1Q 2010 Highlights (Continuing Operations Attributable to GE)
• EPS of .21, down 19%; earnings of $2.3 billion, down 18%
• Company revenues of $36.6 billion, down 5%; Industrial sales declined 2%
• Losses, delinquencies and non-earning assets (ex. FAS 167) declined versus the prior quarter
• Industrial cash flow from operations on track at $2.6 billion; $70 billion consolidated cash and equivalents
• Industrial operating profit solid at 13.4%; ex. Olympics 14.7%, up 30 bps from 1Q ’09
• Total company orders of $17.1 billion, down 8%; total backlog steady at $174 billion
• 2010 framework remains achievable with upside potential; we expect to grow earnings for the balance of 2010
Revenues were $36.6 billion for the quarter, down 5% from a year ago, reflecting acceleration of GE Capital downsizing.
“GE’s environment continued to improve in the first quarter of 2010,” GE Chairman and CEO Jeff Immelt said. “We saw encouraging economic signs, including increases in airline passenger miles and freight loadings, declines in receivables delinquencies, and growth in local advertising markets. Total company backlog of equipment and services held steady from the prior quarter at $174 billion. Our Healthcare and Oil & Gas businesses experienced solid orders growth and our equipment and services backlog remains strong.
“Our business model is performing,” Immelt said. “We are expanding Industrial margins and realizing benefits from over two years of restructuring, while increasing investment in R&D to drive profitable organic growth.
“We are very encouraged by GE Capital’s performance, earning .6 billion in the quarter,” Immelt said. “We are seeing solid signs of stabilization. Losses, delinquencies and non-earning assets (excluding the impact of FAS 167) declined in the quarter. At the same time, reserve coverage increased. We are originating new business at attractive margins and our funding costs have declined. GE Capital losses seem to have peaked. Commercial real estate continues to be challenging, but the risks are understood and we expect them to be manageable. We have strengthened the GE Capital franchise and are on track for solid earnings growth.”
Excluding the impact of the Olympics, Industrial margins improved to 14.7%, up 30 bps from a year ago, reflecting good performances at Energy, Healthcare and Home & Business Solutions. The company grew R&D investment by 16% in the first quarter and has a pipeline of new products and services. Cash generated from Industrial operating activities totaled $2.6 billion in the quarter, on track for $13-$15 billion this year. At quarter-end, GE had $70 billion of consolidated cash.
“Our 2010 framework remains achievable with potential for upside,” Immelt said. “We may evaluate additional restructuring that will improve our earnings power going forward. We will have substantial cash available for allocation and we expect to grow earnings and dividends in 2011 and beyond.”
Positive items were offset by charges in the quarter. After-tax transaction gains of .02 per share were offset by .02 per share in after-tax restructuring and other charges.
“We are leading a renewed GE,” Immelt said. “GE has leadership positions in Infrastructure and Financial Services. We are investing in new products, services and emerging markets. The company is positioned to deliver long-term shareowner value.”
First-Quarter 2010 Financial Highlights:
Earnings from continuing operations attributable to GE were $2.3 billion, down 18% from $2.9 billion in the first quarter of 2009. EPS from continuing operations was .21, down 19% from last year. Segment profit fell 16% compared with the first quarter of 2009, as 12% growth at Energy Infrastructure was more than offset by earnings declines of 41% at GE Capital, 18% at Technology Infrastructure and 49% at NBC Universal.
Including the effect of discontinued operations, first-quarter net earnings attributable to GE were $1.9 billion (.17 per share attributable to common shareowners) in 2010 compared with $2.8 billion (.26 per share attributable to common shareowners) in the first quarter of 2009. During the first quarter, the company recorded incremental reserves related to the 2008 disposal of our GE Money Japan business, which is reflected in discontinued operations.
Revenues decreased 5% to $36.6 billion. GE Capital Services’ (GECS) revenues fell 9% versus the first quarter of last year to $13.2 billion. Industrial sales were $23.5 billion, down 2% from the first quarter of 2009.
Cash generated from Industrial operating activities in the first three months of 2010 totaled $2.6 billion, down 17% from $3.1 billion in the first quarter of 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 a.m. ET today, available at ge.com/investors. Related charts will be posted there prior to the Webcast.
GE (ge.com) is a diversified infrastructure, finance and media company taking on the world’s toughest challenges. From aircraft engines and power generation to financial services, health care solutions, and television programming, GE operates in more than 100 countries and employs about 300,000 people worldwide.
Caution Concerning 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,” or “will.” 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: the severity and duration of current economic and financial conditions, including volatility in interest and exchange rates, commodity and equity prices and the value of financial assets; the impact of U.S. and foreign government programs to restore liquidity and stimulate national and global economies; 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; 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 soundness of other financial institutions with which GECC does business; the adequacy of our cash flow and earnings and other conditions which may affect our ability to maintain our quarterly dividend at the current level; the level of demand and financial performance of the major industries we serve, including, without limitation, air and rail transportation, energy generation, network television, real estate and healthcare; the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks, including the impact of proposed financial services regulation; strategic actions, including acquisitions and dispositions and our success in integrating acquired businesses; 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.
Anne Eisele, GE
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