GE Vernova Q4 2024 Earnings Report

GE Vernova EPS Results

• Actual EPS: $1.73
• Consensus EPS: $2.30
• Beat/Miss: Missed by -$0.57
• One Year Ago EPS: N/A

GE Vernova Revenue Results

• Actual Revenue: $10.56 billion
• Expected Revenue: $10.70 billion
• Beat/Miss: Missed by -$142.88 million
• YoY Revenue Growth: +5.10%

GE Vernova Announcement Details

• Quarter: Q4 2024
• Date: 1/22/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, January 22, 2025
• Conference Call Time: 7:30AM ET

GE Vernova (NYSE:GEV) LLC, an energy business company, generates electricity. It operates under three segments: Power, Wind, and Electrification. The Power segments generates and sells electricity through hydro, gas, nuclear, and steam power. Wind segment engages in the manufacturing and sale of wind turbine blades; and Electrification segment provides grid solutions, power conversion, solar, and storage solutions. The company was incorporated in 2023 and is based in Cambridge, Massachusetts.

GE Vernova Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Good day, ladies and gentlemen, and welcome to GE Vernova's 4th Quarter and Full Year 2024 Earnings Conference Call. At this time, all participants are in a listen only mode. My name is Liz, and I will be your conference coordinator today. If you experience issues with the webcast slides refreshing or there appears to be delays in the slide advancement, please hit F5 on your keyboard to refresh. As a reminder, this conference is being recorded.

[Operator]

I would now like to turn the program over to your host for today's conference, Michael Lapides, Vice President of Investor Relations. Please proceed.

[Michael Lapides, Vice President of Investor Relations - GE Vernova at GE Vernova]

Welcome to GE Vernova's 4th quarter and full year 'twenty four earnings call. I'm joined today by our CEO, Scott Strasik and our CFO, Ken Parks. Our conference call remarks will include both GAAP and non GAAP financial results. Reconciliations between GAAP and non GAAP measures can be found in today's press release and in the presentation slides, all of which are available on our website. Please note that year over year commentary or variances on orders, revenue, adjusted and segment EBITDA and margin discussed during our prepared remarks are on an organic basis unless otherwise specified.

[Michael Lapides, Vice President of Investor Relations - GE Vernova at GE Vernova]

We will make forward looking statements about our performance. These statements are based on how we see things today. While we may elect to update these forward looking statements at some point in the future, we do not undertake an obligation to do so. As described in our SEC filings, actual results may differ materially due to risks and uncertainties. With that, I'll hand the call over to Scott.

[Scott Strazik, CEO at GE Vernova]

Thanks, Michael. Good morning, everyone, and welcome to our Q4 earnings call. We built a strong foundation in 2024 and our 1st year as an independent company. The investment super cycle in the electric power sector driven by the growing need for reliable power generation, grid modernization and decarbonization continues to accelerate. The world is shifting, relying more on electrons and megawatts and this is changing the energy landscape, driving increased demand for our equipment and services.

[Scott Strazik, CEO at GE Vernova]

We are investing in decarbonization technologies within our own portfolio. For example, advancing carbon capture and sequestration. Late last year, we had a great customer milestone with the announcement of the NetZero T side power project expected to be the 1st gas fired power station fully integrated with carbon capture technology. Last week, we also announced efforts jointly with multiple large U. S.

[Scott Strazik, CEO at GE Vernova]

Utilities to accelerate the deployment of our small modular nuclear reactor, the BWRX-three hundred. We expect these technologies to impact the electric power system in the coming decades. Our progress in 2024 reinforced the important role we play at GE FERNOVA in electrifying and decarbonizing the world while creating value for our stakeholders. Turning to Slide 4, I will spend a few minutes on each of our segments and how we are executing to meet demand. In Power, market demand for gas generation is driving significant orders growth.

[Scott Strazik, CEO at GE Vernova]

For the full year, we booked approximately 20 gigawatts of gas orders, double last year's level and secured 9 gigawatts of slot reservation agreements for new turbines, agreements that should convert to orders in 2025 to 2026. These agreements are tied to load growth in the U. S, partially driven by data center hyperscaler demand associated with AI. Given our expansion plans to produce 70 to 80 heavy duty gas turbines per year beginning in the second half of twenty twenty six, up from 48 this year, we are positioning to meet this demand. We expect to grow our gas equipment backlog considerably in 2025 even as we ramp to ship approximately 20 gigawatts annually starting in 2017 and expect to remain at that level going forward.

[Scott Strazik, CEO at GE Vernova]

In addition to equipment demand growth, we are also seeing high margin services growth in our installed base as customers aim to get more capacity and better performance out of their plants. Today, we deliver about $2,000,000,000 of upgrades annually in our gas business, and we anticipate this could grow by 50% by the end of the decade. Beyond gas power, we're having more active customer discussions on nuclear about the existing installed base of 65 plants here in the U. S. That are running our technology today.

[Scott Strazik, CEO at GE Vernova]

We see an opportunity to add 5 gigawatts of nuclear power in the U. S. Between these existing facilities and potential restarts that could impact both nuclear and steam services beginning late in this decade. Against this backdrop, Power delivered 7% revenue growth and nearly 200 basis points of margin expansion in 2024. Overall, there is a lot to be excited about as our Power segment drives profitable growth and significant free cash flow.

[Scott Strazik, CEO at GE Vernova]

In electrification, demand for our products remains strong with equipment orders more than doubling in 4Q 2024 compared to last year as customers modernize and invest in critical grid components such as transformers, switch gears and HVDC systems, which are essential to ensuring a reliable electricity system and effectively connecting new generation sources. We are seeing significant orders and backlog growth in both Europe and North America. And while Europe remains our largest market for grid, we are seeing orders accelerate in North America, which was our fastest growing market in 2024. For the full year, Electrification achieved 18% revenue growth and over 500 basis points of margin expansion. Demand trends and improving execution are driving an acceleration to margin expansion, increasing our confidence in our trajectory, and we expect this segment to deliver double digit EBITDA margin in 2025 and expand further in 2016 beyond.

[Scott Strazik, CEO at GE Vernova]

Turning to Wind. We've made solid progress in our turnaround of this segment in 'twenty four, cutting our EBITDA losses by almost half despite lower revenues. In onshore, we delivered high single digit EBITDA margins on roughly flat revenue in 'twenty four. The timing of inflection in North America onshore wind orders remains uncertain, but we expect to continue accreting margin in this business with our focus on our key countries, improving quality and delivering cost out initiatives. We are deploying more crews and cranes to insert technology that should improve the performance of the existing fleet and better serve our customers.

[Scott Strazik, CEO at GE Vernova]

As a result, we expect to grow these investments by over $100,000,000 in 25 versus 2024, with a heavy year on year increase in the first half as we accelerate our operational improvements in this business. In offshore, we're focused on improving execution and delivering on the approximately $3,000,000,000 remaining backlog swiftly, safely and economically for our customers and ourselves. We are back to fully installing at both project sites. And as we discussed during our investor update in December, we expect to materially complete with Vineyard Wind in 2025, and we have a pathway to be mostly complete with Dogger Bank in 2026. We do not foresee adding to the offshore backlog without substantially different industry economics than what we see in the marketplace today.

[Scott Strazik, CEO at GE Vernova]

Looking ahead, we are applying what we've learned from the challenges in offshore wind to make us a stronger company going forward. Now over to the right hand side of the page. We're focused on further embedding the lean culture across the organization, driving operational improvement across safety, quality, delivery and cost. Let me take you through an example where the lean journey over the last 7 years has driven real results and improved performance across all of SQDC. Earlier this month, I visited Gas Power Services and Repair Facility in Singapore that focuses on F and H gas turbines.

[Scott Strazik, CEO at GE Vernova]

On safety, this facility has achieved decades of fatality free operations supported through implementation of lean lines, which has eliminated millions of mechanical lifts per year. On quality, we have lowered escapes at this facility by 25% from driving standard work and have used lean to reduce the amount of rework, generating cost savings. On delivery, through implementing 8 lean lines, we have tripled the output, utilizing 50% less shop floor space and doubling the working hours. On cost, by performing more database preventative maintenance and removing waste, we reduced machine costs by 50% and significantly increased productivity on existing machines. The Singapore example represents the culture we are building at GE Vernova as we accelerate our lean progress across the entire company and improve our own efficiency.

[Scott Strazik, CEO at GE Vernova]

There is significant growth we will achieve in this facility in the years ahead, all within the same four walls without pouring concrete or adding new cranes, with a team that has fully embraced lean to serve our customers while preserving our capital for our shareholder accretive actions. Turning to Slide 5 on our financial performance in 2024. We booked $44,000,000,000 of orders with $35,000,000,000 in revenue, delivered EBITDA margin expansion across all segments and more than $1,000,000,000 improvement in free cash flow. We grew our backlog to $119,000,000,000 and nearly doubled our cash balance to over $0.08,000,000,000 spin from a combination of strong free cash flow generation and capitalizing on value creation opportunities such as the partial stake sales of GEV T and D India and China XD Electric, which generated $1,300,000,000 of pre tax proceeds in 24. As I said in December, this is representative of the culture we are building inside GE Vernova.

[Scott Strazik, CEO at GE Vernova]

When we see opportunities to simplify our organization or to monetize parts of the portfolio at attractive prices that creates capital that allows us to either invest back into our business or return to shareholders, We are going to act with urgency. In December, we raised our multi year financial outlook and framed our capital allocation strategy, including a shareholder return program with our initial dividend and first buyback authorization, reflecting our conviction in the substantial value creation opportunities ahead. 1 of the primary drivers of our conviction in our path forward is the significant growth and margin expansion in our equipment backlog again in 2024, which I'll touch on in the next page. Over the past 2 years, we have added more than $6,000,000,000 of margin to our equipment backlog given better pricing and more disciplined underwriting as this backlog has grown over 50% to $43,000,000,000 We also expanded margin across all three segments again in 2024. Starting with Power and Electrification, we expect these segments to continue to materially grow their backlogs in 2025 at better margins.

[Scott Strazik, CEO at GE Vernova]

We see this clearly in front of us because of our wins in late 2024 such as the gas slot reservation agreements that we expect to turn into orders this year, along with the continued strong demand for electrification products driven by increased grid investments. Because these segments are longer cycle, we won't begin delivering on the majority of the high margin orders of 2324 until 2026 beyond. Moving to wind, we project a stable to modestly lower backlog in 'twenty five. Our backlog will reduce in offshore wind as we execute on the remaining $3,000,000,000 of backlog, but the margins will improve as this unprofitable business is completed. At Onshore, we expect backlog should remain approximately flat with stable margins as we remain focused on key markets and disciplined underwriting, while we leverage our existing footprint and our supply chain.

[Scott Strazik, CEO at GE Vernova]

But as we said in December, we see incremental opportunity for the teams to expand margins that aren't projected in our external backlog today. That starts with our operating teams delivering variable cost productivity from things like sourcing savings and project execution at important milestones that can secure lower costs and allow us to accrete margins as we execute. The teams are also working hard to accelerate capacity additions leveraging lean, which can create incremental slots we can sell at premium pricing. In summary, we are encouraged with our progress here, but it is just the beginning. When I look at our pricing success in gas in late 2024, our continued momentum in electrification with things like switch gears in North America and the internal expectations I have of the opportunity for teams to accrete incremental margin with variable cost productivity savings, I expect the margin we create in backlog in 2025 to be higher than our run rate the prior 2 years, further positioning GE Vernova for profitable growth over the long term.

[Scott Strazik, CEO at GE Vernova]

With that, I will now turn the call over to Ken for more details on our Q4 performance.

[Kenneth Parks, Chief Financial Officer at GE Vernova]

Thanks, Scott. Turning to Slide 7, we finished 2024 strong with record quarterly orders and revenues and adjusted EBITDA margin reaching 10.2%. We increased our cash balance to over $8,000,000,000 with our 3rd consecutive quarter of positive free cash flow generation and the benefit of 2 additional value accretive portfolio actions. Demand remained robust in the 4th quarter as we booked $13,200,000,000 of orders, an increase of 22% year over year and approximately 1.3 times revenue. Equipment orders grew 44% driven by strength in both electrification and power, partially offset by lower orders in onshore wind.

[Kenneth Parks, Chief Financial Officer at GE Vernova]

As a result, our backlog continued to grow both year over year and sequentially across equipment and services, reaching $119,000,000,000 Equipment margin and backlog remains healthy with overall margin and backlog increasing approximately 5 points versus year end 2023 reflecting our focus on disciplined profitable growth. Revenue increased 9% driven by both higher equipment and services revenues. Wind and electrification equipment revenue both grew double digits, while services revenue increased 6% with growth in all three segments. In addition, price was positive in each segment. Adjusted EBITDA grew to approximately $1,100,000,000 up 85 percent and EBITDA margin expanded 4.40 basis points.

[Kenneth Parks, Chief Financial Officer at GE Vernova]

We delivered our Q1 of double digit margins with expansion in all three segments driven by more profitable volume, price and productivity, which more than offset inflationary impacts. In addition, we benefited from previously announced restructuring actions, primarily at wind and power. We delivered approximately $600,000,000 of positive free cash flow in the 4th quarter. As expected, free cash flow decreased year over year, primarily due to lower customer down payments at wind and actions we've taken to improve cash linearity across the quarters as we continue to more closely align the timing of disbursements and collections. Working capital in the quarter was an approximately $200,000,000 cash benefit, which combined with our stronger EBITDA more than offset higher CapEx investments to support future capacity expansion along with higher cash taxes on higher EBITDA.

[Kenneth Parks, Chief Financial Officer at GE Vernova]

We're using lean to drive better cash management and linearity. For example, the electrification team implemented new standard work and daily management to improve the timing of invoices and reduce disputes. These actions drove a reduction in days sales outstanding by 4 days, resulting in approximately $80,000,000 of additional free cash flow. We continue to leverage our lean culture across GE Vernova to deliver better financial results. In the Q4 of 2024, we generated approximately $600,000,000 of incremental pre tax proceeds by selling partial ownership stakes in our GEV, T and D India and China XD Grid businesses.

[Kenneth Parks, Chief Financial Officer at GE Vernova]

These proceeds are classified outside of free cash flow and the gain was removed from adjusted EBITDA. We remain the majority shareholder of GEV T and D India and currently own 12% of China XD. Combined with our 4th quarter free cash flow, these proceeds increased our cash balance to $8,200,000,000 Our strong cash balance and further improved free cash flow profile enabled us to frame our capital allocation strategy at our investor update on December 10, while maintaining our firm commitment to an investment grade balance sheet. We expect to return at least 1 third of cash generated to shareholders starting with a $1 per share annualized dividend and our $6,000,000,000 share repurchase authorization. In late December, we initiated our share repurchase activity buying approximately $3,000,000 in the month.

[Kenneth Parks, Chief Financial Officer at GE Vernova]

We're pleased with our full year 2024 financial performance. As Scott said, it was strong, but it was just the start of where we expect to go. During the year, we booked over $44,000,000,000 of orders led by double digit equipment growth in both power and electrification. Services orders increased 12% largely due to the strength at power. We delivered approximately $35,000,000,000 in revenue driven by high teens growth in electrification and high single digit growth in Power.

[Kenneth Parks, Chief Financial Officer at GE Vernova]

We doubled our adjusted EBITDA to over $2,000,000,000 and expanded margins nearly 300 basis points year over year with significant improvement in each segment. We also made solid progress towards our lower adjusted G and A target by achieving an almost $200,000,000 reduction in 2024. Finally, we generated $1,700,000,000 of free cash flow, a year over year improvement of $1,300,000,000 primarily driven by our stronger EBITDA. Our growing backlog with higher margin provides an excellent foundation for further improvement in our financial performance ahead. Turning to Power on Slide 8, Power delivered strong full year 2024 results led by the Gas Power business.

[Kenneth Parks, Chief Financial Officer at GE Vernova]

Power orders grew 28% given robust demand for gas equipment and 10% growth in services, which combined increased adjusted backlog by more than $4,000,000,000 Power grew revenue 7% for the year with Gas Power growing 9%. Power EBITDA increased by more than 20%, expanding margins by 180 basis points driven by services strength, more profitable equipment and continued productivity, partially offset by inflation. In the Q4, power orders grew 24% led by high equipment at Gas Power and Hydro, partially offset by lower services. In Gas Power, equipment orders increased nearly 80% as we booked 24 heavy duty gas turbines, including 4 units. This was almost triple the number of heavy duty units booked in Q4 of 2023.

[Kenneth Parks, Chief Financial Officer at GE Vernova]

Power services orders remained strong, but declined 6% largely due to a strong Q4 2023 gas transactional services comparison. Revenue increased low single digits as power services growth and higher deliveries more than offset lower aero derivative shipments. EBITDA margins expanded to approximately 15% led by Gas Power from services volume, productivity and price more than offsetting the impact of inflation. Looking at the Q1 of 2025, we expect continued year over year growth in gas equipment orders. We also anticipate low single digit revenue growth at Power, but a low single digit decline on a reported basis as a result of the impact of the divestiture of a portion of the steam business in the Q2 of 2024.

[Kenneth Parks, Chief Financial Officer at GE Vernova]

We expect EBITDA margins of approximately 10% to 11% as productivity and price should more than offset inflation as well as higher investments at nuclear and gas. Turning to Slide 9, wind results continued to progress in 2024 improving full year EBITDA losses by 42%. Onshore had a solid second half to twenty approximately 7% EBITDA margins for the year. Offshore performance was challenging as we recorded approximately $1,000,000,000 of incremental contract losses in 2024, largely due to the impacts of blade events and project execution delays. These costs were partially offset by a $300,000,000 gain recorded in the Q3 from a previously canceled offshore project.

[Kenneth Parks, Chief Financial Officer at GE Vernova]

We remain focused on continuing to improve results through better quality, delivery and cost productivity across wind. In the Q4, wind orders decreased 41% driven by lower onshore wind given we booked our largest ever onshore order in the Q4 of 2023, the 2.4 Gigawatt Sunseo wind project in the U. S. Excluding this large order, onshore orders declined slightly. In offshore, we remain focused on executing our existing challenged backlog.

[Kenneth Parks, Chief Financial Officer at GE Vernova]

Wind revenue increased 21% in the quarter on higher onshore equipment deliveries, partially offset by lower offshore revenue. We've now restarted blade installations at the Vineyard Wind project in December. Wind was modestly profitable in Q4 of 2024 with EBITDA improving approximately $300,000,000 year over year. Onshore delivered its most profitable quarter in over 3 years on strong volume, price and productivity, partially offset by higher services costs as we deployed more crews and cranes as we focus on improving installed fleet availability. As we've discussed, we remain cautious on the timing of an onshore order inflection in North America as customers continue to navigate growing interconnection queues and higher interest rates.

[Kenneth Parks, Chief Financial Officer at GE Vernova]

We do expect the Wind segment to grow revenue mid single digits in the Q1 of 2025 driven by higher onshore equipment deliveries. EBITDA losses should remain relatively consistent year over year as the impact of higher onshore volume is offset by increased services cost to further improve the operating performance of the installed onshore fleet. Turning to electrification, strong demand and price resulted in high teens full year orders and revenue growth with EBITDA margins expanding to 9% in 2024. Electrification equipment orders grew nearly 20%, which further increased the equipment backlog to $20,000,000,000 Electrification revenue grew 18% led by grid solutions and margins expanded 5 20 basis points from higher volume, favorable pricing and productivity. In the Q4, orders were robust at approximately $4,800,000,000 roughly 2.2 times 4th quarter revenue, more than doubling year over year driven by the growing need for grid equipment and services.

[Kenneth Parks, Chief Financial Officer at GE Vernova]

We booked 2 large HVDC orders in the quarter in Germany and Korea and demand also remains strong for switch gears, particularly in North America. Revenue increased 12% even compared to a strong Q4 2023, which benefited from the ramp in volume that started late last year. Revenue growth in the quarter was primarily driven by higher volume and price at Grid Solutions, where we saw meaningful growth in switch gears and substation equipment. The segment delivered another quarter of double digit EBITDA margins with 500 basis points of margin expansion on more profitable volume, higher price and increased productivity. In the Q1 of 2025, we anticipate solid equipment orders at healthy margins.

[Kenneth Parks, Chief Financial Officer at GE Vernova]

Electrification revenue should increase at a growth rate in line with our full year guidance led by Grid Solutions. We expect year over year margin expansion similar to what we delivered in the 4th quarter from higher volume, productivity and favorable pricing. Consistent with prior years, we expect Q1 revenue and EBITDA margin to be lower sequentially, primarily due to the timing of project milestones, which tend to be more second half weighted. I'll now turn to Slide 11 to discuss GE Vernova guidance further. For the Q1 based on our expectations for the segments, which I've already outlined, we expect continued year over year revenue growth and adjusted EBITDA margin expansion in the quarter.

[Kenneth Parks, Chief Financial Officer at GE Vernova]

We also expect positive free cash flow in the Q1, a significant improvement year over year driven by our continuing focus on better cash linearity along with increased EBITDA partially offset by higher CapEx. As discussed in December, we expect to generate positive free cash flow in all four quarters this year. For the full year, we're reaffirming the 2025 guidance we provided at our investor update on December 10. We continue to expect full year 2025 revenue to be in the $36,000,000,000 to $37,000,000,000 range, a mid single digit year over year increase with growth in both services and equipment. We also expect continued expansion in adjusted EBITDA margin to high single digits as we deliver our growing backlog at better pricing and with better execution.

[Kenneth Parks, Chief Financial Officer at GE Vernova]

We anticipate free cash flow to be between $2,000,000,000 $2,500,000,000 By segment, we continue to expect mid single digit organic revenue growth in Power driven by higher gas services and equipment with EBITDA margins between 13% 14%. In wind, we expect revenue to be down mid single digits given our continued geographic selectivity in onshore and the benefit of the one time settlement from an offshore contract termination in 2024. We expect 2025 wind EBITDA losses to be between $200,000,000 $400,000,000 improving year over year driven by onshore margin expansion within the high single digit range and slightly lower losses at offshore. In electrification, we anticipate continued strong demand and favorable price to drive mid to high teens organic revenue growth with 11% to 13% EBITDA margins as we deliver a more profitable backlog. We expect 2025 adjusted EBITDA to be more second half weighted similar to last year.

[Kenneth Parks, Chief Financial Officer at GE Vernova]

We anticipate the typical gas services seasonality with the highest outage volume in the 4th quarter. In addition, wind EBITDA should improve in the second half compared to the first largely due to the timing of onshore turbine deliveries already in backlog and improved services profitability. Finally, we expect electrification earnings to grow sequentially through the year. Overall, we built a solid foundation in 2024 delivering significant margin expansion with growing free cash flow generation. In 2025, we expect to drive even stronger results as we deliver our growing more profitable backlog with improved execution enabled by our lean culture.

[Kenneth Parks, Chief Financial Officer at GE Vernova]

With that, I'll turn it back to Scott.

[Scott Strazik, CEO at GE Vernova]

Thanks, Ken. We are pleased with our performance this year and are excited about our future as we help our customers electrify and decarbonize the world. 24 has increased my conviction that GE Vernova is well positioned to lead. In Power, it's about delivering continued margin expansion with growing free cash flow, both from equipment as well as strong services. In wind, it's about disciplined margin expansion in onshore, while we position for the market inflection and quality and execution in offshore.

[Scott Strazik, CEO at GE Vernova]

For electrification, it's about delivering an accelerated high margin profitable growth from rising demand for grid technologies. Market dynamics continue to drive strong demand that will lead to multi decade growth for GE Vernova and continue creating value for our stakeholders. As we head into 'twenty five, I'm optimistic about the future and we are just getting started. With that,

[Scott Strazik, CEO at GE Vernova]

I'll hand it back to Michael for the Q and A portion of the call.

[Michael Lapides, Vice President of Investor Relations - GE Vernova at GE Vernova]

Before we open the line, I'd ask everyone in the queue to consider your fellow analysts and ask one question, so we can get to as many people as possible. Please return in the queue if you have follow ups. Operator, please open the line.

[Operator]

Our first question comes from Andrew Percoco with Morgan Stanley.

[Andrew Percoco, Analyst at Morgan Stanley]

Hey, good morning guys.

[Scott Strazik, CEO at GE Vernova]

Good morning, Andrew.

[Kenneth Parks, Chief Financial Officer at GE Vernova]

Good morning.

[Andrew Percoco, Analyst at Morgan Stanley]

Good

[Andrew Percoco, Analyst at Morgan Stanley]

morning. So yes, maybe just to start out at a very high level here, I mean, you guys gave a very comprehensive update back in December, but it's been a pretty active 48 hours or so with the new administration. Certainly some positives to point to on the AI investments and gas infrastructure side, but also some potential headwinds that we're seeing on wind. So can you maybe just give us your latest thoughts on how you're thinking about this incoming administration and how it might impact the outlook across each of your businesses?

[Scott Strazik, CEO at GE Vernova]

You bet, Andrew. I mean, I'll start. I just would take it a step back beyond maybe the last 48 hours and let's just talk about the last 6 weeks since we were together December 10th for the Analyst Day. And I would say in our largest scale businesses, the market continues to get stronger. I mean, we see accelerated activity in pipeline and gas.

[Scott Strazik, CEO at GE Vernova]

That's very focused in the U. S, but not just the U. S. And what I'd emphasize on gas is it's becoming an even more diversified demand cycle and that you can start to see in the numbers. I mean, we had 25 HAs that we had on order this year.

[Scott Strazik, CEO at GE Vernova]

We also had 20 F Class units. We had north of 40 aeroderivative units. So the diversity of demand just continues to get stronger. Similar theme in Grid. Even in the last 6 weeks, we closed the year very strongly with Grid orders.

[Scott Strazik, CEO at GE Vernova]

The pipeline remains very strong, but the diversity of the pipeline is really what I would emphasize. I mean, this was a business that 2 years ago was basically a European company. Today, we've taken a business that was $6,000,000,000 of backlog 2 years ago. It's $20,000,000,000 today. Yes, a little bit more than half of that still Europe, but 20% to 25% is in North America.

[Scott Strazik, CEO at GE Vernova]

The other 20% to 25% is the rest of the world with Asia really growing. So the diversity of demand in grid is just giving me that much more confidence in the durability of those two businesses. On the other side, to your question on wind, it remains soft. I mean, we talked about a generally flat financial projection with wind through the next few years. That's still really what we see 6 weeks later from where we were on December 10.

[Scott Strazik, CEO at GE Vernova]

We're cautious on when that inflection point is going to come in North America. We have been for a while. We still are today. And we're going to keep focused on executing and serving our customers as well as we can there, but the market fundamentals are softer there certainly relative to the other 2 large businesses.

[Operator]

Our next question comes from Julian Mitchell with Barclays.

[Julian Mitchell, Analyst at Barclays Capital]

Hi, good morning. Maybe just wanted to ask my question around the Power organic sales outlook for the year. So you grew I think low single digit or you're guiding for low single digits growth starting out the year. Organically, you've got that mid single digit guide for the year. Maybe help us understand sort of how we should think about that pace of acceleration through the balance of 2025?

[Julian Mitchell, Analyst at Barclays Capital]

And also, help us understand within power service, how we should think about the growth there? Should it be equivalent to equipment this year at sort of mid single digits? Or do you see opportunities on the transactional side of power service maybe to get higher volume and price as gas power utilization rises? Thank you.

[Kenneth Parks, Chief Financial Officer at GE Vernova]

Thanks, Julian. Maybe if we just think about kind of the pace of that business, I would say if you think about equipments and services, which is really how you broke down your question, as we look at what's in backlog, while we're growing at a slightly slower organic pace early in the year and we're still projecting mid single digit growth overall for that business for the year. It's really just built upon how we expect the backlog to roll out. So the build cycle for that, for the equipment piece. So nothing surprising there.

[Kenneth Parks, Chief Financial Officer at GE Vernova]

We overall have about 90% of our overall GE Vernova volumes in backlog today. So that gives us really good visibility on how it's going to roll. So I wouldn't take any indication of a maybe a slightly slower Q1 growth against the full year guide that's higher than that is anything other than us having the knowledge of how that backlog is going to roll out. On the services side, there's certainly opportunity as we're in the cycle of higher utilization to see opportunities not only on the contract service part of our portfolio, but also the transactional part of our service business, which equates for about half of the overall total. So we feel really good about where we're starting and we feel good about the visibility into the backlog and the visibility into the service outages that will take us to the right place on the guide.

[Scott Strazik, CEO at GE Vernova]

Julian, the only thing I'd emphasize is that we talked about in December this being really the last year at mid single digit revenue growth with an acceleration to high single digits and 26 and beyond in this segment. And I spent a lot of the 1st month of the year with some of our suppliers and partners in this space and continue to have real confidence and conviction that they're capacitizing as we need them to for this growth that comes in 'twenty six and beyond.

[Operator]

Our next question comes from Mark Strouse with JPMorgan.

[Scott Strazik, CEO at GE Vernova]

Good morning, Mark.

[Kenneth Parks, Chief Financial Officer at GE Vernova]

Good morning, Mark.

[Mark Streeter, Managing Director at JP Morgan]

Hey, good morning, everybody. Thanks for taking our questions. So when we were together in December, you gave some color about increasing your pricing on the gas power side. Just curious if you can talk about order activity since then or maybe just kind of general customer receptivity to that?

[Mark Streeter, Managing Director at JP Morgan]

And do you have any near term plans to raise pricing further? Thank you.

[Scott Strazik, CEO at GE Vernova]

Sure, Mark. I'd say, again, I'm picking on words a little bit, but the truth of it is in explicit orders in the last 6 weeks, there hasn't been an incredible amount of orders activity, right, because we kind of trended into the holidays and it's early in the New Year. What I would say though is the intensity of discussions for more in bidding activity right now and the receptivity to pay for what I'll call premium slots in the out years going in I'm talking premium slots 28, 29 really to a large extent. The discussions are much more focused on how can the end customers fulfill than the last dollar price. I wouldn't say there's been another explicit price increase since we were together December 10th because the reality is we had, at that point, had a very, very productive month of November and had just taken the market up another level.

[Scott Strazik, CEO at GE Vernova]

So, that hasn't changed. But I would not say at all in gas that the pricing dynamics are the main event. It's us continuing to partner with these end customers on their ability to actually generate the power when they need it. And we'll continue to do everything we can to serve them, but also maximize our economics.

[Operator]

Our next question comes from Nicole DeBlase with Deutsche Bank.

[Nicole Deblase, Analyst at Deutsche Bank]

Yes, thanks. Good morning, guys.

[Kenneth Parks, Chief Financial Officer at GE Vernova]

Good morning, Nicole.

[Scott Strazik, CEO at GE Vernova]

Good morning, Nicole.

[Nicole Deblase, Analyst at Deutsche Bank]

Can we talk a little bit about last week's SMR announcement? I thought that was really interesting. I guess, to what extent can deployment actually be accelerated? And does this kind of come with increased customer interest in the SMR offering? Thank you.

[Scott Strazik, CEO at GE Vernova]

Nicole, I think it's a great question. I'm glad to get a chance to spend a little bit more time talking about that. I mean, it is a longer term play for us, but last week was meaningful because when you think about where we were previous to that, our launch customers in North America with Ontario Power Generation and Tennessee Valley Authority, these are 2 customers that are 100% government owned, okay? Last week's announcement was that next shift forward, having Duke, having AEP join into the mix and join into the consortium to invest in this product and commit towards our technology for projects that they have slotted for new zero carbon power between 2,032,030 4 in the U. S.

[Scott Strazik, CEO at GE Vernova]

So, the activity of customer interest here, not just in the U. S, but also outside the U. S. Is only strengthening. I mean, to give you a little bit more color, I was in Japan the 1st week of the New Year.

[Scott Strazik, CEO at GE Vernova]

We've turned on 2 of our BWX nuclear plants in Japan very recently. There's another 18 in Japan that have not been restarted. That is only accelerating in activity. And I generally spend the 1st week of the New Year in Japan, for kind of the New Year's greetings. It's the 1st year I've left the market saying, okay, this is happening now.

[Scott Strazik, CEO at GE Vernova]

These plants are going to be turned back on, whether it be from the federal government or from the local communities because of the clear need. And we continue to see more activity on upgrades and upgrades into the installed base. In North America, we've talked in the past. We've got 65 plants running with our technology. We will add more megawatts to those existing plants.

[Scott Strazik, CEO at GE Vernova]

And more and more customers with those plants are coming back to us and saying within the security apparatus of the existing plant, we can fit an SMR. And then when you've already got the security infrastructure, that creates a lot of economic and operational arbitrage for them. So you can hear the enthusiasm in my voice on this. Can we move it to the left earlier than the first plant being commissioned in Ontario in 2029? I don't think that will happen.

[Scott Strazik, CEO at GE Vernova]

The first plant will be commissioned in Canada in 'twenty nine. There's even more confidence that in the U. S, many more plants can be commissioned, let's just call it 2,032 and beyond, but this is about the next decade. It's not going to create a substantial amount of incremental megawatts until we get there.

[Operator]

Our next question comes from Andrew Obin with Bank of America.

[Andrew Obin, Analyst at Bank of America]

Yes, good morning.

[Scott Strazik, CEO at GE Vernova]

Good morning, Andrew.

[Kenneth Parks, Chief Financial Officer at GE Vernova]

Hey, Andrew.

[Andrew Obin, Analyst at Bank of America]

Yes. It was the headlines like Constellation buying Calpine, seems people are getting excited about Nat Gas. As we think about services and the scope of your activities as price of gas is going up over the next several years, Just trying to understand what happens to the scope of your service activities as price of gas if price of gas structurally goes up and if you are starting to have those conversations with your customers?

[Scott Strazik, CEO at GE Vernova]

Andrew, if you just take the F Class fleet, which is our largest fleet in North America, we have over 700 F Class gas turbines in the U. S. That we have incremental technology that we can insert into the existing installed base in the U. S. And drive output and efficiency savings.

[Scott Strazik, CEO at GE Vernova]

And that's just the F Class fleet in North America as an illustration amongst the 7,000 gas turbines we have globally. And that's what we're going to see happen. Admittedly, today, the discussions with incremental investments is more focused on megawatts than it is efficiency. I agree with your train of thought on where gas pricing is going, but the discussion is much more on we need every megawatt we can get right now and how can you operationally allow us to generate those megawatts even if in the end it leads to a few more outages over time because we run the gas turbines at higher firing temperatures as an example. But what this is clearly going to lead to is the scope per outage is going up because the amount that our customers are willing to invest in technology at that outage event is going up for, at the moment, megawatts, but ultimately efficiency will matter too.

[Scott Strazik, CEO at GE Vernova]

So that's why we've talked for the better part of, call it, the last 4 months about the fact that we see the upgrades growing directionally 50% by the end of the decade in the gas business because of this market opportunity and a lot of it's going to be in North America and the demand signals with more investment into gas like you alluded to with Constellation is a great indicator.

[Operator]

Our next question comes from Julien Dumoulin Smith with Jefferies. [SPEAKER JULIEN DUMOULIN

[Scott Strazik, CEO at GE Vernova]

SMITH:] Good morning, Julien.

[Kenneth Parks, Chief Financial Officer at GE Vernova]

Good morning.

[Andrew Percoco, Analyst at Morgan Stanley]

Hey, good morning.

[Julien Dumoulin-Smith, Analyst at Jefferies Financial Group]

Nice to chat with you guys. Thank you very much. Hey, look, you made an allusion to this earlier about sort of the diversification in your turbine sales, right, not just H class, but F and aero. Can you speak a little bit more to the extent to which that might be accelerating given the availability dynamics and the supply constraints?

[Julien Dumoulin-Smith, Analyst at Jefferies Financial Group]

And how that might drive volumetric upside where folks might have otherwise thought you were constrained in what you can do in that kind of 2026, 2027 timeframe?

[Scott Strazik, CEO at GE Vernova]

It's Julian, thanks for the question. It's not going to materially change 2026. At the end of the day, the same amount of 4 gs and at least 26 is really kind of what we're going to have to be clear. I mean, we're working this very hard. But the premise of your question is spot on in the sense that the more that we do F class gas turbines as an example, we've been making them for 25 years, it is easier for us to make an F class gas turbine than it is an H.

[Scott Strazik, CEO at GE Vernova]

The supply base has an ability to ramp those faster. And the reality is, yes, there's a lot of baseload power needs. A lot of the data centers' AI will be H class because the end customers are underwriting a business case where they need the power 24 hours a day, 7 days a week, and the efficiency is a given it'll be a base load H class. At the same time, you look at where the reserve margins are today in PJM and ERCOT and where pricing is going and there's a lot of simple cycle pipeline demand growth for F Class that makes a lot of sense. And the truth of it is those are easier for us to make.

[Scott Strazik, CEO at GE Vernova]

And as we continue to drive our lean improvement and I'll be back down in Greenville, South Carolina next week with the team for the entire week to kind of partner with them on our path forward, that diversification of gas turbines, including, let's call it, more mature gas turbines like F Class, does give us a little bit more of a kick in our step that we're going to find every opportunity we can to serve our customer base with as many gas turbines as practical. But we've got to balance that with what our supply base is able to serve. And in that regard today, nothing's changed from our previous comments that we'll be at directionally 20 gigawatts by 27 and steady there going forward.

[Operator]

Our next question comes from Andrew Kaplowitz with

[Operator]

Stifel.

[Scott Strazik, CEO at GE Vernova]

Andrew?

[Andrew Kaplowitz, Analyst at Citigroup]

Good morning, everyone.

[Kenneth Parks, Chief Financial Officer at GE Vernova]

Good morning.

[Andrew Kaplowitz, Analyst at Citigroup]

Scott, could you give more color into your commentary regarding accelerating capacity expansion to sell premium slots that you have on Slide 6? I think at the Investor Day, you're careful to say that you're going to be thoughtful and how quickly you grow capacity. And maybe Slide 6 commentary today seems slightly more pointed. I know you just talked about power and no real changes there. But what about in electrification?

[Andrew Kaplowitz, Analyst at Citigroup]

Are potentially going to accelerate capacity a little bit on that side of the business?

[Scott Strazik, CEO at GE Vernova]

Yes. And that comment is exactly, Andrew, as you said, more applicable to electrification. I'm looking forward to being at one of our factories in Pennsylvania in a few weeks for the better part of a week that makes switch gears for us. And we do see opportunity to continue to accelerate capacity build out and electrification that is in North America in the near term, leveraging some of our industrial footprint. And as we do, the ability to sell those premium slots is something we're very, very focused on.

[Scott Strazik, CEO at GE Vernova]

So we did try to talk about this on December that if there was an upside case within our, call it, what's in, what's out of our Buy 28 guide, we did talk about accelerated fulfillment and electrification being the most applicable example. And that remains the case. And we've got a team that's incredibly focused on making progress there and a leadership team that's here to serve them because the market needs everything we can give them. And we're hopeful we're going to ramp that up even faster. And with it, we should have fulfillment and price opportunity.

[Scott Strazik, CEO at GE Vernova]

Yes.

[Kenneth Parks, Chief Financial Officer at GE Vernova]

And I think the only thing I would add to that is that one of the things we called out in December, which is still true only a few weeks later, is a big portion of the electrification capacity expansion really isn't driven by bricks and mortar, right? The lean culture within some of the businesses that are faster flow businesses, less kind of like project moving through the factory, but flow businesses, we're getting a significant amount of capacity expansion with lean initiatives, which are some of the most effective from a return perspective because you're not putting that bricks and mortar in the ground forever.

[Operator]

Our next question comes from Joe Ritchie with Goldman Sachs.

[Scott Strazik, CEO at GE Vernova]

Good morning,

[Scott Strazik, CEO at GE Vernova]

Joe.

[Joe Ritchie, Analyst at Goldman Sachs]

Hey, good morning, guys. So look, I think very few of us would have thought that over the past 2 years, you'd be able to grow that electrification equipment backlog to over $20,000,000,000 It's pretty incredible. As you're looking out for 2025, Scott, any thoughts around how much that backlog can build? And then specifically as it relates to North America, really encouraging to hear that, that business is now 20% to 25% of your business today.

[Joe Ritchie, Analyst at Goldman Sachs]

What's the opportunity in North America?

[Scott Strazik, CEO at GE Vernova]

Substantial. It is it continues to be the part of the business that as we lean into the front end, I continue to be encouraged that the GE Vernova, symmetry synergy helps the most on the front end. We continue to educate our customers on our offerings in electrification and we're liking the response. And I've alluded to the fact that I spent a week in Asia to start the year in both Singapore and Japan. That's applicable in those markets too.

[Scott Strazik, CEO at GE Vernova]

We are not a known commodity, but there are industrial footprint opportunities for us to invest into in both Asia and North America that are attractive and that are things that we're going to keep working very hard right now. So, of our 3 business segments, Joe, it's very clear to me from a commercial perspective beyond market growth, us simply gaining share, let's say, within the market regardless of where it goes, There's a lot more for us to do in electrification and I expect that $20,000,000,000 equipment backlog to grow substantially in 2025 and beyond as we continue to run this business better.

[Michael Lapides, Vice President of Investor Relations - GE Vernova at GE Vernova]

Operator, we have time for about one last question.

[Operator]

This question will come from Moses Sutton with BNP Paribas.

[Moses Sutton, Managing Director at BNP Paribas]

Thanks for squeezing me in.

[Kenneth Parks, Chief Financial Officer at GE Vernova]

Hey, Moses.

[Moses Sutton, Managing Director at BNP Paribas]

Hi, thanks for squeezing me in. I wanted to continue on gas turbine pricing. At this point, new CCGTs are costing $2,000 per kilowatt all in and rising perhaps. Is your content still tracking at 30% to 35% of that new build cost? And are pricing and bids, is there any differentiation between, I don't know, like a U.

[Moses Sutton, Managing Director at BNP Paribas]

S. 2027 versus an international 2028, which might have a little more open room? So just thoughts on that price level against the total content and then variation by geography and shipment year? Thanks.

[Scott Strazik, CEO at GE Vernova]

Moses, the directional numbers you're giving for an H class gas turbine in North America or a plant build are directionally accurate today and our share of that is directionally accurate too. So I wouldn't think it's different than what you're saying. The only thing maybe I would distinguish is we're very quickly getting to a point that the premium slot dynamic, there's not really a difference between 2728 right now. I mean, I think if you want to start to distinguish between schedule and capacity, it's really turning into more 28 versus 32, okay? And internationally, there are markets that will plan out that far.

[Scott Strazik, CEO at GE Vernova]

That may lead to modestly different way to think about things. But, 20 27, 20 28, we are going to be talking about 2029 in gas before the year is over on some of these calls. That's very clear to me because we've got 20 gigawatts of capacity. We're going to have a strong orders year. We're going to fill the bathtub, so to speak, of those 20 gigawatts per year fairly quickly and be into the out years.

[Scott Strazik, CEO at GE Vernova]

So I don't think we're going to be making much of a pricing distinction between 20 7 and 29 right now. It's really going to continue to be a challenge of how the customers secure not just our equipment, but everything else required. The EPC support is going to be a big open switch and one that I'm going to invest a lot of time in, in 2025 because I continue to believe that could be one of the bigger challenges towards fulfillment is just whether the projects stay on schedule, notwithstanding our explicit gas turbine deliveries. And we have a number of strategic sessions in the Q1 with those EPCs to just stay very aligned on their schedule and ours. So thanks for the question.

[Michael Lapides, Vice President of Investor Relations - GE Vernova at GE Vernova]

Before we wrap up, let me turn it back to Scott for closing comments.

[Scott Strazik, CEO at GE Vernova]

No, everybody, I just want to thank everyone again for your continued interest in GE Vernova. As I do on all of these calls, I think it's important to recognize our employees. In our 1st year as a public company, I have an incredible amount of pride to lead this group, a lot of optimism and ambition for the company that we're creating. I have a huge appreciation for the customers that are leaning in with us right now on the opportunity and the excitement they have for the art of the possible for what GE Vernova can be. So, we had a good 1st year, but there's nobody inside the walls of GE Vernova that's celebrating right now.

[Scott Strazik, CEO at GE Vernova]

We've got our feet on the ground. We're very focused on the opportunity in front of us in these markets and serving it and going into New Year with a lot of energy and a lot of optimism. So thanks for giving us the time today and we look forward to seeing all of you out in the field in the next few months.

[Operator]

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.

Participants

Executives

• Michael Lapides, Vice President of Investor Relations - GE Vernova
• Scott Strazik, CEO
• Kenneth Parks, Chief Financial Officer

Analysts

• Andrew Percoco, Analyst at Morgan Stanley
• Julian Mitchell, Analyst at Barclays Capital
• Mark Streeter, Managing Director at JP Morgan
• Nicole Deblase, Analyst at Deutsche Bank
• Andrew Obin, Analyst at Bank of America
• Julien Dumoulin-Smith, Analyst at Jefferies Financial Group
• Andrew Kaplowitz, Analyst at Citigroup
• Joe Ritchie, Analyst at Goldman Sachs
• Moses Sutton, Managing Director at BNP Paribas