GE Reports 1Q’12 Operating EPS of $0.34, +3% (+17% excluding 1Q’11 one-time items) Industrial Segment Revenues of $23.7B, +14%; Organic Growth +11%
Infrastructure Orders +20%; Industrial Segment Profit +10%
Industrial CFOA of $2.1B, +22%
1Q 2012 Highlights
• Eighth consecutive quarter of strong operating earnings growth
1Q Operating EPS of $0.34, up 3%; up 17% excluding one-time items
1Q Continuing EPS of $0.31, flat vs. prior year
Revenues of $35.2 billion for the quarter, Industrial segment revenues of $23.7 billion, up 14%
• Leading indicators remain positive
Record first quarter Infrastructure orders of $23.1 billion, up 20%; Equipment up 29%; Services up 11%
Organic orders up 14%
Industrial segment orders in growth markets up 21%
• GE Capital earned $1.8 billion (flat vs. 2011), up 27% excluding 1Q’11 Garanti sale impact
Real Estate returns to profitability
GECC Tier 1 Common Ratio of 10.4%
• On track to deliver double-digit earnings growth in Industrial segments and GE Capital for 2012
Operating EPS was up 17% excluding one-time items. GAAP earnings from continuing operations (attributable to GE) were $3.3 billion, down 4%, or $0.31 per share, flat from the prior year quarter. Revenues were $35.2 billion for the quarter, down 8% reflecting the non-repeat of the NBCU and Garanti sales in 1Q ’11 and lower ENI at GE Capital. Industrial segment revenue grew by 14%. The strength of GE’s portfolio was underscored by record first quarter Infrastructure orders of $23.1 billion, up 20%. The company is executing well and is on track to deliver double-digit earnings growth in 2012 for both Industrial businesses and GE Capital.
“We have previously communicated two significant catalysts for investors: double-digit Industrial earnings growth and the return of the GE Capital dividend to the parent,” said GE Chairman and CEO Jeff Immelt. “Today’s results demonstrate that we are achieving Industrial growth and GE Capital continues to grow stronger. This quarter we witnessed broad-based strength in orders across all our Infrastructure businesses and in both equipment and services. We see encouraging leading indicators driven by global growth. Our strategy to invest in technology and global growth platforms continues to produce results with 11% organic Industrial segment revenue growth and 10% Industrial segment profit growth in the first quarter.”
GE Capital’s first quarter earnings were $1.8 billion, flat from last year, but up 27% excluding the 1Q’11 Garanti sale impact. The company believes that GE Capital’s strong business performance should continue for the year. Margins on new business continue to be attractive, with overall portfolio margins increasing. Real Estate turned its first profit since 3Q 2008. GECC’s Tier One common ratio of 10.4% has never been stronger. GE Capital’s solid liquidity position and earnings power remain a source of strength.
Infrastructure orders were a record high for the first quarter at $23.1 billion, up 20% from the prior year. Organic orders grew 14% in the first quarter, marking the eighth consecutive quarter of positive growth. Industrial growth market orders were up 21%. All businesses grew equipment orders at double-digit rates for the quarter. Orders for the quarter included: South Africa’s Transnet ordered 43 new Model C30ACi locomotives, bringing the total number of GE locomotives ordered to 143 since December 2009. GE Oil & Gas received orders of $1 billion to supply a wide range of equipment and services for the Ichthys liquefied natural gas (LNG) project in Australia. Also, GE received commitments for GEnx-1B engines from Kenya Airways valued at $380 million. Yesterday, GE announced a key strategic commitment from Qantas Group involving the selection of the LEAP (CFM) engine to power 78 A320 aircraft valued at $2 billion. The GE joint venture with Snecma has secured orders and commitments for more than 3,500 LEAP engines in the past year.
Total revenues for the quarter were $35.2 billion, up 4% excluding the impact of NBCU. GE’s first-quarter Industrial segment revenues were $23.7 billion, up 14%. Industrial segment organic revenue was up 11% for the quarter. Industrial growth market revenues were up 14%, driven by double-digit growth in Australia, Canada, China, Russia, Latin America, and Sub-Saharan Africa. The U.S. was also strong with Industrial segment revenues up 17%.
Industrial segment profit was up 10% to $3.3 billion and segment operating profit margins showed improvement in Healthcare and Transportation in the first quarter. While margins were down in total in the quarter, we expect them to increase 50 basis points over the total year as businesses continue to implement productivity projects and recognize value gap improvements. In addition, pricing on new orders was up 50 basis points in total with higher prices in 4 out of 5 businesses. Cash generated from Industrial operating activities was up 22% at $2.1 billion. At the end of the first quarter, GE had $84 billion of consolidated-cash and cash equivalents.
Immelt concluded,“We had a strong performance to kick off the year and the leading indicators support our 2012 framework. Industrial segment profit grew. We are positioned for double digit growth and our Industrial cash plan remains solid. We expect to return excess cash from GE Capital over the course of 2012, subject to review by the Federal Reserve. Capital allocation will be balanced and investor friendly. We are prepared for a variety of global outcomes which positions us to deliver for our investors in 2012 and beyond.”
First-quarter operating earnings were $3.6 billion, up 1% from the first quarter of 2011 and operating EPS was $0.34, up 3% from $0.33 in the first quarter of last year. GAAP earnings from continuing operations (attributable to GE) were $3.3 billion, down 4%, or $0.31 per share, flat from the prior year quarter.
Including the effects of discontinued operations, first-quarter net earnings attributable to GE were $3.0 billion ($0.29 per share attributable to common shareowners) in 2012 compared with $3.4 billion ($0.31 per share attributable to common shareowners) in the first quarter of 2011. Discontinued Operations included $0.2 billion charge primarily related to our intent to exit our Irish mortgage platform in GE Capital. We do not expect further charges related to this business post sale. Positive items of $0.01 per share were offset by $0.01 per share of restructuring and other one-time charges.
First-quarter revenues decreased 8% to $35.2 billion and were up 4% excluding NBCU revenues. Industrial sales of $23.7 billion increased 7% versus 2011. GE Capital Corporation (GECC) revenues of $11.4 billion decreased 12% from last year.
Cash generated from GE Industrial operating activities in the first three months of 2012 totaled $2.1 billion, up 22% from $1.7 billion last year.
The accompanying tables include information integral to assessing the Company’s financial position, operating performance and cash flow.
GE will discuss preliminary first-quarter results on a Webcast at 8:30 am. ET today, available at ge.com/investor. Related charts will be posted there prior to the call.
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Trevor Schauenberg - GE Corporate, VP Investor Communications
P: +1 203 373 2424 - E: trevor.a.schauenberg[.]ge.com.