General Electric Co.’s stock GE, +3.65% rallied 4.4% in morning trade, but pared earlier gains, on the back of better-than-expected first-quarter adjusted earnings, revenue and industrial free cash flow (FCF), but the industrial conglomerate indicated that the FCF beat was mostly just because of timing. GE reported earlier industrial FCF of $1.22 billion, an improvement from a negative $1.76 billion a year ago; the two FCF estimates provided to FactSet ranged between a negative $2.16 billion to a negative $3.65 billion. Chief Executive Lawrence Culp said on the post-earnings conference call that the reason industrial FCF was “significantly” better than expected was “largely due to timing of certain orders and customer collections we expected later in the year,” according to a transcript provided by FactSet. Chief Financial Officer Jamie Miller said there can be “substantial variability” from quarter to quarter on the timing of orders, collections and disbursements. “We anticipate these timing items will largely balance out over the year in line with our outlook,” Miller said. The stock was up as much as 8.0% premarket just prior to the start of the conference call at 8:30 a.m. Eastern. The stock has run up 40% year to date, while the Dow Jones Industrial Average DJIA, -0.31% has gained 14%.
Conditions are still bad at General Electric Co., just not quite as bad as expected.
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