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Shares of General Electric Co. dropped early Tuesday, after the industrial conglomerate reported fourth-quarter free cash flow that beat expectations but revenue that fell shy and provided a downbeat full-year earnings outlook.
This marked the first quarterly results since GE’s blockbuster announcement in November that it planned to separate into three separate, publicly traded companies, and changed to one-column reporting of its financial statement from three-column reporting.
There was some confusion over whether profit under one-column or three-column reporting should be compared with Wall Street expectations, as results beat under one format but missed under the other.
GE’s stock
GE,
shed 2.4% in premarket trading, after bouncing 0.6% on Monday to snap a four-day losing streak.
The company swung to a net loss of $3.90 billion, or $3.55 a share, from net income of $2.44 billion, or $2.20 a share, in the same period a year ago.
Excluding nonrecurring items, such as restructuring and debt extinguishment costs, adjusted earnings per share rose to 92 cents from 58 cents. Under the “new one-column reporting format,” GE said adjusted EPS grew to 82 cents from 49 cents.
The FactSet EPS consensus was 85 cents. FactSet did not report whether results beat or missed the consensus.
Revenue fell 3.5% to $20.30 billion, missing the FactSet consensus of $21.31 billion, with three of its four business segments reporting revenue declines.
The closely watched industrial free cash flow for the quarter fell to $3.71 billion from $4.39 billion, but beat the FactSet consensus of $3.06 billion.
Cost of sales dropped 9.1% to $14.34 billion, while total costs and expenses jumped 16.1% to $24.84 billion, as debt extinguishment costs spiked to $5.11 billion from $95 million a year ago.
Among GE’s business segments:
- Aviation revenue rose 4.0% to $6.08 billion.
- Power revenue dropped 13% to $4.66 billion.
- Healthcare revenue declined 4.1% to $4.63 billion.
- Renewable Energy was down 5.6% to $4.19 billion.
Looking ahead, GE said it expects 2022 adjusted EPS of $2.80 to $3.50, below the current FactSet consensus of $4.00, and industrial free cash flow of $5.5 billion to $6.5 billion, which surrounds expectations of $5.16 billion.
The stock has slumped 8.0% over the past three months through Monday, while the SPDR Industrial Select Sector exchange-traded fund
XLI,
has declined 3.1% and the S&P 500 index
SPX,
has dropped 3.4%.
