GE Vernova Inc. Q3 FY2026 earnings call

• Strategic Acquisition of Trench Group: Announced the acquisition of Trench Group for $9 billion to strengthen high-voltage grid equipment capabilities. The deal is accretive from day one, with closing expected in late 2027. It provides vertical integration of critical components like bushings and instrument transformers.
• Accelerating Growth and Backlog: Total backlog reached approximately $200 billion. Orders surged 96% year-over-year to $29.3 billion. Gas power contracts exceeded 130 gigawatts, with strong demand from both traditional utilities and data centers.
• Margin Expansion: Significant margin improvement across segments. Power margins benefited from better-priced equipment shipments starting in H2 2026. Electrification margins are trending toward the higher end of the 18-20% range.
• Capital Allocation and Returns: Doubled stock buyback authorization to $20 billion. Completed exit from GE Aerospace transition services agreements, yielding ~$135 million in annual G&A savings. Ended Q3 with ~$17 billion in cash.
• Innovation and New Products: Strong progress in nuclear SMRs (Clinch River permit approval, Sweden award) and electrification innovations (MVUPS, solid-state transformers), with first hyperscaler orders secured for MVUPS.

• Power: Revenue increased 25% year-over-year. Adjusted EBITDA margin expanded 830 basis points to 21.4%, driven by favorable pricing and higher volume of gas power equipment (including aero derivatives). Full-year guidance raised for revenue growth (19-21%) and EBITDA margin (19-21%).
• Electrification: Revenue increased 16% organically (51% reported, including Prolec). Adjusted EBITDA margin expanded 470 basis points to 19.1%. Equipment backlog grew significantly to $42 billion, driven by Grid Systems Integration and Power Transmission. North America orders doubled year-over-year.
• Wind: Delivered an EBITDA profit of $72 million, marking a return to profitability. Revenue increased 3% due to higher onshore services and offshore deliveries at Dogger Bank B. Full-year organic revenue expected down mid-single digits; EBITDA loss expected between $400-$500 million.

• FY 2026 Revenue: Raised to $46.5 - $47.5 billion.
• FY 2026 Adjusted EBITDA Margin: Raised to 13.5 - 14.5%.
• FY 2026 Free Cash Flow: Raised to $16 - $17 billion.
• Power Segment: Organic revenue growth raised to 19-21%; EBITDA margin raised to 19-21%.
• Electrification Segment: Revenue expected between $14.5-$15 billion; EBITDA margin trending toward the higher end of the 18-20% range.
• Wind Segment: Organic revenue expected down mid-single digits; EBITDA loss expected between $400-$500 million.

• U.S. Onshore Wind Market Uncertainty: Permitting delays and tariff uncertainty continue to impact order visibility for new onshore wind equipment in the U.S., which remains a small market currently.
• Integration Execution Risk: While Prolec integration is ahead of expectations, the successful integration of Trench Group depends on executing planned cost and revenue synergies and managing supply chain transitions.
• Offshore Project Execution: Remaining offshore wind projects in North America (e.g., Dogger Bank) carry execution risks, though Vineyard Wind dispute has been settled with modest impact.
• Macroeconomic and Regulatory Risks: Potential impacts from tariffs (e.g., Section 301/232 on wind components) and regulatory approvals for the Trench acquisition.

Q: Analyst asked if H2 2026 power margins represent a sustainable baseline for 2027, noting exceptional Q3 results despite seasonal service weakness. / A: CEO confirmed that H2 2026 marks the start of shipping better-priced equipment, originating from orders placed in H2 2024 and later. He stated there is no reason to believe this period isn't the right foundation for projecting into 2027, as the company reaches its 5 GW quarterly run rate with improved pricing structures.

Q: Analyst inquired about Trench’s customer mix (internal vs. external) and potential for further supply chain deals given the $9B price tag. / A: CEO explained that while GE Vernova is currently a small part of Trench’s $1.4B revenue, Trench supplies critical components (bushings, coils) that constitute ~5-10% of transformer/HVDC bill-of-materials. This vertical integration gives GE control over key technology and leverages Trench’s strong customer loyalty (especially with hyperscalers) to pull forward transformer volumes, though immediate revenue synergy quantification was deferred.

Q: Analyst asked about the probability of expanding power backlog beyond 130 GW and the conversion rate of Slot Reservation Agreements (SRAs). / A: CEO described SRA conversations as 'very healthy.' He guided for Q4 gigawatts under contract to be modestly larger than Q3 (implying >13 GW in Q4 to reach 130+ GW). He expects continued real growth in contracted gigawatts throughout 2027, with quarterly profiles resembling the stronger Q3/Q4 patterns rather than early-year lulls.

Q: Analyst sought clarity on long-term strategic optionality for the Wind business after returning to profitability, referencing previous discussions about potential divestiture or restructuring. / A: CEO acknowledged the return to profitability and service margin improvements but emphasized navigating 2027 as a critical year. He noted the U.S. onshore market is small and uncertain due to tariffs/permitting, while offshore execution continues in the North Sea. Management will evaluate how to create value in Wind based on U.S. market evolution and execution outcomes in 2027, rather than committing to a specific structural change immediately.

Q: Analyst asked why Electrification margins cannot exceed 30% soon, given Prolec's high performance and Trench's attractive economics. / A: CEO framed the current ~20% margin as a 'jump-off point' for the second half of 2026. He indicated that significant margin expansion is expected annually through 2030, driven by backlog growth, accretive acquisitions, and operating leverage. He deferred detailed 2030 margin targets to the next Capital Markets Day, suggesting the path leads directionally toward higher percentages.