GE Reports 3Q'13 Operating EPS $0.36, Revenues $35.7B; Industrial segment margins +120 basis points; Orders +19%; Record backlog of $229B
(M2 PressWIRE Via Acquire Media NewsEdge) - Operating EPS of $0.36; $0.40 excluding restructuring and other charges
- U.S. orders +18%, Europe orders +17%, growth market orders +22%
- Industrial segment profit +11% with strong growth in six of seven Industrial businesses
- Industrial segment margins +120 bps with strong value gap & cost productivity; no contributing Industrial gains
- GE Capital earnings +13% with ENI at $385 billion; Tier 1 common ratio under Basel 1 at 11.3%, +116 bps
- $13.9 billion returned to shareholders YTD
- Overall framework for 2013 remains unchanged
FAIRFIELD, Conn. -- GE [NYSE: GE] announced today third-quarter 2013 operating earnings of $3.7 billion, or $0.36 per share, down 3% and flat respectively from the third quarter of 2012. Excluding restructuring and other charges, operating EPS was $0.40. GAAP earnings from continuing operations were $3.3 billion, or $0.32 per share, down 5% and 3% respectively. Net earnings of $3.2 billion, or $0.31 per share, fell 9% and 6% respectively from the year-ago period. Revenues were $35.7 billion for the quarter, down 1% from the year-ago period, driven by lower revenues in GE Capital due to planned asset reductions, and a negative FX impact of $132 million.
"Our third-quarter results were very strong in an improving global business environment," said GE Chairman and CEO Jeff Immelt. "Orders grew 19% with orders growth around the world. Total segment profit grew 12%, Industrial margins grew 120 basis points in the quarter, and we are on track for planned margin expansion of 70 basis points for the year. GE Capital continues to perform well, and we finished the quarter with a Tier 1 common ratio of 11.3%, up 116 basis points.
"Our Industrial strength was broad based, with six of seven businesses growing earnings. As expected, our Power & Water business is strengthening in the second half of the year. Our strategic initiatives are working: growth markets orders expanded 22%; service revenues grew 7%; and margins grew significantly, driven by a positive value gap and company-wide simplification efforts. We have reduced Industrial structural costs by approximately $1 billion year-to-date, and will exceed our plan for the year."
Orders for the quarter rose 19% to $25.7 billion. GE's backlog of equipment and services at the end of the quarter was its highest ever at $229 billion, up $6 billion from the second quarter. Infrastructure order pricing was flat for the quarter. The ratio of equipment orders received to sales billed (book-to-bill) was 1.2.
During the quarter, GE announced one of the largest power agreements in company history to supply Algeria's Sonelgaz with power generation equipment and services for six new combined-cycle power plants, valued at $1.9 billion. Also during the quarter, GE received an order of approximately $600 million to provide turbomachinery equipment to Russia's Yamal liquefied natural gas project, an order from Air Asia for 528 LEAP aircraft engines produced by CFM International (a 50/50 joint venture between GE and Snecma), and a commitment from Lufthansa for the new GE9X engine for 34 Boeing 777-9X aircraft, valued at more than $2.5 billion at list price.
GE Capital continues to decrease the size of its portfolio, while focusing on its core businesses. GE Capital earnings rose 13% on positive results from its Real Estate and Consumer businesses. ENI (excluding cash and equivalents) was $385 billion at quarter-end. Volume was up 6% for the quarter, with good returns. General Electric Capital Corporation's (GECC) Tier 1 common ratio rose 116 basis points to 11.3%, and net interest margin was strong at 5%. During the quarter, GECC paid $2 billion in dividends to the parent.
Industrial cash from operating activities (CFOA), excluding NBCUniversal deal-related taxes and pension contributions, was $5.9 billion, up 5% from the year-ago period. Year-to-date total CFOA of $7.8 billion was 27% lower due to NBCU deal-related taxes and the timing of GE Capital dividends. GE ended the quarter with $87 billion of consolidated cash and cash equivalents, and is on track to generate $14 billion to $17 billion of CFOA this year.
GE continues to execute on its balanced, disciplined capital allocation plan. GE has returned $13.9 billion to investors year-to-date through dividends and share buybacks. During the quarter, GE closed its acquisition of Avio Aero, an Italy-based manufacturer of aviation propulsion components and systems for civil and military aircraft. Also during the quarter, GE closed its acquisition of Lufkin Industries, a leading provider of artificial lift technologies for the oil and gas industry and a manufacturer of industrial gears. GE also officially formed a global partnership with XD Electric Group to offer high voltage transmission and distribution solutions and provide customers in China with localized grid automation equipment and services.
Immelt concluded, "This quarter we delivered on our major strategic goals for investors. We grew Industrial segment profits 11% with good margin expansion. GE Capital is smaller and stronger; it is returning cash to the parent, while maintaining its profitability. And with a record backlog of $229 billion, we are winning in the market and are well positioned for 2014. Our overall framework for the year is unchanged."
Third-quarter operating earnings were $3.7 billion, down 3% from third-quarter 2012 and operating EPS was $0.36, flat with the year-ago period. GAAP earnings from continuing operations (attributable to GE) were $3.3 billion, or $0.32 per share, down 5% and 3% respectively from the third quarter of 2012. Operating earnings include $0.02 per share of restructuring and other charges and $0.02 per share of Avio acquisition-related charges, with no offsetting industrial gains.
Including the effects of discontinued operations, third-quarter net earnings attributable to GE were $3.2 billion ($0.31 per share) in 2013 compared with $3.5 billion ($0.33 per share) in the third quarter of 2012.
Third-quarter revenues were down 1% at $35.7 billion. Industrial sales of $25.3 billion rose 2% versus the third quarter of 2012. GECC revenues of $10.7 billion fell 5% from last year.
Cash generated from GE operating activities year-to-date totaled $7.8 billion ($9.8 billion excluding NBCU deal-related taxes), compared to $10.7 billion last year.
The accompanying tables include information integral to assessing the Company's financial position, operating performance and cash flow.
GE will discuss preliminary third-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.
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," or "will." 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; changes in Japanese consumer behavior that may affect our estimates of liability for excess interest refund claims (GE Money Japan); 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 flow and earnings and other conditions which may affect our ability to pay our quarterly dividend at the planned level or to repurchase shares at the planned level; GECC's ability to pay dividends to GE at the planned level; our ability to convert pre-order commitments into orders; the level of demand and financial performance of the major industries we serve, including, without limitation, air and rail transportation, energy generation, 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 and affect planned share repurchases and strategic actions, including acquisitions, joint ventures and dispositions; our success in completing announced transactions and integrating acquired businesses; 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 may also contain non-GAAP financial information. Management uses this information in its internal analysis of results and believes that this information may be informative to investors in gauging the quality of our financial performance, identifying trends in our results and providing meaningful period-to-period comparisons. For a reconciliation of non-GAAP measures presented in this document, see the accompanying supplemental information posted to the investor relations section of our website at .
In this document, "GE" refers to the Industrial businesses of the Company including GECC on an equity basis. "GE (ex. GECC)" and/or "Industrial" refer to GE excluding Financial Services."
Trevor Schauenberg, 203.373.2424
Seth Martin, 203.572.3567
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