Shiny and new. And it's gonna take time. That's what century-old industrial conglomerate General Electric (NYSE: GE) wants you to know about itself, judging by two of its most recent presentations.
New CEO Larry Culp spoke at the Electrical Products Group Conference on May 22, and CFO Jamie Miller spoke at the Deutsche Bank Global Industrials & Materials Summit on June 5. Although the presentation formats were different -- Culp gave a speech and then took questions, while Miller's entire time was spent on Q&A -- the two leaders were very much in sync with their messaging.
Here's the most important thing for investors to take away from these presentations.
All new and different
Right off the bat, Culp began talking about all the changes being made at GE. He, as usual, mentioned his own newness as a CEO who's just "eight months in." In fact, when a questioner referred to his tenure as "nine months," Culp quipped, "Almost eight. But who's counting?"
He also talked about how many other new faces there are in the upper echelons of GE:
For her part, Miller talked up Culp's leadership, with an emphasis on -- you guessed it! -- his newness:
Given how poorly GE has performed in the past under longtime GE insiders like former CEOs Jeff Immelt and John Flannery, it's not surprising that Culp and Miller play up how much they're focusing on organizational transformation at every opportunity.
But there's one important transformation that actually seems to be happening.
No makeup, no smoke, no mirrors
One big transformation that Culp has brought to GE is the lack of sugarcoating results. When Q1's industrial free cash flow came in better than expected, there was a lot of speculation that maybe the company was turning the corner faster than anticipated. But Culp and Miller threw cold water on that idea from the get-go, explaining that the discrepancy was largely due to timing of certain orders that were expected for Q2 but came in during Q1.
Hopeful investors, though, have continued to raise the question, to which Miller responded in her presentation:
Similarly, however, Miller is also rejecting the notion that the company's 2020 projections are overly optimistic. Moderator Nicole Sheree DeBlase brought this up as well:
In other words, the message GE's management is sending is "Don't try to second-guess the projections on the upside or the downside."
At a company that's had big transparency issues in the past, Culp and Miller seem to be walking the walk as well as talking the talk. As a result, as you might expect, there were no major bombshells in either presentation. Culp likes to name-drop the various cities where he's had meetings ("Evendale, outside of Cincinnati," "Atlanta," "Pensacola," "down in Memphis") to emphasize that he's engaging with all facets of the organization. Miller has a laudable habit of backing up her opinions with a lot of data points.
The big takeaway is that it seems unlikely that there's some trove of hidden value at GE that's going to result in a short-term stock pop. Investors should be aware that they're likely in for a long, hard slog as Culp and Miller try to turn this titan around.
Just like they keep saying.
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