GE 2016 second quarter performance Financial results & Company highlights July 22, 2016 CAUTION CONCERNING FORWARD-LOOKING STATEMENTS: This document contains "forward-looking statements" – that is, statements related to future events that by their nature address matters that are, to different degrees, uncertain. For details on the uncertainties that may cause our actual future results to be materially different than those expressed in our forward-looking statements, see http://www.ge.com/investor-relations/disclaimer-caution-concerning-forward- looking-statements as well as our annual reports on Form 10-K and quarterly reports on Form 10-Q. We do not undertake to update our forward-looking statements. This document also includes certain forward-looking projected financial information that is based on current estimates and forecasts. Actual results could differ materially. NON-GAAP FINANCIAL MEASURES: In this document, we sometimes use information derived from consolidated financial data but not presented in our financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP). Certain of these data are considered “non-GAAP financial measures” under the U.S. Securities and Exchange Commission rules. These non-GAAP financial measures supplement our GAAP disclosures and should not be considered an alternative to the GAAP measure. The reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable GAAP financial measures are posted to the investor relations section of our website at www.ge.com. We use non-GAAP financial measures including the following. • Operating earnings and EPS, which is earnings from continuing operations excluding non-service-related pension costs of our principal pension plans. • GE Industrial operating & Verticals earnings and EPS, which is operating earnings of our industrial businesses and the GE Capital businesses that we expect to retain. • Industrial segment organic revenue, which is the sum of revenue from all of our industrial segments less the effects of acquisitions/dispositions and currency exchange. • Industrial segment organic operating profit, which is the sum of segment profit from all of our industrial segments less the effects of acquisitions/dispositions and currency exchange. • Industrial cash flows from operating activities (Industrial CFOA), which is GE’s cash flow from operating activities excluding dividends received from GE Capital. • Capital ending net investment (ENI), excluding liquidity, which is a measure we use to measure the size of our Capital segment. General Electric Capital Corporation (GECC) has been merged into GE and our financial services business is now operated by GE Capital Global Holdings LLC (GECGH). In this document, we refer to GECC and GECGH as “GE Capital”. We refer to the industrial businesses of the Company including GE Capital on an equity basis as “GE”. “GE (ex-GE Capital)” and /or “Industrial” refer to GE excluding GE Capital. GE’s Investor Relations website at www.ge.com/investor and our corporate blog at www.gereports.com, as well as GE’s Facebook page and Twitter accounts, contain a significant amount of information about GE, including financial and other information for investors. GE encourages investors to visit these websites from time to time, as information is updated and new information is posted. Imagination at work.
2Q’16 overview Environment Execution versus goals ü Slow growth and volatile environment 2016 Goals 1H’16 ü GE Capital de-designated as a SIFI; Grow Industrial profit -b) (3)% Appliances & GEAM deals closed Organic revenue growth (2-4%) (1)% GE executing well: +40 bps. Margin expansion ex. Alstom +10 bps. ex. FX ü Industrial operating + Verticals -a) EPS Alstom EPS ~$.05 $- $.51, +65% with Industrial +77%, Segment FX impact $(.03) +35% excluding gains/restructuring Disciplined/balanced capital allocation ü Alstom $.01 EPS in 2Q; segment FX CFOA $30-32B -c) $11.4B impact of $(.01) $15B Capital dividend ~$18B -d) $11.0B ü Industrial margins -b) ex. Alstom flat … July YTD FCF + disp. $28-31B -c) $14.1B +10 bps YTD Cash to investors ~$26B $18.0B ü CFOA $3.5B -c) due to Capital dividend Industrial Reported Organic Portfolio actions $181B GE Capital signings Orders (2)% (16)% GE Capital SIFI de-designation Segment revenue 7% (1)% Appliances closed GE Asset Management closed in July Segment op profit (5)% (6)% Industrial op profit -b) (2)% (4)% (a- Verticals include businesses expected to be retained including allocated corporate costs 2 (b- Excluding gains and restructuring & other items (c- Deal taxes are excluded from CFOA and included in dispositions (d- Subject to regulatory approval
2Q’16 orders $26.6B, (2)% … (16)% organic Orders (V%) Backlog Orders price Total orders price (0.3)% 2Q 1H $320 $315 $316 0.9% 0.4% 0.6% $266 Equipment (11)% (10)% 0.3% 86 89 88 Equip. 71 (0.4)% Services 9 10 233 228 226 (1.3)% Services 195 Total (2)% -% (2.8)% Organic (16)% (12)% '14 '15 1Q'16 2Q'16 Power Ren. O&G EC Av. HC Trans. Alstom backlog +$1.6B since acquisition Company highlights Digital highlights ü Equipment orders (30)% organically driven by ü Digital orders ex. AGP +15%, revenue +17% market pressure in O&G and Transportation; Power ü AGP revenues +2%, orders down due to timing (27)% & Aviation (37)% on tough comps ü Revenue of $1.3B, +12% ü Alstom orders $4.5B: Power $2.9B, Renewables ü 54 partners on Predix … ahead of plan $0.2B, Grid $1.4B ü 12K developers … on track for 20K ü Service orders +9%, organically (1)% and +1% YTD ü $250M digital thread productivity through 1H’16 ü Core backlog +6% with service +11% ü Opened digital foundry in Paris and Shanghai ü International orders flat including Alstom 3
Revenue dynamics Organic revenue growth 1H revenue highlights (Industrial segments) • Core services revenue grew by 5% organically … 2015 2016 strength in Aviation 5% (+17%) & Power (+7%) 4% offset by O&G and 3% 2-4% Transportation 1% • Solid Healthcare organic (1)% growth +6% … Life Sciences +12%, China 1H 2H TY 1H 2HE TYE +19% Power 12% (2)% 4% (6)% ~15% ~5% • Renewables organic growth of 27% … global O&G (2)% (7)% (5)% (18)% ~(7)% ~(12)% expansion Other 4% 4% 4% 5% ~5% ~5% • Excellent global project pipeline + 1H’16 organic growth +3% ex. O&G … comparisons get easier + Power backend loaded … HDGT +65%, AGPs 50%+ in 2H 4
Industrial execution Industrial -b) Segment gross Segment OP Alstom update margins -a) margins -a) OP margins -a) 27.3% 2Q performance 26.8% 15.6% 15.1% ($ in billions except EPS) 14.2% 13.5% +70 bps. $4.5 Alstom on track (60) bps. - bps. for ~$.05 EPS for +40 bps. $3.2 (40) bps. the year +10 bps. 2Q YTD 2Q YTD 2Q YTD $0.1 $.01 Total w/ 26.5% 26.0% 14.4 % 13.6% 13.1 % 12.2% Alstom Segment OP margins 2Q 1H Orders Revenue Segment EPS op profit Mix (0.4) pts. - pts. • Won Hassyan clean coal plant: first ultra- Value gap (price/inflation) 0.3 0.2 supercritical power plant in the Middle East … Cost productivity 0.8 0.2 4x ST, 4x boilers, 4x generators +0.5 pts. Gross Margins -a) 0.7 pts. 0.4 pts. • 10 HRSGs ordered through first half ex. FX Simplification (SG&A) (0.2) 0.1 • 2Q EPS $.01 … segment operating profit Base inflation/other (1.1) (0.9) $138MM, Corporate $(341)MM, tax benefits flat ex. Op Profit Margins -a) (0.6) pts. (0.4) pts. • Synergy benefits $0.4B through the first half … FX Alstom (1.2) (1.5) on track for ~$1.1B for the year Op Profit Margins (1.8) pts. (1.9) pts. • Goodwill +$0.6B to $14.8B in 2Q driven mainly Segment equipment (280) bps. -a) , Services flat -a) by customer contracts 5 (a- Excluding Alstom (b- Industrial includes Corporate with the exception of non-operating pension, gains and restructuring & other
Generating cash ($ in billions) V% GE cash balance walk 2QYTD CFOA F $10.7 Total Beginning balance 1/1/16 $10.4 GE Capital +$4B in 11.0 dividend CFOA ex. deal taxes 11.4 July $3.9 0.5 Dividends (4.3) Industrial 3.5 0.4 (89)% (0.7) U Net P&E (1.4) Deal taxes 2015 2016 Acquisitions (0.2) FCF ex. deal taxes $2.4 $10.0 -a) F Ind’l FCF $2.0 $(1.0) -a) U Dispositions incl. deal taxes 4.1 ex. deal tax 2H Industrial CFOA dynamics Buyback (13.7) 2H income + depreciation & amortization ~$8B Change in debt/FX/other 3.7 ~$3-4B Working capital reduction from 2H shipments June 2016 $9.9 ~$1-2B Other timing differences $18B returned to investors … $14B in buyback and $4B in dividends 6 (a-Including deal taxes: FCF $9.3B, Industrial FCF $(1.7)B
GE Aviation investing and delivering ($ in billions) ‘16 Est. Strategic imperatives + $24.7 $24.0 • Grow installed base and services Revenue $21.9 ++ $5.5 $5.0 • Lead in next-generation products Op profit $4.3 • Position supply chain for new product volume growth 2013 2014 2015 Op% 19.8% 20.7% 22.3% + • Build out digital services for -1) $2.4B $2.9B $2.9B - R&D customer productivity Installed base ~63,000 ~65,000 ~67,500 + (1- Represents company engineering effort; customer, company and deferred engineering Deliveries and installed base includes GE and JV partners volume. 7
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