GE Vernova Inc. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Prolec GE Acquisition: Excited to acquire remaining 50% of Prolec GE from Xignux for $5.275B, funded 50% by cash and 50% by debt, closing by mid-2026. Prolec expected to generate $3B revenue in 2025 with 25% EBITDA margin, focusing on transformers for North American utilities, industrials, and data centers.
• Third Quarter Results: Revenue grew 10% organically, backlog expanded to $135B, adjusted EBITDA margins expanded 600 basis points. Orders totaled $14.6B with a 1.5x book-to-bill ratio.
• Operational Highlights: Prolec investing in factory expansions (e.g., North Carolina, Louisiana, Mexico), GE Vernova integrating lean culture into Prolec's facilities, and investments in AI, robotics, and automation to drive productivity.

Segment Performance

• Power: Orders grew 50% led by Gas Power equipment, revenue increased 14%, EBITDA margins expanded to 13.3%.
• Electrification: Orders more than doubled year-over-year, revenue increased 32%, EBITDA margin expanded to 15.1%.
• Wind: Orders increased 4% year-over-year, revenue decreased 9% due to offshore contract cancellation and blade events, but EBITDA losses improved by ~$250 million year-over-year.

Guidance

• Reaffirm 2025 guidance for revenue, with adjusted EBITDA margins in the range of 8%-9% and free cash flow in the range of $3B-$3.5B.
• Fourth quarter expected to have adjusted EBITDA growth, margin expansion, and positive free cash flow, with Electrification driving growth offsetting softness in onshore wind. 2026 outlook remains positive with rising demand and strong execution.

Risks

• Uncertainties in power market pricing, including potential softening in gas turbine negotiations.
• Supply chain disruptions and tariff uncertainties impacting onshore wind revenue.
• Competition in the electrification and wind sectors affecting market share and margins.

Question and Answer

• Q: What is the visibility on Prolec's 2028 targets? A: Prolec has $4B explicit backlog today, with framework agreements and growth from new customer sets like data centers providing confidence. The business is expected to see robust revenue and EBITDA growth by 2028.
• Q: How is gas turbine pricing trending? A: Price is accelerating in gas, with slot reservation agreements at higher price and more attractive margins translating to future orders. Mix of orders (e.g., more aero derivatives in 3Q) affects short-term perception but long-term trends are positive.
• Q: What are the commercial limitations with Prolec? A: Prolec had exclusivity for transformers in North America, limiting GE Vernova's ability to fulfill certain opportunities. Full ownership will eliminate these limitations, streamlining customer experience and enabling global expansion of Prolec's products.