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GE 2016 first quarter
performance
Financial results & Company highlights
April 22, 2016
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measures are posted to the investor relations section of our website at www.ge.com. We use non-GAAP financial measures including the following.
• Operating earnings and EPS, which is earnings from continuing operations excluding non-service-related pension costs of our principal pension plans.
• GE Industrial operating & Verticals earnings and EPS, which is operating earnings of our industrial businesses and the GE Capital businesses that we expect to retain.
• GE Industrial & Verticals revenues, which is revenue of our industrial businesses and the GE Capital businesses that we expect to retain.
• Industrial segment organic revenue, which is the sum of revenue from all of our industrial segments less the effects of acquisitions/dispositions and currency exchange.
• Industrial segment organic operating profit, which is the sum of segment profit from all of our industrial segments less the effects of acquisitions/dispositions and currency exchange.
• Industrial cash flows from operating activities (Industrial CFOA), which is GE’s cash flow from operating activities excluding dividends received from GE Capital.
• Capital ending net investment (ENI), excluding liquidity, which is a measure we use to measure the size of our Capital segment.
• GE Capital Tier 1 Common ratio estimate is a ratio of equity to total risk-weighted assets .
General Electric Capital Corporation (GECC) has been merged into GE and our financial services business is now operated by GE Capital Global Holdings LLC (GECGH). In this document, we refer to GECC and
GECGH as “GE Capital”. We refer to the industrial businesses of the Company including GE Capital on an equity basis as “GE”. “GE (ex-GE Capital)” and /or “Industrial” refer to GE excluding GE Capital. Our
financial services segment previously referred to as GE Capital is now referred to as Capital.
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Imagination at work.
1Q’16 overview
Environment
Execution versus goals
 Slow growth and volatile environment
2016 Goals
1Q’16
 GE Capital exit execution … filed for
flat
-b)
Grow
Industrial
profit
(3)%
organic
SIFI de-designation on March 31st
Organic revenue growth (2-4%) (1)%
GE executing well:
Margin expansion ex. Alstom
+30 bps.
-a)
 Industrial operating + Verticals EPS Alstom EPS ~$.05
$(.01)
$.21, +5%; Industrial segments
include $(.02) total FX impact
Disciplined/balanced capital allocation
CFOA $30-32B-c)
$7.9B
 Industrial margins-b) +30 bps. ex. Alstom
Capital dividend ~$18B-d)
$7.5B
 Diversified portfolio offsetting a
FCF + disp. $28-31B
$7.1B
challenging Oil & Gas market
Cash to investors ~$26B
$8.3B
 CFOA $7.9B … $7.5B Capital dividend
 Segment digital orders $1.2B, +29%
Portfolio actions $166B Capital deals signed
Industrial
Reported Organic
SIFI de-designation filed
Orders
1%
(7)%
Appliances targeting 2Q close-d)
Segment revenue
6%
(1)%
GE Asset Management signed
Segment op profit
Industrial op profit-b)
(7)%
(3)%
(4)%
0%
(a- Verticals include businesses expected to be retained including allocated corporate costs
(b- Excluding gains and restructuring & other items
(c- Deal taxes are excluded from CFOA and included in dispositions
(d- Subject to regulatory approval
Framework on track
2
1Q’16 orders $23.5B, 1% … (7)% organic
Equipment
$
V%
Power
$1.8
Ren. Energy
1.8
Oil & Gas
0.7
Energy Conn.
2.0
Aviation
2.6
Healthcare
2.4
Transportation
0.1
Total
$11.0
Organic
Services
$
V%
F
F
(70)
37
(35)
3
(89)
(8)%
(18)%
$3.8
0.2
1.8
0.6
4.0
1.9
0.6
$12.4
53%
80
(19)
3
13
(1)
(18)
12%
4%
Backlog ($B)
Equip.
+2.0 %
(0.2)%
Power
Ren.
0.0%
(0.3)%
(1.2)%
O&G
(1.5)%
EC
Aviation
$268
$272
$270
71
70
72
70
198
200
199
1Q'15
2Q'15
Services 195
Core orders price 0.0%
+0.4 %
$266
Healthcare Trans.
'14
3Q'15
$315
$316
89
88
226
228
4Q'15
1Q'16
Highlights
 Equipment orders (8)% driven by Oil & Gas market
& Aviation 1Q’15 comparisons; strong orders in
Power driven by the H turbine, Renewable Energy
+94% ex. Alstom, Healthcare +6% organically
 Service orders +12%, +4% organically … Power
Services +17% ex. Alstom, Aviation +13%
 Alstom orders: Power $1.5B, Renewable Energy
$0.2B, Grid Solutions $1.2B
 Double-digit HCS U.S. equipment orders …
monitoring +20%, ultrasound +16%, CT +26%
3
Industrial segment execution
Segment
Segment
gross margins OP margins
Revenue growth
+2 pts.
+2 pts. (11) pts.
26.2%
25.4%
6%
(1)%
1Q
reported
FX
Disp.
Alstom
1Q
organic
+ 1Q volume impacted by gas turbine profile; 1Q’15
Power organic growth was 21%
+ No change to 2-4% organic estimate for the year
GE Store is a competitive advantage …
(2016E organic revenue growth)
“+” or better
“—”
Power
Oil & Gas
Renewables
Transportation
Aviation
Healthcare
2016 organic revenue +2-4%
+110 bps.
ex. FX
14.5%
12.8%
12.8%
(10) bps.
- bps.
(80) bps.
Core w/ Alstom
Industrial -b)
OP margins
(180) bps.
+30 bps. 11.3%
(120) bps.
Core w/ Alstom
Core w/ Alstom
Equipment (380) bps.-a)
Services +190 bps. -a)
Segment OP margins
1Q
Mix
Value gap (price/inflation)
Cost productivity
Gross Margins-a)
Simplification (SG&A)
Base inflation/other
Op Profit Margins -a)
Alstom
Op Profit Margins
0.3 pts.
0.1
(0.4)
- pts.
0.2
(0.3)
(0.1) pts.
(1.7)
(1.8) pts.
+80 bps.
ex. FX
+60 bps.
ex. FX
Will fund $.25 of restructuring & other items
in 2016
4
(a- Excluding Alstom
(b- Industrial includes Corporate, excluding gains and restructuring
Generating cash
($ in billions)
V%
1Q CFOA
$7.9
GE cash balance walk
F
Total
Beginning balance 1/1/16
Capital
dividend
Industrial
FCF
Ind’l FCF
7.5
F
$1.3
0.5
0.9
0.4
2015
$0.5
$0.0
2016
$7.1
$(0.4)
(60)%
F
U
$10.4
CFOA
7.9
Dividends
(2.2)
P&E
(0.8)
Acquisitions
-
 1Q Industrial cash flow $0.4B, (60)% as
expected … impacted by Alstom $(0.4) and
working capital build for 2H shipments
Buyback
(6.1)
Change in debt/FX/other
0.2
 Received $7.5B Capital dividend … filed for
SIFI de-designation on March 31st
March 2016
$9.3
$8B cash returned to investors … $6B in buyback & $2B in dividends
5
The value of GE
Value of diversified portfolio
+ Businesses expected to perform better
than December outlook
Aviation
+/++
Healthcare
+/++
Renewables
++
Power
++
‒ Expecting a tougher Oil & Gas market
Revenue ~(15)-(20)%
Op profit ~(30)%
 Will continue to restructure and win
in the marketplace
No change to 2016 EPS framework
Alstom performance
• $3B orders … strength in Power $1.5B
with services $1B; Grid $1.2B;
Renewables $0.2B
• $2.8B revenue … Power $1.4B,
Renewables $0.3B, Grid $1.1B
• Segment operating profit $(20)MM …
impacted by purchase accounting & FX
• Corporate $(183)MM … investment in
synergies, purchase accounting
• Synergy benefits ~$100MM … will ramp
up throughout the year
• 1Q EPS of $(.01) in line with expectations
On track for ~$.05 EPS for the year
6
Gas Power Systems overview
($ in billions)
Key metrics
++
Revenue
Business imperatives
1
$8
Utility/Industrial … heavy-duty gas
+ Performance … HA output & efficiency
= Execution … 8X factory output vs. ‘15
Equip. backlog
'15
'16E
$8
++
2
+ Speed … Power to grid in ~3 months
= Timing … “lumpy” demand
Market update
•
•
•
•
H-Class fastest growing segment
North America & Asia strong
Middle East & Africa mixed
 Argentina & Mexico opportunities
Fast Power … Aero engines
3
Extended Scope … Alstom synergy
+ Technology … Steam tail performance
= Convertibility … ’16 orders = ’17 revenue
115+ heavy-duty shipments … 1H ~40, 2H ~75
Delivering better customer outcomes & shareholder value
7
HA platform launch on-track
2016 Program
overview
Differentiated
technology
World-class
execution
 ~24 unit shipments
 ~$2B revenue
 TY margin positive
 Margin dilutive vs. ’15
 2 models fully validated
• Record output: 432MW
simple cycle & 603MW plant
• Fulfillment on-track: 4
shipments with 20+ to go
Orders backlog
35
16
Gas
turbines
Steam
turbines
39
17
Generators
HRSGs
• Flawless validation: zero
fault testing (7HA.02)
• Integrated solutions …
GE/Alstom power island
8
Driving product cost-out
Make vs. buy: 3D Airfoils
Design: Rotor Material
Latest HA designs vertically
integrated 3D technology
High-temp materials technology
for F-Class fleet (GE + Alstom)
From
5-57%
insourced
less expensive
%
70 material
$300-900K per unit
Increased capability drives
$12MM+ annual cost out
savings + services
$30MM+ lower cost
In Source: Generators
Utilize existing Alstom aircooled technology
50%
more GE
volume
$25MM+ margin from
cost out & capacity
utilization
on 2017 volume
9
Delivering accelerated HA returns
2016 Margin profile
Cost
2H’16+
Unit 12
1H’16
Expanded scope opportunity
Performance
A + B
A
Cost-out actions
30%
Rest of
Turbine
2015
Bid
2016
Ship
60% scope
20% scope
• 10th HA turbine =
1,000th F $/kw
Hot Gas
Path
2016
2014
in 1st year
1 GT/1 GEN
1 ST/1 HRSG
2 GT/GEN
$178/kw
Order
$/kw
$389/kw
Delivering higher $ value @ same MW sold
10
Integrated digital ecosystem
Design Validation
• Innovation speed
•  Reliability
• Enables digital twin
• Lower cycle time
Robust testing
• 7,000+ data streams
• >500 TBs of data
Flow
e-Design Models
s
Test
Field
Pressure
Performance Mapping
Advanced Manufacturing
• New design spaces
• Tighter tolerances
• Services upgrades
• Higher plant output
Continuous innovation delivering differentiated performance … $35MM+ per GT
11
1Q’16 consolidated results
($ in billions – except EPS)
($ in millions)
1Q’16
$27.8
25.0
2.6
0.2
V%
6%
7
3
(21)
Industrial + Verticals EPS .21
Operating EPS
.06
Continuing EPS
.02
Net EPS
(.01)
5
F
F
F
Revenues
– Industrial
– Verticals-a)
– Other Capital-b)
CFOA YTD
- Industrial CFOA
7.9
0.4
F
(60)
Revenues
$
V%
Power
$5,204
13%
$573
1,669
62
83
46
Oil & Gas
3,314
(18)
308
(37)
Energy Connections
2,260
34
(85)
U
Aviation
6,262
10
1,524
16
Healthcare
4,183
3
631
7
981
(25)
164
(27)
3
115
13
Transportation
Appliances & Lighting
1,996
1Q’16 1Q’15
Industrial Segments
25,869 6/(1)
(58)%
U
Corporate ex. gains/restructuring
(968)
2
17
23
Industrial ex. gain/restructuring $24,901
7%
36
U
Industrial + Verticals EPS
Industrial operating
Capital Verticals-a)
1Q’16
$.15
.05
$.21
(a- Verticals include businesses expected to be retained including allocated corporate costs
(b- Other Capital includes HQ run-off & exit-related items
(c- Excluding Industrial gains and restructuring & other items
V%
(6)%
67%
5%
Organic
3,314 (7)/(4)
(431)
ex.
Alstom
(24)% (28)%
Renewable Energy
Organic
Consolidated tax rate
– GE (ex. GE Capital)
– GE Capital
Op profit
$
V%
60%
U
(6)%
25
Organic
$2,883 (3)/0%
Adj. V% -c)
5%
67%
14%
12
1Q’16 Industrial other items
EPS
Restructuring & other
items
Gains
$(.05)
$-
Summary
Restructuring & other items
Gains & settlements-a)
Total
 $(686)MM pre-tax, $(483)MM after-tax at Corporate
including Alstom deal costs & purchase accounting
items of $(164)MM pre-tax
 $59MM pre-tax, $38MM after-tax at Corporate
related to the sale of 30 Rock floors
1Q
2QE
2HE
2016E
$(.05)
~$(.11)
~$(.09)
~$(.25)
$-
~$.20
~$.05
~$.25
$(.05)
~$.09
~$(.04)
~$-
Gains = restructuring for the year but quarterly variability in timing
13
(a- After tax impact based on estimated transactional tax rates
Industrial segments
($ in millions)
Power
1Q’16
Revenues
Segment profit
Op profit %
Renewable Energy
V%
1Q’16
13%
(18)%
Revenues
(24)%
(28)%
Segment profit
(5.4) pts.
(2.0) pts.
$
V%
$5,204
$573
11.0%
ex. Alstom
1Q dynamics
Op profit %
$
V%
V%
ex. Alstom
$1,669
62%
34%
$83
46%
60%
5.0%
(0.5) pts.
1.1 pts.
1Q dynamics
• $5.6B orders, +66% ... core equipment +57%
driven by GPS +2x with 25 GTs including 6 U.S.
HA units; core services +11%
• $2.0B orders, +110% ... core +86% on higher
wind units, +335 from prior year driven by
higher U.S. volume; Alstom orders $0.2B
• Revenue … core equipment (48)% driven by
GPS (47)% on 26 less GT shipments; core
services +5% driven by Power Services +7%
• Revenue … core +34% driven by higher wind
turbine shipments and mix shift to larger MW
units
• Segment profit (28)% excluding Alstom driven
by lower gas turbine volume and $(48) total FX
• Segment profit +60% excluding Alstom
primarily driven by higher volume
Power impacted by quarterly gas turbine profile; strong Renewables performance
14
Industrial segments
($ in millions)
Aviation
1Q’16
Revenues
Segment profit
Op profit %
Oil & Gas
1Q’16
$
V%
$6,262
$1,524
10%
16%
Revenues
Segment profit
1.1 pts.
Op profit %
24.3%
1Q dynamics
$
V%
$3,314
$308
(18)%
(37)%
9.3%
(2.8) pts.
1Q dynamics
• $6.6B orders, (12)% … equipment (35)% on
fewer commercial engines; services +13% with
spares +2% … $153B backlog, +9% VPY
• $2.4B orders, (44)% with pressure across all
segments … D&S (74)%, TMS (48)%, Surface
(37)%, DTS (18)%, Digital Solutions (5)%
• Revenue … equipment +2% driven by Military
+8% partially offset by Commercial (4)%;
services +17%
• Revenue (18)% … Surface (41)%, Subsea &
Drilling (28)%, TMS (10)%, DS (10)%, DTS +3%
• Segment profit +16% on higher service volume
and cost productivity … margins +110 bps.
• Segment profit margin (280) bps. as cost-out
actions were more than offset by volume
decline; total FX headwind of $(95)MM
Strong execution
Market pressure continues
15
Industrial segments
($ in millions)
Healthcare
1Q’16
$
Transportation
V%
1Q’16
$
V%
$4,183
3%
Revenues
$981
(25)%
Segment profit
$631
7%
Segment profit
$164
(27)%
Op profit %
15.1%
16.7%
(0.5) pts.
Revenues
0.7 pts.
1Q dynamics
Op profit %
1Q dynamics
• $4.2B orders, +1%, +5% organically … U.S. +3%,
Europe (3)% and +4% organically, China +11%
and +14% organically
• $0.7B orders, (56)% with equipment (89)%
driven by locomotives; service orders (3)%
organically
• Revenue +3%, +6% organically with HCS +4%
and Life Sciences +13%
• Revenue (25)%, (20)% organically with
equipment (41)% on lower locomotive
deliveries, services flat organically
• Segment profit +7% reported, +10% organic
driven by strong volume growth and cost
productivity … margins +70 bps.
• Segment profit (27)% driven by lower
locomotive volume
 Healthcare … strong volume & cost productivity
 Transportation … challenging market
16
Industrial segments
($ in millions)
Energy Connections
1Q’16
$
Revenues
Segment profit
Op profit %
V%
Appliances & Lighting
V%
1Q’16
Revenues
Organic
$2,260
34%
(6)%
$(85)
U
U
(3.8)%
(5.5) pts. (4.3) pts.
1Q dynamics
• $2.7B orders, +27% … Alstom $1.2B; core (13)%
organically with Power Conversion (20)% on
softer oil & gas and Industrial Solutions (7)%
• Revenue +34%, (6)% organically with Power
Conversion (5)%, Industrial Solutions (7)%
• Segment profit of $(85)MM with core $(47)MM
driven by lower volume, digital investment, and
disposition impacts
Segment profit
Op profit %
$
V%
$1,996
3%
$115
13%
5.8%
0.5 pts.
1Q dynamics
• Appliances revenue +8% … industry strength
and favorable product mix offset by price
• Lighting revenue (9)% with LED +19% and
traditional (23)% … LED 39% of total revenues
• Segment profit +13% driven by strong deflation
& cost productivity; margins +50 bps.
 Energy Connections … expect better 2Q performance
 Appliances targeting 2Q close-a)
17
(a- Subject to regulatory approval
GE Capital
($ in millions)
1Q’16 performance
GE Capital update
Earnings
Asset sales-d)
Verticals-a)
$496
Other Continuing
(1,389)
Capital
$(893)
Disc. Ops.
GE Capital
~$9B
1Q’16
(308)
Signings
~$42B
1Q’16
Closings
~$40B
To go
~$166B Complete
~$146B Complete
~$60B
To go
$(1,201)
• $81B of ENI ex. liq. … $127B incl. Disc. Ops.
• $106B of liquidity-b) … CP constant at $5B
• Basel 3 T1C-c) at 14.5%, flat VPQ after $7.5B
dividend in the quarter
 Other Continuing includes excess interest
expense, preferreds, hybrid tender,
restructuring, opex
 Returned $7.5B of capital in 1Q’16, targeting
~$18B in 2016 … on track for $35B-e)
 Applied for SIFI de-designation on March 31st
Capital transformation ~80% complete … continuing strong momentum in 2016
(a- Verticals include businesses expected to be retained including allocated corporate costs
(b- Liquidity includes cash & equivalents (including discontinued operations and held for sale balances) and high quality interest bearing deposits
(c- Basel 3 Tier 1 Common ratio estimated based on U.S. standardized transitional basis
(d- ENI ex liquidity as of 4Q’14
(e- Subject to regulatory approval
Note: Individual amounts are rounded. As a result, the sum of the parts presented may not add to the total
18
2016 operating framework
1
Operating EPS-a)
$1.45-1.55
2
Free cash flow
+ dispositions
$28-31B
$29-32B
3
Cash returned
to investors
~$26B
• Organic growth of 2-4%
• Core margin expansion
• O&G  ~30% offset by Aviation,
Healthcare, Renewables, Power
• Corporate @ $2.0-2.2B
• Alstom ~$.05; Appliances gain ~$.20-c)
• Restructuring = gains
• Total FX impact ~$(.02) at today’s rates
• CFOA of $30-32B-b); ~$18B Capital
dividend-c)
$3-4B-b)
• Dispositions of $2-3B-b)
• Net P&E of ~$4B
• Dividend of ~$8B
• Buyback of ~$18B
(a- Industrial + Verticals
(b- Deal taxes are excluded from CFOA and included in dispositions
(c- Subject to regulatory approval
19