October 17, 2014 Below is our fixed income investor relations update for the third quarter of 2014

Transcription

1 October 17, 2014 Below is our fixed income investor relations update for the third quarter of 2014 Brigid Tobin Manager, Investor Relations GE 201 High Ridge Road Stamford, CT USA T brigid.m.tobin@ge.com GE Chairman and CEO Jeff Immelt said The environment is volatile, but infrastructure growth opportunities exist, and GE is executing well. This is reflected in healthy order growth and margin expansion. During the quarter we continued to execute on our portfolio strategy, including the successful IPO of Synchrony Financial and announcing the sale of our Appliances business. Our total-year framework is intact, and we are executing on our goals. 3Q Highlights GE 3Q operating EPS $0.38, +6% 3Q Industrial segment profit +9%, YTD +10% 3Q total revenue of $36.2B +1%, industrial segment organic revenues +4%, YTD +5% 3Q margins +90 bps, YTD +50 bps 3Q orders +22%, Growth market orders +34%, U.S. orders +25% Cash generation of $7.2 billion year-to-date, $3.8 billion generated in 3Q 3Q Highlights GECC Net earnings $1.5B, down 22% from 3Q 13 on lower assets Ending net investment (excluding cash and equivalents) was $365B at quarter end, down 5% from 3Q 13 Estimated Tier 1 common ratio (Basel 1) rose 79 basis points from 3Q 13 to 12.1% Net interest margin was strong at 5.0%, down 3bps from 3Q 13 During the quarter, GECC paid $0.8B in dividends to GE Company, $2.2B year to date Solid liquidity and capital position $80B in cash and equivalents at quarter end; $65B excluding Synchrony Financial Commercial paper at $25B down $4B from the end of 2013 Issued ~$9.4B in long term debt year to date; substantially completed our issuance for the year Strong asset quality with reserve coverage at 2.13% Announced GECAS will buy helicopter lessor Milestone Aviation Group for $1.78 billion Executing to strategy to decrease the size of its non-core portfolio Successfully completed the IPO of 15% of our North America Retail Finance business, now known as Synchrony Financial Announced exploring options for Australia and New Zealand consumer platform and our 89% stake in Bank BPH Expect to complete Nordics sale in 4Q See the charts on the following pages for additional details about our 3Q 14 earnings 1

2 GE Company overview: Environment Environment volatile but infrastructure growth opportunities exist GE executing well: Operating EPS $.38, +6% Orders +22% Industrial segment organic revenue +4% Growth market orders +34% Margins up 90 bps. Simplification ahead of plan TY CFOA on track for $14-17B Goals 3Q YTD Grow Industrial segments 10%+ 10% Organic growth (4-7%) 5% Margin expansion +50 bps. GECC earnings ~$7B -a) Cash to parent Execution versus goals On track $2.2B dividend Disciplined/balanced capital allocation Buyback + dividend $8.4B M&A $2.1B + Alstom Dispositions $4.7B announced 75/25 Industrial Synchrony IPO, Appliances disposition Strong performance in 3Q and year-to-date total year on track (a - ~$6.7B including the impact from GECC preferred stock dividends GE Capital 3Q 14 results: ($ in millions) 3Q 14 Nordics gain 3Q 4Q Revenue $10,451 (1)% Pretax earnings 1,594 (17) Net income 1,492 (22) ENI (ex. cash) 365B (5) Net Interest margin 5.0% (3) bps. Tier 1 common % (B1) 12.1% 79 bps. 30+ delinquencies 11.54% 11.17% 10.31% 11.16% 11.00% Mortgage 6.11% 6.07% 5.75% 5.84% 5.87% Consumer 1.98% 1.93% 2.14% 1.94% 1.96% CLL 1.41% 1.24% 1.30% 1.49% Real Estate 1.43% 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 Assets ($B) Segment profit ($MM) 3Q segment dynamics CLL $170 - $617 29% Lower impairments & higher gains... volume up 5% Consumer (31) U.S. growth offset by Synchrony build & Int l. reduction Real Estate 36 (9) 175 (62) Lower tax benefits; strong debt volume; equity assets 28% GECAS 43 (9) 133 (23) Solid performance, volume up 62% impairments in line w/py EFS 16 (11) 61 (59) Lower gains, higher impairments volume up 152% Executing on our plan

3 GE Capital Funding ($B): ($ in billions) Non-recourse Securitization Debt composition -a) $376 $371 $358 -b) Unsecured term issuances $32 $32 LT debt non-guaranteed c) $9 -e) '12 '13 '14YTD Deposits/CDs Alternative funding/other Comm l. paper Q'13 4Q'13 3Q'14 Bank lines $48 $48 $44 CP coverage 100%+ 100%+ 100%+ Cash & equiv. $76 $75 $80 LT debt <1yr. $38 $39 $37 -d) Completed $9B of LT debt issuance YTD in 5 currencies Liquidity in the global CP markets continues to be strong Deposits/CDs and other alternative funding ~24% of total debt, securitization ~8% Liquidity position remains strong (a - Continuing operations (b - Includes ~$(5.1)B YTD FX impact and ~$1.7B YTD FAS 133; (c - Includes ~$3.6B of unsecured Synchrony issuance (d - Includes ~$7.5B of Synchrony bank borrowings (e - Excludes ~$3.6B of unsecured Synchrony issuance 5 Bond performance (vs. peers, indices) (USD 5yr): OAS over Treasuries (bps) FinCo Idx Bank Idx C JPM 70 WFC GECC Aa Corp 50 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Source: Barclays Capital 3

4 GE Capital Business Highlights GE Capital Aviation Services announced the signing of an agreement to acquire Milestone Aviation Group, the Dublin-based helicopter lessor, for $1.775 billion. Milestone s fleet includes 168 helicopters worth $2.8 billion as well as a strong forward order and option book of $3 billion with a variety of helicopter manufacturers. The acquisition is in line with GE Capital s strategic plan of growing and enhancing value in core areas aligned with GE s industrial domains including energy, aviation, oil & gas and healthcare GE Capital, Commercial Distribution Finance announced it has significantly expanded its inventory financing program with MarineMax, the nation's largest boat dealer, and extended its duration through The $235 million facility will allow the company to expand its stocking plans from leading manufacturers in the industry including Sea Ray, Boston Whaler and Azimut Yachts. GE Energy Financial Services has arranged a senior secured revolving credit facility for All American Oil & Gas, Inc. to refinance debt and fund reserve development in the Bakersfield, CA Kern River Oil Field. The $200 million facility -- with a $131 million initial borrowing base - was provided to oil and gas exploration and production company Kern River Holdings, Inc., a wholly-owned subsidiary of All American Oil & Gas, Inc. GE Capital, Corporate Finance announced it is providing auction house Sotheby's with $850 million in senior credit facilities. The new facilities include a $250 million credit line increase and will be used for general working capital and to support the company's business strategy. GE Capital Markets served as joint lead arranger and joint book runner on the facilities. GE Capital Fleet Services announced an agreement with VNG.co, a national compressed natural gas (CNG) fueling facility provider, to support the expansion of the CNG refueling infrastructure for light-duty fleet vehicles. With interest rising in CNG as a lower-cost, low-emissions fuel for light-duty fleets, GE Capital Fleet Services' agreement with VNG is aimed at connecting and incenting fleet owners to use CNG-fueled vehicles. Through the agreement with VNG, GE Capital Fleet Services' customers will be able to take advantage of the increasing accessibility of CNG fueling stations, minimize overall fuel costs and meet financial and environmental objectives through the use of a lower cost, more stably priced, environmentally friendly and domestically sourced fuel. Upcoming events: December 16, GE Annual Outlook meeting January 23, 2015 GE 4Q 14 and total year Earnings Webcast For presentations, news and additional information, please visit our investor website at Best regards,

5 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, will, would, or target. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about expected income; earnings per share; revenues; organic growth; margins; cost structure; restructuring charges; cash flows; return on capital; capital expenditures, capital allocation or capital structure; dividends; and the split between Industrial and GE Capital earnings. 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 interest and exchange rate volatility, commodity and equity prices and the value of financial assets; the impact of conditions in the financial and credit markets on the availability and cost of General Electric Capital Corporation s (GECC) funding, GECC s exposure to counterparties and 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; 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 flows and earnings and other conditions which may affect our ability to pay our quarterly dividend at the planned level or to repurchase shares at planned levels; GECC s ability to pay dividends to GE at the planned level, which may be affected by GECC's cash flows and earnings, financial services regulation and oversight, and other factors; our ability to convert pre-order commitments/wins into orders; the price we realize on orders since commitments/wins are stated at list prices; customer actions or developments such as early aircraft retirements or reduced energy demand and other factors that may affect the level of demand and financial performance of the major industries and customers we serve; the effectiveness of our risk management framework; the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks, including the impact of financial services regulation; adverse market conditions, timing of and ability to obtain required bank regulatory approvals, or other factors relating to us or Synchrony Financial that could prevent us from completing the Synchrony split-off as planned; our capital allocation plans, as such plans may change including with respect to the timing and size of share repurchases, acquisitions, joint ventures, dispositions and other strategic actions; our success in completing announced transactions, such as the proposed transactions and alliances with Alstom, and our ability to realize anticipated earnings and savings; our success in integrating acquired businesses and operating joint ventures; the impact of potential information technology or data security breaches; and the other factors that are described in Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 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 includes certain forward-looking projected financial information that is based on current estimates and forecasts. Actual results could differ materially. 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. GE s Investor Relations website at and our corporate blog at 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. 5