10-QPeriod: Q1 FY2019

GENERAL ELECTRIC CO Quarterly Report for Q1 Ended Mar 31, 2019

Filed April 30, 2019For Securities:GE

Summary

General Electric (GE) reported its first-quarter 2019 results, highlighting significant progress in its strategic transformation. The company's consolidated revenues decreased by 2% year-over-year to $27.3 billion, primarily due to the divestiture of several businesses. However, industrial segment organic revenues saw a positive increase of 5%, driven by strong performance in Aviation, Oil & Gas, Healthcare, and Renewable Energy, partially offset by the Power segment. The company reported a significant gain from discontinued operations related to the spin-off and merger of its Transportation segment with Wabtec. GE also announced an agreement to sell its BioPharma business within Healthcare, a key step in streamlining its portfolio. The company continues its focus on de-leveraging and improving its financial position. While GE Industrial Free Cash Flows remained negative at $(1.8) billion, there was an improvement in Adjusted GE Industrial Free Cash Flows to $(1.2) billion, signaling progress in cash generation. GE is actively managing its portfolio through strategic divestitures and focusing on core industrial businesses to drive future growth and profitability.

Financial Highlights

45 data points
Beta

Revenue

$22.20B

27.0% Gross Margin

Net Income

$3.59B

16.2% Net Margin

EPS (Diluted)

$3.20

Total Assets

$315.08B

Cash & Equivalents

$34.91B

Free Cash Flow

-$1.27B

Financial Statements
Beta
Revenue$22.20B
Cost of Revenue$16.21B
Gross Profit$5.99B
SG&A Expenses$3.40B
Operating Expenses$21.93B
Operating Income$960.00M
Net Income$3.59B
EPS (Basic)$3.28
EPS (Diluted)$3.20
Shares Outstanding (Basic)1.09B
Shares Outstanding (Diluted)1.09B

Key Highlights

  • 1Consolidated revenues declined 2% to $27.3 billion, largely due to business dispositions.
  • 2Industrial segment organic revenues grew 5%, driven by Aviation, Oil & Gas, Healthcare, and Renewable Energy.
  • 3The Transportation segment was reclassified to discontinued operations, resulting in a gain of $3.5 billion.
  • 4An agreement was announced to sell the BioPharma business for approximately $21.4 billion.
  • 5GE Industrial profit margin improved to 4.8% from 2.3% in the prior year period.
  • 6GE CFOA from continuing operations was $(0.9) billion, with an improvement in Adjusted GE Industrial Free Cash Flows to $(1.2) billion.
  • 7The company is actively pursuing its de-leveraging strategy, with GE Industrial net debt decreasing slightly.

Frequently Asked Questions

Consolidated revenues decreased by 2% to $27.3 billion, primarily due to the impact of recent business dispositions, such as Industrial Solutions, Value-Based Care, and Distributed Power. However, the company saw a 5% increase in industrial segment organic revenues, led by strong performance in Aviation, Oil & Gas, Healthcare, and Renewable Energy, which helped offset declines in the Power segment.

GE completed the spin-off and merger of its Transportation segment with Wabtec, recognizing a gain of $3.5 billion. Additionally, GE announced an agreement to sell its BioPharma business within the Healthcare segment to Danaher Corporation for approximately $21.4 billion, which is expected to close in the fourth quarter of 2019. These actions are part of GE's ongoing strategy to streamline its portfolio and focus on core industrial businesses.

GE is actively working on its de-leveraging strategy, targeting a sustainable credit rating and reduced debt. GE Industrial net debt was $54.3 billion at the end of the quarter. While GE CFOA from continuing operations was negative at $(0.9) billion, the company reported an improvement in Adjusted GE Industrial Free Cash Flows to $(1.2) billion compared to $(1.8) billion in the prior year period, indicating progress in managing its cash position.

GE Aviation, through its joint venture CFM International, is the exclusive engine supplier for the Boeing 737 MAX. The temporary fleet grounding in March 2019 led Boeing to reduce production rates, which may impact the timing of GE's related cash flows. GE Capital (GECAS) has 29 grounded 737 MAX aircraft leased to customers and has made pre-delivery payments and financing commitments for an additional 150 aircraft. GE has approximately $1.5 billion in net assets related to the 737 MAX program and has not recorded any impairment charges, believing these assets are fully recoverable.