Today GE released its fourth-quarter and full-year results for 2020. You can read the full materials and listen to the earnings call on GE’s investor website.
Key points on GE’s financial performance include:
Fourth quarter 2020:
- Total orders $23.2B, (7)%; organic orders (3)%
- Total revenues (GAAP) $21.9B, (16)%; Industrial organic revenues* $20.1B, (14)%
- Industrial profit margin (GAAP) of 14.4%, +800 bps; adjusted Industrial profit margin* 6.4%, (460) bps
- Continuing EPS (GAAP) $0.27, favorable year over year; adjusted EPS* $0.08, (60)%
- *Note: In our materials today, we talk about some enhanced reporting and disclosure changes we’re making to better align our reporting to how we operate the company and to continue our focus on transparency and accountability. Excluding the impact of these changes, adjusted EPS* would have been $0.10. See page 2 of the press release with more detail in the presentation.
- GE Industrial CFOA (GAAP) $1.9B; Industrial free cash flow* $4.4B
Full year 2020:
- Total orders $72.0B, (20)%; organic orders (17)%; backlog $386.5B, (4)%
- Total revenues (GAAP) $79.6B, (16)%; Industrial organic revenues* $73.2B, (13)%
- Industrial profit margin (GAAP) of 10.0%, +790 bps; adjusted Industrial profit margin* 3.4%, (610) bps
- Continuing EPS (GAAP) $0.59, favorable year over year; adjusted EPS* $0.01, (98)%
- Excluding impact of the reporting changes noted above, adjusted EPS* would have been $0.06.
- GE Industrial CFOA (GAAP) $(1.3)B; Industrial free cash flow* $0.6B
- You can also find free cash flow* results by segment for the year on page 13 of the presentation.
CEO Larry Culp said, “As 2020 progressed, we significantly improved GE’s profitability and cash performance despite a still-difficult macro environment. The fourth quarter marked a strong free cash flow finish to a challenging year, reflecting the results of better operations as well as strong and improving orders in Power and Renewable Energy. Over the past year our team proved resilient, and momentum is growing across our businesses. We are in leading positions to capture opportunities in the energy transition, precision health, and the future of flight. As we continue our transformation, we remain focused on strengthening GE and delivering value for the long term.”
As Larry notes, we delivered a strong free cash flow* finish to a challenging year with $4.4B in in the fourth quarter, half a billion better than last year. This was driven largely by better working capital and improving Renewables and Power orders. Specifically, at Gas Power, our cost measures and operational improvements enabled us to deliver positive free cash flow* one year ahead of our commitment. For the full year, we delivered positive Industrial free cash flow* of $0.6B ($0.3B excluding BioPharma, which we sold in March) despite the weakness in the commercial Aviation market.
Momentum is growing across all of our businesses with further evidence this quarter. In 2020, we achieved our cost and cash targets, completing more than $2B of cost and $3B of cash actions. The biggest actions came at Aviation, where we executed more than $1B of cost and $2B of cash actions, in line with expectations. This led to steadily improving, positive margin and nearly breakeven Industrial free cash flow* at Aviation this year.
In Healthcare, we delivered another strong margin and cash quarter. While our team navigated shifts in pandemic-related demand, we acquired Prismatic Sensors and launched more than 40 NPIs. In Power, our team continues to make progress operationally, particularly in cash generation, with Gas Power reducing fixed costs* by 12% this quarter, on its way to achieving $2.5B fixed cost* base in 2021. We’re also encouraged by the progress at Renewables this year, highlighted by record volumes in Onshore Wind, full type certification for both the 12- and 13-megawatt Haliade-X in Offshore Wind, and turnaround progress at Grid and Hydro.
All of this sets us up well to deliver value for the long term. Larry points out in his quote above how we are leading in the energy transition, precision health, and the future of flight—some of the most important opportunities not just in our end markets, but in the world. Coupled with sustaining our lean efforts across the company to drive performance improvements and cultural change, we believe we can ultimately unlock high-single-digit free cash flow* margin over time and create more value for our investors, customers, communities, and team.
Looking to 2021, despite a still difficult macro environment, our full-year outlook includes:
- Industrial organic revenue* growth: low-single digits
- Adjusted Industrial organic margin* expansion: 250+ basis points
- Adjusted earnings per share*: $0.15 to $0.25
- Industrial free cash flow*: $2.5 to $4.5 billion