Today GE released its second-quarter results for 2019. On balance, while we are seeing progress across our businesses, we clearly have more work to do in what remains a reset year for GE. Below are some select highlights from our results, and I encourage you to read the full materials and listen to our earnings call on GE’s investor website.
- Topline strength, including organic orders* growth up 4 percent compared to the second quarter of 2018, industrial segment organic revenue* growth of 7 percent, and backlog up 11 percent, partially driven by GE Aviation’s record wins at the Paris Air Show.
- Adjusted EPS* of $0.17, including a $0.06 benefit from resolving a tax audit matter.
- Industrial organic profit margins* contracted by 300 basis points, driven by declines in GE Power, GE Renewable Energy, and to a lesser extent GE Aviation, but still in line with our first-half plan.
- Adjusted Industrial free cash flows* of negative $1 billion, at the high end of the range GE’s CFO Jamie Miller mentioned at the Goldman Sachs Industrials Conference in May.
- Progress on improving our financial position, including selling down part of our stake in Wabtec and reducing GE Capital assets by $2 billion and external debt by $2 billion.
- As a result of strategically moving the lower-margin equipment/services business within Grid Solutions from Power to Renewables and moving the digital parts of Grid to GE Digital, we recorded a non-cash goodwill impairment charge of $744 million. The combination of Grid Solutions with Renewable Energy creates an end-to-end clean energy offering for our customers.
Due to improvements in GE Power, lower restructuring, higher earnings, and better visibility in the first half of 2019, GE also announced adjustments to its full-year outlook:
- Increased Industrial free cash flows* outlook range to $(1) billion to $1 billion (from the previous $(2) billion to zero).
- Increased organic revenue* outlook to growth in the mid-single-digit range (from low to mid-single digit).
- Increased adjusted EPS*outlook to $0.55 to $0.65 (from $0.50 to $0.60)
- No change to margin outlook at flat to +100 basis points
- Decreased restructuring spend outlook (cash at $1.5+ billion for the year, from $2+ billion previously, and expense at $1.7 billion to $2 billion, from $2.4 billion to $2.7 billion previously).
As GE’s Chairman and CEO Larry Culp said in our press release, “We made steady progress on our strategic priorities in the second quarter … We will continue to take planned actions to improve our businesses and monitor some market headwinds. We remain focused on driving continuous improvement and delivering for our customers, and I am encouraged by our team’s progress and dedication to date.”
We’ve also announced this morning that Jamie Miller will be transitioning from her role as CFO and GE has initiated a search to identify its next CFO. Jamie has agreed to remain in her role and will assist with a smooth transition. As Larry noted in the announcement, Jamie has been instrumental in developing our portfolio strategy and spearheading our deleveraging plan during our transformation. Jamie has been at GE for 11 years in a number of roles. She is a great leader, colleague and friend to so many of us here.
As always, feel free to reach out with any questions, comments or suggestions. Thank you for your continued interest in GE.
VP Investor Communications
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