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Imagination at work.
GE Proprietary & Confidential Information
UBS Industrials & Transportation Conference November 20th, 2015
GE Power
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS: 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 financial condition, and often contain words such as "expect," "anticipate," "intend," "plan," "believe," "seek," "see," "will," "would," or "target." Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about our announced plan to reduce the size of our financial services businesses, including expected cash and non-cash charges associated with this plan; expected income; earnings per share; revenues; organic growth; margins; cost structure; restructuring charges; cash flows; return on capital; capital expenditures, capital allocation or capital structure; dividends; and the split between Industrial and GE Capital earnings. For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include: obtaining (or the timing of obtaining) any required regulatory reviews or approvals or any other consents or approvals associated with our announced plan to reduce the size of our financial services businesses; our ability to complete incremental asset sales as part of that plan in a timely manner (or at all) and at the prices we have assumed; changes in law, economic and financial conditions, including interest and exchange rate volatility, commodity and equity prices and the value of financial assets, including the impact of these conditions on our ability to sell or the value of incremental assets to be sold as part of our announced plan to reduce the size of our financial services businesses as well as other aspects of that plan; the impact of conditions in the financial and credit markets on the availability and cost of GECC's funding, and GECC's exposure to counterparties; the impact of conditions in the housing market and unemployment rates on the level of commercial and consumer credit defaults; pending and future mortgage loan repurchase claims and other litigation claims in connection with WMC, which may affect our estimates of liability, including possible loss estimates; our ability to maintain our current credit rating and the impact on our funding costs and competitive position if we do not do so; the adequacy of our cash flows and earnings and other conditions which may affect our ability to pay our quarterly dividend at the planned level or to repurchase shares at planned levels; GECC's ability to pay dividends to GE at the planned level, which may be affected by GECC's cash flows and earnings, financial services regulation and oversight, and other factors; our ability to convert pre-order commitments/wins into orders; the price we realize on orders since commitments/wins are stated at list prices; customer actions or developments such as early aircraft retirements or reduced energy demand and other factors that may affect the level of demand and financial performance of the major industries and customers we serve; the effectiveness of our risk management framework; the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks, including the impact of financial services regulation and litigation; adverse market conditions, timing of and ability to obtain required bank regulatory approvals, or other factors relating to us or Synchrony Financial that could prevent us from completing the Synchrony Financial split-off as planned; our capital allocation plans, as such plans may change including with respect to the timing and size of share repurchases, acquisitions, joint ventures, dispositions and other strategic actions; our success in completing, including obtaining regulatory approvals for, announced transactions, such as the proposed transactions and alliances with Alstom, Appliances and our announced plan to reduce the size of our financial services businesses, and our ability to realize anticipated earnings and savings; our success in integrating acquired businesses and operating joint ventures; the impact of potential information technology or data security breaches; and the other factors that are described in "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2014. These or other 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. This document includes certain forward-looking projected financial information that is based on current estimates and forecasts. Actual results could differ materially. This document also contains non-GAAP financial information. Management uses this information in its internal analysis of results and believes that this information may be informative to investors in gauging the quality of our financial performance, identifying trends in our results and providing meaningful period-to-period comparisons. For a reconciliation of non-GAAP measures presented in this document, see the accompanying supplemental information posted to the investor relations section of our website at www.ge.com. In this document, “GE” refers to the Industrial businesses of the Company including GECC on an equity basis. “GE (ex-GECC)” and/or “Industrial” refer to GE excluding Financial Services. GE’s Investor Relations website at www.ge.com/investor and our corporate blog at www.gereports.com, as well as GE’s Facebook page and Twitter accounts, contain a significant amount of information about GE, including financial and other information for investors. GE encourages investors to visit these websites from time to time, as information is updated and new information is posted.
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Video
GE Completes Alstom Power Acquisition November 2, 2015
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Largest installed base in the world
50% world’s land-based gas
~55k digital connected assets
GE Power ~65,000 employees >120 countries
Powering everyone © 2015, General Electric Company. All Rights Reserved.
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P&W | 19 November 2015
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GE Proprietary & Confidential Information 5
DIFFERENTIATED Products & Services
GLOBAL Presence/Talent
DIGITAL Capability
Improving our competitiveness … adding value for our customers
OUR STRATEGIC FOCUS
© 2015, General Electric Company. All Rights Reserved.
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Power demand growing… fundamentals strong
Natural gas power leads energy & capacity growth
Sources: World Bank, IEA, IHS, EIA, EPRI, Navigant, Brattle, GE Marketing
Central power
Energy drivers
• Economic growth (GDP)
• Population growth
• Demand-side efficiency
Capacity drivers
• Environmental policy
• Economic displacement
• Peak demand growth
• Fuel availability & price
10.0 10.9
3.9
4.5 2.5
3.1
0.7
2.2
0.2
0.9
1.3
1.5
19%
3%
20%
15%
6% 5%
30% 20%
Wind
Coal Nuclear
Solar
Coal
Gas
Hydro
Nuclear
Wind Solar
Hydro ~24K TWh
Energy ‘24 Energy ‘14
50% 7.4
Gas Turbines
Central Power Equipment Orders*
2,500 GW 5.0
*Excludes 700 GW of non-grid connected capacity additions
Other.
~31K TWh
Energy Efficiency & Onsite tech (Includes rooftop solar/diesel recips)
~3% CAGR
570 GW of retirements
~38K TWh
~3X
Gas Engines
© 2015, General Electric Company. All Rights Reserved.
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© 2015, General Electric Company. All Rights Reserved.
Order year
‘05 ‘14 ’19e
% o
f in
du
stry
GT
ord
ers
0
100 H-Class
E-Class
F-Class 45%
27%
9%
11%
19%
43%
12%
12%
Industrial <100 MW
utility
Aeroderivative
9% 13% intermediate
distributed
Industry-leading products & plants
H class growing fastest, generates most revenue … well positioned in all classes
$600MM customer of value creation vs. ‘15
World’s broadest, most
competitive portfolio
55
60
65
Gas turbine firing temperature °F
Co
mb
ine
d c
yc
le e
ffic
ien
cy
%
introduced
2003 steam-cooled
introduced
2013 air-cooled
introduced
1986
2300 2600 2000 2900
introduced
1972 50
Industry orders shifting
towards H-class (% by MW)
H-class fastest
growing segment
Technology & plant
capability drives industry
GE delivering best
economics
© 2015, General Electric Company. All Rights Reserved.
GE’s HA gas turbine transforming the industry
55%+ efficient
>61%+ efficient
=
F class H class $30B Capex savings
$8B/year Fuel savings
2X Operating hours
400 Sensors with
500 HA units vs. F-Class
H launch advancements…
• Unprecedented validation prior to field operation
• FastWorks reduced NPI cycle by 50% vs. F-class
• Ramping to 30 units per year… launched 50 & 60 Hz simultaneously
Creates more customer, consumer, and OEM value
PredixTM
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Winning with the HA … 70 units selected 1
1. Includes orders and units where customer has selected GE H-class technology. Conversion to an order could
be affected by factors such as financing, permitting and project award by end-customer.
2. Bid activity does not mean that these units will all eventually become orders.
7
7
6
1
1
1
1
1
4
10
25
6
Winning & capturing price for value on recent selections
© 2015, General Electric Company. All Rights Reserved.
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21 GT’s in backlog
+33 Steam Turbines +97 Generators +33 HRSGs
Combustor
• Additive manufacturing
• Maintenance inspection
• Combustion dynamics & emissions technology
Advanced materials, coatings, & cooling technologies
• Thermal barrier coatings
• Single-crystal alloys
• Ceramic Matrix Composites (potential for future growth)
• Analytical tools
Compressor
• Large scale airfoil aerodynamics
• Field-replaceable blades
• Multiple-stage inlet control
Aviation GE Oil & Gas GE Global Research
HA … taking from & contributing to the GE Store
Product cost
• Should-cost process & derivatives
• PO variance report
• “Positioning for Growth” supplier summits
Corporate… Audit Staff, etc.
PERFORMANCE & FULFILLMENT SPEED
PERFORMANCE & AVAILABILITY
PERFORMANCE & LIFE
PROFITABILITY & COMPETITIVENESS
© 2015, General Electric Company. All Rights Reserved.
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Contributing to the store Borrowing from the store
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State of the art test stand
Enabled 70 selections & 21 orders ahead of first fire in the field … unprecedented
Test Stand
1 Unit 200 Hours
more valuable
than
• Off-grid full speed, full load test capability
• Able to operate beyond “real world” limits
• Comprehensive validation before 1st fire in field
• Enabling rapid acceptance by customers, insurers & lenders
Field Operation
500 Units 1 Year
GT
Eff
icie
nc
y %
GT MW
43.1
41.1
381 413 397 +
Engineering expected
+1% output
.5% efficiency
© 2015, General Electric Company. All Rights Reserved.
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Best Integrated Power Systems
Heat Recovery Steam Generator
Gas Turbine
Gas Turbine Generator
Alstom contribution
GE contribution
Steam Turbine
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© 2015, General Electric Company. All Rights Reserved.
Increasing GE scope 20% 60% of combined cycle power plant … improved performance
Steam Turbine Generator
Grid Solutions
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Services are evolving Plan & Install Operate & Maintain Upgrade & Optimize Repower & Repurpose
• Economic forecasting
• Generation planning
• Flexible operations
• O&M optimization
• Parts/repairs reliability
• Outage solutions
• Performance upgrades
• Asset life extension
• Total plant solutions
• Decommissioning
• Repurposed assets
• Asset repowering
Installed base up over 2x from ‘08 … positioned for expansion with Alstom
12K units (gas, steam, gen)
1,500+ outages ~500+ upgrades ~30 repair centers
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© 2015, General Electric Company. All Rights Reserved.
Services value creation
GT + ST
installed base
~1,600 GW
Power Services
backlog
~$50B
Services ~50% of Power’s revenue
Attractive margins
Why we win
Winning products = installed base
growth
Local capability to support
customers
− 1,500 field engineers + 6,000
service craft labor
− 100+ countries
Best customer outcomes driven by
Services 2.0
− CSA model
− Material science
− Software & analytics
Sustainable and proven business model
GE Power Services
1
2
3
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Power Digital
Significant value from the marriage of digital and industrial
• 50% orders growth in 2015
• Digital Power Plant launch
• Signed 15+ Predix customers in the past 90 days
© 2015, General Electric Company. All Rights Reserved.
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ADVANCED MANUFACTURING WORKS
GE Company Proprietary & Confidential GE © 2014 – All Rights Reserved
Greenville , SC
Investing in our 21st Century Supply Chain
~$73M Investment over 2 years
• 3D Additive • Lower Costs & Cycle • New Capabilities • Global Expansion
16 © 2015, General Electric Company. All Rights Reserved.
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© 2015, General Electric Company. All Rights Reserved.
Cost competitiveness
Product cost savings SG&A savings
Simplified features & material selection
Should-cost & cross-functional COEs
Multi-platform component strategy
~$700M cost out over last 3 years
Consolidate structure, functional cost
Investing in ERP infrastructure
(% of sales) 7HA.02 Heavy Duty GT
11%
9%
7%
'11 '13 '14
Simplification and FastWorks yielding margin accretion
Start lower
kW pivots
kW pivots $
/kW
Time
1st unit cost
10%
30%
$/kw
vs. 7F.05 launch
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Wrap
Positioning GE for long-term shareholder value
Great, high-return global Power business
Clear competitive advantages − Technology leadership
− Globalization … world-class & flexible supply chain
− Strong services business … large installed base
− Simplification for speed & cost
Smart investing in a dynamic environment
© 2015, General Electric Company. All Rights Reserved.
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Revenue
3Q’15 YTD Financials ($B)
$19.0
V%
8%
organic
Orders $19.1 4%
10%
organic
8%
organic
3Q’15 YTD
Op profit $3.4 5%
4%
#PoweringEveryone
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