10-QPeriod: Q2 FY2019

GENERAL ELECTRIC CO Quarterly Report for Q2 Ended Jun 30, 2019

Filed July 31, 2019For Securities:GE

Summary

General Electric (GE) reported a decline in consolidated revenues for the second quarter of 2019, primarily due to asset dispositions and foreign currency impacts. The company experienced a net loss of $0.01 per share on a consolidated basis. However, "adjusted" earnings per share, which excludes certain charges and gains, were $0.17. GE Industrial segment organic revenues saw an increase of 7%, driven by Renewable Energy, Oil & Gas, Aviation, and Healthcare. The company made significant progress in divesting non-core assets, including the spin-off of its Transportation segment and the agreement to sell its BioPharma business. Despite these divestitures, the company recognized a significant non-cash goodwill impairment charge of $0.7 billion in the Renewable Energy segment. The company's financial performance was impacted by various strategic actions, including the spin-off of Transportation to Wabtec and the pending sale of BioPharma. The Aviation segment remained a strong performer, while the Power segment continued to face challenges due to overcapacity and pricing pressure. GE's liquidity position remained solid with $20.1 billion in cash and cash equivalents at the end of the quarter. The company is focusing on deleveraging and operational improvements across its segments.

Financial Highlights

45 data points
Beta

Revenue

$23.41B

25.6% Gross Margin

Net Income

$127.00M

0.5% Net Margin

EPS (Diluted)

$-0.08

Total Assets

$312.11B

Cash & Equivalents

$28.83B

Free Cash Flow

-$1.48B

Financial Statements
Beta
Revenue$23.41B
Cost of Revenue$17.41B
Gross Profit$6.00B
SG&A Expenses$3.42B
Operating Expenses$23.87B
Operating Income$846.00M
Net Income$127.00M
EPS (Basic)$-0.08
EPS (Diluted)$-0.08
Shares Outstanding (Basic)1.09B
Shares Outstanding (Diluted)1.09B

Key Highlights

  • 1Consolidated revenues decreased by 1% year-over-year to $28.8 billion, largely due to business dispositions and foreign currency headwinds.
  • 2The company reported a net loss of $0.01 per share, but adjusted earnings per share (excluding certain items) was $0.17.
  • 3GE Industrial segment organic revenues grew by 7%, indicating underlying strength in its core industrial businesses.
  • 4Significant progress was made on strategic divestitures, including the spin-off of the Transportation segment to Wabtec and the agreement to sell the BioPharma business for $21.4 billion.
  • 5A $0.7 billion non-cash goodwill impairment charge was recognized in the Renewable Energy segment, primarily impacting the Grid Solutions business.
  • 6The Aviation segment showed resilience with segment profit of $1.4 billion, despite impacts from the Boeing 737 MAX grounding.
  • 7GE's liquidity remains robust, with $20.1 billion in cash and cash equivalents as of June 30, 2019.

Frequently Asked Questions

GE reported a consolidated net loss of $0.01 per share for the second quarter of 2019. Consolidated revenues decreased by 1% to $28.8 billion compared to the prior year, primarily due to the disposition of businesses and foreign currency impacts. However, the company's adjusted earnings per share, which excludes certain items like goodwill impairment and gains/losses from business dispositions, was $0.17, showing a focus on underlying operational performance.

GE Industrial segment organic revenues grew by 7%, demonstrating positive underlying performance in its industrial operations. The Aviation segment remained strong, reporting $1.4 billion in segment profit. Renewable Energy saw increased orders but faced profit challenges due to higher losses in certain business units and project execution issues. The Power segment continued to experience declines in revenue and profit, attributed to market overcapacity and pricing pressures, although the company sees early signs of stabilization. The Healthcare segment showed modest growth in profit.

GE completed the spin-off of its Transportation segment into Wabtec Corporation, receiving approximately $2.8 billion in cash and a stake in Wabtec. Additionally, GE announced an agreement to sell its BioPharma business for approximately $21.4 billion, expected to close in late 2019. These divestitures are part of GE's ongoing strategy to streamline its portfolio and focus on its core industrial businesses.

The temporary grounding of the Boeing 737 MAX aircraft has had an adverse impact on GE's cash flows from operating activities (CFOA). For the three and six months ended June 30, 2019, CFOA was negatively impacted by an estimated $0.3 billion and $0.6 billion, respectively. GE anticipates a negative impact of approximately $0.4 billion per quarter in the second half of 2019 if the grounding persists.