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General Electric Conference Call Highlights

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General Electric Company (NYSE: GE) reported its third quarter earnings. Shares of the company are 3 percent.

Below are some key highlights from its conference call.

• EPS was $0.38, an increase of 6% versus last year.
• Our Industrial segment profits grew by 9%.
• Our relative position in key markets is improving.
• We've gained share in transportation, aviation, power, and healthcare behind great new products.
• Orders grew by 22%.
• For the first time in a while, we are seeing volume improving for GE Capital the U.S. GE grew margins by 90 basis points.
• We continue to generate benefits from our simplification efforts, and are on track for more than $1 billion of cost out for the year.
• Margins improved in six of seven businesses and our cost-out momentum was strong.
• We launched the Synchrony IPO in July and, as we move forward, this will dramatically reduce the size of GE Capital and our presence in consumer finance.
• And we've invested in platforms like Milestone Aviation, a helicopter leasing business linked to GE Aviation.
• So we're on track to create a smaller GE Capital focused on commercial finance.
• Orders growth was broad-based geographically. U.S. orders were strong with growth a 25%.
• And growth markets expanded by 34% with five of nine regions up in the quarter.
• These include China at 26%, orders in the Middle East, North Africa and Turkey doubled, Latin America was up 54%, Africa up 9%, and Canada up 46%.
• Backlog is a record high of $250 billion, up more than $20 billion in the past 12 months.
• We had a service backlog true-up in Aviation driven by finalization of terms with CFM for LEAP, which reduced the total by $2 billion.
• Nonetheless, we're at record highs. Strong orders positioned GE for sustained growth in the fourth quarter and beyond.
• Segment profits grew by 9% with six of seven segments expanding.
• Year-to-date segment profit is up 10%, driven by 5% organic revenue growth and 50 basis points of margin expansion.
• Organic growth was up 4% in the quarter and 5% year-to-date.
• We saw a strong U.S. environment in Healthcare, and Power & Water had tough comps in the third quarter but will have a very strong fourth quarter shipments versus last year.
• And for the year, our industrial organic growth should be at the high end of our framework.

Financials:

• We had another strong quarter of margins at 16.3%, up 90 basis points.
• We've generated $7.2 billion of CFOA year-to-date and are on track for $14 billion to $17 billion for the year.
• For the quarter, we grew CFOA by 41%. GE capital dividends are on track for $3 billion in the year.
• We had revenues of $36.2 billion, up 1% from the third quarter of 2013. Industrial sales of $26 billion were up 3% and GE Capital revenues of $10.5 billion down 1%.
• Operating earnings of $3.8 billion were up 3% for the quarter.
• Operating per share of $0.38 were up 6%.
• Continuing EPS of $0.34 includes the impact of non-operating pension, and net EPS includes the impact of discontinued operations.
• The GE tax rate for the quarter was 18%.
• That brings the year-to-date rate for the industrial company to 20%.
• We expect the total year rate to be in the high teens.
• Industrial segment revenues were up 3% reported, up 4% organically.
• We had $0.03 of restructuring and other charges at Corporate, $0.02 of that related to ongoing industrial researching and other items as we continue to take actions to improve the industrial cost structure.

Posted-In: conference callEarnings News

 

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