General Electric Company (NYSE:GE) Q2 2019 Earnings Conference Call Transcript
Jul 31, 2019 • 08:30 am ET
Ladies and gentlemen, welcome to the General Electric Second Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen only mode. My name is Brandon 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, Steve Winoker, Vice President of Investor Communications. Please proceed.
Thanks, Brandon. Good morning and welcome to GE Second Quarter 2019 Earnings Call. I'm joined by our Chairman and CEO, Larry Culp; and CFO, Jamie Miller.
Before we start, I'd like to remind you that the press release, presentation, supplemental and 10-Q are available on our investor website. We now file our 10-Q in concert with our earnings, a practice we began in October of 2018. Note that some of the statements we're making are forward-looking and are based on our best view of the world and our businesses as we see them today. As described in our SEC filings and on our website, those elements can change as the world changes. Please note, Third Quarter Earnings will be the morning of Wednesday, October 30th.
With that I'll hand over the call to Larry.
Steve, thanks. Good morning everyone and thank you for joining us. I'll start with some thoughts on our second quarter performance and our strategic priorities, then Jamie will cover the quarter in greater detail before I wrap with an overview of our renewable energy business and our outlook.
Let me begin by reiterating that 2019 remains a reset year for GE. We made some progress in the first quarter and that continued in the second quarter. I'll remind you, though, that our own actions and market dynamics may not always follow a straight line, but I will draw your attention to those elements that are most important for GE's results today and tomorrow.
First, our year-to-date performance is ahead of our outlook in several areas. We have not planned for perfection, meaning we have planned conservatively to cover market and execution risks, specifically within our power business. At the halfway point, our performance at power is better than expected, including better project execution, orders and working capital management. Restructuring spend is also lower.
Accordingly, we are raising our outlook for organic growth, adjusted EPS and industrial free cash flow, which we now expect to be negative, a $1 billion to positive $1 billion while holding our margin guidance. This is progress, but let me be clear, even with this mid-year increase we recognize that our revised free cash flow range includes negative territory. Over time, as our operational improvements take hold, we continue to expect significantly better cash results.
Now looking at quarterly results we saw top line strength orders were up 4% organically due to strength in renewable energy and oil and gas. We ended the quarter with backlog of $369 billion, up 11% year-on-year. This is comprised of equipment of $85 billion, up 4%;