ge capital services · 2020-06-14 · ge capital services overview / strategy “this document...

GE Capital Services

Overview / Strategy

“This document contains “forward-looking statements”- that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” believe,” “seek,” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties that could adversely or positively affect our future results include: the behavior of financial markets, including fluctuations in interest and exchange rates and commodity and equity prices; the commercial and consumer credit environment; the impact of regulation and regulatory and legal actions; strategic actions, including acquisitions and dispositions; future integration of acquired businesses; future financial performance of major industries which we serve, including, without limitation, the air and rail transportation, energy generation, media, real estate and healthcare industries; and numerous other matters of national, regional and global scale, including those of a political, economic, business and competitive nature. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements."

2011 third quarter

3 2011 third quarter

GE‟s portfolio and financials

Energy Infrastructure

Aviation Transportation GE Capital Home & Business

Solutions

$37.5B

$7.3B

$17.6B

$3.3B

$3.4B

$0.3B

$47.0B

$3.3B

$8.6B

$0.5B

Commercial

Consumer

Real Estate

GECAS

EFS

Appliances

Lighting

Intelligent Platforms

Healthcare

$16.9B

$2.7B

Commercial

Military

Service

Avionics/Systems

Healthcare Systems

Life Sciences

Healthcare IT

Molecular Diagnostics

Locomotives

Services

Propulsion

Systems

Rev.

OP

Thermal

Wind

Oil & Gas

Services

T&D

• 2010 revenue $150B • 53% revenues outside U.S. • 32% revenues in developing markets-a)

(a-Excludes GECS & NBC Universal

2011 Earnings Growth Outlook

=/+ = ++ ++ ++ =


3Q‟11 consolidated results ($ in billions – except EPS) ($ in millions)

Revenues $35.4 –% – Industrial sales 23.2 (2)

– Financial Svcs. rev. 12.0 1 Operating earnings 3.4 11 Operating EPS

ex. pref. redemption 0.31 11 Operating EPS 0.24 (14) Continuing EPS–a) 0.22 (21 ) Net earnings–b) 3.2 57 Net EPS–a) 0.22 22 CFOA – YTD 6.5 (35) – Industrial CFOA 6.5 (35) Tax rate 12% 34% – GE (ex. GECS) 18 45 – GECS 4 14

3Q‟11 V%

Continuing operations Segment profit

Energy Infra. $10,855 30% $1,503 (9)% Aviation 4,835 10 862 7 Healthcare 4,332 9 608 5

Transportation 1,287 48 196 94 H&BS 2,094 (1) 38 (63) Industrial 23,403 19 3,207 (1)

GE Capital 11,148 Flat 1,467 79

$34,551 12% $4,674 15%

Revenues

$ V% $ V%

(a- Earnings attributable to common shareowners (b- Attributable to GE

‟11 YTD 3Q‟11

Memo: includes NBCU JV pretax profit of $237MM; excluding impact of NBCU, revenues +12%

Preferred redemption notification drives $(0.08) EPS impact


($ in billions) Strong backlog ($B)

Highlights

Equipment book-to-bill 1.07 Total order price flat ... Energy (0.5)%,

Aviation 1.4% $191B ... highest backlog ever Organic orders +6% Energy Infrastructure ... broad equipment

strength ... services +4% excluding large 3Q‟10 Calpine order

Orders profile Equipment

2010

Services

2011

3Q‟11 orders +16%

Equip.

CSA

2011

$191

$158 $172 $175 $175 $177

$189

3Q orders $22.5/+16%

Energy $4.7 56% $3.9 (12)% O&G 1.8 F 1.2 26 Energy Infra. 6.2 72 5.0 (6 ) Aviation 2.7 10 2.9 18 Healthcare 2.6 13 2.0 9 Transportation 0.4 (55) 0.6 30 Total $12.0 28% $10.5 4%

Equipment Services

$ V% $ V%

Fourth straight quarter of double-digit growth

2010 2011


Cash outlook ($ in billions)

3Q YTD CFOA

$10.1

$6.5

Industrial

(35)%

V%

NBCU $(1.3) impact

Growing working capital in line with orders & revenue

GE cash balance walk

Total

Beginning balance 1/1/11 $19.2

CFOA 6.5

Dividends (4.8 )

P&E (2.1 )

Acquisitions (11.2 )

Buyback (2.0 )

NBCU disposition 1.8

Change in debt/FX/other 1.3

September 2011 $8.7

Consolidated cash $91B

$1B of stock buyback in 3Q & redeemed preferred for $3.3B on 10/17 Expect ~$12B Industrial CFOA in 2011


Managing Europe volatility

3Q‟11 YTD orders 1%, 7% ex. FX 3Q‟11 YTD Industrial revenues 16%, 6% ex. FX Healthcare seeing pressure with revenues +12%, +1%

ex. FX Energy growing with revenues up +25%, 2% ex. FX Minimal earnings impact from currency fluctuations

Despite volatility, our businesses continue to perform

GE Industrial

~18% of revenue

Europe revenues

Delinquencies stable across Europe Well diversified ... ~700K commercial customers ~85% of assets secured by collateral Minimal sovereign debt in focus countries ... $0.3B in

Greece & Italy Actively managing counter-party exposures Opportunistically acquiring assets in CLL/EFS ... $2B

GE Capital

$0.9

$132 $132

($ in billions)

YTD NI–a) By country By business

U.K. 28%

France 19%

E. Europe 19%

Focus countries 13% -b)

Netherlands 2%

Germany 7%

Consumer 51%

CLL 29%

CRE 10%

GECAS 9%

EFS/other 1%

+32%

(a- Includes Consumer, CLL-EMEA & Real Estate (b- Portugal, Italy, Ireland, Greece, Spain (c- Includes gross financing receivables, ELTO & other investments, excludes $39B cash & cash equivalents

Other 8% Switzerland 4%

Financing assets–c)

GE Capital


GE Capital

Middle market lending &

leasing

Commercial Lending &

Leasing

• „10 revenue: $47B

Energy Financial Services

GECAS Consumer Real Estate

Financing for energy & water

industries

Commercial aircraft leasing &

financing

Consumer & retail financing

Debt & equity financing for commercial real estate

• „10 assets: $576B • „10 profit: $3.3B

++ + + ++ +

One year ahead on reduction targets Volumes increasing at attractive rates Well capitalized … prepared for new requirements

2010: Assets

NI V% 2011 NI Outlook

$203B $20B $49B $154B $73B

$1,554MM $367MM $1,195MM $2,629MM $(1,741) 61% 73% 18% 85% (13)


GE Capital

3Q dynamics

($ in millions) 30+ delinquency %

$ V%

Consumer $141 (3)% $737 (5)%

Real Estate 64 (14) (82) F

CLL 195 (4) 688 55

GECAS 49 Flat 208 32

EFS 18 (8) 79 44

Segment profit ($MM)

$ V% $ V%

Assets ($B)

Revenue $11,148 Flat

Pretax earnings 1,571 234%

Net income 1,467 79

ENI (ex. cash) 452B (4 )

3Q‟11

Volume of $43B ... CLL up 31%; pipeline up

Margins remain strong at ~5.4% year-to-date

ENI ahead of plan … ANZ Mortgage closed, GE

SeaCo signed

Reserve coverage at 2.2%, non-earnings

$(0.3B) vs. 2Q

Real Estate

CLL

Consumer

Mortgage

Continued improvement in GE Capital earnings profile


'09 '10 3Q'11

YTD

'12E

1/1/2009 3Q'11 '12F

GE Capital strength

Stronger franchise that is executing well

Strong earnings growth

• Significant origination

advantage

• Attractive returns … portfolio

margin 5.4%

ENI–a) reductions on plan Capital Tier 1 common ratios strong

Better volume and margins

$3.3

$1.5

$5.2 ++

$537

~$452 ~$440

'09 '10 3Q'11

GECC

GECS

8.9%

7.8%

11.0%

9.6% 7.6%

6.6%

($ in billions)

Expect 11-15% ROE

long term

(a- Ex. cash & equivalents

Remix red to green

$123B

+16%

3Q‟11 YTD Volume


Support • GE support to ensure GECC 1.1x fixed-charge

coverage ratio (strengthened Income Maintenance Agreement in 2009)

• History of capital infusion or dividend reductions when necessary

GE Capital structure

100%

100%

AA+/Aa2

General Electric Capital

Corporation

Primary GE Issuer/Guarantor

General Electric

Company

General Electric

Capital Services, Inc.

Owns all of GE‟s financing

assets

AA+/Aa2 100%

Commitment to local markets • GECC unconditional guarantee • Highly rated parent • Proceeds used primarily to fund local assets • Access to deeper investor base

GE Capital UK Funding

GE Capital Australia Funding

GE Capital European Funding

GE Capital Canada Funding

GE Japan Funding KK

GE Capital New Zealand Funding

GE Capital Mexico Funding


GE credit ratings

General Electric Company P-1 Aa2 A-1+ AA+

General Electric Capital Services P-1 Aa3 A-1+ AA+

General Electric Capital Corporation P-1 Aa2 A-1+ AA+

• GE Capital Australia Funding* P-1 Aa2 A-1+ AA+

• GE Capital Canada Funding* P-1 Aa2 A-1+ AA+

• GE Capital European Funding* P-1 Aa2 A-1+ AA+

• GE Japan Funding KK* P-1 Aa2 A-1+ AA+

• GE Capital Mexico Funding* P-1 Aa2 A-1+ AA+

• GE Capital UK Funding* P-1 Aa2 A-1+ AA+

* Guaranteed by General Electric Capital Corporation

Moody‟s Rating

Short Term Long Term

S&P Rating

Short Term Long Term


GE Capital business model

Pre-crisis

• Substantial origination capability

• Deep domain expertise

– Healthcare, Energy, Media, Aircraft, Retail Cards

• Experts at collateral/asset management

• Experienced, disciplined risk management and capital allocation

– Spread of risk, secured

• GE operational headset & tools

• Match funded

Today

Largest direct origination team

Well positioned to compete

Still largest direct origination team

Advantaged in key verticals

Growing advantage

Strong residual realization

Strong collateral and residual realization

On balance sheet underwriting

Core to business model

Scale focus >25% lower costs

Core value Important differentiator

Advantage

1

2

3

4

6

5


Consumer Portfolio

Product Geography

Sales Finance

13%

6%

20% 30%

7%

6%

8%

29%

18% 13%

10%

17%

8%

5% North America

Personal Loan

Small and Medium

Enterprises

Cards Mortgage

Auto

JVs

Asia

Latin America

ANZ

U.K. Western Europe

Eastern Europe

Other

10%

>70% International ~22% in developing markets

3Q‟10 - $166B


Commercial Portfolio

Industry sectors

55% less than 6% industry weighting -

55 industries

15%

23%

2%

5%

31%

3%

6%

4%

6%

2%

3%

Collateral type

Diversified portfolio in long-standing GECC

collateral types

15%

23%

7%

6%

8%

6% 5%

10%

6%

4%

4%

3%

3%

Commercial Airlines

Real Estate

Specialty Retail

Business Services

Others

Machinery & Equipment

Energy

Health Care

Hotels Restaurants & Leisure

Trucking

Automotive

A/c Rec and Inv

Cash Flow

Comm. Real Estate

Dealer Inventory

Comm. Aircraft

Fleet Vehicles

Franchise

Healthcare Equipment & Facilities

Corporate Jets

FF&E and Other Equipment

Energy Generation/Distribution

Others

Transportation Equipment

3Q‟10 - $348B


Commercial Real Estate - debt

Owner

occupied

25%

Hotel

11%

Apartment

14%

Mixed

3%

Other RE

6%

Office

21%

Warehouse

10%

Retail

10%

Europe

13%

US

61%

Americas

17%Pacific Basin

7%

Debt business improving

Collateral type

Geography

• Quality book

– Avoided high risk segments … i.e. construction, 2nd lien

– Disciplined underwriting … ~70% LTV at origination, 2.6X DSCR

– Diverse spread of risk

– 3Q‟11 delinquency at 4.18%

• Adequately reserved … 3Q‟11 coverage 3.32%

• Managing debt maturities

Dynamics

$34.4B @ 3Q‟11


Commercial Real Estate - equity

Europe

33%

Americas

10%

U.S.

30%

Pacific Basin

27%

$26.4 @ 3Q‟11

Signs of stabilization in equity business Risk is manageable and within our framework

Office

54%

Hotel

1%

Mixed

4%

Parking

0% Apartment

16%

Warehouse

12%

Other RE

6%

Retail

9%

Collateral type

Geography

• Diverse spread of risk portfolio

• Primarily wholly owned, limited 3rd party debt

• Occupancy (~80%) and NOI yield (~6%) stable

• Estimated unrealized loss declining

Dynamics

~$(7)

4Q‟09 4Q‟10

~$(5) ~$(4.1)

2Q‟11


GE Capital reserves ($ in billions)

Commercial

Consumer

Allowances for losses $8.9

$6.7 $7.1

Coverage:

Reserves 2.75% 2.29% 2.22%

Non-earnings 74% 69% 68%

Environment continues to improve


GE Capital non-earnings/write-offs ($ in millions)

Non-earning assets/non-earnings % fin. rec.

CLL $3,299 $3,488 $4,308 2.53% 2.65% 3.04% Real Estate 1,028 1,003 1,425 2.99 2.72 3.35 GECAS 62 64 – 0.52 0.53 0.00 EFS 135 136 163 2.26 2.21 2.24 Consumer 5,276 5,431 5,948 4.54 4.54 5.05 Corporate & elims. 71 88 90 5.13 5.83 4.32 GE Capital $9,871 $10,209 $11,935 3.29% 3.32% 3.69%

2Q‟11 3Q‟11 3Q‟10

Total write-offs/write-offs % fin. rec.

CLL $264 $273 $254 0.80% 0.82% 0.71% Real Estate 187 117 222 2.10 1.24 2.05 GECAS 0 3 7 0.01 0.08 0.23 EFS (2) (7) 0 (0.10) (0.42) 0.00 Consumer 834 983 1,259 2.83 3.32 4.33 Corporate & elims. 13 8 0 3.51 2.02 0.03 GE Capital $1,296 $1,377 $1,742 1.71% 1.78% 2.15%

2Q‟11 3Q‟11 3Q‟10

ge capital services · 2020-06-14 · ge capital services overview / strategy “this document...

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