General Electric Stock Higher After Q1 Earnings Beat, Free Cash Flow Forecast Boost

"We reported our first positive free cash flow in the first quarter in nearly a decade,” said CEO Larry Culp.

Updated at 8:47 am EST

General Electric  (GE) - Get Free Report posted stronger-than-expected first quarter earnings Tuesday,  while boosting its full-year forecasts for free cash flow and profits thanks in part to the strength of its core aerospace division.

General Electric said adjusted non-GAAP earnings for the three months ending in March were pegged at 27 cents per share, up 12.5% from last year and firmly ahead of the Street consensus forecast of 14 cents per share. Group revenues, General Electric said, fell 15% from last year to $14.5 billion, but again topped analysts' estimates of an $13.36 billion tally.

Looking into the current financial year, GE said it sees adjusted earnings in the region of $1.70 to $2.00, compared to its prior forecast of $1.60 to $1.80 per share, and reiterated its estimate for organic sales growth in the 'mid-to-high' teens in terms of percentage gain. 

In terms of free cash flow, GE also lifted the lower end of its prior guidance to a new range of between $3.6 billion and $4.2 billion, after posting its first positive free cash flow quarter since 2015.

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"The GE team is off to an encouraging start in 2023, with our results reflecting robust market demand and our progress operating leaner and more focused businesses," said CEO Larry Culp. "In the first quarter, we delivered double-digit top-line growth with all segments up organically and continued strength in services, as well as margin expansion in all segments. And we reported our first positive free cash flow in the first quarter in nearly a decade.” 

"At GE Aerospace, we are growing rapidly and supporting our customers amidst the pronounced commercial ramp," Culp added. "At GE Vernova, we are seeing continued signs of progress in Renewable Energy while Power is delivering solid growth. Overall, GE is creating significant value today and tomorrow as we prepare to stand up these leading franchises as independent companies sometime in early 2024." 

General Electric shares, which closed over the $100 mark for the first time since 2018 last night, were marked 2.35% higher in pre-market trading to indicate an opening bell price of $102.50 each, a move that would extend the stock's year-to-date advance to around 57%.

GE Aerospace saw revenues rise 25% from last year to $6.98 billion, thanks in part to renewed demand from one of its key customers, planemaker Boeing BA, while the units profits were up 46% at $1.326 billion.

GE, which spun-off its health care division, GE Healthcare Technologies, earlier this year, is also planning to separate its energy business, which will be called GE Vernova, through a tax-free deal sometime in 2024.  

Vernova revenues were down 1% from last year at $2.837 billion, while the units loss narrowed by 5% to -$414 million.