GE 2016 first quarter performance Financial results & Company highlights April 22, 2016 CAUTION CONCERNING FORWARD-LOOKING STATEMENTS: This document contains "forward-looking statements" – that is, statements related to future events that by their nature address matters that are, to different degrees, uncertain. For details on the uncertainties that may cause our actual future results to be materially different than those expressed in our forward-looking statements, see http://www.ge.com/investor-relations/disclaimer-caution-concerning-forwardlooking-statements as well as our annual reports on Form 10-K and quarterly reports on Form 10-Q. We do not undertake to update our forward-looking statements. This document also includes certain forward-looking projected financial information that is based on current estimates and forecasts. Actual results could differ materially. NON-GAAP FINANCIAL MEASURES: In this document, we sometimes use information derived from consolidated financial data but not presented in our financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP). Certain of these data are considered “non-GAAP financial measures” under the U.S. Securities and Exchange Commission rules. These non-GAAP financial measures supplement our GAAP disclosures and should not be considered an alternative to the GAAP measure. The reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable GAAP financial 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. 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, 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. 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