General Electric Company (NYSE:GE) Q4 2014 Earnings Conference Call - Final Transcript

Jan 23, 2015 • 08:30 am ET

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General Electric Company (NYSE:GE) Q4 2014 Earnings Conference Call - Final Transcript

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Presentation
Operator
operator

Good day ladies and gentlemen, and welcome to the General Electric Fourth Quarter 2014 Earnings Conference Call. At this time, all participants are in a listen-only mode. My name is Larissa and I will be your conference coordinator today. (Operator instructions)

Operator
operator

As a reminder, this conference is being recorded. I would now like to turn the program over to your host for today's conference, Matt Cribbins, Vice President of Investor Communications. Please proceed.

Executive
Matthew Cribbins

Great, thank you. Good morning, and welcome everyone. We are pleased to host today's fourth quarter webcast. Regarding the materials for this webcast, we issued the press release, presentation and GE Supplemental earlier this morning on our website at www.ge.com/investor.

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 Senior Vice President and CFO, Jeff Bornstein.

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

Executive
Jeff Immelt

Hey thanks, Matt. Good morning everybody. Look, we still see the global environment as generally positive with a lot of volatility. GE had a strong fourth quarter with some elements better than we indicated in December. Operating EPS was $0.56, up 6%, led by industrial EPS which grew by 23%. Orders grew by 3%, which was 5% organically and our backlog expanded to a new record.

Industrial organic growth was up 9% and margins expanded by 50 basis points. Our initiatives continued to deliver results. Industrial CFOA was $7.2 billion, up 64% reported in the quarter or 30% ex the 2013 NBCU taxes. Capital's quarter was consistent with our expectations. The US continued to strengthen as in Asia.

Some businesses are seeing more momentum like aviation, healthcare. Our oil and gas team executed well despite volatility. Their underlying performance was revenue flat and earnings up 6%. And we believe that our diverse and integrated model worked for investors in the quarter as it will in 2015.

We delivered on our key commitments for the year. Industrial segment profits grew by 10%, driven by 7% organic growth and 50 basis points of margin expansion. GE Capital reduced ENI by $17 billion in the hit to earnings plan. CFOA was in the middle of the range at $15.2 billion. Free cash flow was $11.2 billion, up 6% for the year.

Our capital allocation choices were in line with expectations. On the M&A front, Alstom should be a financial and strategic driver. Appliances were well priced and done a good point of cycle, and the Synchrony spin will result in a substantial reduction in GE shares.

We are executing a valuable pivot at GE, one that improves our business mix while delivering EPS growth and expanding returns. Now for orders, total orders grew by 3%, which is pretty good in the environment. As I said earlier

Executive
Jeff Immelt

organically