This summary is based on the fourth quarter fiscal 2007 earnings call conducted by General Electric Co. (GE) on January 18, 2008.
Management:
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Chairman and CEO: Jeff Immelt
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Vice Chairman and CFO: Keith Sherin
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Vice President, Investor Communications: Dan Janki
Key Investors Issues
- Earnings were up 15% from the prior year to $6.8 billion or 68 cents a share.
- Revenues increased 18% to $48.6 billion from $41.3 billion in the prior year.
- The firm reaffirmed guidance for the year to $2.42 a share.
Full Year Highlights:
- Earnings from continuing operations were $22.5 billion or $2.20 per share, up 16% and 18%, respectively, from 2006.
- Revenues from continuing operations were $173 billion, up 14% from the prior year, reflecting core growth and the net effects of acquisitions.
- Cash generated from operating activities totaled $23.3 billion, down 2% from $23.8 billion last year, reflecting an increase of 15% from the Industrial businesses.
Fourth Quarter Highlights
Earnings from continuing operations of $6.8 billion or 68 cents per share, up 15% from the prior year, following an 18% rise in revenues to $48.6 billion.
- The firm had $14 billion of major equipment orders, up 33%, with strength in the large infrastructure business, Aviation at $3.6 billion up 66%.
- Energy, at $5.1 billion, was up over 50%, oil and gas were up over 90%, and transportation has some timing issues, including one large order that did not repeat.
- The firm is running on a four quarter rolling average of $6.9 billion up to four quarter rolling average of $12.5 billion with the orders still growing.
- Overall infrastructure orders were up 54% and even without Smith and Vetco they are up 40% the infrastructure backlog is at an all time high of $44 billion up 65%.
- The firm realized a loss of $100 million of assets in discontinued operations from the final exited WMC.
Service Orders were $9.7 billion, up 5% driven by oil and gas and healthcare.
- Energy services had some growth in power services and nuclear fuels but was impacted by tough comparables in the aero derivatives business and a very strong commercial of 8% in aviation offset by the Military which was down 20%.
- Transportation was down 12% due to some tough fourth quarter comparisons on orders and some slowing parts volume in the locomotive business.
Appliances were flat as the firm continued to have very strong success in the retail channel and that was offset by the slowdown in the Contract and Builder channels.
- Globally Lighting continues to be very strong driven by eco growth and compact fluorescents are just booming.
- The firm is benefiting from the tight liquidity and higher prices and looking forward to the new business delivering future earnings growth for the Financial Services business.
- Equipment Services grew three times faster than services overall for the firm.
- Industrial CFOA of $16 billion, were up 15%, driven by great performance in initiatives
- The firm repurchased $5.8 billion during the period and ended the year with higher debt and higher cash of $6.7 billion.
Update on the Smith and Vetco Acquisitions
- Vetco has done a great job above the deal plan, Smith is slightly above the deal plan.
- They are at lower margins than the existing business and that is also an opportunity as the firm works to improve the productivity and the cost structure of those enterprises to get them up to the existing margins
The firm funded significant restructuring with the $2.6 billion of after tax gains, mostly from the Plastic sale, the Swiss Re shares and the Nuclear Joint Venture.
- Half of the restructuring was in continuing operations which are ongoing programs cost footprint reduction and lowering infrastructure.
- The other half was in discontinued operations for moving risk out of GE Money.
- The continuing ops restructuring are being counted on a three year payback, reinvestment in the company to lower future costs and reduce future risk of GE money.
- The intellectual property in the IT infrastructure that went with that business were also sold and the remaining $90 million of assets will be sold through the rest of the year.
Segment Highlights
