Publish date:

General Electric Tops Earnings Forecast, Boosts Free Cash Flow Forecast

"Based on our encouraging cash results, we are increasing our full-year free cash flow outlook," said CEO Larry Culp.

General Electric  (GE) - Get General Electric Company (GE) Report posted better-than-expected second quarter earnings Tuesday, and boosted its forecast for industrial free cash flows, as "early signs" of a recovery in its aviation business support that ongoing turnaround plans of CEO Larry Culp.

General Electric said adjusted non-GAAP earnings for the three months ending in June were pegged at 5 cents per share, up from a loss of 14 cents per shares over the same period last year and 2 cents ahead of the Street consensus forecast. Group revenues, General Electric said, rose 9% to $18.3 billion, coming in just ahead of analysts' estimates of an $18.14 billion tally.

Looking into the second half of the year, GE reiterated that its sees adjusted earnings in the region of 15 cents to 25 cents per share, but lifted its forecast for industrial free cash flows to between $3.5 billion and $5 billion.  Industrial free cash flow for the first quarter was $388 million, GE said, compared to -$845 million in the previous quarter.

“The GE team delivered strong overall performance in the second quarter. Orders and revenue returned to growth, our operating margins expanded across all segments, and we generated positive Industrial free cash flow. Momentum is building across our businesses, driven by Healthcare and services overall, with Aviation showing early signs of recovery," said CEO Culp. "Based on our encouraging cash results, we are increasing our full-year free cash flow outlook."  

TheStreet Recommends

“The team is committed to innovating for a more sustainable world with leading positions in the future of flight, precision health, and the energy transition," he added. "With our focus on profitable growth and cash generation, I am confident we are well-positioned to achieve high single-digit free cash flow margins over time.”  

General Electric shares were marked 3.1% higher in early trading immediately following the earnings release to change hands at $13.32 each.

Aviation segment revenues rose 10% from last year to $4.84 billion, GE said, while orders were up 47% to $5.5 billion. Healthcare revenues jumped 14% to $4.45 billion while renewable energy revenues gained 16% to $4.05 billion.

Last month, General Electric said it will proceed with its planned one-for-eight stock split on July 30, with shares trading on the adjusted basis as of August 2.

GE unveiled the split plans in early May that it said would "reduce the number of shares outstanding "to a number more typical of companies with comparable market capitalization".