GE’s first-half earnings have surpassed full-year 2022 results, CEO Larry Culp says
Shares of General Electric Co. shot up toward a six-year high Tuesday, after the aerospace and renewable energy company reported second-quarter results that rose well above expectations and boosted its full-year outlook.
“The GE team turned in another strong quarter with double-digit growth in orders, revenue, operating profit and cash supported by services strength, robust market demand and the lean transformation within our more focused businesses,” said Chief Executive Larry Culp in the post-earnings conference call with analysts, according to an AlphaSense transcript. “In the first half alone, earnings have now surpassed our full year 2022 results.”
The stock GE, +6.27% charged 4.0% in morning trading, putting it on track for the highest close since Nov. 10, 2017.
The company swung to net income of $946 million, or 86 cents a share, from a loss of $1.25 billion, or $1.13 a share, in the year-ago period.
Excluding nonrecurring items, adjusted earnings per share rose to 68 cents from 36 cents and beat the FactSet consensus of 46 cents.
Total revenue grew 18.2% to $16.70 billion, above the FactSet consensus of $14.76 billion, as services revenue rose 13.2% to $9.16 billion and equipment revenue increased 27.0% to $6.69 billion.
Free-cash flow improved to $415 million from $192 million and beat the average estimate of two analysts compiled by FactSet of $95.0 million.
Among GE’s business segments, GE Aerospace saw revenue rise 28% to $7.86 billion to beat the FactSet consensus of $7.31 billion, as commercial services grew with strong spare part sales and higher internal shop visits. Orders increased 37% to $9.45 billion.
Renewable energy revenue rose 24% to $3.85 billion to top expectations of $3.15 billion, with orders soaring 167% to a record $8.29 billion, while power revenue slipped 1% to $4.15 billion but was above forecasts for $4.13 billion as orders increased 7% to $4.35 billion.
The renewable-energy and power businesses will become part of GE Vernova. After the separation of GE Healthcare Technologies Inc. at the start of 2023, GE continues to expect to separate GE Aerospace and GE Vernova in early 2024.
For 2023, GE raised its guidance ranges for adjusted EPS to $2.10 to $2.30 from $1.70 to $2.00 and for free cash flow to $4.1 billion to $4.6 billion from $3.6 billion to $4.2 billion.
The stock has soared 75.3% year to date, while the Industrial Select Sector SPDR exchange-traded fund XLI, -0.13% has tacked on 10.9% and the S&P 500 SPX, +0.28% has advanced 18.8%.