GE Vernova Q4:2025 Earnings

Key quotes from the investor call

“Electrification had its largest order quarter in its history, and wind had its largest order quarter of 2025. On the negative, we have been impacted by the U.S. government’s halting of all offshore wind activity on December 22, which led to us booking an incremental accrual in 4Q for costs associated with the delay on the Vineyard Wind project.”

“In 2025, we increased our total backlog by over 25% or $31 billion to $150 billion, with robust, profitable order growth in power and electrification, further underscoring our momentum as we kick off 2026. In power, we continue to see accelerating demand and favorable pricing trends for both equipment and services as customers invest in new units and existing assets. In 4Q, gas power equipment backlog and slot reservations increased from 62 GW to 83 GW sequentially, primarily due to strong U.S. demand, but also with agreements in the Middle East, Vietnam, and Taiwan, with backlog increasing from 33 GW to 40 GW and SRAs increasing from 29 GW to 43 GW. We expect to reach approximately 100 GW under contract in 2026, under the assumption we’ll ship high teens GW this year, with new contracts north of 30 GW. In 4Q, we grew our power services backlog 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, which drove strong high-margin services backlog growth. In electrification, customers are working to keep pace with growing electricity demand, grid stability needs, and national security interests. In 4Q, we grew the segment’s total backlog to $35 billion, up $4 billion sequentially and $11 billion year-over-year, representing electrification’s largest growth quarter on a dollar basis in 25. Importantly, we are seeing demand across the segment for grid and data center equipment, both with traditional customers globally and hyperscalers, primarily in the US. Of note, over $2 billion of electrification orders were signed directly for data centers in 2025, more than triple the 2024 total.”

“I’ll talk about this more on page five, with the growth of margin in our equipment backlog, including $8 billion of incremental margin added to our equipment backlog in 2025. I’m also pleased with the returns that our 2025 investments are yielding. On the CapEx side, we remain on track to see a substantial step-up in gas turbine output in 3Q 2026. We installed over 200 new machines in our factories, while adding nearly 1,000 new production workers in 2025. We plan on adding an incremental 200 machines and over 500 production workers in 2026.” 

“Our investments in automation and robotics are advancing at scale, and AI is starting to gain momentum in our engineering organizations and back-office functions. Our advanced research center is progressing future businesses for us. This includes Direct Air Capture, where we already have a facility up and running, real momentum in our Solid-State Transformer program, and a good technical progress on our fuel cell program in Malta, New York. We are making all of these investments from a position of financial strength, ending the year with almost $9 billion in cash.”

“We also grew our revenue by 9% year-over-year to $38 billion, with growth in both equipment and services, while increasing our adjusted EBITDA margin by 210 basis points year-over-year. We generated $3.7 billion in free cash flow, more than double our prior year, while investing more than $2 billion in R&D and CapEx. We are increasing our 2026 guidance and by 2028 outlook, which now includes Prolec GE.”

“One of the primary drivers of our conviction on our path forward is the significant growth and margin expansion in our equipment backlog again in 2025, which I will touch on in the next page. On page 5, we show the growth of margin in our equipment backlog, consistent with our practice from last January. We started 2025 with the expectation to increase our margin dollars and equipment backlog above our run rate in the prior two years. We achieved that expectation, adding $8 billion in equipment backlog margin dollars in 2025, more than the prior two years combined. We ended 2025 with $64 billion in equipment backlog, an increase of approximately 50% year-over-year, with an incremental 6 points in equipment margin expansion.”

“We expect significant growth again in power and electrification’s backlog in 2026 at better margins as we convert higher-priced gas slot reservation agreements into orders and benefit from strong demand and pricing for grid equipment. These businesses’ longer equipment cycles mean that we will not begin delivering on the majority of the higher-margin orders placed in 2024 and 2025 until 2027 and beyond. In wind, we expect relatively stable margins this year and for backlog to decrease as we execute on the remaining unprofitable offshore wind backlog and project a smaller onshore wind backlog, given the recent softness in U.S. orders. As we noted in December, we see incremental opportunity for the teams to expand margins that are not projected in our backlog today. This includes our operating teams delivering our backlog with variable cost productivity versus known cost today, accelerating capacity additions, leveraging lean to sell incremental slots, and a recovery in U.S. onshore wind orders.”

“With continued strong demand and pricing in gas, the strong demand environment across multiple products and electrification, and my expectation for the team to drive variable cost productivity not embedded in our backlog margins today, we expect to add at least as much equipment margin dollars in backlog in 2026 as in 2025, setting us up for even more profitable growth over the long term. Said differently, in totality, the equipment margin and backlog from 2023 to 2026, those four years will add at least $22 billion in equipment margin, driving future profitable growth.”

“Our backlog expanded to $150 billion, a year-over-year and sequential increase, with equipment backlog increasing to $64 billion, up approximately $21 billion and 50% year-over-year, while our services backlog grew $10 billion or 13% year-over-year to $86 billion, led by power.” 

“We ended Q4 with a healthy cash balance of nearly $9 billion, up approximately $1 billion compared to the third quarter. During the fourth quarter, we returned $1.1 billion of cash to shareholders through share repurchases and dividends. Also, both S&P and Fitch upgraded our investment-grade credit ratings and maintained positive outlooks on these upgraded ratings. In early February, we expect to issue roughly $2.6 billion of debt as we complete the previously announced acquisition of the remaining 50% ownership stake of Prolec GE, will remain below 1x gross debt to adjusted EBITDA after this debt issuance.”

“We generated $3.7 billion of free cash flow, a year-over-year increase of $2 billion. As discussed in prior quarters, we continue to utilize Lean to improve our billings and collection processes and drive better cash management and linearity. In 2025, we reduced days sales outstanding by 2 days compared to year-end 2024, resulting in over $200 million of additional free cash flow in 2025.”

“At offshore, we remain focused on executing our challenged backlog. Wind revenue decreased 25% in the quarter, given lower onshore equipment deliveries as a result of softening orders over the last year. Wind EBITDA losses were $225 million in the quarter, below the fourth quarter of 2024 levels, due to higher offshore contract losses, including the impact of the recently issued US order to halt construction of all offshore projects and lower onshore equipment volume, partially offset by improved onshore services. For the year, wind losses came in at approximately $600 million, higher than our expectations of approximately $400 million outlined during our December investor event, driven by the US government’s December 22 stop work order for offshore wind projects. Until that point, the team was on a path to achieve these expectations as they worked to complete the Vineyard Wind project in early January. The order created a potential delay of at least 90 days, and we accrued and forecast the estimated incremental contract losses for the extension of installation work. As a reminder, the project has 62 turbines in total, and we’ve made significant progress with only 10 turbines needing blades and 1 turbine left to be installed at the time of the stop work order. At any time the order is in place, we are unable to execute the project. This and the resulting incremental costs are excused under a declaration of force majeure prompted by the government action. We understand that Vineyard Wind received an injunction of the stop work order yesterday. If given permission to resume work soon, we would work to complete installation of the remaining turbines by the end of March. At the end of March, we’ll lose access to the vessel required to complete installation of the remaining turbines. If we’re unable to complete the installation of the remaining 11 turbines, 2026 wind revenue could be negatively impacted by approximately $250 million due to our inability to bill the customer for those turbines. Because of our contract loss accruals and protection from incremental costs resulting from the stop work order, we do not anticipate significant additional negative EBITDA impacts for the Vineyard Wind project beyond the amounts already recorded.”

“For the full year, we’re increasing our 2026 guidance provided in December to now include the Prolec GE acquisition. We now expect full year 2026 revenue to be in the range of $44 billion-$45 billion, up from $41 billion-$42 billion, with growth in both services and equipment. We continue to expect adjusted EBITDA margins of 11%-13% as we deliver our growing backlog with favorable pricing plus improved operational execution. We’re also increasing our free cash flow guidance to between $5 billion and $5.5 billion, up from $4.5 billion-$5 billion.”

“We expect 2026 GEV adjusted EBITDA to be more second-half weighted than 2025, with the highest revenue and EBITDA in the fourth quarter of 2026. We expect higher second-half gas power revenue as we ship more gas turbines in the second half of the year, as we increase annual production capacity to approximately 20 GW starting in mid-year 2026. We also anticipate typical gas services seasonality, with the highest outage volume in the fourth quarter.”

“We expect full year 2026 corporate cost to be between $450 million and $500 million as we continue investing in AI, robotics, and automation to drive productivity over the medium and long term.” 

“We’re also increasing our by 2028 outlook to include Prolec GE. We now project at least $56 billion of total revenue by 2028, up from $52 billion, implying a low teens growth CAGR through 2028, and we still expect to achieve adjusted EBITDA margins of 20%. We’re increasing our cumulative GE Vernova free cash flow generation from 2025 to 2028 by approximately $2 billion to at least $24 billion, which incorporates nearly $1 billion of incremental CapEx from Prolec GE to support increased transformer production. This brings our expected cumulative CapEx and R&D investments through this period to approximately $11 billion. At Electrification, by incorporating Prolec GE into our 28 by 2028 outlook, we now expect approximately $4 billion of incremental revenue on top of high teens organic growth, and we maintain expectations for 22% EBITDA margins. We’re not including any synergies from the Prolec acquisition into our updated outlook, but we see real opportunities in both revenues as well as costs.”

“We are executing well in the early stages of our multi-year growth trajectory. This is evidenced in the $150 billion backlog we enter 2026 with, versus roughly $100 billion in backlog that we entered 2022 with after the announcement of our spin from GE in November of 2021. Just think about that for a moment. Just over 4 years ago, we announced our separation from GE, and today, our backlog is 50% larger than it was upon the time of the spin announcement.”

“The steepness of our growth trajectory is probably best evidenced in our Electrification segment, which I often say has been the largest beneficiary of GEV working as one purpose-built, focused company, now better linking the commercial muscle and customer relationships of our power and wind businesses with the electrification solutions we provide. Electrification generated about $5 billion in revenue in 2022, and we now expect that number to be $13.5 billion-$14 billion in 2026, and we are just getting started. But this isn’t about growth for growth’s sake. In the last three years alone, we’ve more than doubled our GEV equipment backlog, adding over $14 billion in future margin dollars in this backlog, while adding $13 billion in high-margin services backlog over the same period. On the operations front, we are improving, but culturally hunting every day for waste and opportunities to serve our customers in a more efficient manner.”

“Take our transformer product line inside Electrification.

Our labor hours were up 39% in Q4, with output increasing more than 50% year-over-year as we drive significant productivity at these sites, and we now see real opportunity to apply a similar playbook to the five large factories we are acquiring with Prolec GE.”

“Our customers and investors will see substantial value creation from our increased gas turbine output starting in Q3 2026. These incremental returns are right in front of us, less than 180 days from now. Other investments we are making are just starting to take shape, but I have high confidence that our automation and AI investment returns will grow in 2027, becoming a bigger part of our margin expansion in 2028. These investment returns are not included in our 2028 financial outlook today. And as we invest in these time horizons, we also are investing in businesses for the next decade. We expect SMR to contribute meaningfully to the top line of our power business in the next decade.”

“And as we invest in these time horizons, we also are investing in businesses for the next decade. We expect SMR to contribute meaningfully to the top line of our power business in the next decade. We’re making real progress in construction of our first plant in Ontario today, while continuing to invest in the engineering to drive down the cost of the product for the long term. Nuclear was a drag on power’s 2025 margins, and we expect 2026 to be directionally similar. But our customers and investors will see this value in the next decade. Similar theme with our solid-state transformer product line. We’ve completed production of our first unit, and just two weeks ago, I visited our new testing facility in upstate New York that we’ll be using to test and validate the performance of this first unit before delivering the completed solution to our hyperscaler customer in the autumn of this year. We can do all of this while returning substantial capital to our shareholders, as evidenced in our $3.6 billion return of capital in 2025, and our announced increase in our dividend and share buyback program. So we enter 2026 pumped up about the company we are creating, the opportunities to serve our customers and deliver returns for our owners, not only in 2026, but through cycles and for the long term.” 

“Yes, pricing does continue to strengthen. When we look at where we’re trending with our slot reservation agreements today versus our existing backlog, there’s another 10 to 20 points of pricing strength in the SRAs today.” 

“Which is we do see our slot reservation agreements 10 to 20 points higher in price than where we are other backlogs. So we’re continuing to gain price as we continue to play this game in gas. Frankly, a lot of the smaller applications are simply enabling more projects to get started because what it’s enabling is earlier power that truthfully we can’t provide. But then on the back end, as the heavy-duty gas turbines are available, those smaller applications will become the reliability solution [back up power] on the back of the — on the heavy-duty gas turbines. So what we talk about every day is this is about economics and when you’re underwriting 20-year business cases, efficiency matters a lot when you’re running these units at baseload. So now with humility, we don’t really view those smaller units to be competition, but that doesn’t mean that’s not a good business in the near term. I think those smaller applications could do very good business the next few years. But we also have just as much conviction in the competitiveness and the value proposition our heavy-duty gas turbines are providing. And we’ll continue to provide, and we expect to continue to have the attractive share in the market that we have had and will continue to have.”

“And Julian, I know you know this, but we obviously play in a piece of that as well, right. So we have aeroderivative units, and I think last year we booked orders for about 63 of those, which was up significantly year-over-year. Because of us playing in that market, it informs those comments that Scott just made, which is we know how the customers are thinking about utilizing that equipment in the midterm.”

“Most definitely, we expect the margins in equipment backlog in Power to continue to grow at a very healthy clip in ’26. And that’s why we articulated on the call that we expect to add at least as much equipment margin in backlog in ’26, i.e., at least $8 billion this year as we did last year.”

“if you think about the pricing on the service contract that comes along with a new heavy-duty gas turbine as the pricing is accelerating on the equipment itself, as we sign those new contracts for service orders, we’ll see incremental pricing there. So your point is exactly right, we’re seeing accretion in margins on the equipment. That also leads to a long life of pricing improvement on the service side of the portfolio.”

“Because when you think about it, everybody, we added about $12 billion of equipment backlog in Power. We added $9 billion of services backlog in Power over the course of the year. Both [equipment and services] are experiencing real margin accretion.”

“With humility, I would argue that we’re able to provide a very unique solution to the end customers today with the linkage of the power generation and the electrical equipment together in a way that it is difficult for many other providers to do. So this isn’t simply about drafting on a larger market. I would say that was maybe more of a theme in ’23, as the European market started to move post the Ukraine crisis, that supply and demand created an opportunity for us and we took advantage of it. That was a ’23 theme. ’25 theme is we’re providing a differentiated solution. And our ability to link power generation solutions with electrical equipment is positioning us to continue to grow this business on an outsized basis. So I look at the business and I say $14 billion of revenue in 2026 directionally, we think our addressable market today with the products we sell is directionally $150 billion. So I mean we’re at like 10% of our directional market, and there’s a lot we can do. Now yes, to earn that, we’ve got to get better with our operations. And that’s why we talked about the fact that from ’24 to ’28, we’re doubling our output with transformers and switch gears. And most of that is coming from more shifts, more investments in how we operate. That helps.”

“I’d just start by saying no change from the expectations from Prolec from what we talked about when we closed the deal in October. The reality is we could have a little bit of debate as to whether we wanted to change the margin guide by basis points, to be exact, to where we had framed things up in October. What I would just interpret is this gives us even more opportunity to outperform over the course of ’26. I wouldn’t overthink that there’s been any change in the financial contribution from Prolec in 11 months of, call it, the ’26 or, at all, the ’28 expectations. Frankly, if anything, we’ve had a very productive 3 months of integration meetings and are very excited for this to be part of the company on Monday.”

“The opportunity [with SMRs] is great. The discussions are progressing. What I would say with nuclear may be a little bit different than gas and grid because we’re really restarting an industry here in the western world is they’re progressing, they’re sequential. There’s a lot of terms and conditions that are being discussed. We’re working very closely with the U.S. administration that is very determined to restart a nuclear industry in the U.S., and we’re very motivated to serve them on that path. We’re also having productive conversations in Sweden, in Poland today that we’re very optimistic about going forward, but it may take a little while before they translate to announcements. So we’re into a new year. We’re working hard with a number of both governments and customer archetypes, including the hyperscalers, on what this can mean for them in, let’s call it, the first half of the next decade. So opportunity pipeline growing, but the timing to close is going to be a little bit different than the intensity of the close velocity right now with gas and grid.”

“There’s clearly a need to continue to evolve the market mechanisms to encourage what’s needed in this country, which is substantially more new build of firm fixed power generation capacity. Whether that happens through the auction mechanism a few weeks ago announced by the administration allowing hyperscalers to bid into a separate auction for separate PPAs, that’s one pathway to do it. Do we probably need in a number of markets a capacity auction mechanism that provides more years of revenue guarantee for more build to happen today? Definitely. The market’s already moving, right? We moved into ’25 with 46 gigawatts on contract. We ended the year with 83 gigawatts. We’ll end this year with at least 100 gigawatts. So the market is moving regardless, but we are very motivated by continuing to iterate with the administration on how to enable even faster growth and simultaneously thinking our way through on how we’ll fulfill [that capacity] if that happens. So motivated by the announcement a few weeks ago, but I’d also emphasize it’s early. I think changing policy and how these markets have worked isn’t going to happen overnight. But clearly, you can see in our orders book that the market continues to move our way regardless.”

“On the gas capacity, the reality is the 83 gigawatts that we now have on capacity is certainly very heavily playing into ’29, but there are slots in ’30 and beyond that are also secured. So we do continue to have capacity available today at 83 gigawatts on contract for 2029. That said, by the time we get to 100 gigawatts which we’re now projecting by the end of the year that 100 gigawatts directionally will have both ’29 and ’30 largely sold out based on where we see it today. But sitting here today on January 28, there are still slots available for 2029.”

“The only exception to that is with our long-term service contracts and those have material escalators attached with them. So on our $150 billion backlog, we feel very good about our protection for material [input cost] inflation.”

“Now can we be even more effective with our sourcing leverage here now that we’re at this level of scale? And do I have a high degree of expectations that the sourcing productivity will contribute even more to our margin expansion when we show you that chart that we showed you today on backlog in March, 12 months from now? The answer is yes. But there’s a maturation process here between investments in the factories for output and fulfillment, feeling very good, somewhat countered with how strategically forward thinking our teams are with sourcing savings that I think we’ve got a few miles still to go together. That is good news in the sense that it’s opportunity and opportunity for us to get better and something I look forward to updating everyone on as we go through that journey together in 2026.”