to think asking that were be you our should Joe I billion the in $X payments, we billion in about,

have come, for. as little remarks. But orders the rules we what progress formal here timing and they trying to bit have to until finalizes movement, been the a and the we were again, of flag tax developers which Some selected of the the rules, orders many those for could are four that’s of in

it greater as we So much be will aerospace but linearity regard, loaded in will have back that Carolina suggested. in

Operator

from with Our Morgan next Josh Pokrzywinski comes question Stanley.

Josh Pokrzywinski

Larry just what the renewables. wanted It back maybe folks follow-up there not perhaps were to profit some here is all like expecting. way to on improvement, looks

or you year? what’s kind what’s or like if material still grid cost headwind more of versus wondering selectivity this could Just getting better parse price a

Larry Culp

at grid, if renewables, put the be break down, Josh, good team place. morning. by we’re encouraged really If No, at profitability improvements will the look it I think you we significantly I think in better. has

quarter I profitable seen think more is yielded up people we’ve to the be across but a business right? in had really XXXX, that’s this And the sets a few portfolio interest what here with line in that importantly, underway. the that’s given up electrification on in This particularly ago. Europe, fourth, years grid profitable them accelerated in tremendous

contribute to think year. I good So begin and all the new in that’s they

I ago onshore perspective, same question think Joe’s moment on profitability. applies from little an the a a cash, to to thing

the think we year, challenged our to the in way way work going much be expect the first has. I see that would continue through as we But volume. XXXX half to is to

volume our our book before. selects and our We and revenues that to that test can we our orders will pricing higher about order in see compared to quality better see talked compared a our selectivity, We’ve function in of pipeline. as really and

challenged the anticipation is the and that But transitioning IRA a of that be that things really may capacity in where do whole there we operationally. overall. be by one think a to may industry that of sign is demand, will host be – good I need volumes to is

going we’re what losses to have because get case cost transition the the GE double producibility we improving early need business of go in do for going time, then only Haliade-X onshore call in revenue, of taken nearly some our our structural recognize to And the At the that to to manufacturing. here what where lies in offshore, on really look think the the particular, in same the actions as we in that’s X,XXX about talked with the associates renewables we place better we in I for we last and robustness ahead. with here. aren’t shape

much you wind offshore, renewables what a grid So bit and guide gives dynamic and transition, a better, that with together, that’s the and really of you onshore for ‘XX. timing put

Operator

comes Our from next Barclays. Julian with Mitchell question

Julian Mitchell

Hi, good morning.

cash, for we ask to about the the cash sort but year and headwind sort Just think few year? you renewables do first year years, free cash talk a about maybe cash was when of on and think $XXX cash a had wanted time half about be something refreshing that’s in the It in flow like moving minus flow through the swings the this I second. flow of of to sort uses the through see seasonality, the very a in first your also quarter you How ago. million the the of first big year, sounds the may then

It’s So the capital go for thoughts any on GE free the mostly optionality Larry, GE the sort cash us of years, flow. starting help to we more deployment partly be And on for there use? reduction year? through understandably for of firm-wide cash is some color your few maybe as a on understand cash just then maybe now priorities debt improving been but because

Carolina Dybeck Happe

through Maybe me quarter. how let the me Julian, seasonality first part just on first year happening that we of with see the and XXXX. that the let on in question take start

$X.XX first We quarter. $X.XX an in to are of expecting the EPS

new better in actually off before X.X. The we’ve we expect linearity first negative negative still point to is So cash jumping the than On quarter. in cash, XXXX. a also seen be

I So than but we our general, that, say And is changes in don’t for seasonality. material expect typical we to seasonality. significantly be as would our expect it to negative better seasonality, still

revenue and now and back-end healthcare. are excluding cash, on even sort we second loaded We profit that are loaded still actually half heavy more of on both

XQ ramp for typical more the renewables to the half. sequentially volume ramping – through aerospace sorry, and sequentially to of lower the also second power sort where renewables year equipment XQ have I first and see half second significant expect we the half. year, growing large of But more that half do. So is first saying growing would second for through improving and larger and key in in priority clearly you’d half the the deliveries by in the linearity a seasonality operational even finish outage and us sort

Larry Culp

would a ago, to they were right. We’ve than you’re years reduced respect just pleased are debt here. Really Julian, with is few loans allocation, has The with by I billion. right? and boardroom different say now way capital conversations our the healthcare traded fundamentally $XXX

to a You can effectively look that at $XX shareholders. billion is dividend

So And we a on the I options. of have lot would say all table. options are

job announced, to than the described up transformation more are However, that remains that of one November in completion We we what right. Vernova aerospace sure the and in the them. way back of we ‘XX, make setting both want anything we

So, overarching will back have be in where but that work about a it. continue considerations, objective we enjoyable were if more much doubt through strategic in than conversation conversation will, It’s and mind, ‘XX more as to a of, and number you to no a we it’s ‘XX. tactical foremost different

Operator

Bank Obin America. Andrew next from Our question comes with of

Andrew Obin

guys. morning. Good Hi

Larry Culp

Good morning Andrew.

Carolina Dybeck Happe

Good morning Andrew.

Andrew Obin

Just a is just questions, shape. I in because industry particularly to on sort I a not think is contract, the good there of of right, talk overall the lot in structurally couple wind on First, about change Vernova, – think industry of

we sort second suggest facing structurally are focus is in structure? you. profit revenue you want you traditional the seem that growth, just and capacity, the on the but are more helping more contract with overall, we I Are renegotiating where to contract in large are are yet power, headwinds hand in power in one, in gas growth. question really question who the to Where Thank key not terms modest are focused are seems So, the industry And customers on margin ‘XX, make guidance any of levers expansion? not money? there ‘XX? services any conversations What

Larry Culp

are you perhaps Andrew, more the of would that the in than I the take the in first some that. challenging has given of to onshore in the Carolina, on see, part place I more makes will that do economy can you part. jump of that wake discussion of arrangements. relative the second think every in that part say run renegotiation those press over inflation offshore our PPAs I

really offshore just our are starting We in business.

So, position. we not bit see but of given little lot frankly, relatively small that, our a a

dynamics in you think want those workhorse I the the IRA of to the playing as we way the for really customers products. here refer wake U.S. what again, out is in see us, in particular that

in of business. count terms That’s and delivery. new at renegotiations. can is business, to pricing. on, both of the I I thing think look that technical performance make we sure is not quickly we arms want several And But the not nature particular, they dynamic the to they quickly fading that and better leading a years in turn over think onshore – that, customers get right, race in a the they specmanship, is next as the reason are know seeing the here units can that’s that

think incredibly that And be over they so that through is turn, think by volume sold regard, and are that in industry work IRA presumably rules these the we I in and new will equilibrium once anticipate the levels price see us you next helpful cash. finalized. the up convert it, that step that years need several to that better into are a – the to work there going I real why real carats IRS be is margins will in least at offered will the

Carolina Dybeck Happe

power, X.X% positives. op XXXX, have that for margin, $X.X really To digits, the of at and year and profit delivered, building team have landed a that’s the getting of the start we by quite we of just to saying on billion what high-single where an I to for looking power, achievement. And couple

about year, CSA outage talked ‘XX CSA year, that’s We outages. more have ‘XX We will higher a outage be so good. being low-CSA

also as aeroderivatives expect well a have we do tough equation inflation. to as growing. with But equipment have deliveries We mix

big So, being having impact price the pressured through business. such long-cycle cost in price coming a had for P&L in lap you a that XXXX in being when inflation power, the XXXX, by

distribution, by growth cash we and the So, cash down services offset high number. very strong also but still the so conversion cash overall, earnings but side, side, expect on slightly on a collections,

Operator

with comes Our Coe Research. from next Wolfe question Nigel

Nigel Coe

Can hear you me?

Larry Culp

ahead, Nigel. can. Go We

Nigel Coe

Hi. Good morning.

Just went went – there. my line just

all First of for details. all, thanks the

go so We have did to want offshore ‘XX. covered far. the back I and to cash a lot outflow losses in

in you progressing ‘XX bridge how do confident I to to just But back curve it And the in headwinds don’t ‘XX maybe that the total, ‘XX know or for see the in wondering do in how terms magnitude ‘XX? in you that of renewables if see still facing. profit? given losses quantify Just you ‘XX the want are of in developing? we

Larry Culp

I if got we don’t know of that. Nigel, all

speak me Let the dynamic. offshore to

I see We go will our We is a customers pressure. And as execute will lead in pressure. I around We where need projects see next bit evolution some too dynamics cash have look ‘XX. order to and where the going are to teams we as the of dynamic, our Haliade-X a think lot of we the about what with But rec that’s be back-end feedback variability we are move also of to think see little and to they that a revenue, relative opposed that teams in ‘XX gotten the we ‘XX we Haliade-X. from well. what them. the product rev is of have focused. forward, And forward. talked timing little how of engineering in as which doubling new being to payments, From bit will earlier to those some should disbursements a op profit loaded as see with milestone good

that but that the Vernova were we think ‘XX ‘XX of seeing again, free look that clarity many when I business is given But what should such with in are think that some create be in guide, wish too overall, improving I what we respects. us what cash flat to. at help really are in next see late slightly dynamic. that’s a timing we once effectively grid have that a that the in referring of potentially IRA, than of onshore and is will the going buffet I we tranche it’s you we to for will that to orders not mode. see startup atypical pressure a otherwise, And when is more it for

the grid no expectation, the We market, I pricing, coupled right. get we where perspective, are profitable coming in and that in we healthier manufacturing, offshore if best do along, onshore I anticipates from or everyone a with should that think in think to do American seeing ‘XX. with that cost market, here we Again, from coming our year. execution volume a North rather next better respect change to being need

Carolina Dybeck Happe

capital that the turn also And progress XXXX. that when then the see of cash then on talked working cash timing down and about profit in more payments that happening you – have that we with and into will

Operator

Our Vertical next from comes question Jeff Sprague Partners. Research with

Jeff Sprague

Hi. Thank you. Good morning everyone.

Larry Culp

morning. Good

Carolina Dybeck Happe

Good morning Jeff.

Jeff Sprague

morning. Good Alright.

am guide But to we on net me, more you do just so from little the bridge? but bridge XXX% that free just would income, to Just could, right? difference cash net flow. us time? cash little billion normalize conversion first confirm flow here be to the absolute I the to just includes two really provide relative my renewables. that the about to XXX%, just sort on is between think of And how that larger XXX%, I want a Carolina, $X started through you walking expect to billion cash multi-parter income expectation of $X delta bit a flow you. free is of maybe that free color over still question So, or this bit, interesting guide could normal the Thank a sorry. ‘XX we kind if implied of do on for I for going how payments. conversion forward, today of But the kind

Carolina Dybeck Happe

Sure, Jeff.

with, you start right. to are So,

we we $X always of Larry where mentioned flow. renewables, the billion free the billion important cash to it payments morning, $X me, expecting it’s guide cash to talk cash, this are in conversion, in comes When talk but know from. for and earlier As I you our about free see about flow

why So, flow broadly at conversion of different speaking, is we operate do years. next that, And for than a expect couple parts. few more to free XXX% the cash

about depreciation as and talk important than distinction. opportunities then But being the and working and higher part, depreciation timing capital amortization, CapEx. First will I more well. with amortization And an the

healthcare, continue basically expect that difference. working opportunities do supply capital, the on And see couple our on here. after we improving there about to years. working with say of the to $XXX parts We excluding in would it’s the amortization be of invest. in that the I we pressure would that CapEx difference, It’s to are that to a are We expect depreciation for different the we especially largely now makes million chain. continue really And continue line and to management, capital with see year the

inventory. we both so at receivables inventory on in when and turns improve to contract progress see where expect given both be we we opportunities So, and the But we sources also and look assets, to are cycle. to

negative we capital, driver. billion on had we a couple it’s not year, positive AD&A. flow of And have a but it’s expecting from years working $X.X with and Finally, also of are AD&A, this flow

But the we couple expect that be of see can would next we over for to So, pressure. time, also normalizing. that years,

to So, and growing on we are we But for overall, we earnings. focused opportunity improve work continue do to see will that. to continue now,

Operator

question the UBS. Our Snyder next comes of with Chris from line

Chris Snyder

model Thank question wanted business given towards margins But the how understand I XXXX, margins. to Thank expect should XXXX? and achieved general XXXX? aerospace And these is, long you. of over conversation you. in to anything guess the level XXXX, coming lining mixed turn I in mix returning the margins the the there equipment. my we XX% higher I flat specifically headwinds of is that to persist? keeping to from up we out segment Should

Larry Culp

talk to aerospace. are delighted Well, about we

frankly, me had you Chris, dynamic nearly will ‘XX. and be us to as So, jump up saw pressure let in finish, this know, But a in. XX%. LEAP for strong as mix We you a very margins overall

of revenue rather units ‘XX. at be think the it, we call they headwind and said, as itself. the That margins of ceiling we than XX% us don’t within rapidly a call would next we some suspect to create will about new mix I I expect look in of will I new we drive One, that’s as units services, growth more would two both sort grow up, to think flat, XX%. we that cannot services but through And things within expect pierce. then out this that year, look growth opportunity in profit do the year. the would I course the remind at year, and dynamic, pressure folks will an give LEAP

We young improve units is very forward. continue to the have, to much still aftermarket the of The I with program and as about margins program go LEAP lot both and in think one. the a optimism a we opportunity new

the at we as know think at been price-cost challenging has same aerospace. it I hasn’t time, challenging, but been

We much intendancy. think will very do sure a we And am better forward. go job, an is as efforts, I lean our I

will You flow P&L in cash both see and the in statement. the I think that

necessarily to So, dynamic. growth drive and ‘XX aerospace. be we our expectations at continue I don’t done dollar is expansion top as said, would margin go all this growth, think a profit to and line That forward, in

Steve Winoker

Liz, we more have one question. time for

Operator

Our next RBC. Dray Deane question with comes from

Deane Dray

Thank you. Good morning everyone.

Larry Culp

Hey Deane.

Carolina Dybeck Happe

Deane. Good morning

Deane Dray

some cash smooth still flow kind follow-up you trying And the are to is impacts. joined out First to hockey talked seasonal GE, initiative that cash there when year, stick. you Larry, look, of a to avoid cadence the historical flow free an for Jeff’s free question. about

outages the follow-up been away smoothing terms can’t from still But question. something that’s And will flow? I there out then an fourth quarter. that in impact that Is has get macro scheduled cash free of progress? initiative like here You a had

Larry Culp

a And word linearity, been progress. us use talk gets more right, back it, about There still say I there that lot we you has it the would when to do. hear just We make every bit to And every is XXX. dynamic. every a Lean week hour day month. day, there still a every of of every week, of to count, want every is

end, year-end. migrate customers, this our where towards some this of Some quarter is is us, of we we migrate towards

how the So, more people by I encouraged more linear. think understand be we today And am can I progress.

you at three this of we reviews If just aerospace, the year look right. first at weeks the had have

the we at Those help operating year, December, year started how we vis-à-vis, us in are have We really have cadences, regard. looking this a how are vis-à-vis, which this January that of ago. started month, sort

So, we are pleased, not but done.

Deane Dray

quote macro, And that. changes you meaningful looking at, cite indicators given in activity, changes, whether log, could the this uncertain demand morning. any it’s that front anything Appreciate here just can share then you that you are any

Larry Culp

a we the has we as at is in same. looking we are have economy obviously, can only The we Well, Deane, view, bookings watching proprietary only everything that here are about thing short-cycle Obviously, everything that seen, and in and freight that. done precede just is not departures, softened that can. aerospace, this the has

have fleet. we in think of in for gas at don’t to respect XX% the in happening been we utilization Vernova, we Even That utilization see look gas with in we said, by I time. we and can are immune think when Europe, what’s want to real that encouraged, with I we suggest the and the our recovery now real-time well transition the wouldn’t if both line we ‘XX. services aerospace of that and year confident up digit with to those dynamics watching sets do top revenue to tied here positioning be are high-single but us a energy this guiding we carefully, weren’t number

Deane Dray

Larry, thank you.

Larry Culp

Thanks Deane.

Steve Winoker

comments. any Larry, final

Larry Culp

about in we us, company of March with have excited investment things join thrilled today hope GE. lies I spends are I But strongly. saying your are very was a think, finished ground year how wrap your we ahead. for the a year appreciate the in plans, And out you I everybody interest for again, up of think what XXXX historic The here to time the played the Steve, be, we with healthcare. lot would that Cincinnati. Certainly group covered morning. importantly, and us, historic more many this have we see couldn’t taking for We in our rather in more just really, advancing. to ‘XX

Steve Winoker

Thank you. everybody. Thanks

Operator

Thank gentlemen. you and ladies you, participating. conference. concludes for Thank This today’s

may You disconnect. now

General Electric (GE) 24 Jan 232022 Q4 Earnings call transcript