10-QPeriod: Q1 FY2013

GENERAL ELECTRIC CO Quarterly Report for Q1 Ended Mar 31, 2013

Filed May 8, 2013For Securities:GE

Summary

General Electric (GE) reported steady revenues in the first quarter of 2013 compared to the prior year, with total revenues and other income at $35.01 billion. The company saw a notable increase in net earnings attributable to the Company, rising 16% to $3.527 billion, and diluted earnings per share (EPS) increased 17% to $0.34. This performance was significantly boosted by a pre-tax gain of $1.096 billion from the sale of its remaining stake in NBCUniversal LLC to Comcast. Industrial segment revenues, however, saw a 6% decline to $22.3 billion, primarily impacted by lower volumes and a stronger U.S. dollar, though segment profit from industrial operations decreased by a more pronounced 9% to $2.936 billion. GE Capital's revenues saw a modest 2% increase to $11.5 billion, with segment profit up 9% to $1.927 billion, benefiting from higher gains, though facing organic revenue declines. The company continues its strategic focus on reducing GE Capital's ending net investment, emphasizing core financial services products. Despite headwinds in industrial segments, the divestiture of NBCUniversal provided a significant one-time boost to earnings. Investors should monitor the performance of industrial segments, particularly Power & Water, which experienced a notable revenue decline, and the ongoing management of GE Capital's asset levels and loan portfolios.

Financial Highlights

41 data points
Beta

Revenue

$34.94B

63.2% Gross Margin

Net Income

$3.53B

10.1% Net Margin

EPS (Diluted)

$2.72

Total Assets

$670.69B

Free Cash Flow

$966.00M

Financial Statements
Beta
Revenue$34.94B
Cost of Revenue$12.87B
Gross Profit$22.08B
Operating Expenses$30.80B
Operating Income$4.87B
Net Income$3.53B
EPS (Basic)$2.72
EPS (Diluted)$2.72
Shares Outstanding (Basic)1.30B

Key Highlights

  • 1Net earnings attributable to the Company increased 16% to $3.527 billion, and diluted EPS rose 17% to $0.34.
  • 2The sale of the remaining 49% stake in NBCUniversal LLC generated a significant pre-tax gain of $1.096 billion.
  • 3Consolidated revenues remained flat year-over-year at $35.01 billion.
  • 4Industrial segment revenues decreased 6% to $22.3 billion, impacted by lower volumes and a stronger U.S. dollar.
  • 5GE Capital revenues increased 2% to $11.5 billion, with segment profit up 9% to $1.927 billion.
  • 6Power & Water segment revenues saw a significant 26% decrease to $4.8 billion.
  • 7GECC reduced its total borrowings by $10.5 billion during the quarter.

Frequently Asked Questions

The primary driver for the increase in net earnings was the significant pre-tax gain of $1.096 billion recognized from the sale of GE's remaining 49% common equity interest in NBCUniversal LLC to Comcast Corporation. This one-time event substantially boosted the company's overall profitability for the quarter.

Industrial segment revenues declined by 6% to $22.3 billion, impacted by lower volumes and a stronger U.S. dollar. In contrast, GE Capital's revenues increased by 2% to $11.5 billion, benefiting from higher gains, though it also experienced organic revenue declines. This indicates a divergence in performance between the industrial manufacturing businesses and the financial services arm.

GE Capital is actively pursuing a strategy to reduce its ending net investment. This involves focusing on selective financial services products where GE Capital has deep domain experience and the ability to earn consistent returns, while simultaneously managing its overall balance sheet size and risk. The company is also strategically exiting underperforming or non-strategic businesses.

While overall results were impacted positively by the NBCU sale, the decline in industrial segment revenues, particularly in the Power & Water segment, is a point to monitor. Additionally, GE Capital continues to manage a large portfolio of financing receivables, and while allowance for losses increased slightly, investors should keep an eye on delinquency and nonaccrual rates, especially in light of potential economic uncertainties in Europe.