GE 2018 fourth quarter performance

Transcription

1 GE 2018 furth quarter perfrmance Financial results & Cmpany highlights January 31, 2019 CAUTION CONCERNING FORWARD-LOOKING STATEMENTS: This dcument cntains "frward-lking statements" that is, statements related t future events that by their nature address matters that are, t different degrees, uncertain. Fr details n the uncertainties that may cause ur actual future results t be materially different than thse expressed in ur frward-lking statements, see as well as ur annual reprts n Frm 10-K and quarterly reprts n Frm 10-Q. We d nt undertake t update ur frward-lking statements. This dcument als includes certain frward-lking prjected financial infrmatin that is based n current estimates and frecasts. Actual results culd differ materially. NON-GAAP FINANCIAL MEASURES: In this dcument, we smetimes use infrmatin derived frm cnslidated financial data but nt presented in ur financial statements prepared in accrdance with U.S. generally accepted accunting principles (GAAP). Certain f these data are cnsidered nn-gaap financial measures under the U.S. Securities and Exchange Cmmissin rules. These nn-gaap financial measures supplement ur GAAP disclsures and shuld nt be cnsidered an alternative t the GAAP measure. The reasns we use these nn-gaap financial measures and the recnciliatins t their mst directly cmparable GAAP financial measures are included in the GE earnings supplemental infrmatin package psted t the investr relatins sectin f ur website at Our financial services business is perated by GE Capital Glbal Hldings LLC (GECGH). In this dcument, we refer t GECGH as GE Capital. We refer t the industrial businesses f the Cmpany including GE Capital n an equity basis as GE. GE (ex-ge Capital) and /r Industrial refer t GE excluding GE Capital. GE s Investr Relatins website at and ur crprate blg at as well as GE s Facebk page and Twitter accunts, cntain a significant amunt f infrmatin abut GE, including financial and ther infrmatin fr investrs. GE encurages investrs t visit these websites frm time t time, as infrmatin is updated and new infrmatin is psted.

2 Summary Business strengths: CEO Observatins Aviatin: Strng financial perfrmance & peratinal executin Healthcare: Slid perfrmance; valuable franchise Significant liquidity: $30B+ GE Industrial & GE Capital cash; $40B in available funding lines; in prcess f separating 3 businesses, which will generate $30B+ f cash surces Taking Actin De-leveraging the balance sheet: Reduced dividend (~$4B/year), accelerated BHGE sell dwn (~$4B), mdified Transprtatin deal (~$2B) Signed r cmpleted ~$20B Industrial dispsitins in 2018 Cmpleted ~$15B GE Capital asset sales & ther actins in 2018 Agreed in principle with the U.S. DOJ t settle FIRREA investigatin f WMC fr $1.5B Opprtunities fr imprvement: Leverage: T high; cmmitted t de-leveraging Industrial & Capital balance sheets Pwer: Secular/cyclical challenges; nging prfit & cash pressures frm Alstm; better peratinal executin Running the business: sharper peratinal executin, strnger custmer fcus, fewer pririties Strengthening the businesses: Delayering Pwer and Renewables HQs Fcusing ur GE Digital business n the cre New leaders, including in Gas Pwer, Glbal Grwth Organizatin, HR, IR Appinted Paula Rsput Reynlds t GE s Bard Annunced intentin t cnduct auditr tender prcess 2

3 perfrmance ($ in billins except EPS) Orders $34.1 y/y (1)% y/y (rg.) 4% Adjusted EPS walk Revenues % GAAP Cntinuing EPS $ GE Industrial % 8% Less: Gains/unrealized mark-t-market GE Capital % Less: Gdwill impairments (0.02) Adj. GE Industrial prfit -a) 2.3 (16)% (10)% Less: Restructuring & ther (0.07) Adj. GE Industrial prfit margin -a) 7.5% (1.5)pts (1.5)pts Less: Nn-p. benefit csts (0.05) GAAP Net EPS 0.07 F Less: US tax refrm enactment (0.01) GAAP Cntinuing EPS 0.08 F Adjusted EPS -a) $0.17 Adjusted EPS -a) 0.17 (60)% Restructuring & ther includes $(0.5)B after-tax restructuring expense & $(0.1)B tax impact frm Healthcare separatin (a - Excludes interest & ther financial charges, nn-perating benefit csts, gains (lsses), gdwill impairments, and restructuring & ther 3

4 Industrial free cash flws ($ in billins) y/y 2018 y/y Net earnings (lss) -a) $0.9 $5.5 $(20.7) $(18.5) Gdwill impairments 0.2 (0.1) Depreciatin & amrt. 1.3 (0.1) Wrking capital 2.3 (1.4) 0.0 (2.8) Cntract assets 0.9 (0.2) (0.1) 1.8 Other CFOA -b) 0.9 (4.7) 1.1 (2.9) Grss capex (1.0) 0.2 (3.6) 1.0 Less: BHGE FCF -c) Plus: BHGE dividend 0.1 (0.0) Adj. GE Industrial FCF -d) $4.9 $(1.9) $4.5 $(1.0) Psitive wrking capital driven by inventry liquidatins & strng prgress cllectins in Renewables Cntract assets flw driven by services billings in Aviatin as traffic grwth remains strng 2018 $4.5B adjusted FCF largely frm incme, better payables perfrmance, and Renewables prgress ffset by Pwer drag, lwer factring penetratin, and $2.7B f capex (ex-bhge) (a - Aggregates the fllwing: Net earnings (lss), (earnings) lss frm discntinued peratins, (earnings) lss frm GE Capital cntinuing peratins; excludes 2017 cmmn dividends frm GE Capital (b - Aggregates the fllwing: Lsses (gains) n sales f business interests, principal pensin plans (net), ther pst retirement benefit plans (net), incme taxes (net), and all ther perating activities; excludes deal taxes and GE Pensin Plan cntributins (c - BHGE FCF n a grss capex basis; 2017 figures include 2H BHGE FCF nly (d - Excludes deal taxes & GE Pensin Plan cntributins; BHGE n a dividend basis 4

5 Liquidity ($ in billins) GE cash balance walk liquidity metrics (ex. BHGE) Beginning balance 4Q 17 Adjusted GE Industrial FCF -a) GE cmmn dividends Business dispsitins -b) Lan frm GE Capital fr pensin funding Pensin funding Alstm jint ventures BHGE secndary + buybacks Other Ending balance $ (4.2) (6.0) (3.1) 4.4 (2.5) $16.8 Peak intra-quarter CP/revlver usage Available bank lines Credit rating $14.8B $40B BBB+ (a - Excludes deal taxes & GE Pensin Plan funding; BHGE n a dividend basis (b - Includes deal taxes 5

6 Financial plicy ($ in billins) Targeted gals Sustainable credit rating in single A range Debt (as f 12/31/18) GE Ind. net debt (ex-bhge) $55 Other -b) $7 GE Capital debt $66 $4 Alt funding Industrial net debt/ebitda <2.5x -a) Pensin -c) $21 Interc lan frm GE Capital $14 $75 External debt Dividend payut in line with peers ver time External debt $26 75% cash-d) $13 Interc lan $14 t GE Cash $16.8 $15.0 $50B surces: - $18B Healthcare debt/pensin transfer - $30B+ BHGE, Transprtatin, and up t <50% f Healthcare (a - Nn-GAAP measure (b - 50% f preferred stck and perating leases (c - GE Pensin Plan, GE Supplementary Pensin Plan, Other Pensin Plans, and Principal retiree benefit plans, after tax (d - 75% f $16.8B ending GE (ex-bhge) cash balance 6

7 Segments ($ in billins) Pwer Renewable Energy Orders $7.9 (19)% Orders $3.9 19% Revenues $6.8 (25)% Revenues $3.4 28% Segment prfit $(0.9) U Segment prfit $0.1 (51)% Segment prfit % (12.9)% U Segment prfit % 2.0% (3.3) pts. Aviatin Orders $8.8 12% Revenues $8.5 21% Segment prfit $1.7 24% Segment prfit % 20.4% 0.6 pts. Healthcare Orders $5.8 (2)% Revenues $5.4 2% Segment prfit $1.2 2% Segment prfit % 21.8% 0.1 pts. 7

8 Segments ($ in billins) Oil & Gas Orders $6.9 21% Revenues $6.2 8% Adj. Segment prfit -a) $0.4 60% Adj. Segment prfit % -a) 6.3% 2.0 pts. Transprtatin Orders $1.1 (48)% Revenues $1.2 24% Segment prfit $0.2 (16)% Segment prfit % 16.1% (7.7) pts. Lighting Orders $0.3 (16)% Revenues $0.5 (16)% Segment prfit $- F Segment prfit % 4.0% 6.8 pts. Capital Revenues $2.5 60% Cntinuing earnings $(0.1) 99% Adj. cntinuing -b) $- (96)% Assets $123.9 $(4.6) sequential variance (a - Oil & Gas segment prfit $320MM in 2018 & segment prfit % f 5.1% including restructuring & ther charges; fr 2017, segment prfit f $(165)MM & segment prfit % f (2.9)% including restructuring & ther charges (b - Excluding tax refrm adjustment 8

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