The GE Brief: October 29, 2020
BUILDING MOMENTUM
Reporting GE’s third-quarter results yesterday, Chairman and CEO Larry Culp told investors that despite the still-difficult environment, he is encouraged by the company’s progress. “Our topline remains pressured,” Culp said, “but our actions are driving improved profitability and cash performance.” Industrial free cash flow stood at $500 million at the end of the quarter, largely driven by better working capital and earnings. Culp said the company expects to deliver at least $2.5 billion in industrial free cash flow* in the fourth quarter, with positive contributions from all businesses.
The lean path: Many of the actions contributing to the company’s improved profitability come down to the rigorous application of lean management techniques — the “strongest common denominator,” Culp said, and GE’s “foundation for sustainable growth.” What Culp called the company’s “operational improvement” is showing results across businesses, including within GE’s Aviation, Healthcare, Renewable Energy and Power units, which reported positive industrial margins for the first time in two years. The latter three businesses also saw their revenues grow in the quarter. Despite setbacks in the aviation sector related to the coronavirus pandemic, both GE Aviation and GE Capital Aviation Services (GECAS) saw sequential improvement; GE Aviation, Culp said, was “on track to deliver more than $1 billion of cost and $2 billion of cash actions this year.” GECAS, responding to the shifting needs of the industry, is expanding its passenger-to-freighter conversion program to include Boeing 777 widebody jets.
Culp elaborated on the themes he discussed with investors in a LinkedIn post.
He also said GE’s transformation is accelerating: “In September, we introduced a new purpose statement for the company: We rise to the challenge of building a world that works. This is more true than ever as we continue to deliver for our customers and tackle the world’s biggest challenges from precision health to the safe return to flight to the energy transition.”
Learn more here about GE’s third-quarter earnings report.
Lean management helped this GE Gas Power plant in Schenectady, New York, get its mojo back.
— QUOTE OF THE DAY —
"This is a company with tremendous capabilities. … I think what people hopefully get a glimpse of today is the building momentum we have toward realizing that full potential.”
— Larry Culp, GE chairman and CEO
Important information about our forward-looking statements.
*Non-GAAP Financial measures
In this document, we sometimes use information derived from consolidated financial data 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. The reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable GAAP financial measures are included in our quarterly report on Form 10-Q and the GE earnings supplemental information package posted to the investor relations section of our website at www.ge.com, as applicable.
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Quote: GE Reports. Images: GE Renewable Energy.