GE - Earnings call transcript Q4 2019 | General Electric Company

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Operator

Good day, ladies and gentlemen and welcome to the General Electric Fourth Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. My name is Brandon, and I’ll be your conference coordinator today. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the program over to your host for today’s conference, Steve Winoker, Vice President of Investor Communications. proceed. Please

Steve Winoker

morning joined GE’s CEO, by and Jamie Good earnings quarter Larry welcome CFO, I’m call. our Miller. and Brandon. fourth to XXXX Culp; Thanks, Chairman and

press to website. of our that the best businesses and some we’re our you like are available statements Note I’d as the world them are start, presentation are and we that Before today. we view the making release of based and on our remind see forward-looking on

and on as filings website, As those change described SEC in can our the elements our changes. world

will note that on an Please Wednesday, on March outlook. XXXX to we detail hold more investor call provide Xth our

With over call that, hand the to Larry. I’ll

Larry Culp

thank Steve, us. for Joining thanks. and Good morning, you everyone

execution in strategic the XXXX. against will cover I’ll expectations detail, to more Jamie our performance with begin overview our on priorities. financials an then for our our will and turn on and progress

a full year Starting quarter Overall, financial fourth on a exceeded or XXXX. our of targets marked slide close you’ll our two, in and results. year we snapshot met strong to fourth find quarter as the

driven Aviation’s as orders Hughes, X% by Power following in quarter was Notably, in and the more in Baker our by declines Aeroderivatives growth formed JV Orders were between Renewables. and down than Aviation was organically offset growth newly and positive Power Healthcare double-digit GE deconsolidation.

Excluding that JV, Aviation��s X%. up orders were

organically. up For the closed year, X% Company total orders

of $XX representing X%; our backlog XXXX XX%, with of up of $XXX comprises billion, billion, ended backlog. equipment year-on-year. services We billion, XX% XX% of up and approximately up $XXX This

the segments for of Industrial the segment and in posting full X.X% with delivered revenue year, growth all X.X% We organic positive growth. quarter,

our revenue differentiator half quarter about represent continue the and of key the which in driver with a to and be profitability. businesses, of our year, service industrial a customers, Our

points basis points Our Aviation Power. in and driven XXX XXX basis Industrial profit margin organically the expanded quarter, and by adjusted

above XX%. XX and expanded with and closing margins XX Power by basis Healthcare points Aviation organically, year, driven margins points the For basis

Industrial and in generated outperformed in the in free the quarter recent This We $X.X of saw and expectations came outlook strength Power of continued ahead most for billion billion year. $X.X Aviation. our cash we flow full as

As with visit the for late to year, exceptional Healthcare growth of the go. are a runway businesses my CEO XXXX. as on I franchises, long we’ve delivering initial each Aviation since with in way the reflect and come clearly year profitable

In grow to cash of center Aviation, precision free At of flow the was despite at the able Boeing MAX prior Healthcare, the the health. $X.X from versus cash operate year, XXX grounding. billion business headwind we

team has scanner, you to our for innovative and of in digital the Revolution at which December, by outlined launched we Maxima resulting Kieran CT in as RSNA. growth products many As continue in be and capabilities, such solutions will driven

but do. Gas in gained line Power, Power our proud stabilizing In At puts of of progress portfolio, have these we’re into to while Power takes, there better businesses. sight we were more we and

this their For Conversion better operational Brazil. example, of at as showed delivery on-time improvement year, facility Power such signs in

to steep In turbine. here. mixed. full still were as wind XXXX, and of through trends businesses cash global largest ramp Haliade-X, we’re mode, we customer world’s wind, launch demand. the build and investment offshore year, to in presence meet our next prepare In LM, the on delivered improved year Renewables, we our more a wind onshore each In the results on and Reflecting earnings as

on hydro turnaround. the focus both, solutions grid is The simply in and

as our reduction on taking field well framework service in complex underwriting and organization, in cost We’re daily our working projects, through execution and as factories both improving measures. our focusing

my performance conviction and that week, these will was this in Last Paris of our Renewables. can operating improve for businesses, and reviews I with in each we reinforced

the the tax better and continue simplify as gains operations, GE to by earnings, driven we GE we Capital, In Capital delivered positive portfolio.

our priorities in the multiyear XXXX, on one I our XXXX the while we progress as back see quarter, Stepping encouraged transformation, from substantial of year by in three. across made I’m So, momentum outlined GE. evidence was slide on

XXXX, First on targets of number on us of actions, proceeds X.X, achieve debt, in position, and set to ago. Wabtec to less including year ending proceeds $X down from to our a which a billion, net net tender. Industrial, X.X year to deleveraging We $X at move reduced BioPharma down ratio improving the pay a X.X times. billion debt of for close than debt up we and deleveraging Hughes our with XXXX. about our leverage used we In sales speed debt financial At target by our a we of from Baker expect net billion EBITDA $XX the achieve

$X ending billion, ratio in Capital, to by X.X, X.X down with reduced debt of a equity XXXX. debt XXXX At we from

We close target to leverage our times. below expect than less X XXXX of

year, asset We $XX this which approximately to reductions also billion, completed our billion bringing surpasses our $XX of two-year target. $XX billion total

other more our on which strengthening of and businesses. time focus to us energy allow will our progress our deleveraging priority, is Our executing

It’s execution. Power, by are our risk Gas no board, as zero projects fourth turnkey we’re the booked has quarter. last improving In across we and backlog focus building that secret the evidenced over power in been lower the year, with

business plan XX% the business we’re costs quarter XX% reduction a XXX% And conservative We’re today’s underwriting with the with rightsizing by through the XXXX. in and equipment our in commercial financials year assumptions for now in fixed market more in the XXXX backlog. versus

clear, Power contribution a Let’s to performance. at Gas we’re overall a to more journey be multiyear reliable on deliver Industrial’s GE still

mid-single-digit the Healthcare and even on shared with faster to increases growth, and prioritizing targeted the as I’ve can we R&D, grew We’ll best This Systems growth returns reduction forward. better organically, this where through in low stronger, you and post to going As Systems year, cost drive with well programs our expect revenue our including opportunity delivery do sale. Healthcare quality, X% we businesses as before, highest safety, efforts. BioPharma be Healthcare see execution

lean met produce mammography Senographe we daily principles, management as I and supply our France, to to improve such and Buc, chain mapping where value Pristina stream using during my our machines, example, both commercial our For teams our recent visit performance. with

Renewables in reorient the important our our gravity and especially has of and to effort restructuring operating future for Power we center across in also XXXX, businesses. move structure cost the as an been Corporate Investing

While cash to outlook this mix year of remain lower original better our on were than timing, due expense and expected and a savings cost our track. execution, attrition

in as costs with headcount of roughly are At Corporate, team functional and result core The for moved processes X,XXX shrink example, was accountability to resulting corporate people, people savings. cost this our a the the year. actions in reduction progress down This were costs on our to segments. solid made real X% year,

restructuring, business also will stronger result accretive the the finished launching improved more with services and we’re margins the better shifting our of execution While both returns and new products. field, toward mix and not in factory be discipline, underwriting

year, of This the those you we starts of This visible GE. on much our Company run the to progress outside with basis. of a substantial in areas on was less how daily

of developing in a solving and lean and standard transformation, We’re identifying capable problems of and work establishing days of the humility. embracing alike, leaders candor, values early transparency, our

we throughout budget operations, rigor Our ongoing prioritization the changing of work. and how This strategic and reviews. being an year and conversations type talent sequence is of are woven

evident which we’re I is you partially As the I numbers in momentum our travel real with today. building, to only sharing businesses, see

go service which were at For Joyce The customers’ impressive, improvement using were repairs experts example, lean that our XX-day in will earlier used Center, and operators back. by impressed to customers time engines, motivated, parts this work. our passionate, to Component we a turnaround principles in Service positively there, our Moreover, results improve bottom-line. I daily to complex and lean our Ohio the month, Aviation impact their and David so excited were I’m firsthand. tools witnessing

a enter do New still And Year do, So, plenty with in the momentum. and work way in but we ultimately we stronger better we’re together summary, results by progress the work believe eye culture. firm I’m heartened delivering of a our on changing to XXXX. I with There’s

I over driven team year. their the sense forward take for of all moment and looking more. their we’ve last just listening ownership, thank resilience, I’m want as on grit, the to change GE of a clear we have the those to to

that, over with And turn it to I’ll Jamie.

Jamie Miller

Larry. Thanks,

were services orders, Industrial revenue down services in Aero and quarter. were Starting with the Power declines equipment with down up revenue largely X% Equipment segment Healthcare in and X% and organically organically. was while up by offset $XX.X were organic aviation segments. with $XX.X in all in Consolidated billion, Renewables. down Orders fourth as was orders growth quarter the well XX% from summary. organically up organically, as X% X.X% billion, revenue X% up revenue growth X%

growth drivers and of Aviation by services. were driven wind Power The equipment, onshore services, Renewables equipment and biggest

X.X% the year, segment was For up organically. Industrial revenue

was points and non-repeat volume Aviation $XXX better driven charges in segments than the in and quarter, profit margins Renewables we majority Industrial Adjusted rigor were Power of of higher the accretion up reported. All of basis The margins year, last other services. margin operational quarter. expanded Gas the XXX in million about took in XX.X% by

year, Aviation. the and in significant in Power we the For declines Renewables margin and Healthcare, saw expansion

Baker our at continuing $X.XX. and had Walking Hughes, and measure EPS, incurred net in related in other we fair across and was quarter we our $X.XX, from EPS M&A restructuring of which we restructuring $X.XX stake was EPS Power. principally to Fourth $X.XX, charges On each was cost EPS continuing and quarter. value remaining $X.XX adjusted gains items, from segments,

based transaction, close deal preparatory $X.XX and the $X.XX charge on benefit restructuring announced includes expected pension a the were plans the ahead October. incurred the expense additional the associated of other BioPharma internal quarter. to $XXX this quarter, which in about freeze with taxes in we we million quarter Next, first of Non-operating pension for related in

Excluding quarter. EPS in fourth the was $X.XX these adjusted items,

year. Moving down quarter, free $X.X lower $XXX $X.X million impairment the to flow net year. Income, $XXX cash of totaled million for cash. depreciation Industrial billion, goodwill billion and versus than generated of prior prior We amortization

receivables negative of capital was Working MAX usage last quarter. capital accounts grounding driven reductions and levels. long-term billion. the $XXX quarter, working the program grounding factoring was million receivable was cash, flow cash by The to impact of Similar and $X.X other a impact MAX in the positive a in

by accounts cash of volume driven as cash, All higher cash milestones. the and and were in other supply working originally The finance project anticipated, quarter on was less usage capital from collections source seasonal a than orders inventory but of planned. transition lower new chain a

anticipate customer from and at the of Contract outlook. with million, contract converting assets suppliers by results negotiations billings to a received completing For part of better we our contract CSA of the termination $XXX with a cash driven a XX% the over original source CSA on than XXXX completed were Aviation. in a in transition large cash year, and

and net income. in usage, offset non-cash Another billion, allowance was items payments in which restructuring $X.X CFOA cash accrued includes Aviation, and discount

about in We also by million spent aviation. $XXX CapEx, driven gross

prior versus capital billion industrial free driver the The monetization programs. year, was year. was $X.X certain the billion, $X MAX in For reduction flow in due decrease the and working the most cash to significant down receivable of grounding

takes, expectations Steam Power, partially While $X.X from collections project there ahead the was and the timing strong at to were driven forward due performance which billion of largely puts Gas carried our in and half, of Power, disbursements. by first and the many

of helped impact about on by payments from headwind and restructuring Aviation cash $X.X a Larry chain the allowance supply timing services, the performance and lower driven million, grounding. program earlier, for the $XXX a and from engine MAX than Lower the parts distribution collections and discount mentioned billion fourth items quarter offset deal were transition, including more strong legacy finance

billion this and have billion billion the ended with was billion billion year. contribution in largely on of was short-term Moving short-term reduce last intercompany at $X.X $X.X quarter, from billion fourth billion funding to XXXX. funding, our equity We left positive billion liquidity funding flow where the six. about by to we average XXXX. from peak ongoing $XX $XX.X down fourth to $XX.X Industrial And GE billion, free line of $XX.X cash In down in go the cash, short-term $X.X the by goal $X Capital, quarter sequentially, reliance intra-quarter offset up This our of billion. on quarter $X.X partially was driven with $X planned, approximately repayment loan as slide

this strong, liquidity Industrial other we to $XX will over position have XXXX access transaction, remains with in in Overall, actions. $XX deleveraging And and down and the to billion step Biopharma as we our complete take cash. lines, in continue billion bank

leverage Next on on seven. slide

leverage. are We our reducing and our financial improving position

balance down Capital, at Larry to from by debt GE year-end. from $X leverage billion cash at year higher year-end achieved billion, times, $X.X through and of loan the ending As the debt we a and shared, times net $X tender, This GE was billion X.X reduced with intercompany X.X the repayment XXXX.

We expect to achieve less EBITDA of X.X than in debt leverage goal our Industrial XXXX. net times to

billion which billion will announced also to comprehensive $X net debt by completed. actions, pension $X reduce our U.S. We when

lower may approximately to we deficit you sum the quarter, Ultimately, year-end pension by increase freeze prior recall, year. from offerings. pressure global third were largely of the $X potential the asset the As our returns versus billion. this discount Year-over-year, million and estimating only as higher $XXX the were of rate, a and lump the increased offset key pension by completion deficit of drivers

We have and Baker $X from billion delever sheet. we balance substantial sources proceeds To-date, Hughes our received sales. to derisk and our of Wabtec have

stake fashion. track We quarter, first BioPharma our close on to in to down Baker and an the are sell continue orderly remaining in we’ll in Hughes

see to the ERISA pension, you will BioPharma close, billion which we the at through on requirements $X funding will we U.S. meet our contribute that the the billion estimated expect XXXX. previously Post XXXX actions We’ll right. minimum least $X announced to execute on deleveraging

loan to from repay also down GE $XX the will We Capital maturities. Capital, remaining will used GE of to XXXX which be intercompany debt billion GE pay

will Finally, of billion approximately debt. repay maturing $X Industrial we

we’ve be the balance than a measures we operating will debt less our deleveraging to target As measures, including our gross of also to evaluate to strong Industrial other across debt ensure actions net we leverage times and are size with EBITDA, sheet. we while said, EBITDA, ultimately the Company will range previously X.X

XXXX in capital and and will while expect billion. key deleveraging of actions that deleveraging be monitoring their will Over cash additional range actions based $XX our potential we on risks. the We target total economics, XXXX, impact, risk also evaluate our mitigation structure

Power. on Next

X.X down order organically, the in non-repeat quarter, booked up Power units XX% quarter in driven XXXX. driven were quarter largely a billion the while as We XXXX. HA for by organically, For were XXXX. with XX were of Gas Power services down a Gas and improvement services unit. orders portfolio non-repeat largely organically. down Difficulty] and three of gigawatts of down. fourth as [Technical volume, XX% steam contractual Power commercial were organically, quarter equipment $X.X turnkey of up This upgrades higher orders XX% by strongest down turbines, orders well including of and on orders large utilization the growth one was fourth orders X% aeroderivative XX% in order gas were large organically of services transactional the

Power, Power and billion, down flat segment Power Backlog up X% versus which Gas prior shipped units Gas $XX portfolio robust up almost H backlog closed XX sequentially units. of grid. aeroderivative achieve to representing X.X to X%. revenue quarter, at aeroderivative revenue customers X turbines helped Gas the on units operation in turbines and down billion gigawatts was units services which the X%. revenues, with contractual X% X and transactional new improved fourth dynamics. versus which of Gas of line by and XX translates $XX added and included down in power H were continued organically fall units We X guidance driven and was gas our over year. Upgrades commercial Revenue X% of this up commercial up season Power market performance. on with up, were $X.X was billion XXXX, quarter XX outage revenue our on Power X including a

to at we quarter as the product improved not charges than fourth more was we well rigor and we margin of increase operational up $X.X incur XXXX, Operating processes as fleet $XXX million, Gas stronger billion, and X.X%, by better had utilization X,XXX that of segment an was experienced driven volume. as Power largely This did points. related profit projects, in reported was basis and

down costs, prior to the were which continue versus XX% also Power fixed year. reduce We Gas

down revenue a Power and negative was the organic year, $X.X X%, was portfolio, reported For flow cash segment reflecting margin in decline was X.X%, free billion.

the While we and foundation team have lining by do, to the to stable market business laid driving has improvements. a base operational new more realities

organically orders of flat Solutions. as were international to due billion non-repeat continues $X.X Wind services down Hydro down Grid Onshore organically. in a North stabilize. new Energy, XX% large were were notably, Wind were order America. pricing the and And down X% Equipment decline deals orders strength on orders of orders in Renewable XX% at Next to offset Onshore and

two-thirds Overall, turbans volume. organically. kits, X% of down roughly these of year-over-year. billion with the Wind up was XX% revenue X% the onshore up $XX deliveries XX% backlog while driven of U.S. X,XXX was Total and Revenue equipment $X.X of sequentially, Onshore was up organically, billion total in of was by as flat mainly marked record services revenue quarter repower organically in

down negative reported of R&D volume execution, points. profit was tariffs of more headwinds and margin by $XXX XXX segment million pricing, negative was grid, in Positive particularly X.X%, contraction and investment. million, from basis Operating offset $XXX increased than was to project a

the was Importantly, third year. consecutive for full profitable quarter onshore and

at which we progress Looking X.X% negative headwind headwind flow expected. will inbound was and full as volume revenue reported exceeds negative collections. were a a $X organic lower that cash execute by that offset flow XX%, We XXXX be less in XXXX year, by we collections impacted was heavy earnings on Renewables the free collections up PTC of free was in billion. than was cash progress anticipate segment delivery margin

operational Renewables a for As team. key focus the is Larry noted,

XX% while were were organically. of $XX.X Total down XX% orders Aviation, This were driven to orders commercial down XX%, XX%. orders organically by excluding services as due LEAP with Aeroderivatives orders XX% organically, X% billion orders At up was were equipment up Aeroderivatives up up JV. orders the primarily engine

and up up X% XXX last sequentially to $X.X We down up versus units prior driven organically, partially by X% Revenue XX% service long-term primarily down equipment year, year, from and was grew by up sales XX% from billion, XXX was XX LEAP-XA XX% revenue prior this XX%. by up $XXX billion LEAP-XB Backlog shipped of driven quarter, offset of CFM organically, units year. units, agreements.

to also shop in reflecting development with revenues mix sales aftermarket of mix. higher $X.X XX% and XX% versus visits XXX external commercial Services commercial by price XXX were X%, the and billion by Reported points net basis prior Operating up growth engine programs. organically with margin due XX% XX%. segment improved shop productivity profit on Organically expanded X% up organically more were up visits. up Total favorable offset shipments driven up services unit of a negative of year, strength. was volumes, military

prior was to a the partially shipments drag, quarters, in engine basis-point which XX was the a CFM LEAP the in were offset this basis-point quarter. transition, which by As drag and passport XX

For organic cash was up revenue was was the segment free XX.X% flow year, X%, margin billion. $X.X and

finished growth and billion orders we with Life what X% partially up organically. imaging by in X%, basis, dynamics were and largely and was organically, were driven in Healthcare Day Sciences Canada, equipment $X.X you up December. by in a Healthcare ultrasound, imaging, orders in U.S. line offset organically, due Healthcare, shared line services organically growth up were Systems product services were Care and organically. Orders up by solid at Looking In market we Systems orders ultrasound. China. up the XX% of Life our Investor with at in boosted Solutions, X% On up to X% were X%

was basis organically was Operating by This flat points. Revenue equipment and price by sequentially segment cost services down, prior up XX.X%, organically with X% X% up X% up and of organically. driven volume billion, Healthcare billion growth. investments. was billion profit year. offset productivity was and Systems by $XX.X was of offset XX was flat reported revenue $X.X and tariffs, Backlog program versus $X.X up margin

Healthcare XX.X% X% was billion. For up revenue flow up cash X%. was $X.X the and organic free margin year, with Segment was Systems

up excluding reform million income gains, On continuing million. lower net by $XX impact lower and GE year, impairments, operations and tax offset was partially tax year prior Capital, million, the favorability of versus prior of benefits marks expense, by $XXX The and interest driven operations. the $XX generated

adjusted tax versus of million generated up income insurance impact of net operations and tests. excluding million, $XXX annual premium the continuing year, the $XXX the the reform year, deficiency prior For

XXXX. by assets liquidity, assets. lower of expect sale the assets AirFinance quarter GECAS sequentially, GECAS, of and be $X we that the of excluding substantially PK the completed to $XXX billion billion of the down half WCS first with remaining ended primarily Capital business in of EFS all sold driven and the

billion Capital approximately $XX reductions of in the a XXXX, Including billion billion in completed previously we reduction asset $XX exceeded the quarter billion target in the of $X asset XXXX. for total $XX communicated.

year-end, addition, GE $X concluded no WMC the the case has XX further which in of to finished of quarter liabilities driven the billion maturities its by debt In GE was with and proceeds profile. $X disposition liquidity, on We of Chapter primarily quarter. billion approving by its Capital $XX Capital as billion. up capital WMC. And infusion partially leverage sequentially, $X.X focused derisking remain billion, billion of of including $X offset Capital,

was the X.X Capital’s down debt repayment ended of $XX primarily billion debt-to-equity ratio the maturities, sequentially, year-end with XXXX debt by loan at intercompany Capital by by $X at partially We billion, times. driven offset billion. $X.X

we With expect times. increase XXXX, the of X but this anticipated throughout intercompany XXXX less at repayment than ratio end loan, to the will

Discontinued $XX the million XXXX. litigation net loss by a versus year, operations million of DOJ and driven prior in $XX reserves WMC, up other generated

look primarily earnings capital the driven a from by and non-recurring and expect earning flow in also lower smaller we break base to to still XXXX. even items, expect GE sale we other asset complete cash gain, statutory annual we but first Capital, lower will its XXXX, quarter As by insurance asset test

the quarter, versus intercompany prior up operating Adjusted and to in due costs corporate. and to $XXX eliminations environmental million safety health remedial costs existing year increased matters. to higher were relating Moving profit

the as of the operating costs previous in $XXX This billion, were year, outlook was versus revised our asset corporate up largely non-repeat led the million with line prior sales. drivers, the as $X.X the For year, by same quarter. intangible adjusted well from

corporate the were functional core of gravity we costs as the businesses. the move center our from down in year X% Importantly, to

Larry. And with that, to over I’ll back it turn

Larry Culp

thanks. Jamie,

and unprecedented GE our into GE contributions recognize role announcement her acknowledge last refresh make of complete an our move and set She been setting to also instrumental tenure. a to place our the through targets more Company will take of deleveraging significant we I’d achieve to spearheading CEO her moment appreciate rigor transition culture and her to partner Jamie’s been in across greater outlook, during trusted and has are moves your has shifts change, in but partnership. including earnings and deleveraging focused those I my you, to own since to only leave transparency. industrial CFO foundational portfolio our I like contributions a the organization, XXXX. a our and to Board, period where support She in and in drive personal transition a not plan, she all GE us, call many of thank On Jamie. behalf of GE Before the

and more I’m build focused efforts From GE. confident today, a in I sit our stronger where and to excited

the We a total XXXX expectations But to call. Company. outlook for you today, are on share detailed planning provide I’ll by Xth our investor our segment March

find our to you’ll slide moving side. on the XX, hand targets So, right

the in $X for We’re expansion organic free cash for to a Industrial for to and margins; growth for our of range range expecting Industrial adjusted EPS; to $X basis organic Industrial; points XX $X.XX billion billion low-single-digit flow. operating $X.XX of up

number year. key again a our plan assumptions of underpinning are There this

Hughes. and the cash dispositions, and most lost First is BioPharma Baker from notably earnings

our stake. remaining closes a sale assumes in the in dividends, sale quarter, of and line first Baker reduction Hughes outlook of BioPharma with the the that orderly Our

and XXXX, cash dividends profit, in Hughes million reference, for billion represented approximately BioPharma the year, Baker while full cash $X.X in in of $X.X billion approximately For flow. generated $XXX

we commentary. Second XXX dependent for the the is remains are plan in service, which situation to fluid. That our said, that planning on with MAX’s mid-XXXX, Boeing’s is return line

XXXX key to the turn onshore This grid take as and cash Renewables focus offshore segments. the across around in and ramp, deliver journey Renewables to the us and earnings improve continue time. wind invest Looking at will in operational we is for hydro. both

We management, continued earnings while Healthcare and business, includes continue to and and which headwinds operational strength XXXX. in cost continued Capital lower are in diminish. rigor are enhancing we to improvement And Aviation in expecting restructuring compared each non-operational continued Power,

commitments In have delivering in summary, day-in we our be areas Despite will of environment aggregate, a volatility of trajectory byproduct which in day-out positive our the results operate. a we on in in XXXX. and

XX we’ve our to priorities Moving year. slide the for where outlined

XXXX the First, financial actions position, on took solidifying our achieve to leverage building in we targets. our

lean long-term to I’m our over GE businesses team near driving be this that gains strengthen profitable traction. our differently can innovative and problems. and our strengths us build deliver to to through valuable important technologies solve Combined, keeps And transformation to growth, network. efficient our global upon customers, the third, which continuing their most that close confident will operating as Critical our base helping help installed us Second, these medium-term.

And that, let’s take your questions. Steve? with

Steve Winoker

Larry. Thanks,

one again please open possible. Before get so line, the fellow I’d the as your a line. ask queue and everyone Brandon, we open in ask consider and people the analysts question to follow-up, many we can to as

Operator

Obin. And Instructions] go Andrew America, we have Bank from [Operator Please ahead. Thank of you.

Andrew Obin

out to want wishes thanks I expressing forward. best Jamie just by my and start to going

Jamie Miller

you. Thank

Andrew Obin

a of questions; them ask just I’ll together. both couple So, of

adjustments Airbus components. first XXXX. the indicated has that the publicly sizable one of engines biggest is we understand And, in So, one payables making in is they’re

if Nice improving. follow-up much, into you to questions. baked this how Thanks. but your XXXX are see, my differently doing Power Services forecast? is question So, in is And the exactly? what two of are So, any these dynamic

Larry Culp

a them was well, one with level. The want as by relationship last Andrew, to we keep we higher in you today at is Aviation I relative week, with an guide to Airbus. design have just excellent fact. know

on here and at friends the puts have I imagine, can and primary Airbus. timing, around are But the MAX. our we in work balance, be to the to assumptions you going really do As to takes think, with with respect

an of more provide will and to committed We’re in update March.

Jamie Miller

some some as of it talked Yes. third it headwinds XXXX. aviation tailwinds we’re the discounts is we there on Airbus, can that relates our puts across in back tell baked some And impact do But, and are the about XXXX. into And XXXX. quarter about comment payment on of board, their across takes. that’s And call front, see and payables. thinking the how on you, What to in of see We multiple Andrew, I of the we of allowances I -- our timing do saw can’t we programs, to airframers.

Larry Culp

second Andrew, heard correctly, about it was I Services? if Power question, your

Andrew Obin

Correct.

Larry Culp

doing patterns, customers, forward call their the our a we’re with that to and so to are on base - is to to delivery, regular improve we front applications. would I just we say better, are on-time possible. way course scheduled team quick outages, sell our with commercial improve opportunities the of CSA coordinating and and -- to our we only saw the better their see customers you tell both other more do just see of the team Power, you we number Gas transactional what there, doing what side, execution things. not coupled into work planning within better in we’re are on the time through so the what I budget doing That what that or Clearly, the around is extent times, of we lead the operationally capability. outage point a have well-positioned within would with really year in commercial but schedule that deliver is response contacts, I installed

good we to as did. that uptick I quarter look the So, fourth numbers, think, see we it’s the at

momentum work fully that you year to more think, and on here I the there’s suggests to through exit clearly look And is I team continuing doing at if balance, XXXX. do. the think, committed

Andrew Obin

much. you very Thank

Operator

Coe. Research, go we ahead. Wolfe Nigel From Please have

Nigel Coe

Andrew’s comments. echo Good to Thanks, Jamie. want do I morning. luck. Good Thanks.

you’ll be us. But, not us. sure luck. missed good miss by You’ll I’m

Jamie Miller

Thanks, Nigel.

Nigel Coe

to won’t That’s on these for you do I’m want Aviation. calls. sure. sure, miss touch I

this Just all, EBIT first obviously of was very impressive. quarter the performance

about we how quarterly in think do about? more free end, around how the performance. If the or I MAX grounded importantly earnings GE? think cash and boundaries to think is Anything do through think, the factor the year production it’s there to grounding? record a impact about to But, we unusual

Larry Culp

Nigel, let order. reverse me take let those -- us in

is Aviation, MAX. a But, would in the in think exactly the complex the for safety. at full strong performance. I headwinds. And we’re right saw performance priority here in You’re of we situation terms despite around that looking we as Clearly, more strong year and forward, the the I argue look one MAX

been think, Boeing our at friends I crystal clear. have

FAA support going trying We’re we’re here, the to lead fullest possible. extent both Boeing the the to take FAA’s to and and

think, Boeing building you engines; rates normal we through we back, I forward, look look were delivering to were before we at if clearly, XXXX.

half a it’s in a some the to fall deliveries. going to of of gap ‘XX. rates that drives going ‘XX variability shipment a the the Clearly, here be guide. to as see our in turn, that in rate you We’re bit And roughly relative see result

turn with challenge the I are perspective, us have we’re an going are We things, We which build in really to on cost we profile, cost operating make as side. are in later that because taking the wall, view, has adjusting but what to sure three we Boeing dealing our indicated, be lower presumably up need a a will temporary structure long ramping and accordingly year. this right? will think, from will also the be

to that teams, make only supply but not we to want are our prepared So, sure rebound. our chains

fewer at bit see if cash -- wall realized, going there are will little a I know that for were in, liquidation. services service, clearly source mix us until as deliveries. last a in obviously. which we through return a we’re to And to progress positive of deliveries. spare perspective engine come service. a to continue we’re clearly be that terms orders, to preparation mid-year offset new of that of return an in of And nice of ramping be resume to mid-year. AR to just process fewer the cash us, that’ll from think, least back bit a put the relative But, will a to pressure we’ll see well the mid-year a on of half year for going There’ll bit With return Folks

pieces So, here. a of number moving

manage this shipping, But, pieces setup that many the ahead seeing We’re delivering going as more saw as not do. we to XXXX. always it’s through last build, were building, simply year receivables where we we to moving look the we and

Jamie Miller

aftermarket Aviation, And businesses Aviation profitability there at Nigel, so stronger in saw our EBITDA to respect quarter-over-quarter. with question your second year-over-year. on strength We

We variable R&D spares that and the offset of SG&A. a had bit we cost higher the was all mix somewhat also some from had We benefited by quarter. little install and productivity, in higher

Operator

Deane Markets, Dray. RBC From Capital we have

Deane Dray

morning, and to my well. goodbye Thank you. as congratulations Jamie And, Good everyone.

Jamie Miller

you, Deane. morning. Good Thank

Larry Culp

Good morning, Deane.

Deane Dray

some picture going cover probably to bigger the we’re call, just know I year. approach thoughts this on but X the Larry, March this guidance on to

EPS of you’re It’s and specifically. more target. outcome that not was cash earlier targeting really an said free the had flow You

do action this year. how we of range? us And remind Just that seeing in as might number, either this implicitly be a contingency you have or part explicitly

Larry Culp

lot detail of the indicated Deane, on more March. we’ll beginning that into Xth question, at of the as you a get

are XXXX. thought do fourth give at really preparation did best than our that. share our outlook frankly this the in could we for all and New is also broad to look earlier we you given of the the I for in think, contours today of last we quite where context We XXXX, Year, year. everybody have that quarter year The the we quarter wanted

that, again, volatility guidance. source is greatest I MAX -- within that the the think range of probably the or with

Clearly, Power, think Deane, point, to But, do at on. not operationally, clear spot work we’ve I at Renewables. your a being but we’re Renewables priority, I is earlier alluded there I that with done momentum think got to

generation. to just to only look but we business, conditions, in on. not. interactions to it’s mistake. margin top-line in all We be everything and but that when I we But, encouraged order, you go leads a EPS we we’re talking numbers, that that making with can are businesses, the that’s businesses terms level and everything frankly, new what we you forward of here the you with what in no see good the make the focused for prospect think evidence in have sustainable expansion. This see range, for low-single-digit see a to far team going on I $X We’re think That -- cash I year, next flow billion think range billion more the $X not what or of think our positive see of accretive equipment that price the into of in see terms, service, of new scope, about it discipline a or finished. upfront way for don’t terms heightened the And

daily we service quality projects, building same of of let factories in that I management installing do equipment, what we in field think, the when applies and in alone that talk we driving productivity. the context about, equipment terms we’re when are our the in new

to together in be sustainable, So, again, different of cycle when course much ups long But any quarter. higher you performance a there the free going the more level cash this put a one on long-term. over and in that of team downs all business, are is focused

Deane Dray

a you mode on point wind just in where And Renewables still investment on specifically? in expand follow-up, could you’re the as

Larry Culp

think segment, Renewables, you priorities us. of will, if we’ve operating one but I way The Sure. about got, in front different three

Our onshore mature business, in clearly the it’s segment. most respects, is many business our what drives

that need in you pleased look investing growth last But, We with the double-digit there. onshore a year see more and level, cash. margins into directly at We are healthy very to wind, that. convert

with reference wind. The investment I making was to offshore respect was really

some earnings our an is But exciting big the performance. an in improve here XX wind. and an that’s the drag days area a are overall have to cash to relative This is We we seen us. Haliade-X, You’ve numbers offshore we in market in experts’ that bring help will outlook an opportunity think some near-term, technology for where to last innovator. XXXX with that for -- an

JVs Hydro. again, Renewables, in of the performance didn’t ‘XX. full legacy bit year of and third reported the That our a is in numbers. had consolidated Grid really We The Alstom help JV

which terms that that But, more I’ll to bit here like. out why three front and investment the turn detail are where center We’re specifically in is in program. kin is Haliade-X the a I XXXX. little wind that of pieces, behind executing get in around on and think we like we and around, if the you call put be offshore those into would

Operator

ahead. From have Tusa. go JP Please Steve Morgan, we

Steve Tusa

year. and of of flow cash just for end then And you expense Congrats us impact of Baker what bit also, ultimately the on good a color progress that had on give corporate the for billion dividend. kind cash Can the $X.X XXXX? little that the finish includes in at free the

kind gave basis. that last on the of and given more, that So, then it’s the that number? high considered kind than And to a kind What that stale of guys should in on how core even kind on about those Is going color into you’re -- XXXX level of guide? think kind just XXXX of of us March update March now, to you that higher high or level commentary. be then, goes one we

Jamie Miller

question. I answer progress but second your catch your question, Yes. Steve, didn’t maybe quite I’ll repeat you that. can

Steve Tusa

XX, $X.X Yes. Slide negative the corporate, billion.

Jamie Miller

Sorry.

Okay. Yes.

just at there. Power progress payments, contributed of billion in year, year drivers. Corporate, out, with the is you When So, capital and Renewables those other and well. you were was over expense inflows. working on And temper corporate. look drivers two as a that One year-over-year progress the and the couple $X.X up prior look big progress in the is When cash for to levels. higher tax line biggest our come and higher starts back restructuring Aviation

Larry Culp

with going on of with thinking and in the days, think respect front how some again, I the to an ‘XX Steve, we’re future. everybody in be update about XX to guidance, we’re

at say, when see that. can growth -- see details do through you the freshest, be also characterize latest, improve probably to we’re in some in we’ll recognizing challenged be We the we free and [Ph] performance, how question, we and would not know early MAX. step I and March. focused step we certainly to view of moving together to how the Renewables. the back earlier going all But, the around a sure XXXX. in we’ll them the we going Again, in the their we’re cash, XXX consolidated give and I in we’ll pieces dynamics not think on Aviation, I’m in very XXXX.We you take up would in So, around can and OMX. some And probably speak to we’re that of how free cash

Operator

go From have Mittermaier. ahead. Markus Please UBS, we

Markus Mittermaier

thanks And Jamie, morning, everybody. Good Hi. Yes. from my also side.

Gas in that? Power significant about Power we think, appreciate more guide, get of flow March. high just that granularity looks Power? should you than maybe the in portfolio, down XXXX detail think Power think jumping out significantly does What’s ago. that nine the months free like you’ve we for the I side. the on as taken Conversion cost point How But, better out What in how that progress we about thought cash the turnaround? it came into Power timeline? level, the kind On what off Sort I here on of

Larry Culp

right. Markus, look back be at the major mean, where March, I thought clearly of you’re Power, if finished we we outperformance. might was driver where in the versus exactly we we

in to well. as her able referenced Jamie And, clearly We think, I there. in MAX, transition a prepared supply better. was again, do despite finance bit with anticipated Aviation the less better restructuring than the spent headwind chain little remarks a

we and Gas the Power lot saw performance, preserve delivery I are much is You execution In business. credit uptick Conversion details Stokes, go as-sold underway we within portfolio, Again, as that it We’ve Power and P&L, organization really more costs that what’s as to like smarter where only think jumped better really who’s is CEO, they and put got better there, the give broadly. to quality, progress after in portfolio. they’re ‘XX in grabbed the for update. underwriting. from ‘XX of But, March together, that suggests some Conversion happening I’d of driving but businesses have that of one, firmly in better for improvements, specifically $X just in the call Power roughly Power Power looking nice a the but out three Conversion making. the not specifically, billion margins Russell all Power I a

do from Power will again a as still segment think year better next we positive. a be think, but I perspective, cash not

Markus Mittermaier

quick for one follow-up just then, Jamie. And

already to aviation. within alluded You AD&As the

that if tailwind was spread this ‘XX a out over XXXX Would completely that’s think, maybe this about I right, for expect than more $XXX I million. year? you reverses or remember in the

Jamie Miller

the it on in numbers, roughly favorability of the we So, print million. actually $XXX XXXX. When million had expected call third was we that $XXX quarter I mentioned

fully that XXXX see as there, expect did fourth more we reverse headwind. in a catch-up some in do expected we the we quarter. to So, And than

Operator

have From Morgan Stanley, we Josh Pokrzywinski.

Josh Pokrzywinski

source I just of mentioned but capture the the that. XXXX you’re Aviation to within around Just, attribute is around Larry, $X first that or would spread kind able you guess, billion, within the MAX? how of number couple a in -- as on the much over actually volatility what volatile? maybe bit volatility is question. next to cumulative guess timing biggest doesn’t So, the $X more to or of years, I move the maybe billion much you of billion $X --

Larry Culp

Yes.

going think well said, I XXXX of to Boeing, order the We FAA folks know Neither the the to in at that’s But Boeing, return dictate first business don’t a want nor is Josh. shortly. here get of GE who I are service. that ahead will. to here out is schedule safe that

have the think given return are what again, deliveries pieces just know, build places and I And service acknowledge date, to putting think, we But how we I profile, within to the moving reality, thereafter, over out the on you a it, forward, plays share that a with even So, we different there depending going time. of embrace want though we’re number a here. see. Again, future, this at be that lot the Boeing. we’ll of healthy could in out Clearly, range, in engine. engine. And for LEAP and very two a that we’ll major at should our plays to very refer is of be think much like the a Boeing we’re going us. very the colleagues at I track. customer feel into right that ‘XX our one How customers and Boeing, But strong out program point, on conviction this forward real relationship for that we

Jamie Miller

Larry spares, when spares, mix about factors in we return billion of overhead it’s And, whether timing the of even that but impact of $X.X just earlier, Josh, unabsorbed felt the particularly I that of add some and the the XXXX. installs you also mentioned or to think would the

As normalize. this as production expect more more should the that second service, first feel the into really headwinds is now you we’ll in tailwinds a half mid-year half reentry and in rates

maybe So, to that’s the about. factor think other

Larry Culp

Josh, to Yes. I But be clear. again, want

the for of lot a they respect respect right? stop I FAA. on Pulling guts. real of the today that. did under at Dave’s he’ll to the what’s a Boeing first, of I happening think, lot a respect leadership, Clearly, primacy we safety just as put end for the have line takes

clear, Recertification, a the new ultimately but right. I us service, partnership at focus chain. couldn’t think Boeing to is then think inventory, supply be we and It return significant a others delivering alignment with see production. the and complicated, in here in I the then certainly

tragedy an two we’ll But unfortunate going So, to it forward, think industry. here that and tragedies lessons be hopefully I is all better, specific. build occurred, stronger clearly a the take

Josh Pokrzywinski

or December. PTC change announced in year that. the been on Understood, the we otherwise? two just of that follow-up have got cash extension kind at profile then, shape appreciate of or where the over all And the next would Does still quick that

Jamie Miller

that to will high on should the in say. the in in of same inbound. the a XXXX, orders PTC some drag liquidates. I a be for mitigating U.S. collection think, expect we it’s hard level extension terms still and which Certainly, deliveries there little But the PTC incremental as help of progress new us progress collections

to So, see expect but we’ll a have little do that some goodness market bit out, how plays there. we

Operator

From Vertical Jeff Sprague. Research,

Jeff Sprague

Just a items. couple

the different backlog, on of items said very the need in returns it’s these induct kind commentary There’s that, to you engine relative back you’re and cut been secondly shipments to MAX. not what’s Boeing service to cetera. then also, could be parse your mess production down And production but two to if rates. to will that Arconic that kind of I given from others roughly to half. difficult et with much. to First, Larry, wonder production words, your taking in be

on if I’d appreciate it. both of just those, you clarify could So, thinking your

Larry Culp

You bet, Jeff.

just at to the I do that of doing need only That we’re turn we’re to for our to we’re But, the somebody’s return if a of levels down, lines more be the the case, we’re as rest. zero. and is, service, on sure that and all teams function And know I mindful going a call make not what’s here how were suppliers, the think, Arconic, page. own wet building not manage indeed keep PCC dynamic subsequent bringing that’s the like this our same comment of to going the bringing not process we’re much, is on prepare we will, is what Boeing. ramp. We but engines. to to spare production was very we in you there and in to going happening to relative

be will probably year, build whatever us. as for early to want make ahead prepared ramp We the go awaits sure We to little late year this we bit a next year we through are spare return this our XB But, around expect come there see engine with the as folks Boeing. year, lockstep pause down deliveries with we to the schedule. in this to do just service

Jeff Sprague

and the but unrelated, just the the JV Aviation big does come all? And at with impact order cash if how did in this flow, significant quarter, Baker, that deposits that with

Jamie Miller

not? on that Is no There was progress quarter. in the did

Jeff Sprague

Thank you.

Larry Culp

Thanks, Jeff.

Operator

have Please go From Mitchell. Barclays, we ahead. Julian

Julian Mitchell

maybe for a a on Capital And Hi. change. question

Jamie, year. level likely heard leverage I through your rising this So, comments around the

you. can framing around You are Thank capital thinking in XXXX? Capital lower commentary the had also, infusion the from you What billion QX. further about earnings in to Industrial year? $X.X infusions And any Capital this you give

Jamie Miller

Yes.

we at lower we companies. on of our based and to we look what our Think economic significantly a have in with be at was do capital to funding. the our XXXX. in it Capital insurance elements parent support lot in statutory what’s required will risk line before, it framework expect said still roughly of held We the as insurance what in statutory GE different with profile be in GE XXXX, it businesses in line see than though So, about to

something So, there. still we do expect

-- things on earnings, to of have think with And biggest XXXX the Capital a base. couple respect then, we to we’ll just about are smaller asset

of as off lower those asset I get program, by smaller benefited asset expect time have as base. And to as repeat asset from before, Capital sale But, mentioned XXXX. our gains, we largely, earnings XXXX. we’ll So, into breakeven, still secondly, sale XXXX the just a we we concluded won’t hit we’ve which then be

Operator

Davis. go From Melius Research, ahead. Please Scott we have

Scott Davis

Hi. Good morning.

Larry Culp

Good morning.

Scott Davis

prior echo of best the sure, luck hopefully see road. comments. to you. you I’m Jamie, down we’ll I’ll

Larry Culp

Thank you.

Scott Davis

to positive the one a term that you that at -- just things out, just LEAP how or and your and lean that is the wanted to Larry the I another not? upgrade something impact, ask faster. get lines out to In maybe processes allowing real production potential Is tooling, look get questions just is there just figure cost time of maybe on take slowdown down any longer of somewhat event, curve

Larry Culp

allow past very more curve and help real. coming made lean principles I all I drive service, at will delivery have first, safe But, focus. LEAP our a that elsewhere into to lower the only elsewhere. think, Aviation, inventories submit to FAA, that dues Scott, across in to the is I the some rate. would by will most that production ramp is pleased real we’ll slower, delinquencies broadly, of what better a progress the Safety clarity cost here it us down and The we think, operations, a recertification XXXX. the we’re pace have of in Scott, of regard, with and concert more we us return then also I that but But, elsewhere, not in think, team, slower tend again,

Boeing think our but long help we clarity of with way bit and we about that serve that a ways helps, us and long and that here can the next goes do pause goes should airline having to years best a customers. just couple clarity LEAP. Just Little all of

Operator

Gordon we Inch. From Haskett, ahead. Please go John have

John Inch

You guys these numbers. run all

to MAX X, $X.X have flying normally the been terms free Industrial $X have And to I’m if flow XXXX ask, your of been has your never $X.X $X been cash billion of been what if What billion range? ‘XX, think MAX you would grounded, of since Jan that in the have guidance? do and would the billion instead? So, going producing billion would

Jamie Miller

X.X the about V to we’ve XXXX, expectations. before our the [ph] So, that talked original is

that would higher. yes, So have been

Larry Culp

couple I we of here times on not about with XXXX, to pieces respect would to might talked what we’ve want all John, Q&A, during given been. have speculate moving probably a think, the

I taking Jamie was X.X a printed, the there, offset gives [ph] was good from would jumping that we here, perspective, MAX, to But point, moving if relative for there’s the back mindful tell. I very, the a think just think, look again, you all that. the around to maybe pieces step the cash XXXX, free right? we that off flat the from if pretty then aviation of deduct in think, and that probably seen hard there and held and growth I an have up off at to that outlook you X.X a Just there service very you

traction efforts deal real results. MAX comes, this cash but our of a generating franchise, real long-term, delivering business We’ll with other clearly with portfolio. a as strong it again, is So, going be across number non-MAX-related the strongest to

Steve Winoker

Brandon, please? just we’re the Can question, more we take hour. one past

Operator

Yes.

is Kaplowitz. question Citi, from go last Our have Please Andrew ahead. we

Andrew Kaplowitz

in at delays as And Larry, you be any down, Healthcare Systems or suggested under positive China Healthcare XXXX? some your does if Day inflection seen in there the about the you seeing were Systems, that of Healthcare leadership So, down? all how outlook for in you new Healthcare flat U.S. complicate Have and slightly in you die with to business to have the the and the China began trade just December, in coronavirus flat. you either in revenue came issues in to QX the

Larry Culp

in But, really I the everything Everett China and should in with basis discipline optimistic of behind too to the early year. in intensity improvement on Andy, I of say will, through have we the course the to teams, underperform they're Healthcare being if go XXXX suggests caused that on positive has And is was I here bringing, terms that in see I within a to remedied. we anything us relative as to way the its would the numbers well, to commercial execution yet. the a need point to the their am in week a as European team just on today just work it. curtain, more that these have doing in that respects impact commercial many market. and they're talk seen, challenging you probably France, last that, it’s had team in not deliver retool But, strong Yihao States we about that's

sorry coronavirus, respect its own right. in With a It's that disheartened corona the obviously we're it's tragedy to -- and happening.

clearly GE. safety across on is our of team priority really Our

Wuhan and really imagine, providers equipment, is team the elsewhere, the a deliveries, hospitals. particularly As smack significant our the to there. patient Healthcare equipment might in the Wuhan in help new care equipment We've this you made our of in servicing middle prioritizing and ultrasound certainly monitors to donation of

a solution lot So, itself And there a is can be there on. fortunately, going the real tragedy. we part of in China, but

Operator

turn you. closing it Thank remarks. back Mr. Winoker, to for I’ll you

Steve Winoker

day, Thanks, afterwards. a forward I the it’s everybody. and Take earnings know time. busy you appreciate up look I care. to following taking

Operator

Thank Ladies today’s this and concludes gentlemen, for conference. you joining.

disconnect. now may You

General Electric (GE) 29 Jan 202019 Q4 Earnings call transcript