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GE(GE) - 2024 Q2 - Quarterly Report
GEGE(GE)2024-07-23 10:28
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Revenue and Profit Performance - Total revenues for Q2 2024 were 9.1billion,up9.1 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,withaprofitmarginof15.91.20, 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 18.0billion,withequipmentrevenuesupduetohigherpricesandfavorablemix,andservicesrevenuesupduetoincreasedshopvisitvolumeandspareparts[19]−ContinuingearningsforthethreemonthsendedJune30,2024increasedby18.0 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 1.3billion,drivenbya1.3 billion, driven by a 0.4 billion increase in segment profit and a 0.1billiondecreaseinprovisionforincometaxes[20]−AdjustedearningsforthethreemonthsendedJune30,2024were0.1 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 0.5billion,primarilyduetoa0.5 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 4.7billion,primarilyduetoa4.7 billion, primarily due to a 6.0 billion decrease in gains on retained and sold ownership interests, partially offset by a 0.7billionincreaseinsegmentprofit[21]−Totalrevenues(GAAP)forQ22024were0.7 billion increase in segment profit[21] - Total revenues (GAAP) for Q2 2024 were 9.094 billion, a 4% increase compared to 8.755billioninQ22023[76]−Adjustedrevenues(Non−GAAP)forQ22024were8.755 billion in Q2 2023[76] - Adjusted revenues (Non-GAAP) for Q2 2024 were 8.223 billion, up 4% from 7.907billioninQ22023[76]−Operatingprofit(Non−GAAP)forQ22024was7.907 billion in Q2 2023[76] - Operating profit (Non-GAAP) for Q2 2024 was 1.897 billion, a 37% increase from 1.385billioninQ22023[76]−Operatingprofitmargin(Non−GAAP)improvedto23.11.385 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 1.20pershare,comparedto1.20 per share, compared to 1.195 billion, or 1.09pershare,inQ22023[78]−Adjustedearnings(Non−GAAP)forQ22024were1.09 per share, in Q2 2023[78] - Adjusted earnings (Non-GAAP) for Q2 2024 were 1.321 billion, or 1.20pershare,comparedto1.20 per share, compared to 812 million, or 0.74pershare,inQ22023[78]−TotalrevenuesforthethreemonthsendedJune30,2024,were0.74 per share, in Q2 2023[78] - Total revenues for the three months ended June 30, 2024, were 9,094 million, compared to 8,755millioninthesameperiodin2023[84]−NetearningsattributabletocommonshareholdersforthethreemonthsendedJune30,2024,were8,755 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 25millioninthesameperiodin2023[84]−DilutedearningspersharefromcontinuingoperationsforthethreemonthsendedJune30,2024,were25 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 1.09inthesameperiodin2023[84]−NetearningsforthesixmonthsendedJune30,2024,were1.09 in the same period in 2023[84] - Net earnings for the six months ended June 30, 2024, were 2.833 billion, compared to 7.518billioninthesameperiodin2023[86]−EarningspersharefromcontinuingoperationsforQ22024increasedto7.518 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),comparedto1.21 (basic), compared to 1.09 (diluted) and 1.10(basic)inQ22023[148]−NetearningsattributabletocommonshareholdersforQ22024were1.10 (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 25millioninQ22023[148]−EarningsfromcontinuingoperationsattributabletocommonshareholdersforQ22024were25 million in Q2 2023[148] - Earnings from continuing operations attributable to common shareholders for Q2 2024 were 1.320 billion, up from 1.195billioninQ22023[177]CashFlowandFinancialPosition−Cashflowsfromoperatingactivities(CFOA)forthesixmonthsendedJune30,2024,were1.195 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 1.6billioninthesameperiodin2023[14]−Freecashflows(FCF)forthesixmonthsendedJune30,2024,were1.6 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 1.8billioninthesameperiodin2023[14]−Totalcash,cashequivalents,andrestrictedcashwas1.8 billion in the same period in 2023[14] - Total cash, cash equivalents, and restricted cash was 12.1 billion at June 30, 2024, with 5.0billionheldintheU.S.and5.0 billion held in the U.S. and 7.1 billion held outside the U.S.[54] - The company repurchased 11.7 million shares for 1.9billionduringthethreemonthsendedJune30,2024,undera1.9 billion during the three months ended June 30, 2024, under a 15.0 billion share repurchase authorization[59] - Consolidated total borrowings decreased by 0.9billionto0.9 billion to 19.7 billion at June 30, 2024, mainly due to maturities[59] - The company received 2.6billionfromthedispositionof31.1millionsharesofGEHealthCareinthefirstquarterof2024,witharemaininginterestof30.5millionsharesasofJune30,2024[58]−Freecashflows(Non−GAAP)forthefirstsixmonthsof2024were2.6 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 1.770billioninthesameperiodof2023[80]−Cashflowsfromoperatingactivities(GAAP)forthefirstsixmonthsof2024were1.770 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 1.564billioninthesameperiodof2023[80]−TotalassetsasofJune30,2024,were1.564 billion in the same period of 2023[80] - Total assets as of June 30, 2024, were 123,190 million, compared to 173,300millionasofDecember31,2023[85]−Cash,cashequivalents,andrestrictedcashasofJune30,2024,were173,300 million as of December 31, 2023[85] - Cash, cash equivalents, and restricted cash as of June 30, 2024, were 12,107 million, compared to 15,204millionasofDecember31,2023[85]−TotalliabilitiesasofJune30,2024,were15,204 million as of December 31, 2023[85] - Total liabilities as of June 30, 2024, were 104,347 million, compared to 144,695millionasofDecember31,2023[85]−Totalshareholders′equityasofJune30,2024,was144,695 million as of December 31, 2023[85] - Total shareholders' equity as of June 30, 2024, was 18,598 million, compared to 27,403millionasofDecember31,2023[85]−Thecompany′sretainedearningsasofJune30,2024,were27,403 million as of December 31, 2023[85] - The company's retained earnings as of June 30, 2024, were 77,349 million, compared to 86,553millionasofDecember31,2023[85]−Thecompany′stotalequityasofJune30,2024,was86,553 million as of December 31, 2023[85] - The company's total equity as of June 30, 2024, was 18,843 million, compared to 28,605millionasofDecember31,2023[85]−CashfromoperatingactivitiesforthesixmonthsendedJune30,2024,was28,605 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 226millionin2023[86]−CashusedforinvestingactivitiesforthesixmonthsendedJune30,2024,was226 million in 2023[86] - Cash used for investing activities for the six months ended June 30, 2024, was 3.478 billion, compared to 171millionin2023[86]−CashusedforfinancingactivitiesforthesixmonthsendedJune30,2024,was171 million in 2023[86] - Cash used for financing activities for the six months ended June 30, 2024, was 3.092 billion, compared to 4.394billionin2023[86]−ComprehensiveincomeforthesixmonthsendedJune30,2024,was4.394 billion in 2023[86] - Comprehensive income for the six months ended June 30, 2024, was 4.931 billion, compared to 6.212billionin2023[87]−Thecompany′scash,cashequivalents,andrestrictedcashatJune30,2024,were6.212 billion in 2023[87] - The company's cash, cash equivalents, and restricted cash at June 30, 2024, were 14.947 billion, compared to 14.832billionin2023[86]−Thecompany′stotalequitybalanceatJune30,2024,was14.832 billion in 2023[86] - The company's total equity balance at June 30, 2024, was 18.843 billion, compared to 32.393billionin2023[87]−GEVernova′scashbalanceonthedateofseparationwas32.393 billion in 2023[87] - GE Vernova's cash balance on the date of separation was 4,242 million, with GE Aerospace contributing 515milliontofundfutureoperations[94]−GEAerospacecollectednetcashof515 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 157millionrelatedtotransitionservicesandotheractivitieswithGEHealthCareforthesixmonthsendedJune30,2024[97]−Thecompanyrepurchased13.9millionsharesfor157 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 2,434millionduringthesixmonthsendedJune30,2024[147]SegmentPerformance−EquipmentrevenuesforQ22024decreasedto2,434 million during the six months ended June 30, 2024[147] Segment Performance - Equipment revenues for Q2 2024 decreased to 2.2 billion from 2.5billioninQ22023,primarilyduetolowerdeliveriesofnewengines[18]−ServicesrevenuesforQ22024increasedto2.5 billion in Q2 2023, primarily due to lower deliveries of new engines[18] - Services revenues for Q2 2024 increased to 6.0 billion from 5.4billioninQ22023,drivenbyhigherinternalshopvisitvolumeandprices[18]−SegmentrevenuesforthethreemonthsendedJune30,2024increasedby5.4 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 6.1billion,withsegmentprofitup6.1 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 344millionandasegmentprofitmarginof14.3344 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 0.4billion(90.4 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 16.941billion,upfrom16.941 billion, up from 15.310 billion in 2023[177] - Commercial Engines & Services segment revenue for Q2 2024 was 6.132billion,a6.96.132 billion, a 6.9% increase from 5.737 billion in Q2 2023[177] - Defense & Propulsion Technologies segment revenue for Q2 2024 was 2.401billion,slightlyupfrom2.401 billion, slightly up from 2.375 billion in Q2 2023[177] - Corporate & Other segment reported a loss of 534millioninQ22024,comparedtoalossof534 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 5.8billion(45.8 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 159.765billion,with159.765 billion, with 19.191 billion related to equipment and 140.574billionrelatedtoservices[177]−Equipment−relatedremainingperformanceobligationisexpectedtobe37140.574 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 75million,downfrom75 million, down from 163 million in Q2 2023, as the company completed its spin-off of GE Vernova[154] - The company recognized 216millionofnettaxbenefitforQ22024relatedtoseparationactivities,includingdeferredtaxbenefitsfromstatetaxattributes[154]TaxandAccounting−Theeffectiveincometaxratewas8.6216 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 7,502millionattheendof2023[145]−ThecompanyisevaluatingtheimpactofnewFASBaccountingstandardsonsegmentreportingandincometaxdisclosures,effectivefromfiscalyearsbeginningafterDecember15,2024[70][71]ShareRepurchasesandInvestments−Thecompanyrepurchased11.7millionsharesfor7,502 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 15.0billionsharerepurchaseauthorization[59]−Thecompanyrepurchased11,700thousandsharesfor15.0 billion share repurchase authorization[59] - The company repurchased 11,700 thousand shares for 1,946 million under the 15billionsharerepurchaseauthorizationduringthethreemonthsendedJune30,2024[81]−Thecompanyrepurchased13.9millionsharesfor15 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 2,434millionduringthesixmonthsendedJune30,2024[147]−Thecompany′sinvestmentinGEHealthCarecomprises30.5millionshares(6.72,434 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 38,129millionatJune30,2024from38,129 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 21,476millionatJune30,2024,with21,476 million at June 30, 2024, with 16,283 million having gross unrealized losses of (2,813)millionandbeinginalosspositionfor12monthsormore[107]−Grossunrealizedlossesof(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)millionrelatedtoU.S.corporatesecurities,(2,122) million related to U.S. corporate securities, (138) million related to commercial mortgage-backed securities, and (71)millionrelatedtoAsset−backedsecurities[107]−ThemajorityofequitysecuritiesareclassifiedwithinLevel1anddebtsecuritieswithinLevel2,with(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 1,141millionofequitysecuritieswithoutreadilydeterminablefairvalueatJune30,2024,primarilylimitedpartnershipinvestmentsinprivateequity,infrastructure,andrealestatefunds[111]−InvestmentsinunconsolidatedVIEsincreasedto1,141 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 6,577millionatDecember31,2023[165]−Totalinvestmentcommitmentswere6,577 million at December 31, 2023[165] - Total investment commitments were 3,930 million at June 30, 2024, including 3,671millionforunconsolidatedVIEs[166]InsuranceandLong−TermCare−Insurancecashandcashequivalentsroseto3,671 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 784millionatDecember31,2023[123]−Futurepolicybenefitreservesdecreasedto784 million at December 31, 2023[123] - Future policy benefit reserves decreased to 35,376 million at June 30, 2024, down from 37,689millionatDecember31,2023[127]−Presentvalueofexpectednetpremiumsforlong−termcaredecreasedto37,689 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 4,134millionatJune30,2023[130]−Grosspremiumsforlong−termcarewere4,134 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 246millionforthesameperiodin2023[130]−Benefitpaymentsforlong−termcarewere246 million for the same period in 2023[130] - Benefit payments for long-term care were 29,105 million at June 30, 2024, compared to 30,022millionatJune30,2023[131]−Benefitpaymentsforstructuredsettlementannuitieswere30,022 million at June 30, 2023[131] - Benefit payments for structured settlement annuities were 8,700 million at June 30, 2024, compared to 9,224millionatJune30,2023[131]−Policyholdersaccountbalancestotaled9,224 million at June 30, 2023[131] - Policyholders account balances totaled 1,654 million as of June 30, 2024, a decrease from 1,884millionin2023,primarilyduetosurrenders,withdrawals,andbenefitpaymentsof1,884 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 142million[133]−Thecompanyprovidedatotalof142 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