GE Delivers $0.31 Operating EPS Excluding Effects of Preferred Redemption, Up 11%; GE Reports Net EPS of $0.22, Up 22%; Industrial Segment Revenue Growth of $23.4 billion, Up 19%; Industrial Orders Up 16%; GE Capital Earns $1.5 billion, Up 79%
3Q 2011 Highlights
• Operating earnings of $3.4 billion, up 11%
Operating EPS of $0.24; $0.31 excluding effects of preferred redemption
Continuing EPS of $0.22, down 21% (includes preferred redemption impact)
Net EPS of $0.22, up 22% (includes discontinued operations)
• Leading indicators remain encouraging
Total revenues of $35.4 billion
Industrial organic revenue growth of 8%
Industrial segment global revenue growth of 25%
Industrial backlog of $191 billion, a record
• GE Capital earned $1.5 billion, with pre-tax earnings of $1.6 billion
GECC/GECS Tier 1 Common Ratios of 11.0%/9.6%
• Confident in 2011 framework; projecting double-digit operating EPS growth in 2012
FAIRFIELD, Conn. – October 21, 2011 – GE [NYSE: GE] announced today third-quarter 2011 operating earnings of $3.4 billion, or $0.31 per share, up 11%, from the third quarter of 2010 (excluding effects of the preferred redemption).
During the quarter, GE gave notice of redemption for the preferred stock held by Berkshire Hathaway, and subsequently redeemed the shares on October 17, 2011 for $3.3 billion. As expected, the redemption resulted in a $0.08 per share one-time impact. Including the impact of the preferred redemption, Continuing EPS was $0.22, down 21%. Net EPS was $0.22, up 22%. Going forward, retiring the Berkshire preferred stock will improve GE’s annualized earnings per share by $0.03.
“We are pleased to deliver our sixth consecutive quarter of double-digit operating earnings growth in a volatile macro environment,” GE Chairman and CEO Jeff Immelt said. “We improved earnings, achieved solid double-digit infrastructure order growth, executed on our balanced capital allocation plan and maintained a strong balance sheet. We ended the quarter with a record high order backlog of $191 billion and we remain confident in our full-year 2011 operating framework.”
GE is aggressively investing in its growth platforms. Highlights from the quarter include the closing of GE’s acquisition of Converteam, a leading provider of power conversion and automation systems and high-efficiency power electronics, motors and generators. GE continued to build its global position, including announcing two Russian joint ventures that will help modernize the country’s healthcare and power generation sectors.
Industrial orders grew 16% as compared to the prior year quarter, which is the fourth straight quarter of double-digit growth. GE also announced more than $3 billion in new customer wins across its Energy business during the quarter. These included: $800 million of wins to supply gas and wind turbines for projects in Brazil that will produce 1.4 gigawatts of electricity – 40% of the total amount awarded in energy auctions conducted recently by Brazil’s National Electric Power Agency. Other industrial wins included Delta Airlines announcing that it had ordered 100 Next-Generation 737-900ER aircraft powered by CFM56-7BE engines.
GE’s third quarter Industrial segment revenues were $23.4 billion, up 19%. Revenues for the quarter were $35.4 billion, up 12% excluding the impact of NBCU. GE’s Industrial segments experienced double-digit revenue growth both domestically and internationally with international revenues up 25% driven by strong double-digit growth in Brazil, Russia, China, India, Canada, Mexico and the Middle East.
“GE Capital executed across all of its businesses, earning $1.5 billion after tax, an increase of 79% from the third quarter of last year,” Immelt said. “We grew GE Capital volume to $43 billion, up 15%. GE Capital’s margins remained strong at 5.4% year-to-date and the business continues to benefit from the credit cycle recovery. GE Capital continued to strengthen its capital ratios and liquidity during the quarter. GECC and GECS Tier 1 common ratios were up to 11.0% and 9.6% and we have reduced leverage across the portfolio.”
Total segment profit was up 15% to $4.7 billion. Margins declined from a year-ago primarily driven by Wind pricing in Energy. GE expects Industrial margins to improve sequentially in the fourth quarter. Cash generated from Industrial operating activities for the first nine months of 2011 totaled $6.5 billion. At quarter-end GE had $91 billion of consolidated cash. GE’s cash position enabled the Company to repurchase $1 billion of common stock during the third quarter and has enabled $3.7 billion in stock repurchases since the buyback program was restarted in the third quarter of 2010.
“We continue to successfully navigate a volatile global economy,” Immelt said. “Our investment in research and development and global expansion is paying off with robust organic growth. Our liquidity is strong. GE Capital is safe and secure, with increasing competitive advantage. Our balanced capital allocation plan is reducing share count, sustaining a strong dividend yield and funding growth. We are well positioned to execute on our operating framework in 2011 and achieve double-digit operating EPS growth in 2012.”
Third-quarter 2011 Financial Highlights:
Third-quarter operating earnings were $3.4 billion, up 11% from $3.1 billion in the third quarter of 2010 and Operating EPS excluding the preferred redemption impact was $0.31, up 11% from $0.28 per share in the third quarter of last year. GAAP earnings from continuing operations (attributable to GE) were $3.2 billion, up 4%, or $0.22 per share, down 21% from the prior year quarter.
Including the effects of discontinued operations, third-quarter net earnings attributable to GE were $3.2 billion in 2011 compared with $2.1 billion in the third quarter of 2010, up 57%. Net EPS was up 22%.
Positive items in the quarter were offset by one-time charges.
Third-quarter revenues were $35.4 billion for the quarter, up 12% excluding the impact of NBCU, and were flat compared to revenues of $35.4 billion from the prior year’s quarter. Industrial sales of $23.2 billion decreased 2% compared to 2010 and increased 18% excluding NBCU. GE Capital Services (GECS) revenues of $12.0 billion were up 1% from the third quarter of 2010.
Cash generated from GE Industrial operating activities for the first nine months of 2011 totaled $6.5 billion, down 35% from $10.1 billion for the comparable period of 2010.
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 am. ET today, available at ge.com/investors. Related charts will be posted there prior to the webcast.
GE (ge.com) is a diversified infrastructure and finance company taking on the world’s toughest challenges. From aviation and power generation to financial services, healthcare solutions, oil and gas and rail, GE operates in more than 100 countries and employs about 300,000 people worldwide.
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 the European sovereign debt situation; 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 (Grey Zone); potential financial implications from the Japanese natural disaster; 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; our ability to convert customer wins (which represent 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; strategic actions, including acquisitions, joint ventures and dispositions and our success in completing announced transactions and integrating acquired businesses; 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.
Trevor Schauenberg - GE Corporate, VP Investor Communications
P: +1 203 373 2424 / E: trevor.a.schauenberg[.]ge.com.