GE - Earnings call 4 2023 | General Electric Company

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Operator

Good day, ladies and gentlemen, and welcome to the General Electric Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] My name is Liz, and I will be your conference coordinator today. [Operator Instructions] 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. Please proceed.

Steven Winoker

Liz. Thanks, Fourth call. GE's XXXX Quarter to earnings Welcome I'm CFO, Rahul Chairman and Culp; and CEO, Larry Ghai. joined by We're also business pleased here to have GE Vernova additional on to CEO, insights performance and guidance. share Scott Strazik

we're making the world elements today, may website, of our as Many of in and Over the are and to SEC our world see based we as the those our change changes. forward-looking Larry. businesses described as view on them and statements filings

H. Culp

GE made of thank progress and the April. you, momentous morning, everyone. we GE results, company. spin Steve, with year XXXX successful ongoing our launched early operating a Aerospace GE tremendous excellent will of good in and be and XXXX as in lean GE the transformation Healthcare Vernova

delivered more growth our almost meaningfully free cash tripled in GE respective our continued Looking and energy expect ahead, on GE the earnings free flow we year to GE cash together In at both continue profit XX commercial better we power [ and drove in results, and trajectories. Vernova renewable with Vernova generated their Aerospace Aerospace positive profit flow. cash XXXX. more and generated results upward ] services. strength engines revenue, as GE and double-digit and than

XX% on the order support we cost and each. our rotorcraft to combat a our We and everything bring revenue. Let safety, invent home focused franchise It's me seriously, aftermarket on we people engines, XX,XXX to do each XX,XXX customers responsibility of and spend purpose plus a an take GE representing and exceptional up, is of sources are and of Aerospace in very the in engines in moment quality, live delivery with lift industry. them our flight, future day that commercial extensive our fleet teams safely.

growth XX% customer supply quarter, sequentially, chain engine deliveries engines Despite environment, needs up today, do to and X,XXX were total to over going We LEAP with up Strategically, for XX%. services. the representing more in executing forward. delivered meet yet XX% including we're Defense, the challenged engines,

our for flow to of ceramic components. lean XX% improved times, focusing improve we've lead example, part we've As And we're model in digits. developing our by on over times shop using key deliveries. reduced matrix LEAP on visit services, lines transformation, constraints, By double connected turnaround

This lean by are driving is not comes GEnx when more recurring to like our but more team partnership us yield and GE to in blades. our address The helping delivery, XX%. quality. used and first-time with it Lean within than Lean with entrepreneurial only Aerospace. defects safety improved across in Rutland, importantly, in suppliers actions fundamentals turbine low-pressure Vermont plants improvements these

$XXX cooling flying enhancements a plus and engine received our For across and fleet. system service to maintenance backlog. XXX tomorrow, our agreements engines spares along an order that's we're module XA several billion building LEAP we're over Dubai XXXX services At for Emirates and introduction. long-term Aerospace, durability keeping power narrowbodies. its Boeing and partners with XXX fleet as GE its fleets our customers' widebody such upcoming to fuel both on way and Airshow agreement our with And included the GEXX commitments This

significantly technologies. hybrid will emissions. thermal And R&D the Recently, investing reduce program, and Improvements fuel for developing Aerospace RISE of -- in program. X in and enhance for the future, next-generation leverage will selected we're phase efficiency NASA GE which

who service engines carry value with billion our each propulsion under term, and provide future Authorization National adaptive will Act, And military next-generation capabilities. customers transition long with engine cutting-edge help of in Aerospace our GE year. our wing people progress is driving accelerating advanced which the program, All said, the the for X funding Defense lean the authorized and all the program traveling

represent to ambition is to lead. electricity our world. position us approximately where Vernova, our the and Over With to services our scale decarbonize to world's of our XX% and the of helping electrify generate XX% and technologies backlog, GE incumbency

at framing additional progress color. of way and of cash. year. give I'll lot today a another strong and the delivered with Grid profitable here high-level for Vernova. Scott's you Power profit onshore growth, made And the was full We've free own delivered proud our quarter strengthen profitability. along these the to Offshore better businesses. outlook. I team's of stand like work selectivity we're GE commercial its but really challenging, Vernova and improve soon. remained lean I'm with underwriting the will to using on

very GE and note, now met led seen grid executing during have I building team at the his I our visit. the action And Scott leadership turnaround Power in he's momentum in and strong first businesses. onshore the on personal with site Gas more impressive my a and

is lead person to an Vernova and Scott lean, of he student right Importantly, GE confident the highly that is Arden I'm future. the into

Aerospace experience GE ready Turning Vernova diverse two Boards, to with are together stronger, Slide assembled valuable We've go. and businesses bringing domain more expertise, X to perspectives delivering our extraordinary more and exiting GE now missions. our their sheet, rise also Vernova balance leadership focused to We've GE fully further aircraft equity our GE and to simplified sharper, stake. Aerospace help and strengthened

teams We GE respectively, Vernova customers GE our how Looking excited will Aerospace X March to City. host in create on there. GE Form-XX X, New Investor and many to Both ahead, hope share alike. see of York to month. greater publicly plans are and file Vernova value shareholders and Days next its you will for Then

Rahul. to over Now

Rahul Ghai

and Larry, morning, you, Thank good everyone.

X. Slide to Turning

We to results basis. on an will seek organic

all services This and supporting profit volume XX segments by partially all segments and We closed from net with Revenue digits. XX%. XX%, inflation. up margin points, higher of another out XX% of increased was double driven Adjusted price by solid year mix expansion investments up operating by up the negative growth. with offset basis was were in equipment up quarter. Orders driven across

driven partially by capital progress including including Adjusted taken was to the orders. was have working $X flow support our was we recent XX%. up collections, and actions largely EPS by $X.XX, earnings payables, stronger suppliers. offset sizable from positive cash Free billion This

was For execution and better and high increased the above led all from Renewables pricing. our robust and year, cash EPS fit XX%. revenue end demand, up the Aerospace guidance. up Profit, Services the of equipment full XX% XX%. benefiting and way,

profit EPS growth. by earnings. billion, growth was significantly in $X.X increased expanded $X up Adjusted and by billion the driven across long operating debt items by XXX points, and lower to growth, to by over price over improvement investments Adjusted profit businesses, Free driven offset increased margin partially and lead basis supported cash $X.X strong renewables billion. $X.X inflation on by reduction. billion -- than aerospace from interest $X more Adjusted flow sizable three

chain working partially was cash offset In capital inventory from robust and source $X.X build XXXX, of billion continued a supply progress growth by challenges. collections, given

corporate. and costs to improved on million. income. year it were lower ended moment cash expenses year-over-year with A Overall, over costs billion just functional $X.X significant of This $X use and XXXX due We higher the roughly $XXX billion. of represents adjusted interest when since progress

see We prepares join turn digital to the team firmly profitable are GE as pleased to Vernova.

of and was are fully go. operators growing And a Our industry-leading GE staffed grid Aerospace spin. who to XXX teams year in the the be at close Vernova others energy This of stands and first with cost half headcount, complexity is the software full are helps less ready utilities, GE quarter XXXX in which address to in us corporate the will X,XXX temporary transition. second Aerospace's GE people, to The just than guidance. ago, embedded years final and few execute

Aerospace expect on back, GE stand-alone In XXXX. pleased and GE profit with revenue, grow XXXX, our we basis, a and Stepping are we performance Vernova to in cash.

shortly. guidance will on We more business share

to Aerospace. turning GE Now

quarter, benefiting up commercial, robust This with XX%. XX% GE services driven by orders. demand solid equipment up higher year-over-year. Profit was volume offset high with of increased up deliveries was pricing was and and CFM teens from and were X%, engine expected departures spare XX% inflation. net and engine Revenue mix up Orders higher over commercial and unfavorable from remained growing partially by install investments. services This the

flat price and offset as roughly down XX unfavorable of volume year-over-year inflation. organically were points and margins and net basis mix investments higher Reported

shop up was scopes. pricing higher from heavier higher parts work XX% internal volume, spare were slightly. increased services commercial, and and visits In with LEAP volume revenue External up

demand us cost. capacity higher to turnaround is decrease time create new and Lean to meet enabling and

our X.X engines servicing lean their XX process, remove to of to disassembly waste in go hours week to team MRO engine from engines used from example, them a -- a Scotland which For X will help week.

XX%. Revenue grew X% LEAP deliveries with up

our mix continues shift As expected, [ ]. installations to towards

was Xx, demand engine Defense, the down X%, underscoring our In book-to-bill digits grew while lower higher combat Revenue double franchises. by equipment driven deliveries. services was quality from of and solid

XX% Commercial and XXXX. For spare deliveries shop parts engine the was XX%, consistent increased with ratio visits up engine external up services XX% year, up significantly internal and Commercial total XX%. XX%. engines grew revenue up with spare with

billion billion, second approximately or with and than on with Defense than a basis consecutive native Free of over increased were million X%. LEAP higher $X.X points year offsetting and $XXX -- was growth and from the basis investments. more offset cash grew XX.X% of reported of orders X% services was than more of pressure. $X.X approximately $X volume inflation. basis Margins mix and capital XX on XX% this up increasing -- net and from offset pricing book-to-bill more This billion for X.Xx Profit expanded working flow earnings points basis. an XX AD&A organic

cover to Vernova. GE it will Now I'll hand Scott, who

Scott Strazik

on Steve, GE last a electrification Thanks, earnings decarbonization. to launch the we a call you, and and GE company Larry Vernova, Rahul. pleasure purpose-built before that's enabling It's join

President built welcome ] to as team and team and strong overseeing experienced our Uhl Jessica leadership leadership innovation technology, We've [ growth. a to delighted

XXXX our in what by as encouraged better team I'm we meaningfully now. accomplished deliver results

slightly renewable million drove We're of energy $XXX double-digit this over combined and power cash profit and year. growth. $X improving generated Our billion revenue businesses profitable,

that energy turnaround billion, booked a the ], large orders the just quarter, renewable $X XQ including fourth sizable [ originally produced offshore At operational was over improvement. order 'XX. were cancellation in our In of

by cancellation, this onshore repower. equipment over stronger led XX% and grew orders Excluding

wind to a expected U.S. Pattern largest We order support to also project secured X.X SunZia be the history. gigawatt in Energy's record project wind

double doubled consecutive And America digits. million onshore offshore. driven by onshore digits for double as grid North backlog. Offshore as grew, deliver than we over Grid pressure volume. the at increased $XXX fifth Profit equipment existing than quarter. Revenue improved offset grew more more and

in $XX $X.X quality and absence Orders and billion plus which XX% over at from revenue over productivity billion, year. onshore of onshore-related charges. $X by better grid billion, negative roughly the driven cash billion improved largely price, flow Free payments. last and XX%. by up improved down earnings Looking Profit the was with $X.X were year's up higher

price We go higher the enabled consecutive -- year At profitability businesses. quarters of following volume at X and profit. grid, through full

over points. billion X backlog approximately more $XX backlog doubled While with our increasing than to and margins average

product reduce lead here. increased core by delivery This flow that is up our doubled facility rising. at about capacity, when Take XX%. Lean times We speed customers Pennsylvania is breakers. to circuit a and helping will time transmission demand production makes

Onshore equipment profitable orders approximately grown XX%. We've has than backlog global XX% America. equipment roughly XX% billion for increased X North to backlog North been nearly and is the quarters. consecutive $X of our more onshore America

equipment over Importantly, due pricing. expanded onshore XX selectivity margins backlog continued and in points our total to

delivering lineup products, focusing on high-performing to completed proactive of costs productivity XX% XXXX fixed more still we're with the streamlined of lowering roughly We're significantly. come. higher-quality our and in workhorse XX% field product with fleets We roughly volume. reliable, And increasing enhancement our

billion, to with the with next improving $X lean. We're of 'XX. executing years. an with losses billion roughly equipment Offshore challenging XXXX to expect wind over productivity in which the $X.X X backlog complete starting backlog, roughly largely down We're we existing was

key Longer highly term, selective on to it in transition. the role play while backlog. a should adding we'll beginning does, industry to energy and is wind be The offshore reset the

Gas strong by We led delivered another power. to Power. Turning year,

Revenue Looking as offset at with digits. air services declined increased driven revenue the higher we quarter. and was driven grew exit XX% new Orders gas by gas. orders by build, Equipment by aero derivative derivatives. growing up largely heavy-duty double steam turbines. gas X% Equipment partially

services with double-digit strong were with Profit strength. low margins driven was over million by $XXX outages higher Services contractual and upgrades.

margins, on As offset additional given individual In growth always quarter, price volume. higher equipment inflation. long-term units productivity and contracted focused this -- may we're in drives expected, higher margin but and weigh margins on an to

Services HAs. For up the gas. revenue grew by delivered X%. XX%. mid-single year, grew with XX digits, of $X.X led billion XX strong, We Profit heavy-to-gas roughly were by turbines

year. this margins double-digit achieved gas Importantly,

Here, productivity lean and is growth. higher enabling

operating hours standard example, cycle and lead by by our For created time us XX%. deliver cost Mexico work in gas time to customers. faster repairs and unit for our helping is decreasing reduce XX% team per This

a cash a is source backlog. of higher-margin strong We're generation. continues power's growing Free services over roughly cash $X flow around pleased million. with up billion, business $XXX comprise performance, of to Power strong, reliable be the XX% where

guidance. it to Rahul I'll discuss to back Now turn

Rahul Ghai

Scott. Thanks,

the quarter Aerospace be combined our the just GE including will GE With time around the last corner, Vernova. first GE reporting and spin results,

GE quarter, high dividend first year-over-year, the EPS we advance [ stock growth. to growth single-digit driven revenue this and flow preferred in expect Aerospace. more income $X.XX For than line ] by growth cash profit $X.XX, driven Adjusted of doubling by net free and with improvement of

Our annual operating independently -- for that full incur incorporating XXXX separately. and year, guidance the reflects impacts business other each stand-alone will

and I'll it and Scott, businesses details overall will and Vernova provide back now over Aerospace the to to further Scott you. we for hand to guides share Larry in GE both GE March.

Scott Strazik

end $XX mid-single flow billion, growth billion to We expecting Vernova in GE solid the XXXX. price, and digits efforts. low margin from this growth outlook EBITDA between mid-single Supporting is $XX in XXXX to at 'XX. EBITDA with organic restructuring up and benefits the low Rahul. adjusted continued Thanks, building is momentum, revenue higher single-digit digits profit see of free up range from margin and substantial from cash productivity

highlights. A few

We improvement. Onshore single-digit will backlog flat achieving on to price margins. Gas revenue current continue and better year-over-year significantly, Power Offshore margins cost-out. with low continue mix, slight remain continued from roughly will to strong execute and services double-digit with expect to our growth high improve

will grid higher mid-single-digit from and Finally, to margins, primarily price. volume expand

million of carve-out Our $XXX guidance ongoing assumes other of and $XXX roughly stand-alone costs. million

these combined costs Power this difference margin to D&A, profit billion When or GE plus roughly including is year's and operating $X.X for the from Vernova, margin converting X.X points. EBITDA adjusted expected Renewables, for

flow. cash free On

the expect million includes $X.X working pension. which better to from GE EBITDA We and $XXX billion of stand-alone a our on higher basis, capital portion absorbing

and energy secular tailwinds excited the lead customers Vernova Given forward. financial with are our trajectory and the GE ahead, to multi-decade partner stronger we to transition launch

to back that, Larry. With

H. Culp

we're Aerospace, excited also GE At about XXXX.

includes midpoint to low implies in of $X.X to Defense Propulsion [ in billion margins billion business. On growth, investments. to Additive profit LEAP, corporate of of year mid-teens growth On $X.X basis, million commercial, growth up operating growth solid profit, double the and mid- reporting billion improving $XXX engines implies another other at high initial revenue high digits, for this MinEx the teens growth expect guidance to in of the mid- and We and stand-alone comes which current the given Systems, high approximately least range. digits including shipments our $X in single-digit of costs, double the roughly our & including and to at services; Technologies including in year-over-year billion $X.X basis, XXXX flat a growth and platform stand-alone growth ] teens other

to stand-alone remains cash impacts. above flow, which over free billion, we including well $X For expect XXX% conversion, generate

teams Investor you Our additional looking insights forward with are in March to detail our Days. at sharing

In Both year. closing, and excellent results. drove growth Aerospace growth, in XXXX was XXXX. better an substantially double-digit Vernova are GE track for continued delivered on GE

what remain accomplished shareholders of we debt billion using and us how of XXXX, $X out day to fully day for future, reduction value behind and While billion in proud in with we've we're on our our to deliver sights serve returned lean improve customers shareholders. we the $XXX and on focused are over

Underpinning this in of important sincere GE the all did work XXXX. the team. of for is all thanks My to you you

commitment GE's to improvement At We're created will of missions. confident future in inventing been more electrifying decarbonizing never Aerospace, path We've in carry vital to Vernova, flight leaders and GE world. that go. industry grounded while and continuous and the the ahead. the ready at I've innovation GE

Steve? you. Over to

Steven Winoker

Larry. Thanks,

ask people queue possible analysts as the open to Please your the XX ask in open next line. and the can minutes. consider to so XX to many get everyone question one I'd as the we fellow line, we Before in

Operator

question [Operator Instructions] first Myles Our Research. Wolfe comes from Walton with

Myles Walton

is engines' I similar similar LEAP And little was high-teens ratio 'XX? a know the also, you I does maybe mentioned in bit And break to about dig if deliveries? down 'XX 'XX. still little commercial a X,XXX to spares you hoping the could growth. it bit, was on to include

H. Culp

the see think lead commercial up Engines engines engines plus. from we're high teens a will to going and Myles, I perspective, way. services CES or be

to I a from XX% to unit mid-teens right think you're now to area. Specific anticipate your what growth. increase in services we the in going see perspective, is a question, LEAP XX%

I of get think we'll ahead see spares. installs

in begin with that moderate So to spares the more ratio typical line will average of a historic cycle. life

So there. that's really are to specifics we with where narrowbody the respect have you

Operator

with Sachs. Our Goldman next the question Ritchie Joe line comes of from

Joseph Ritchie

feels good Yes. said Feels out on the like era. the it end an an of I a end era. of to note. Way like go

for question is Scott. So my one

XXXX. some flow not to like XXXX. expecting slides, Clearly, looks cash Scott, right, have you apples-to-apples, on pickup comments, to corporate. pretty XXXX a just to it's free you're but numbers the So I'm like It like XXXX the look the trying in out meaningful not bridge numbers burden guys

So the embedded in high guide the end and what's and for maybe of just puts talk about 'XX. the to us the low and takes

Scott Strazik

cash proud and million Joe, generated Renewable start. flow I that mean, XXXX. Power at of the $XXX of in we're we free with the segments

we in from clear as $XXX will and of costs all some taxes to basis, in that we're free reportable the to stand-alone Form addition February. $XXX back get we with that need in million, middle through out be to an working carve-out the variables cash pension million, of approximately Now our and flow filing XX apples-and-apples

cash free flow continuing working a that of be of in $X.X million that growth expect up of growth Jumping towards single-digit EBITDA end we of addition see source cash the at capital us cash that drives real drive off will $XXX high that low with from positive about point, flow EBITDA to EBITDA we're mid-single-digit talking billion free the to that starting to to it Vernova. to range

connected grid as down is primarily the on XX-megawatt got the timing of that largest real -- substantial confidence 'XX we've how turbines things. fact variability both Now billion drivers to the North Atlantic wind come and go the us to quickly with proud Wind and improvement execution expecting of on that the the we but Offshore today two that close XXXX. wind into $XXX to of cases both range to two One really in the a install variables the in for and of see of we the off transaction EDF in lot $X.X guide, that the Sea, turbines million

Operator

next Our line RBC Ken Herbert Capital question Markets. come with will from the of

Kenneth Herbert

services can the LEAP provide maybe granularity you much turnaround Larry, assumptions more XXXX in services? for commercial parts improvement guide? embedded the are times maybe mid-teens in spare outlook, the to price then any for other on Maybe, And how some comments on implied compared the and

H. Culp

that on growth is, the think effect, being foundation. I side in services the what really anticipating we're mid-single-digit departure

will going departures grow more ladder mid-teens you how to We think, to work than in likely we're see spare expect shop see internal We're going to pricing parts. services visits from really I up would number terms rapidly we that's what And improvements. scope to get benefit. see of see, growth. We're to that

Rahul Ghai

of add Ken, points couple that response. dot just to a to

said, departures X%. visits. up our are shop with As on to Larry entering some And do we catch-up are XXXX

we as we supply the liked. not Given completed visits as in chain could many would challenges shop XXXX, have get

pushes given double of And Larry said from our enter the digits XXXX, of low are we to pricing, kind in revenue the of on demand increase as expecting adding our So visits to shop mid-teens. shop end visits the up scope that the kind we and teens. what be higher towards to given traffic, outlook,

that that you just to will and growth spares of we services that, then visit When the get that all kind growth below mid-teens growth. moderates spares growth of combine mentioned. And be shop the you

Operator

Mitchell Barclays. from Our next Julian of line the with come question will

Julian Mitchell

Vernova. on Just cash for maybe the a free for flow question Scott again

I working to source. try and assumed So understand, wanted capital think I is just a as

this us help understand year. Vernova maybe intake orders the of what So kind is assumption for

I the in orders think XX%, it was XXXX. up

kind free that of that growth year there sort so cash see must capital working trying point for or orders guide. what and this orders how of interest assumption just separately, on So expense you're expecting? And be sort to cash much inflow some within of forth from flow

around So please? just that, any framing

Rahul Ghai

just the start orders. and first, Scott it and on to let kick Julian, part me me let it I'll the off with second then hand

out, about the Investor you more guide think details we'll comes Form-XX flow cash free the definitely Days. As provide and then as have Vernova, we for

discussed, retain But GE will just the mind, keep Aerospace. previously vast vast, majority GE debt of in as with we've

not there's GE impact a Vernova. lot on So of interest

come the that's the to take But So year. on way to free want to you the cash for structure. flow part? capital next orders Scott, do think about More the details

Scott Strazik

with, with number there Rahul. had with to year onshore quarter. to every a specifically and those big wind in going orders we're And of to were any your see quarter I can think expect grid, as You point, Julian, the an HVDC types we of SunZia fourth begin large a order or bet, in Across in transactions. that example, you Tenet

a expect don't we to 'XX repeat those, So in see versus 'XX.

think But are more see But profile flattish an going utilized as back-end Onshore our with largest and in more much revenue to individual the business, and an loaded than to right and on had active up do shipments PTC, orders very having clarity half will mean book projects, now. replenishing orders really example, I be we with they investing like prior they be actively loaded first all Renewables customers profile onshore. Wind. we the in than projects their 'XX, Onshore the Wind, the project our

in strength. business a On business, in XXXX, even see orders to HVDC XX%. by our as one our HVDC that orders Tennant don't had in Power the to orders largest Renewables to grid, point you XXXX. much much as grid grid, back in we And grew in an the And we orders transformers by about the the as is we going I'd large expect aren't if although extent expect is out talk we over to make grew second example, with XX%. reality continue

to flow a we than but significant free Renewables the into we lot demand our and Tenant -- across XXXX headline about. the cash growth less of a be projects, that of So be continue continue there's contributes talked of free expect XXX% just cash towards SunZia generation that there HVDC or to flow greater orders that may healthy magnitude that

Operator

next line will Sheila of come question Our Jefferies. from Kahyaoglu the with

Sheila Kahyaoglu

if How change you. for one's industry. approach perspective across this regards it the could ensuring your own seen does just the Larry, you integrity your Maybe your lapses the on in quality offer grapples chains to we've as industry supply the the initial challenges, but also your like GEXX flow free XXXX. lead production obviously, How into things that inventory assumptions on mentioned build? with does in you cash of flow for

H. Culp

lot there's a Sheila, there.

from -- industry, strongly everybody to years, to this a first. for the have responsibility having not the that business safety industry, of think I for been solid view world take understands almost close the X the we I'm over. the speak but

before from perspective, talked, lean safety, we way, And framework, quality delivery out. we here day foremost, not SQDC you to is that in the and and transformation as very day the way that work I GE been I we before only before approach, that's and cost. sure have Aerospace rooted hard a underway first operate in think operating talk much an make

Fortunately, being a Aerospace, safety. focused GE history have we at of hyper long on

to FAA well You the really first XXXX, we management And to doing safety our to sure kind. go We possibly we system OEM the do in the we sorts we're time. were over and checks So layer a been all first that example, quality that. deliver all think I that capabilities its perfection, that scheme to implement industry before have the assumes process of so. can building to on deliver for never make But such safety, right? audits, was to required approach of back,

like defense on legacy in side, Xx. applies the and realm, it new applies platforms that And commercial the platforms, LEAP

when say the And get an and and after improve, so of opportunity miss focus, to share transparency our we to that we with talk about that behaviors something, case us forward, really want in get action. that work we and have helps to folks lay if humility if come can and because we undergird of I'd we corrective also leadership all that

So that's general really the approach.

It's us From thrilled of perspective, be a that, to foreseeable only volumes, ramp half Xx cost of with it the be service an ship underwing that we financial eye the building assuming be of the back annuities will future overall over and in that 'XX. cycle in obviously engines to really a an that business on platform. we the We're structure will exciting a It's improve do know will of May on headwind EIS but for platform, XXXX. time. the but for life the begin We're as base that 'XX, us toward the for the XXXX. not installed come the beginning pressure

Rahul Ghai

Sheila, just to to add that.

It start On our of some interest half will of of you've not the a -- the that But driver the as flow negatively start overall, to you greater even absorption cash your in seen we cash XXXX than free saw. has material including Xx extent. to said, in XXXX, free corporate of flow for bringing year, the billion back free headwind cash free cash question, continue impact it's pension, expense, this year. so a inventory towards we've as flow been -- part on this flow, to Larry shipping as $X

XXXX, feel for the I material driver for free pretty So still not and year. cash Xx the the free good a flow of cash about is the flow

Operator

will the Obin Andrew from with Bank of line question next Our America. of come

Andrew Obin

GE. me into detail But you into first gave for maybe But for a just the one the us more for question time first last quarter business for GE company if quarter. yes, a the by for bit -- color. Maybe Just an little overview Rahul.

Rahul Ghai

Andrew. Sure,

kind up year projecting with with to you what full if rates look for year. quarter, strong. Aerospace Revenue So going in the at first mid-teens start the the first quarter commercial the in guide, are line is growth we of

quarter to And business flat expenses, year-over-year we first the as the expect Aerospace. up the to on of all margins a stand-alone pre for on do slightly be kind usual margins basis a for

Scott as said, improvement profit improvement that more Renewables, year, For but be loaded. will there back-end be will during the

we XXXX. that prepared referenced start that the onshore orders second wind of start higher-margin orders half converting we we got in As in Scott remarks, those 'XX into his the shipping

So there's lag to little conversion. revenue bit order a between of

more improvement the back-end so Renewables And loaded. be will

a The for look will first quarter fourth Renewables. quarter Renewables the for lot like

So think in about zone. the roughly same

power, for year-over-year some single-digit typical margin with expansion growth, seasonality And low first in quarter. the

just is But want both that Vernova team are public that and we the other corporate be in fully given expense to small And very very, two one will companies, staffed corporate be fully stand-alone a first effectively And first Aerospace with in the the point will make expense on and corporate up are to I become zero. quarter businesses. historic operating now absorbed staff. the quarter

that of to in quarter as margins to just provided just the given about cost guidance to is after with absorption full reported and and way the companies is first margin But incremental expense through that going we for year. line for think both think Aerospace majority the balance we of Vernova. So

about way to So the that's think first the quarter margins.

Operator

the will of with from Seth Seifman ] Our question come JPMorgan. [ line next

Unknown Analyst

we apples-to-apples do I key we XX% When you to go how that think just so in don't flattish ahead think for to about the you cadence going the want about kind But as talked drivers I we given as you've when think from to here. about Aerospace, 'XX of us for bridge kind 'XX. that? we -- 'XX, jumping margin of kind XXXX of about guidance, apologize the

Rahul Ghai

Seth, right, profit, profit when in listen, flat back year-over-year. growth, expansion a better margins what and let's of so $X.X XX than billion of 'XX, we of margin were billion $X.X we strong basis March, expecting points really Yes. start said with right?

in up than XXXX what a the expected back lot shaped we better March. So initially

steps in but you 'XX, forward back in it with had that when rate, exactly said, ramp in we as of look our I the Now OE that how the right? kind thought along skipped here, but to sitting will margin introduction -- I we hey, would minds had growth double-digit were the is XXXX over 'XX a we the on way March, Xx know And look step XXXX, 'XX. profit to be

an in and LEAP to though a 'XX services biggest offsets as in the issue. 'XX, ramps, driver volume headwind be well. still Now with improvement OE top to 'XX, that be becomes then get previously margin growth 'XX to that inflation is to LEAP line and LEAP profit from as we profitable said, productivity. will ramps. volume ramps pricing the and in But mix will services benefit Xx it's And continue line we've what even 'XX between

said we you company back the to layering So March, billion $X.X other about all just thinking what the $X.X to adjusted in billion moving which that billion which in cost, And $X.X reporting, of of stand-alone profit line XX% we on public $X roughly to more things, had recall, And think expenses, of and billion for about EH&S to expenses. $X.X margins. XXXX, in profit about if we billion 'XX, incremental back in billion, the for said GE are $X.X is current translates with talk March.

Operator

of the Kaplowitz come will Andrew question next Our line with from Citigroup.

Andrew Kaplowitz

up, the 'XX which of terms the your give second half I in be on meaningfully performance you maybe Scott, color ramp I you initial a mentioned can than last components? single-digit for in XXXX Vernova, business year. more think you high expectations better would with expectations your set could reach for margins onshore think margin little us

have through So you cost a of price get your product driver most been does reliability versus And thought? assume bigger you than that would as issues? just

Scott Strazik

high Power's stronger to expectations being in I if mean mid-single-digit 'XX, in Onshore 'XX bet. March. Gas back and back take point, original there. go are talked to you being Andy, with Wind and expectations March, Wind single-digit And a about the margins. today our guide we mean, in than But step both our if in going to largely we grid back, your margins stronger. Onshore I we grid line

X but were March. execute that our businesses Now we has little a low but margins in bit tougher also taking backlog, where tough And about gas, to we've offshore onshore that's is than three with already of strength it'll largest offshore grid account challenging gotten and accrete, XX% today, years that to revenue into more of our that. gas representing continue double-digit through got and to in

in you a to stronger offshore about we businesses reduce billion to 'XX and accrete oxygen liquidate about 'XX approximately our three you $X as we the go, don't smaller backlog also the X offshore but accrete of businesses rest to margin continue then to largest to years were, economics our as our share $X billion clear some and then we to think see in talk while we be pathway the of really with beyond really with tough much. when where we than find approximately from margin So continuing to

share But those more that X. business and digital you March to heard profitability, with Rahul we you get we're mention areas really when grid to software excited like that of we'll earlier some our fact the about returned

'XX the even So than a out key bit and are looking further those of really to little that. dynamics 'XX

Steven Winoker

time Liz, question. last one we for have

Operator

This Deuschle of the question line Bank. Scott Deutsche will come from with

Scott Deuschle

but on margins on flat give Rahul, bit Seth's your imply detail in to in a you GE touched bit question, for the Aerospace can answer 'XX? a you more

And relative for share for you to your hoping fit 'XX, paydown? was an including on update how allocation debt Larry, I priorities give then repurchases in can capital

Rahul Ghai

Sure, Yes. Scott.

another going look of year, billion as to public other a basis. billion strong to to we on including $X.X profit X.X on EH&S, forward I -- guided $X company So then to This and to billion it's XXXX, be after We've basis, billion think expenses. is a $X.X $X.X stand-alone current right?

which now with million Including, GE corporate support second be of through $XXX kind wind to of the down us what, quarter. office,

about million of of low the or a double at So this implies digit growth. growth $XXX midpoint profit that

expecting. OE of Xx of that we impacting LEAP More Margins, services as LEAP about be coming still points profitable, pressure flat, X.X negatively from growth. I turning even those to as just LEAP Seth it have than that expected, margins we're is introduction do ramp, would the strong the is point to is And that we expect services and said margins. margin engines of though earlier, X

incremental improve flight. of headwind -- generation of And then -- the the to for rest coming support X-point is introduction the in products of future develop that R&D from durability, lead of next Xx and improvement further

offset margin we that This are benefit expecting. strong with volume, the completely growth from services productivity, is pressure

in of had step March laid in is a that it for it's 'XX. out again, overall, medium-term the So Larry? line we with our outlook expectations that

H. Culp

you asked the and are really know talked through just through want really Rahul sure confident to change the we don't make role I moment. in Vernova's no businesses. feeling spin investment I that Scott relative set at that Aerospace and good see that role, I this the think prospects But Scott, my about the as outset, very we -- outlook, a to point. grade, see with both There here be to We on at or GE had latter. my suspect GE for want if to

will, capital Investor for about York, in the in structures, early share the March at only We but to how the not more strategies allocation New businesses. each capital Days as thinking of -- we're both the

do demand, going going those I buybacks certainly Aerospace covering Aerospace, assume be an so compelling we'll are should those want that to look beyond Board more value-accretive and the time have GE overall of the think dilution M&A. that meaningful part important timing important in really to have we're to that mix, you come. a details just I to The questions. to with effort

offense opportunities beyond certainly around deleveraging Scott's to inorganically forward I and in to Aerospace. play, think to while playing have to got continue more going moving at invest the that the looking energy we're they they're different to But look hand transition. a And

Steven Winoker

to I first GE's remind results a Vernova will want wit quarter Liz, that in wrap, April. holding folks GE before report we late GE call. Aerospace separate

on comment GE his like focus team. and commentary to in we'll with Healthcare, leaving result, a April Aerospace GE our Vernova we Scott As did late

any final Larry, comments?

H. Culp

Steve, thanks.

call, in close really as looking to forward to both Vernova. We're delivered Aerospace what's the ahead teams entities. and independent again, for both XXXX, the Just companies

to day Investor that support of the you and Days March. Before see time early in We in many investment we today, your your hope April, at appreciate of GE.

Operator

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

disconnect. now may You

General Electric (GE) 23 Jan 242023 Q4 Earnings call transcript