GE Vernova Inc. Q1 FY2025 earnings call

• Markets: Strong end markets for power electrification, global demand for reliable power, grid infrastructure, decarbonization.
• Mitigation of tariffs: Pricing actions, G&A cost structure transformation, supply chain investments.
• Backlog growth: Equipment backlog grew $2.4B, services backlog $2B, total backlog $123B.
• Services: Orders grew 16%, high-margin services driven by gas power, onshore wind, steam services up nearly 60%.
• Wind progress: Fifth straight profitable quarter in onshore wind, investing in blade inspection robots, expect fleet availability improvement in 2026.
• Offshore wind: Commissioning units, expect completion of Vineyard Wind in 2025, Dogger Bank in 2026.
• Lean initiatives: CEO Kaizen week identified 500+ safety improvements, ~$150M incremental revenues from capacity/delivery enhancements.
• Capital returns: Repurchased ~$1.5B in stock, paid dividend, $8.1B cash balance.

Power: Orders grew 28%, revenue increased 16%, EBITDA margins expanded 70 basis points to 11.5%. Gas power equipment orders up over 30%, booked 7 GW of gas turbine orders, backlog at 29 GW with 21 GW slot reservations. Wind: EBITDA margin improved despite investments. Wind orders down 43% due to US policy uncertainty, offshore focused on executing backlog. Revenue up 15% with higher onshore deliveries, EBITDA losses improved 7%. Electrification: Robust demand, orders ~$3.4B, revenue up 18%, EBITDA margin expanded 680 basis points. Equipment backlog ~$22B, driven by grid equipment demand.

• Reaffirmed 2025 guidance including $300-400M tariff impact net of mitigations.
• Full-year revenue $36-37B, mid-single-digit growth.
• Adjusted EBITDA margin to high single digits.
• Free cash flow $2-2.5B.
• Power: Mid-single-digit organic revenue growth, EBITDA margin 13-14%.
• Wind: Revenue down mid-single-digit, EBITDA losses $300-400M, improving year over year.
• Electrification: Mid to high teens organic revenue growth, EBITDA margin 11-13%.

• Tariffs and inflation: Cost increase of $300-400M in 2025, need for ongoing mitigation.
• Offshore wind challenges: One-time charge from supply agreement termination, ongoing execution risks.
• Onshore wind challenges: US policy uncertainty, permitting delays, interconnection queues.

Q: Nicole DeBlase asks about tariffs impact, G&A vs pricing mitigation.

A: Ken Parks responds about active mitigation, supply chain and G&A actions.

Q: Mark Strouse asks about Power segment slot reservations by customer type and geography.

A: Scott Strazik provides details on US focus and data center alignment in slot reservations.

Q: Joe Ritchie asks about cancellation risk for backlog and slot reservations.

A: Scott Strazik discusses stickiness of backlog and slot reservations, low cancellation risk.

Q: Chris Dendrinos asks about pricing dynamics in gas and electrification.

A: Scott Strazik and Ken Parks discuss ongoing price increases in gas, slower growth in electrification.

Q: Andrew Percoco asks about customer behavior change due to tariffs and recession, contract structure.

A: Scott Strazik and Ken Parks discuss ongoing growth, tariff mitigation, and cash curve management.

Q: Nigel Coe asks about gas data center exposure and slot reservations to orders.

A: Scott Strazik explains data center alignment in slot reservations and order conversion process.

Q: Julian Mitchell asks about EBITDA margin guide and seasonal ramp.

A: Ken Parks discusses first half performance, tariff impact on wind, and confidence in full-year guide.

Q: Julien Dumoulin-Smith asks about FCF range and onshore wind trends.

A: Scott Strazik and Ken Parks discuss FCF drivers and onshore wind permitting challenges.

Q: Andrew Obin asks about EPA directives and utility spending plans.

A: Scott Strazik discusses collaboration on permitting reform and timing implications.

Q: Andrew Kaplowitz asks about Electrification orders, guidance, and capacity.

A: Scott Strazik reaffirms Electrification backlog growth expectations and capacity progress.