| Init [50257] | |
| cut seek 2600 | |
| Init [50360, 50363, 4599, 3329, 290, 7062] | |
| cut seek 5400 | |
| Init [50360, 50363, 4599, 3329, 290, 7062] | |
| cut seek 8000 | |
| Init [50360, 428, 4495, 318, 852, 6264] | |
| cut seek 10900 | |
| Init [50360, 319, 674, 3052, 13, 51413] | |
| cut seek 13800 | |
| Init [50360, 428, 3298, 19798, 5314, 13] | |
| cut seek 16700 | |
| Init [50360, 12, 1129, 19798, 5314, 12572] | |
| cut seek 19400 | |
| Init [50360, 287, 262, 1474, 3381, 13] | |
| cut seek 21900 | |
| Init [50360, 13029, 640, 11, 356, 821] | |
| cut seek 24850 | |
| Init [50360, 508, 389, 407, 3264, 9489] | |
| cut seek 27550 | |
| Init [50360, 50913, 50913, 775, 821, 13359] | |
| cut seek 30350 | |
| Init [50360, 286, 511, 9588, 284, 1104] | |
| cut seek 32850 | |
| Init [50360, 468, 15229, 3227, 286, 7435] | |
| cut seek 35450 | |
| Init [50360, 284, 5529, 1597, 24216, 1231] | |
| cut seek 38050 | |
| Init [50360, 1535, 13, 51063, 51063, 1763] | |
| cut seek 40850 | |
| Init [50360, 340, 1724, 22650, 326, 356] | |
| cut seek 43750 | |
| Init [50360, 51363, 51363, 2893, 3747, 468] | |
| cut seek 46250 | |
| Init [50360, 262, 1410, 13, 51263, 51263] | |
| cut seek 48950 | |
| Init [50360, 4244, 6841, 11, 262, 1074] | |
| cut seek 51250 | |
| Init [50360, 338, 674, 3164, 994, 13] | |
| cut seek 53950 | |
| Init [50360, 31434, 428, 13, 50813, 50813] | |
| cut seek 56350 | |
| Init [50360, 5692, 11, 356, 2067, 284] | |
| cut seek 59050 | |
| Init [50360, 11, 2592, 832, 9574, 286] | |
| cut seek 60650 | |
| Init [50360, 706, 5913, 8088, 262, 717] | |
| cut seek 63550 | |
| Init [50360, 287, 12131, 284, 10068, 674] | |
| cut seek 65950 | |
| Init [50360, 2166, 3951, 329, 23761, 7375] | |
| cut seek 68050 | |
| Init [50360, 11, 475, 356, 821, 991] | |
| cut seek 70050 | |
| Init [50360, 290, 8733, 287, 2214, 2139] | |
| cut seek 72850 | |
| Init [50360, 14659, 13, 51563, 50363, 775] | |
| cut seek 75350 | |
| Init [50360, 4058, 11, 475, 428, 1165] | |
| cut seek 77550 | |
| Init [50360, 262, 922, 13, 3125, 284] | |
| cut seek 79650 | |
| Init [50360, 4028, 356, 1183, 2112, 1568] | |
| cut seek 82250 | |
| Init [50360, 717, 12, 39123, 869, 355] | |
| cut seek 84650 | |
| Init [50360, 4058, 286, 428, 3074, 11] | |
| cut seek 87350 | |
| Init [50360, 5743, 318, 11, 340, 318] | |
| cut seek 90250 | |
| Init [50360, 604, 1033, 72, 2522, 10961] | |
| cut seek 92750 | |
| Init [50360, 11008, 12, 1129, 13, 51063] | |
| cut seek 95650 | |
| Init [50360, 1687, 4414, 287, 4903, 313] | |
| cut seek 98450 | |
| Init [50360, 428, 2378, 12328, 412, 4694] | |
| cut seek 101250 | |
| Init [50360, 2805, 503, 75, 7807, 11] | |
| cut seek 104150 | |
| Init [50360, 422, 616, 1998, 326, 379] | |
| cut seek 107050 | |
| Init [50360, 7375, 11008, 12, 1129, 11] | |
| cut seek 109450 | |
| Init [50360, 11, 51213, 51213, 3739, 45980] | |
| cut seek 111950 | |
| Init [50360, 290, 36351, 13, 51013, 51013] | |
| cut seek 114650 | |
| Init [50360, 6266, 287, 616, 617, 7524] | |
| cut seek 117150 | |
| Init [50360, 2651, 11, 356, 1607, 3767] | |
| cut seek 120050 | |
| Init [50360, 11, 866, 6702, 642, 13] | |
| cut seek 122750 | |
| Init [50360, 356, 1607, 284, 423, 287] | |
| cut seek 125450 | |
| Init [50360, 6087, 286, 8611, 481, 4361] | |
| cut seek 128250 | |
| Init [50360, 284, 402, 13, 36, 13] | |
| cut seek 130850 | |
| Init [50360, 3035, 11, 51213, 51213, 286] | |
| cut seek 133550 | |
| Init [50360, 317, 2837, 11, 290, 302] | |
| cut seek 136050 | |
| Init [50360, 4367, 11, 674, 717, 3860] | |
| cut seek 138450 | |
| Init [50360, 866, 604, 4, 7525, 7986] | |
| cut seek 140550 | |
| Init [50360, 13, 51213, 51213, 5157, 2604] | |
| cut seek 143050 | |
| Init [50360, 866, 5214, 9051, 3161, 614] | |
| cut seek 145750 | |
| Init [50360, 29311, 866, 860, 7225, 51563] | |
| cut seek 148150 | |
| Init [50360, 11874, 290, 2594, 13, 50913] | |
| cut seek 150850 | |
| Init [50360, 6992, 3484, 2380, 3224, 1160] | |
| cut seek 153350 | |
| Init [50360, 6292, 416, 16119, 287, 31156] | |
| cut seek 156250 | |
| Init [50360, 736, 2604, 373, 510, 352] | |
| cut seek 159150 | |
| Init [50360, 416, 6115, 290, 1575, 13714] | |
| cut seek 161850 | |
| Init [50360, 6266, 547, 866, 513, 4] | |
| cut seek 164650 | |
| Init [50360, 604, 4, 1618, 1146, 13] | |
| cut seek 167450 | |
| Init [50360, 284, 7375, 11008, 12, 1129] | |
| cut seek 170250 | |
| Init [50360, 51113, 51113, 554, 3710, 11] | |
| cut seek 173150 | |
| Init [50360, 11, 51063, 51063, 428, 373] | |
| cut seek 175750 | |
| Init [50360, 6266, 11, 543, 547, 510] | |
| cut seek 178550 | |
| Init [50360, 5141, 7585, 286, 30453, 4] | |
| cut seek 180950 | |
| Init [50360, 7986, 416, 262, 5127, 6333] | |
| cut seek 183550 | |
| Init [50360, 9706, 2428, 547, 18682, 379] | |
| cut seek 186150 | |
| Init [50360, 4414, 11, 50763, 50763, 8282] | |
| cut seek 188950 | |
| Init [50360, 4200, 11, 50863, 50863, 45980] | |
| cut seek 191850 | |
| Init [50360, 50963, 50963, 9747, 635, 4444] | |
| cut seek 194350 | |
| Init [50360, 6355, 2476, 284, 4532, 284] | |
| cut seek 196350 | |
| Init [50360, 1664, 7630, 21472, 11, 543] | |
| cut seek 198850 | |
| Init [50360, 314, 389, 14523, 1575, 290] | |
| cut seek 201250 | |
| Init [50360, 770, 2099, 286, 4645, 318] | |
| cut seek 203450 | |
| Init [50360, 674, 5692, 13, 50763, 50763] | |
| cut seek 206150 | |
| Init [50360, 5314, 749, 15052, 13, 50663] | |
| cut seek 208450 | |
| Init [50360, 13, 51563, 50363, 1675, 326] | |
| cut seek 210950 | |
| Init [50360, 517, 621, 734, 2997, 287] | |
| cut seek 213450 | |
| Init [50360, 6196, 9117, 355, 2672, 13] | |
| cut seek 216250 | |
| Init [50360, 389, 867, 36553, 11, 314] | |
| cut seek 219150 | |
| Init [50360, 1762, 386, 33329, 351, 674] | |
| cut seek 221150 | |
| Init [50360, 50050, 1973, 262, 1336, 2831] | |
| cut seek 223650 | |
| Init [50360, 11, 543, 547, 866, 1877] | |
| cut seek 225850 | |
| Init [50360, 654, 866, 7323, 2026, 7225] | |
| cut seek 228250 | |
| Init [50360, 11, 290, 428, 481, 7716] | |
| cut seek 230850 | |
| Init [50360, 262, 3833, 287, 262, 1218] | |
| cut seek 233650 | |
| Init [50360, 1541, 6027, 2793, 3227, 2494] | |
| cut seek 235650 | |
| Init [50360, 319, 262, 826, 11, 356] | |
| cut seek 238250 | |
| Init [50360, 14340, 55, 13, 50913, 50913] | |
| cut seek 240950 | |
| Init [50360, 23584, 3186, 355, 1728, 9021] | |
| cut seek 243750 | |
| Init [50360, 50863, 12168, 367, 7902, 1720] | |
| cut seek 246450 | |
| Init [50360, 287, 4271, 28651, 9021, 290] | |
| cut seek 248850 | |
| Init [50360, 11409, 11, 4436, 13938, 290] | |
| cut seek 251350 | |
| Init [50360, 1129, 318, 14537, 262, 761] | |
| cut seek 253550 | |
| Init [50360, 5742, 284, 4292, 511, 5339] | |
| cut seek 256450 | |
| Init [50360, 356, 821, 9904, 290, 12848] | |
| cut seek 258850 | |
| Init [50360, 3687, 290, 311, 4090, 4896] | |
| cut seek 261650 | |
| Init [50360, 810, 1877, 3056, 4536, 389] | |
| cut seek 264250 | |
| Init [50360, 1390, 530, 6841, 287, 6026] | |
| cut seek 267150 | |
| Init [50360, 3954, 1176, 5692, 389, 2263] | |
| cut seek 269850 | |
| Init [50360, 11, 2139, 503, 1095, 290] | |
| cut seek 272550 | |
| Init [50360, 307, 5688, 546, 10068, 9706] | |
| cut seek 274750 | |
| Init [50360, 290, 15435, 11, 543, 714] | |
| cut seek 277150 | |
| Init [50360, 367, 6765, 375, 1395, 13] | |
| cut seek 280050 | |
| Init [50360, 13, 50963, 50963, 4718, 803] | |
| cut seek 282750 | |
| Init [50360, 51013, 51013, 383, 2526, 286] | |
| cut seek 285650 | |
| Init [50360, 11, 356, 821, 10629, 329] | |
| cut seek 287950 | |
| Init [50360, 5096, 11, 1910, 290, 2494] | |
| cut seek 290450 | |
| Init [50360, 307, 3767, 284, 1607, 2440] | |
| cut seek 293350 | |
| Init [50360, 8282, 284, 6687, 18671, 329] | |
| cut seek 296050 | |
| Init [50360, 13, 51613, 50363, 1629, 262] | |
| cut seek 298350 | |
| Init [50360, 2080, 326, 11, 6542, 11] | |
| cut seek 301050 | |
| Init [50360, 345, 423, 257, 1808, 11] | |
| cut seek 303450 | |
| Init [50360, 510, 534, 40445, 717, 878] | |
| cut seek 306050 | |
| Init [50360, 51213, 6930, 329, 477, 262] | |
| cut seek 307450 | |
| Init [50360, 286, 1570, 262, 11171, 3081] | |
| cut seek 309750 | |
| Init [50360, 11, 314, 892, 611, 356] | |
| cut seek 312450 | |
| Init [50360, 290, 2068, 287, 262, 2423] | |
| cut seek 314650 | |
| Init [50360, 4308, 13, 775, 750, 326] | |
| cut seek 316950 | |
| Init [50360, 50513, 50513, 1002, 345, 804] | |
| cut seek 318250 | |
| Init [50360, 13, 51163, 51163, 13403, 319] | |
| cut seek 319950 | |
| Init [50360, 355, 356, 467, 2651, 11] | |
| cut seek 321750 | |
| Init [50360, 284, 1315, 12, 1941, 11704] | |
| cut seek 324450 | |
| Init [50360, 51513, 50363, 10347, 345, 19096] | |
| single ending 327450 | |
| Init [50360, 994, 1909, 287, 1657, 286] | |
| cut seek 330350 | |
| Init [50360, 262, 1575, 290, 262, 5003] | |
| cut seek 332950 | |
| Init [50360, 7373, 13, 50713, 50713, 6930] | |
| cut seek 335850 | |
| Init [50360, 5018, 286, 2253, 13, 775] | |
| cut seek 338350 | |
| Init [50360, 12437, 11, 340, 338, 720] | |
| cut seek 341250 | |
| Init [50360, 892, 428, 318, 644, 356] | |
| cut seek 343350 | |
| Init [50360, 821, 4379, 826, 783, 287] | |
| cut seek 346050 | |
| Init [50360, 13, 51363, 51363, 6952, 345] | |
| cut seek 348750 | |
| Init [50360, 3509, 13, 51813, 50363, 314] | |
| cut seek 351450 | |
| Init [50360, 612, 546, 428, 852, 257] | |
| cut seek 354350 | |
| Init [50360, 4058, 13, 50713, 50713, 4599] | |
| cut seek 356650 | |
| Init [50360, 11, 355, 345, 880, 760] | |
| cut seek 359450 | |
| Init [50360, 351, 262, 32938, 625, 262] | |
| cut seek 361850 | |
| Init [50360, 1096, 326, 355, 8584, 13] | |
| cut seek 363650 | |
| Init [50360, 262, 1115, 2997, 286, 5003] | |
| cut seek 366050 | |
| Init [50360, 954, 3519, 11, 41314, 4341] | |
| cut seek 368150 | |
| Init [50360, 13, 50963, 50963, 16805, 11] | |
| cut seek 370950 | |
| Init [50360, 340, 750, 1282, 379, 257] | |
| cut seek 373650 | |
| Init [50360, 338, 845, 1593, 329, 514] | |
| cut seek 376250 | |
| Init [50360, 356, 1607, 284, 423, 1088] | |
| cut seek 379150 | |
| Init [50360, 2526, 393, 5236, 9629, 290] | |
| cut seek 381350 | |
| Init [50360, 481, 13, 50913, 50913, 3914] | |
| cut seek 384150 | |
| Init [50360, 314, 760, 345, 3730, 423] | |
| cut seek 385950 | |
| Init [50360, 1022, 618, 7974, 923, 7348] | |
| cut seek 388850 | |
| Init [50360, 286, 617, 355, 617, 286] | |
| cut seek 391750 | |
| Init [50360, 1049, 15440, 13, 50963, 50963] | |
| cut seek 394250 | |
| Init [50360, 326, 481, 1234, 514, 736] | |
| cut seek 396250 | |
| Init [50360, 477, 2666, 340, 612, 13] | |
| cut seek 398350 | |
| Init [50360, 475, 345, 635, 6619, 546] | |
| cut seek 400650 | |
| Init [50360, 51063, 4231, 356, 991, 588] | |
| cut seek 403350 | |
| Init [50360, 614, 356, 821, 407, 5137] | |
| cut seek 405650 | |
| Init [50360, 475, 326, 531, 2158, 890] | |
| cut seek 408350 | |
| Init [50360, 290, 636, 286, 340, 852] | |
| cut seek 411050 | |
| Init [50360, 644, 356, 821, 25937, 994] | |
| cut seek 413950 | |
| Init [50360, 51113, 51113, 632, 1107, 1973] | |
| cut seek 416650 | |
| Init [50360, 13, 51113, 51113, 314, 1612] | |
| cut seek 418450 | |
| Init [50360, 938, 614, 422, 257, 422] | |
| cut seek 420050 | |
| Init [50360, 3588, 470, 7748, 523, 636] | |
| cut seek 422350 | |
| Init [50360, 284, 466, 517, 611, 356] | |
| cut seek 424550 | |
| Init [50360, 502, 3863, 1061, 510, 319] | |
| cut seek 426350 | |
| Init [50360, 290, 25812, 42, 82, 389] | |
| cut seek 428450 | |
| Init [50360, 286, 588, 810, 345, 760] | |
| cut seek 430450 | |
| Init [50360, 543, 15242, 389, 262, 11874] | |
| cut seek 432450 | |
| Init [50360, 1474, 3381, 20128, 286, 326] | |
| cut seek 435350 | |
| Init [50360, 5503, 1332, 1088, 13, 51063] | |
| cut seek 437750 | |
| Init [50360, 428, 262, 20110, 736, 287] | |
| cut seek 440350 | |
| Init [50360, 649, 2858, 13, 51363, 50363] | |
| cut seek 443050 | |
| Init [50360, 4941, 326, 257, 1310, 1643] | |
| cut seek 445250 | |
| Init [50360, 262, 3139, 550, 281, 35547] | |
| cut seek 447650 | |
| Init [50360, 3139, 2346, 826, 284, 1011] | |
| cut seek 449850 | |
| Init [50360, 7532, 286, 477, 286, 514] | |
| cut seek 451950 | |
| Init [50360, 13, 51713, 50363, 6952, 345] | |
| cut seek 453850 | |
| Init [50360, 326, 319, 262, 835, 510] | |
| cut seek 456650 | |
| Init [50360, 50363, 1081, 345, 743, 307] | |
| cut seek 459250 | |
| Init [50360, 2126, 13, 50963, 50963, 314] | |
| cut seek 461950 | |
| Init [50360, 326, 338, 257, 922, 2126] | |
| cut seek 464150 | |
| Init [50360, 314, 892, 326, 338, 257] | |
| cut seek 466850 | |
| Init [50360, 51413, 51413, 843, 314, 4724] | |
| cut seek 469150 | |
| Init [50360, 561, 910, 326, 612, 338] | |
| cut seek 471350 | |
| Init [50360, 1735, 13, 50763, 50763, 843] | |
| cut seek 473750 | |
| Init [50360, 2392, 994, 284, 2277, 883] | |
| cut seek 476350 | |
| Init [50360, 13, 50913, 50913, 1406, 11] | |
| cut seek 478350 | |
| Init [50360, 7375, 11008, 12, 1129, 13] | |
| cut seek 480750 | |
| Init [50360, 338, 1593, 284, 910, 326] | |
| cut seek 483650 | |
| Init [50360, 514, 477, 284, 3505, 11] | |
| cut seek 485850 | |
| Init [50360, 1243, 326, 356, 423, 1760] | |
| cut seek 488350 | |
| Init [50360, 379, 22548, 13, 50863, 50863] | |
| cut seek 491050 | |
| Init [50360, 428, 34540, 13, 50813, 50813] | |
| cut seek 493750 | |
| Init [50360, 1762, 3139, 13, 51113, 51113] | |
| cut seek 495950 | |
| Init [50360, 24351, 351, 13, 51613, 50363] | |
| cut seek 498250 | |
| Init [50360, 4646, 262, 32050, 3976, 11] | |
| cut seek 500550 | |
| Init [50360, 883, 13184, 2974, 866, 287] | |
| cut seek 502750 | |
| Init [50360, 11, 788, 262, 7628, 287] | |
| cut seek 505550 | |
| Init [50360, 13, 50613, 50613, 314, 892] | |
| cut seek 508250 | |
| Init [50360, 1392, 284, 651, 319, 262] | |
| cut seek 510650 | |
| Init [50360, 7894, 7972, 815, 1382, 832] | |
| cut seek 513594 | |
| Init [50360, 16, 11, 345, 423, 617] | |
| cut seek 515994 | |
| Init [50360, 11, 826, 30, 50563, 50563] | |
| cut seek 518894 | |
| Init [50360, 887, 314, 892, 287, 1176] | |
| cut seek 521394 | |
| Init [50360, 389, 530, 572, 82, 11] | |
| cut seek 524294 | |
| Init [50360, 290, 1176, 36351, 13, 51063] | |
| cut seek 526994 | |
| Init [50360, 13, 50713, 50713, 887, 356] | |
| cut seek 529394 | |
| Init [50360, 9144, 477, 262, 3124, 287] | |
| cut seek 531494 | |
| Init [50360, 1479, 5003, 1103, 5365, 11831] | |
| cut seek 533894 | |
| Init [50360, 262, 1218, 3860, 351, 257] | |
| cut seek 535794 | |
| Init [50360, 8318, 13, 51563, 50363, 775] | |
| cut seek 538494 | |
| Init [50360, 1231, 17253, 278, 262, 890] | |
| cut seek 541094 | |
| Init [50360, 1807, 530, 286, 262, 1103] | |
| cut seek 543094 | |
| Init [50360, 2123, 269, 2357, 64, 11] | |
| cut seek 545594 | |
| Init [50360, 1310, 1643, 286, 5022, 612] | |
| cut seek 548094 | |
| Init [50360, 355, 356, 892, 546, 262] | |
| cut seek 550794 | |
| Init [50360, 1053, 1392, 257, 1074, 508] | |
| cut seek 552994 | |
| Init [50360, 18678, 20261, 503, 287, 3426] | |
| single ending 555994 | |
| Init [50360, 1808, 13, 50763, 50763, 10889] | |
| cut seek 558594 | |
| Init [50360, 3329, 11325, 13, 4599, 3329] | |
| cut seek 561294 | |
| Init [50360, 1406, 326, 338, 262, 717] | |
| cut seek 563494 | |
| Init [50360, 3113, 22040, 602, 780, 4297] | |
| cut seek 566394 | |
| Init [50360, 1597, 329, 22319, 329, 1440] | |
| cut seek 568194 | |
| Init [50360, 2278, 286, 640, 994, 286] | |
| cut seek 569894 | |
| Init [50360, 706, 10728, 468, 7334, 355] | |
| cut seek 572794 | |
| Init [50360, 286, 703, 262, 24713, 468] | |
| single ending 574060 | |
| Init [50257] | |
| cut seek 2600 | |
| Init [50360, 4599, 3329, 290, 7062, 284] | |
| cut seek 5400 | |
| Init [50360, 4599, 3329, 290, 7062, 284] | |
| cut seek 8000 | |
| Init [50360, 4222, 3465, 428, 4495, 318] | |
| cut seek 10900 | |
| Init [50360, 10470, 389, 1695, 319, 674] | |
| cut seek 13800 | |
| Init [50360, 883, 5676, 416, 428, 3298] | |
| cut seek 16700 | |
| Init [50360, 11008, 12, 1129, 19798, 5314] | |
| cut seek 19400 | |
| Init [50360, 9389, 287, 262, 1474, 3381] | |
| cut seek 21900 | |
| Init [50360, 428, 13029, 640, 11, 356] | |
| cut seek 24600 | |
| Init [50360, 1675, 326, 886, 11, 356] | |
| cut seek 27500 | |
| Init [50360, 11, 290, 2260, 3761, 13] | |
| cut seek 30200 | |
| Init [50360, 2766, 1973, 22319, 423, 8639] | |
| cut seek 32800 | |
| Init [50360, 11, 674, 1074, 468, 15229] | |
| cut seek 35400 | |
| Init [50360, 5529, 1597, 24216, 1231, 19911] | |
| cut seek 38100 | |
| Init [50360, 51113, 51113, 1763, 14344, 674] | |
| cut seek 40800 | |
| Init [50360, 22650, 326, 356, 821, 6476] | |
| cut seek 43700 | |
| Init [50360, 13, 51413, 51413, 2893, 3747] | |
| cut seek 46300 | |
| Init [50360, 821, 3867, 351, 2866, 11] | |
| cut seek 48900 | |
| Init [50360, 257, 2060, 636, 17781, 1141] | |
| cut seek 51200 | |
| Init [50360, 19798, 5314, 1182, 12, 261] | |
| cut seek 53900 | |
| Init [50360, 775, 1392, 2277, 1327, 11] | |
| cut seek 56300 | |
| Init [50360, 5692, 11, 356, 2067, 284] | |
| cut seek 59000 | |
| Init [50360, 10039, 6958, 11, 2592, 832] | |
| cut seek 61900 | |
| Init [50360, 460, 11, 290, 477, 262] | |
| cut seek 64500 | |
| Init [50360, 5442, 3073, 588, 329, 22548] | |
| cut seek 66700 | |
| Init [50360, 13, 51713, 770, 318, 7531] | |
| cut seek 69600 | |
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| Cond: | |
| good morning and welcome to the 1st quarter 2020 general electric company earnings conference call my name is brandon and i will be your operator for today at this time all participants are in a listen only mode later we will conduct a question and answer session during which you can now star one if you have a question please note this conference is being recorded and i will not turn it over to steve wannaker by the president of investor communications you may begin sir thanks brandon good morning and welcome to ge is 1st quarter 2020 earnings call i am joined by our chairman of ceo larry culp and cfo carolina divecapa before we start i would like to remind you that the press release and presentation are available on our website note that some of the statements we are making are forward looking and are based in 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 if the world changes with that i will hand the call over to larry steve thanks good morning everyone we hope you and your families are healthy and safe our thoughts are with all of those affected by this global pandemic we recognize this is a very difficult and challenging time for everyone on behalf of ge i want to express our gratitude to those on the front lines in the medical community many of whom were privileged to call our customers working tirelessly to protect all of us thank you when the last spoke during our outlook call in march we were encouraged by the continued strength and aviation and health care and the progress made in power and renewables in the 8 weeks since the world has fundamentally changed as we all know the covid 19 pandemic evolved rapidly hitting hard and hitting fast while this is an earnings call our voltages to provide you with the most current and relevant information we have and as always to be as open and transparent as we possibly can so forgive us if we run a little long today the covid 19 dynamics at ge like the economy at large are fluid and still evolving but clearly challenging in the near term with that i will start with our response to covid 19 carolina who is joining our earnings call for the 1st time will cover the financials then i will wrap with a more in depth view of our current operations moving to slide 2 during this unprecedented time we are focused on 3 areas 1st the health and safety of our employees and our communities we established a covid 19 task force that is working to ensure we are doing everything in our ability to protect the health and safety of our employees we have detected the health and safety in aligning with various government directives and medical advisories in real time to that end we have encouraged those employees who were not directly performing customer facing essential jobs to work from home wherever possible but given the mission critical work we do at ge not everyone can stay home i would like to acknowledge our employees out in the field and in our factories for their unwavering dedication as they continue to deliver for our customers supporting essential services like hospitals power generation airlines and national defense we are ensuring they have what they need to do their job safely this includes temperature screenings face coverings and gloves as necessary and physical distancing all keeping with national state and local guidelines i am also inspired by the support that our employees have shown each other we recently established an employee relief fund and more than 75 senior leaders across ge have contributed portions of their salary to support those affected by this crisis our 2nd priority is continuing to serve our customers in healthcare we are ramping production of critical medical equipment used to diagnose and treat covid 19 patients including respiratory ct monitoring solutions x ray anesthesia and point of care ultrasound product lines already our team has doubled production of ventilators and plans to double again by the end of june healthcare is digital and ai solutions are helping hospitals remotely monitor multiple patients at once and automate road tasks so clinicians can spend more of their precious time focused on life saving work across all of our businesses we are in constant communication with employees customers suppliers and governments to maintain business continuity without disruption our 3rd priority is preserving our strength 1st and foremost sound liquidity is crucial in solidifying our balance sheet remains a key focus with the recent closing of the bio pharma transaction we have received $20000000000 of net proceeds this provides ge with optionality to protect our company and remain flexible and importantly we retain the $17000000000 leading healthcare business at the center of an ecosystem striving for precision health preserving our strength in a timeline this also requires a different operating model here i draw my experiences as ceo managing through 9 11 and the global financial crisis there are 3 steps in this model embrace reality redefine winning and execute the plan easy to say hard to do starting with embrace reality this is necessary in a time like this when so much has changed and remains uncertain for us it means recognizing that we are facing significant headwinds in aviation and we may be for a while we wish it were otherwise but that is not our reality next redefine winning we came into 2020 with a plan that defined winning as profitable growth margin expansion and cash generation now we need to adjust to the altered environment to focus and inspire our team let me share some ways for doing this while safety has always been a top priority for ge covid 19 has reshaped our safety agenda in terms of our financial priorities improving our cash generation and decro member margins in the 2nd half are key focus areas and in health care we clearly did not come into the year expecting to increase our ventilator production for fold but we will and finally execute the plan we are moving with speed discipline and intensity to improve our cost structure targeting more than 2000000000 of cost actions and more than 3000000000 of cash actions and this is where lean is particularly relevant from daily management to traditional combine systems which help reset inventory levels to do problem solving tools we are rolling out across ge let me share a recent example from gas power in our greenville facility the team used lean to cut the distance that a single part travels during production from 3 miles yes 3 miles to a mere 165 feet flashing the time it took to make that part by 42% these are the sort of operational efficiencies that are more essential than ever in this environment so that is our approach here we are facing the pandemic head on while continuing to execute our long term strategy for ge moving to slide 3 you will find a snapshot of our 1st quarter results and carolina will take you through this in detail but 1st a few top line thoughts as i noted we entered the year with momentum however as covid 19 came you would just spread globally and i am not going to sugarcoat this we got hit hard and some of our highest margin parts of our best performing businesses this is especially true at aviation services where covid 19 costs are rapid decline in commercial aviation demand and even essential travel became difficult in the 2nd half of march a similar situation also transpired at power services where travel restrictions cost by covid 19 impacted our field personnel and across all of our businesses we started to see some project development and execution issues at the same time healthcare performed well due to urgent demand for our product used in the fight against covid 19 taking a step back about 80% of our roughly $400000000000 backlog is in services which have a long time horizon and while services have been hurt in the near term those capabilities remain one of our greatest strengths they keep us close to our customers with deep strategic relationships especially through periods of volatility so in the spirit of embracing reality let me frame for you what we are seeing right now at a high level and then i will do a deeper dive after carolina reviews the 1st quarter in aviation and at g cast airlines are conserving cash not applying to planes they have limiting maintenance spare spend where they can and all the while deferring orders in many places no one can predict when and how leisure and business travel will resume but the reality is likely it is not soon so we are redefining winning for margin expansion in 2020 to improving our deck run on a margins this year which requires we aggressively adjust our cost structure that is what winning looks like for aviation and they are moving forward with a comprehensive plan to be clear we will get back to targeting those 20% operating margins post pandemic in healthcare we have been on the front lines combating covid 19 since the early days in wuhan this is fundamental to our mission while we have seen demand surge for certain products other products including those in our high margin pharmaceutical diagnostic business have been negatively impacted as multiple procedures are deferred healthcare is likely to rebound faster than aviation but we are still fast tracking additional cost out actions targeting an incremental $700000000 since karen and the team spoke with you in december and power and renewable energy the impact of covid 19 has been more limited to date specifically at power we are experiencing outage delays and restrictions in field service travel and we are monitoring new unit orders and services to offset this we are further right sizing the cost structure and in power we already reduced headcount by 700 in the 1st quarter now clearly across ge there are a number of large variables that are unknown at this point including the full duration magnitude and pace of recovery across our end markets operations and supply chains we are also monitoring how the resulting interest rate environment will impact pension obligations and our runoff insurance business so let me tell you what we do know the 2nd quarter will be the 1st full quarter with pressure from covid 19 and we expect that our financial results will decline sequentially before they improve later this year the bottom line is we have some challenging times ahead but this too shall pass i am confident the underlying reset we took over the last 18 months to focus ge sport folio and instill a greater focus on customers and lean give us a running start for what we face today moreover i have seen our response to covid 19 signs of how we are moving faster to change ge for the good more to lean work to help reduce inventories in the face of demand challenges in aviation travel restrictions spring on the use of remote digital technology to complete field work and renewables and more capital discipline across the board with new leaders assimilating faster and with real impact healthcare comes to mind so all of this in combination with the planned actions we will discuss later are accelerating our transformation of ge with that i will turn it over to carolina but before i do let me say how pleased i am to have her on board in 2 short months it is clear we share the same perspectives of embracing reality and operational bias or action and executing with speed thank you larry i am proud to join my 1st earned call as the refer of ge and help lead this company and turn forward as you noted we are operating in unprecedented times i have been focused on 1st keeping our financial position strong and safe with the keen eye on leverage and liquidity as well as cash flow and capital discipline while ge is actions over the last couple of years have put up on stronger footing ahead of this situation we will do more 2nd working with our businesses to take the right action not only to help mitigate the impact of covid 19 but to serve customers better operate smarter and more efficiently and integrate lean more holistically by larry and i are focused on the near term we are also managing for the long term we are working together to reduce complexity edge is and in the infrastructure that delivers sustainable earnings and cash flow generation today my intention is to take you through our results in detail and provide context that help you see what i see across the businesses with that let us turn to slide 4 this was a challenging quarter for us as the macro amendments rapidly deteriorated taking it from the top 1st quarter orders were down 3% organically or down 4 expiopharma growth in power and healthcare was assessed by double digit declines in aviation and renewables both equipment and service orders were down low single digits i will cover this by business shortly industrial revenue was down 5% organically or down 6 expiopharma with equipment revenue flat and services down 9% both aviation and power services were adversely impacted in the quarter due to covid 19 adjusted industrial profit margins were down 450 basis points organically most of the dilution came from aviation and renewables with aviation impact mostly driven by covid 19 now let us discuss the ets what starting at continuing ets of ¢72 there was a ¢75 gain primarily related to the 11900000000 off attack skin from the biopharma side which also included one of tax benefit in geotapidol this was partially assessed by a 4600000000 off detect loss on our remaining bake a huge steak which will measure at 5 value edge quarter on restructuring and other items we incurred ¢2 of charging this is principally related to the reduction of aviation is us workforce softly non operating pension and other benefit plants were a ¢6 head gred in the quarter including this item adjusted ets was ¢5 as described earlier our earnings performance was materially impacted by covid 19 and other market dynamics this was primarily in aviation and geotapidol with negative marks and impairments in both 3 tests and insurance as well as higher credit costs the estimates of the 1st quarter industrial operating profit impact from covid 19 roughly 700000000 drivers included lower off the market sales project delays and supply chain constraints this impact is higher than we anticipated at the march outlier corn reflecting the rapid global progression of the pandemic but our prior forecast largely reflected the slowdown in china our focus on addressing this pandemic is global retargeting more than 2000000000 of costs out this year but this may not affect the full impact will rapidly addressing both cost and cash and making our businesses more agile and customer focused over time i can tell you from my experience that at this program is bills momentum and the company leaders begin to see how powerful results can be they tend to extend beyond their stated goals so just what i have seen so far i am encouraged that we can have some of that same experience at you moving to cash as many of you know the 1st quarter is typically low for our free cash flow this year we are impacted by our usual seasonality but also covid 19 especially in aviation industrial free cash flow was a use of 2200000000 1000000000 worse than prior year but notably excluding aviation each industrial business improved free cash flow versus lost years turning to the key drivers in the quarter starting with net earnings if we exclude the biopharmic and the market on our baking hues investment in count depreciation and amortization total 700000000 that is down 900000000 versus prior year next working capital -2600000000 the significant use of cash down 1100000000 let me take it through the main factors 1st we have the net inflow in count receivable driven by a reasonably lower volume in gas power and renewables 2nd we have an outflow in count total driven by a lower volume in aviation and higher dispersants related to prior year material vice in renewables 3rd we increase inventory to support an expected 2nd and 3rd quarter volume ramp in onshore wind and shop output declined in aviation 4th progress collection they were a use of cash as new orders in my son payments were more than a set by burn down of prior progress payments in parallel renewables lastly we also spent about 600000000 in gross capital we do not track now to reduce 25% of our capital expand this year for cash flow in total we estimate the 1st quarter impact from covid 19 of around 1000000000 the majority of which was held in aviation as we look forward we expect continued free cash flow pressure retargeting more than 3000000000 in cash action however over time we know that each business can be a better cash generated as we improve execution moving to slide 6 we continue to strengthen our balance sheet the largest milestone in the quarter was closing by a farmer the 20000000000 of revenue we ended the quarter with 33800000000 of industry cash up approximately 16000000000 sequentially see a capital and a result in 500000000 of cash down approximately 5300000000 sequentially driven by contractual maturity we continue to hold a liquidity balance can be in 12 months of due debt maturity we recently taken action to enhance and expand our liquidity and pay down debt on april 17 geely entered into a 3 year 15000000000 syndicated revolving credit facility this was a planned re financing of geely is prior trans evilience indicated revolver credit facility including bilateral agreements we expect to have in the range of 20000000000 in total credit lines except flowing forward following this sale of biopharma we also improved our liquidity profile in april we reduced our near term death maturity by issuing 6000000000 in geely debt in april and subsequently can bring for 4200000000 of debt we plan to use the remaining 1800000000 of proceeds to further debt reduction and the combination of transaction will therefore be leverage neutral following this geely is industrial has no debt maturity in 2021 1900000000 of maturity in 2022 and 900001000 in 2023 a geely industrial reduced debt by approximately 7000000000 we reduced commercial pay per use by 1100000000 in the quarter and we paid 6000000000 of the inter company loans from geely to geely capital in april using proceeds from biopharma at the capital we reduced debt by 4000000000 so we reduced external debt by 10000000000 yet to the including 4700000000 of maturity in the quarter and an additional 5400000000 of 2020 matrices tended in april offset by geely is 6000000000 in total debt from geely to company loan our financial policy goes to remain maintaining a high cash balance achieving less than 2.5 times net debt to eba achieving the industrial and less than 4 times debt to equity at geely capital accreditrating in the single air range and re insulating a dividend in line with peers over time we remain committed to achieving our leverage targets but we now expect to achieve those targets over longer period than previously enough due to the impact of covid 19 next on slide 7 we will discuss the industrial segments results starting with aviation as you have noted our 1st quarter results were materially impacted orders were down 13% organically with those equipment and service orders found equipment orders were down 27% primarily driven by commercial ingeant business due to the max grounding and the covid impact services orders were down 4% primarily driven by commercial services partially affected by military which one you fighter and helicopter service orders from the us dod service orders were stronger than revenues due to the military orders which were up 60% year of year back log of 273000000000 was flat sequentially and up 22% versus prior year primarily driven by long term service agreement this included roughly 200 lit one day unit order cancellations in the quarter revenue was found 11% organically equipment revenue was found 17% we shipped 472 commercial inched oil and spare engine units with quarter down 37 versus prior year sales of 272 lit one a and 1000000000 units were down 152 and so if i am 56 units were down 98 units service revenue was down 8% due to commercial services down 11% this was driven by lower spare parts shipments and lower shops visits from the impact of covid 19 30 military revenue was down 7% with 146 engine units shipments down 9% and this was driven by supply chain for payment dynamics and environmental parts and satellites partly assessed by the advanced programs growth operating process was down 39% organically primarily on lower volume and negatively expression in commercial services from the impact of covid 19 and lower spare engine units the segment margin contracted 650 basis points organically this was primarily due to covid 19 interacting our commercial businesses in both engines and services the continued 737 max grounding the non rital of prior year favorable contract adjustments and the 1st full quarter of revenues on our aerative business now that we have decontolidated big issues add a bit more color covid 19 represents just over half of the year of the year of margin difference 737 max timing considering install and spare engine volumes and supply chain excess costs represent additional 20% of the value moving to healthcare which performed well orders for up 9% organically equipment orders for up 40% and services were up one healthcare orders excluding where format were up 6% driven by a surge demand related to covid 19 this was partially accepted by delays in procurement and lower demand of products less related to covid 19 examples like mister and intervention in healthcare systems as well as contrast media and new trade offs in pharmaceutical diagnostics life sciences orders for up 10% back log was 17400000000 down 6% sequentially and down 3% versus prior year due to the sale of environment so excluding by a format back log was up one sequentially and 4% versus prior year reven over that 2% organically and one excluding by a format healthcare systems revenue was up 2% with services and 3% with equipment flat life sciences was up 4% operating profit was up 10% organically segment margin expanded the 100% of 40 basis points organically or 30 basis points excluding by a format this was driven by volume and cost productivity of set by price and logistics pressures from covid 19 next on power we had mixed results with equipment to offline strength of set by challenges and services orders were up 14% organically gas power orders were up 8% with equipment orders up 37% largely due to one turn to order we booked 2.2 giga rock of orders for 9 gas turbines gas power service orders were down 3% with contractual services down and transactional upgrades roughly flat power portfolio orders up 27% with strong equipment and services orders in student and power conversion back log took at 85000000000 flat sequentially and down one versus prior year gas battery of 71000000000 of that sequentially revenue was down 12% for guarantee largely driven by services in gas power revenue was down 12% gas power equipment revenue was up 4% organically on higher hedge turbine mix we shipped 9 gas turbines versus 9 gas turbines in the 1st quarter of 19 we helped our customers achieve commercial operations on over 32 units translating almost 4.7 giga last of new power added to the grid gas power services revenue was down 19% damage if outages this and transaction sales pushed out of the quarter due to covid 19 and we had no revenue on higher margin upgrades despite this the services would still have been down in the quarter this was driven by supply base constraints on hot gas pot parts and outage cost over our pressuring our csa margin rate power portfolio revenue was down 12% this was driven by lower volumes across sub segments in student we had lower services back log convertability in nuclear the decline was driven by outage timing and in power conversion we refined our sales parameters focused on higher margin market segments operating profit was down 239000000 and segment margin contract with 570 basis points organic while gas power fixed costs were down 9% sequentially and 16 versus prior year this was more than a set by a lower service volume and additional costs from covid 19 disruption next our renewables continuing revenue growth was more than a set by fulfillment and execution issues impacting profitability orders were down 11% organically equipment were down 11% as we cycle a stronger us citizen and services were down 23% a positive spot in the quarter was international orders which were up 11% back log of 26500000000 accounts 4% sequentially but up 5% versus prior year revenue was up 28% organic this was mainly driven by onshore wind up 60% onshore equipment revenue was up 81% with a new unit turbine delivery of 731 more than double prior year and re power kit delivers of 219% up 40% onshore services revenue excluding re power kits was up 50% onshore order pricing index continues to stabilize at one in line with using tramp grid revenue was down 8% mostly due to site closures and delayed myathos driven by covid 19 operating loss was down 115000000 this was driven by the supply chain disruptions due to covid 19 full fainment delays and the non recurrence of their non cash gain from an offshore wind contract termination in the prior year this was partially affected by higher onshore wind volume segment margin contracted to 110 basis points mainly driven by the same items mentioned above and the range of execution issues were fixing at grid and hydro moving to slide 8 starting with geocapital in the quarter adjusted continued operations generated a net loss of 180000000 this excludes the impact of the capital loss tax benefit utilized against by a farm again resulting in 88000000 of earnings compared to prior year which excludes the us tax reform benefit continuing net earnings was unfavorable by 154000000 this was due to negative marks and impairments at gk and insurance lower gains and lower earnings from smaller asset days this was partially affected by lower excess interest costs and sga the under the quarter with 101000000000 of assets excluding liquidity this was down 1000000000 sequentially primarily driven by gks due to asset sales depreciation and collections partially assessed by new volume insurance assets were flat sequentially as the decrease in unrealized gains driven primarily by higher market rates was assessed by the annual insurance capital contribution supplies and finance assets were down as our suppliers continued to migrate to amu f g as noted earlier capital ended the quarter with 13500000000 of liquidity capital also ended with 54500000000 of debt which was down 4500000000 sequentially driven by debt maturity this continued operations generated a net loss of 164000000 which was unfavorable versus prior year by 200000000 if they plan to provide the required support to do e capital in line with insurance tax store funding next just like our businesses corporate needs to adjust to our new realities and we are continuing to take additional structural actions to rationalize costs and reduce the size at corporate looking at the quarter adjusted corporate costs were 374000000 8% higher but that is primarily due to higher intercompany profit elimination which will partially offset their better digital performance from continuing cost reduction action thanks to the operation we are 25% lower primarily driven by ge digital is improvement you can see from digital is performance that the focus cost reduction programs are getting traction we continue to right size our functional costs across to you and push more accountability into the division larry and i are conducting cost and cash reviews of each of the businesses with fresh eyes in the current environment so you can expect that there will be more to come stay tuned i have spent most of my career in leadership at moon du centralized companies fundamentally i believe companies outperform when they have a structure that empowers businesses to take the right actions quickly this type of structure is critical to respond to situations like we have today with covid 19 but also to be prepared to pivot to growth we are working toward this goal and there will be more to come with that thanks to you larry there is no question that covid 19 is putting real pressure on our businesses given that so much has changed and this quarter will be our 1st full quarter with pressure from covid 19 i would like to spend some time here discussing 2nd quarter trending based on what we are seeing through the month of april so starting with aviation on slide 9 of all of our industrial segments the business is feeling the impact of the pandemic most severely the rapid contraction of our travel is resulted in a significant reduction in demand as commercial airlines to spend routes and ground large percentages of their fleets we will cover commercial services and engines on the next 2 slides in detail but on the other end of the spectrum demand for our military business remains strong to that end we have rebalanced some of our capacity to meet this increased demand to offset some pressure in the commercial business we are taking several steps that while painful preserve our ability to adapt as the environment continues to evolve we have previously announced $500 to $1000000000 in cost and cash actions and we have now increased this targeting more than 1000000000 in cost actions and more than 2000000000 in cash actions this will be achieved through different initiatives some of which have been completed others in flight as we speak these include a 10% reduction in aviation is total us workforce and furloughs impacting 50% of its us maintenance repair and overhaul facilities and new engine manufacturing will continue to monitor and potentially extend as required we are also focused on reducing the discretionary and cap expend and optimizing working capital i know aviation is deck removal margin through this pandemic is top of mind for investors and carolina touched on the main dynamics impacting our margins in the quarter while we expect our commercial revenues and profits will continue to be down in the 2nd quarter our expectations are that the cost actions we are undertaking will improve deck removal margins in the back half of the year while there are many uncertainties i expect that we will exit the year with a much lower deck removal margin than what you saw in the 1st quarter so make no mistake driving improvement here is our number one focus as we think about the full year we are tracking travel restrictions carrier and passenger behavior disease countermeasures and freight command all of which will impact aircraft departures and revenue passenger kilometers while we are seeing an unprecedented decline in 2020 we are taking action and david and the team are working proactively with our customers to navigate through this crisis so spending a little more time on commercial services which represented $3300000000 of revenue in the 1st quarter that is good a slide 10 as you can see on the left side departures across the full industry were strong in the 1st quarter before rapidly declining in mid march as we look at it this week focused on the ge and cfm fleet global departures are down approximately 75% roughly 60% of the cfm fleet is parked today in line with this we are also seeing significant headwinds and global shop visits which were down low double digits in the 1st quarter as airlines defer short term maintenance and we expect this trend gets worse before it gets better with some potential to moderate in the latter half of the year depending on the variables just outlined based on what we are seeing through the month of april in the 2nd quarter we are seeing shop visits down roughly 60% and csa billings down roughly 50% additionally we expect the significant reduction in utilization is likely to continue to pressure our csa margins that said when the aviation industry recovers and it will recover over time she is well positioned with the largest and youngest install base of all engine manufacturers additionally roughly 62% of our ge cfm fleet has seen one shop visit for the last and this will generate demand upon recovery we have more narrow bodies that are 10 years or younger than the narrow body installed base of the rest of the industry and when we see a pickup in eric is travel demand we expect narrow bodies will recover most quickly overall it was a challenging quarter and we are expecting additional pressure here in the 2nd but our post actions will alleviate some of the pressure in the 2nd half of 2020 moving to commercial engines which represented $1500000000 to revenue the 1st quarter in light of covid 19 airframeers are producing at a lower rate based on what we are seeing through the month of april in the 2nd quarter we see installed engines down roughly 45% and spare engines down roughly 60% year on year attributable to the delivery deferrals in addition to the already planned lower production rate on the 737 maps in the near term we are right sizing production capacity and actively managing the supply base we have very strong relationships with the airframeers and an attractive value proposition is evidenced by a multi year backlog as you will see on the right we have strong positions sole source on 2 of the biggest new engine and a 65% win rate on the other while we acknowledge there is pressure on near term demand for new aircraft these stats demonstrate the customer is sea the value of ge technology we are taking the right actions to be well positioned for the post pandemic world moving to healthcare which consists of healthcare systems and pdx in the 2nd quarter of the day we are seeing increased demand for vital medical equipment in the diagnosis and treatment of covid 19 within healthcare assistance now these product orders including ventilators have increased one.5 to 2 times versus pre pandemic levels but at the same time we are seeing reduced demand for other diagnostic products as certain procedures are deferred or canceled around the world to be clear these other diagnostics are still essential and often associated with saving lives in areas including oncology and cardiology but are currently deprioritized pdx is a similar story this is a high margin this is made about contrast agents and nuclear tracers associated with procedures that are being deferred or canceled right now several hcs product lines and most of pdx is down is much as 50% versus pre pandemic levels while these dynamics vary by country it appears to be a pattern emerging as geographies experience different stages of the virus taking china for example as hospitals come back online we are seeing a ramp in previously deferred procedures and increased demand for our equipment and consumables healthcare is accelerating its plan transformation to expand margins post biopharma by reducing headcount fixed costs discretionary spend and marketing spend prioritizing r d deferring cat backs and optimizing working capital looking forward we are most focused on the following indicators for healthcare hospital admission and occupancy rates and increase in non covid 19 procedures changes in hospital cat ex budget government spending on healthcare broadly and development of covid 19 test treatments and vaccines based on our experience in china and the market in april we expect to be down in the 2nd quarter with potential recovery afterwards covid 19 has highlighted the need to build and truly invest and scale a new digitized infrastructure and quickly we are committed to our investments in our digital edison platform and solutions like neural virtual care solution which allows one clinician to remotely view numerous ventilated patients simultaneously helping to expand their capacity while reducing their risk of exposure as our digital healthcare journey continues we are at the center of an ecosystem striving for precision health i am very proud of the work our team is doing to combat covid 19 moving to power on slide 13 we will talk to the current trending in the 2nd quarter to date in dynamics at gas power and power portfolio starting with gas power equipment while we are monitoring and finishing supply chains disruptions as of today we still see a path to 45 to 50 gas turbine deliveries this year but our orders profile when they are forecast down payments worth several $100000000 or likely weaker due to ipp pressures in the u s and mexico is we expected deal financing will become harder through the year additionally with oil price pressure impacting middle east and ssa investment including demand for new lng we are expecting a longer road to normalization ultimately we are sticking to our strategy of securing a lower risk margin of creative backlog with disciplined execution in services approximately 20% of planned averages are shifting from the 1st half of this year due to covid 19 field labor constraints we are also seeing pressure on upgrades primarily in the middle east where low oil prices are impacting customer budgets we are seeing ge gas turbine utilization in the u s up mid single digits due to low gas prices in the ship from coal but utilization globally is down low double digits due to lower electricity demand within power poor co io our steam business is most impacted factory closures pressured our steam operations including one facility in muhan which was closed for approximately 8 weeks in the 1st quarter today we are back up to more than 70% of capacity the global supply chain has also been disrupted by the shutdown in india driven by government restrictions overall we are seeing about 30% of our landers shift from the 1st half of this year to the 2nd half with another 10 to 15% pushing into next year our power businesses are taking several measures to offset these pressures in the 1st quarter we reduced headcount by 700 notified approximately 1300 contractors implemented a hiring freeze and in line with the demand profile we are taking even further actions this will serve to reduce fixed costs in 2020 and drive benefits in 2021 looking forward we are tracking a number of items including timing of our gas turbine new order closure service outages and volume lead utilization is the energy mix and fuel prices are impacting each region differently supplier impacts and project execution billing milestones and customer collections we are targeting to have our accelerated cost out measures drive organic margin expansion despite these demand changes moving to slide 14 on renewables there was a limited impact of covid 19 in the 1st quarter and our disappointing results continue to be largely about improving execution as we have said we think about renewables in 3 distinct operating pools starting with onshore wind while we continue to deliver at record levels in the americas we are seeing supply change disruption at our lm wind facilities and we are monitoring key commercial milestones such as permitting and financing which could potentially cause timing delays in offshore wind certification for our industry leading turbine the halleod x remains on track we are also on plan to start delivering on our 80 unit 6 megawatt commitments to edf after completion of this project in 2021 we expect to start shifting production to the halleod x we are also monitoring financial closure of 2020 deals grid and hydro are 2 turnarounds are impacted by supply change disruptions with over half of our grid facilities now operating below full capacity and a grid automation we are also impacted by lower book to bill order conversion across all 3 of these pools we are increasing cost down in restructuring and we have identified several $100000000 of additional actions longer term a lower cost structure will benefit renewables relating to the global supply chain we are focused on the safe reopening of our plants globally and then optimizing the workforce and plant load levels we will be forward we are expecting a larger impact on covid 19 in the 2nd quarter and by business we are tracking 20 and 21 demand impact on progress collections and potential cyclease in onshore wind the risk of financing the laces associated with deals at offshore project cyclease at grid and hydro and the backlog at grid once like 15 within ge capital our g cafs and insurance businesses are where we are feeling the largest impacts so i will keep my comments focused there 1st g cafs is better positioned today than in previous downturns we have better asset quality less customer concentration and more geographic diversity that said we are preparing for elevated reposessions and redeployments as well as lease restructureings and we have had approximately 80% of our customers seek short term deferrals as you may have seen we have agreed with going on a rebalancing of our 737 match order book 2nd at insurance market and rate volatility is impacting the current value of our investment portfolio and reinvestment yields therefore we are deploying capital to capture market dislocation investment opportunities we are closely monitoring how this volatility will impact insurance this year and similar to the industrial segments we are implementing incremental cost and cash actions we will be forward to be continued to expect higher impairments and lower assets sales at g cafs and insurance our season teams are working closely with our customers to navigate through this period so to close our priorities are clear we have rapidly localized our team in the face of covid 19 with our top priority being the health and safety of our employees and overall the priorities we reviewed with you at the outlook call remain intact we are facing into our near term realities while continuing to manage ge for the long term when the world is facing the worst pandemic in a century our team is rising to the challenge with humility transparency and focus we continue to deliver value for our customers enabling air carriers to transport essential goods supplying vital health care equipment and keeping the lights on and while there are many unknowns there will be another side planes will fly again health care will normalize and modernize and the world still needs more efficient resilient energy at the same time we are embracing this new reality we are redefining winning and we are executing our plan the cost and cash actions we have taken you through this morning are a major result these moves will ultimately allow us to accelerate our multi year transformation to make ge a stronger nimbler and more valuable company and i am confident that ge will emerge stronger with that steve let us go to questions great before we open the line i would ask everyone in the queue to consider your fellow analysts again and ask one question in a follow up so we can get to as many people as possible brandon can you please open the line yes thank you sir we will now begin the question and answer session if you have a question please press star one on your telephone keypad if you would like to be removed from the queue please press the pound sign or the hash key if you are on a speaker phone please pick up your handset 1st before dialing once again if you have a question please press star one on your telephone keypad and from vertical research we have jeff spragg please go ahead thank you good morning everyone hope everyone is well thanks for all the great details good morning jeff i was hoping you could provide a little bit of color on how you view the asset quality of the contractual service agreements and the like there is a lot of assets there obviously there is at least a temporary impairment of cash flows how does that test work have you done it yet and are you close to any particular threshold there that we should be thinking about jeff i think if we look at the service backlog broadly just under 325000000000 for the company the vast majority of that 234000000000 is the in aviation i suspect that is that is where your most focus we go through those those backlog reviews and the csa reviews on a regular basis what we have done here over the last call at the last 78 weeks is really tighten and quick in the review process that we do with the businesses both at aviation and a g cass what we are trying to do is make sure we have got the latest and if you will most most accurate information possible with respect to customer risk given everything that is going on so we do that on a regular basis we did that at the end of the 1st quarter in closing much as we do every quarter clearly we have got a we have got a fluid situation and i think the the modest charges that we took the modest changes in the 1st quarter clearly are going to play out as we go through the course of the year we can not really scope that were you today if you look at the csa book and aviation for example as we went through the the mechanics of the future buildings the future costs related to those buildings based on the information at the time it was really just a 100000000000 the $100000000 adjustment non cash of course which is why you see a little bit of the earnings cash dynamic certainly as we go forward we are going to be updating those those adjustments and again i think we would expect that we would see more of that given what the airwaves are doing with with their planes but i think it is important to keep in mind again you know these these are 10 to 15 year agreements as you know and those adjustments are taken in the context of that particularly extended time period great thanks for that and just as a follow up if i could i know you do not want to get real precise on guidance but you know you you are pointing us to a further declining cash flow in q 2 which is in surprising quite frankly but could you bracket that at all for us what we should expect for for q 2 and you know any high level thoughts on how the year plays out from the cash standpoint yeah jeff i think that we we took guidance off the table a few weeks back and did not want to take it an attempt at framing formal guidance here today in light of all of this fluid and all of it is still evolving here i think that the tackle took was really to try to to share as much with you as we possibly could in terms of the the april detailed business by business and acknowledge that we are going to see a more challenging 2nd quarter here given the full impact of covid in the light but beyond that i think that is that is really where we are we know we have got to get to work on the cost and the cash actions that is why you see a stumbling that activity the deviation stepping it up elsewhere around the company so the 2000000000 of costs the 3000000000 of cash will clearly help us later on in the year as those those actions take take root but today i think that is really what we are that is what we know and that is what we are comfortable sharing thanks best of luck larry thanks from morgan stanley we have got poker is whiskey please go ahead josh your line is open yeah josh you might be up through there why do not we brandon must let us move on to come back to josh sure next question we have from bank of america we have andrew olden please go ahead i guess good morning can you hear me yep yeah yeah i just like you i just want to thank you so much and we would like to everybody so run rate minus 60% in terms of shops is it is 50% in csa is do you think you continue to trend of this level in the 2nd quarter or is there more downside andrew the i think you are referring to page 9 and the slide deck yeah maybe what we are seeing here yeah i think this is what we are what we are seeing right now right and given given what the carriers have had said publicly what they are doing we think these are these are good likely near and run rates to share with you we are not trying to offer up at the minute of view is to the next several quarters but this is this is what we are seeing right now in the 2nd quarter for sure and my follow up question on sarah engine sales i think minus 60% have we lost these or will these come back when the situation normalizes maybe you can give us some sort of framework how to think about and jim demand over the next couple of years thank you so much thank you andrew we were we were ramping spares with with both the the leaf one a and the leaf one b as the narrow body market was taking off typical early in the life of an engine activity we are clearly seeing that soft and not necessarily going to 0 as preparations are being made for return to service of the max right i do not think that that that opportunity is lost but i think like much of what we are seeing in aviation broadly it will be it will be pushed out refuure years and again i do not think we are taking a definitive view as to what year what quarter things get back to if you will a normalize 2019 level but we recognize the the discussions out there about this being a multi year recovery gradual slow think we are embracing that reality and that applies really across the portfolio both on the oe side as well as the after market spirit included thank you very much for the detail and stay safe thank you for the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the the 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| good morning and welcome to the 1st quarter 2020 general electric company earnings conference call my name is brandon and i will be your operator for today at this time all participants are in a listen only mode later we will conduct a question and answer session during which you can now star one if you have a question please note this conference is being recorded and i will not turn it over to steve wannaker by the president of investor communications you may begin sir thanks brandon good morning and welcome to ge is 1st quarter 2020 earnings call i am joined by our chairman of ceo larry culp and cfo carolina divecapa before we start i would like to remind you that the press release and presentation are available on our website note that some of the statements we are making are forward looking and are based in 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 with that i will hand the call over to larry steve thanks good morning everyone we hope you and your families are healthy and safe our thoughts are with all of those affected by this global pandemic we recognize this is a very difficult and challenging time for everyone on behalf of ge i want to express our gratitude to those on the front lines in the medical community many of whom were privileged to call our customers working tirelessly to protect all of us thank you when the last spoke during our outlook call in march we were encouraged by the continued strength and aviation and health care and the progress made in power and renewables in the 8 weeks since the world has fundamentally changed as we all know the covid 19 pandemic evolved rapidly hitting hard and hitting fast while this is an earnings call our voltages to provide you with the most current and relevant information we have and as always to be as open and transparent as we possibly can so forgive us if we run a little long today the covid 19 dynamics at ge like the economy at large are fluid and still evolving but clearly challenging in the near term with that i will start with our response to covid 19 carolina who is joining our earnings call for the 1st time will cover the financials then i will wrap with a more in depth view of our current operations moving to slide 2 during this unprecedented time we are focused on 3 areas 1st the health and safety of our employees and our communities we established a covid 19 task force that is working to ensure we are doing everything in our ability to protect the health and safety of our employees we detect the health and safety in aligning with various government directives and medical advisories in real time to that end we have encouraged those employees who are not directly performing customer facing essential jobs to work from home wherever possible but given the mission critical work we do at ge not everyone can stay home i would like to acknowledge our employees out in the field and in our factories for their unwavering dedication as they continue to deliver for our customers supporting essential services like hospitals power generation airlines and national defense we are ensuring they have what they need to do their job safely this includes temperature screenings face coverings and gloves as necessary and physical distancing all keeping with national state and local guidelines i am also inspired by the support that our employees have shown each other we recently established an employee relief fund and more than 75 senior leaders across ge have contributed portions of their salary to support those affected by this crisis our 2nd priority is continuing to serve our customers in healthcare we are ramping production of critical medical equipment used to diagnose and treat covid 19 patients including respiratory ct monoclonal monitoring solutions x ray anesthesia and point of care ultrasound product lines already our team has doubled production of ventilators and plans to double again by the end of june healthcare is digital and ai solutions are helping hospitals remotely monitor multiple patients at once and automate road tasks so clinicians can spend more of their precious time focused on life saving work across all of our businesses we are in constant communication with employees customers suppliers and governments to maintain business continuity without disruption our 3rd priority is preserving our strength 1st and foremost the sound liquidity is crucial in solidifying our balance sheet remains a key focus with the recent closing of the bio pharma transaction we have received $20000000000 of net proceeds we provide ge with optionality to protect our company and remain flexible and importantly we retain the $17000000000 leading healthcare business at the center of an ecosystem striving for precision health preserving our strength in a timeline this also requires a different operating model here i draw my experiences as ceo managing through 9 11 and the global financial crisis there are 3 steps in this model and brace reality redefine winning and execute the plan you see to say hard to do starting with embrace reality this is necessary in a time like this when so much has changed and remains uncertain for us it means recognizing that we are facing significant headwinds in aviation and we may be for a while we wish it were otherwise but that is not our reality next redefine winning we came into 2020 with a plan that defined winning as profitable growth margin expansion and cash generation now we need to adjust to the altered environment to focus and inspire our team let me share some ways for doing this while safety has always been a top priority for ge covid 19 has reshaped our safety agenda in terms of our financial priorities improving our cash generation and decro member margins in the 2nd half are key focus areas and in health care we clearly did not come into the year expecting to increase our ventilator production for fold but we will and finally execute the plan we are moving with speed discipline and intensity to improve our cost structure targeting more than 2000000000 of cost actions and more than 3000000000 of cash actions and this is where lean is particularly relevant from daily management to traditional combine systems which help reset inventory levels to do problem solving tools we are rolling out across ge let me share a recent example from gas power in our greenville facility the team usually need to cut the distance that a single part travels during production from 3 miles yes 3 miles to a mere 165 feet flashing the time it took to make that part by 40 times these are the sort of operational efficiencies that are more essential than ever in this environment so that is our approach here we are facing the pandemic head on while continuing to execute our long term strategy for ge moving to slide 3 you will find a snapshot of our 1st quarter results and carolina will take you through this in detail but 1st a few top line thoughts as i noted we entered the year with momentum however as covid 19 came to spread globally and i am not going to sugarcoat this we got hit hard and some of our highest margin parts of our best performing businesses this is especially true at aviation services where covid 19 costs are rapid decline in commercial aviation demand and even essential travel became difficult in the 2nd half of march similar situation also transpired at power services where travel restrictions cost by covid 19 impacted our field personnel and across all of our businesses we started to see some project development and execution issues at the same time healthcare performed well due to urgent demand for our product used in the fight against covid 19 taking a step back about 80% of our roughly $400000000000 backlog is in services which have a long time horizon and while services have been hurt in the near term those capabilities remain one of our greatest strengths they keep us close to our customers with deep strategic relationships especially through periods of volatility so in the spirit of embracing reality let me frame for you what we are seeing right now at a high level and then i will do a deeper dive after carolina reviews the 1st quarter in aviation and at g cast airlines are conserving cash not applying to planes they have limiting maintenance spare spend where they can and all the while deferring orders in many places no one can predict when and how leisure and business travel will resume but the reality is likely it is not soon so we are redefining winning from margin expansion in 2020 to improving our deck run on a margins this year which requires we aggressively adjust our cost structure that is what winning looks like for aviation and they are moving forward with a comprehensive plan to be clear we will get back to targeting those 20% operating margins post pandemic in healthcare we have been on the front lines for batting covid 19 since the early days in wuhan this is fundamental to our mission while we have seen demand surge for certain products other products including those in our high margin pharmaceutical diagnostic business have been negatively impacted as multiple procedures are deferred healthcare is likely to rebound faster than aviation but we are still fast tracking additional cost out actions targeting an incremental $700000000 since karen and the team spoke with you in december in power and renewable energy the impact of covid 19 has been more limited to date specifically at power we are experiencing outage delays and restrictions in field service travel and we are monitoring new unit orders and services to offset this we are further right sizing the cost structure and in power we already reduced headcount by 700 in the 1st quarter now clearly across ge there are a number of large variables that are unknown at this point including the full duration magnitude and pace of recovery across our end market operations and supply chains we are monitoring how the resulting interest rate environment will impact pension obligations and our run off insurance business so let me tell you what we do know the 2nd quarter will be the 1st full quarter with pressure from covid 19 and we expect that our financial results will decline sequentially before they improve later this year the bottom line is we have some challenging times ahead but this too shall pass i am confident the underlying reset we took over the last 18 months to focus ge for polio and instill a greater focus on customers and lean give us a running start for what we face today moreover i have seen our response to covid 19 signs of how we are moving faster to change ge for the good more to lean work to help reduce inventory from the face of demand challenges and aviation travel restrictions spring on the use of digital technology to complete field work and renewables and more capital discipline across the board with new leaders assimilating faster and with real impact health care comes to mind so all of this in combination with the planned actions we will discuss later are accelerating our transformation of ge with that i will turn it over to carolina but before i do let me say how pleased i am to have her on board in 2 short months it is clear we share the same perspectives of embracing reality and operational bias reaction and executing with speed thank you larry i am proud to join my 1st earned call as to the fall of ge and help lead this company and turn forward as you noted we are operating in unprecedented times i have been focused on 1st keeping our financial position strong and safe with the keen eye on leverage and liquidity as well as cash flow and capital discipline while ge is actions over the last couple of years have put us on stronger footing ahead of this situation we will do more 2nd working with our businesses to take the right action not only to help mitigate the impact of covid 19 but to serve customers better operate smarter and more efficiently and integrate lean more holistically by larry and i are focused on the near term we are also managing for the long term we are working together to reduce complexity edge is it is an encounter that delivers sustainable earnings and cash flow generation today my intention is to take you through our results in detail and provide context that help you see what i see across the businesses with that let us turn to slide 41st we are launching quarter for us as the macro amendments rapidly deteriorates it taking it from the top 1st quarter orders were down 3% organically or down 4 expiopharma growth in power and healthcare was assessed by double digit decline in aviation and renewables both equipment and service orders were down low single digits i will cover this by business shortly the industrial revenue was down 5% organically or down 6 expiopharma with equipment revenue flat and services found 9% both aviation and power services were adversely impacted in the quarter due to covid 19 just that industrial profit margins were down 450 basis points organically most of the dilution came from aviation and renewables with aviation impact mostly driven by covid 19 now let us discuss the ets what starting at continuing ets of ¢72 the world of ¢75 gain primarily related to the 11900000000 off attack skin from the biopharma side which also included one of tax benefit in geotapital this was partially assessed by a 4600000000 off attack loss on our remaining bake a huge stake which we measure at sire value edge quarter the manufacturing and other items we incurred ¢2 of charging this is principally related to the reduction of aviation is us workforce softly non operating pension and other benefit plants were a ¢6 head gid in the quarter including this item adjusted ets was ¢5 as described earlier our earnings performance was materially impacted by covid 19 and other market dynamics this was primarily in aviation and geotapital with negative marks and impairments in both 3 cases and insurance as well as higher credit costs the estimates the 1st quarter industrial operating profit impact from covid 19 roughly 700000000 drivers included lower off the market sale project delays and supply chain constraints this impact is higher than we anticipated at the march outlacon reflecting the rapid global progression of the pandemic but our prior forecast largely reflected the slowdown in china our focus on addressing this pandemic is global retargeting more than 2000000000 of costs out this year but this may not affect the full impact will rapidly addressing both cost and cash in making our businesses more agile and customer focused over time i can tell you from my experience that at this program spill momentum and the company leaders begin to see how powerful results can be the time to extend beyond their stated goals so just what i have seen so far i am encouraged that we can have some of that same experience at the end moving to cash as many of you know the 1st quarter is typically low for our free cash flow this year we are impacted by our usual seasonality but also covid 19 especially in aviation industrial free cash flow was a use of 2200000000 1000000000 worse than prior year but notably excluding aviation its industrial business improved free cash flow versus lost years turning to the key drivers in the quarter starting with net earnings if you exclude the biopharmic and the market on our baking shoots investment income depreciation and amortization total 700000000 that is down 900000000 versus prior year next working capital -2600000000 the significance use of cash down 1100000000 let me take it through the main factors 1st we had a net inflow in accounts receivable driven by a reasonably lower volume in gas power and renewables 2nd we had an outflow in accounts receivable driven by a lower volume in aviation and higher dispersants related to prior year material vice in renewables 3rd we increased inventory to support an expected 2nd and 3rd quarter volume ramp in onshore wind and shelf output declined in aviation 4th progress collection they were a use of cash as new orders in my some payments were more than a step by burn down of prior progress payments in parallel renewables lastly we also spent about 600000000 in gross capital we do not track now to reduce 25% of our capital expense this year for cash flow in total we estimate the 1st quarter impact from covid 19 of around 1000000000 the majority of which was felt in aviation as we look forward we expect continued free cash flow pressure retargeting more than 3000000000 in cash action however over time we know that each business can be a better cash generated as we improve execution moving to slide 6 we continue to strengthen our balance sheet the largest milestone in the quarter was closing by a farmer the 20000000000 of profit we ended the quarter with 33800000000 of industry cash up approximately 16000000000 sequentially here capital ended with 13500000000 of cash down approximately 5300000000 sequentially driven by contractual maturity we continue to hold a liquidity balance can be 12 months of due debt maturity we recently taken action to enhance and expand our liquidity and pay down debt on april 17 g e entered into a 3 year 15000000000 syndicated revolving credit facility this was a planned refinancing of g e e e e prior trans eviliance syndicated revolver credit facility including bilateral agreements we expect to have in the range of 20000000000 in total credit lines except for the forward following this sale of biopharma we also improved our liquidity profile in april we reduced our near term debt maturity by issuing 6000000000 in g e e in april and subsequently can bring for 4200000000 of debt we plan to use the remaining 1800000000 of proceeds to further debt reduction and the combination of transaction will therefore be leverage neutral following this g e e kept in industrial has no debt maturity in 2021 1900000000 of maturity in 2022 and 900001000 in 2023 a g e industrial reduced debt by approximately 7000000000 we reduced commercial paper used by 1100000000 in the quarter and we paid 6000000000 of the intercompany loans from g e to g e to g e capital in april using proceeds from biopharma a g e capital reduced debt by 4000000000 so we reduced external debt by 10000000000 yet to that including 4700000000 of maturity in the quarter and an additional 5400000000 of 2020 matrices tended in april of fact by g e e 6000000000 in the total net from g e e to company loan our financial policy goes to remain maintaining a high cash balance achieving less than 2.5 times net debt to g e e to industrial and less than 4 times debt to equity at g e capital accreditrating in the single a range and reinserting a dividend in line with peers over time we remain committed to achieving our leverage targets but we now expect to achieve those targets over longer period than previously not due to the impact of covid 19 next on slide 7 we will discuss the industrial segments results starting with aviation as you have noted our 1st quarter results were materially impacted orders were down 13% organically with both equipment and service order balance equipment orders were down 27% primarily driven by commercial engine business due to the max grounding and the covid impact services orders were down 4% primarily driven by commercial services partially affected by military which one you fighter and helicopter service orders from the us dod service orders were stronger than revenues due to the military orders which were up 60% year to year back log of 273000000000 was flat sequentially and up 22% versus prior year primarily driven by long term service agreement this included roughly 200 liter one based unit order translations in the quarter revenue was found 11% organically equipment revenue was found 17% we shipped 472 commercial install and spare engine units with quarter down 37 versus prior year sales of 272 liter to one a and 1000000000 units were down 152 service revenue was found 8% due to commercial services down 11% this was driven by lower spare parts shipments and lower shops visits from the impact of covid 19 30 military revenue was found 7% with 146 engine units shipments down 9% this was driven by supply chain fulfillment dynamics and environmental parts of the advanced programs operating process was down 39% organically primarily on lower volume and negatively expressed in commercial services from the impact of covid 19 and lower spare engine units the segment margin contracted 650 basis points organically this was primarily due to covid 19 interacting our commercial businesses in both engines and services they continued 737 max grounding the non rittles of prior year favorable contract adjustments and the 1st full quarter of revenues on our air adreveative business now that we have decontolidated big issues add a bit more color covid 19 represents just over half of the year of the year margin difference 737 max timing considering install and fair engine volumes and supply chain excess costs represent additional 20% of the volume moving to healthcare which performed well orders for up 9% organically equipment orders for up 40% and services were up one healthcare orders excluding where far or not were up 6% driven by a surge demand related to covid 19 this was partially accepted by delays in procurement and lower demand of products less related to covid 19 examples like mister and interventional in healthcare systems as well as contrast media and new trade offs in pharmaceutical diagnostics life sciences orders for up 10% back log was 17400000000 down 6% sequentially and down 3% prior year due to the sale of obama so excluding by a farmer back log was up one sequentially and 4% versus prior year revenue was up 2% organically and one excluding by a farmer healthcare systems revenue was up 2% with services and 3% with equipment flat life sciences was up 4% operating profit was up 10% organically segment margin expanded 140 basis points organically or 30 basis points excluding by a farmer this was driven by volume and cost productivity offset by price and logistics pressures from covid 19 next on power we had mixed results with equipment to offline strength offset by challenges and services orders were up 14% organically gas power orders were up 8% with equipment orders up 37% largely due to one turn to order we booked 2.2 giga watt orders for 9 gas turbines gas power service orders were down 3% with contractual services down and transactional upgrades roughly flat power portfolio orders up 27% with strong equipment as services orders in student and power conversion back log took at 85000000000 flat sequentially and down one versus prior year gas back log was 71000000000 flat sequentially revenue was down 12% organically largely driven by services in gas power revenue was down 12% gas power equipment revenue was up 4% organically on higher hedge turbine mix we shipped 9 gas turbines versus 9 gas turbines in the 1st time the health hour customers had shared commercial operations on over 32 units translating almost 4.7 giga watt of new power added to the grid gas power services revenue was down 19% damage if altitude this and transaction sales pushed out of the quarter due to covid 19 and we had no revenue on higher margin upgrades despite this services would still have been down in the quarter this was driven by supply base constraints on hot gas pot parts and outage cost over out pressuring our csa margin rate power portfolio revenue was down 12% this was driven by lower volumes across the sub segment in student we had lower services back log convertability in nuclear the decline was driven by outage timing and in power conversion we refined our sales parameters focused on higher margin market segments operating profit was down 239000000 and segment margin contract with 570 basis points organic gas while gas power fixed costs were down 9% sequentially and 16 versus prior year this was more than a set by a lower service volume and additional costs from covid 19 disruption next our renewables continue revenue growth was more than a set by fulfillment and execution issues in piping cost availability orders were down 11% organically equipment were down 11% as we cited a stronger usptc and services were down 23% a positive spot in the quarter was international orders which were up 11% back log of 26500000000 on 4% sequentially but up 5% versus prior year revenue was up 28% organically this was mainly driven by onshore winds up 60% onshore equipment revenue was up 81% with a new unit turbine delivery of 731 more than double prior year and we power kid delivery of 219% up 40% onshore services revenue excluding the power kids was up 50% onshore water pricing index continues to stabilize at one in line with usptc greed revenue was down 8% mostly due to site closures and delayed my spouse driven by covid 19 operating loss was down 115000000 this was driven by the supply chain disruptions due to covid 19 full fainment delays and the non recurrence of the non cash gain from an offshore wind contract termination in the prior year this was partially set by higher onshore wind volume segment margin contracted 210 basis points mainly driven by the same items mentioned above and the range of execution issues were fixing at grid and hydro moving to slide 8 starting with geocapital in the quarter adjusted continued operations generated a net loss of 180000000 this excludes the impact of the capital loss tax benefits utilized against by a farm again resulting in 8000000 of earnings compared to prior year which excludes the uspac is reform benefit continuing net earnings was unfavorable by 154000000 this was due to negative marks and impairments at geocap and insurance lower gains and lower earnings from smaller asset gains this was partially set by lower excess interest costs and estimates the under the quarter with 101000000000 of assets excluding liquidity this was found 1000000000 sequentially primarily driven by geocaps due to asset sales depreciation and collections partially accepted by new volume insurance assets were flat sequentially as the decrease in unrealized gains driven primarily by higher market rates was also set by the annual insurance capital contribution supplies chain finance assets were down as our suppliers continue to migrate to amu f g as noted earlier capital ended the quarter with 13500000000 of liquidity capital also ended with 64500000000 of debt which was down 4500000000 sequentially driven by debt maturity this continued operations generated a net loss of 164000000 which was unfavorable versus prior yet by 200000000 if they plan to provide the required support to geocapital in line with insurance federal funding next just like our businesses corporate needs to adjust to our new realities and we are continuing to take additional structural action to rationalize costs and reduce the size at corporate looking at the quarter adjusted corporate costs were 374000000 8% higher but that is primarily due to how in the company profit elimination which will partially offset by better digital performance from continuing cost reduction action thanks to the operation we are 25% lower primarily driven by geocapital improvement you can see from digital performance that the focus cost reduction programs are getting traction we continue to right size our function costs across to and push more accountability into the division larry and i are conducting cost and cash reviews of each of the businesses with fresh eyes in the current environment so you can expect that there will be more to come stay tuned i have spent most of my career in leadership at moon due centralized companies fundamentally i believe companies outperform when they have a structure that empowers businesses to take the right action quickly this type of structure is critical to respond to situations like we have today with covid 19 but also to be prepared to pivot to growth we are working toward this goal and there will be more to come with that thanks to you larry there is no question that covid 19 is putting real pressure on our businesses given that so much has changed and this quarter will be our 1st full quarter with pressure from covid 19 i would like to spend some time here discussing 2nd quarter trending based on what we are seeing through the month of april so starting with aviation on slide 9 of all of our industrial segments the business is feeling the impact of the pandemic most severely the rapid contraction of air travel is resulted in a significant reduction in demand as commercial airlines suspend routes and ground large percentages of their fleets we will cover commercial services and engines on the next 2 slides in detail but on the other end of the spectrum demand for our military business remains strong to that end we have rebalanced some of our capacity to meet this increased demand to offset some pressure in the commercial business we are taking several steps that while painful preserve our ability to adapt as the environment continues to evolve we have previously announced $500 to $1000000000 in cost and cash actions and we have now increased this targeting more than 1000000000 in cost actions and more than 2000000000 in cash actions this will be achieved through different initiatives some of which have been completed others in flight as we speak these include a 10% reduction in aviation is total us workforce and furloughs impacting 50% of its us maintenance repair and overhaul facilities and new engine manufacturers we will continue to monitor and potentially extend as required we are also focused on reducing the discretionary and cap expend and optimizing working capital i know aviation is deck removal margin through this pandemic is top of mind for investors and carolina touched on the main dynamics impacting our margins in the quarter while we expect our commercial revenues and profits will continue to be down in the 2nd quarter our expectations are that the cost actions we are undertaking will improve deck removal margins in the back half of the year while there are many uncertainties i expect that we will exit the year with a much lower deck removal margin than what you saw in the 1st quarter so make no mistake driving improvement here is our number one focus as we think about the full year we are tracking travel restrictions carrier and passenger behavior disease counter measures and freight command all of which will impact aircraft departures and revenue passenger kilometers while we are seeing an unprecedented decline in 2020 we are taking action and david and the team are working proactively with our customers to navigate through this crisis so spending a little more time on commercial services which represented $3300000000 of revenue in the 1st quarter that is good a slide 10 as you can see on the left side departures across the full industry were strong in the 1st quarter before rapidly declining in mid march as we look at it this week focused on the ge and cfm fleet global departures are down approximately 75% roughly 60% of the cfm fleet is parked today in line with this we are also seeing significant headwinds and global shop visits which were down low double digits in the 1st quarter as airlines defer short term maintenance and we expect this trend gets worse before it gets better with some potential to moderate in the latter half of the year depending on the variables just outlined based on what we are seeing through the month of april in the 2nd quarter we are seeing shop visits down roughly 60% and csa billings down roughly 50% additionally we expect the significant reduction in utilization is likely to continue to pressure our csa margins that said when the aviation industry recovers and it will recover over time she is well positioned with the largest and youngest install base of all engine manufacturers additionally roughly 62% of our ge cfm fleet has seen one shop visit for the last and this will generate demand upon recovery we have more narrow bodies that are 10 years or younger than the narrow body installed base of the rest of the industry and when we see a pickup in eric is travel demand we expect narrow bodies will recover most quickly overall it was a challenging quarter and we are expecting additional pressure here in the 2nd but our post actions will alleviate some of the pressure in the 2nd half of 2020 moving to commercial engines which represented $1500000000 to revenue in the 1st quarter in light of covid 19 airframeers are producing at a lower rate based on what we are seeing through the month of april in the 2nd quarter we see installed engines down roughly 45% and spare engines down roughly 60% year on year attributable to the delivery deferrals in addition to the already planned lower production rate on the 737 max in the near term we are right sizing production capacity and actively managing the supply base we have very strong relationships with the airframeers and an attractive value proposition is evidenced by a multi year backlog as you will see on the right we have strong positions sole source on 2 of the biggest new engine and a 65% win rate on the other while we acknowledge there is pressure on near term demand for new aircraft these stats demonstrate that customers see the value of ge technology we are taking the right actions to be well positioned for the post pandemic world moving to healthcare which consists of healthcare systems and pdx in the 2nd quarter of the day we are seeing increased demand for vital medical equipment and diagnosis and treatment of covid 19 within healthcare systems now these product orders including ventilators have increased one.5 to 2 times versus pre pandemic levels but at the same time we are seeing reduced demand for other diagnostic products as certain procedures are deferred or canceled around the world to be clear these other diagnostics are still essential and often associated with saving lives in areas including oncology and cardiology but are currently deprioritized pdx is a similar story this is a high margin this is made of contrast agents and nuclear tracers associated with procedures that are being deferred or canceled right now several hcs product lines and most of pdx is down is much as 50% versus pre pandemic levels while these dynamics vary by country it appears to be a pattern emerging as geographies experience different stages of the virus taking china for example as hospitals come back online we are seeing a ramp in previously deferred procedures and increased demand for our equipment and consumables healthcare is accelerating its plan transformation to expand margins post biopharma by reducing headcount fixed costs discretionary spend and marketing spend prioritizing r d deferring catbacks and optimizing working capital looking forward we are most focused on the following indicators for healthcare hospital admission and occupancy rates and increase in non covid 19 procedures changes in hospital cat ex budget government spending on healthcare broadly and development of covid 19 test treatments and vaccines based on our experience in china and the market in april we expect to be down in the 2nd quarter with potential recovery afterwards covid 19 is highlighted the need to build and truly invest and scale a new digitized infrastructure and quickly we are committed to our investments in our digital edison platform and solutions like neural virtual care solution which allows one clinician to remotely view numerous ventilated patients simultaneously helping to expand their capacity while reducing their risk of exposure as our digital healthcare journey continues we are at the center of an ecosystem striving for precision health i am very proud of the work our team is doing to combat covid 19 moving to power on slide 13 we will talk to the current trending in the 2nd quarter of today in dynamics at gas power and power portfolio starting with gas power equipment while we are monitoring and finishing supply chain disruptions as of today we still see a path to 45 to 50 gas turbine deliveries this year but our orders profile when they are forecasted down payments worth several $100000000 or likely weaker due to ipp pressures in the us and mexico as we expected deal financing will become harder through the year additionally with oil price pressure impacting middle east and ssa investment including demand for new lng we are expecting a longer road to normalization ultimately we are sticking to our strategy of securing a lower risk margin of creative backlog with disciplined execution in services approximately 20% of planned averages are shifting from the 1st half of this year due to covid 19 field labor constraints we are also seeing pressure on upgrades primarily in the middle east where low oil prices are impacting customer budgets we are seeing ge gas turbine utilization in the us up mid single digits due to low gas prices in the ship from coal but utilization globally is down low double digits due to lower electricity demand within power poor co io our steam business is most impacted factory closures pressured our steam operations including one facility in luhon which was closed for approximately 8 weeks in the 1st quarter today we are back up to more than 70% of capacity the global supply chain has also been disrupted by the shutdown in india driven by government restrictions overall we are seeing about 30% of our landers shift from the 1st half of this year to the 2nd half with another 10 to 15% pushing into next year our power businesses are taking several measures to offset these pressures in the 1st quarter we reduced headcount by 700 notified approximately 1300 contractors implemented a hiring freeze and in line with the demand profile we are taking even further actions this will serve to reduce fixed costs in 2020 and drive benefits in 2021 looking forward we are tracking a number of items including timing of our gas turbine new order closure service outages and volume lead utilization is the energy mix and fuel prices are impacting each region differently supplier impacts and project execution billing milestones and customer collections we are targeting to have our accelerated cost out measures drive organic margin expansion despite these demand changes moving to slide 14 on renewables there was a limited impact of covid 19 in the 1st quarter and our disappointing results continue to be largely about improving execution as we have said we think about renewables in 3 distinct operating pools starting with onshore wind while we continue to deliver at record levels in the amount of energy at record levels in the americas we are seeing supply change disruption at our lm wind facilities and we are monitoring key commercial milestones such as permitting and financing which could potentially cause timing delays in offshore wind certification for our industry leading turbine the halleod x remains on track we are also on plan to start delivering on our 80 unit 6 megawatt commitments to edf after completion of this project in 2021 we expect to start shifting production to the halleod x we are also monitoring financial closure of 2020 deals grid and hydro are 2 turnarounds are impacted by supply change disruptions with over half of our grid facilities now operating below full capacity and a grid automation we are also impacted by low air book to bill order conversion across all 3 of these pools we are increasing cost down in restructuring and we have identified several $100000000 of additional actions longer term a lower cost structure will benefit renewables relating to the global supply chain we are focused on the safe reopening of our plants globally and then optimizing the workforce and plant load levels looking forward we are expecting a larger impact on covid 19 in the 2nd quarter and by business we are tracking 2020 and 2021 demand impact on progress collections and potential cycle delays in onshore wind the risk of financing delays associated with deals at offshore project cycle aids at grid and hydro and the backlog at grid on slide 15 within ge capital our g cafs and insurance businesses are where we are feeling the largest impacts so i will keep my comments focused there 1st g cafs is better positioned today than in previous downturns with better asset quality less customer concentration and more geographic diversity that said we are preparing for elevated reposessions and redeployments as well as lease restructureings and we have had approximately 80% of our customers seek short term deferrals as you may have seen we have agreed with going on a rebalancing of our 737 match order book 2nd at insurance market and rate volatility is impacting the current value of our investment portfolio and reinvestment yields therefore we are deploying capital to capture market dislocation investment opportunities we are closely monitoring how this volatility will impact insurance this year and similar to the industrial segments we are implementing incremental cost and cash actions we will be forward to be continued to expect higher impairments and lower asset sales at g cafs and insurance our season teams are working closely with our customers to navigate through this period so to close our priorities are clear we rapidly mobilize our team and the face of covid 19 with our top priority being the health and safety of our employees and overall the priorities we reviewed with you at the outlook call remain intact we are facing into our near term realities while continuing to manage ce for the long term when the world is facing the worst pandemic in a century our team is rising to the challenge with humility transparency and focus we continue to deliver value for our customers enabling air carriers to transport essential goods supplying vital health care equipment and keeping the lights on and while there are many unknowns there will be another side planes will fly again health care will normalize and modernize and the world still needs more efficient resilient energy at the same time we are embracing this new reality we are redefining winning and we are executing our plan the cost and cash of actions we have taken you through this morning are a major result these moves will ultimately allow us to accelerate our multi year transformation to make ge a stronger nimbler and more valuable company and i am confident that ge will emerge stronger with that steve let us go to questions great before we open the line i would ask everyone and eq to consider your fellow analysts again and ask one question in a follow up so we can get to as many people as possible brandon can you please open the line yes thank you sir we will now begin the question and answer session if you have a question please press star one on your telephone keypad if you would like to be removed from the queue please press the pound sign or the hash key if you are on a speaker phone please pick up your handset 1st before dialing once again if you have a question please press star one on your telephone keypad and from vertical research we have jeff sprague please go ahead thank you good morning everyone help everyone as well thanks for all the great details good morning jeff good morning i was hoping you could provide a little bit of color on how you kind of view the asset quality of the contractual service agreements and the like there is a lot of assets there obviously there is at least a temporary impairment of cash flows how does that test work have you done it yet and are you close to any particular threshold there that we should be thinking about jeff i think if we look at the service backlog broadly just under 325000000000 for the company the vast majority of that 234000000000 is the in aviation i suspect that is that is where your most focused we go through those backlog reviews and the csa reviews on a regular basis what we have done here over the last we call it the last 7 or 8 weeks is really tighten and quick in the review process that we do with the businesses both at aviation and a g cas what we are trying to do is make sure we have got the latest and if you will most accurate information possible with respect to customer risk given everything that is going on so we do that on a regular basis we did that at the end of the 1st quarter in closing much as we do every quarter clearly we have got a fluid situation and i think the modest charges that we took the modest changes in the 1st quarter clearly are going to play out as we go through the course of the year we really scope that for you today if you look at the csa book in aviation for example as we went through the mechanics of the future buildings the future costs related to those buildings based on the information at the time it was really just a 100000000000 the $100000000 adjustment non cash of course which is why you see a little bit of the earnings cash dynamic certainly as we go forward we are going to be updating those adjustments again i would expect that we would see more of that given what the airlines are doing with their planes but i think it is important to keep in mind again these are 10 to 15 year agreements as you know and those adjustments are taken in the context of that particularly extended time period great thanks for that and just as a follow up if i could i know you do not want to get real precise on guidance you are pointing us to a further decline in cash flow in q 2 which is not surprising quite frankly could you bracket that at all for us what we should expect for q 2 and any high level thoughts on how the year plays out from the cash standpoint yeah jeff i think that we took guidance off the table a few weeks back and did not want to take an attempt at framing formal guidance here today in light of all of this flu and all that is still evolving here i think the tact we took was really to try to share as much with you as we possibly could in terms of the april detailed business by business and acknowledge that we are going to see a more challenging 2nd quarter here given the full impact of covid in the light but beyond that i think that is really where we are we know we have got to get to work on the cost and the cash actions that is why you see a stumbling that activity in aviation stepping it up elsewhere around the company so the $2000000000 of cost the $3000000000 of cash will clearly help us later on in the year as those actions take root but today i think that is really what we know and that is what we are comfortable sharing thanks best of luck larry thanks from morgan stanley we have josh proker is whiskey please go ahead josh your line is open let us get it josh you might be up through there what do we have brandon let us move on to come back to josh sure next question we have from bank of america we have andrew olden please go ahead yes good morning can you hear me yep yeah i just look like you are on thank you so much and we would like to everybody so run rate minus 60% in terms of shops it is $6000 csa is do you think you continue to trend of this level in the 2nd quarter or is there more downside andrew i think you are referring to page 9 and the slide deck yeah there it is what we are seeing here yeah i think this is what we are seeing right now right and given what the carriers have said publicly what they are doing we think these are good likely near and run rates to share with you we are not trying to offer up a definitive view as to the next several quarters but this is what we are seeing right now in the 2nd quarter for sure and my follow up question on sarah engine sales i think minus 60% have we lost these or will these come back when the situation normalized maybe you can give us some sort of framework how to think about sarah engine demand over the next couple of years thank you so much andrew we were ramping spares with both the leaf one a and the leaf one b as the narrowbody market was taking off typical early in the life of an engine activity we are clearly seeing that soft and not necessarily going to 0 as preparations are being made for the return to service of the max i do not think that that opportunity is lost but i think like much of what we are seeing in aviation broadly it will be pushed out for a few years and again i do not think we are taking a definitive view as to what year what quarter things get back to if you will a normalized 2019 level but we recognize the discussions out there about this being a multi year recovery gradual slow i think we are embracing that reality and that applies really across the portfolio both on the oe side as well as the aftermarket spares included thank you very much for all the detail and stay safe thank you congratulations thank you from the earliest research we have scott davis please go ahead good morning guys and welcome carolina thank you larry any good morning larry any way to think about the cost actions as it relates to kind of structural versus more kind of pandemic short term related sure well i would say scott as you well know that when we are in a mode like this you are moving as quickly as you possibly can almost anywhere that you can so if you look at what we have announced at aviation the doubling of those activities today the broadening across the company if you look at the taury today there is a decidedly short term bias there that carolina and i are going to be working with the ceos over the coming weeks to transition to a more permanent action right if you look at what we did in aviation for example in terms of the temporary lack of works that was a way to quickly adjust our cost structure and that business on a variable basis to these shockingly fast changes you might categorize that as temporary we need to work through the changes on a more permanent basis that are required and light of the length of the recovery that we are looking at so we have confidence in these numbers that we are sharing today the 2000000000 of costs the 3000000000 of cash there is a bit of a tactical bias today just given how fresh this is but we will be leaning in toward making more of them permanent recognizing that at the end of the day there will be a bit of a mix be it head count related discretionary spend on the cost side in addition to some of the working capital and certainly the capx reduction the carolina reference the 25% reduction year on year so a lot going on and by no means if these headlines today the end it is very much a work in progress okay that is helpful larian we think that the $20000000000 came to you pretty much about perfect timing but is that money just sit on the ballot does that have to sit on the balance sheet pretty much as is for the year or is it just such a big number you can start to parse some of it out to thinking in terms of whittling down some of the debt that you can manage well we it did come at a good time there is no question that is why we put the emphasis in the bio pharmist setup on certainty we want to take the market risk off the table relative to thinking through the healthcare options carolina anything you want to add relative to managing liquidity versus leverage right here yeah i think it is important to acknowledge that the world is different now compared to before covid and it is very important for us of course leverage is important but liquidity is very important and we end the quarter with 47000000000 cash right and that is really to cover it is in 1000000000 of the capital long term debt maturity is now through 21 and actually after the april act we are down to 13000000000 of maturity for 2021 almost all of that team in capital and i would also say you know we expect to have around 20000000000 in total credit lines going forward and that is really in line with our risk appetite we have the new 15000000003 year rcs that i mentioned and 5000000000 in china will be on the 20000000000 of credit lines i think we just said that you know we really intend to maintain a high level of cash i would say to maximize flexibility and that is why we are taking this action also to do risk or balance sheet and basically prudently manage our liquidity in these very challenging external environment in time that makes sense and thank you and good luck to you guys thank you thanks scott you will let us try josh parker is win scheme and for morgan stanley please go ahead sir hi guys can you hear me this time yes yes clearly josh good morning awesome and hope everyone is as well that go earlier comments larry can you just give us a sense and i know you guys have data going back eons and aviation how the impact of retirement and cannibalizations kind of make more of a u shay purses you know what you know the air traffic may look like is there a natural lag between when folks start flying again and when when shop visits can happen just as a function of kind of using up some of the run time on otherwise idle assets well josh you know certainly we have we have revisited the history of the team is as well burst in and what we have seen in years past not sure we have seen anything kind of on par with with this but there is there is no question that there is going to be a bias on the part of some as some of these fleet reductions play out to retire some of the older aircraft and that will factor into the to the aftermarket much like some of the dynamics around green time and how here in the short term folks try to preserve cash carries try to preserve cash in in their business so i am not sure that there is necessarily an exact model that captures what all the carriers and as we are going to do here a model that offers great precision i think we do know that this that the combination of these factors is going to create pressure for us for us here in the short term i think what is most important for our business really is is cycles much more so than red revenue passenger miles and as we see schedules come back as we work our way through the pandemic that will that will put us back on i think better footing but here in the short term i think we are acknowledging that we are going to see shop visits and see if they billings take on some real pressure due to the downturn understood thanks all leave it there from j p morgan we have steve to some thanks josh hey guys good morning hey steve good morning in in early march you guys had that slide that showed you know 2 to 4000000000 in you know free cash flow guidance which obviously also table but you also talked about things growing and you know 21 and 22 and you know off that kind of $3000000000 base i think you know most research and numbers i saw were kind of in that you know $6000000000 range of free cash flows to kind of growth off of that level are we still like is the out here numbers still it all legit or is that you know are you kind of withdrawing that long term outlook as well i think we have been in mid leavant focused on taking the right actions both the cost the cash the the balance sheet actions here in the short term in the face of this the sun president did die pandemic we have taken guidance off for the year we are not putting it back on today just given the given the undo uncertainty of it all right so i do not i do not think we are trying to get out any further than that i appreciate the question but i think for purposes of today we are really just trying to the frame for folks will what we are seeing but that said however long it takes us to work through this i think we feel very good about our ability to come out stronger and get back on a on a positive cash flow growth trajectory got got it early in the ending you would add to that well now i think it is important to to acknowledge that by taking out of course now and part of it being structural that gives us sort of as well as mitigating the decrement that helps improving the incremental the the outer years i mean that will depend on the recovery on the industry and so that i would say it was impossible to speak to to the right and i guess how much on that structural i see yeah good yeah yeah just 11 other point i think worth mentioning i think what we are acknowledging here is the assistance played out in march and what we are seeing already day for ready to it really is hitting hitting us from mixed by mixed perspective hard our highest margin business is a really feeling it here i would think that on the on the recovery we would see we would see it swing the other way when we get back and come off a bottom we should have positive mix effect it really across across the work particularly in aviation and healthcare your your 2nd question steve is relative to the cost action some how much permanent how much not permanent yeah i know i guess how much is that going to cost you i mean like you know to come up with 2 to $3000000000 of of cost and cash you know you have done you cut your restructuring last year pretty significantly needed a couple 100000000 in the 1st quarter i mean most companies kind of one for one what how much is this stuff going to cost you this year on a cash basis yeah i think what we have said previously we were going to be down off of last year from a from an expense and from a cash perspective i think we are probably going to end up more or less in line right keep in mind that some of the cost actions like for lows do not carry a restructuring charge with that right because they are not permanent so part of what we are trying to do is squeeze out some of the temporary cost but all the while if we can we can make more structural moves we want to make sure we have got room to do that but i would say right now assume that it we relatively flat year on year but it is carolina indicated in her remarks we want to try to do more if we can great all right thanks a lot of best of luck guys thanks dave you the yes we have marcus better but here we go ahead good morning larry carolina and steve let me maybe follow up on the on the morning hey good morning within the year so in your 10 q you reference the other numbers of 48% rpk reduction this is an obviously a slide hours and rpks are 2 different stories but it is that sort of a kind of scenario that you are playing through internally and i am just trying to get a sense for that would mean if we look at our sort of like 19 we have a variation cash as a baseline sort of like where you know on that type of scenario we could end up particularly you know looking at sort of what you have mentioned in your prepared remarks that you have i think 62% of of engines still ahead of shop with it one which arguably are the engines that are on the narrow bodies coming back 1st because they are probably the youngest the youngest in the fleet right just trying to get a sense for within the year how you are thinking about that well i think that given what we highlighted relative to the the the april experience and the near term projection of that there is no question that we are going to continue to see the pressure on on cash at aviation that we have seen here of late right now that will be our undoubtedly our biggest headwind no sure but you know you know shop is it be heard sort of the numbers that you that you said but did you do sort of internal internal stress test around where you could end up i said it is just something that you say it is too early to comment no no there is there is there is plenty of planning or again a an extended slow down here we are we are embracing this reality to the fullest extent possible we are not expecting this the bounce back in the near term so we we flag in the queue the i out of numbers we also reference others you see it in our own departure data here in april right we are we are way down that has a direct fee in the shop visits csa billing and the like so we are we are adapting to this new environment confident that it will recover the work marcus we are simply not trying to assume that the pressure a base anytime soon witness the the cost of the cash actions that we are taking sure okay now appreciate that and maybe as a follow up quickly on on the capital site do you anticipate any change in the capital support therefore for insurance in particular you you reference that a little bit in the prepared remarks i think 2000000000 is sort of the current number how are you thinking about that at the moment on the parents support to cap it on yeah on the insurance let us let us take a step back then so in 19 the capital had an infusion from the of 4000000000 right and the estimate for for this year is 2000000000 on insurance funding and those 2000000000 you know that significantly lower than the before we estimated that the parents will need to support roughly in mind with this some variables are still open and that depends on the capital itself right to take up the earnings the capital and the assets liquidity level but basically it is about to be in it looks now and i would also say going forward it is a protein of all of us we do continue to anticipate further funding and that will be again through a combination of do you captain itself either as the term liquidity and the future earnings and on top of that possible captain contributions from thank you from cohen and company we have a question kind of please go ahead yeah thank you good morning guys good morning question 2 questions morning at aviation it sounds like you guys acknowledge that on the way up the spares business the after market the $15000000000 commercial after market business will lag asm growth because of you know a younger fleet emerging you know a search of you service a one material and the like part out and obviously lower spares provisioning as the oe rates come down 30 to 50% i guess 1st question is when do you anticipate aviation free cash flow getting to break even is it even possible before calendar 22 in that type of environment and then i have a follow up i am not not sure we would buy into the premise per se right i mean we we are a cycles business much more so than any other indicator and the cycles are going to have to come back before the passengers do as you may be able to flee will will help us over time there could be some short term headwinds but we will see how that plays out i think what we are acknowledging here that we have been hit from a free cash perspective i think that is a good idea i think that is a good idea i think that is a good idea i think that is a good idea i think that is a good idea i think that is a good idea i think that is a good idea i think that is a good idea i think that is a good idea i think that is a good idea i think that is a good idea i think that is a good idea i think that is a good idea i think that is a good idea i think that is a good idea i think that is a good idea i think that is a good idea okay and just to follow up obviously 2020 is a tough year we are going to have some cash burn 2021 unclear but certainly does not seem like an aviation we are going to have a strong recovery so as we emerge from this we are going to have more leverage and i guess the question is you guys have made some asset sales to deliverage what else besides cost reduction can you do to get the balance sheet better faster is there any other things that you guys are exploring or that you might explore that is different than what you have done over the past year thank you well i would say that there is a lot that is a police care leader well i was going to say that to do things that we can not do i would say yeah i would just say it at a high level we are committed to our televeraging target of less than 2.5 times on the industrial side and i think you have seen us make a lot of progress here to date which i hope underscores the seriousness of that objective both on the ge side right like a 7000000000 of debt reductions in the quarter and that capital i think it is up to 10 on a year today basically given some of the things we did in april clearly it is going to take us a while longer here to hit those targets i suspect most companies but in terms of doing anything new or different i think we are going to continue to try to run these businesses as best we can be as this is planned as we can on the capital front so i think the smart and thoughtful relative to some of the other obligations like pension issue have seen us relative to the plan design and some of the settlement options so i am not sure they are necessarily new plays per se but we will continue to look at every option available that continue to strengthen the company strengthen the balance and the leverage levels down in the face of covid 19 carolina i am sorry i jumped in there anything to add there i would just add that to the leverage comment also the liquidity that at times like this you know you do look at the liquidity and i think it is important to say that we really want to maintain a high level of cash to maximize the flexibility we have been the dewisking activities that we have led to sort of push out the debt for the years so we keep optionality thank you yeah and i but i think to that it is just important for us all to remember we ended the quarter of a 47000000000 of liquidity on the back of the biopharma action and some of the other things that we have done so we will continue to be number and flexible mindful of our obligations and our reality okay from barclays we have jillian mitchell please go ahead hi good morning maybe just a question the working capital dynamics in the free cash flow at aviation i guess you know there is a lot of industrial businesses where when you get this rapid sales down draft you get a working capital cash offset to an extent and then it reverses whenever the sales come back could you just update us on how you see the working capital cash impact at g aviation sort of in the early stages now in this downturn what you would expect to happen to work in capital when things recover and if there is any major difference on the cash dynamics of the power by the hour type service relative to the ad hoc spares activity at aviation you can say yeah with respect to working capital i think our primary challenge is really inventory at aviation we came into this year knowing we were going to have to adjust to a different schedule with the max chasing the step up at airbus with the 320 neo while dealing with a good bit of past new on the commercial side both oe and aftermarket while having pretty good military demands to contend with that all gets reset here and one of the real pressures we saw from a cash flow perspective was an inventory at aviation in the quarter so that is where we are going to be most focused trying to make sure that we reduce the delinquencies adjust to the production schedules the lower act of market requirements while continuing to take care of the military business that is a complex supply chain undertaking but the team as you can imagine is keenly focused on using some of the lean tools working with our supply base to make sure that we not only take the cost out of the business but bring those inventory levels down in light of current demand but should we expect so i guess i am the best idea of the u in this year your 2nd part of your question i may have missed that if you are trying to understand i guess in aviation you have the drop in ebitda in a downturn then the recovery in ebitda in the early part of the uptem so just trying to understand on works in capital is that cash impact counter cyclical or is it pro cyclical so you are getting a working capital outflow through the downturn as well as the ebitda decline i understand these high level dynamics there that you are alluding to i think right now the simple reality deviation given the pressures and the cross currents is that it is a -and we need to work to improve it how much of a tailwind could it be kind of at this point in the cycle i think it is too early to tell we have got to get on the improvement path 1st julian to be able to take that potential and deliver it in the financials with the reality thank you and then my 2nd question was just around the operational issues so i think it sounds like the cost out tailwind should build through the year but in q one you have some operational issues in power on the service side you know steep decommentals even with the fixed cost down 16% renewables the margins were down despite a big revenue increase so i guess what is the conviction that operational inefficiencies will not swallow up a lot of these cost savings over the balance of the year you have to take it business by business right if you look at what happened in power clearly the push out by customers because of their own site restrictions and by us on the back of the travel restrictions really pushed a lot of high morge and revenue out of the quarter and probably out of the 1st half so i think that is the focus on top of some cost pressures of our own making which we need to improve upon but i think in power i believe that the team is doing a very nice job working off the so called inheritance taxes driving real cost improvements so i think that is the point of view of the cost it is by nature a very low gross margin business so the growth is not high calorie unfortunately we had a few what we think are one offs but they are not one off until they go away permanently cost and execution issues all the while the turnaround and hydro and grid are i think moving forward but it is early days and they have a number of inheritance taxes that will take a few years to work through so i think the cost actions that we have talked about today will accelerate those turnaround and power renewables they are dealing with different dynamics in the perspective businesses and that is really why i think i have the confidence to say that you should expect the decrometal margins sequentially to improve the restructuring and the cost actions should present themselves in and in pre adecrimentals in the back half but we have got work to do to make that happen great thank you from world research we have nigel coley please go ahead thanks julian thanks good morning everyone and karina great to see you on board so look we appreciate all the color in the slides and the additional color in the queue so larry is it now a base case that industrial free cash flow will be -and maybe just dress the risk of significant cash burn this year or is there enough on the cost outs and the world and capital side to maybe mitigate some of that pressure and keep industrial free cash real relatively steady yeah i think what we are trying to share this morning nigel is that probably 3 things one we have been very we have been hit hard and fast here right in some of our most important highest margin businesses be it aviation in services particularly gas power services pdx and healthcare we think that that gets worse before it gets better particularly here in the 2nd quarter with a full effect it is uncertain as to how things play out from here we are going to acknowledge that uncertainty hence the pulling of the guide but we are not going to sit back and hope that it all passes we are not going to take the view that we have got to start the bounce coming hence the 2000000000 of cost actions we have talked about and the 3000000000 of cash actions we are going to do everything we possibly can to control our destiny here without impairing the long term value and the long term trajectory of our company so we are telling you what we know today we wish we knew more but that is really the state of play right now and the approach the headset that we are taking to it okay i appreciate that larry thanks i thought one of the real highlights of the quarter was the underlying strength of the healthcare margins even next by a farmer especially given some of the headwinds you face in there within strength and small equipment and pressure in the guide how does that mix look when you look at the mix on smaller patient monitoring equipment et cetera versus the big guy how does that equipment mix play out to the margins well we certainly i think the key thing to keep in mind nigel is the big guy i certainly got hit the lower ticket the lower price point the patient monitor is ventilators in the light certainly got quite a boost it is a small part of the business so there was a little bit of mix there but not a lot it was really more a function frankly of the team doing a nice job more broadly recognizing that absent biopharma we needed to tend to the core cost structure in all its form in the acs business we have been growing healthcare biopharma leading the way we got some good margin support from that business the last several years well now as we think about the $17000000000 core the teams really i think put their sights the last couple of quarters on growing that business growing it with a creative margin and it is really the cumulative effect that i think you see a bit here in the 1st quarter before we got hit they got hit a little bit later not as much you will see more of that unfortunately here in the 2nd quarter but i think you have got a team who thinks that like many other medtech companies they can grow mid or low to mid single digits over time and put more digital into the mix better cost that should give us the opportunity to grow with a creative margins along the lines of what karen weighed out in december and i have no less conviction about the ability to do that today than we did when we made that presentation again mindful that we have got some chirations here in the near turn to deal with right okay thanks larry good luck thanks nigel hey we are at the bottom of the hour so we are at the bottom of the hour so we could just take one more question sure from our bc capital markets we have dean drey please go ahead thank you good morning everyone wishing everyone good health and add my welcome to carolina thank you hey just morning dean good morning just 2 questions both aviation a lot of discussion about structural cost out and larry be interested in how have you balanced the structural cost out in aviation with rifts and balancing the rifts and furloughs versus how you might be compromising the ability to bounce back when it does ramp back up so that is the 1st question and then the 2nd one just to make sure i heard it correctly did you quantify the leap cancellations in the quarter i know there is delivery deferrals our experience in 2008 was that you did not see many outright engine cancellations because customers would lose that non refundable deposit so what is the expectation here in terms of engine cancellations that is it for me thank you i will take the 1st part of that and perhaps carolina can take the 2nd i think we are mindful that there will be a recovery and we want to be well positioned for this going to be very good business for ge for 4 decades but i think we are really trying to again embrace our reality and take the cost actions in the aftermarket business and more broadly at aviation mindful that we have got a period of time here of an unknown duration but it is not going to be measured in months right where that business is going to be under considerable pressure so after a period of time as the aftermarket has grown as it has last the last decade this is going to give us an opportunity to rethink to consolidate all the while mindful of our obligations to customers the nature of how the footprint has changed the changes that are probably still still coming so there are a number of variables it is very much a work and progress as well but i think we have got line of sight to build on some of the temporary actions to take permanent action to make sure that we have a lean cost structure with adequate capacity to come out of the downturn here well positioned to perform both for customers and for investors thank you we will not turn it back to steve whitaker for closing remarks well do you want to answer the question on your question go ahead carol go ahead carol so i actually mentioned that in my notes that in our backlog which was flat sequentially an opportunity to present versus prior that did include roughly 200 loose 1000000000 or the translations in the quarter i would say in the progress we have really found a very small so far but on top of that we also saw gcast right so we have gcast and we have gcast thank you ladies and gentlemen this concludes today is conference thank you for joining and you may now disconnect | |
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| good morning and welcome to the 1st quarter 2020 general electric company earnings conference call my name is brandon and i will be your operator for today at this time all participants are in a listen only mode later we will conduct a question and answer session during which you can dial star one if you have a question please note this conference is being recorded and i will now turn it over to steve whitaker vice president of investor communications you may begin sir thanks brandon good morning and welcome to ge is 1st quarter 2020 earnings call i am joined by our chairman and ceo larry culp and cfo carolina dybeck happe before we start i would like to remind you that the press release and presentation are available on our website note that some of the statements we are 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 scc filings and on our website those elements can change as the world changes with that i will hand the call over to larry steve thanks good morning everyone we hope you and your families are healthy and safe our thoughts are with all of those affected this global pandemic we recognize this is a very difficult and challenging time for everyone on behalf of ge i want to express our gratitude to those on the front lines in the medical community many of whom we are privileged to call our customers working tirelessly to protect all of us thank you when we last spoke during our outlook call in march we were encouraged by the continued strength and aviation in healthcare and the progress made in power renewables in the 8 week since the world has fundamentally changed as we all know the covid 19 pandemic evolved rapidly hitting hard and hitting fast while this is an earnings call our goal today is to provide you with the most current and relevant information we have and as always to be as open and transparent as we possibly can so forgive us if we run a little long today the covid 19 dynamics at ge like the economy at large are fluid and still evolving but clearly challenging in the near term with that i will start with our response to covid 19 carolina who is joining our earnings call for the 1st time will cover the financials then i will wrap with a more in depth view of our current operations moving to slide 2 during this unprecedented time we will focus on 3 areas 1st the health and safety of our employees and our communities we established a covid 19 taskforce that are working to ensure we are doing everything in our ability to protect the health and safety and aligning with the various government directives and medical advisories in real time to that end we have encouraged those employees who are not directly performing customer facing essential jobs to work from home wherever possible but given the mission critical work we do at ge not everyone can stay home i would like to acknowledge our employees out in the field and in our factories for their unwavering dedication as they continue to deliver for our customers supporting essential services like hospitals power generation airlines and national defense we are ensuring they have what they need to do their job safely this includes temperature screenings face coverings and gloves as necessary and physical distancing all keeping with national state and local guidelines i am also inspired by the support that our employees have shown each other we recently established an employee relief fund and more than 75 senior leaders across ge have contributed portions of their salary to support those affected by this crisis our 2nd priority is continuing to serve our customers in healthcare we are ramping production of critical medical equipment used to diagnose and treat covid 19 patients including respiratory ct monitoring solutions x ray anesthesia and point of care ultrasound product lines already our team has doubled production of ventilators and plans to double again by the end of june healthcare is digital and ai solutions are helping hospitals remotely monitor multiple patients at once and automate road tasks so clinicians can spend more of their precious time focused on life saving work across all of our businesses we are in constant communication with employees customers suppliers and governments to maintain business continuity without disruption our 3rd priority is preserving our strength 1st and foremost sound liquidity is crucial and solidifying our balance sheet remains a key focus with the recent closing of the biopharma transaction we received $20000000000 of net proceeds this provides ge with optionality t to protect our company and remain flexible and importantly we retained a $17000000000 leading healthcare business at the center of an ecosystem striving for precision health preserving our strength in a time like this also requires a different operating model here i draw on my experiences as ceo managing through 911 and the global financial crisis there are 3 steps in this model embrace reality redefine winning and execute the plan easy to say hard to do starting with embrace reality this is necessary in a time like this when so much has changed and remains uncertain for us it means recognizing that we are facing significant headwinds in aviation and we may be for awhile we wish it were otherwise but that is not our reality next redefine winning we came into 2020 with a plan to define winning as profitable growth margin expansion and cash generation now we need to adjust to the altered environment to focus and inspire our team let me share some ways we are doing this while safety has always been a top priority for ge covid 19 has reshaped our safety agenda in terms of our financial priorities improving our cash generation and decremental margins in the 2nd half are key focus areas and in healthcare we clearly did not come into the year expecting to increase our ventilator production fourfold but we will and finally execute the plan we are moving with speed discipline and intensity to improve our cost structure it is already more than 2000000000 of cost actions and more than 3000000000 of cash actions and this is where lean is particularly relevant from daily management to traditional kanban systems which help reset inventory levels to do problem solving tools we are rolling out across ge let me share a recent example from gas power in our greenville facility the team use lean to cut the distance that a single part travels during production from 3 miles yes 3 miles to a mere 165 feet slashing the time it took to make that part by 42% these are the sort of operational efficiencies that are more essential than ever in this environment so that is our approach here we are facing the pandemic head on while continuing to execute our longterm strategy for ge moving to slide 3 you will find a snapshot of our 1st quarter results and carolina will take you through this in detail but 1st a few top line thoughts as i noted we entered the year with momentum however as covid 19 continued to spread globally and i am not going to sugar coat this we got hit hard in some of our highest margin parts of our best performing businesses this is especially true at aviation services where covid 19 costs are rapid decline in commercial aviation demand and even essential travel became difficult in the 2nd half of march a similar situation also transpired at power services where travel restrictions caused by covid 19 impacted our field personnel and across all of our businesses we started to see some project fulfillment and execution issues at the same time healthcare performed well due to urgent demand for our products used in the fight against covid 19 taking a step back about 80% of our roughly $100000000000 backlog is in services which have a long time horizon and while services have been hurt in the near term those capabilities remain one of our greatest strengths they keep us close to our customers with deep strategic relationships especially through periods of volatility so in the spirit embracing reality let me frame for you what we are seeing right now at a high level and then i will do a deeper dive after carolina reviews the 1st quarter in aviation and at gecas airlines are conserving cash not flying the planes they have limiting maintenance spare spend where they can and all the while deferring orders in many places no one can predict when and how leisure and business travel will resume but the reality is likely it is not soon so we are redefining winning for margin expansion in 2020 to improving our detrimental margins this year which re requires we aggressively adjust our cost structure that is what winning looks like for aviation and they are moving forward with a comprehensive plan to be clear we will get back to targeting those 20% operating margins post pandemic in healthcare we have been on the front line combating covid 19 since the early days in wuhan this is fundamental to our mission while we have seen demand surge for certain products other products including those in our high margin pharmaceutical diagnostics business have been negatively impacted as multiple procedures are deferred healthcare is likely to rebound faster than aviation but we are still fast tracking additional cost out actions targeting an incremental $700000000 since kieran and the team spoke with you in december in power and renewable energy the impact of covid 19 has been more limited to date specifically at power we are experiencing outage delays and restrictions and field service travel and we are monitoring new unit orders and services to offset this we are further rightsizing the cost structure and in power we already reduce head count by 700 in the 1st quarter now clearly across ge there are a number of large variables that are unknown at this point including the full duration magnitude and pace of rec recovery across our end markets operations and supply chains we are also monitoring how the resulting interest rate environment will impact pension obligations and our run off insurance business so let me tell you what we do know the 2nd quarter will be the 1st full quarter with pressure from covid 19 and we expect that our financial results will decline sequentially before they improve later this year the bottom line is we have some challenging times ahead but this too shall pass i am confident the underlying reset we took over the last 18 months to focus ge is portfolio and instill a greater focus on customers and lean give us a running start for what we face today moreover i see in our response to covid 19 signs of how we are moving faster to change ge for the good more lean work to help reduce inventories in the face of demand challenges in aviation travel restrictions spurring on the use of remote digital technology to complete field work and renewables and more capital discipline across the board with new leaders assimilating faster and with real impact healthcare comes to mind so all of this in combination with the planned actions we will discuss later are accelerating our transformation of ge with that i will turn it over to carolina but before i do let me say how pleased i am to have her on board in 2 short months it is clear we share the same perspectives of embracing reality and operational bias for action and executing with speed thank you larry i am proud to join my 1st call as cfo of ge and help lead this company forward as you are noted we are operating in unprecedented times and we are focused on 1st keeping our financial position strong and safe with a keen eye on leverage and liquidity as well as cashflow and capital discipline while ge is actions over the last couple of years have put us on a stronger footing ahead of this situation we will do more 2nd working with our businesses to take the right action not only to help mitigate the impact of covid 19 but to serve customers better operate smarter and more efficiently and integrated lean more holistically while larry and i are focused on the near term we are also managing for the long term we are working together to reduce complexity at ge adding a lean culture that delivers sustainable earnings and cashflow generation today my intention is to take you through our results in detail and provide context that help you see what i see across the businesses with that let us turn to slide 4 this was a challenging quarter for us as the macro environment rapidly deteriorated taking it from the top 1st quarter orders were down 3% organically or down 4 ex biopharma growth in power and healthcare was effect by double digit decline in aviation and renewables both equipment and service orders were down below single digit i will cover this by business shortly industrial revenue was down 5% organically or down 6 ex bio pharma is equipment revenue flat and services down 9% both aviation and power services were adversely impacted in the quarter due to covid 19 adjusted industrial profit margins were down 450 basis points organically most of the came from aviation or renewable with aviation impact mostly driven by covid 19 now let us discuss starting at continuing etf of ¢0.72 there was a ¢0.75 gain primarily related to the 11500000000 after tax gain can from the biopharma side which also included one of tax benefit in ge capital this was partially affect by a 4600000000 after tax loss on our remaining baker hughes which will measure at fair value each quarter on restructuring and other items we incurred ¢2 of charges is this principally related to the reduction of aviation is us workforce lastly non operating pension and other benefit plans were ¢6 headwind in the quarter excluding this item adjusted tax was ¢5 as described earlier our earnings performance was materially impacted by covid 19 and other market dynamics this was primarily in aviation and ge capital line with negative marks and impairment in both gecas and insurance as well as higher credit costs we estimates the 1st quarter industrial operating profit impact from covid 19 roughly 700000000 drivers included lower aftermarket sales project delays and supply chain constraints this impact is higher than anticipated at the march outlook call reflecting the rapid global progression of the pandemic but our prior forecast largely reflected the slowdown in china our focus on addressing this pandemic is global we are targeting more than 2000000000 of cost out this year while this may not affect the full impact we are rapidly addressing both costs and cash to making our businesses more agile and customer focused over time i can tell you from my experience that as this program builds momentum and the company leaders begin to see how powerful results can be they tend to extend beyond their stated goals with just what i have seen so far i am encouraged that we can have some of that same experience at ge moving to cash as many of you know the 1st quarter is typically low for our free cashflow this year we are impacted by our usual seasonality but also covid 19 especially in aviation industrial free cashflow flow was use of 3200000000 worse than prior year that is notably excluding aviation each industrial business improved free cashflow versus last year turning to the key drivers in the quarter starting with net earnings if you exclude the bio pharma and the mark to market on our baker hughes investment income depreciation and amortization total 700000000 that is down 900000000 versus prior year next working capital -2600000000 asa significant use of cash down 1100000000 let me take you through the main factors 1st we had the net inflow in accounts receivable driven by seasonally lower volume in gas power and renewables 2nd we had an outflow in accounts payable driven by lower volume in aviation and higher disbursements related to primary end material buys in renewables 3rd the increased inventory to support an expected 2nd and 3rd quarter volume run in onshore wind and shop output declined aviation 4th progress collections there were a use of cash as new orders and milestone payments were more than effect by burndown of prior progress payments in power and renewables lastly we also spent about 600000000 in gross capex we are on track now to reduce 25% of our capex spend this year for cashflow in total we estimate the 1st quarter impact from covid 19 of around 1000000000 the majority of which was health and aviation as we look forward we expect continued free cashflow pressure retargeting more than 3000000000 in cash action however over time we know that each business can be a better cash generator as we improve execution moving to slide 6 we continue to strengthen our balance sheet largest in the quarter was closing bio pharma the 20000000000 we ended the quarter with 33800000000 of industrial cash up approximately 16000000000 sequentially ge capital and with the 13500000000 of cash down approximately 5300000000 sequentially driven by contractual maturity we continue to hold a liquidity balance covering 12 months of ge debt maturity the risk that we take in action to enhance and expand our liquidity and pay down debt on april 17 ge entered into a 3 year 15000000000 syndicated revolving credit facility this was the planned refinancing of ge is prior 20000000000 syndicated revolver credit facility including bilateral agreements we expect to have in the range of 20000000000 in total credit line access going forward following the sale of bio pharma we also improved our liquidity profile in april we reduced our near term debt maturities by issuing 6000000000 in ge debt in april and subsequently tendering for 4200000000 of debt the plan to use the remaining 1800000000 of proceeds to further debt reduction and the combination of transaction will therefore be leverage neutral following this ge cap ge industrial has no debt maturities in 2021 1900000000 of maturity in 2022 and 900000000 in 2023 as ge industrial will reduce debt by approximately 7000000000 we reduced commercial paper use by 1100000000 in the quarter and repaid 6000000000 of the intercompany loan from ge to ge capital in april using proceeds from bio pharma at ge capital we reduce debt by 4000000000 but we reduced external debt by 10000000000 year to date including 4700000000 of maturities in the quarter and an additional 5400000000 of 2020 majorities tendered in april offset by ge is 6000000000 repayment for the intercompany loan our financial policy goals remain maintaining a high cash balance achieving less than 2.5 times net debt ge industrial and less than 4 times debt to equity at ge capital our credit rating in the single a range and reinstating a dividend in line with peers over time we remain committed to achieving our leverage targets but we now expect to achieve those targets over a longer period than previously not due to the impact of covid 19 next on slide 7 we will discuss industrial segments results starting with aviation as you have noted our 1st quarter results were materially impacted orders are down 13% organically with both equipment and service orders down equipment orders were down 27% primarily driven by commercial ngs business due to the max grounding and the covid impact services orders were down 4% primarily driven by commercial services partially offset by military which one you fighter helicopter service orders from the us dod service orders were stronger than revenues due to the military orders which were up 60% year over year backlog of 273000000000 was flat sequentially and up 22% versus prior year primarily driven by long term service agreement this included roughly 201 day unit order cancellations in the quarter revenue was down 11% organically equipment revenue was down 17% we shipped 472 commercial installed and spare engine units this quarter down 37 versus prior year sale of 272 one a and one b units were down 152 and cfm 56 units were down 98 units service revenue was down 8% due to commercial services down 11% this was driven by lower spare part shipments and lower shop visits from the impact of covid 19 total military revenue was down 7% with 146 engine unit shipments down 9% and this was driven by supply chain fulfillment dynamics and inbound material is partly offset by the enhanced programs gross operating profit was down 39% organically primarily on lower volume and negative mix pressure in commercial services from the impact of covid 19 and low spare engin units segment margin contracted 650 basis points organically this was primarily due to covid 19 impacting our commercial businesses in both engines and services the continued 737 max grounding the non repeat of prior year favorable contract adjustment and the 1st full quarter of revenues from our aero derivative business now that we have de consolidated big issues add a bit more color covid 19 represents just over half of the year over year margin difference 7737 max timing considering install and spare engine volumes and supply chain exact costs represent additional 20% of the world moving to healthcare which performed well orders were up 9% organically equipment orders put up 40% and up one healthcare order excluding were up 6% driven by a surge demand related to covid 19 this was partially offset by delays in procurement and lower demand of products less related to covid 19 examples like mister and intervention in healthcare systems as well as contracting their nuclear tracers in pharmaceutical diagnostics life sciences orders were up 10% backlog was 17400000000 down 6% sequentially and down 3 versus prior year due to the sale of marijuana so excluding biopharma battler was up one sequentially and 4 versus prior year revenue was up 2% organically and one excluding biopharma healthcare systems revenue was up 2% with services and 3% with equipment flat life sciences was up 4% operating profit was up 10% organically segment margin expanded 140 basis points organically or 30 basis points excluding biopharma this was driven by volume and cost productivity offset by price and logistics pressures from covid 19 next on power we had mixed results with equipment top line strength offset by challenges in services orders were up 14% organically gas power orders were up 8% with equipment orders up 37% largely due to one turnkey order you booked 2.2 gigawatt of orders for 9 gas turbines gas power service orders were down 3% with contractual services down and transactional upgrades roughly flat power portfolio orders up 27% with strong equipment and services orders instant and power conversion backlog tilted 85000000000 flat sequentially and down one versus prior year backlog was 71000000000 of that sequentially revenue was down 12% organically largely driven by services in gas power revenue was down 12% gas power equipment revenue was up 4% organically on higher hitch turbine mix we shipped 9 gas turbines versus . 0 sorry we shipped 7 gas turbines versus 9 gas turbines in the 1st quarter of 19 we helped our customers it is a promotional brazen over 32 units translating to almost 4.7 gigawatts of new power added to the grid gas power services revenue was down 19% strategy outages this and transactional sales pushed out of the quarter due to covid 19 and we had no revenue on higher margin upgrades despite this services would still have been down in quarter this was driven by supply based constraints on hot gas path parts and outage costs overall pressuring our suicide margin rate power portfolio revenue was down 12% this was driven by lower volumes across the sub segments and still we had lower services back low convertibility in nuclear the decline was driven by outage timing and in power conversion we find our sales permitted focused on higher margin market segments operating profit was down 239000000 and segment margin contracted 570 basis points organically the gas power fixed costs were down 9% sequentially and versus prior year this was more than offset by lower service volume and additional costs from covid 19 disruption next are renewables continued revenue growth was more than offset by fulfillment and execution issues impacting profitability orders were down 11% organically equipment was down 11 as we cycle a stronger and services were down 23% a positive spot in the quarter was international orders which were up 11% backlog of 26500000000 were down 4% sequentially but up 5% versus prior year revenue was up 28% organically this was mainly driven by onshore wind up 60% onshore equipment revenue was up 81% with the new unit turbine deliveries of 731 more than double prior year and repower kit deliveries of 219 up 40% on shore services revenue excluding the power kits was up 15% on short order pricing index continues to stabilize at one in line with recent trump grid revenue was down 8% mostly due to site closures and delayed milestones driven by covid 19 operating losses was down 115000000 this was driven by the supply chain disruptions due to covid 19 for delays and the non recurrence of the non gain non cash gain from an offshore wind contract termination in the prior year this was partially offset by higher onshore wind volume segment margin contracted 210 basis points mainly driven by the same items mentioned above and during range of execution issues with fixing at grid and hydro moving to slide 8 starting with the capita in the quarter adjusted continue operations generated a net loss of 118000000 this excludes the impact of the capital loss tax benefit utilized against biopharma gain resulting in 88000000 of earnings compared to prior year which excludes excludes the tax reform benefit continuing net earnings was unfavorable by 154000000 this was due to negative mark and impairment at and insurance lower gain and lower earnings from a smaller asset base this was partially offset by lower excess interest costs and as we ended the quarter with 101000000000 of assets excluding liquidity this was down 1000000000 sequentially primarily driven by due to asset sales depreciation and collection partially offset by new volume insurance assets were flat sequentially as the decrease in unrealized gains driven primarily by higher market rates with effect the annual issuance and the capital contribution supply chain finance assets were down as our suppliers continue to migrate to mufg as noted earlier capital ended the quarter with 13500000000 of liquidity capital also ended with 54500000000 of debt which was down 4500000000 sequentially driven by death majority discontinued operations generated a net loss of 164000000 which was unfavorable versus prior year by 200000000 if they plan to provide the required support to ge capital in line with insurance statutory funding next just like our businesses corporate needs to adjust our new realities and we are continuing to take additional structural action to rationalize costs and reduce the size at corporate looking at the quarter adjusted corporate costs were 374000000 8% higher but that is primarily due to higher inter company profit elimination which was partially offset by better digital performance from continuing cost reduction actions sanctions and operations were 25% lower primarily driven by ge digital improvement you can see from digital is performance that the focus cost reduction programs are getting traction they continue to right size our function costs across ge and push more accountability into the division larry and i are conducting costs and cash reviews of each of the businesses with fresh eyes in the current environment so you can expect that there will be more to come stay tuned i have spent most of my career in leadership at many decentralized companies fundamentally i believe companies outperform when they have a structure that empowers businesses to take the right actions quickly this type of structure is critical to respond to situations like we have today with covid 19 but also to be prepared to be able to grow we are working toward this goal and there will be more to come with that back to you larry thank you there is no question that covid 19 is putting real pressure on our businesses given that so much has changed and this quarter will be our 1st full quarter with pressure from covid 19 i would like to spend some time here discussing 2nd quarter trending based on what we are seeing through the month of april so starting with aviation on slide 9 of all of our industrial segments this business is feeling the impact of the pandemic most severely the rapid contraction of air travel has resulted in a significant reduction in demand as commercial airlines suspend routes and ground large percentages of their fleets we will cover commercial services and engines on the next 2 slides in detail but on the other end of the spectrum demand for our military business remains strong to that end we have re rebalanced some of our capacity to meet this increased demand to offset some pressure in the commercial business we are taking several steps that while painful preserve our ability to adapt as the environment continues to evolve we have previously announced 500 to 1000000000 in cost in cash actions and we have now increased this targeting more than 1000000000 in cost actions and more than 2000000000 in cash actions this will be achieved through different initiatives some of which have been completed others in flight as we speak these include a 10% reduction in aviation is total us workforce and furloughs impacting 50% of its us maintenance repair and overhaul facilities and new engine manufa will continue to monitor and potentially extend as required we are also focused on reducing the discretionary and capex spend and optimizing working capital i know aviation is detrimental margin through this pandemic is top of mind for investors and karolina touched on the main dynamics impacting our margins in the quarter while we expect our commercial revenues and profits will continue to be down in the 2nd quarter our expectations are that the cost actions we are undertaking will improve detrimental margins in the back half of the year while there are many uncertainties i expect that we will exit the year with a much lower detrimental margin than what you saw in the 1st quarter so make no mistake driving improvement here is our number one focus as we think about the full year we are tracking travel restrictions carrier and passenger behavior disease countermeasures and freight demand all of which will impact aircraft departures and revenue passenger kilometers while we are seeing an unprecedented decline in 2020 we are taking action and david and the team are working proactively with our customers to navigate through this crisis so spending a little more time on commercial services which represented $3300000000 of revenue in the 1st quarter let us go to slide 10 as you can see on the left side departures across the full industry were strong in the 1st quarter before rapidly declining in mid march as we look at it this week focused on the ge and cfm fleet global departures are down approximately 75% roughly 60% of the cfm fleet is parked today in line with this we are also seeing significant headwinds in global shop visits which were down low double digits in the 1st quarter as airlines to 1st short term maintenance and we expect this trend gets worse before it gets better with some potential to moderate in the latter half of the year depending on the variables just outlined based on what we are seeing through the month of april in the 2nd quarter we are seeing shop visits down roughly 60% and csa billings down roughly 50% additionally we expect this significant reduction in utilization is likely to continue to pressure our csa margins that said when the aviation industry recovers and it will recover over time ge is well positioned with the largest and youngest installed base of all engine manufacturers additionally roughly 62% of our ge cfm fleet has she has seen one shop visit or less and this will generate demand upon recovery we have more narrow bodies that are 10 years or younger than than the narrow body installed base of the rest of the industry and when we see a pickup in air travel demand we expect narrow bodies will recover most quickly overall it was a challenging quarter and we are expecting additional pressure here in the 2nd but our cost actions will alleviate some of the pressure in the 2nd half of 2020 moving to commercial engines which represented $1500000000 of revenue in the 1st quarter in light of covid 19 airframers are producing at a lower rate based on what we are seeing through the month of april in the 2nd quarter we see installed engines down roughly 45% and spare engines down roughly 60% year on year attributable to the delivery deferrals in addition to the already planned lower production rate on the 737 max in the near term we are right sizing production capacity and actively managing the supply base we have very strong relationships with the airframers and an attractive value proposition is evidenced by a multi year backlog as you will see on the right we have strong positions sole source on 2 of the biggest new engine entrance and a 65% win rate on the other while we acknowledge that there is pressure on near term demand for new aircraft these stats demonstrate the customers see the value of ge technology we are taking the right actions to be well positioned for the post pandemic world moving to healthcare which consists of healthcare systems and pdx in the 2nd quarter to date we are seeing increased demand for vital medical equipment and the diagnosis and treatment of covid 19 within healthcare systems now these product orders including ventilators have increased one.5 to 2 times versus pre pandemic levels but at the same time we are seeing reduced demand for other diagnostic products as certain procedures are deferred or canceled around the world to be clear these other diagnostics are still essential and often associated with saving lives in areas including oncology and cardiology but are currently deprioritized pdx is a similar story this is a high margin business made up of contrast agents and nuclear tracers associated with procedures that are being deferred or canceled right now several hcs product lines and most of pdx is down as much as 50% versus pre pandemic levels while these dynamics vary by country there appears to be a pattern emerging as geographies experience different stages of the virus taking china for example as hospitals come back online we are seeing a ramp in previously deferred procedures and increased demand for our equipment and consumables healthcare is accelerating its plan transformation to ex to expand margins post biopharma by reducing headcount fixed costs discretionary spend and marketing spend prioritizing r d differing capex and optimizing working capital looking forward we are most focused on the following indicators for healthcare hospital admission and and occupancy rates and increase in non covid 19 procedures changes in hospital capex budgets government spending on healthcare broadly and development of covid 19 tests treatments and vaccines based on our experience in china and the market in april we expect to be down in the 2nd quarter with potential recovery afterwards covid 19 has highlighted the need to build and truly invest and and scale a new digitized infrastructure and quickly we are committed to our investments in our digital edison platform and solutions like mural virtual care solution which allows one clinician to remotely view numerous ventilated patients simultaneously helping to expand their capacity while reducing their risk of exposure as our digital healthcare journey continues we are at the center of an ecosystem striving for precision health i am very proud of the work our team is doing to combat covid 19 moving to power on slide nine . on slide 13 we will talk to the current trending in the 2nd quarter to date and dynamics at gas power and power portfolio starting with gas power equipment while we are monitoring and managing supply chain disruptions as of today we still see a path to 45 to 50 gas turbine deliveries this year but our orders profile and therefore cash down payments were several $100000000 or likely weaker due to ipp pressures in the us and mexico as we expect that deal financing will become harder through the year additionally with oil price pressure impacting middle east and ssa investment including demand for new lng we are expecting a longer road to normalization ultimately we are sticking to our strategy of securing a lower risk margin of creative backlog with disciplined execution in services approximately 20% of planned averages are shifting from the 1st half of this year due to covid 19 field labor constraints we are also seeing pressure on upgrades primarily in the middle east where low oil prices are impacting customer budgets we are seeing ge gas turbine utilization in the us up mid single digits due to low gas prices and the shift from coal but utilization globally is down low double digits due to lower electricity demand within power portfolio our steam business is most impacted factory closures pressured our steam operations including one facility in move on which was closed for approximately 8 weeks in the 1st quarter today we are back up to more than 70% of capacity the global supply chain has also been disrupted by the shutdown in india driven by government restrictions overall we are seeing about 30% of outages shift from the 1st half of this year to the 2nd half with another 10 15 pushing into next year our power businesses are taking several measures to offset these pressures in the 1st quarter where we reduced head count by 700 notified approximately 1300 contractors implemented a hiring freeze and in line with the demand profile we are taking even further actions this was serve to reduce 6 costs in 2020 and drive benefits in 2021 looking forward we are tracking a number of items including timing of our gas turbine new order closure service outages and volume leak utilization in the energy mix and fuel prices are impacting each region differently supplier impacts and project execution billing milestones and customer collections we are targeting to have our accelerated cost out measures drive organic margin expansion despite these demand changes moving to slide 14 on renewables there was a limited impact of covid 19 in the 1st quarter and our disappointing results continue to be largely about improving execution as we have said we think about renewables in 3 distinct operating pools starting with onshore wind while we continue to deliver at record levels in the americas we are seeing supply chain disruption at our lm wind facilities and we are monitoring key commercial milestones such as permitting and financing which could potentially cause timing delays in offshore wind certification for our industry leading turbine the haliade x remains on track we are also on plan to start delivering on our 80 unit 6 megawatt commitments to edf after completion of this project in 2021 we expect to start shifting production to the haliade x we are also monitoring financial closure of 2020 deals grid and hydro are 2 turnarounds are impacted by supply chain disruptions with over half of our grid facilities now operating below full capacity and a grid automation were also impacted by lower book to bill order conversion across all 3 of these pools we are increasing cost down in restructuring and we have identified several $100000000 of additional actions longer term a lower cost structure will benefit renewables relating to the global supply chain we are focused on the safe reopening of our plants globally and then optimizing the workforce and plant load levels looking forward we are expecting a larger impact of covid 19 in the 2nd quarter and by business we are tracking 20 and 21 demand impact on progress collections and potential site delays in onshore wind the risk of financing delays associated with deals at offshore project site delays at grid and hydro and the backlog at grid on slide 15 within ge capital our and insurance businesses are where we were feeling the largest impacts so i will keep my comments focused there 1st g cas is better positioned today than in previous downturns with better asset quality less customer concentration and more geographic diversity that said we are preparing for elevated repossessions and redeployments as well as lease restructurings and we have had approximately 80% of our customers seek short term deferrals as you may have seen we agreed with going on a rebalancing of our 737 max order book 2nd at insurance market and rate volatility is impacting the current value of our investment portfolio and reinvestment yields therefore we are deploying capital to capture market dislocation investment opportunities we are closely monitoring how this volatility will impact insurance this year and similar to the industrial segments we are implementing incremental cost and cash actions looking forward we continue to expect higher impairments and lower asset sales at g cas and insurance our seasoned teams are working closely with our customers to navigate through this period so to close our priorities are clear we rapidly mobilized our team in the face of covid 19 with our top priority being the health and safety of our employees and overall the priorities we reviewed with you at the outlook call remain intact we are into our near term realities while continuing to manage ge for the long term when the world is facing the worst pandemic in a century our team is rising to the challenge with humility transparency and focus we continue to deliver value for our customers enabling air carriers to transport essential goods supplying vital healthcare equipment and keeping the lights on and while there are many unknowns there will be another side planes will fly again healthcare will normalize and modernize and the world still needs more efficient resilient energy at the same time we are embracing this new reality we are redefining winning and we are executing our plan the cost and cash we have taken you through this morning are a major result these moves will ultimately allow us to accelerate our multi year transformation to make ge a stronger nimbler and more valuable company and i am confident that ge will emerge stronger with that steve let us go to questions great before we open the line i would ask everyone in the queue to consider your fellow analysts again and ask one question and a follow up so we can get to as many people as possible brandon can you please open the line yes thank you sir we will now begin the question and answer session if you have a question please press one on your telephone keypad if you would like to be removed from the queue please press the pound sign or the hash key if you are on a speakerphone please pick up your handset 1st before dialing once again if you have a question please press one on your telephone keypad and from vertical research we have jeff sprague please go ahead thank you good morning everyone hope everyone is well thanks for all the the great details good morning jeff good morning i was hoping you could provide a little bit of color on how you you know kind of view the kind of the asset quality of the you know the contractual service agreements and the like right there is a lot of assets there obviously there is at least a temporary impairment of cash flows how does that test work have you done it yet and are are you close to any particular thresholds there that we should be thinking about jeff i i think if if we look at the th the service backlog right broadly just under $325000000000 for the company the vast majority of that $234000000000 is in aviation i suspect that is that is where you are most focused we we go through those those backlog reviews and the csa reviews on a regular basis what we have done here over the last call it the last 78 weeks is really tighten and quicken the review process that we do with the the businesses both at aviation and at gecas what we are trying to do is make sure we have got the latest and if you will most most accurate information possible with respect to customer risk given given everything that is that is going on so we we we do that on a regular basis we did that at the f at the end of the 1st quarter in in in closing much as we do every quarter clearly we have got a we we have got a fluid situation and i think the the modest charges that we took the modest changes in the 1st quarter clearly are going to play out as we go through the course of the year we can not really scope that for you today if you look at the csa book and aviation for example as we went through the the mechanics of the future billings the future costs related to those billings based on the information at the time it was really just 100000000000 d . $100000000 adjustment non cash of course which is why you see a little bit of the earnings cash dynamic certainly as we go forward we are going to be updating those those adjustments and again w we would expect that we would see more of that given what the airlines are doing with with their planes but i think it is important to keep in mind again you know these these are 10 to 15 year agreements as you know and those adjustments are take taken in the context of that particularly extended time period great thanks for that and just as a followup if i could i know you do not want to get real precise on guidance but you know you you are pointing us to a further decline in cashflow in q 2 which is not surprising quite quite frankly but could you bracket that at all for us what we should expect for for q 2 and you know any high level thoughts on how the year plays out from the cash standpoint yeah jeff i i think that we we took guidance off the table a few weeks back and did not want to take a an attempt at at at framing formal guidance here today in light of all that is fluid and all that is is still evolving here and i think that the tack we took was really to try to to to share as much with you as as we possibly could in terms of the the april detail business by business and acknowledge that we are going to see a a more challenging 2nd quarter here given the full impact of of covid and the like but beyond that i think that is that is really where we are we we we know we have got to to get to work on the cost and the cash actions that is why you see us doubling that activity in aviation stepping it up elsewhere around the company so the the $2000000000 of costs the $3000000000 of cash will clearly help us later on in the year if those those actions take take root but for today i think that is really what we are that is what we know and that is what we are comfortable sharing great thanks best of luck larry thanks from morgan stanley we have josh pokrzywinski thanks jeff please go ahead josh your line is open josh you might be on mute josh you might be on mute josh josh are you there why do not we w . brandon let us move on and come back to josh okay sure next question we have from bank of america we have andrew obin please go ahead yes good morning can you hear me good morning andrew yep yeah i can i can hear you yeah just a question on . thank you so much and good luck to everybody so run rate minus 60% in terms of shop visits 50% in csa do you think you will continue to trend at this level in the 2nd quarter or is there a more downside andrew the i think you are referring to to page 9 in the slide deck yeah there it is yeah i think this is what you know what we are seeing here . yeah i i think this is what we are what we are seeing right now right and given given what the carriers have have said publicly what they are doing and we think these are these are good likely year end run rates to share with you we are again we are not trying to offer up a definitive view as to the next several quarters but this is you know this is what we are seeing right now in the 2nd quarter for sure and my my follow up question on engine sales i think minus 60% have we lost these or will these come back when the situation normalizes maybe you can give us some sort of framework how to think about spare engine demand over the next couple of years thank you so much andrew we were we were ramping spares with with both the the leap one a a and the leap one b as the narrow body market was taking off typical early in the life of an engine activity w we are clearly seeing that soften not necessarily going to 0 as preparations are being made for the return to service of the max right i do not think that that that opportunity is lost but i think like much of what we are seeing in aviation broadly it will be it will be pushed out for a few years and again i do not think we are taking a definitive view as to what year what quarter things get back to if you will a normalized 2019 level but we recognize the the discussions out there about this being a multi year recovery gradual slow like we are embracing that reality and that applies really across the portfolio both on the oe side as well as the aftermarket spares included thank you very much for all the detail and stay safe thank you likewise andrew thank you from melius research we have . from melius research we have scott davis please go ahead hey good morning guys and welcome carolina thank you larry any . good morning larry any any way to think about the cost actions as it relates to kind of structural versus more kind of pandemic short term related sure well i i would i would say scott as you well know that when we are in a we are in a mode like this you are you are you are moving as quickly as you possibly can almost anywhere that you can so if you look at what we have announced at aviation the doubling of those activities today the the the broadening across the company if you look at the the tally today there is a decidedly short term bias there that carolina and i are going to be working with the ceos over the coming weeks to transition to a more permanent action right if you look at what we did in aviation for example example in terms of the temporary lack of works that was a way to quickly adjust our cost structure in that business on a variable basis to these shockingly fast changes in demand you might categorize that as as temporary we need to work through the changes on a more permanent basis that are required in in light of the the length of the recovery that we are looking at so we have confidence in these in these numbers that we are sharing today the $2000000000 of costs the $3000000000 of cash there is a bit of tactical bias today just given how fresh this is but we will be leaning in toward making more of them permanent recognizing that at the end of the day there will be a a bit of a mix be it be it headcount related discretionary spend on the cost side in addition to some of the working capital and certainly the the the capex reduction that carolina referenced the 25% reduction year on year so a lot going on and by no means is this these headlines today the the end it is very much a work in in progress okay that is helpful larry and we think you know that the $20000000000 kind of came to you pretty much about perfect timing but you know does that money just sit on the balance . does that have to sit on the balance sheet pretty much as is for the for the year can you . or is it just such a big number you can start to parse some of it out to think of in terms of whittling down some of the you know debt that you can you can manage well we . it it it it did come at a at a at a good time there is there is no question that is why we put the emphasis in in the biopharma set up on on on certainty right we want to take the market risk off the table relative to thinking through the the healthcare options carolina anything you want to add relative to kind of managing liquidity versus leverage right here i think that is yeah i i think it is it is important to acknowledge that the world is different now compared to like before covid and it is very important for us of course leverage is important but liquidity is very important and we end the quarter with $47000000000 cash right and that is really to cover $13000000000 of ge and ge capital long term debt maturities now through 21 and actually after the april actions we are down to $13000000000 of maturities for 20 and 21 almost all of that in in capital and i would also say that we expect to have around $20000000000 in total credit lines going forward and that is really in line with our risk appetite we have the new $15000000003 year rcf that i mentioned and $5000000000 either will be on 20000000000 credit lines i think we are just so that you know we we really intend to maintain a high level of cash i would say to maximize flexibility and that is why we are taking these actions also to de risk our balance sheet and basically prudently manage our liquidity in these very challenging external environment and time that that makes sense and thank you and good luck to you guys thank you thanks scott be well yeah let us try josh pokrzywinski again from morgan stanley please go ahead sir hi there can you hear me this time yes yes clearly josh good morning awesome and and hope everyone is is well to echo earlier comments w larry can you just give us a sense and i i know you guys have data going back eons in in aviation how the impact of of retirements and cannibalizations you know kind of make more of a a u shape versus you know what you know the the air traffic may look like is is there a natural lag between when folks start flying again and when when shop visits can happen just as a function of kind of using up some of the runtime on on otherwise idled assets well josh you know certainly we have we have revisited the history the team is is well versed in in what we have seen in years past i am not sure we have we have seen anything kind of on par with with this but there is there is no question that there is there is going to be a bias on the part of some as some of these fleet reductions play out to retire some of the older aircraft and that will factor into the to the aftermarket much like some of the dynamics around green time and how you are in the short term folks try to preserve cash carriers try to preserve cash in in in their business so i am not sure that there is necessarily an exact model that captures what all the carriers in aggregate are going to do here a model that offers great precision i think we do know that this that the combination of these factors is going to create pressure for us a force here in the short term i think what is most important for our business really is is cycles much more so than reverend . revenue passenger miles and as we see schedules come back as we work our way through the pandemic that will that will put us back on i think better footing but here in the short term i think we are acknowledging that we are going to see shop visits and csa billings take on some real pressure due to the downturn understood thanks i will leave it there from jp morgan we have steve tusa please go ahead thanks josh hey guys good morning hey steve good morning good morning in in in early march you guys had that slide that showed you know $2 to $4000000000 in you know free cash flow guidance which is obviously off the table but you also talked about things growing in you know 21 and 22 and you know off that kind of $3000000000 base i think you know most research and numbers i saw were kind of in that you know $6000000000 range of of free cash flows to kind of growth off of that level are are we still . like is is are the iata numbers still at all legit or is that you know are are you kind of withdrawing that long term outlook as well steve i think we have admittedly been on taking the right actions both the costs the cash the the balance sheet actions here in the short term in the face of this this unprecedented dyna pandemic we have taken guidance off for the year we are not putting it back on today just given the given the undue un uncertainty of it all right so i i do not i do not think we are trying to get out any further than than that i appreciate the question but i think for purposes of today we are really just trying to frame for folks what what we are seeing but that said however long it takes us to work through this i think we feel very good about our ability to come out stronger and get back on a on a positive cashflow growth trajectory got got it and carolina anything you would add to that well no i think it is important to to acknowledge that by taking out cost now and part of it being structural that gives us sort of self mitigating the decremental that helps improving the incremental the the the outer years i mean that would depend on the recovery on the industries as well so so that is that is i would say almost impossible to to speak to today r right and and i guess how much on that is structural costs side yeah yeah steve yeah go ahead yeah no i am just just 11 other point i think worth mentioning i mean i think what we are acknowledging here is that assistance played out in march and and what we are seeing already in april right it it really is hitting hitting us from a mix a mix perspective hard our highest margin businesses are really feeling it here i would think that on the on the recovery we would see we would see it swing the other way when we get back and come off a bottom we should have positive mixed effect really across the across the board particularly in aviation and healthcare yeah y your your 2nd question steve is relative to the cost actions and how much permanent how much not permanent yeah i i know i guess how much is that going to cost you i mean like you know to come up with 2 to $3000000000 of of cost and cash you know you have done you you cut your restructuring last year pretty significantly needed a couple 100000000 in the 1st quarter i mean most companies kind of one for one what how much is this stuff going to cost you this year on a cash basis yeah i i think what we have said previously we were going to be down off of last year from a from an expense and from a cash perspective i think we are we are probably going to end up more or less in line right keep in mind that some of the cost actions like furloughs do not carry a restructuring charge with that right because they are not permanent so part of what we are trying to do is squeeze out some of the temporary costs but all the while if we can we can make more structural moves we want to make sure we have got room to do that but i would say right now assume that it be relatively flat year on year but as carolina indicated in her remarks we want to try to do more if we can great all right thanks all that that is all i have guys thanks steve from ubs we have markus mittermaier please go ahead all right good morning larry carolina and steve let me maybe follow up on the on the aviation marcus good morning hey good morning . within the year so in your q . 10 q you have referenced the iata numbers of 48% rpk reduction if if . and i know obviously fly dollars and rpks are are 2 different stories but is that sort of a a kind of scenario that you are playing through internally and and i am just trying to get a sense of what that would mean if we look at our sort of like 19 aviation cash as a baseline sort of like where you know on on that type of scenario we could end up particularly you know looking at sort of what you have mentioned in your prepared re remarks that you have i think 62% of of engines still ahead of shop visits one which arguably are the engines that are on the narrow bodies coming back 1st because they are probably the youngest the youngest in the fleet right right and so i am just trying to get a sense for within the year how you are thinking about that well i i i think that given what we what we highlighted relative to the the the april experience and the near term projection of that there is no question that we are going to continue to see the pressure on on cash at aviation that we have seen here of late right and that that will be our undoubtedly our our biggest headwind no sure sure sure but you know the the you know sh shop visits we heard sort of the the numbers that you that you said but did you do sort of internal internal stress test around w where you could end up or is that is that just something that you say it is it is too early to comment no no no there is there is there is plenty there is plenty of of of planning for again a an extended slowdown here we are we are we are embracing this reality to the fullest extent possible we are not expecting this to bounce back in in the near term so we we we flag in the queue the iata numbers we also reference others you see it in our own departure data here in april right we are we are we are way down that has a direct feed into shop visits csa billings and the like so we are we are we are adapting to this new environment confident that it will recover so we are marcus . we are we are simply not trying to assume that that the the pressure abates anytime soon witness the the . cost and the cash actions that we are taking sure okay no i appreciate that and may maybe as a followup quickly on on the capital side do you anticipate any change in the in . the capital support there for for insurance in particular you you you referenced that a little bit in the prepared remarks i think 2000000000 is sort of the current number how are you thinking about that at the moment on the current support to capital yeah on the insurance yeah let us yeah . let us take a step back then so in 19 the capital had an infusion from ge of 4000000000 right and the estimate for for this year is 2000000000 on the insurance funding and those 2000000000 you know they are significantly lower than the year before we estimated that the will need to support roughly variables are still open and that depends on ge capital itself right ge capital earnings the the the capital and the asset liquidity levels but basically it is about 2000000000 as it looks now and i would also say going forward followup we do continue to to anticipate further funding and that will be again through a combination of ge capital itself through their asset liquidity and their future earnings and on top of that possible capital contributions from ge thank you from cohen and company we have please go ahead yeah thank you good morning guys good morning 2 question . 2 questions so morning at at aviation it sounds like you guys acknowledge that on the way up the spares business the aftermarket the $15000000000 commercial aftermarket business will lag asm growth because of you know a younger fleet emerging you know a surge of used serviceable material and the like part outs and obviously lower spares provisioning as the oe rates come down 30% to 50% i guess 1st question is when do you anticipate aviation free cashflow getting to break even is it even possible before calendar 22 in that in ty type of environment and then i have a followup i am not i am . not sure we would buy into the premise per say right i mean we we we are a cycles business much more so than than any other indicator and those cycles are going to have to come back before the passengers do a as you indicated the age of the fleet will will help us over time there could be some short term headwinds but we will we will . we will see how that plays out i think i . think what we are acknowledging here is that we have been hit from a free cash perspective in our kind of our our our biggest and best cash generator at at aviation but we are really not getting into much more much . more in terms of the the . the pre cash forecast on on a multi year basis it is just too soon there is just too many moving pieces for us to to . be that forward leaning at this point we wish we could be it is just it is . just not where we are okay and just a followup you know obviously 2020 is a tough year we are going to have some cash burn 2021 unclear but certainly does not seem like in aviation we are going to have a strong recovery any so . so as we emerge from this we are going to have you know more leverage and i i guess the question is you guys have made some asset sales to de leverage what else besides cost reduction can you do to get the balance sheet better faster is there any other things that you guys are exploring or that you might explore that is different than what you have done over the past year thank you well i would i am not sure i would say that there is a lot that is no . please carolina i i was i . was going to say that to do things that we have not done well i i i would say in . the last couple of years yeah well i i would just i . would just say at at at a high level we we are committed to our de leveraging target of less than 2.5 times on the industrial side and i think you have seen us make a lot of progress year to date which i hope underscores the seriousness of of of that objective both on the ge side right i think it is 7000000000 of of . debt reductions in the quarter and capital i think it is up to 10 on on a year to date business given given some of the things we did in april clearly it is going to take us a a a while longer here to hit those targets like i i suspect most most companies but in terms of doing anything new or different i think we are going to continue to try to run these businesses as as best we can be as disciplined as we can on the capital front be be be smart and thoughtful relative to some of the other obligations like like . pension as you have seen us relative to the plan design and and some of the settlement options so i am not sure they are necessarily new plays per se but we will continue to to look at at every and and every option available to continue to strengthen the company strengthen the balance sheet bring those leverage levels down in the face of of . covid 19 carolina i am sorry i jumped in there anything to add there i would just add that to the leverage comment also the liquidity that at times like this you know you do look at the liquidity and i think it is important to say that you really want to maintain a high level of trust to maximize the flexibility and you have the de risking activities that we have made to sort of push out the debt and for . the year so thank you yeah and i and . i i but . i but . i think to that i mean it is just important for us all to remember we we ended the quarter with 47000000000 of liquidity on the back of the bio pharma action and some of the other things that we have done so we will we will continue to be nimble and and flexible mindful of of of our obligations and our reality okay and from barclays we have julian mitchell please go ahead hi good morning maybe just a question around good morning julian good morning maybe just a 1st question around the the . working capital dynamics and the free cashflow at aviation i guess yeah there is a lot of industrial businesses where when you get this rapid sales down draft you get a working capital cash offset to an extent and then it reverses whenever the sales come back could you just update us on how you see the working capital cash impacts at ge aviation sort of in the early stages now in this downturn what you would expect to happen to working capital when things recover and if there is ma any . major difference on the cash dynamics of the power by the hour type service relative to the ad hoc spares activity at aviation julian i would say what working capital part yeah on on with . respect to working capital i i think our our our primary challenge is really inventory at aviation right we we came into this year knowing we were going to have to adjust to a different schedule with the max chasing the the . step up at at . airbus with the 320 neo while dealing with a good bit of of of past due on the commercial side both both oe and aftermarket while having pretty good military demand to to . to contend with that all gets reset here and one of the real pressures we saw from a from . a cashflow perspective was in inventory at aviation in in . the quarter so that that is where we are going to be most focused trying to make sure that we reduce the delinquencies adjust to th these production schedules the lower aftermarket requirements while continuing to take care of a military business it . that that is a that is . a complex supply chain undertaking but the team as you can imagine is keenly focused on using some of the lean tools working with our supply base to make sure that we not only take the cost out of the business but bring those inventory levels down in in in light of current current demand but should we expect . so i guess i i understand yeah is there a 2nd part to your question i i may have missed that i think we are on a little bit of a delay here yeah so i was trying to understand i guess you know in aviation you have the the you . have the drop in ebitda in a downturn and the recovery in ebitda in the in . the early part of the upturn i was just trying to understand on capital is that cash impact counter cyclical or is it pro cyclical so you are you are getting the working capital outflow through the downturn as well as the ebitda decline i understand the the the the high level dynamic there that you are alluding to i i think right now the the . simple reality at aviation given the pressures and the cross currents is that it is a -and we need to work to improve it how much of a a tailwind could it be kind of at this point in the cycle i think it is too early to tell we we we have we have got to get on the improvement path 1st julian to be able to take that potential and and deliver it in the financials as a reality thank you and then my 2nd question was just around the the . operational issues so i think it sounds like the cost out tailwind should build through the year but in q one you had some operational issues in in power on the on . the service side you know steep decrementals even with the fixed cost down 16% renewables the margins were down despite a big revenue increase so i guess what is the conviction that operational inefficiencies will not swallow up a lot of these cost savings over the balance of the year well i think you have to take it business by business right if if you look at what happened in power clearly the the push out by customers because of their own site restrictions and by us on the back of the travel restrictions really pushed a lot of high margin revenue out of the quarter and probably out of the 1st half that was on top of some cost pressures of of our own making which we need to we . need to improve upon but i think in in in power i believe that the team is doing a very nice job working off the the . the so called inheritance taxes driving real cost improvements you see that in the head count reductions here in the 1st quarter and as we get to a more normalize service environment i think you will continue to see that that . turnaround continue to to . take flight i think in renewables julian it is a it is . a different dynamic yes we had phenomenal revenue growth in the quarter doubled the the . on shore turbine deliveries here in the u s got a little bit of a little . bit better price got a better point of price which is encouraging to see but it is by nature a a very low growth margin business so the growth is not high calorie unfortunately we had a a a a few what we think are one offs but they are not one offs until they go away permanently cost and execution issues all the while the the . turnarounds in hydro and grid are are i think moving forward but it is early days and they have a a number of inheritance taxes that will take a few years to to . work through so i i think the cost actions that we have talked about today will accelerate those turnarounds in power and renewables they are dealing with different dynamics in the respective businesses and that is really why i think i have the the the confidence to say that you should expect the decremental margin sequentially to improve that the restructuring and cost actions should present themselves in in in pro in . improved decrementals in the back half but we have got work to do to to make that to . make that happen great thank you from wolf research we have nigel please go ahead thanks julian hi good morning everyone and carolina great to see you on board so look we appreciate all the color and and slides and you bet additional color in in the in . the queue so is is larry . is it now a base case that industrial free cashflow will be -and maybe just address the risk of significant you know cash burn this year or you know is there enough on the on . the cost out and and the working capital side to maybe mitigate some of that pressure and keep the industrial free cash relatively steady yeah i i i think what i . think what we are trying to to share this morning nigel is that probably . 3 things one we we have we have been very we have . been hit hard and fast here right in some of our most important highest margin businesses be it aviation in services particularly gas power services pdx and and healthcare we think that that gets gets worse before it gets better particularly here in the 2nd quarter with a full a a full effect it is uncertain as to how things play out from from . here we are going to acknowledge that uncertainty hence the the . the the the pulling of the guide but we are not going to sit back and hope that it all passes we are not going to take the view that we have got a sharp v bounce coming hence the the . 2000000000 of of cost actions we have talked about and the 3000000000 of of cash actions we are going to do everything we possibly can to to control our destiny here without impairing the the . long term value and the long term trajectory of our company so we are telling you what we know today we wish we we . knew more but that is really the state of play right now and and the approach the headset that we are taking to it okay i appreciate that larry thanks and then you know i thought one of the one . of the real highlights of the quarter was the underlying strength of the healthcare margins you know ex even . ex biopharma you know especially given some of the headwinds you face in there so we are seeing strength in small equipment and and pressure in big iron how does that mix look though when when you look at the the the the mix on smaller you know patient monitoring equipment et cetera versus the big iron how does that equipment mix play out to the margins well we we . we certainly i . i think the the key thing to keep in mind nigel is the the big iron certainly got hit the the the lower the . lower ticket the the lower price points be it patient monitors ventilators and the like certainly got quite quite a boost but it is a sm it is . a small part of the of . the of . the business so there was a little bit of mix there but but not a lot it was really more a function you know frankly of of the team doing a nice job more broadly recognizing that absent biopharma we needed to tend to the core cost structure in all its form in the hcs business right we we have been growing healthcare biopharma leading the way we got some good margin support from that business the last several years well now as we think about the $17000000000 core the team is really i think put their sights the last couple of quarters on growing that business growing it with a creed of margins and it is really the cumulative effect that that i think you see a bit here in the 1st quarter before we we . we got hit we got hit a little bit later not as much you will see more of that unfortunately here in the 2nd quarter but i think you have got a team who thinks that like many other med tech companies they can grow mid or . low to mid single digits over time and put more digital into the mix better cost that should give us the opportunity to grow with a creed of margins along the lines of what laid out in december and i i have no less conviction about their ability to do that today than than we did when we made that presentation again mindful that we have got some gyrations here in the in . the near term to deal with right okay thanks larry good luck hey thanks . nigel hey brandon thanks nigel we we are at the bottom of the hour so brandon . we are at the bottom of the hour so we can just take one more question sure from rbc capital markets we have dean please go ahead thank you good morning everyone wishing everyone good health and add my welcome to carolina thank you hey just good morning dean good good morning just 2 questions both aviation lot of discussion about structural cost out and larry would be interested in how have you balanced the the . structural cost out in aviation with rifts and and balancing the rifts and furloughs versus how you might be compromising the ability to bounce back when it does ramp back up so that is the 1st question and then the 2nd one just to make sure i heard it correctly were there did . you quantify the lead cancellations in the quarter i know there was delivery deferrals our experience in 2008 was that you did not see many outright engine cancellations because customers would lose that non refundable deposit so what is the expectation here in terms of engine cancellations that is it for me thank you d dean maybe i will take the 1st part of that and and perhaps carolina can take the 2nd i i think we are mindful ever mindful that there will be a recovery right and we and . we want to be well positioned for it because it is going to be very good business for ge for for decades but i i think we are really trying to again embrace our reality and take the the cost actions in the aftermarket business and more broadly at aviation mindful that we have got a period of time here of an unknown duration but it is it is not going to be measured in months right where that business is going to be under considerable pressure so after a period of time as as the aftermarket has has grown as it has the last the . last decade this is going to give us an opportunity to to . rethink to re to . to consolidate all the while mindful of our obligations to customers the nature of how the footprint has changed the changes that are probably still still still coming so there there are a number of variables it is it is very much a a work in progress as well but i think we have got line of sight to build on some of the temporary actions to to . take permanent action to make sure that we we have a lean cost structure with adequate capacity to to . come out of the the downturn here well positioned to perform both for customers and for investors thank you we will now turn it back to steve for closing remarks well do you want me to answer the question on yeah yeah 2nd question go ahead carolina sorry go ahead yep yeah go ahead go ahead carolina yeah you were right because i actually mentioned that in my in . my notes that i left in our backlog which was flat sequentially and up 22% versus prior year that did include roughly 200 order cancellations in the quarter but i would say the progress refunds are very small so far but on top of that we also saw right so we have g cast cancellation in april so that will be reflected in the 2nd quarter aviation backlog great th thanks everybody i know i . know it is a long call and a busy day so if you need more just reach out to us and and . best of luck thank you ladies and gentlemen this concludes today is conference thank you for joining and you may now disconnect | |
| Result: | |
| WER Orig 0.16956907737485488 | |
| WER HF 0.4555077511438913 | |
| Done | |