Exhibit 99
PRESS RELEASE
GE Reports 2Q’14 Operating EPS $0.39, +8%
2Q Industrial Organic Revenues +5%; Segment Profit +9%
2Q Operating Margins Up 20 Basis Points
Backlog of $246B, Up $23B from Year-Ago
Retail Finance IPO Targeted for End of July
Total-Year Framework on Track
2Q Highlights
| · | 2Q operating EPS $0.39, +8% |
| · | 2Q Industrial segment revenues +7% |
| · | Growth market orders +14%, revenues +6% |
| · | Services orders +14%, revenues +5% |
| · | 1H margins +30 bps vs. year-ago |
| · | Cash generation of $3.4 billion year-to-date, including $1.4 billion GECC dividend |
| · | GE Capital ENI (excluding cash and equivalents) at $371 billion, down 5% vs. year-ago |
FAIRFIELD, Conn. – July 18, 2014 – GE [NYSE: GE] announced today second-quarter 2014 operating earnings of $3.9 billion, with operating earnings per share of $0.39, up 8% from the second quarter of 2013. GAAP earnings from continuing operations were $3.6 billion, with earnings per share of $0.35, up 13% from last year. Revenues were $36.2 billion for the quarter, up 3% from the year-ago period.
“GE had a good performance in the quarter and in the first half of 2014, with double-digit industrial segment profit growth, 30 basis points of margin expansion, and nearly $6 billion returned to shareholders,” said GE Chairman and CEO Jeff Immelt. “The environment continues to be generally positive.”
Industrial segment profits rose 9% in the second quarter to $4.2 billion. Industrial segment margins expanded 20 basis points over the prior-year period. Industrial segment revenues grew 7%, with organic growth of 5%. Growth market revenues were up 6% for the quarter, and growth market orders rose 14%, with increases in six of nine growth regions. Services revenues were up 5%, and services orders rose 14%.
GE’s backlog of equipment and services at the end of the quarter was $246 billion, up $23 billion over the year-ago period with increases in every segment. The Company’s investment in technology was reflected in its launch order during the quarter for Tier 4 locomotives, nine HA gas turbines to date, and its order for the oil and gas industry’s first 20k-psi rated deepwater drilling system. This week, GE and CFM (a 50/50 joint venture between GE and Snecma) also announced Farnborough Airshow wins of more than $36 billion at list price, including $13 billion with Emirates, $3.3 billion with easyJet, and $2.6 billion with American Airlines.
During the quarter, GE’s offer for Alstom’s Power and Grid businesses was accepted by the Alstom board and approved by the French government. It is proceeding to works council consultations and is subject to Alstom shareholder approval and customary regulatory approvals. The deal is targeted to close in 2015. GE expects Alstom to be accretive to earnings in 2015, and add $0.06 to $0.09 per share in 2016. This will accelerate the Company’s portfolio strategy to achieve 75% of earnings from its Industrial business by 2016.
GE Capital continued its strategy to decrease the size of its non-core portfolio. ENI (excluding cash and equivalents) was at $371 billion at quarter-end, down $2.4 billion from last quarter and down 5% from the year-ago period. General Electric Capital Corporation’s (GECC) estimated Tier 1 common ratio (Basel 1) rose 51 basis points from the year-ago period to 11.7%, and net interest margin was strong at 5%. Through the first half of the year, GECC has returned $1.4 billion in dividends to the parent. GECC recorded tax benefits in the quarter to reflect a lower expected tax rate for 2014, primarily driven by its planned tax-efficient disposition of the consumer bank in the Nordics.
GE is also announcing today that it is targeting the IPO of its North American Retail Finance business (Synchrony Financial) for the end of July, the first step in a planned, staged exit from that business.
GE continues to make good progress with its simplification goals. The Company is on track to meet its goal of $1 billion or more in structural cost-out for the year, with $382 million of cost-out through the first half of 2014.
Cash from GE operating activities (CFOA) was $3.4 billion year-to-date. GE ended the quarter with $87 billion of consolidated cash and cash equivalents. The Company has returned $5.9 billion to shareowners year-to-date, including $4.4 billion of dividends and $1.5 billion of stock buyback.
Immelt concluded, “Our total-year framework is on track and we are committed to delivering for our investors. Investments in R&D are paying off in Industrial segment growth and the share gains we see across the board are reinforced by the Farnborough Airshow this week. GE Capital is returning cash to the parent while becoming more focused on its core business. Our balanced approach to capital allocation is delivering cash to shareowners. With the Retail Finance split-off and Alstom acquisition, we are boldly repositioning the Company for the future.”
Second-quarter Highlights:
Second-quarter operating earnings were $3.9 billion, up 7% from second-quarter 2013, and operating EPS was $0.39, up 8%. GAAP earnings from continuing operations (attributable to GE) were $3.6 billion, up 10%, or $0.35 per share, up 13% from the second quarter of 2013.
Including the effects of discontinued operations, second-quarter net earnings attributable to GE were $3.5 billion ($0.35 per share) compared with $3.1 billion ($0.30 per share) in the second quarter of 2013.
Second-quarter revenues increased 3% to $36.2 billion. Industrial sales of $26.2 billion increased 7% compared to the second quarter of 2013. GECC revenues of $10.2 billion decreased 6% from last year.
Cash generated from GE operating activities year-to-date totaled $3.4 billion. Cash generated from Industrial operating activities totaled $2.0 billion.
GE will discuss preliminary second-quarter results on a webcast at 8:30 a.m. ET today, available at www.ge.com/investor. Related charts are now posted on our website for your review prior to the call.
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About GE
GE (NYSE: GE) works on things that matter. The best people and the best technologies taking on the toughest challenges. Finding solutions in energy, health and home, transportation and finance. Building, powering, moving and curing the world. Not just imagining. Doing. GE works. For more information, visit the company's website at www.ge.com.
GE’s Investor Relations website at www.ge.com/investor and our corporate blog at www.gereports.com, as well as GE’s Facebook page and Twitter accounts, including @GE_Reports, contain a significant amount of information about GE, including financial and other information for investors. GE encourages investors to visit these websites from time to time, as information is updated and new information is posted.
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,” “will,” or “would.” 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: current economic and financial conditions, including volatility in interest and exchange rates, commodity and equity prices and the value of financial assets; potential market disruptions or other impacts arising in the United States or Europe from developments in sovereign debt situations; 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; pending and future mortgage securitization claims and litigation in connection with WMC, which may affect our estimates of liability, including possible loss estimates; 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 adequacy of our cash flows and earnings and other conditions which may affect our ability to pay our quarterly dividend at the planned level or to repurchase shares at planned levels; GECC’s ability to pay dividends to GE at the planned level, which may be affected by GECC's cash flows and earnings, financial services regulation and oversight, and other factors; our ability to convert pre-order commitments/wins into orders; the price we realize on orders since commitments/wins are stated at list prices; the level of demand and financial performance of the major industries we serve, including, without limitation, air and rail transportation, power generation, oil and gas production, real estate and healthcare; the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks, including the impact of financial services regulation; our capital allocation plans, as such plans may change including with respect to the timing and size of share repurchases, acquisitions, joint ventures, dispositions and other strategic actions; our success in completing announced transactions and integrating acquired businesses; adverse market conditions, timing of and ability to obtain required bank regulatory approvals, or other factors relating to us or Synchrony Financial could prevent us from completing the Synchrony IPO and split-off as planned; our ability to complete the proposed transactions and alliances with Alstom and realize anticipated earnings and savings; the impact of potential information technology or data security breaches; 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.
This document includes certain forward-looking projected financial information that is based on current estimates and forecasts. Actual results could differ materially.
Investor Contact:
Matt Cribbins, 203.373.2424
matthewg.cribbins@ge.com
Media Contact:
Seth Martin, 203.572.3567
seth.martin@ge.com
Dollar amounts and share amounts in millions; per-share amounts in dollars. Supplemental data are shown for “GE” and “GECC.” Transactions between GE and GECC have been eliminated from the “Consolidated” columns. See Note 1 to the 2013 consolidated financial statements at www.ge.com/ar2013 for further information about consolidation matters.
Dollar amounts and share amounts in millions; per-share amounts in dollars. Supplemental data are shown for “GE” and “GECC.” Transactions between GE and GECC have been eliminated from the “Consolidated” columns. See Note 1 to the 2013 consolidated financial statements at www.ge.com/ar2013 for further information about consolidation matters.
Supplemental consolidating data are shown for "GE" and "GECC." Transactions between GE and GECC have been eliminated from the "Consolidated" columns. See Note 1 to the 2013 consolidated financial statements at www.ge.com/ar2013 for further information about consolidation matters.
We sometimes use information derived from consolidated financial information but not presented in our financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP). Certain of these data are considered “non-GAAP financial measures” under the U.S. Securities and Exchange Commission rules. These non-GAAP financial measures supplement our GAAP disclosures and should not be considered an alternative to the GAAP measure. We have referred to operating earnings, operating earnings per share (EPS), Industrial segment organic revenue growth, GE Capital ending net investment (ENI) excluding cash and equivalents, and cash generated from GE Industrial operating activities (Industrial CFOA). The reconciliations of these measures to the most comparable GAAP measures follow.
Operating earnings excludes non-service related pension costs of our principal pension plans comprising interest cost, expected return on plan assets and amortization of actuarial gains/losses. The service cost and prior service cost components of our principal pension plans are included in operating earnings. We believe that these components of pension cost better reflect the ongoing service-related costs of providing pension benefits to our employees. As such, we believe that our measure of operating earnings provides management and investors with a useful measure of the operational results of our business. Other components of GAAP pension cost are mainly driven by capital allocation decisions and market performance, and we manage these separately from the operational performance of our businesses. Neither GAAP nor operating pension costs are necessarily indicative of the current or future cash flow requirements related to our pension plan. We also believe that this measure, considered along with the corresponding GAAP measure, provides management and investors with additional information for comparison of our operating results to the operating results of other companies.
Organic revenue growth measures revenue excluding the effects of acquisitions, business dispositions and currency exchange rates. We believe that this measure provides management and investors with a more complete understanding of underlying operating results and trends of established, ongoing operations by excluding the effect of acquisitions, dispositions and currency exchange, which activities are subject to volatility and can obscure underlying trends. We also believe that presenting organic revenue growth separately for our industrial businesses provides management and investors with useful information about the trends of our industrial businesses and enables a more direct comparison to other non-financial businesses and companies. Management recognizes that the term "organic revenue growth" may be interpreted differently by other companies and under different circumstances. Although this may have an effect on comparability of absolute percentage growth from company to company, we believe that these measures are useful in assessing trends of the respective businesses or companies and may therefore be a useful tool in assessing period-to-period performance trends.
We use ENI to measure the size of our GE Capital segment. We believe that this measure is a useful indicator of the capital (debt or equity) required to fund a business as it adjusts for non-interest-bearing current liabilities generated in the normal course of business that do not require a capital outlay. We also believe that by excluding cash and equivalents, we provide a meaningful measure of assets requiring capital to fund our GE Capital segment as a substantial amount of this cash and equivalents resulted from debt issuances to pre-fund future debt maturities and will not be used to fund additional assets. Providing this measure will help investors measure how we are performing against our previously communicated goal to reduce the size of our financial services segment.
