General Electric, Co. (GE)
Q1 2010 Earnings Call Transcript
April 16, 2010 8:30 p.m. ET

Executive

Trevor A. Schauenberg – Vice President, Corporate Investor Communications
Jeffrey R. Immelt – Chairman and Chief Executive Officer
Keith S. Sherin – Vice Chairman and Chief Financial Officer

Analysts

Christopher Glynn – Oppenheimer & Company
Scott Davis – Morgan Stanley
Steven Winoker – Sanford C. Bernstein
Jeffrey T. Sprague – Vertical Research Partners
Stephen Tusa– J.P. Morgan
John Inch – Banc of America/Merrill Lynch
Robert Cornell – Barclays Capital
Terry Darling – Goldman Sachs

Presentation

Trevor A. Schauenberg

Thank you, Noelya [ph]. Good morning and welcome, everyone. We are pleased to host today''s first quarter 2010 earnings webcast. Regarding the materials for this webcast, we issued the press release this morning and the presentation slides are available via the webcast. The slides are also available for download and printing on our website at www.ge.com/investor. We will have time for Q&A at the end.

As always, elements of this presentation are forward-looking and are based on our best view of the world and our businesses as we see them today. Those elements can change as the world changes. Please interpret them in that light. For today''s webcast, we have our Chairman and CEO, Jeff Immelt and our Vice Chairman and CFO, Keith Sherin.

Now, I would like to turn it over to our Chairman and CEO, Jeff Immelt.

Jeffrey R. Immelt

Great, Trevor. Thanks. Good morning, everyone. On the overview page, look, we think this was a good quarter. Our environment continues to improve. We saw some encouraging signs in places like revenue passenger miles and losses declining in GE Capital.

The business model is performing. We''ve got better margins and strong cash flow. And really most metrics in GE Capital improved in the quarter, Keith will go through that. The losses, delinquencies and non-earning assets all declined.

We think the 2010 framework remains achievable, really with upside potential, based on how we are doing at GE Capital. We see earnings growth for the balance of 2010. And we might do more restructuring and financial asset sales to position us for the future.

We continue to invest in research and development and restructuring and we really think this quarter is a pretty good testament to our ability to grow earnings and dividends in 2011 and beyond. So we feel really good about how we finished the quarter and where we are positioned.

We reviewed the next page several times vis-a-vis GE Capital and some of the critical metrics around safe & secure. Our long-term debt funding is in great shape. We’ve funded about $8 billion year-to-date. The funding costs are low and we feel very, very good about how we are positioned here.

Our commercial paper is on track. Leverage particularly -- and Keith will go through the impact of FAS 167 -- is declining. Our capital structure is very strong. And the lower rate really just updates our goals on ending that investment. It factors in the impact of FASB 167, the impact of the GE Capital corporate, some of the FX pluses and minuses that change over time.

If you put in those factors, we stand at $516 billion today. We reduced $22 billion in the last quarter. And we''re on track, I think, for a number that we used to talk about as being $400 billion -- of about $440 billion as we go through this -- these changes.

So we''re on track. We are actually ahead of plan there. You know, it boils down to about $20 billion or $25 billion reduction per year and we feel like that is in great shape and we''re making good progress towards those goals.

We had $17.1 billion in orders. The backlog is stable. Equipment is heading towards easier comps. Service really would have been flat except for a couple of one-time orders in transportation last year. We''ve got a strong pipeline of commitments. A lot of our new orders are coming from outside the United States, a strong pipeline of commitments.