Positive trajectory in 2021 as momentum builds across businesses
BOSTON--(BUSINESS WIRE)-- GE (NYSE:GE) today announced its detailed 2021 outlook.
GE Chairman and CEO H. Lawrence Culp, Jr. said, “Our team has built a strong foundation to drive improvements throughout GE. Scaling lean and shifting decision-making closer to our customers are helping us execute better and transform our culture—so that these improvements are both continuous and lasting.”
Culp continued, “We are on a positive trajectory in 2021 as momentum builds across our businesses and we transform to a more focused, simpler, and stronger industrial company. I remain confident we will deliver value for GE’s shareholders, employees, customers, and communities for the long term. We are excited to shift more toward offense, investing in breakthrough technologies to serve the needs of our customers and the world—for more sustainable, reliable, and affordable energy; more integrated and personalized healthcare; and smarter and more efficient flight.”
GE shared the following total company outlook for full-year 2021:
GE's 2021 outlook reflects a reduction in cash and profit from businesses that were disposed in 2020 (primarily BioPharma) as well as the continued reduction of Baker Hughes shareholder dividends in line with the orderly sale of GE's remaining stake. This outlook assumes Aviation organic revenue* is up year-over-year, which depends on the Commercial Aviation market recovery accelerating in the second half of 2021 as well as the timing of aircraft deliveries. GE also expects to improve operational performance in Power and Renewable Energy, with continued strength in Healthcare and better Capital earnings compared to 2020.
GE expects to achieve a net debt*/EBITDA* ratio of less than 2.5x over the next few years.
Business Outlooks
GE also announced the following outlook by business for full-year 2021:
| GE Industrial | Power | Renewable Energy | Aviation | Healthcare |
Organic Revenue* | Low -single-digit growth | Down mid-single digits | Mid-single-digit growth | Low-single-digit growth | Low- to mid-single-digit growth |
Organic Profit Margin* | 250+bps expansion | Expanding | Better | Low double digits | 25-75bps expansion |
GE Industrial Free Cash Flow* | $2.5 – 4.5 billion | ~Flat (Gas Power up; Power Portfolio down) | Up and positive | Up, partial recovery | Flat to slightly up |
GE Capital
Today GE separately announced an agreement to combine its GE Capital Aviation Services business (“GECAS”) with AerCap Holdings N.V. (“AerCap”) for consideration valued at more than $30 billion. The transaction simplifies GE and focuses it on its industrial core—Power, Renewable Energy, Aviation, and Healthcare—while significantly reducing GE Capital assets and generating proceeds to further de-risk and de-lever.
For the first quarter of 2021, in connection with signing the transaction agreement, GE will record an approximate $3 billion non-cash charge and report GECAS as a discontinued operation. In 2021, GE Capital expects to generate a loss in adjusted continuing earnings* of between $0.5 to $0.7 billion, with reported assets, excluding cash and Insurance*, of approximately $17 billion. In addition, GE will discontinue the majority of its factoring programs. GE’s 2021 Industrial free cash flow* outlook of $2.5 billion to $4.5 billion excludes the one-time impact of this decision.
With the closing of the GECAS transaction, GE will consolidate the GE Capital balance sheet into Industrial, simplifying its reporting.
Reverse Stock Split
In light of its significant transformation over the past several years, GE is also announcing today that its Board will recommend that shareholders approve a reverse stock split at a ratio of 1-for-8 and a corresponding proportionate reduction in the number of authorized shares of Common Stock. The reverse stock split would decrease the number of shares outstanding to a number more typical of companies with comparable market capitalization. Whether and when to effect it would be at the discretion of GE’s Board, at any time prior to the one-year anniversary of its 2021 Annual Meeting on May 4, 2021. GE will share additional information in a preliminary proxy filing, which it expects to file later this week.
Conference Call and Webcast
GE will discuss its 2021 outlook during its investor conference call today starting at 8:00am. ET. The first 30 minutes will be dedicated to the transaction, including Chairman and CEO H. Lawrence Culp, Jr. and CFO Carolina Dybeck Happe. The remainder of the call will feature GE’s business operating leaders, including Scott Strazik, Gas Power CEO; Dan Janki, Power Portfolio CEO; Jérôme Pécresse, Renewable Energy CEO; John Slattery, Aviation CEO; Russell Stokes, Aviation Services CEO; Kieran Murphy, Healthcare CEO; Jennifer VanBelle, GE Capital CEO & GE Treasurer; Pat Byrne, GE Digital CEO; Vic Abate, GE CTO; and Steve Winoker, GE Investor Relations VP.
The conference call will be broadcast live via webcast, and the webcast and accompanying slide presentation containing financial information can be accessed by visiting the Events and Reports page on GE’s website at: www.ge.com/investor. An archived version of the webcast will be available on the website after the call.
Caution Concerning Forward Looking Statements
This release and certain of our other public communications and SEC filings contain statements related to future, not past, events. These forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as "expect," "anticipate," "intend," "plan," "believe," "seek," "see," "will," "would," "estimate," "forecast," "target," "preliminary," or "range." Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about our expected financial performance, including cash flows, revenues, organic growth, margins, earnings, and earnings per share; macroeconomic and market conditions; planned and potential business or asset dispositions; our de-leveraging plans, including leverage ratios and targets, the timing and nature of actions to reduce indebtedness and our credit ratings and outlooks; GE’s and GE Capital’s funding and liquidity; our businesses’ cost structures and plans to reduce costs; restructuring, goodwill impairment or other financial charges; or tax rates.
For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include:
These or other uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.
This release includes certain forward-looking projected financial information that is based on current estimates and forecasts, and actual results could differ materially. Refer also to the webcast of our investor conference later this morning for additional discussion of our outlook and uncertainties that could cause our future results to be different than our current expectations.
General Electric Capital Corporation (GECC) has been merged into GE and our financial services business is now operated by GE Capital Global Holdings, LLC (GECGH). In our public communications and SEC filings, we refer to GECC and GECGH as “GE Capital”. We refer to the industrial businesses of the Company including GE Capital on an equity basis as “GE”. “GE (ex-GE Capital)” and /or “Industrial” refer to GE excluding GE Capital. Our financial services segment previously referred to as GE Capital is now referred to as Capital.
GE’s Investor Relations website at www.ge.com/investor and our corporate blog at www.ge.com/reports, as well as GE’s Facebook page and Twitter accounts, contain a significant amount of information about GE, including financial and other information for investors. GE encourages investors to visit these websites from time to time, as information is updated and new information is posted.
Non-GAAP Financial Measures
In this document, we use information derived from consolidated financial data but not presented in our financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP). Certain of these data are considered “non-GAAP financial measures” under the U.S. Securities and Exchange Commission rules. These non-GAAP financial measures supplement our GAAP disclosures and should not be considered an alternative to the GAAP measure. The reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable GAAP financial measures are included in the 2021 GE Investor Outlook materials posted to the Events and Reports page on GE’s website at: www.ge.com/investor.
Additional Financial Information
Additional financial information can be found on the Company’s website at: www.ge.com/investor under Events and Reports.
About GE
GE (NYSE:GE) rises to the challenge of building a world that works. For more than 125 years, GE has invented the future of industry, and today the company’s dedicated team, leading technology, and global reach and capabilities help the world work more efficiently, reliably, and safely. GE’s people are diverse and dedicated, operating with the highest level of integrity and focus to fulfill GE’s mission and deliver for its customers. www.ge.com
1 Excluding the one-time impact of GE’s decision to discontinue the majority of its factoring programs, as described further in the GE Capital section.
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GE Investor Contact: Steve Winoker, 617.443.3400 swinoker@ge.com GE Media Contact: Mary Kate Mullaney, 202.304.6514 marykate.nevin@ge.com
Source: GE