Power & Water (Discussion topic) - GE.com · UBS Industrials & Transportation Conference November 20th, 2015 GE Power CAUTION CONCERNING FORWARD-LOOKING STATEMENTS: This document

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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

© 2015, General Electric Company. All Rights Reserved.

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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


5

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


6

7


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


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


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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


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Contributing to the store Borrowing from the store

© 2015 General Electric Company - All rights reserved

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


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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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Increasing GE scope 20% 60% of combined cycle power plant … improved performance

Steam Turbine Generator

Grid Solutions


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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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


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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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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

18 Power

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


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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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Power & Water (Discussion topic) - GE.com · UBS Industrials & Transportation Conference November 20th, 2015 GE Power CAUTION CONCERNING FORWARD-LOOKING STATEMENTS: This document

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