GE Vernova December 2025 Investor Day

Key quotes from the Investor Day transcript…

“Electrifying the world is accelerating. It’s accelerating because of AI, but there’s a lot of other dynamics at play. The reindustrialization of the U.S. economy, industrial growth in many other parts of the world, the electrification of buildings and ultimately, over time, the electrification of transportation are all driving accelerated growth today. Now we haven’t seen demand at this level and this scale in decades. And because of that, the second real theme is this is going to take time. Infrastructure at this scale is not easy and is going to take time for permits to play out, for construction companies to build things, for fuel to be available, whether it would be gas for power plants, our long lead equipment. This is a larger market for a longer period of time.”

“In all cases, Vernova is well positioned to serve because we have the largest installed base, over 50% of the electrons every day in this country, 1/3 of the electrons in the world if you exclude China.”

“So again, accelerating market, larger for longer with GE Vernova very well positioned to lead going forward.”

“I wanted to have one page just to contextualize the expanding profit pool we’re playing in because we spend a lot of time talking about electric power. But practically speaking, the world spends over $1.5 trillion a year on energy in totality, but only 20% of that energy is coming from electric power today. Over time, the world, #1, needs more energy to prosper. And based on almost all projections, the proportion of that energy that’s going to come from electric power is only going to grow and likely grow substantially. We see the early signs of that happening. You see that with utilities having larger CapEx budgets today than traditional oil and gas companies. You see that with hyperscalers contracting directly with us to provide the solutions for their applications. You see it with governments that are leaning in more strategically to the electric power system for new capacity, for resilience and for incremental electrons to protect national security. This is an expanding profit pool in which GE Vernova is well positioned to grow and grow with expanded margins.”

“One page on the fourth quarter, but a page I’m going to spend a little bit of time on because this was a critical or is a critical quarter for us, really reaffirming the growth acceleration that we’re seeing in the business. We start on the left-hand side with Gas Power. Quarter-to-date, we have secured 18 gigawatts of new gas contracts. So to contextualize that, first quarter, we did 8 gigawatts. Second quarter was 9. Third quarter, 12. We’ve done 18 quarter-to-date. And by the end of the quarter, we’ll land somewhere in the low 20s. When you add that all up, sitting here today, we’ll end the year with approximately 80 gigawatts of new contracts on order with about half in backlog and about half in slot reservation agreements. From a fulfillment perspective, we are on track to get to a run rate of 20 gigawatts annualized by the third quarter of 2026.” 

“And we’re going to end the year with about 80 gigawatts on contract, on track with production with an ability to grow in a very capital-efficient way. And our commercial teams will have approximately 10 gigawatts of supply still available for 2029 deliveries going into next year, in which we sit here today and would expect to be largely sold out of deliveries in 2030 by the end of ’26. That’s gas. But it’s by no means the only encouraging dynamic that we’re leading through right now.”

“Small modular reactors. We’ve been very pleased, very appreciative, frankly, inspired with the work with the U.S. government right now on recreating a nuclear industry in the U.S. We signed an MOU for up to $100 billion of SMR industrialization in the U.S. earlier in the quarter when the government and ourselves were in Japan. We’ve got a lot of work still to do. We’re working our way through site selections right now, terms and conditions, but are gaining exponential confidence that in 2026, we can translate what today are MOUs into agreements that are going to accelerate the reindustrialization of nuclear in the U.S. We’re very excited about this and appreciative of the administration and working very hard to serve them every day in this regard.”

“We’ve had a great quarter in electrification. It will be our largest quarter by a reasonable margin of orders coming directly from the hyperscalers to us in our electrification business, but it’s not just hyperscalers. We’ve signed our sixth HVDC contract with Tennant in Germany, exact same scope as the first 5, 2-gigawatt bipole solution allowing us to execute with exponential confidence and come down the variable cost curve. It’s not just HVDC. We’ve signed grid resilience reliability solution contracts in Australia, in Saudi, and we signed a very large contract in Iraq in the fourth quarter. So just strong global demand across our electrification businesses.”

“And then wind, this will be our largest quarter from an orders perspective in the year. It will be larger orders in the fourth quarter of ’25 than ’24, but still soft on a relative basis for where we want to be. But just to kind of give an illustration of what’s happening in wind today, we have over 30 gigawatts of installed base that’s eligible for repowering between now and the end of the decade. Our customers through the start of physical work have made the investments to protect for at least 10 gigawatts of that 30 to be repowered with investments with us or others, but aren’t yet putting in the orders because there continues to be too much tariff uncertainty to drive the economics. But it’s an anecdotal view on the activity that’s happening, although the orders in totality, although better in the fourth quarter, are still soft relative to the potential of what it could be over time.”

“And then from here, our 2028 outlook. Left-hand side, you can see the numbers on the page. We project at least $52 billion of revenue by ’28, 20% EBITDA margins with both power and electrification at 22%, wind at 6%, and we will generate cumulatively $22 billion of free cash flow, ’25 to ’28, and that’s after investing $10 billion in that period of time in P&E and R&D. Now very consistent with the financial outlooks we provided in both March and December of ’24. We view this to be a very grounded financial case, still positioning our businesses with the opportunity to outperform and what I want to do next is walk through those key drivers and opportunities that we see. Starts with price. This is most pronounced in our Gas Power business, where our outlook is tied to the price in backlog today. Our slot reservation agreements, as an example, are at a higher price on average than our existing backlog. As our slot reservation agreements convert to orders, that’s a financial opportunity that will drive incremental margin. Lean. This is probably most pronounced in our electrification business. Our electrification business this year will grow mid-20% directionally, 25% this year. We’ve assumed in this financial framework that the electrification business grows high teens, 25% to 29%. As we continue to have productive progress with lean and electrification, that would be an opportunity. Variable cost productivity. Consistent with prior outlooks, we do not include in our financial outlooks variable cost productivity that isn’t being demonstrated today. We’re managing our teams and setting the expectations with our teams and paying our teams to drive variable cost productivity, but we don’t put it in our external financial outlook until it’s proven. That’s an opportunity for us. Talked a little bit about wind. This outlook by 2028, in essence, has grounded the onshore wind North America market to approximately 4 gigawatts annually with us having representative share we’ve held to over time. 5 years ago, the U.S. onshore wind market was mid- to high teens. But this financial outlook assumes 4 gigawatts by 2028, a real opportunity. And as Michael framed at the beginning of the discussion, none of these numbers include the Prolec GE joint venture that we expect to close by the summer of 2026. Grounded financial case with a real opportunity for our teams to outperform.”

“When you think about my role and a CEO’s areas of focus, it certainly starts with culture and talent. It then it is about going to Gemba in the operations and being deep in the details and then getting capital allocation right. And I’m very pleased with our capital allocation plays in 2025. It will always start with our organic investments. And over the last 2 years, we’ve invested about $4 billion in CapEx and R&D to support the backlog growth that you’re seeing in this business today. In 2025, we’ve returned $3.6 billion to our shareholders. About 90% of that is through the stock buyback program. We’ve repurchased 8 million shares year-to-date, a bit over 8 million shares and have acquired approximately 2 million shares in the fourth quarter alone. The Board last week approved an increase in the stock buyback program from $6 billion to $10 billion and also approved a doubling of the annualized dividend from $1 to $2. Now we aren’t just spending money. Top right-hand corner, we’ve created $2.5 billion of capital by simplifying the organization with business dispositions with negligible financial impact. That’s on deals that have closed and deals that have been announced and signed and will close by the beginning of next year. And we’re pleased with the M&A activity we’ve done so far. The Woodward acquisition in gas is going great. It’s very illustrative of other deals we would like to do, small vertical integrations that give us more control over the supply chain in our core businesses. We’re only going to do deals that make economic sense. But we’re working hard on that and would like to get some more vertical integration deals done like a Woodward.”

“This is an accelerating opportunity to grow this business. Our growth prospects are strengthening even further. Very happy with our fourth quarter. It’s an affirmation of where this company is going. We’ve set a new financial outlook through ’28, but very consistent with our March and December financial outlooks. We view this to be a grounded financial case, providing our teams a real opportunity to outperform.”

“As Scott outlined, our momentum is accelerating. We’re seeing increasing market demand, and we’re delivering even stronger execution utilizing lean. As a result, we’re further expanding our backlog with growing profitability. That gives us confidence in our ability to deliver an even stronger multiyear financial outlook compared to what we told you last year. We’re doing all of this while we’re executing on our capital allocation principles. I showed you this chart last year. Our financial strategy remains unchanged. It begins with disciplined top line growth, solid underwriting and pricing on equipment sales and continued growth in services. This, combined with our lean culture and a relentless focus on cost out and productivity is driving healthy margin expansion and strong and growing free cash flow generation. All of this enables us to maintain an investment-grade balance sheet, while funding and strategically allocating capital. Our strategy remains firmly in place and guides our decision-making every single day. We’re continuing to deliver better results each year with top line growth, margin expansion, stronger free cash flow generation.”

“Right now, we’re reaffirming our 2025 revenue and adjusted EBITDA margin guidance and we’re increasing our free cash flow guidance for 2025 from what was $3 billion to $3.5 billion to $3.5 billion to $4 billion, and that’s primarily due to higher down payments on rising orders and slot reservations. We’re also introducing our 2026 financial guidance, which builds on this strong performance in 2025. We expect revenue of between $41 billion and $42 billion, implying low double-digit increase year-over-year with growth in both services and equipment. Adjusted EBITDA margins expand to 11% to 13% as we deliver our growing backlog with favorable pricing plus improved operational execution. Finally, free cash flow grows to $4.5 billion to $5 billion, largely driven by stronger adjusted EBITDA net of tax, positive working capital with higher progress collections and then partially offset by increased CapEx to support growth and innovation. The key levers of our EBITDA growth and margin expansion remain in our control. Positive price more than offsets inflation, while we benefit from volume as we deliver our growing backlog at better margins. We also expect meaningful productivity benefits from continuing lean activities as well as significant progress in achieving our G&A cost-out reduction targets. These levers will drive solid margin expansion even as we continue to make important investments in R&D and expenses to support increased production.”

“We’ve also almost doubled the power equipment backlog since the end of 2022. So far this year through the third quarter, we booked approximately 20 gigawatts of gas turbine orders and expect our power equipment backlog to grow even further as we finish this year. We’re seeing a growing demand, particularly in North America and the Middle East for our heavy-duty gas units that will provide reliable and highly efficient baseload generation. We’re also seeing growing demand for our aeroderivative and smaller gas units to serve as bridge power supporting data center needs. Now in electrification, the equipment backlog there has grown by more than 4x since the end of 2022, and it’s now at approximately $26 billion with significant orders in Europe to integrate renewables and transmit electricity efficiently. But we’re also seeing rising orders in North America, the Middle East and Asia for products such as switchgear, transformers, synchronous condensers that will modernize the grid and support increasing electricity needs. Overall, the stronger equipment backlog will deliver multiple years of growth along with margin expansion. As the demand increases for our equipment and services, we are increasing our capacity.” 

“Reducing our cost structure continues to be a key building block in our EBITDA margin expansion road map. We began executing our G&A cost-out initiatives in early 2024, and we’re making solid progress there. We’re accelerating our transformation, and we’re on track to achieve our $600 million cost reduction target as we implement more efficient organizational designs with process improvements. In 2026, we’ll realize a substantial portion of the benefits from the approximately $250 million restructuring program that we launched earlier this year, and a portion of that will go to reduce G&A. We expect to become even more efficient going forward as we increase the use of AI in how we do work. Now in addition, we’re also working to drive more variable cost productivity, leveraging our scale, while implementing lean and deploying more robotics, automation technology and AI.”

“Let me touch upon where we are with our offshore wind progress. We’re proud of the work the team is doing. We’re driving productivity in the factory and out in the field as we incorporate our learnings from our first peak installation season, which was this last summer. We expect to be materially complete with both the Vineyard Wind project and Dogger Bank A project by the end of this year and the remaining portion of the Dogger Bank project in ’26 and ’27. As we reduce the existing offshore backlog, we expect EBITDA losses to improve.”

“We’re raising our cumulative free cash flow by 2028 from $14 billion to at least $22 billion, primarily from the result of $6 billion of higher adjusted EBITDA net of tax. We’re also expecting progress collections to continue to be a cash source given the robust demand environment we’re operating in. And then to support growth and innovation, we’re taking a piece of that, and we’re investing in CapEx an additional $1 billion in that time period. We’re generating higher free cash flow with better linearity. And all of this makes it much easier for us to be flexible with our deployment of capital. We’re executing well on that disciplined capital allocation strategy that we framed back last year in December of 2024, and we remain committed to maintaining our investment-grade balance sheet. With the increased free cash flow outlook, we now expect total cash sources to be at least $30 billion from the date of the spin. So far this year, we’ve already returned over $3 billion of capital to shareholders through share repurchases and dividends. And we remain committed to returning at least 1/3 of our cash generation to shareholders over time. Given our strong cash position and strong growth trajectory, we’ve doubled our annual dividend to $2 a share and increased the buyback authorization to $10 billion. We expect to grow the dividend over time as our earnings grow, and we expect to opportunistically continue repurchasing our shares. After considering the cash we need to run the business, we now expect at least $16 billion of capital to deploy even after investing organically in our business. This is $6 billion of incremental capital compared to what we showed you at last year’s event. We expect to use a portion of this available cash to fund the Prolec GE acquisition, which isn’t included in this cash walk. We plan to fund that $5.3 billion acquisition with an equal mix of debt and cash on hand. And going forward, we’ll continue to evaluate inorganic opportunities to gain scale, vertically integrate our supply chain and accelerate R&D. At the same time, we’ll also assess additional shareholder returns as well as organic investments. Our strong net cash balance sheet and free cash flow enable us to deliver on our capital allocation priorities.”

“Based upon all this, we now expect to deliver an even stronger set of results by 2028, and that’s built on encouraging sector fundamentals, but also on solid operational execution. We’re increasing our revenue outlook from high single-digit to low double-digit growth on incremental strength in both equipment and services, all while maintaining disciplined underwriting. We’re also increasing our outlook for EBITDA margins by 600 basis points to 20%, driven by increased price and volume leverage, particularly in Power and Electrification, along with additional productivity from lean. The higher EBITDA combined with higher down payments on rising orders and slot reservations in addition to better working capital velocity will drive at least $22 billion of cumulative free cash flow with 100% conversion over time. The attractive market, combined with solid execution through lean will result in significant profit and free cash flow growth for Vernova. We’re excited to lead the industry, and we’re excited to drive significant value creation for our shareholders.”

“You know, left-hand side is really everything we’ve talked about so far from a financial perspective. $52 billion of revenue by 2028, 20% EBITDA margins, the $22 billion of free cash flow cumulatively, and we’ll keep taking down our share count every year. Fine. We needed to provide a new financial outlook to continue to drive productive conversations with you. But that’s a start. That’s not why I get up in the morning and have a kick in my step. That’s not what our team’s ambition is. Our ambition is much greater than our 2028 financials. And I just wanted to start to spend a few minutes with you today in this third section on where this company is going into the 2030s. You start with the backlog. We have a $135 billion backlog today that will grow to at least $200 billion by 2028. You can then extrapolate it out for how much more growth there is in this business into the 2030s. Our Electrification backlog will go from $30 billion to $60 billion between now and 2028, that will drive its growth into the next decade. Our Gas services business will have its base load power installed base go from 200 GW to 400 GW over the next decade, that creates an incredible financial annuity stream for us for a very long time.” 

“We’re focused on delivering this financial outlook between now and ’28, but we’re playing a much bigger game here. On the backlog, just to walk through a little bit more, $135 billion to $200 billion. As I said, that includes electrification backlog doubling by 2028. It also will have our gas equipment backlog doubling between now and 2028, but the gas services backlog in nominal dollars will grow by an even larger amount than the equipment backlog in this period of time. This has our wind backlog shrinking between now and 2028 on the orders outlook that we framed up. And again, by ’28, the assumption is 4 gigawatts a year annually in the U.S. That’s an opportunity that if we see an orders inflection could take these projections higher. And we have not included anything in the $200 billion for our SMR book, but that represents a real opportunity from here.”

“One page on Prolec. Left-hand side, same financials we shared on October 22. Right-hand side, just to reinforce, it’s been 45 days, since we signed the deal approximately. I have even more confidence today in the ability for us to grow this business and the synergy with end customers, merging these businesses together. I spent time in our 4 largest factories that we’re acquiring and have even more confidence today that as we apply our GE Vernova lean playbook to these factories, the operational productivity will be substantial. And just as importantly, I just like the cultural fit and the people. And I’m really looking forward to having them inside Vernova by next summer and making these businesses everything they can be.”

“An important page on the Power services installed base and revenue path forward. If you think about the Power segment today, about $12 billion of the $19 billion in revenue this year is in gas and steam services. That number by 2035, that $12 billion will be at least $22 billion. So you just pause for a second. The entire business segment is $19 billion of revenue today, $12 billion in gas and steam services, the rest equipment revenue, hydro, nuclear, and we see a clear pathway to this revenue stream of $12 billion to be at least $22 billion 10 years from now. Why? Because the baseload installed base is doubling. These are machines that run a lot and have very healthy services annuity streams attached to it. That’s most clearly driven in our HA revenue. In our financials today, we have a little bit more than $1 billion of HA services revenue in today’s business. By 2035, that will be $4 billion annually as we grow our HA product line. We have very strong escalation protections in our long-term service contracts that every year drive price and are continuing to get very strong orders price index benefit in our services business that will drive revenue growth throughout this period of time.”

“The SMR solution is going to be a very compelling alternative in Europe. And I gain more and more confidence and conviction into the next decade, this is going to be a valuable part of our business. Now long-term investments we’re making are more diversified than that. On the left-hand side, I spend a lot of time talking about our horizontal investments across the company. That’s both AI and robotics. From an AI perspective, we’re seeing real productivity gains. Part of how we’re driving the growth in gas that’s both on new units and in upgrades and doing it in an efficient way is with AI. We’re getting a lot of volume growth, very modest growth in our engineering resources because of the investments we’re making here, and we’re doing a lot more in ’26 that’s embedded in our financial guide. Robotics. We have 8 lighthouse projects that we’re executing on in 2026, primarily in power transmission and gas and parts of our factories that are the most advanced with lean that as we execute on those projects in 2026, we project extrapolating across the analogous supply chain throughout the company, real opportunity for us to drive variable cost productivity. Now we’re also investing in new products that can create new businesses for us. Carbon capture is a good example. We have a running direct air capture facility in Niskayuna, New York today. We’ve been contracted to build a 1,500-ton direct-air capture facility outside of Calgary and Canada that will be built in 2026. And we have a high degree of confidence that with this carbon capture technology in the end, we can apply this to gas turbines and are having active discussions with another number of customers that can come into play in the 2030s. Fuel cells. We have a dedicated facility in Malta, New York and are getting more and more confidence and conviction with our thermal spray technology relative to what most of the industry uses today, which is more ceramic processing, that we can manufacture fuel cells in a very cost-competitive way at a larger physical scale. And that this is another example of a business that we have or a product that we have today that we see a very clear right to win in. Now we’re 12 to 24 months away from commercializing this product, add another, make it 24 to 36 months away from industrializing, but it’s something we’re really ambitious about today. Solid-state transformers. We’ve talked in different settings about the fact that we’re making investments and have co-investment programs right now with hyperscalers. This is an example with our solid-state transformer that we have an R&D sharing arrangement with one of the hyperscalers to develop in ’26. And if we can meet spec through the R&D, a commitment from them to buy 1,000 solid-state transformers from us in ’27 and beyond. We have a lot of confidence and conviction in what this business can be. So you take these products, and this stuff is hard, but we have the technical expertise. And almost as importantly, we know how to build these products at scale and industrialize these products at scale in a world in which the economics are going to play a meaningful role, and we’re really excited about all these investments.”

“Page on culture. Every day, I have so much gratitude and pride in the teams that I’m able to represent. And if I just spend a minute on this page, top left-hand corner, it’s a little bit hard to see, but that’s a picture in February when we were in Saudi with our female engineers, with members of the Royal family. These women are changing our company, while simultaneously changing their country. Hard to go back to the hotel room at the end of the day and not be pretty pumped up with what we’re doing in Saudi today. Bottom left-hand corner, our launch MIT event and our alliance this fall. We’re working hard to make Vernova a very attractive platform for young kids to come in and start their career excited about what the world can look like with further electrification. We’ve got a number of research projects that we’re working with them on today and are hiring a substantial number of these kids walking distance from our headquarters in Cambridge. This is a priority for me. To become the company I want us to become, we need early career young talent that are swarming our offices, and we’re gaining real traction on the MIT campus. Top right-hand corner, I went down to Family Day. At our Greenville, South Carolina factory in November, we had 6,500 people at a Family Day on a Saturday, our production workers, our salaried employees, bringing their kids, bringing their grandparents to show them what we’re doing and what we’re building. When I went home on that Saturday night, I had that much more confidence and that much more conviction that, that factory in Greenville, South Carolina is as important as any factory in this country, when it comes to the U.S. competitiveness and the reindustrialization of this economy. And that team is going to perform. And then the last week, at the end of the summer, to give a little bit of context, my marketing team laid out a plan for the rest of the year. And I asked them to do one more thing this year that no other company had done before, but to do it in a very entrepreneurial way, i.e., not much of a budget. They came up with what we executed on our giving campaign in the last week. On December 2, on National Giving Day, we launched a toy drive with Toys for Tots, asked our team to break or set a Guinness Book world record. And over the course of 24 hours with our team donated over 23,000 toys. As I was watching our team interact that day because every hour, every 90 minutes, we were kind of providing an update on how far along we were on the journey towards breaking the record. I just could step back and see that the company we’re building and the team chemistry that’s coming together — our chance to do something great is substantial. The picture you see on the page was us taking over Rockefeller Center yesterday with an innovator’s toy land with our scientists trying to inspire high school kids and many kids throughout New York to be excited about this industry. So I get this is a financial update. We’ve gone through all the numbers, why the pictures and the stories because this is a critical enabler towards us meeting our potential into the 2030s. And if I compare where we are as an organization today relative to our first Investor Day in March of ’24, our second in December ’24, we’re making a lot of progress in this regard, and it’s a critical enabler for the company we’re going to become.”

“New financial outlook between now and 2028, grounded case providing an opportunity for our teams to outperform. But we’re not playing for 2028. We are running this company. I am running this company with a high level of confidence with humility on what we can become, and it is a much larger, much more profitable company in the 2030s. We are building a platform to serve this accelerating growth market of solutions that varies across the spectrum to high electro-intensive AI factories to very complex projects in parts of the world that need substantial infrastructure build for their grid to work. Attached to all this is the culture. We need to stay humble. We need to stay hungry, serving leadership approach with our teams, with our customers, with our government with an eye towards reaching our potential. And as we do all these things, I love our chances for what’s going to come in the 2030s and beyond.”

“The answer there to your question then from that is, yes, we continue to see that opportunity [services margin expansion]. In fact, with the page that Scott showed you with all the things on the right, today, we have 125 or so H-class turbines running. As we get more of those running, and we had a number on the page that shows how far we get on that, we’ll get productivity on that service. That will bring incremental margins. The bigger the installed base, the more these turbines run at baseload generation, the more they’re going to throw off service streams. And then just layer on top of that the fact that through this period, as we price new units higher, then what’s also happening is you get a carry-on impact in the service portfolio or the service contract that’s going to follow that unit that you’re going to see incremental pricing.”

“The margin expansion we’re seeing on the equipment side, we will also see in our services book, but there’s more of a lag, right? Because you deliver equipment and gas between now and 2030, you don’t get to your first major outage until 4 or 5 years after that. But the margin expansion that we see in our services book is analogous to what we’re experiencing in equipment. So by default, with that services growth, it will be an enabler of incremental margin expansion.”

“But most definitely, we still see substantial opportunities in lean. So from a baseball analogy perspective, in gas, third inning of a 9-inning game.”

“But the 2035 in many regards is more the beginning of that in margin than the end because, again, you think about orders we’re taking today. We’re shipping in ’29 or ’30. You’ll like the equipment margins. We won’t get to the first outage on the stuff that we’re taking as equipment orders today until about 2035. So by no means are we saying that’s like a plateau on the revenue growth or the profitability. But it was a logical time that, in essence, most of the stuff that we have on equipment order today will be starting to contribute to services revenue, which is why that 2035 milestone felt like a good representation of the art of the possible with a lot that will follow from there.”

“But at the same time, think about it this way, we’re kind of telling you a [electrification] backlog that has doubled twice already since we spun. And we have a high degree of confidence it is going to double again between now and 2028. We see less than $1 billion of incremental CapEx to support that.” 

“Oon the gas equipment business, we are highly confident we’ll be sold out of deliveries in ’30 by the end of next year or largely sold out. And thinking about deliveries in ’30 that we’re already past the 2035 milestone we’ll experience our first outage, it’s [services business] clearly continuing to grow from there. As long as you believe the installed base is going to continue to grow as this order book continues to grow, maybe not at the same percentage growth we’ve certainly experienced this year, we should expect a higher services revenue base in ’26 and ’27 and ’28 because every year, you see us continue to add to the equipment backlog — you got to add another 4 to 5 years before the services calories start to come through [because it takes 4 to 5 years for the first breakdown to happen].”

“One of the things we’re very clear on is we’re not projecting any variable cost productivity beyond what’s demonstrated today. Yet with this much volume growth that on the equipment side, we have not experienced in decades, it’s not unfair of you or me of the teams to expect variable cost productivity that would change the incrementals on that volume. But we’ve set up a financial algorithm that we’re comfortable with on how we talk with you on what is in and what the opportunities are. I think we do a pretty good job being very overt on what we think can lead to it being better and variable cost productivity is a big dynamic there. Now can there be some conservatism in our approach? Yes. But at the same time, we haven’t experienced this much volume growth. And certainly, if we execute well from a safety and quality perspective, naturally, in the gas equipment side, we’re going to experience variable cost productivity simply on the volume with a generally flat overhead base. That’s all part of the opportunity to do better. Yes.”

“But it is true that the 18 gigawatts in the quarter have a larger proportion of hyperscaler orders than what’s in our backlog, which is only 10%. So we’ve talked about the fact that we project going forward that to be more like 1/3 on the gas side.”

“But the blade is still more lucrative than the razor in our gas business over the long term, including on an NPV basis. And we’ll get that services annuity stream.” 

“Now our share in the U.S., which is, from a legacy perspective, been fairly high, will be even higher than historical. But there’s a lot of business in other parts of the world with 50Hertz applications that other OEMs are winning, and you can see that in the McCoy reporting. A little bit of the dynamic that I want to draw on, though, when you talk about the capacity tug of war between equipment and services is drawing on something that’s pretty important because when you go back to the services revenue going from $12 billion to $22 billion, that takes a lot of heavy-duty supply chain output to service the outages. So the point I’m just making is as we’ve built out the business case for the investments we’re making in gas, we need a fair amount of these investments simply to support the baseload growth because our outage numbers are going to grow substantially in the middle of the next decade. And if this level of new unit demand sustains itself for a number of years, we will have a pinch point [where they will have to invest in new capacity]. And that pinch point, we will have to address at a later date. Do we see that to be something we are going to be taking on in the next 18 months? No. Because we feel pretty good over the next 18 months from both our ability to meet the deals we want to win on the equipment side and the services growth we projected. But the truth of it is with that services growth and if we really do sustain an 80-gigawatt directional new unit market that would stay at that level through to, let’s say, the middle of the next decade, we would need to invest further in our supply chain to manage the 2 dynamics together of a lot more outages and continued demand. So said another way, just to repeat it, some of the new unit growth that we are — have underwritten this decade and the early next decade, we’ve somewhat assumed gets consumed with services outages and output by the middle of the decade. If this size market sustains itself, we will have to make further investments to meet those 2 dynamics together. But that would be a discussion 18-plus months from now.”

“When the equipment shifts to services, and that will create incrementals [margins] that are much more positive.”

“I mean, our first real pricing increase of substance was in May of ’24, and it took us until November of ’24 to realize that price, and that was significant. We then went through a level of price increases in December of last year and have been incrementally raising price throughout this year. The price growth in the fourth quarter [of 2025] is substantially more than the price realized in the first 3 quarters, so price benefit continues to accelerate. Now not all of that will be in our change in margin and backlog in the fourth quarter in the January earnings call that we’ll show the fourth quarter backlog because a lot of it will still be in slot reservation agreements on New Year’s Eve. And what we show each January is just the firm backlog, not the slot reservation agreements. And I think likely what we will be framing up to you in January is, #1, a very healthy change in margin and backlog in ’25, but we’ll provide commentary directionally on where we project it to be in ’26. And in the case of gas, because most of the orders next year are already slot reservation agreements by the end of the year, we see another year with substantial margin accretion and backlog based on what’s already papered. And within the year, the fourth quarter is our strongest quarter of both new contract commitments, but also at higher pricing.”

“We are confident in the financials we framed up today and view them to be very grounded with an ability to outperform, but we also wanted to spend a healthy amount of the time today talking about the company we’re creating into the 2030s. View this to be the first of many conversations in that regard. But in a long-cycle business with the investments we’re making, there are a lot more conversations to come because when I look at this company and what we can create, the art of the possible is great. And if we get the culture right, I love our chances from here.”