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Here Comes The Earnings Barrage: Highlights From GE, GM, 3M, RTX, MCD And UPS

One day after an shocking earnings cut from Walmart which has hammered the entire retail space, traders were on edge ahead of today’s proper rollout of the Q2 earnings barrage when results from GM, GE, KO, UPS, 3M, RTX and MCD were all on deck. Here is a snapshot of what they all reported:

General Electric:

  • GE gained 3.9% in premarket trading after reporting adjusted earnings per share for the second quarter that beat the average analyst estimate. Quarterly revenue also topped expectations.
  • Q2 results:
  • Adjusted EPS 78c, estimate 37c (Bloomberg Consensus)
  • Revenue $18.65 billion, +2.2% y/y, estimate $17.7 billion
    • Renewable Energy revenue $3.10 billion, estimate $3.11 billion
    • Healthcare revenue $4.52 billion, estimate $4.47 billion
    • Power revenue $4.20 billion, estimate $3.97 billion
  • Renewable Energy operating loss $419 million, estimate loss $424.3 million
  • Healthcare operating profit $651 million, estimate $637.5 million
  • Power operating profit $320 million, estimate $278.6 million
  • The company said it is likely to push out about $1B of Free Cash Flow into future, and cited supply chain issues, renewable energy-related orders. CEO Culp added: “improving delivery, price, and cost performance via lean and decentralization. Notwithstanding this progress, much is still uncertain about the external pressures companies are facing at this moment. We continue to trend toward the low end of our 2022 outlook on all metrics except cash, which is lower due to timing of working capital and Renewable Energy-related orders.”

McDonalds:

  • MCD dipped but then reversed earlier losses, after it missed on revenues, but beat on earnings and comp store sales.
  • Q2 Results:
  • EPS $1.60
  • Comparable sales +9.7%, est. +7.5%
    • US Comp Sales +3.7%, est. +2.9%
  • Adjusted EPS $2.55, estimate $2.46
  • Revenue $5.72 billion, estimate $5.82 billion
  • Operating income $1.71 billion, estimate $2.63 billion

Raytheon:

  • RTX dropped after the company missed revenues but beat on EPS
  • Q2 Results:
  • Adjusted EPS $1.16 vs. $1.03 y/y, estimate $1.13 (Bloomberg Consensus)
  • Sales $16.31 billion, +2.7% y/y, estimate $16.62 billion
    • Collins Aerospace Systems sales $5.01 billion, +10% y/y, estimate $5.03 billion
    • Pratt & Whitney sales $4.97 billion, +16% y/y, estimate $4.71 billion
    • Intelligence & Space sales $3.57 billion, estimate $3.64 billion
    • Missiles & Defense sales $3.56 billion, estimate $3.9 billion
  • Free cash flow $807 million, estimate $1.48 billion
  • Forecast:
    • Still sees adjusted EPS $4.60 to $4.80, estimate $4.73
    • Still sees sales $67.75 billion to $68.75 billion, estimate $68.35 billion Still sees free cash flow about $6 billion, estimate $6.06 billion
  • The company confirmed share buyback of at least $2.5B of Shares
  • For segments, six months ended June 30, 2022 includes a net pre-tax charge of $0.3 billion related to the impact of the sanctions imposed upon Russia in response to the Russia-Ukraine conflict, primarily consisting of charges related to increased estimates for credit losses on both our accounts receivables and contract assets, inventory reserves, impairment of customer financing assets for products under lease and contract fulfillment costs, and recognition of supplier obligations
  • “While we expect the global supply chain environment, labor availability and inflation will remain challenging near term, we are actively engaged with our customers and suppliers to meet demand and remain cost competitive.”
  • Company says it remains focused on strategic investments in technology and innovation

3M:

  • 3M jumped after reporting top and bottom line beats while cutting sales guidance and reported a spin off of its health business
  • Q2 Results:
  • Adjusted EPS $2.48, estimate $2.44
  • Net sales $8.7 billion, estimate $8.63 billion
  • Forecast:
  • Sees sales -0.5% to -2.5%, saw +1% to +4%
    • Sees EPS $7.32 to $7.82, saw $9.89 to $10.39
    • Sees organic sales +1.5% to +3.5%, saw +2% to +5%
    • Sees adjusted EPS $10.30 to $10.80, saw $10.75 to $11.25, estimate $10.56
  • Spinoff: 3M said it intends to spin off its Health Care business, resulting in two public companies to pursue their respective growth plans. The spin-off is intended to be tax-free for U.S. federal income tax purposes. Company expects to complete the transaction by year-end 2023.3M will retain responsibility for non-Health Care related litigation, including those related to Combat Arms Earplugs and PFAS
    • Health Care is currently expected to be spun off with net leverage of approximately 3.0x – 3.5x Ebitda
    • “The decision to spin off our Health Care business will result in two well-capitalized, world-class companies, well positioned to pursue their respective priorities.”
    • “Looking ahead, we updated our adjusted full-year expectations largely due to the strength of the U.S. dollar and uncertain macroeconomic environment.”
    • The New 3M will remain focused on material science, while Health Care will be diversified healthcare technology company focused on wound care, healthcare IT, oral care and biopharma filtration.
  • New 3M expects to retain a stake of 19.9% in Health Care, which will be monetized over time

General Motors:

  • GM shares sank 3.9% in premarket trading Tuesday, after the automaker’s second-quarter profit missed expectations, and the CEO said the company was limiting hiring to critical needs.  Shares of peer Ford down 1%, Stellantis down 1.5%. Tesla falls 1.1%. GM also reaffirmed its full-year outlook
  • Q2 Results:
  • Adjusted EPS $1.14, estimate $1.31 (Bloomberg Consensus)
    • Net sales and rev. $35.76 billion, estimate $34.81 billion
    • Cruise net sales and revenue $25 million, estimate $53.5 million
    • Automotive net sales and revenue $32.61 billion, estimate $32.52 billion
    • GM Financial net sales and revenue $3.15 billion, estimate $3.45 billion
  • Adjusted automotive free cash flow $1.41 billion
  • Adjusted Ebit $2.34 billion, estimate $2.29 billion
  • Forecast:
    • GM Continues to Expect to Meet Year Earnings Guidance
    • Full-year net automotive cash provided by operating activities guidance range of between $16.0 billion and $19.0 billion, and adjusted automotive free cash flow guidance range of between $7.0 billion and $9.0 billion
  • Comments from CEO Mary Barra:
    • Outlook for the Second Half Is Strong
    • Reducing Discretionary Spending
    • Limiting Hiring to Critical Needs
    • Operating With Lower Volumes on Semiconductor Shortage
    • Prepared to Take Deliberate Action When & if Necessary
    • Will Continue to Mitigate Risk, Drive Down Costs
    • Sees Wholesale Deliveries up Sharply in Second Half
    • “Going forward, we will continue to mitigate risk and drive down costs to help us deliver $90 billion of annual EV revenue by 2030”

UPS

  • UPS shares were flat after reporting adjusted earnings per share for the second quarter that beat the average analyst estimate
  • Q2 results:
  • Adjusted EPS $3.29 vs. $3.06 y/y, estimate $3.15; (GAAP EPS $3.25 vs. $3.05 y/y)
  • Revenue $24.77 billion, +5.7% y/y, estimate $24.63 billion
    • US package revenue $15.46 billion, +7.3% y/y, estimate $15.33 billion
    • International package revenue $5.07 billion, +5.3% y/y, estimate $5.03 billion
    • Supply Chain Solutions revenue $4.23 billion, estimate $4.23 billion
  • Average revenue per package $13.72, estimate $13.41
  • Forecast:
    • Sees adjusted operating margin 13.7%, saw about 13.7%, estimate 13.7%
    • Sees capital expenditure $5.5 billion, saw about $5.5 billion, estimate $5.47 billion
    • Still sees revenue $102 billion, estimate $102.05 billion

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