Vertical Research Partners Industrial Conference

Transcription

1 Vertical Research Partners Industrial Conference Lorraine Bolsinger CEO GE Distributed Power September 3, 2014 Imagination at work.

2 Forward-Looking Statements: This document contains forward-looking statements that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as expect, anticipate, intend, plan, believe, seek, see, will, or would. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include: current economic and financial conditions, including volatility in interest and exchange rates, commodity and equity prices and the value of financial assets; potential market disruptions or other impacts arising in the United States or Europe from developments in sovereign debt situations; the impact of conditions in the financial and credit markets on the availability and cost of General Electric Capital Corporation s (GECC) funding and on our ability to reduce GECC s asset levels as planned; the impact of conditions in the housing market and unemployment rates on the level of commercial and consumer credit defaults; pending and future mortgage securitization claims and litigation in connection with WMC, which may affect our estimates of liability, including possible loss estimates; our ability to maintain our current credit rating and the impact on our funding costs and competitive position if we do not do so; the adequacy of our cash flows and earnings and other conditions which may affect our ability to pay our quarterly dividend at the planned level or to repurchase shares at planned levels; GECC s ability to pay dividends to GE at the planned level, which may be affected by GECC's cash flows and earnings, financial services regulation and oversight, and other factors; our ability to convert pre-order commitments/wins into orders; the price we realize on orders since commitments/wins are stated at list prices; the level of demand and financial performance of the major industries we serve, including, without limitation, air and rail transportation, power generation, oil and gas production, real estate and healthcare; the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks, including the impact of financial services regulation; our capital allocation plans, as such plans may change including with respect to the timing and size of share repurchases, acquisitions, joint ventures, dispositions and other strategic actions; our success in completing announced transactions and integrating acquired businesses; adverse market conditions, timing of and ability to obtain required bank regulatory approvals, or other factors relating to us or Synchrony Financial could prevent us from completing the Synchrony IPO and split-off as planned; our ability to complete the proposed transactions and alliances with Alstom and realize anticipated earnings and savings; the impact of potential information technology or data security breaches; and numerous other matters of national, regional and global scale, including those of a political, economic, business and competitive nature. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements. This document includes certain forward-looking projected financial information that is based on current estimates and forecasts. Actual results could differ materially. This document may also contain non-gaap financial information. Management uses this information in its internal analysis of results and believes that this information may be informative to investors in gauging the quality of our financial performance, identifying trends in our results and providing meaningful period-to-period comparisons. For a reconciliation of non-gaap measures presented in this document, see the accompanying supplemental information posted to the investor relations section of our website at In this document, GE refers to the Industrial businesses of the Company including GECC on an equity basis. GE (ex-gecc) and/or Industrial refer to GE excluding Financial Services. GE s Investor Relations website at and our corporate blog at 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. 2

3 GE s Distributed Power Operating in a big, growing & high-tech segment GE s core capabilities are a differentiator Positioned for profitable growth 3

4 Power & Water largest industrial business ~$25B 13 revenue >37,000 employees >120 countries $4B $8B $6B Power Gen Products Power Gen Services Distributed Power $5B $2B $1B Renewables Water & Process Technologies Nuclear Diverse technology & services solutions >1,000GW installed globally 4

5 GE s Distributed Power business Aero Jenbacher Waukesha Stationary Diesel Technology Gas turbines ( MW) Gas engines ( MW) Gas engines (0.1-4 MW) Diesel engines (2-5 MW) Target segments Power Gen Oil & Gas Power Gen Oil & Gas Power Gen The broadest gas-fired portfolio 100 kw to 100 MW 5

6 Products used in a diverse set of applications Combined Heat & Power (CHP) Renewables support Mobile fast power Gas compression Oilfield drilling LNG Growing in a $100B+ space GE Confidential - Distribute to authorized individuals only. Source: EnginLink, McCoy, GE analysis 6

7 Positioned for megatrend-driven growth Growth in emerging countries Demand for lower emissions O&G investment, gas availability Rise of unconventional O&G Customers need fast, reliable & financeable solutions 7

8 Evolution of GE s Distributed Power Aero Gas Turbines (Orders, GW) Jenbacher gas engines (Orders, GW) Waukesha Gas engines (Orders, GW) ~2x ~3x ~2x Continued product investment Grew in O&G Acquired in 2003 Invested in products, grew beyond Europe Acquired in 2011 Scaled business, growing beyond US Finding attractive spaces & scaling building another great GE business 8

9 Waukesha growth story Performance Op Margin, actual % above expected ~70% Actual Expected Year 1 Year 3 EBITDA multiple paid: 9.5x (part of Dresser) Deal closed: Feb ~80% Actual Expected Cumulative OM performance: ~80% higher than pro forma by year 3 Fully integrated: Revenues growing faster than segment Key drivers Attractive space Compression growth at ~8%/year, new to GE Profit drivers Used GE brand & reach to expand global footprint Strong execution, utilize Jenbacher platform for synergies Building out services Growing service & continuing opportunities to provide solutions, move beyond parts provider Waukesha gas engines Product range: Applications: 120 kw 3,605 kw +Gas compression +Mechanical pump drive +Oilfield power generation Invested in new but core business segment outperforming expectations 9

10 1 Includes Aviation & Aero turbines. For Aviation includes GE (40k), CFM (18k) & EA (0.2k). CFM is a 50/50 JV between GE & Snecma. EA is a 50/50 JV between GE and Pratt & Whitney 2 Includes engines from GE Transportation & Distributed Power GE s capabilities are a differentiator Basic II Aviation heritage >60,000 turbines installed 1 Aerodynamics, adv. materials, reliability Engines heritage >55,000 gas & diesel engines installed 2 Combustion, emissions, efficiency Research centers 7 centers spread across 4 continents Investments in software & services Global footprint Global Growth Organization (GGO) Global supply chain Oil & Gas Partnering to grow faster ~Half of DP orders in 13 Enabling Distributed Power s success 10

11 Distributed Power strategy Strategic imperatives Actions 1 Invest in differentiated products Doubling NPI investments Entering new spaces >5 MW recips, oilfield power 2 Grow services Growing $/installed base Using data & analytics to create value 3 Win in fast growing regions & segments Forming local partnerships Huadian, Navigat, Clarke Shifting commercial resources to growth regions Positioning for long term growth with margins accretive to P&W 11

12 1 Invest in differentiated products Entered >5MW engine space Entering diesel a $10B+ space Launched 10MW engine in N. Am. Launch customer identified Best in class electrical efficiency 49% for 60 Hz segment Attractive customer segments combined heat & power, flexible generation MOU w/sky Global for 6xJ920 engines for 1 st North American project FastWorks Engine reducing cycle time product development 1.5 yr Utilizing GE engine experience Jenbacher Type 6 fleet has >60M hours <10% of base program cost vs. clean-sheet development Increasing tech investment while embracing FastWorks mentality 12

13 2 Grow services DP Services business Differentiation Key account focus One P&W fulfillment COEs Localization Lifecycle technologies Conversions, modifications & upgrades Low cost, modular repowers New Offerings Remanufacturing Contractual structures RM&D connectivity & Predictivity TM Seeing growth from efforts Orders ($B) $1.7 24% 1H Orders YoY e Good early results will continue to drive as a growth priority 13

14 3 Win in fast growing regions & segments New unit orders Engines and turbines (GW) Profitable global growth Cost, revenue via GE footprint Utilizing GE Global Growth Organization Non-OECD OECD 11% CAGR 1% CAGR '06 '13 Expanding regional services Faster, more aligned customer response Commercial leadership in regions Grew # of tech experts, hired in regions Entered new growth countries, segments O&G drilling MOU in China 1 st TM2500 order in Papua New Guinea 1 st LM6000 order in Philippines Fuel flexibility Positioning to win by being faster, smarter, more local 14

15 GE s Distributed Power Operating in a big, growing & high tech segment Great space for GE to invest GE s core capabilities are a differentiator Enabling Distributed Power s success Positioned for profitable growth Differentiated products & services Winning in fast growing regions & segments 15

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