General Electric Company (NYSE:GE) Q2 2018 Earnings Conference Call - Final Transcript

Jul 20, 2018 • 08:30 am ET


General Electric Company (NYSE:GE) Q2 2018 Earnings Conference Call - Final Transcript


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Good day, ladies and gentlemen, and welcome to the General Electric Second Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. My name is Christine and I will be your conference coordinator today. (Operator Instructions) 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, VP of Investor Communications. Please proceed.

Matt Cribbins

Good morning and welcome to GE's second quarter earnings webcast. I'm joined by our Chairman and CEO, John Flannery; CFO, Jamie Miller, and our new Head of IR, Todd Ernst. Before we start, I would like to remind you that the press release, presentation and supplemental had been available since earlier today on our Investor website at

(Forward-Looking Cautionary Statements)

And now, I will turn the call over to John Flannery.

John Flannery

Thanks Matt. The second quarter was an important one for GE. We've described 2018 as a reset year, and in the quarter we made significant progress on that journey. At an overall Company level, we laid out our path to a simpler and stronger GE by announcing our broad portfolio strategy going forward to drive shareholder value.

The core of GE will consist of our aviation, power, and renewables businesses. We also announced our plans to move our healthcare, BHGE and transportation businesses out of the GE core to enable them to pursue more focused growth strategies as standalone companies. We made significant ongoing progress on our tactical priorities. We've now closed the sale of industrial solutions and value-based care. We also announced the merger of our transportation business with Wabtec and our sale of distributed power.

This essentially completes the announcement or actual closing of our target of $20 billion of dispositions. We moved on this with deliberation but with an eye for value as well. We are materially shrinking the size of GE Capital with planned asset reductions of $25 billion over the next two years. We continue to take out structural costs, we've achieved $1.1 billion in cost out through the first six months and we are on track to exceed our goal of $2 billion. We also announced changes in our operating model that will allow us to take out an additional $500 million plus at corporate by 2020.

The aviation market continues to be very strong. We had a strong orders quarter and a good week at the Farnborough Airshow with $22.6 billion of wins. The biggest challenge we face continues to be working through the turnaround of our power business. The market continues to be difficult with softness in orders putting pressure on our cash flow and working capital. The team continues to focus on rightsizing footprint, reducing base costs, improving quality and maximizing the value of our installed base. This transformation is taking place in the context of a very dynamic macro environment. Overall, economic activity remained solid in most parts of the world. I made trips to Europe and