GE Reports 4Q'12 Operating EPS $0.44, +13%
4Q Revenues $39.3B +4%, Industrial Organic Growth +8% for total year
Operating margins expand 120 bps over 4Q'11, total year up 30 bps
Record backlog of $210B
GE CFOA of $7.2B for the quarter, $17.8B for the year, +48%
4Q and Full-Year 2012 Highlights
- Eleventh consecutive quarter of strong operating earnings growth
- 4Q Operating EPS of $0.44, up 13%; Full-year operating EPS of $1.52, up 16% (up 10% excluding effects of 3Q'11 preferred stock redemption)
- 4Q Continuing EPS of $0.41, up 11%; Full-year continuing EPS of $1.39, up 12%
- Second consecutive quarter with all Industrial segments reporting positive earnings growth
- Double-digit earnings growth for five of seven Industrial segments
- 4Q orders up 7% ex. Wind and FX; Growth region orders up 12%
- Margins up 120 bps over prior year period, increases in all seven Industrial segments
- GE Capital earned $1.8 billion in 4Q, up 9%; GECC Tier 1 common ratio 10.2%
- GE Capital 4Q ending ENI balance $419 billion
GE [NYSE: GE] announced today fourth-quarter 2012 operating earnings of $4.7 billion, or $0.44 per share, both up 13% from the fourth quarter of 2011. GAAP earnings from continuing operations were $4.3 billion, or $0.41 per share, up 9% and 11% respectively. Revenues were $39.3 billion for the quarter, up 4%, and $147.4 billion for the year. Industrial segment organic revenue growth was 4% for the quarter and 8% for the year.
"We ended the year with a strong quarter despite the mixed global economic environment," said GE Chairman and CEO Jeff Immelt. "The outlook for developed markets remains uncertain, but we are seeing growth in China and the resource rich countries. With our largest backlog in history and a substantial amount of cash generated by our businesses in the fourth quarter, we have great momentum going into 2013."
Industrial segment profit rose 12% in the fourth quarter to $4.9 billion. All Industrial segments had positive earnings growth for the second consecutive quarter, and five of the seven segments achieved double-digit earnings growth. All Industrial segments also expanded margins in the quarter, with Industrial segment margins up 120 basis points over the prior-year period. Infrastructure orders for the quarter were $28.5 billion, up 2%, and up 7% excluding the effects of a decrease in orders for wind turbines, and FX. The ratio of equipment orders received to orders billed (book-to-bill) was 1.2. GE's backlog of equipment and services at the end of the quarter was its highest ever, at $210 billion.
Industrial segment growth market revenues were up 9% for the quarter, excluding FX. For the year, Industrial segment growth market revenues increased 11%, driven by double-digit growth in Russia, Australia/New Zealand, Latin America, China, Sub-Saharan Africa and ASEAN.
Infrastructure order pricing rose 0.5% for the quarter, and four of six Infrastructure businesses had double-digit growth in orders for equipment, including Oil & Gas, Energy Management, Aviation, and Transportation. During the quarter, GE received orders from Petrobras of $0.4 billion for turbomachinery. GE also announced a $0.2 billion contract to supply subsea production equipment to Chevron's Lianzi project and a contract with Renova Energia in Brazil worth $0.4 billion for 230 GE 1.68-82.5 wind turbines. In addition, CFM International (a 50/50 joint venture between GE and Snecma) announced a commitment from Alaska Airlines, the largest in its history, for the purchase of CFM engines to power 50 new Boeing 737 aircraft.
In 2012, the Company's long-term investment in research & development led to the launch of new products like GE's new power plant technology, FlexEfficiency™ 60, with turbines based on a design originally developed for supersonic jet engines. Also this year, GE Transportation introduced a prototype locomotive, the Tier 4 Evolution® Series, which will be the most fuel-efficient freight locomotive in its history, with a new combustion system to meet strict U.S. emission standards. In Industrial Internet applications, the Company announced nine new industrial service technologies for industries including energy, healthcare, aviation, rail and manufacturing.
GE Capital progressed with its strategy of a smaller, more focused financial services business with solid earnings. GE Capital earnings grew 9% in the quarter and ENI was $419 billion at quarter end. Commercial Real Estate grew net income to $0.8 billion while shrinking assets by $15 billion. GE Capital Corporation (GECC) paid a $1.0 billion dividend to the parent in the quarter, bringing the year-to-date total to $6.4 billion. Its Tier 1 common ratio remains strong at 10.2%.
Cash generated from GE operating activities rose 48% to $17.8 billion for the year, with strong Industrial CFOA of $6.2 billion, and total GE CFOA of $7.2 billion, in the fourth quarter. GE ended the quarter with $77 billion of consolidated cash and cash equivalents.
GE continued to execute on its balanced capital allocation plan. The Company's strong cash position enabled the repurchase of $2.1 billion of stock during the fourth quarter and $5.2 billion of stock for the year. For 2012, GE returned $12.4 billion to investors through dividends and buybacks. In December, GE's Board of Directors raised the Company's dividend 12% to $0.19 per outstanding share of the Company's common stock, the fifth increase in three years.
Also during the quarter, GE announced an agreement to purchase the aviation business of Avio S.p.A., an Italy-based manufacturer of aviation propulsion components and systems, for $4.3 billion, a multiple of approximately 8.5x estimated 2012 earnings before interest, taxes, depreciation and amortization. The acquisition of Avio's aviation business, which provides components for GE Aviation and other engine companies, would further GE's participation in jet propulsion, one of the most attractive sectors of the aviation industry.
Immelt concluded, "Facing an uncertain fiscal environment, the GE team had strong fourth-quarter execution. With our strong backlog and good momentum in margins, we are well-positioned to achieve our 2013 framework: double-digit earnings growth and solid organic revenue growth for the Industrial segment, significant cash returned to the parent company from GE Capital, further margin expansion, and returning cash to shareholders."
Fourth-quarter and Full-year 2012 Highlights:
Fourth-quarter operating earnings were $4.7 billion, up 13% from fourth-quarter 2011, and operating EPS was $0.44, up 13%. GAAP earnings from continuing operations (attributable to GE) were $4.3 billion, up 9%, or $0.41 per share, up 11% from the fourth quarter of 2011. Positive one-time gains of $0.01 per share were more than offset by $0.02 per share of restructuring and other charges.
Including the effects of discontinued operations, fourth-quarter net earnings attributable to GE were $4.0 billion ($0.38 per share attributable to common shareowners) in 2012 compared with $3.7 billion ($0.35 per share attributable to common shareowners) in the fourth quarter of 2011.
Fourth-quarter revenues increased 4% to $39.3 billion. Industrial sales of $27.3 billion increased 2% compared to the fourth quarter of 2011. GECC revenues of $11.8 billion increased 2% from last year.
Full-year operating earnings were $16.1 billion, up 8%, from $14.9 billion in 2011, and operating EPS was $1.52, up 16%, and up 10% excluding effects of the 3Q'11 preferred stock redemption. GAAP earnings from continuing operations (attributable to GE) were $14.7 billion, or $1.39 per share, up 3% and 12% respectively from 2011.
Including the effects of discontinued operations, full-year net earnings attributable to GE were $13.6 billion ($1.29 per share attributable to common shareowners) in 2012 compared with $14.2 billion ($1.23 per share attributable to common shareowners) in 2011.
Full-year revenues were $147.4 billion, flat with last year and up 3% excluding the $3.7 billion pre-tax gain on the sale of NBC Universal in 2011. Industrial sales of $100.9 billion increased 6% from last year. GECC revenues of $46.0 billion were down 6% from 2011.
Cash generated from GE operating activities in 2012 totaled $17.8 billion, up 48% from $12.1 billion last year. Cash generated from GE Industrial operating activities in 2012 totaled $11.4 billion, down 5% from last year.
The accompanying tables include information integral to assessing the Company's financial position, operating performance and cash flow.
GE will discuss preliminary fourth-quarter and full-year results on a Webcast at 8:30 a.m. ET today, available at www.ge.com/investor. Related charts will be posted there prior to the call.
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