"GE Vernova (GEV) Q1 2026 Earnings Transcript" April 22, 2026

The stock is now up $121.45 (+12.25%) at $1,112.75. 

From Motley Fool Transcribing, April 22:

DATE

Wednesday, April 22, 2026 at 7:30 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Scott L. Strazik
• Chief Financial Officer — Kenneth S. Parks
• Vice President, Investor Relations — Michael Jay Lapides

TAKEAWAYS

• Total orders -- $18.3 billion, up 71% year over year with a book-to-bill ratio of approximately 2.
• Backlog -- $163 billion, including a sequential increase of $13 billion and 80% growth in equipment backlog since the spin.
• Adjusted EBITDA -- $896 million, an 87% increase year over year, driven by Electrification and Power segments.
• Adjusted EBITDA margin -- Increased 390 basis points year over year with higher price, volume, and productivity outweighing inflation and tariffs.
• Free cash flow -- $4.8 billion for the quarter, exceeding prior full-year free cash flow of $3.7 billion.
• Revenue -- Grew 7% year over year as both equipment and services contributed; equipment revenue up 10%, services up 4%.
• Power segment EBITDA margin -- 16.3%, expanding 500 basis points due to favorable price and volume, despite higher expenses and R&D at Nuclear.
• Power segment orders -- Grew 59% with Gas Power equipment orders more than doubling year over year and services up 29%.
• Gas turbine activity -- 21 gigawatts of new agreements signed, raising total gigawatts under contract from 83 to 100 sequentially.
• Electrification orders -- Reached $7.1 billion, up 86% year over year; equipment orders nearly tripled in North America and Asia.
• Electrification revenue -- Increased 61% on a U.S. GAAP basis, 29% organically, with expansion across all regions.
• Electrification segment EBITDA margin -- 17.8%, up 590 basis points, with Prolec contributing $500 million in revenue and just over 20% EBITDA margin since acquisition.
• Electrification data center orders -- $2.4 billion in Q1, exceeding full-year 2025 orders for this vertical.
• HVDC backlog -- Approximately $10 billion, primarily in Europe, with new large orders booked in Asia.
• Prolec backlog -- $5 billion, rising $1 billion since Q3 2025 announcement of acquisition, a 25% increase.
• Wind segment orders -- Increased 85%, driven by improved Onshore equipment orders in North America after a low prior-year comparison.
• Wind segment revenue -- Decreased 25% due to lower Onshore equipment deliveries from 2025 softness, partially offset by services and Offshore revenue.
• Wind segment EBITDA loss -- $(382) million for the quarter, attributed to lower equipment deliveries, tariffs, and higher Offshore contract losses.
• 2026 guidance raised -- Revenue now projected at $44.5 billion-$45.5 billion (increase of $500 million); adjusted EBITDA margin raised to 12%-14%; free cash flow guidance lifted to $6.5 billion-$7.5 billion.
• Power 2026 outlook -- Organic revenue growth expected at 16%-18%, EBITDA margin now 17%-19% (from 16%-18%).
• Electrification 2026 outlook -- Revenue revised to $14.0 billion-$14.5 billion; EBITDA margin increased to 18%-20% (from 17%-19%); Prolec forecast to contribute $3 billion in revenue.
• Wind 2026 outlook -- Organic revenue expected to decline low double digits; EBIT losses projected around $400 million for the year.
• Working capital benefit -- Delivered $5.3 billion cash benefit, mainly from higher down payments on increased Power orders and slot reservations, plus higher Electrification orders.
• Cash returned to shareholders -- $1.4 billion in Q1 via dividends and $1.3 billion in share repurchases.
• Debt issuance -- $2.6 billion in new debt during the quarter, maintaining gross debt to adjusted EBITDA below 1x.
• R&D and CapEx -- Combined investment of $700 million in Q1; R&D grew roughly 25% year over year, focused mainly on Electrification.
• Portfolio activity -- Completed Prolec acquisition for $5.3 billion and divested the manufacturing software business for $600 million in pretax proceeds.
• Data platform simplification -- Retired 15 legacy platforms via company-wide data lake, expected to reduce annual costs by $15 million.
• AI/Lean initiatives -- 13 AI-based process transformations doubled to 26; tens of millions in annual expected savings and over 10,000 hours of manual work eliminated.
• Kaizen Week -- 2,000 employees completed 200 Kaizens, identifying $100 million in potential EBITDA improvement from cost reduction and quality gains.

RISKS

• Wind EBITDA losses increased year over year, primarily due to lower Onshore equipment deliveries, tariff impact, and higher contract losses at Offshore Wind; expected EBIT losses for 2026 remain at approximately $400 million.
• CFO Kenneth S. Parks said, "The anticipated year-over-year increase in losses was primarily a result of lower equipment deliveries and the impact of tariffs at Onshore Wind, as well as higher contract losses at Offshore Wind."
• Uncertainty remains around U.S. Onshore Wind market demand due to permitting delays and tariff issues; management cannot identify an inflection point in orders.
• Guided net tariff impact for 2026 is $250 million-$350 million, fully factored into outlook but dependent on evolving global tariff structures and mitigation success.

SUMMARY

GE Vernova (GEV +12.00%) delivered substantial first-quarter order and backlog growth, highlighted by a rapid year-over-year increase in Electrification orders and major contract wins in Gas Power. New pricing for 2026 Power equipment orders is expected to be 10%-20% above Q4 2025 levels, with immediate margin expansion across both Power and Electrification. Management confirmed a $13 billion sequential backlog increase—now targeting $200 billion in 2027, a year earlier than previously expected—and nearly tripled Electrification equipment orders in North America and Asia. Free cash flow nearly doubled previous annual results in just one quarter, prompting an upward revision to full-year 2026 guidance for revenue, adjusted EBITDA margin, and free cash flow, all attributed explicitly to segment-level performance and new contract quality. Prolec's backlog and integration have accelerated expected benefits in Electrification, while robust multi-year orders from both traditional and data center customers reinforce GE Vernova's strategic positioning and service opportunity for the long term.

• Management stated, "we have booked more Power equipment orders in terms of value than we did in all of Q1 2026," indicating ongoing acceleration in Power demand.
• Electrification's backlog rose from $9 billion at year-end 2022 to $42 billion, with significant data center order growth outpacing prior full-year performance in a single quarter.
• SMR and EMS projects advanced, including regulatory progress on OPG Darlington Unit 1 and new North American and European pipeline developments; SMR-related government support now totals up to $40 billion for projects in the U.S. and Japan.
• 21 gigawatts of new Gas Power agreements in Q1 raised total gigawatts under contract to 100, now spanning 90 customers in 24 countries, with 20% tied directly to data centers.
• Company raised its 2026 adjusted EBITDA margin outlook to 12%-14%, and guided Power EBITDA margin to 17%-19% and Electrification EBITDA margin to 18%-20%, all reflecting pricing and productivity improvements.
• Prolec contributed $500 million in revenue at over 20% EBITDA margin since the acquisition closing in February, and its backlog increased 25% to $5 billion since Q3 2025.
• Segment realignment and divestitures yielded $900 million in pretax cash; manufacturing software and China XD Grid/merchant transmission stakes were sold, supporting ongoing portfolio simplification.
• Kaizen and AI productivity initiatives delivered tangible cost and quality improvements, including a 70% subassembly rework hour reduction and 40% output gain at Prolec, with company-wide EBITDA improvement potential identified at over $100 million for future years.
• Wind segment performance remains challenged; "EBITDA losses in the first half to be partially offset by profitability in the second half," but ongoing tariff and order softness present continuing risk.

INDUSTRY GLOSSARY

• HVDC: High Voltage Direct Current, a technology for long-distance, efficient power transmission using direct current rather than alternating current.
• SMR: Small Modular Reactor, a nuclear reactor design that is smaller in size and capacity than conventional reactors, intended for scalable deployment.
• SRA: Slot Reservation Agreement, contractual mechanism reserving future production or delivery capacity for specific projects or customers.
• EMS: Energy Management System, software and hardware integrating electrical equipment and automation to optimize power usage in complex facilities like data centers.
• Kaizen: Continuous improvement process involving incremental, employee-driven operational enhancements, commonly used in manufacturing environments.
• PCS: Power Conversion and Storage segment, which focuses on grid stability solutions such as rotating machines, power electronics, and battery systems.
• MV UPS: Medium-Voltage Uninterruptible Power Supply, equipment providing backup power and grid stability at the medium voltage level, commonly used in data center and industrial applications.
• SST: Solid-State Transformer, an advanced transformer with enhanced efficiency, protection, and integration capabilities for grid and data center applications.

Full Conference Call Transcript

Michael Jay Lapides: Thank you. Welcome to GE Vernova Inc.'s first quarter 2026 earnings call. I am joined today by our CEO, Scott L. Strazik, and CFO, Kenneth S. Parks. Our conference call remarks will include both GAAP and non-GAAP financial results. Reconciliations between GAAP and non-GAAP measures can be found in today’s Form 10-Q, press release, and presentation slides, all of which are available on our website. Please note that unless otherwise specified, our year-over-year commentary or variances on orders, revenue, adjusted and segment EBITDA and margin discussed during our prepared remarks are on an organic basis, which includes the removal of the impact of our Prolec GE acquisition.

In addition, we realigned the reporting of certain business units to reflect how we are managing the company. Notably in Power, we integrated the Steam business primarily into our Nuclear business. In Electrification, we realigned the segment into four distinct business units to provide investors with greater visibility. This included revising our former Grid Solutions and Electrification Software business units into three separate business units: Power Transmission, Grid Systems Integration, and Grid Automation and Software. A portion of our Electrification Software was also moved to Gas Power. Finally, in Wind, we simplified our reporting by integrating LM Wind into Onshore Wind. These changes are reflected in our first quarter 2026 10-Q and throughout our slide deck.

We have posted a financial supplement on our IR website reflecting our realigned 2025 segment results, and please note, there were no changes to our 2025 total company results. We will make forward-looking statements about our performance. These statements are based on how we see things today. While we may elect to update these forward-looking statements at some point in the future, we do not undertake any obligation to do so. As described in our SEC filings, actual results may differ materially due to risks and uncertainties. With that, I will hand the call over to Scott.

Scott L. Strazik: Thank you, Michael. Good morning, and welcome to GE Vernova Inc.'s Q1 2026 earnings call. We have had a solid start to 2026. As global electrification accelerates, the structural drivers underpinning demand for our solutions continue to strengthen. The growth is just starting, and there is no company better positioned to serve and transform the global electricity system than GE Vernova Inc. Since our spin, we launched with a $116 billion backlog. We have grown this backlog to $163 billion with an 80% increase in our equipment backlog at considerably better margins.

In the last 90 days, we have added $13 billion to our total backlog and now expect to reach $200 billion in backlog in 2027, versus our previous expectation of 2028. In Power, we delivered strong results and further margin expansion in Q1, even with the continuing investments in capacity expansion and SMR. In Gas Power, we continue to see significant demand and favorable pricing trends for both equipment and services. This demand is global and spans a diverse set of customers. We saw continued strength in new gas turbine agreements in Q1, signing 21 gigawatts in countries like the U.S., Vietnam, Mexico, Brazil, and Canada to grow our total gigawatts under contract from 83 to 100 gigawatts sequentially....

....MUCH MORE 

Earlier:

"GE Vernova Earnings Crush Views. AI Data Center 'Power Play' Jumps." (GEV)

Possibly also of interest, April 21: 

"GE Vernova and Vertiv Report Wednesday: The Real AI Data-Center Trade" (GEV; VRT)