- GE's closely watched industrial free cash flow, which is used as a gauge of efficiency, totaled $650 million.
- On a nonadjusted basis, and including certain accounting charges, GE still lost $9.5 billion in the quarter.
- "We are raising our industrial free cash flow outlook again even with external headwinds from the 737 Max and tariffs," GE Chairman and CEO Larry Culp says.
General Electric's stock surged Wednesday after the industrial conglomerate raised its 2019 cash flow forecast and reported adjusted third-quarter earnings and revenue that topped analysts' expectations. On a nonadjusted basis, and including certain accounting charges, GE still lost $9.5 billion in the quarter.
GE shares jumped 11.5% on heavy trading volume to close at $10.11 a share, its second best day of trading this year.
Here's what the company reported versus what Wall Street expected:
- EPS: adjusted 15 cents a share, vs. 11 cents a share expected by analysts surveyed by Refinitiv.
- Revenue: $23.36 billion, vs. $22.93 billion expected in the Refinitiv survey.
"Our results reflect another quarter of progress in the transformation of GE," Chairman and CEO Larry Culp said in a statement.
GE said its closely watched industrial free cash flow, which is used as a gauge of efficiency, totaled $650 million. FCF is money left over after a company pays for operating expenses and capital spending. The company increased its 2019 forecast for industrial FCF to a range of flat to $2 billion, up from a range between negative and plus $1 billion.
"We are raising our industrial free cash flow outlook again even with external headwinds from the 737 Max and tariffs," Culp said.
On the whole, GE reported a consolidated net loss of $9.5 billion for the third quarter. While improved from a $22.8 billion nonadjusted loss for the same period last year, the bottom line reveals GE is still a struggling industrial conglomerate in the depths of a turnaround.
The company's troubled power division saw quarterly revenue fall 14% year over year to $3.9 billion from $4.6 billion as orders for its turbines and other products fell 30%. But the division recorded a $144 million loss, improved 79% from the $676 million loss it reported a year earlier.
"I'm relieved; you didn't really know walking into the quarter [what to expect from GE], particularly with what's going on at Boeing," Melius Research analyst Scott Davis said on CNBC's "Squawk Box." Davis has a buy rating on GE's stock.
GE's key aviation business logged an 8% increase in revenue from the same quarter last year, to $8.1 billion from $7.5 billion. The company continues to warn that its aviation unit may see a cash flow hit from the grounding of the Boeing 737 Max. GE makes the LEAP engines used on Boeing's top-selling airplane. But GE sold 455 LEAP engines during the quarter, 50% more than a year earlier even as the company said it continues "working through MAX" issues.
"We still expect this year to be impacted to the tune of about negative $1.4 billion," CFO Jamie Miller said of delays in aircraft engine production during the company's third-quarter earnings call.