GE Stock Soars Following Q3 Performance, Raises FY23 Outlook, Plans Spin-Off

General Electric Co GE reported third-quarter FY23 revenues of $17.3 billion, an increase of 20% year-over-year, and Adjusted revenue of $16.5 billion (+18% Y/Y).

Total orders increased by 19% Y/Y to $17.9 billion and up +18% on an organic basis.

Adjusted EPS was $0.82, up from $(0.17) a year ago, beating the consensus of $0.56.

GE reported a profit margin GAAP of 1.7%, up by 330 bps, and an Adjusted organic operating margin of 9.8%, up 760 bps organically.

Aerospace’s Q3 revenues jumped 25% Y/Y to $8.41 billion, driven by strength in both Commercial Services and Defense, while orders rose 34% to $9.79 billion.

GE Vernova Renewable Energy revenues increased by 15% Y/Y to $4.15 billion; Orders were $3.92 billion for the quarter compared to $3.73 billion a year ago.

GE Vernova Power Orders were increased by 2% Y/Y to $4.26 billion. Revenues increased by 9% Y/Y organically to $3.97 billion, driven by price and higher scope on heavy-duty gas turbine and Aeroderivative equipment.

Operating cash flow for the third quarter totaled $1.89 billion, compared to 813 million a year ago. Free cash flow was $1.67 billion.

The company repurchased ~2.2 million shares for $0.3 billion in the quarter, with $1.2 billion remaining under the authorization.

GE announced that it expects to spin off GE Vernova and launch GE Aerospace in the beginning of the second quarter of 2024. 

Shares of GE Vernova will be listed on the New York Stock Exchange under the ticker symbol “GEV,” and shares of GE Aerospace will continue GE’s listing on the New York Stock Exchange under the ticker symbol “GE.”

“At GE Aerospace, we continue to experience rapid growth driven by robust demand and solid execution, largely in Commercial Engines and Services. At GE Vernova, our Grid and now Onshore Wind businesses were both profitable this quarter and we expect their performance to continue to improve. With our two largest Renewable Energy businesses delivering and Power’s continued strength, we remain highly confident in GE Vernova’s spin-off next year,” commented GE Chairman and CEO and GE Aerospace CEO H. Lawrence Culp, Jr.

“Based on our year-to-date results and continued momentum in the fourth quarter, GE is raising full-year 2023 guidance. We’re well-positioned to launch GE Aerospace and GE Vernova as independent companies in the beginning of the second quarter. I’m more excited than ever about our path ahead,” added Culp.

FY23 Guidance: GE now expects Organic revenue growth in Low teens up from the prior expectation in the low double-digit range.

GE sees Adjusted EPS of $2.55 to $2.65 (prior $2.10-$2.30) versus the consensus of $2.06. GE sees a Free cash flow of $4.7 to $5.1 billion, up from prior $4.1 billion-$4.6 billion.

Price Action: GE shares are trading higher by 5.72% at $112.79 premarket on Tuesday.