10-QPeriod: Q2 FY2020

GENERAL ELECTRIC CO Quarterly Report for Q2 Ended Jun 30, 2020

Filed July 29, 2020For Securities:GE

Summary

General Electric (GE) reported a significant revenue decline in the second quarter of 2020, primarily driven by the severe impact of the COVID-19 pandemic on its Aviation segment. Consolidated revenues were $17.7 billion, down 24% year-over-year, with GE Industrial revenues decreasing 25%. The Aviation segment saw a substantial revenue drop of 44% due to reduced air travel and its associated impact on engine and service orders. While the Healthcare segment experienced increased demand for certain products like ventilators, this was largely offset by declines in other areas. GE continued to implement cost-saving and cash preservation measures, targeting over $2 billion in operational cost out and over $3 billion in cash preservation actions company-wide. The company also took steps to bolster its liquidity by issuing $13.5 billion in longer-dated debt, extending its maturity profile and reducing near-term debt obligations. Despite these efforts, GE reported a net loss attributable to common shareholders of $2.18 billion for the quarter, or $(0.27) per share. However, the company highlighted its substantial cash position of $41.4 billion at the end of the quarter, providing a cushion against ongoing market uncertainties. The company also recognized significant goodwill impairments across its Aviation and Capital segments due to the pandemic's impact on business outlooks.

Financial Highlights

44 data points
Beta

Revenue

$16.81B

18.9% Gross Margin

Net Income

-$1.99B

-11.8% Net Margin

EPS (Diluted)

$-2.12

Total Assets

$256.49B

Cash & Equivalents

$41.43B

Free Cash Flow

-$1.66B

Financial Statements
Beta
Revenue$16.81B
Cost of Revenue$13.63B
Gross Profit$3.18B
R&D Expenses$611.00M
SG&A Expenses$3.07B
Operating Expenses$20.18B
Operating Income$5.22B
Net Income-$1.99B
EPS (Basic)$-2.12
EPS (Diluted)$-2.12
Shares Outstanding (Basic)1.09B
Shares Outstanding (Diluted)1.09B

Key Highlights

  • 1Consolidated revenues decreased by 24% to $17.7 billion, impacted by COVID-19, particularly in the Aviation segment.
  • 2Aviation segment revenue fell 44% due to reduced air travel affecting engine and service demand.
  • 3Healthcare segment saw mixed results with increased demand for COVID-related products but decreased demand elsewhere.
  • 4GE secured $13.5 billion in longer-dated debt to enhance liquidity and extend its maturity profile.
  • 5The company reported a net loss attributable to common shareholders of $2.18 billion ($0.27 per share).
  • 6Consolidated cash, cash equivalents, and restricted cash stood at $41.4 billion as of June 30, 2020.
  • 7GE recognized goodwill impairments totaling $1.7 billion across its Aviation ($0.9 billion) and Capital ($0.8 billion) segments.

Frequently Asked Questions

The primary driver was the severe negative impact of the COVID-19 pandemic, particularly on the Aviation segment, which led to significant declines in revenue and orders. Reduced global air travel directly impacted GE's commercial engine and services businesses.

GE took proactive steps to strengthen its liquidity by issuing $13.5 billion of longer-dated debt, which helped reduce near-term debt maturities by $10.5 billion. This, combined with its existing cash reserves of $41.4 billion, provided significant financial flexibility.

Aviation was the most severely impacted segment, with revenues down 44% due to drastically reduced air travel. Power and Renewable Energy also experienced declines due to supply chain disruptions and project delays. The Healthcare segment saw increased demand for certain products like ventilators but faced reduced demand in other areas due to postponed procedures.

Yes, GE recognized significant non-cash pre-tax goodwill impairment charges totaling $1.7 billion. This included $0.9 billion related to the Additive reporting unit within Aviation and $0.8 billion related to the GECAS reporting unit within Capital, reflecting the adverse impacts of COVID-19 on their respective business outlooks.