LIVE: GE VERNOVA 2nd Quarter 2026 Earnings Webcast

Thank you, Michael. Good morning and welcome to GE Vernova's 2Q26 earnings call. Our team is executing well as the demand for our solutions in power and electrification accelerates. In 2Q, our equipment orders more than doubled and service orders grew 15%. Our total backlog has reached $176 billion with improving margins. This is up $13 billion from last quarter and is on track to reach $200 billion in '27. The long-cycle electric power industry is in the early stages of a multi-decade growth opportunity, and we are well positioned to create substantial value. Let me walk through the demand environment across our three segments. In power, we continue to see strong global demand for our equipment and services. In gas power, we shipped 3 gigawatts while signing 20 gigawatts of orders and slot reservation agreements in the quarter in countries like the US, Brazil, and Qatar, to grow our total gigawatts under contract from 100 to 116 gigawatts sequentially. This includes orders for 52 heavy-duty units and 61 aeroderivatives in the quarter. More than half of the gigawatts that are now under contract are for our largest, most efficient HA turbines, units expected to run baseload and provide substantial services growth for us in the next decade. Backlog grew from 44 to 53 gigawatts, and SRRAs increased from 56 to 63 gigawatts. For our total gigawatts under contract, demand remains diverse with approximately 100 customers in 26 different countries, of which approximately 80% are traditional customers and 20% are for data centers. We now expect at least 125 gigawatts under contract by the end of the year. We had a strong first half and now have agreements signed into '31. In the second half of the year, we expect to convert many of these SRRAs into orders, driving continued growth in our backlog while achieving an important inflection point with gigawatts in backlog greater than SRRAs. In '27, we expect our combined gigawatts under contract to continue to grow.

We continue to see strong pricing in gas to deliver and service our critical equipment needed to electrify the world. On the equipment side, first half '26 orders were priced more than 20% above 4Q25 equipment orders, reflecting a conversion of higher-priced SRRAs to backlog. In 2Q, we booked a higher dollar-per-kilowatt price on orders given a higher mix of aeroderivatives versus heavy-duty gas turbines and incremental combined cycle equipment as SRRAs converted to orders. Given our large SRRA balance, we would expect gas equipment orders in the second half to have a dollar-per-kilowatt that is at the higher end of the range of 10 to 20 points versus 4Q25 orders. For services, we continue to benefit from increased volume and solid pricing. This is happening not only on long-term service agreements, but also on transactional orders. We've seen transactional orders per unit continue to rise by double digits annually as customers invest in upgrades and greater scope and outages, all at higher prices. And electrification. We continue to see robust demand from unprecedented electricity demand growth, increasing grid stability needs, and national security interests. Our backlog growth at electrification has been driven from both traditional customers and data centers, with equipment backlog rising above $40 billion. In 2Q, we booked $2.7 billion of data center orders in electrification, bringing total segment data center orders to over $5 billion in the first half of '26, more than double full year '25. Prolec is also performing well, and we like the early traction we are seeing in this business's integration and how it equips us to better serve our customers, especially in North America. In the first half of the year, we have booked $800 million in orders for transformers in the US that will be fulfilled by our global factories, something we could not do when we did not fully own Prolec.

In wind, the team is executing with discipline and focused on the factors within our control. In onshore, we continue to drive a more profitable service business with significant margin expansion versus the prior year for the third quarter in a row. While the US market for new onshore equipment remains soft, we are monitoring the outcome of 232 tariffs that impact wind development, which could lead to more orders clarity in the second half of the year. We are also making progress in how we integrate solutions as one GE Vernova to bring incremental value to our customers. For example, our electrification team sees up to $500 million in incremental orders each year as they partner with the gas power aeroderivative team to align turbine, electrical, and control interfaces together as one. The opportunity to create value for our customers with integrated solutions across GEV is meaningful, but there's still so much more we can and will do. We're also delivering continued significant margin expansion. In the first half of '26, we have grown margins to 10.5%, up 360 basis points from the first half of '25. Even as equipment revenue grows faster than services and becomes a larger percentage of total revenue, we are benefiting from strong volume and price in power and electrification while driving productivity and operational improvements across the company.

GE Vernova is operating from a position of financial strength, and we are executing our capital allocation strategy with discipline. Year to date, we have generated approximately $10 billion in free cash flow, more than 2.5 times our '25 results, as well as realizing $1.5 billion from dispositions as we further simplify our businesses. In early July, we completed an acquisition of Rootech Automation, a specialized team of engineers that can accelerate deployment of robotics and automation across GEV. This is a small transaction, but one that can help us improve our productivity and deliver more for our customers. We've grown our cash balance to $13 billion while investing $1.4 billion in R&D and capex combined, all while returning approximately $4 billion to shareholders this year through share repurchases and the dividend, already more than the full year of '25. We are in the early stages of this electricity investment super cycle, and we continue to see significant opportunity ahead given the strength of first half performance and confidence in our full-year trajectory. And as Ken will go into further detail, we are raising our revenue and free cash flow guidance for '26.

Turning to page four, I will discuss multiple catalysts we see for long-term growth and how we are investing to meet this moment. First, to serve this accelerating demand, we are expanding our production capacity in power and electrification through lean and capital-efficient investments in gas power. Given that we've now reached our 20-gigawatt annualized run rate and are on track for 24 gigawatts in '28, we now see further opportunity to serve this growing demand with 30 gigawatts of annual output in '30 in a capital-efficient manner, utilizing lean and incremental machinery in our existing factory footprint, and have already secured significant supply chain capacity, all funded by customer down payments. As I mentioned earlier, we expect to end the year with at least 125 gigawatts under contract, making us mostly sold out through '30, and have sold more than half of the 30-gigawatt of '31 production slots by the end of this year. Customers face growing electricity demand and see real economic value in deploying new gas turbines to serve this demand. In electrification, we are increasing our output across multiple product lines. To highlight one example, air-insulated switchgears comprise approximately $5 billion of electrification's equipment backlog that will drive revenue growth for multiple years. We shipped approximately 9,000 units last year, plan to do approximately 10,500 this year, and expect growth to accelerate in '27 from our existing factories, including our Pennsylvania facility. We've done this utilizing lean, adding shifts, and incorporating more automation and robotics into the factory. Our large and growing install base is positioning us well to continue generating growth at healthy margins both on equipment and services. We reached 4 million operating hours for HA this quarter, up 1 million hours in just over a year, a significant milestone since its launch nearly 10 years ago.

This growth in HA provides us with a strong foundation for service agreements and life cycle support. We expect the HA fleet size to double in the years to come based on units under contract today. We are also investing in aeroderivative services, increasing and further industrializing our in-house capabilities to significantly expand our shop visit capacity by the end of the decade. Both HA and aeroderivatives will lead to growth in high-margin services revenue well into the 2030s. In onshore wind, we see opportunity as customers repower their existing projects. In our install base in the US, there are approximately 10 gigawatts of units with repowering potential, projects that have already qualified for the new production tax credits. Finally, we are investing for the long term on nuclear. We continue advancing the SMR for industrialization at scale, as evidenced by our progress on the existing project underway in Ontario. In 2Q, we secured two more tech selects and early work agreements for our SMR in the US. In electrification, we're making progress on solid state transformers. Last week, I saw the complete buildout of our 5-megawatt SST prototype for indoor application that will be delivered to our first hyperscaler later this year, and in parallel have started development of a 6-megawatt SST for outdoor applications. We're also developing solutions like medium voltage uninterruptible power supply blocks that would improve the electrical efficiency and resiliency of data centers. In summary, we are improving how we operate, generating better returns while expanding the platform of solutions we provide customers as their need for infrastructure accelerates. We are allocating capital in a disciplined manner that will create substantial value going forward. With that, I'll turn the call over to Ken for more details on our 2Q performance as well as our financial outlook.

Around the world, electricity demand is accelerating driven by economic growth, grid modernization, electrification, data center expansion, and the need for more reliable, resilient power. As we've seen over the past few quarters, these trends are creating sustained demand for our platform of solutions. With our scale, technology, install base, and backlog, GE Vernova is uniquely positioned to help meet this moment and lead the transformation of the global electricity system. I want to thank our team of 85,000 people around the world for their ongoing commitment to excellence. We see significant opportunities ahead and collectively continue to take actions that drive efficiencies on the top and bottom line and create value for all our stakeholders. Our potential continues to grow. And we are investing to make our businesses leaner, more profitable, and a great place for talent. This includes investing in capacity expansions to meet growing demand from our customers, investing in R&D, robotics and AI to work smarter and continue driving financial and operational performance through lean and pursuing opportunistic inorganic growth, especially in electrification. These initiatives will better our businesses while simultaneously enabling us to continue returning capital to our shareholders through buybacks and dividends. This is an exciting time for us and I look forward to our Q&A discussion. With that, I'll hand it over to Michael.

Good morning, Nicole. Morning, Nicole.

You bet, Nicole. I'd start exactly where you ended. We will make the jump from where we've been, which has been about 3 gigawatts of output a quarter to 5 gigawatts of output a quarter starting in the third quarter. That's very well on track and we will deliver that in the second half of the year both in 3Q and 4Q on the 20 gigawatt annualized that we've talked about. We have 325 machines in our gas factories that have now been installed and we're on track to have approximately 400 new machines installed in gas power by the end of this year. What we also can see at this point is the progress the supply chain is making to meet our next step in the ladder. And what I mean by that is we can see clearly the castings and forgings arriving in 27 for that next step up in output in 28 to 24 gigawatt annualized. So in all these regards things are on track and as we continue to reach operationally where we are today. We continue to identify opportunities to drive efficiency. We've created more space in our factories by driving lean. We just closed on the Rotech automation acquisition in July and we're making real progress with automation into our factories that gives us more capacity within our existing footprint and over the course of the last 90 days have continued to make progress for later in the decade to get incremental supply output that can support this 30 gigawatt. Now, as we said on the call to start, most of that 30 gigawatts for 30 will already be sold this year and over half of the 31 gigawatts will be on contract by the end of this year. The only other thing that I do think is really important to note here, Nicole, and for everyone is we're going to ultimately need some of this capacity as you look over the long term next decade for the services business. I mean, we only have 130 of our HAs running right now, we have a 325 on contract. As these run base load and every four years, they go through a major outage. By the time you get to the middle of the next decade, the outage profile with the H's and the service revenue we need to fulfill, that's driving some of this investment also that we'll need to utilize. But that's more of a middle of the next decade dynamic once these units are all running by call it the beginning of next decade and then four years later they reach their first outage cycle. So we're very pleased with where we are operationally. We're very pleased with our ability to continue to serve this market with growing demand. And we'll continue to look for efficiency and opportunity in our supply chains to serve the market.

Morning Andrew.

You bet, Andrew. We continue to see a very healthy pipeline of opportunities in Taiwan. That's an important market for us where we have north of 10 gigawatts of H's on contract already that are either running or in execution right now. We continue to see real demand in Saudi. There's a lot of iteration happening in Mexico right now as an example to support that administration as they revitalize their electric grid. There are more discussions happening with end customers today on gas buildout in Southeast Asia. Now those discussions are less about the grid and more about Southeast Asian EPC capability to utilize gas buildout in other parts of the world. And those discussions I would say are a little bit louder today than maybe they were even 90 days ago for Southeast Asia. We signed contracts in Qatar this quarter as an example. So we continue to see very healthy demand not just in the US but in a number of our global markets and we're going to work really hard to serve those global markets.

Hey, Nigel. Good morning, Nigel.

Yeah. I think as we said for 31, yes, we'll be more than halfway contracted by the end of the year. There are active discussions for 32 and beyond, but I would say we need more time before we can articulate the timing of contracting 32. I mean, I think we have to remember when you go six years out, we'll learn a lot more the second half of the year, but what we are highly confident in is more than 50% of 31 will be contracted and there's healthy discussions for 32 and beyond, but let us do that work with our customers. Now on the machines, we'll be through about 400 machines installed into our gas factories by the end of this year. That largely supports a lot of the growth next year at 20 gigawatt and the ramp up in castings and forgings for 28. We will invest in incremental machines beyond 400 to ultimately get to the 30 gigawatts, very much the same equipment that we are installing today, leveraging the existing industrial footprint we have. So within the same walls, we won't be done at 400 machines. But certainly when we project our continued progress streams relative to the capex required, the capex with the incremental machines beyond this year relative to the backlog and progress streams, the capex is modest. And Nigel, to your question on labor, we've been actually investing in labor to support this transition from the 15 to 20 gigawatts out of Greenville well back a year ago. We started hiring labor in to make sure that we were training them and they were sitting alongside our existing workforce. So that way as that incremental labor came, as that incremental capacity came on board, we had trained workers ready to help with the productivity ramp as quickly as we could. And we've referenced that just lightly as we've gone through the quarters to talk about the fact that even with that incremental labor which in the early stages is relatively underutilized because they're in a training mode, the business has continued to see margin expansion through those periods.

Morning Andrew.

Andrew, all your numbers are exactly right. I mean, about 5 billion of our orders in the first half of the year with data centers on the about 14 billion of orders in total in the first half. So that gives you the directional amount of the first half, how big, how important this customer set is and the progress we're making with them. We are making real progress within our scope today. We've talked in the past on our EMS solutions, our energy management solution that integrates more, it's really more software and controls between the data center and the power generation equipment. You're right. In our orders still in the first half of the year, the 5 billion, there isn't an SST order. I cited that I saw the physical buildout of the 5 megawatt SST last week and we'll deliver it to the customer later this year, but 27 is as early as orders will come. The medium voltage uninterruptible power supply block, the stability block also, we're driving real progress with customers and it's possible orders come for that before the SST. We continue to work our way through that and are having encouraging conversations, but that 300 million directional of scope per gigawatt today, if you include the MVUPS, if you include the SST and some of the other things we're working on, we certainly think entitlement just with the things we're already investing in is two to three times what our scope per gigawatt is today. And none of that is in the $5 billion. Potentially MVUPS starts to come through the second half of the year, but I think about that incremental scope at two to three times being more credibly expected in our 27 orders than in 26, at least based on where our iteration is today with the customers.

Morning Amit.

Very encouraged with the technical progress. I would say what we had in December was more of a research lab in development. Now we have an automated line that we are building. I visited the line in July. We have a number of test labs right now that are challenging ourselves on what I think is the fundamental question with fuel cells generally, which is life. We talked about in December that we were going to use the better part of 26 into 27 to gain conviction on the life durability of our fuel cells. But we continue to see real capex efficiency using the thermal spray efficiency technology that we are for this technology. And as we sit here today, that's something that's more of a 27 discussion with customers than 26. 26, this continues to be about technology validation, but I'm very pleased with the progress that we've made from a technology perspective in 26. We're going to keep going and start to advance commercial discussions in 27 with the benefit of another full year of testing here right now.

Morning, David.

Well, what I would say, David, is we articulated earlier in the discussion that we see a very clear pathway to continuing to grow our contracted gigawatts on order beyond this year. So, we sit here at 116 gigawatts right now. We'll end the year with at least 125 gigawatts. We can look ahead the next year and a half and tell you with confidence that with the ramp up to 20 gigawatts annualized for the second half of this year and next year, i.e., that we're going to ship over the next six quarters at least 30 gigawatts of output. Right now that we're at this annualized rate, with the pipeline we see, we continue to see very healthy growth above 125 gigawatts in 27 relative to year end 26. Now, a lot of this comes down to how many years out are customers ready to contract and also from peak orders perspective, how quickly they can get the commitment with the EPCs for us to transition things also from slot reservation agreement to orders because we're not putting things in our order book without a firm pathway to the schedule which includes the pipelines, it includes the EPCs, and we're going to have to monitor that. So what we are confident of is very clearly continuing to grow the contracted backlog for the better part of the next six quarters that we see in front of us even with the accelerated or the higher output, and we're going to monitor that from there. And as all of that happens, as I said earlier, what we also have is you take a step back and that $176 billion backlog, it's about 50% equipment, 50% services. We don't spend as much time talking about that 50% that's services, but all of this incremental equipment is going to drive a lot more services growth into the next decade.

Morning Joe. Hey guys. Good morning. Hey guys. Hey.

Certainly from a heavy duty equipment capacity, we've got very sound, we call them box charts, Joe, views on available industry capacity for the next six years. We feel very balanced with demand relative to supply. Where it can get a little bit less clear to us is exactly how much demand or excuse me, supply can be created with much smaller applications that are trying to take advantage of the market where there's only so much heavy duty output, and that's a little harder for me to know exactly how much output there will be here five to six years. But what I'll tell you is I love our economic positioning relative to that part of supply and it's less of a competition and more complimentary, but the efficiency levels on where we are with our heavy duty gas turbines are incredibly competitive. And when we look at that landscape in totality, we're very comfortable looking out over the next 5 to 6 years with supply relative to demand. And again, we're going to need some of this capacity. Even the 30 gigawatts we'll be able to deliver in 30 and 31 for outages by the time you get to the middle of the next decade. And a lot of the 325 units that are on contract today start to go through their first outage event.

Morning Julian.

Yeah, I mean our customers in partnership with us are making very good progress on operationalizing the slot reservations into projects that are on schedule largely. And that's why we said in the earlier comments that we're going to reach a very important inflection point as I see it the second half of this year where orders in backlog will be greater than gigawatts on slot reservation agreement. That is happening because the convergence of customers with slot reservation agreements on long cycle are making progress operationally and that's what's driving the conversion to orders in the second half of the year. Now, I think that is going to continue from here and I would say we've generally been encouraged with that progress.

Demand is very strong for the heavy duty. In a number of cases, the aero are complementary to the heavy duty over the longer term. So think to yourself, customers in earlier periods leveraging the aeroderivatives until the heavy duty can ultimately be installed and commissioned because we also need to remember even if the shipments are 24 months apart between an aero and a heavy duty, the commissioning of that aeroderivative is reasonably quick. It could be 6 months whereas the ultimate commissioning of the heavy duty could take another 18 months at site after it's actually shipped from Greenville. So they're in very real ways providing another level of integrated solutions for us where the aeroderivatives are providing the bridge. They're buying customer time with the first tranche of incremental electrons while they're securing the EPC capacity for the early 2030s on those contracts that we're citing today are already signed for 30 and 31 and that will be largely sold out of 30 and more than half of 31. Part of that dynamic is the complement of aero that comes first and heavy duty that will be shipped in 30 and 31 but then really commissioned in 32 and 33 at site.

Yep. The first 5 megawatt indoor application SST is R&D shared with a hyperscaler that will receive it later this year and then go through a testing period. On the other side of that, the orders would be traditional transaction at that point no different than other business. What I cited in the prepared remarks earlier with a 6 megawatt outdoor application is with a different hyperscaler that also would have R&D sharing attached with the development of the product over the better part of the next 18 months. But then on the other side of the prototype would be again very traditional supply and demand business. So we're very motivated with the innovation that we're seeing from our teams there. As I said on the earlier comment, the stability block technology, the MVUPS, medium voltage uninterruptible power supply, we're also making real progress with and that could cut into traditional orders even sooner than SST. I think SST the open question that I do think is still remaining is how quickly do the AI factories shift towards 800 volt DC. And as that conviction happens that will be more of a triggering to go from where we are right now with SST which is more prototype R&D sharing to orders at scale. And again, I think for SST, you have to think 27 and beyond. For MVUPS, we're working really hard for that to cut into our orders book as quickly as possible.

Michael, team, everyone, I appreciate everyone giving us the time today. I would just reinforce for my teams, I appreciate what you're doing every day. For our customers, your faith in us motivates us to help you meet this moment together. For our partners, we can only do this with you and are humbled and appreciative with all the stakeholders along on these early stages of a very exciting journey we're on in GE Vernova. So for all of you that are giving us time today for this hour, thank you and we look forward to the opportunity to talk further in the days and weeks ahead. Thanks everyone.