Thanks, John. Welcome to GE's third quarter 2021 earnings call. I am joined by Chairman and CEO, Larry Culp; and CFO, Carolina Dybeck Happe. Note that some of the statements we're making are forward-looking and are based on our best view of the world and our businesses as we see them today. As described in our SEC filings and on our website, those elements may change as the world changes. With that, I'll hand the call over to Larry.

Steve, thanks and good morning, everyone. Our team delivered another strong quarter as orders, margins and cash improved. While the aviation market is showing continued signs of recovery and contributed to the quarter, our focus on continuous improvement and lean is driving broader operational and financial progress. At the same time, we're managing through significant challenges that we'll discuss further today. Starting with numbers on Slide 2, orders were robust, up 42%, with growth in all segments in both services and equipment, reflecting continued demand for our technology and solutions and better commercial execution. Industrial revenue was mixed. We saw a continued strength in services up 7% organically. Aviation improved significantly benefiting from the market recovery. Equipment was down 9% organically, largely due to supply chain disruptions, the forward ventilator comparison in healthcare, and as expected, lower power equipment. Adjusted industrial margin expanded 270 basis points organically, largely driven by operational improvement in many of our businesses, growth in higher-margin services at Aviation and Power, and net restructuring benefits. Adjusted EPS was up significantly driven by Industrial. Industrial free cash flow was up $1.8 billion, excluding discontinued factoring programs due to better earnings, working capital, and the short-term favorable timing impact of aircraft delivery delays. Overall, I'm encouraged by our performance, especially at Aviation. Let me share what gives me confidence there. First, our results reflect a significant improvement in near-term market fundamentals. Departure trends are better than the August dip and have recovered to down 23% of 2019 levels. We expect this acceleration in traffic to continue as travel restrictions lift and vaccination rates increase. Our results also reflect operating improvements. For example, at Aviation's overhaul shops, our teams have used lean to increase turnaround time by nearly 10% and decrease shop inventory levels by 15% since the fourth quarter of 2020. These improvements are enabling us to get engines back to customers faster and at a lower cost. No business is better positioned than GE Aviation to support our customers through the coming upcycle. We're ready with the industry's largest and youngest fleet, while we continue to invest for the next-generation with lower carbon technologies, such as the CFM RISE program. This platform will generate value for decades to come. We're also clearly navigating headwinds as we close this year and look to 2022. We're feeling the impact of supply chain disruptions in many of our businesses with the largest impact to date in healthcare. Based on broader industry trends, we expect company-wide pressure to continue at least into the first half of next year. Our teams are working diligently to increase supply by activating dual sources, qualifying alternative parts, redesigning and requalifying product configurations and expanding factory capacity. We're also focused on margins as we deploy lean to decrease inventory and costs, as well as implement appropriate pricing actions and to reduce select discounts. Our CT team in Japan, for example, has been experiencing higher customer demand. So we're making our production even more efficient to help offset the challenge of delayed inputs. The team used value stream mapping, standard work, and quarterly Kaizens to reduce production lead time once parts are received, by more than 40% from a year ago. And there's line of sight there to another 25% reduction by the end of the year. While this is a single example within healthcare, taken together with other efforts and over time, these add up. At renewables, we're encouraged by the U.S. administration’s commitment to offshore wind development. However, in Onshore Wind, the pending U.S. production tax credit extension is creating uncertainty for customers and causing much less U.S. market activity in preparation for 2022. As we've shared, a blanket extension, while a well-intended policy has the unintended consequence of pushing out investment decisions. In our business given the lag between orders, and revenue, the impact will continue through the fourth quarter and into 2022. This environment, along with inflation headwinds picking up next year, makes renewables ongoing work to improve cost productivity even more urgent. Given these puts and takes, we now expect revenue to be about flat for the year, driven by changes to some of our business outlooks, which Carolina will cover in a moment. Importantly, even with lower revenue, we're raising our margin and EPS expectations, underscoring improved profitability and services growth, and reflecting our strengthened operations. And we're narrowing our free cash flow range around the existing midpoint. Looking further out to next year, as our businesses continue to strengthen, we expect revenue growth, margin expansion, and higher free cash flow despite the pressures that we're managing through currently. We'll provide more detail as usual, during our fourth quarter earnings and outlook calls. Moving onto slide 3. Challenges aside, our performance reflects the continued progress in our journey to become a more focused, simpler, stronger, high-tech industrial. The GECAS and AerCap combination is a tremendous catalyst, enabling us to focus on our industrial core and accelerate our deleveraging plan. Just last week, GE and AerCap satisfied all regulatory clearances for the GECAS transaction and we're now targeting to close on November 1st. We'll use the proceeds to further reduce debt, which we now expect to reach approximately $75 billion since the end of 2018. This is enabling GE to look longer-term even as we execute our deleveraging. As we accelerate our transformation, lean and decentralization are key to improving operational results. This quarter, we hosted our global Kaizen week in each of our businesses with over 1,600 employees participating. John Slattery, the CEO of GE Aviation; and I joined our military team in Lynn, Massachusetts for the full week, while our business CEOs joined their teams across the globe. Lynn is fundamentally about going to Gemba, where the real work is done. And is best learned in operations, where you can see it, touch it, smell it firsthand. And in Lynn, we were there to serve those closer to the work, our operators. Our mission was to improve first-time yield on mid frames, a key sub assembly of the military engines we produce in Lynn, whose stubborn variability has been directly and negatively impacting our on-time delivery. By the end of the week, we had improved processes for welding and quality checks on mid-frame parts, improvements that we're convinced will help us reach our goals for military on-time delivery by the middle of next year, if not earlier. And we can improve our performance on the back of these changes for years to come. There are countless other examples of how our teams are leveraging lean to drive sustainable, impactful improvements in safety, quality, delivery, cost, and cash. They reflect how we're running GE better and how we're sustaining these efforts to drive operational progress and lasting cultural change. Our significant progress on deleveraging and operational execution sets us up well to play offense in the future. Our first priority, of course, is organic growth. That starts with improving our team's abilities to market, sell, and service the products we have. There are many recent wins across GE this quarter, but to highlight one, our Gas Power team delivered, installed, and commissioned four TM 2500 aeroderivative gas turbines in only 42 days to complement renewable power generation for California's Department of Water Resources during peak demand season. These turbines, using jet engine technology adapted for industrial and utility power generation, start and ramp in just minutes, providing rapid and reliable intermittent power, helping enhance the flexibility and sustainability of California's grid. And we're bolstering our offerings with innovative new technology that serves our customers and leads our industries forward. For example at Renewables, our Haliade -X offshore wind turbine prototype operating in the Netherlands, set an industry record by operating at 14 megawatts. More output than has ever been produced by any wind turbine. From time-to-time we'll augment our organic efforts with inorganic investments. Our recently announced acquisition of BK Medical represents a step forward, as we advance on a mission of precision healthcare. Bringing BK's intraoperative ultrasound technology together with the pre, and post-operative capabilities in our ultrasound business creates a compelling customer offering across the full continuum of care, from diagnostics through surgical, and therapeutic interventions, as well as patient monitoring. Not only does BK expand our high performing $3 billion ultrasound business, but it also is growing rapidly with attractive margins itself. We expect the transaction to close in 2022, and I'm looking forward to welcoming the BK team to GE. All told, we hope that you see that GE is operating from a position of strength today. We delivered another strong quarter and we're playing more offense, which will only accelerate over time. We're excited about the opportunities ahead to drive long-term growth and value. So with that, I'll turn it over to Carolina who will provide further insights on the quarter.

Thank you, Larry. Our results demonstrate our team's dedication to enhancing operational efficiency. We’re applying Lean methodologies across GE, focusing on our finance function as well. Alongside the Kaizen Week that Larry mentioned, over 1,800 finance team members participated in a waste workweek, utilizing Lean and digital tools to cut non-value added tasks by 26,000 hours and still going. For instance, in our renewables sector, our team has made account reconciliations, company settlements, and cash applications more efficient and automated. This transactional Lean approach frees up time, allowing us to improve operational insights and efficiency. Moving on to Slide 4, looking at an organic basis, orders surged 42% year-over-year and rose 21% sequentially, continuing the revenue momentum into 2022. Equipment and services across all sectors showed annual growth, particularly in Aviation, Renewables, and Healthcare. We are becoming more selective in the commercial deals we pursue, emphasizing pricing amid inflation and economic fluctuations while also targeting more profitable segments like services to enhance order quality and achieve profitable growth. Revenue grew sequentially, driven by aviation and power services, though it declined year-over-year with equipment revenue decreasing, primarily due to declines in healthcare and power sectors. The revenue mix is shifting toward higher-margin services, which now account for half of our total revenue. Adjusted industrial margins improved sequentially, primarily boosted by aviation services. Year-over-year, total margins increased by 270 basis points due to our Lean initiatives, cost productivity enhancements, and services growth. Both aviation and power segments showed margin growth, offsetting challenges faced in healthcare and renewables. Like the broader market, we are feeling inflationary pressures, which we expect to be limited for the rest of 2021. Next year, we foresee a more difficult inflation landscape, particularly affecting our onshore business due to rising transportation and commodity costs like steel. We are actively implementing strategies to lessen inflationary impacts across our different business units. Our shorter-cycle businesses felt this impact first, while our longer-cycle operations were somewhat shielded due to their extended purchasing and production timelines. Our service business is experiencing impacts somewhere in between. Our teams are diligently working across functions to manage costs better and improve our bidding strategies, including price adjustments. Adjusted EPS rose by 50% year-over-year, primarily due to our industrial segment's performance. Overall, we are pleased with the strong demand reflected in orders growth and our year-to-date margin performance. While we face challenges from supply chain issues and PTC pressures impacting our growth expectations, we now anticipate flat revenue for the year. Nevertheless, due to ongoing improvements across GE, we are raising our 2021 outlook for organic margin expansion to 350 basis points or more and adjusting our EPS estimate to a range of $1.80 to $2.10. In terms of cash, a key element of our transformation efforts has been to strengthen cash flow generation through improved working capital management and better operational efficiency, ultimately driving more consistent and sustainable cash flow. Our quarterly results highlight the benefits of these initiatives. Industrial free cash flow increased by $1.8 billion, excluding discontinued factoring programs from both years. Aviation, Power, and Healthcare all generated strong free cash flow this quarter. The growth in cash earnings, working capital, and discount payments related to deferred aircraft deliveries significantly contributed to this increase. Focusing on working capital, we noted the most significant operational improvement in receivables, which generated $1.3 billion in cash year-over-year, primarily due to collections in Gas Power. Strengthening our billings and collections operations is leading to noticeable improvements in Days Sales Outstanding, which decreased by 13 days year-over-year. Additionally, about $0.5 billion in free cash flow this quarter benefited from AD&A. Given our year-to-date performance and the fourth-quarter projections aligning with current delivery schedules, we expect a positive cash flow in 2021 of approximately $300 million, which is $700 million better than our previous forecast. This year's benefits will turn around next year, resulting in an estimated outflow of about $1.2 billion due to higher scheduled aircraft deliveries. This is primarily a timing matter. Earlier this year, we made the decision to exit most of our factoring programs. In this quarter, the impact from discontinued factoring was just under $400 million, which we adjusted out of free cash flow. The fourth-quarter impact should be less than $0.5 billion, leading to a full-year adjustment of about $3.5 billion from factoring activity. Without considering the factoring dynamics, our enhanced management of receivables has developed into a genuine cross-functional initiative. For instance, our Steam Power team has transitioned from a siloed approach to adopting problem-solving and value stream mapping techniques, which have allowed us to reduce average billing cycle time by 30% so far. Though we still have work to do, improved operational alignment is driving more stable billings and collections. Cumulatively across all quarters, we have achieved $4.8 billion in free cash flow year-over-year. Each of our businesses is focusing on working capital enhancements, which, combined with increased earnings, are making a significant and measurable difference. Considering our strong year-to-date results and the headwinds we've discussed, we are adjusting our full-year free cash flow expectations to a range of $3.75 billion to $4.75 billion. Moving to Slide 6, we expect to finalize the GECAS transaction on November 1. This strategic move not only underscores our commitment to our industrial core but will also enable us to expedite our debt reduction by approximately $30 billion. With our progress in deleveraging and cash flow improvements, paired with expected actions and better partial performance, we now project a total reduction of around $75 billion since the end of 2018. GE will receive a 46% equity stake in a leading global aviation leasing company, which we will monetize as the aviation sector recovers. We anticipate that near-term leverage will remain elevated, and we are committed to further reducing debt in alignment with our leverage objectives over the next few years. Regarding liquidity, we concluded the quarter with $25 billion in cash. We are making significant strides in lowering cash balances, which currently stand at $11 billion, down from $13 billion. Our cash position decreased during the quarter mainly due to reduced factoring and improved working capital management. This demonstrates our capacity to operate with reduced and more predictable cash levels, opening doors for high-return investments. Now looking at our businesses, which I will also address on an organic basis, we start with Aviation. Our improved results stem from a notably stronger market. Departure trends rebounded from early August, with the uplift that began in September continuing through October. Enhanced departures and increased customer confidence led to higher shop visits and spare parts sales than initially expected. The challenges related to green time utilization are lessening, and we anticipate this profitable trend will persist into the fourth quarter. Orders rose in double digits, with significant increases in both commercial engines and services year-over-year. Military orders also rose, highlighted by a substantial Hindustan Aeronautics order for nearly 100 F414 engines and multiple smaller orders. In terms of revenue, commercial services saw significant growth due to robust external spares and a more than 40% increase in shop visit volume year-over-year. While commercial engines experienced a decline in shipments, our mix is transitioning from legacy products to newer units with lower production risks. Next, we are dealing with material fulfillment challenges exacerbated by heightened industry demand, which impacted deliveries. Military revenue saw a minor downturn, with flat unit shipments sequentially but up on a yearly basis. Without these delivery hurdles, military revenue growth would have been in the high single digits this quarter. Due to ongoing impacts, we now expect military growth for the year to be negative. Segment margins expanded significantly, chiefly due to growth in commercial services and operational cost reductions. We expect margins to continue growing in the fourth quarter, maintaining our low double-digit margin guidance for the year. Our outlook for 2021 shop visits has strengthened, now anticipated to rise at least mid-single digits year-over-year, compared to previous flat expectations. Our solid performance, particularly in services, reflects strong underlying business fundamentals as the commercial market recovers. Turning to Healthcare, the market momentum is generating high demand despite ongoing supply chain constraints. Both government and private health systems are investing in capital equipment to meet capacity demands and enhance the quality of care in the market. Recently, we renewed a five-year service agreement for diagnostic imaging and biomedical equipment with HCF Healthcare, solidifying a partnership built over two decades. We are adapting to the market's emphasis on health system efficiency, digitalization, as well as resilience and sustainability. In this context, orders rose in double digits year-over-year and compared to 2019, with healthcare systems seeing a 20% increase year-over-year and PDx growing in the high single digits. However, revenue declined due to a significant drop in HCF, which more than countered the growth in PDx. Last year, our partnership with Ford on ventilators yielded approximately $300 million in Life Care Solutions revenue, which negatively affected revenue comparisons by six points. Additionally, we estimate that growth would have been nearly nine points higher had we been able to fulfill all orders, with these challenges expected to persist at least through the first half of 2022. Segment margins decreased year-over-year, primarily driven by rising inflation and reduced Life Care Solutions revenue, although productivity improvements and increased PDx volume provided some offset. Even facing supply chain challenges, we expect close to 100 basis points of margin expansion as we proactively manage sourcing and logistics. Overall, we feel well-positioned to keep investing in future growth, affirming our commitment to generating profits and cash flow. We are strategically allocating capital to support organic growth while making acquisition investments that align with our goals, such as BK Medical, enhancing our operational and strategic integration capabilities. In Renewables, we are optimistic about our growth prospects supported by new technologies like HalioDx and fibrosis, alongside our leadership in energy transition, despite current industry challenges. Since the second quarter, the anticipated PTC expansion has continued to negatively influence the U.S. onshore market outlook. According to recent forecasts, equipment and repowers are expected to dip from 14 gigawatts of wind installations this year to approximately 10 gigawatts in 2022, which is exerting pressure on orders and cash for 2021. Conversely, in offshore wind, global momentum is strong, and we plan to expand our commitment pipeline throughout the decade, with grid modernization being critical to the energy transition. Record orders in the offshore sector were seen, although the project-driven profile may bring variability in progress collections. Onshore orders saw modest growth, driven by services and international equipment, while U.S. equipment orders declined due to PTC-related issues. Revenue declined significantly, primarily due to fewer onshore repower deliveries, although excluding repower, onshore services grew by double digits. Equipment revenue also fell slightly due to declines in U.S. onshore and grid operations, though international onshore and offshore growth provided some offsets. We now expect annual revenue growth to be roughly flat. Segment margins contracted by 250 basis points, with onshore showing minor positivity but still down year-over-year. Cost reductions were outweighed by lower U.S. repower volumes, mixed headwinds from new products, and supply chain pressures. Offshore margins remain negative as we work through legacy projects while ramping up HalioDx production. At grid, better execution was offset by reduced volumes primarily due to PTC impacts. Accordingly, we now expect Renewables' free cash flow to decrease this year. Looking ahead, despite facing challenges, we are highly focused on improving operational performance, profitability, and cash generation. In Power, we are performing well. Analyzing the market, global gas generation has dropped high single digits due to price-driven gas-to-coal shifts. However, GE gas turbine utilization remains resilient, with megawatt-hours rising in the low single digits. Despite recent price fluctuations, gas continues to be a dependable and economical power generation source. Over the next decade, we anticipate stability in the gas market, with low single-digit growth in gas generation. Orders were primarily driven by Gas Power Services, aero, and steel, all reporting double-digit increases. Despite bookings for six additional heavy-duty gas turbines, gas equipment orders were down due to uneven timing. We are maintaining careful discipline in underwriting to expand our installed base, booking orders for smaller frame units this quarter. Demand for aeroderivative power remains strong, and we expect about 60 unit orders this year, an increase of over five times from last year. Revenue experienced a slight decline, with equipment down due to reduced turnkey scope at Gas Power and the ongoing exit of new build coal projects. In line with our strategy, we are on track to achieve around 30% of turnkey revenue relative to heavy-duty equipment this year, down from 55% in 2019, reflecting a better risk-return profile. Simultaneously, Gas Power shipped 11 more units year-over-year. Gas Power Services rose in the high single digits, better than our initial expectations due to strong seasonal volumes. We are confident in achieving high single-digit margins for the year. While margins progressed negatively in the short term due to outage seasonality, Gas Power positively improved year-over-year due to services growth and aeroderivative shipments. We are committed to securing appropriate orders, expanding services, and increasing free cash flow generation. As a reminder, following the GECAS closure in the fourth quarter, we will transition to one-column reporting, incorporating the remainder of Capital into corporate. Our future results, including adjusted revenue, profits, and free cash flow, will exclude insurance while maintaining the same level of insurance disclosures. This change simplifies our results presentation, allowing us to focus on our industrial core. At Capital, we experienced a year-over-year loss in continuing operations driven mainly by the absence of prior-year tax benefits, though this was partially offset by the cessation of preferred dividend payments. In terms of insurance, we reported $360 million in net income year-to-date, supported by positive investment outcomes and favorable operating levels compared to pre-COVID states, although some portfolio areas show decelerating trends. This year, we conducted our annual premium deficiency tests, known as the Loss Recognition Test, yielding a positive margin that had no earnings impact for the second year in a row. This margin increase was driven largely by rising discount rates as we realigned our investment portfolio towards select growth assets, while claims costs remained stable. Furthermore, our teams are preparing to implement a new FASB Accounting Standard consistent with industry changes, working on modeling updates. Given our performance thus far, Capital still expects a loss of around $500 million for the year. In discontinued operations, Capital reported a $600 million gain chiefly attributable to a recent uptick in AerCap stock prices, which will be updated quarterly. Now moving to Corporate, our priorities include reducing functional and operational expenses while enhancing linear processes and embracing decentralization. These efforts are yielding results, with year-over-year costs down by $7 million. We now project corporate costs to be about $1 billion for the year, which is an improvement over our previous guidance of $1.2 to $1.3 billion. Lean and decentralization are not merely theoretical concepts; they are driving improvements in execution and cultural shifts within the organization. They supported another strong quarter and are enabling our businesses to take more proactive measures, ultimately fostering sustainable long-term profitable growth.

Carolina, thank you. Let's turn to Slide 9. Our teams continued to deliver strong performance. We are especially encouraged by our earnings improvement, which makes us confident in our ability to deliver our outlook for the year. You've seen today that our transformation to our more focused, simpler, stronger, high-tech industrial is accelerating. We're on the verge of closing the GECAS - AerCap merger, a tremendous milestone for GE. Stepping back, our progress has positioned us to play offense. We just wrapped up our annual strategic reviews with nearly 30 of our business units. This complements our quarterly operating reviews but has a longer-term focus as we answer two fundamental questions: What game are we playing, and how do we win it? These reviews were exceptionally strong this year across the board with the most strategic and cross-functional thinking we've seen in my three years, enabling us to drive long-term growth and value across GE, while delivering on our mission of building a world that works. We're positioned to truly shape the future of flight with new technology for sustainability and efficiency, such as the recent catalyst engine launch, the first clean sheet turboprop design entering the business and general aviation market in 50 years. Touching a billion patients per year, we're delivering more personalized and efficient care through precision health and combining digital and AI within our products, including our new cloud-based Edison True PACS to help radiologists adapt to higher workloads and increase exam complexity with improved diagnostic accuracy. Through our leadership in the energy transition, we're helping the world navigate the trilemma of sustainability, affordability, and reliability from launching new tech platforms at Renewables, such as the HalioDx in Cyprus to our recently announced flexible transformer project with the Department of Energy, to growth in the world's most efficient gas turbines. To be clear, we still have work to do. And as we do it, we're operating increasingly from a position of strength, serving our customers and vital Global markets with a focus on profitable growth, and cash generation. Our free cash flow will continue to grow towards the high single-digit percentage of sales level, and we have an opportunity to allocate more resources on capital deployment to support GE's growth over time. Steve, with that, let's go to questions.

Thanks, Larry. Before we open the line, I'd ask everyone in the queue to consider your fellow analysts again and ask one question so we can get to as many people as possible. John, can you please open the line?

Thank you. And our first question is from Julian Mitchell from Barclays.

Hi, good morning.

Good morning.

Good morning, Julian.

Good morning everyone. My question is about free cash flow. You've indicated that it will increase in 2022. Is this expected to be comparable to the guidance of $3.75 billion to $4.75 billion for this year, or does this take into account the remaining capital when calculating this year's cash flow? Additionally, on Slide 9, you mentioned a high single-digit cash flow margin over time. I want to confirm that this does not represent a change from the previously discussed 2023 timeframe. Thank you.

So Julian, maybe let me start then. You talked about the 2022 remarks that we made. Like-for-like, we expect industrial free cash flow to step up. We expect our business earnings to improve. We expect that through top line growth and margin expansion that will turn into profit, which we then believe — well, which we then we’ll say go to cash, right? Then if you look a little bit outside of earnings, we do have a couple of significant cash flow items to think about. We have mentioned the supply chain headwinds that we think will continue into next year. So that will hamper both on profitability, but also on inventory. And then we have the headwind of AD&A. We talked about that in this year, it's going to be more positive, but it's going to be a big headwind in next year. And this is really only a timing effect because of when customers expect to deliver the aircraft, right? And overall, my last comment on industrial side would be, if you look at working capital, with that growth in mind, we will need some working capital to fund the top line growth, right? But on the other hand, we also expect to continue to improve working capital management, for example, in receivables, and to some extent also to inventory. Within that, we do see improvement in linearity as possible as well. So that's like-for-like on the Industrial side. If we then add the consolidated capital of basically what's left of capital then consolidated in like-for-like, we expect it to also increase. And the increase on top of that would mainly have been driven by the lower interest that we will see from debt reduction. So we are confident in the overall growing trajectory, both investor like-for-like as well as including capital.

I would say just to the second question, the simple short answer is no change whatsoever relative to our expectations with respect to high single-digit free cash flow margins. When we talk about that, let's just take for simplicity sake 8% on a revenue base akin to where we were in 2019. That pencils out on an $85 billion to $90 billion revenue base to say $7 billion of free cash. That's really going to be on earnings, lower restructuring spend, and better working capital management story. Clearly, from a profit perspective, that's going to be an Aviation-led dynamic healthcare right in behind it, and then we still anticipate that we turn Power profitable, and we get a couple of billion dollars of profit from Power. You deduct, call it, $1.4 billion for corporate, but you get close to it, let's call it, $10 billion of operating profit, convert that to net of interest and taxes at 90%, you get that same $7 billion figure. So we think we're on our way, but again, the short answer is, no change.

And our next question is from Nigel Coe from Wolfe Research.

Thanks. Good morning, everyone.

Good morning.

Good morning, Nigel.

Thank you for detailing the AD&A for next year, which is $1.2 billion. I would like to confirm that I anticipate some support from progress collections in Aviation next year, assuming we are in a recovering order environment. However, my main question is regarding the insurance testing in the third quarter. I understand this is a GAAP test and not a STAT test, but I believe the 10-K indicates an 11% surplus. Carolina, could you clarify what this means for future cash payments? At what point does the service grow large enough that it could positively impact cash flow going forward?

Thanks for the question, Nigel. Yes, so it is a factor. So we did do the testing on the LRT, and we had good news I would say as expected. And when you have a positive margin that means no charge to the P&L, and the margin was 11% positive, which is significantly higher than what we have seen. It was mainly driven by the discount rate increase. It increased from 5.7% to 6.15%. And I would say that increase was really driven by asset allocation and really our plan to increase the amounts allocated to growth assets, where we’re going from 9% to 15%. The other variables had, like morbidity, mortality, inflation in premium, they were a small impact. We're really happy with that. And your question then on top of that sort of for the CFT, so the CFT or the cash flow testing, that is what decides if there is a need to add cash to the insurance. I would say like this, it's not one-to-one. The variables are similar to LRT, but they are used under moderately adverse conditions. I would say the modeling will happen beginning of next year as usual. We will look at our investments portfolio realignment and the changes factored into that model. We also look at the future cash flow, but it could have some adverse effect because we're using more granular assumptions. But I would say overall, the good news from the LRT bodes very well for the CFT, but it's not one-to-one.

And our next question is from Jeff Sprague from Vertical Research Partners.

Thank you. Good morning, everyone.

Good morning, Jeff.

Hi, Jeff.

Hello. Hope everybody is well. Larry or Carolina, can we talk a little bit more about price cost? I think your message on the pressures into the first half are pretty clear, but kind of this kind of question of kind of cost in the backlog, so to speak, that needs to work its way through the system. I wonder if you could just kind of size this a little bit for us or put it in the context of what you're actually capturing on price, say, on current orders. Maybe what kind of the price/cost total headwind or tailwind is in 2021 versus what you're kind of expecting in 2022 based on what you can see in the backlog?

So Jeff, why don't I start and then Larry, you can jump in.

Sure.

If we start with inflation, I just want to reiterate that of course we hit by inflation, but it's a bit different depending business by business. We have the shorter cycle businesses like healthcare, where we are feeling the impact faster than the longer cycle like Power and we have sort of Services in between. On the longer cycle ones, they are more protected because of the, I would say, the extended purchasing and production cycles. We are seeing the main pressures on commodities like steel, but also logistics pressure is increasing. Specific to 2021, we have felt inflation, but so far we've been able to offset it, and we expect the impact for the full year to be limited in '21, the net impact. For 2022, we do expect to see significant pressure, and I will say top of list priorities for next year. And we're taking both price and cost countermeasures.

I think that's right and as you would imagine in an environment like this, we're really working the value add, value engineering, and more traditional cost action aggressively. We're working with the supply basis feverishly as we can, both on availability and on costs. That said, as Carolina was alluding to on the price side, we're doing all we can in the shorter-cycle businesses, it's a little easier, say in Healthcare, where we've got more like-for-like, we can see those price actions. We're beginning to see some early traction. Their services is a bit mixed but where we have opportunity, say, on spares and within the escalation frameworks, within some of the longer-term service agreements, we're obviously going to get what we can there. You spoke to projects. I mean, that's a little bit more bespoke, but while it's difficult to measure price like-for-like, we are managing the margins with some of the longer-term procurement efforts that Carolina alluded to. Just more broadly on the backlog, and what's important to remember when you look at what is what? $380 billion of backlog, 70% of that's in Aviation. Virtually all of that is in Services. So certainly a competitive space, but between the catalog, pricing dynamics, and some of the escalation protection, we think we're well-positioned, but we take nothing for granted there outside of Aviation, the backlog is also in services where similar dynamics apply. But again, limited pressure net-net in '21, building headwinds for us next year, we've got time to work, both the cost and the price countermeasures. And as Carolina said, I don't think we've got a higher priority operational here in the short term than those two.

And our next question is from Deane Dray from RBC Capital Markets.

Thank you. Good morning, everyone?

Good morning, Deane.

Like to get some more comments if we could on the Aviation Aftermarket visibility, that 40% up year-over-year and shop visits similar to what your competitors have announced. Just talk about visibility, the wrap on departures, and your capacity. I know there had been some cuts. Do you have the capacity to handle all this? I know Lean is helping and then a related question, what kind of R&D investments are you making today or you're planning for to help the airlines hit their carbon neutral goals by 2050?

I want to reiterate that regarding the aftermarket, you pointed out some important factors for us. I am very pleased to see shop visit activity increase by 40% in the third quarter, surpassing our expectations of a 25% increase. We anticipate sequential improvement, although it may not be as significant year-over-year in the fourth quarter; we're likely looking at about a 30% increase. So far in October, we’ve had a strong start in terms of underlying activity. Additionally, there has been robust demand for spare parts from third-party providers. This combination of volume and value puts us in a good position for a solid second half and going into next year. We are addressing supply chain challenges related to materials and labor, as many others are. I believe we are positioned as well as we can be. I appreciate your mention of lean improvements; rather than simply increasing our workforce and capital, we are focusing on process optimization. Our services team understands this well, which is why we highlighted some of our turnaround improvements in our formal remarks. Going back to what was technically the second quarter around mid-June, John Slattery, in collaboration with our partners at Safran, announced the CFM RISE program. This is a long-term technology investment initiative aimed at ensuring we remain leaders in the industry, focusing on sustainable aviation fuels, hybrid technologies, and hydrogen solutions. We have significant plans ahead, and we will be making smart investments in these areas to develop technologies that will eventually transition into product programs as deemed appropriate by our airframe and airline customers. There is a lot happening both in the short term and the long term, but we are particularly optimistic about the Aviation sector, especially given the positive trends in departures and our outlook in the near term.

Our next question is from Steve Tusa from JP Morgan.

Hi, guys. Good morning.

Good morning, Steve.

Morning Steve.

You mentioned the sequential margin increase in Aviation. I think the revenues were a little bit weaker this quarter. For the fourth quarter, I believe there's implied guidance. I know it's a wide range and you haven't updated in a while. This leads me to a midpoint of $1 billion for the fourth quarter. You just had a nice sequential increase from the second quarter to the third quarter. Is that the right number? And then as a follow-up for next year, with a $1.5 billion headwind as AD&A normalizes, what is the math that can overcome that kind of headwind for Aviation to grow free cash?

Starting with Aviation and its margins, you mentioned the margin heading into the fourth quarter. We are observing a clear shift towards services. In the third quarter, services grew by 20%, while equipment sales declined. This improvement also favors external sales, leading to an increase in our performance. Additionally, there was a 40% year-over-year rise in shop visits, and strong third-party sales grew by around 30%. Looking ahead to the fourth quarter, we anticipate that the performance may not be as high as in the third quarter, but we expect to maintain sequential improvement, which should help us achieve low double-digit margins for 2021. Although we haven’t specified the exact profit for the fourth quarter in Aviation, we can piece together the components for a clearer picture. As for 2022, regarding Aviation's free cash flow, you are correct about the anticipated AD&A timing issue that will present a significant headwind next year. Nonetheless, we expect flight utilization to rise, leading to more hours flown and increased service billing. Cash flow is expected to improve significantly due to higher services, despite AD&A challenges. Furthermore, the profits from greater shop visits will contribute positively to the overall situation. Thus, the favorable mix, particularly in services and CSS, will yield a positive outcome.

And our next question is from Joe Ritchie from Goldman Sachs.

Thank you. Good morning, everyone.

Hey, Joe.

Maybe just sticking with free cash flow for a second and thinking about the 4Q implied guidance. Typically, 4Q is your seasonally strongest quarter. The step-up from 4Q to 3Q seems to be a little bit seasonally weaker than what we've seen in prior years. So I'm just curious if any puts and takes that we need to be aware of as we kind of think about the sequential bridge for free cash flow, 3Q to 4Q Thank you.

Joe, let me answer that. So I think it's important to take a step back. And if we look at jumping off point for 2020 for free cash flow for the full-year, the free cash flow, excluding factoring and biopharma, we were on $2.4 billion in 2020. If you take a midpoint of our guide now and you add back the factoring, you get to $5 billion for this year. So just to put in perspective, we're going from last year, $2.4 to midpoint of $5 billion this year. So we're doubling the cash flow for 2021. We're also seeing linearity improvements in 2021, which is part of the reason the fourth quarter is not being as unlinear as it has been before. After the range that we have, they’re basically two main areas that bring us uncertainty. One is on the supply chain challenges and the other one is the PTC pressure that we then expect to impact progress. Well, that's what's exactly meant for the fourth quarter. Well, we'll have higher sequential profit and we expect to see free cash from the market improving and some of the usual seasonality. But it would still be down year-over-year. The supply chain challenges you'll see some earnings, but also through inventory. It's going to be lot stack and wave that isn't going out. And then for the full-year fourth quarter last year, you remember we had big Renewables progress of a billion so we don't expect that to happen this year. And then I also previously talked about the Aviation settlements and Cares Act as positive one-offs in fourth quarter last year. To take that all together, that's how you get to the fourth quarter, and importantly, how we get to $5 billion of jumping off points for free cash flow this year, which is really important proof point and step to our high-single-digit fee margin journey that Larry talked about a little while ago.

And the next question is from Andrew Obin from Bank of America.

Yes. Good morning.

Good morning.

Good morning, Andrew.

I have a question about the longer-term outlook. Long-term care seems to be improving and power is stabilizing. Once we consolidate the balance sheet, it becomes easier and there is a pathway for delivering results. In the past, there was a lot of discussion around strategic options, but the focus shifted during COVID. It appears that interest in this area is returning. Can you discuss our current position regarding strategic options and provide historical context on what has been said about Healthcare, long-term care, renewables, and so on? It's a broad question, but any insights you can share would be appreciated.

Sure. Sure. Andrew, let me take a swing at that. I would say that again, we're really pleased with the progress on both the deleveraging and the operational improvements. We still have to close the transaction, worked through the follow-on debt reductions, but to be in a position to have line of sight now on what will be a cumulative approximately $75 billion debt reduction over the last 3 years allows us, I think, to look at the Balance Sheet and begin to think about playing more offense and take advantage of the strategic optionality that we have been looking to build and grow. That goes hand-in-hand with the underlying improvements, some of which I would argue you see in these numbers, others, like what I saw on the shop floor and Lynn a few weeks back, you don't see yet, but which I think gives us confidence that more improvements in terms of top line, bottom line and cash are forthcoming. And all that really does is, I think, allow us to both invest in the business more aggressively, organically and inorganically. That's why we were so excited about the BK Medical transaction, admittedly small, but the strategic logic behind it, the value-add operationally, our $3 billion high-performing ultrasound business will generate. And the high single-digit returns we think we will have in time that's what we should be doing more of in concert with what we're going to do organically. All of that really sets us up, I think, Andrew, to be in a position to really realize the full potential of these wonderful businesses in the GE portfolio. There are host of ways that could play out over time. But first things first, we've got some business here with the GECAS and AerCap merger to work through. We've got these operating challenges to navigate through the fourth quarter and going into next year. But I really do think we're increasingly operating from a position of strength. I like where we are; in time we will realize the full value of these businesses.

Our next question is from Markus Mittermaier from UBS.

Hi. Good morning everyone.

Hi.

Morning. Hi. Maybe a question on Power. Could you update us on the steam Power restructuring progress and any view on the potential impact here on the cost base for that business. And is that anything that changes how you view that business given the French government's push, recently investment push in nuclear and renewable source that really separate in your business on the steam side, between coal and nuclear. Thank you very much.

Hi, Markus. Let me start by talking to the restructuring then. First of all, Instron, which is now part of the Power Segment and also run by Scott. We have Valerie and her team working through the restructuring there. I would say they are on track, it's a big restructuring. We do expect margins to turn in 2023 and basically have the restructuring to temper down by then. And then the business is going to be 2 thirds services going forward at a significantly lower overhead cost, which is what you were alluding to. So we see good traction but we're still in the middle of it. So again, it would take time until 2023, but then we'll have a very different business with the high service element and lower overheads.

Markus, I think the other part of your question was really with respect to the steam generators for nuclear applications. As you will appreciate, our focus continues to be on running that business as well as we can for our customers. Recently, we did acknowledge that we are in discussions with EDF regarding a potential transaction. If there's an opportunity to create value, we'll certainly pursue it. But if you step back for a moment, I think we are of the view that nuclear overall has an important role to play in the energy transition. We know the French government is strongly of that view. They aren't alone. I was in the UK last week where we had similar conversations, particularly in and around advanced nuclear technology, particularly in the case of the small modular reactors, which we know can provide carbon-free, dependable baseload, and flexible capacity as we move forward here. So we've got a lot of capabilities in and around nuclear, really the whole nuclear lifecycle. So we don't talk a lot about it, but it is part of the Power framework for the energy transition and one we'll continue to manage as best we can going forward.

And our next question is from Joe O'Dea from Wells Fargo.

Hi, good morning, everyone.

Morning, Joe.

Morning Joe.

Morning, Joe.

I wanted to ask on PTC and how you're planning for that and what your base case assumptions are, what you're thinking about in terms of important dates on the timeline. You talked about the step-down in installs expected next year, how temporary that is or what you're seeing, how much kind of persistent pressure it can put on the install market.

Joe, let me take that. I think with respect to the U.S. market for onshore wind, we do see a step down here going into 2022, probably stepping down from say, 14 to 10 gigawatts. It's not yet set in stone because these conversations are active and underway in Washington given all the legislation under review that run up to COP26 and the like. I think what we are incorporating in our commentary here today, is a more pessimistic perhaps, but updated view relative to the very near-term. So in the absence of those incentives in the short term, we're going to feel pressure both on new unit orders and in repowering. So some of that impacts cash, some of that impacts margins relative to repowering installations this year. The good news is, this is all part of a long-term extension given the administration's commitment to the energy transition, to the role of both onshore and relatedly offshore wind in that transition. So if you take the decade-long view, the impetus or the imperative for us is really to manage these businesses better, to generate better margins, operating margins. But in the short term, we've got some additional pressures just given the reduction in demand that will follow the uncertainty around the tax incentives. And they hit us hard because North American market, the U.S market, is clearly the best onshore wind market for us on a global basis.

And our next question is from Nicole DeBlase from Deutsche Bank.

Thanks. Good morning.

Good morning, Nicole.

Good morning, Nicole.

I was hoping to dig into the supply chain challenges a little bit here. And I know it's become a little bit spread across a lot of your businesses, you mentioned that becoming challenged Aviation as well. But Larry, are you seeing any signs of abatement there? We've heard a few companies talk about the view that August and September where the pinnacle of supply chain challenges and things might be easing a little bit, we would love to hear what GE is saying.

Nicole, I've talked to some of those CEOs. Some of those CEOs are friends of mine. I'm not sure we're yet at a place where we would say that things are stable. We may have line of sight, we may have improvements in one commodity or in one business, but almost without fail. The next day, a commodity, a supplier, a logistics provider that we thought was good for the next 6 weeks or the next 6 months offers up a revision to that outlook. So I think I've used a phrase I probably shouldn't, but I'll repeat it, and it really is playing whack-a-mole. By business, by commodity, by geography, it just seems like every day there's new news to battle with. I couldn't be more pleased with the way our team is navigating all of this, both in terms of availability and cost. We've got new procurement leadership in a number of businesses. We're really trying to make sure that we are true to our lean imperative of safety, quality, delivery, and cost in that order. We don't want to have a short-term band aid that costs us long term. But it really is a tactical, muscular endeavor right now that we're working our way through. You've heard others, you've heard some of the key suppliers talk about electronic components are likely to be at least a 2, 3 quarter challenge, maybe longer. That's important for us in certain businesses and certainly in some of our higher-margin businesses. But we're working through it. It's probably more challenging than I've ever seen in my career. But we'll work our way through it. Things will level out in time, and I think that given this was an area where we wanted to strengthen our operational capabilities, while it's more challenging in the short-term, we'll be better for medium and long term.

Hey, John, we only have time for one more question. Could you please proceed with what's going to be our last question?

Yes. And our final question is from Andy Kaplowitz from Citigroup.

Good morning, guys. Just slipped in.

Good morning, Andy.

Larry, can you give a little more color into how you're thinking about Healthcare revenue margin going forward? I know you mentioned that growth could've been 9 points higher. Obviously, very strong orders despite the weaker revenue. So to get those nine points back in '22 and/or does the backlog you're building give you confidence in the stronger than usual revenue environment in '22?

Andy, for sure. And it's not our style to try to build back a better headline here. But that's 9 points of real pressure given the supply chain issues that Nicole was just probing us on. And again, Carolina mentioned that the Ford ventilator effort a year ago for the HHS was a significantly tough comparison. But if you look at the 19% orders growth, if you look at what's happening both in the public and the private spheres. Plus what we're doing increasingly, both from a commercial and from a product perspective, we talked about the opportunity to take this business from a low-single-digit grower in the mid-single-digit range to grow margins in the 25 to 70 basis points over time. I've got more conviction about our potential to do that than I did a year ago. Just off a UK trip where I had some quality time with a number of our business leaders over there, our PDx business in particular, lots of good things going on. We've got a CEO transition here in the offing that we're excited about. Karen Murphy is doing a heck of a job with that business. Pete Arduini coming in is very much committed to those types of expectations. He's certainly coming because he's excited about the potential that he sees across the GE Healthcare portfolio. So we wish it weren't as Mike you have a camouflaged headline here, given the supply chain issues, we'll work through it and just feel like this is a strong business that will get stronger over time.

Larry, we're out of time, but any final comments?

I want to take a moment to express my gratitude to our employees and partners worldwide for their extraordinary efforts during the pandemic and recent challenges. My thanks go out to everyone involved. We are operating from a position of strength today. I also want to thank our investors for their ongoing support. We truly appreciate your interest, investment in our company, and the time you've taken today. Steve and the Investor Relations team are always available to assist you as you evaluate GE in your investment decisions.

Thank you. Thanks, John.

Thank you, ladies and gentlemen. That concludes today's conference. Thank you for participating and you may now disconnect.