Good day, ladies and gentlemen, and welcome to the General Electric second quarter 2016 earnings conference call. At this time, all participants are in a listen-only mode. My name is Ellen, and I will be your conference coordinator today. As a reminder, this conference is being recorded. I would now like to turn the program over to your host for today's conference, Matt Cribbins, Vice President of Investor Communications. Please proceed.

Good morning and thanks for joining our second quarter earnings call. Today I'm joined by: our Chairman and CEO, Jeff Immelt; our CFO, Jeff Bornstein; and GE Aviation President and CEO David Joyce. Earlier today, we posted a press release, presentation, and supplemental on our Investor website at www.ge.com/investor. As a reminder, elements of this presentation are forward-looking and are based on our best view of the world and our businesses as we see them today. As described in our SEC filings and on our website, those elements can change as the world changes. Now with that, I'd like to turn it over to Jeff Immelt. Jeffrey R. Immelt - Chairman & Chief Executive Officer: Thanks, Matt. GE had a good quarter in a slow growth and volatile environment. I would describe our markets in two segments really. The resource sector remains tough, putting pressure on our Oil & Gas and Transportation businesses. Meanwhile, the rest of our markets have plenty of growth available. The strength of GE is our diversity, and we remain on track for our 2016 framework and our bridge to 2018. In the second quarter, our portfolio execution was a real highlight. This includes GE Capital de-designation, the Appliances sale with a substantial gain, and the sale of GE Asset Management. From an operations standpoint, we had EPS of $0.51, and that is growth of 65%. Industrial EPS was up 35% excluding gains and restructuring. Margins were flat ex-Alstom and up 10 basis points year to date, and we're on track for our margin goals for the year. Alstom was $0.01 of share in the second quarter, and we're on track to hit our plan in 2016. CFOA was $10.7 billion, and we're on track for our CFOA goals for the year. Industrial operating profit and…

Thanks, Jeff. I'll ask that the operator opens the lines for questions.

Our first question is from Scott Davis with Barclays.

Hi. Good morning, guys. Jeffrey R. Immelt - Chairman & Chief Executive Officer: Hey, Scott.

When I look at your top line forecast for the back half of the year, and considering I don't think the world is getting better, and I think that's going to be part of my question for you, but how do we get to that 2% core growth number? Is it just comps in Oil & Gas get easier and that just provides a tailwind, or is there something else you're seeing in macro that should make us feel a little bit better about the world? Jeffrey R. Immelt - Chairman & Chief Executive Officer: So, Scott, I'll start and then maybe toss it over to Jeff. But again, I think just like we said on the first quarter call, we think Power really explains the first half/second half split. As you can look in the presentation, the year-over-year comps are better. The backlog is strong. You're going to ship most of the gas turbine units in the second half plus the 50% growth in the AGPs. Oil & Gas has got easier comps, but we're not really counting on that much out of Oil & Gas. And then the rest of the company, the underlying companies, mid-single-digit, 5% organic growth. So I think it's really a Power story when you think about it, and that's really in backlog and that really explains how we think about the first half/second half. I think the world itself, Scott, is no better, no worse, so we just see the general trend on markets. Jeff? Jeffrey S. Bornstein - Chief Financial Officer & Senior Vice President: I don't have much to add other than when you think about Power, about 65% of our gas turbines are in the second half. AGPs will grow 60% year over year in the second half. That's a big source of it. Oil & Gas, the comps do get better or less difficult in the second half of the year. And we've got about 70%-plus of the revenue for Oil & Gas, based on our forecast of revenue the second half in backlog. And as you mentioned, the balance of portfolio, we expect roughly mid-single-digit growth. Jeffrey R. Immelt - Chairman & Chief Executive Officer: This is really the profile we expected, I think. Jeffrey S. Bornstein - Chief Financial Officer & Senior Vice President: Yes.

The next question is from Julian Mitchell with Credit Suisse. Julian Mitchell - Credit Suisse Securities (USA) LLC (Broker): Thanks a lot. Jeffrey R. Immelt - Chairman & Chief Executive Officer: Hi, Julian. Julian Mitchell - Credit Suisse Securities (USA) LLC (Broker): Hi. My question was just around the margin bridge on slide five. Just in light of input costs and your own pricing outlook, how do you see the value gap item trending? And then the quick follow-up would just be on the base inflation number there. That was a 110 bps headwind in Q2. Just explain that, please. Jeffrey S. Bornstein - Chief Financial Officer & Senior Vice President: So a couple thoughts. On value gap for the year, I don't think we've changed our outlook. We've said we expect value gap for the year to be roughly flat or neutral for the year, with strong – roughly $1 billion direct material benefits, offset by price and a little bit of inflation on our other variable costs, so no change of outlook on value gap. Value gap in the second quarter discretely was a positive, not huge but it was a positive in the second quarter. As you work down that margin walk, the 110 basis points in other, 40 basis points of that is foreign exchange. It's the marks generally on our hedges that are moving through that line. Then you get about 40 basis points of inflation on other base costs, including compensation, et cetera; and then a small impact associated with minority interest in JVs, which is about a 20 basis point negative in the quarter.

The next question is from Shannon O'Callaghan with UBS.

Good morning, guys. Jeffrey R. Immelt - Chairman & Chief Executive Officer: Hey, Shannon.

Hey, just two things on digital. One, on the partners, you were targeting 50-plus for the year. A month ago you were at 31, now you're at 54. Maybe just comment on that rapid pace of additions. What are you seeing in maybe some of the recent partnerships? And then for David on the 35,000 engines monitored, curious how that's ramped so far. And are you seeing that pick up, and where do you see that going over the next couple years? Jeffrey R. Immelt - Chairman & Chief Executive Officer: So, Shannon, I'll hit the first one. Again, I think the momentum for Predix is growing. There's no doubt that partnerships like the one with Microsoft, the notion of putting Predix as really the analytical platform inside of Azure I think is a big signal to the industry. Huawei in China is another great relationship that will help us extend on a global basis big wins like the one with Schindler, I think gets us in a completely new industry space for Predix. So I just think what you're seeing is momentum taking off, and we're pleased with the partnership numbers. And I think that will continue to accelerate through the year. David L. Joyce - Senior Vice President; President & CEO-GE Aviation: Shannon, hi. This is David Joyce. On the 35,000 engines installed, we have a number of different ways in which we take data off the engines. The newer the airplanes, of course, the more accessible the data is on a real-time basis. And then the older the airplane, then we have to go and actually get the data after it lands. But I would say we're making great progress. We're actually starting to connect data acquisition as part of our services contracts. As we take on the risk, which is part of the service contract, we're requesting that we have the ability to go get the data so we can do the evaluations and get the productivity for both our customer and ourselves, so good progress.

Our next question is from Andrew Kaplowitz with Citi.

Hey. Good morning, guys. Jeffrey R. Immelt - Chairman & Chief Executive Officer: Andrew, how are you?

Good. Can you talk about organic services orders in the quarter? They were negative 1%. The core services backlog is up 11%. So you still seem in good shape for services growth in the back half. But was the services order number in line with your expectation, given it was down a bit from 1Q's 4%? Is it really just Oil & Gas services weighing and the timing of AGPs weighing on the business and the confidence level that services orders gets better in the second half of the year? Jeffrey R. Immelt - Chairman & Chief Executive Officer: Andrew, again, I think sometimes, particularly with AGPs, there's some timing involved. I think in the second half of the year in services, we expect orders to be mid-single-digits positive. So again, our business model there, 5% organic growth in the first half, backlog growth, and our visibility in the second half I think is all quite positive around services. Jeffrey S. Bornstein - Chief Financial Officer & Senior Vice President: I would just add, I talked about AGPs being up 60% year over year in the second half and a total year outlook of 135 to 150 versus 119 last year. That is a big driver. We see double-digit services order growth in the second half of the year here and very solid mid-single-digit growth in our Aviation service business. And those are the two big drivers on the service side.

The next question is from Jeff Sprague with Vertical Research Partners.

Thank you. Good morning, gentlemen. Jeffrey R. Immelt - Chairman & Chief Executive Officer: Hey, Jeff.

Hey. I just was wondering if we could also just address the back-loading to some degree through the profit lines. At EPG you talked about 5% underlying growth in the Industrial businesses ex-Alstom. Obviously we're starting off in the hole here in the first half. Should we expect some OP growth in the third quarter, or does that profit ramp really have to all manifest itself in the fourth quarter? Jeffrey S. Bornstein - Chief Financial Officer & Senior Vice President: Listen, we're going to have a very large fourth quarter because we've got an enormous Renewables and Power fourth quarter, no question about it. We expect to grow sequentially in the third quarter. I'm not giving you third quarter op profit guidance. But I think the variables that we've talked about, Power volume in the second half of the year, Oil & Gas on a year-over-year basis less negative than they were in the first half of the year. We expect Energy Connections to accelerate, and we expect the Alstom synergies as well as the ROME (50:50) restructuring synergies to really kick-in in the second half of the year. We're looking for a real acceleration there. So that's where we see the op profit growth in the second half of the year, one. Two, that's why we're so confident that we can deliver 50 basis points of margin expansion for the total year, having been flat in the first half. Jeffrey R. Immelt - Chairman & Chief Executive Officer: I would only add to what Jeff said. Again, I think a lot of this is a Power story. And with their shipment backlog in the second half, their operating profit growth is quite robust in the second half of the year. And I think, Jeff, the way you think about the walk I think is still more or less intact from the standpoint of how we think about the company for 2016.

The next question is from Andrew Obin with Bank of America.

Yes, good morning. Jeffrey R. Immelt - Chairman & Chief Executive Officer: Hi, Andrew.

Just a question on G-SIFI and the impact on your appetite for accelerated buyback or more M&A. I think at EPG you said that you were busy with Alstom but it just seems G-SIFI came a lot faster than we expected, and it gives you an opportunity to use your balance sheet. So both, if you could, address appetite for more buyback and appetite for more M&A in the near term. Thank you. Jeffrey R. Immelt - Chairman & Chief Executive Officer: Jeff, so I would maybe talk about the capital allocation piece. And, Jeff, maybe you talk about the leverage piece. So I'd say capital allocation hasn't really changed that much since EPG. I think we're just looking for the highest return. I think, Andrew, we've got a lot of good ideas inside the company, but we'll be disciplined about those ideas. And it's really for us just making the right – the smart investments for investors vis-à-vis buyback versus acquisitions. But we always have good ideas inside the company. And, Jeff, on the... Jeffrey S. Bornstein - Chief Financial Officer & Senior Vice President: I would just say, just remember that the $18 billion target we have for GE Capital difference in the year assumed that we would de-designate. So there's no change in that framework. It happened sooner rather than later, which is really outstanding, and that has allowed us to accelerate the buyback. I talked about the $5 billion loan we did in the year through GE Capital (53:09), where they have excess debt, excess cash. We took that and we did a $5 billion ASR here in June, and so our buyback through the first half of the year is about $13.7 billion, so we're running ahead of the plan here. Our average buyback is below $30 a share, so I think we feel pretty good about that. On the leverage, the leverage is going to be paced by the opportunities to put that capital to work if we, in fact, do it, and the returns that we can generate for shareholders. And I would say everything else being equal, I think we've consistently said we're more focused on M&A and where those opportunities lie than we are on anything else, and that will be paced on the ideas that we have.

The next question is from Joe Ritchie with Goldman Sachs. Joe Ritchie - Goldman Sachs & Co.: Thanks. Good morning, guys. Jeffrey R. Immelt - Chairman & Chief Executive Officer: Hey, Joe. Joe Ritchie - Goldman Sachs & Co.: So I guess my one question is maybe on Oil & Gas. You're down, EBIT is down about 40% to start the year, in the first half of the year. You're trying to hold to 30% for the entire year, yet pricing continues to get worse. I guess maybe just talk a little bit about your confidence in trying to make up some of the gap on the Oil & Gas EBIT in the second half of the year. Jeffrey S. Bornstein - Chief Financial Officer & Senior Vice President: Listen, I think this is all about what we talked to you about in terms of restructuring the cost in the business. And through the first half of the year, we realized about $300 million, a little less than $300 million of benefits through the entirety of the income statement around all those efforts, head count, cost, deflation, restructuring agreements with suppliers, et cetera. We're still pushing hard for the $800 million in the second half of the year. So you get a real acceleration between what we started and executed in 2015, what we've executed in the first half of 2016, that everything else being equal, we expect to deliver an additional $500 million of cost-out in the second half of the year. So if volume stays intact and our outlook on revenue in the second half is roughly close, we ought to be in reasonably good shape. There's some risk, obviously, that if volume is a little bit lighter that some of the benefits, even though the actions have been taken, because you lose the volume leverage may not materialize. But I think we feel, and Lorenzo [Simonelli] and the team feel really good about the execution they're doing around the restructuring in the projects inside the business.

The next question is from Steven Winoker with Bernstein. Steven Eric Winoker - Sanford C. Bernstein & Co. LLC: Thanks. Good morning, guys. Jeffrey R. Immelt - Chairman & Chief Executive Officer: Hey, Steve. Steven Eric Winoker - Sanford C. Bernstein & Co. LLC: Hey. Just if I could get a little clarity on Alstom, you walked through the numbers in the supplemental around the $100 million operating loss, $300 million-ish benefit on synergies, and the offset on some of the one-time investments to get those. Maybe just talk about where are you seeing the growth recovery here? What's driving that? What do you think is sustainable, and how should we expect a little more color there going forward? Jeffrey R. Immelt - Chairman & Chief Executive Officer: Yes, so, I'll take a crack and, Jeff, you could add to it. But again, I think if you look at the gas turbine Balance of Plant activity, Steve, we're already seeing tremendous pull-through vis-à-vis the Balance of Plant. Services, I think the customer reception in services is quite positive. And so we're seeing good activity around energy efficiency upgrades, bringing AGPs to the steam side as well as the gas side, things like that. I think similarly Grid revenue growth, which is something that we hadn't put a lot of benefits towards, I think we see Grid as being potential upside as time goes on as well. So I would say Balance of Plant, more steam activity than we had anticipated, better Grid acceptance than we had forecasted, and services, which was really the way we underwrote the deal in the first place, is quite positive for Alstom. Jeffrey S. Bornstein - Chief Financial Officer & Senior Vice President: Yes, I would just add. Listen, the team is executing. Through the half we've got in excess of $400 million of synergies executed so far against the goal of $1.1 billion for the year. That feels good. As Jeff said, the Power I mentioned earlier when I went through the results. The backlog we acquired in the Power business is up 22% as of the first half. So those synergies on the growth side are absolutely materializing here, and we feel great about that. So I think the execution is pretty good. We did have a cash use for the first half of the year. We expected a cash use for the first half of the year. We hope to be neutral for the year as part of the cash recovery in the second half of the year. But I would say on par, I think we feel really good about both the cost and the growth synergies we're realizing so far.

The next question is from Steve Tusa with JPMorgan.

Hi, guys. Good morning. Jeffrey R. Immelt - Chairman & Chief Executive Officer: Hey, Steve.

Just to follow up on an earlier question, when you say growth in the third quarter, is that seasonal from an operating profit perspective? And then with your second half cash flow guidance, that $8 billion that you highlighted there on backing into something that's around $18 billion, is that the right profit number for the year that underlies that $8 billion in operating – net income plus D&A contribution? Jeffrey S. Bornstein - Chief Financial Officer & Senior Vice President: There are multiple questions in there. Let me start with this. Let me start with CFOA. So through the half, Industrial CFOA was about $400 million. So when we look to the second half, we've guided $12 billion to $14 billion for the year. We've not changed anything about that guidance. So how do you go from $400 million of Industrial CFOA in the first half to $12 billion to $14 billion for the year? We look at earnings, cash earnings. So adding back depreciation and amortization as you look forward to the second half, we see that as about $8 billion. We think we're going to reduce working capital $3 billion to $4 billion. A big part of that is the inventory reductions that we talked about, partly driven by Power but also driven by Renewable and our other businesses. And we need to be better on receivables. Our delinquency rates in the first half were higher than we estimated. We think we can get that back on par. So if we just get back to the inventory performance we went out of 2015 with, if we get back to delinquency and receivable performance that we ended 2015 with, that in total generates about $3 billion to $4 billion of working capital cash flow. And then I just talked about Alstom. So we used a little more than $800 million of cash in the first half of the year on Alstom. We still expect to be roughly neutral in the second half of the year, so that's an $800 million turnaround. And then I think earlier when I went through the results, I talked about we had some unfavorable timing on tax. That's not an issue for the year. That's just a first half/second half issue. So that's how we got to work our way back to $12 billion to $14 billion of CFOA for the year, which supports what Jeff talked about of $29 billion to $32 billion of free cash flow plus dispositions for the total company. Jeffrey R. Immelt - Chairman & Chief Executive Officer: And I would say beyond that for 2016, we profiled that at the end of the first quarter call. We really have no change in how we see the year.

The next question is from Deane Dray with RBC Capital Markets.

Thank you. Good morning, everyone. Jeffrey R. Immelt - Chairman & Chief Executive Officer: Hey, Deane.

Hey, I know we've covered a lot of ground here, but I just want to circle back to your opening comments about still in a slow-growth macro environment. Maybe you could provide some of those geographic data points, U.S., Europe, Asia, developed versus developing. And then on the Europe side, I know it's still early, too early to tell, but does Brexit pose any unique risks for GE as you see it today? Jeffrey R. Immelt - Chairman & Chief Executive Officer: So, Deane, what I would do is I would say versus just talking geographically, I would talk industry-wide and go back to, say, Oil & Gas and Transportation, which are both really around the resource sector, oil on the Oil & Gas side and coal on the Transportation side. Those are tough cycles, and those are tough cycles mainly in North America. The Power and Aviation businesses, we don't see – we see continued Aviation strength. The Power market is okay, but there's plenty of growth out there for us to go after and go get. Healthcare is better, not just in the U.S., but globally. Energy Connections, the Oil & Gas stuff is tough, but the rest of the stuff is quite strong. And we think Renewables is in a very good cycle right now, both in the U.S. and globally. So that's the mix of the world. Now if you bore in on some place like China, the Healthcare business was awesome in China. Our Energy orders grew by more than 30% in the second quarter in China. Aviation was negative, but that really wasn't because of revenue passenger miles. That was because we had big orders last year. So we see, I would say, around the edges, China getting better, Europe stable. And then you can – puts and takes in the rest of the world. So there's plenty of growth out there for us to go get in the second half and into 2017. In terms of Brexit, I just think Brexit is just another point of volatility. It wasn't the outcome we hoped for, but we were plenty ready for that as just another point of volatility.

Great, Jeff. A couple of quick announcements, I'll pass it back to you to wrap up. The replay for today's call will be available this afternoon on our Investor website, and we'll be doing our third quarter earnings call on Friday, October 21. Jeffrey R. Immelt - Chairman & Chief Executive Officer: Great, Matt. Thanks. I would just say first half more or less what we expected, positioned for a strong second half of 2016 with what we have in backlog. I think looking forward, we are again confirming the bridge to $2.00 a share by 2018. And it's really driven by real strength in Power and Aviation, strong turnarounds in Energy Conversion, Healthcare, Renewables, good Alstom execution. And the strength of the GE portfolio I think offsets weaknesses in the Oil & Gas and Transportation business, and that really is the strength of the company is the diversified portfolio and the ability to meet our commitments, even with this volatility.

Great, thank you.

This concludes your conference call. Thank you for your participation today. You may now disconnect.