GE Vernova Inc. (GEV) Q4 2025 Earnings Call Transcript
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Overview
The earnings call summary shows strong performance in the Electrification segment, with significant revenue growth and margin expansion. The Q&A reveals optimism in future orders and backlog improvements, particularly in gas power and electrification. Despite challenges in the Wind segment, the company's strategic focus on electrification and strong cash position are positive indicators. The Prolec integration is progressing well, enhancing future prospects. Overall, the sentiment is positive, with potential stock price movement in the 2% to 8% range, considering the strong financial metrics and optimistic guidance.
Key Financial Performance
Total Backlog Increased by over 25% or $31 billion to $150 billion year-over-year. This growth was driven by robust profitable order growth in Power and Electrification.
Power Services Backlog Grew to $70 billion, up $5 billion sequentially and $9 billion year-over-year. This increase was mainly driven by strength in gas with customers investing in fleets and signing new long-term service agreements at favorable pricing.
Electrification Backlog Grew to $35 billion, up $4 billion sequentially and $11 billion year-over-year. This growth was driven by demand for grid and data center equipment, with over $2 billion of orders signed directly for data centers in 2025, more than triple the 2024 total.
Wind Orders Received approximately $3 billion of orders in 4Q, the largest of the year for the segment. Growth was driven by repowering and new units in onshore wind.
Orders Booked $59 billion of orders, up 34% year-over-year. Growth was driven by Power equipment orders more than doubling and Electrification equipment orders growing more than 20%.
Revenue Grew by 9% year-over-year to $38 billion, with growth in both equipment and services.
Adjusted EBITDA Margin Increased by 210 basis points year-over-year. This was driven by higher price, volume, and productivity.
Free Cash Flow Generated $3.7 billion, more than double the prior year. This was driven by strong adjusted EBITDA and working capital management.
Power Orders Grew 77% in 4Q, led by gas power equipment tripling year-over-year. This was driven by higher volume and pricing.
Electrification Revenue Increased 32% in 4Q, driven by strong volume and higher price for switchgear and HVDC equipment.
Wind Revenue Decreased 25% in 4Q due to lower onshore equipment deliveries as a result of softening orders over the last year.
Electrification EBITDA Margin Expanded 320 basis points to 17.1% in 4Q, driven by more profitable volume, productivity, and favorable pricing.
Wind EBITDA Losses Were $225 million in 4Q, below the prior year due to higher offshore contract losses and lower onshore equipment volume.
Cash Balance Ended 4Q with nearly $9 billion in cash, up approximately $1 billion compared to the third quarter.
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Operating Highlights
New Gas Contracts: Signed an incremental 6 gigawatts in the last 3 weeks of December, totaling 24 gigawatts in Q4 2025.
Electrification Orders: Largest order quarter in its history in Q4 2025, with a total backlog of $35 billion, up $4 billion sequentially and $11 billion year-over-year.
Wind Orders: Largest order quarter of 2025, receiving approximately $3 billion of orders in Q4.
Advanced Research Center: Progressing in direct air capture, solid-state transformer program, and fuel cell program in Malta, New York.
Global Gas Power Demand: Strong U.S. demand and agreements in the Middle East, Vietnam, and Taiwan, with backlog increasing from 33 to 40 gigawatts.
Electrification Growth: Signed large deals for grid resilience in Saudi Arabia and Australia, HVDC contract in Germany, and grid equipment contract in Iraq.
Data Center Equipment: Over $2 billion of Electrification orders signed for data centers in 2025, more than triple the 2024 total.
Operational Investments: Installed over 200 new machines and added nearly 1,000 production workers in 2025, with plans for 200 more machines and 500 workers in 2026.
Automation and AI: Investments in automation and robotics advancing at scale, with AI gaining momentum in engineering and back-office functions.
Cash Management: Ended 2025 with $9 billion in cash, generating $3.7 billion in free cash flow, more than double the prior year.
Prolec GE Acquisition: Received rapid approval and set to close on February 2, 2026, contributing approximately $3 billion in revenue for 2026.
Dividend and Buyback Program: Doubling dividend in 2026 versus 2025 and increasing stock buyback authorization to $10 billion from $6 billion.
Offshore Wind Challenges: Impacted by U.S. government halting offshore wind activity, leading to delays and cost accruals for the Vineyard Wind project.
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Risk or Challenges
Offshore Wind Activity Halt: The U.S. government halted all offshore wind activity on December 22, leading to delays and additional costs for the Vineyard Wind project. This resulted in an incremental accrual in Q4 for costs associated with the delay. If the project is not completed by March, 2026 revenue could be negatively impacted by approximately $250 million.
Onshore Wind Challenges: The onshore wind segment faces softness in U.S. orders due to permitting delays and tariff uncertainty. This has led to lower equipment deliveries and revenue declines.
Tariff Impacts: The wind segment is facing approximately $70 million in tariff-related costs, which started in Q2 of last year and are expected to continue impacting profitability.
Offshore Wind Contract Losses: Higher contract losses in offshore wind projects have been recorded, driven by delays and challenges in executing the remaining unprofitable offshore wind backlog.
Economic and Regulatory Uncertainty: Permitting delays and regulatory hurdles in the U.S. are impacting the wind segment, particularly onshore wind orders.
Execution Risks in Offshore Wind: The company acknowledges execution challenges in offshore wind projects, which are contributing to financial losses and delays.
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Guidance & Outlook
2026 Financial Guidance: GE Vernova is raising its full-year 2026 financial guidance to include the Prolec GE acquisition. Revenue is expected to be in the range of $44 billion to $45 billion, up from $41 billion to $42 billion. Adjusted EBITDA margins are projected to be 11% to 13%, and free cash flow guidance is increased to between $5 billion and $5.5 billion.
Electrification Segment Outlook: Electrification is expected to achieve revenue between $13.5 billion and $14 billion in 2026, representing 20% organic growth plus approximately $3 billion from Prolec GE. EBITDA margins are projected to expand to 17% to 19%.
Power Segment Outlook: Power is anticipated to grow organically by 16% to 18% in revenue in 2026, driven by gas power. EBITDA margins are expected to be between 16% and 18%.
Wind Segment Outlook: Wind segment revenue is expected to decline by low double digits in 2026 due to decreased onshore equipment revenues. However, EBITDA losses are projected to improve to approximately $400 million, consistent with prior expectations.
2028 Financial Outlook: By 2028, GE Vernova projects at least $56 billion in total revenue, up from $52 billion, implying a low teens growth CAGR. Adjusted EBITDA margins are expected to reach 20%. Cumulative free cash flow generation from 2025 to 2028 is projected to be at least $24 billion, incorporating nearly $1 billion of incremental CapEx from Prolec GE.
Gas Turbine Output Expansion: A substantial step-up in gas turbine output is expected in Q3 2026, with annual production capacity increasing to approximately 20 gigawatts starting mid-year 2026.
Electrification Backlog Growth: Electrification equipment orders are expected to continue outpacing revenue, with a growing backlog projected to support future growth.
Onshore Wind Services Profitability: Onshore wind services are expected to become more profitable in 2026, with critical customer-facing events reduced by over 50% in 2025 compared to 2024.
Automation and AI Investments: Returns from automation and AI investments are expected to grow in 2027, contributing to margin expansion in 2028.
Nuclear and SMR Contributions: Nuclear investments, including the construction of the first SMR plant in Ontario, are expected to contribute meaningfully to the top line of the power business in the next decade.
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Shareholder Return Plan
Dividend Increase: The company announced a doubling of its dividend in 2026 compared to 2025.
Share Buyback Program: The company increased its stock buyback authorization to $10 billion from the previously approved $6 billion program.
Share Repurchase in 2025: The company repurchased more than 8 million of its shares, returning $3.6 billion to shareholders in 2025.
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Key Q&A
Q:What is the current status and future expectations for gas power equipment orders?
A:The company ended 2025 with 83 gigawatts in backlog, exceeding the original expectation of 60 gigawatts. They now expect to reach 100 gigawatts by the end of 2026. Discussions with customers have been intense, and pricing has strengthened with a 10-20 point increase in slot reservation agreements (SRAs). The split between orders and SRAs is expected to shift to 60% orders and 40% SRAs by 2026.
Q:What is the company's view on competition from smaller turbine makers?
A:The company does not view smaller turbine makers as significant competition for their heavy-duty gas turbines. Smaller applications are seen as enabling earlier power projects, but the company remains confident in the efficiency and value proposition of their heavy-duty turbines. They also noted strong orders for aeroderivative units, with 63 booked last year, up significantly year-over-year.
Q:What is the outlook for backlog margins in the Power segment?
A:Backlog margins have improved significantly, with an 11-point year-over-year increase and a 17-point improvement since year-end 2022. The starting point was approximately breakeven. Margins are expected to continue growing in 2026, with at least $8 billion in equipment margin backlog expected to be added this year. Service contracts tied to new turbines are also seeing incremental pricing improvements.
Q:What progress has been made in the Electrification segment?
A:The Electrification segment has seen record orders in Q4, driven by a differentiated solution linking power generation and electrical equipment. The company expects $14 billion in revenue by 2026, with a $150 billion addressable market. Investments in operations, such as doubling output of transformers and switch gears from 2024 to 2028, are underway. The Prolec acquisition is expected to optimize transformer distribution globally and contribute to growth.
Q:What is the status of the Prolec integration and its impact on margins?
A:There has been no change in expectations for Prolec since the deal closed in October. The integration is progressing well, and the company is optimistic about its contribution. The margin guidance remains consistent with prior expectations, and Prolec is expected to enhance the Electrification business.
Q:What opportunities exist in the nuclear space?
A:The company sees significant opportunities in the nuclear space, particularly with small modular reactors (SMRs). Discussions with governments and customers in the U.S., Sweden, and Poland are progressing, but the timeline for announcements may take longer due to the industry's restart in the western world.
Q:What is the company's reaction to the recent emergency power auction announcement?
A:The company is motivated by the announcement, which aims to encourage new firm, fixed power generation capacity. While the market is already moving, with 83 gigawatts on contract and a projection of 100 gigawatts by year-end, the company is working with the administration to enable faster growth. However, policy changes will take time.
Q:What is the current status of gas capacity and backlog?
A:The company has 83 gigawatts on contract, with capacity available for 2029. By the time they reach 100 gigawatts, they expect 2029 and 2030 to be largely sold out. Slots for 2029 are still available as of January 28.
Q:How is the company addressing variable cost productivity and rising commodity costs?
A:The company locks in prices with suppliers for orders and has material escalators for long-term service contracts, protecting against material inflation. They are making progress in fulfilling backlog and ramping up capacity, with expectations for sourcing productivity to contribute more to margin expansion in the future.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the timeline for nuclear project announcements, citing the sequential nature of discussions and the industry's restart in the western world. Additionally, they did not provide a clear explanation for the perceived change in organic growth expectations for the Electrification segment, though they stated there was no change.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI
Electrification Prolec
GE acquisition
GE moment
GEV
Page margin
Power gas
Prolec GE
RD investment
accrual
approval
automation
backlog Electrification
backlog increase
backlog margin
center equipment
debt
demand pricing
dollar backlog
equipment margin
event
front day
gigawatts contract
government
horizon
installation turbine
investment return
investor value
margin dollar
order Electrification
order segment
point price
power Power
production
revenue
stop work
tariff
teen
turbine shipment
week
work order
GEV Transcript
GE Vernova Inc. (GEV) Q4 2025 Earnings Call Transcript
Positive1-28
The earnings call summary shows strong performance in the Electrification segment, with significant revenue growth and margin expansion. The Q&A reveals optimism in future orders and backlog improvements, particularly in gas power and electrification. Despite challenges in the Wind segment, the company's strategic focus on electrification and strong cash position are positive indicators. The Prolec integration is progressing well, enhancing future prospects. Overall, the sentiment is positive, with potential stock price movement in the 2% to 8% range, considering the strong financial metrics and optimistic guidance.
GE Vernova Inc. (GEV) Q3 2025 Earnings Call Transcript
Positive10-22
The earnings call highlights robust financial performance, with significant growth in revenue and margins, and strong free cash flow. The Q&A session reveals positive market trends, such as rising gas turbine prices and strong demand for aero derivatives. Management expresses confidence in future growth and strategic acquisitions, such as Prolec, which are expected to enhance capacity and revenue. Despite some uncertainty in synergy realization timelines, the overall sentiment is highly optimistic, suggesting a strong positive stock price movement.
GE Vernova Inc. (GEV) Presents At Morgan Stanley's 13th Annual Laguna Conference Transcript
Neutral9-11
GE Vernova Inc. (GEV) Q2 2025 Earnings Call Transcript
Positive7-23
The earnings call highlights strong growth in the Power and Electrification segments, with significant backlog and order increases, particularly in Gas Power. Despite challenges in the Wind segment, the overall financial performance is robust, with expanding margins and positive pricing trends. Management's optimistic guidance and strategic investments in manufacturing and automation further support a positive outlook. The Q&A reinforced these positives, with analysts showing interest in growth areas and management addressing pricing and demand trends effectively. However, some uncertainty remains in Wind and long-term tax bill impacts, slightly tempering the overall positive sentiment.
GEV Slides
GEV Report
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