GE(GE) - 2024 Q2 - Quarterly Report

Revenue and Profit Performance - Total revenues for Q2 2024 were $9.1 billion, up $0.3 billion (4%) from the previous year, driven by an increase in Commercial Engines & Services[12] - Adjusted earnings per share for Q2 2024 was $1.20, with a profit margin of 15.9% and operating profit margin of 23.1%[13] - Total revenues for the six months ended June 30, 2024, increased by $1.5 billion (9%) to $18.0 billion, with equipment revenues up due to higher prices and favorable mix, and services revenues up due to increased shop visit volume and spare parts[19] - Continuing earnings for the three months ended June 30, 2024 increased by $0.1 billion to $1.3 billion, driven by a $0.4 billion increase in segment profit and a $0.1 billion decrease in provision for income taxes[20] - Adjusted earnings for the three months ended June 30, 2024 were $1.3 billion, an increase of $0.5 billion, primarily due to a $0.4 billion increase in segment profit and lower Adjusted Corporate & Other operating costs[20] - For the six months ended June 30, 2024, continuing earnings decreased by $4.7 billion, primarily due to a $6.0 billion decrease in gains on retained and sold ownership interests, partially offset by a $0.7 billion increase in segment profit[21] - Total revenues (GAAP) for Q2 2024 were $9.094 billion, a 4% increase compared to $8.755 billion in Q2 2023[76] - Adjusted revenues (Non-GAAP) for Q2 2024 were $8.223 billion, up 4% from $7.907 billion in Q2 2023[76] - Operating profit (Non-GAAP) for Q2 2024 was $1.897 billion, a 37% increase from $1.385 billion in Q2 2023[76] - Operating profit margin (Non-GAAP) improved to 23.1% in Q2 2024, up 560 basis points from 17.5% in Q2 2023[76] - Earnings (loss) from continuing operations (GAAP) for Q2 2024 were $1.320 billion, or $1.20 per share, compared to $1.195 billion, or $1.09 per share, in Q2 2023[78] - Adjusted earnings (Non-GAAP) for Q2 2024 were $1.321 billion, or $1.20 per share, compared to $812 million, or $0.74 per share, in Q2 2023[78] - Total revenues for the three months ended June 30, 2024, were $9,094 million, compared to $8,755 million in the same period in 2023[84] - Net earnings attributable to common shareholders for the three months ended June 30, 2024, were $1,266 million, compared to a loss of $25 million in the same period in 2023[84] - Diluted earnings per share from continuing operations for the three months ended June 30, 2024, were $1.20, compared to $1.09 in the same period in 2023[84] - Net earnings for the six months ended June 30, 2024, were $2.833 billion, compared to $7.518 billion in the same period in 2023[86] - Earnings per share from continuing operations for Q2 2024 increased to $1.20 (diluted) and $1.21 (basic), compared to $1.09 (diluted) and $1.10 (basic) in Q2 2023[148] - Net earnings attributable to common shareholders for Q2 2024 were $1.266 billion, a significant improvement from a net loss of $25 million in Q2 2023[148] - Earnings from continuing operations attributable to common shareholders for Q2 2024 were $1.320 billion, up from $1.195 billion in Q2 2023[177] Cash Flow and Financial Position - Cash flows from operating activities (CFOA) for the six months ended June 30, 2024, were $2.6 billion, up from $1.6 billion in the same period in 2023[14] - Free cash flows (FCF) for the six months ended June 30, 2024, were $2.8 billion, compared to $1.8 billion in the same period in 2023[14] - Total cash, cash equivalents, and restricted cash was $12.1 billion at June 30, 2024, with $5.0 billion held in the U.S. and $7.1 billion held outside the U.S.[54] - The company repurchased 11.7 million shares for $1.9 billion during the three months ended June 30, 2024, under a $15.0 billion share repurchase authorization[59] - Consolidated total borrowings decreased by $0.9 billion to $19.7 billion at June 30, 2024, mainly due to maturities[59] - The company received $2.6 billion from the disposition of 31.1 million shares of GE HealthCare in the first quarter of 2024, with a remaining interest of 30.5 million shares as of June 30, 2024[58] - Free cash flows (Non-GAAP) for the first six months of 2024 were $2.767 billion, compared to $1.770 billion in the same period of 2023[80] - Cash flows from operating activities (GAAP) for the first six months of 2024 were $2.586 billion, up from $1.564 billion in the same period of 2023[80] - Total assets as of June 30, 2024, were $123,190 million, compared to $173,300 million as of December 31, 2023[85] - Cash, cash equivalents, and restricted cash as of June 30, 2024, were $12,107 million, compared to $15,204 million as of December 31, 2023[85] - Total liabilities as of June 30, 2024, were $104,347 million, compared to $144,695 million as of December 31, 2023[85] - Total shareholders' equity as of June 30, 2024, was $18,598 million, compared to $27,403 million as of December 31, 2023[85] - The company's retained earnings as of June 30, 2024, were $77,349 million, compared to $86,553 million as of December 31, 2023[85] - The company's total equity as of June 30, 2024, was $18,843 million, compared to $28,605 million as of December 31, 2023[85] - Cash from operating activities for the six months ended June 30, 2024, was $1.905 billion, a significant increase from $226 million in 2023[86] - Cash used for investing activities for the six months ended June 30, 2024, was $3.478 billion, compared to $171 million in 2023[86] - Cash used for financing activities for the six months ended June 30, 2024, was $3.092 billion, compared to $4.394 billion in 2023[86] - Comprehensive income for the six months ended June 30, 2024, was $4.931 billion, compared to $6.212 billion in 2023[87] - The company's cash, cash equivalents, and restricted cash at June 30, 2024, were $14.947 billion, compared to $14.832 billion in 2023[86] - The company's total equity balance at June 30, 2024, was $18.843 billion, compared to $32.393 billion in 2023[87] - GE Vernova's cash balance on the date of separation was $4,242 million, with GE Aerospace contributing $515 million to fund future operations[94] - GE Aerospace collected net cash of $477 million related to transition services and sales of engines and parts to GE Vernova for the three months ended June 30, 2024[95] - GE Aerospace collected net cash of $157 million related to transition services and other activities with GE HealthCare for the six months ended June 30, 2024[97] - The company repurchased 13.9 million shares for $2,289 million during the three months ended June 30, 2024, and 15.0 million shares for $2,434 million during the six months ended June 30, 2024[147] Segment Performance - Equipment revenues for Q2 2024 decreased to $2.2 billion from $2.5 billion in Q2 2023, primarily due to lower deliveries of new engines[18] - Services revenues for Q2 2024 increased to $6.0 billion from $5.4 billion in Q2 2023, driven by higher internal shop visit volume and prices[18] - Segment revenues for the three months ended June 30, 2024 increased by $0.4 billion (7%) to $6.1 billion, with segment profit up $0.3 billion (21%) to $1.7 billion[29] - Defense & Systems segment revenues for the three months ended June 30, 2024 were $1.5 billion, with segment profit increasing to $344 million and a segment profit margin of 14.3%[38] - Segment revenues increased by 1% and segment profit increased by $0.1 billion (71%) for the three months ended June 30, 2024, driven by growth in Propulsion & Additive Technologies[39] - For the six months ended June 30, 2024, segment revenues increased by $0.4 billion (9%) and segment profit increased by $0.2 billion (49%), with growth in both Defense & Systems and Propulsion & Additive Technologies[41] - Commercial Engines & Services (CES) has a commercial engine fleet in service of approximately 44,000 units, with 13,000 units under long-term service agreements[27] - Total segment revenues for the six months ended June 30, 2024, were $16.941 billion, up from $15.310 billion in 2023[177] - Commercial Engines & Services segment revenue for Q2 2024 was $6.132 billion, a 6.9% increase from $5.737 billion in Q2 2023[177] - Defense & Propulsion Technologies segment revenue for Q2 2024 was $2.401 billion, slightly up from $2.375 billion in Q2 2023[177] - Corporate & Other segment reported a loss of $534 million in Q2 2024, compared to a loss of $84 million in Q2 2023[177] Remaining Performance Obligations (RPO) - Remaining performance obligation (RPO) as of June 30, 2024, increased by $5.8 billion (4%) to $159.8 billion, driven by Commercial Engines & Services and Defense & Propulsion Technologies[16] - The remaining performance obligation as of June 30, 2024, was $159.765 billion, with $19.191 billion related to equipment and $140.574 billion related to services[177] - Equipment-related remaining performance obligation is expected to be 37% satisfied within 1 year, 54% within 2 years, and 74% within 5 years[177] - Services-related remaining performance obligation is expected to be 11% recognized within 1 year, 42% within 5 years, 69% within 10 years, and 85% within 15 years[177] - GE Vernova's remaining performance obligations (RPO) related to GE Aerospace credit support were reduced by over 50% to approximately $29.0 billion as of Q2 2024[74] - Approximately $16 billion of GE Vernova's RPO related to GE Aerospace credit support is expected to mature within five years post-spin-off[74] Corporate and Other Costs - Corporate & Other operating costs increased by $0.5 billion for the three months ended June 30, 2024, primarily due to $0.8 billion of lower gains on retained and sold ownership interests and other equity securities[44] - For the six months ended June 30, 2024, Corporate & Other operating profit decreased by $5.6 billion, mainly due to $6.0 billion of lower gains on retained and sold ownership interests and other equity securities[45] - Adjusted Corporate & Other operating costs decreased by $0.1 billion for both the three and six months ended June 30, 2024, primarily due to a reduction in core functional costs[44][45] - Pre-tax separation costs for Q2 2024 were $75 million, down from $163 million in Q2 2023, as the company completed its spin-off of GE Vernova[154] - The company recognized $216 million of net tax benefit for Q2 2024 related to separation activities, including deferred tax benefits from state tax attributes[154] Tax and Accounting - The effective income tax rate was 8.6% for the three months ended June 30, 2024, compared to 16.8% for the same period in 2023[48] - Adjusted effective income tax rate (Non-GAAP) for Q2 2024 was 20.3%, compared to 24.1% in Q2 2023[78] - The effective income tax rate for the six months ended June 30, 2024, was 10.7%, reduced from the U.S. statutory rate of 21% due to separation income tax benefits and U.S. business tax credit benefits[142] - Net deferred income tax assets were $7,338 million as of June 30, 2024, compared to $7,502 million at the end of 2023[145] - The company is evaluating the impact of new FASB accounting standards on segment reporting and income tax disclosures, effective from fiscal years beginning after December 15, 2024[70][71] Share Repurchases and Investments - The company repurchased 11.7 million shares for $1.9 billion during the three months ended June 30, 2024, under a $15.0 billion share repurchase authorization[59] - The company repurchased 11,700 thousand shares for $1,946 million under the $15 billion share repurchase authorization during the three months ended June 30, 2024[81] - The company repurchased 13.9 million shares for $2,289 million during the three months ended June 30, 2024, and 15.0 million shares for $2,434 million during the six months ended June 30, 2024[147] - The company's investment in GE HealthCare comprises 30.5 million shares (6.7% ownership) as of June 30, 2024, with $2.602 billion received from share dispositions in H1 2024[149] - GE Aerospace held 30.5 million shares (approximately 6.7% ownership interest) in GE HealthCare as of June 30, 2024[104] - The estimated fair value of investment securities decreased to $38,129 million at June 30, 2024 from $38,000 million at December 31, 2023, primarily due to share sales of GE HealthCare equity interest and higher market yields[106] - Total estimated fair value of debt securities in an unrealized loss position were $21,476 million at June 30, 2024, with $16,283 million having gross unrealized losses of $(2,813) million and being in a loss position for 12 months or more[107] - Gross unrealized losses of $(2,946) million at June 30, 2024 included $(2,122) million related to U.S. corporate securities, $(138) million related to commercial mortgage-backed securities, and $(71) million related to Asset-backed securities[107] - The majority of equity securities are classified within Level 1 and debt securities within Level 2, with $7,088 million of investments classified within Level 3 at June 30, 2024[110] - The company holds $1,141 million of equity securities without readily determinable fair value at June 30, 2024, primarily limited partnership investments in private equity, infrastructure, and real estate funds[111] - Investments in unconsolidated VIEs increased to $7,260 million at June 30, 2024 from $6,577 million at December 31, 2023[165] - Total investment commitments were $3,930 million at June 30, 2024, including $3,671 million for unconsolidated VIEs[166] Insurance and Long-Term Care - Insurance cash and cash equivalents rose to $1,442 million at June 30, 2024, compared to $784 million at December 31, 2023[123] - Future policy benefit reserves decreased to $35,376 million at June 30, 2024, down from $37,689 million at December 31, 2023[127] - Present value of expected net premiums for long-term care decreased to $3,803 million at June 30, 2024, from $4,134 million at June 30, 2023[130] - Gross premiums for long-term care were $242 million for the six months ended June 30, 2024, compared to $246 million for the same period in 2023[130] - Benefit payments for long-term care were $29,105 million at June 30, 2024, compared to $30,022 million at June 30, 2023[131] - Benefit payments for structured settlement annuities were $8,700 million at June 30, 2024, compared to $9,224 million at June 30, 2023[131] - Policyholders account balances totaled $1,654 million as of June 30, 2024, a decrease from $1,884 million in 2023, primarily due to surrenders, withdrawals, and benefit payments of $215 million, partially offset by net additions from separate accounts and interest credited of $142 million[133] - The company provided a total of $15,035 million in capital contributions to its run-off insurance subsidiaries since 2018, including a final contribution of $1,820 million in Q1 2024[134] - The company signed an agreement in June 2024 to exit a block of its life and health insurance business via an assumption reinsurance transaction, pending regulatory approvals