Archive · Wed Oct 28 · Plain text · Event page
GE Vernova Raises 2026 Outlook as Gas Orders Quadruple, Eyes Wind Options
The power equipment maker said it has seen no financing-related slowdowns among turbine customers and expects at least 130 gigawatts of gas capacity under contract by the end of 2026.
GE Vernova raised its 2026 revenue, adjusted EBITDA margin and free cash flow guidance after reporting third-quarter orders of $29.3 billion, up 96 percent from a year earlier, and a total backlog of $197 billion. Asked on an earnings call whether customers were facing financing problems, CEO Scott Strazik said, "no David we're not," pointing to continued order growth, unchanged cash terms and $17 billion in cash on the company's balance sheet.
Higher guidance on gas and grid demand
The company now expects 2026 revenue of $46.5 billion to $47.5 billion, an adjusted EBITDA margin of 13.5 percent to 14.5 percent and free cash flow of $16 billion to $17 billion. Third-quarter adjusted EBITDA rose 123 percent to $1.9 billion, and free cash flow was $5.4 billion, helped by a $5.3 billion working capital benefit from customer down payments and slot reservations. Revenue increased 18 percent, and equipment backlog reached $104 billion.
Gas power: pricing and capacity
Strazik said GE Vernova signed 11 gigawatts of orders and slot reservation agreements in the quarter, lifting gigawatts under contract to 122 from 116. The company now expects at least 130 gigawatts by year-end, versus 83 gigawatts at the start of the year. Third-quarter equipment orders were priced more than 20 percent above fourth-quarter 2025 levels, and full-year 2026 gas order pricing per kilowatt should be about 50 percent higher than in 2025. He said fourth-quarter pricing per kilowatt would be lower because of fewer aeroderivative units. Power segment EBITDA margin expanded 830 basis points to 21.4 percent, and the company raised its full-year power margin range to 19 percent to 21 percent.
Electrification and wind
Electrification orders were $5.4 billion, down 9 percent year over year against a prior-year $1.6 billion Saudi Arabia synchronous condenser order, while equipment backlog rose to $42 billion. Segment EBITDA margin was 19.1 percent, and the company said it expects margin toward the higher end of its 18 percent to 20 percent range. In wind, EBITDA was $72 million for the quarter, and the company now expects a full-year loss of $400 million to $500 million. Asked about long-term options for the business, Strazik said he wants to see where the U.S. market goes over the next year before deciding how to create value.
Trench deal and leadership change
Executives also discussed the planned acquisition of Trench, which Strazik described as a vertical integration of critical components. He said bushings account for 5 percent to 8 percent of the bill of materials of every transformer. Strazik also said Claire and Akan will start next week as the next chief financial officer and wind leader, respectively, taking their roles in January 2027.
Bulletins
GE VERNOVA: TO ACQUIRE TRENCH GROUP, ANNOUNCED ALONGSIDE Q3 2026 EARNINGS
GE VERNOVA CEO: NEW ORDERS ALMOST $30 BILLION; BACKLOG UP FROM $176 BILLION TO ~$200 BILLION
GE VERNOVA CEO: SERVICES ORDERS GREW 10% IN Q3; POWER SEGMENT EBITDA MARGIN REACHED 21%
GE VERNOVA CEO: ELECTRIFICATION EBITDA MARGIN 19%; ENDED Q3 WITH ~$17 BILLION IN CASH
GE VERNOVA: DOUBLES BUYBACK AUTHORIZATION TO $20 BILLION FROM $10 BILLION
GE VERNOVA CEO: BOUGHT 15.6M SHARES AT AVG ~$635; $1.6B BUYBACK IN Q3, OVER $1.3B IN OCT
GE VERNOVA CEO: TRENCH ACQUISITION IS $9 BILLION, ACCRETIVE ON DAY ONE
GE VERNOVA CEO: $1.5 BILLION BARMER HVDC PROJECT IN INDIA TO BE BOOKED AS ORDER IN Q4
GE VERNOVA CEO: SEES GLOBAL HIGH VOLTAGE MARKET OPPORTUNITY OF $130 BILLION BY END OF DECADE
GE VERNOVA CEO: TRENCH DEAL TO CLOSE LATE 2027; PAYING 13X 2028 EBITDA BEFORE SYNERGIES
GE VERNOVA CEO: TRENCH 2026 REVENUE EST. $1.4 BILLION, SEEN APPROACHING $2 BILLION IN 2028
GE VERNOVA CEO: TRENCH HAS 3,000+ EMPLOYEES ACROSS 11 FACTORIES; SERVES HYPERSCALERS
GE VERNOVA CEO: SEES 55,000+ US TRANSMISSION SUBSTATIONS REBUILT OR UPGRADED IN NEXT DECADE
GE VERNOVA CEO: ELECTRIFICATION ADDRESSABLE MARKET SEEN REACHING $300 BILLION BY 2030
GE VERNOVA CEO: SEES HIGH VOLTAGE EQUIPMENT MARKET GROWING AT HIGH SINGLE DIGITS LONG TERM
GE VERNOVA CEO: ELECTRIFICATION BACKLOG AT $46 BILLION, VS $7 BILLION AT START OF 2022
GE VERNOVA: TRENCH NORTH CAROLINA PLANT FIRST US MAKER OF HIGH VOLTAGE BUSHINGS UP TO 765 KV
GE VERNOVA CFO: TRENCH HAS ~$5 BILLION COMBINED BACKLOG, FRAMEWORK AGREEMENTS AS OF SEPT 2026
GE VERNOVA CFO: SEES TRENCH ADJ EBITDA MARGIN OF ~36% IN 2028, BEFORE SYNERGIES
GE VERNOVA CFO: SEES TRENCH MID-TEENS ANNUAL REVENUE GROWTH 2026-2028, BEFORE SYNERGIES
GE VERNOVA CFO: TRENCH $9 BILLION DEAL FUNDED WITH EQUAL MIX OF DEBT AND CASH ON HAND
GE VERNOVA: EXPECTS ~$50-100 MILLION ANNUALIZED TRENCH COST SYNERGIES BY 2030
GE VERNOVA CEO: TRENCH ACQUISITION WILL BE IMMEDIATELY ACCRETIVE AFTER CLOSING
GE VERNOVA CFO: ADDED $46 BILLION TO TOTAL BACKLOG SO FAR IN 2026, TO ~$200 BILLION
GE VERNOVA: SEES AT LEAST 130 GW GAS POWER UNDER CONTRACT BY END 2026, VS 83 GW AT YEAR START
GE VERNOVA CFO: Q3 GAS POWER SHIPPED 5 GW, SIGNED 11 GW; GW UNDER CONTRACT 122 VS 116
GE VERNOVA CFO: Q3 GAS EQUIPMENT ORDERS PRICED MORE THAN 20% ABOVE Q4 2025 ORDERS
GE VERNOVA CFO: FULL YEAR 2026 GAS ORDERS PRICING PER KW ~50% HIGHER THAN FULL YEAR 2025
GE VERNOVA CFO: Q4 GAS ORDER PRICE PER KW SEEN BELOW Q3 ON FEWER AERO UNITS, MORE 50HZ
GE VERNOVA: TOTAL SEGMENT DATA CENTER ORDERS OVER $6 BILLION YTD, ~$1.4 BILLION IN Q3
GE VERNOVA: SPENT $2.4 BILLION ON R&D AND CAPEX SO FAR IN 2026, NEARLY AS MUCH AS ALL OF 2025
GE VERNOVA: RAISES 2026 REVENUE, MARGIN AND FREE CASH FLOW GUIDANCE
GE VERNOVA CFO: Q3 ORDERS $29.3 BILLION, UP 96% Y/Y; BOOK-TO-BILL MORE THAN 2X
GE VERNOVA CFO: Q3 REVENUE UP 18%; EQUIPMENT REVENUE +26% Y/Y, SERVICES REVENUE +6%
GE VERNOVA CFO: Q3 BACKLOG $197 BILLION; EQUIPMENT BACKLOG $104 BILLION, +92% Y/Y
GE VERNOVA CFO: Q3 ADJUSTED EBITDA $1.9 BILLION, UP 123% Y/Y; MARGIN EXPANDED 690 BPS
GE VERNOVA CFO: Q3 FREE CASH FLOW $5.4 BILLION; WORKING CAPITAL $5.3 BILLION CASH BENEFIT
GE VERNOVA: BOUGHT 15.6M SHARES AT AVG $635, ~$9.9 BILLION THROUGH OCT 23; CASH ~$17 BILLION
GE VERNOVA CFO: Q3 POWER ORDERS MORE THAN DOUBLED; GAS POWER EQUIPMENT ORDERS UP ~4X Y/Y
GE VERNOVA CFO: Q3 POWER REVENUE +25%; SHIPPED 32 GAS TURBINES, UP 60% Y/Y, 13 AERO
GE VERNOVA: RAISES POWER FY ORGANIC REV GROWTH TO 19%-21%; POWER EBITDA MARGIN 19%-21%
GE VERNOVA CFO: Q3 ELECTRIFICATION ORDERS $5.4B, ~1.4X REVENUE; ORDERS DOWN 9% Y/Y
GE VERNOVA CFO: Q3 ELECTRIFICATION REVENUE +51% REPORTED, +16% ORGANIC; EBITDA $739 MILLION
GE VERNOVA: WIND FY ORGANIC REV NOW SEEN DOWN MID-SINGLE DIGITS; EBITDA LOSS $400M-$500M
GE VERNOVA RAISES FY GUIDANCE: REV $46.5B-$47.5B, ADJ EBITDA MARGIN 13.5%-14.5%, FCF $16B-$17B
GE VERNOVA CFO: FY CORPORATE COSTS SEEN $450M-$500M; R&D, CAPEX COMBINED UP MORE THAN 30%
GE VERNOVA CFO: EXPECTS Q4 REVENUE AND ADJ EBITDA GROWTH, MARGIN EXPANSION, POSITIVE FCF
GE VERNOVA: NAMES CLAIRE AS NEXT CFO, AKAN AS WIND LEADER; BOTH START NEXT WEEK, ROLES JAN 2027
GE VERNOVA: SECOND-HALF 2026 POWER MARGINS RIGHT BASE FOR 2027; BETTER-PRICED SHIPMENTS START
GE VERNOVA: GAS TURBINE FACTORY RUNNING AT 5 GIGAWATTS A QUARTER, RAMP A POSITIVE INTO 2027
GE VERNOVA: TRENCH HAS $1.4B REVENUE; GE IS A VERY SMALL PART OF THAT
GE VERNOVA: TRENCH BUSHINGS 5-8% OF TRANSFORMER BOM; 10% OF $1.5B HVDC ORDER DUE Q4
GE VERNOVA: ELECTRIFICATION BACKLOG $40B HIGHER THAN $7B AT START OF 2022
GE VERNOVA: MVUPS ORDER IN Q3 IS AN NPI; TRENCH COILS ABOUT 5% OF MVUPS BILL OF MATERIALS
GE VERNOVA: SEES Q4 GIGAWATTS ON AGREEMENT TO BE MODEST; CONVERSATIONS 'VERY HEALTHY'
GE VERNOVA: SEES Q4 GAS GIGAWATTS ON AGREEMENT 13+ VS 11 IN Q3; ENDING AT 130 GW
GE VERNOVA: SEES WIND SERVICES PROFITABILITY IMPROVING IN 2027 SIMILAR TO 2026 YOY GAIN
GE VERNOVA: HISTORICALLY ~50% OF NA ONSHORE WIND; ONE MORE YEAR OF NORTH SEA OFFSHORE EXECUTION
GE VERNOVA: ASSUMES NORTH AMERICA WIND VOLUME ESSENTIALLY FLAT TO 2025 IN 2028 LOOK-THROUGH
GE VERNOVA: ELECTRIFICATION 2H 2026 MARGIN JUMP-OFF POINT APPROXIMATELY 20%
GE VERNOVA: TO SET CAPITAL MARKETS DAY DATE AT JANUARY CALL; 2030 FINANCIAL GUIDE TO BE ISSUED
GE VERNOVA: EXPECTS GAS TURBINE ORDERS UP 10-20 POINTS VS Q4 2025 BASELINE
GE VERNOVA: Q3 GAS TURBINE ORDER PRICING UP 'NORTH OF 20 POINTS' VS Q4 2025 BASELINE
GE VERNOVA: 2026 GAS TURBINE ORDER PRICING UP DIRECTIONALLY 50% VS 2025
GE VERNOVA: SEES POWER BACKLOG MARGIN GROWING SUBSTANTIALLY MORE IN 2026 THAN 2025
GE VERNOVA: SEES POSITIVE ELECTRIFICATION PRICING, AT SLIGHTLY LESS GROWTH RATE THAN POWER
GE VERNOVA: DOES NOT EXPECT TO SUSTAIN Q2/Q3 AERODERIVATIVE ORDER RUN RATE IN Q4
GE VERNOVA: SEES NO FINANCING-RELATED DISRUPTIONS, SLOT EXIT REQUESTS OR SLOWING SRA CONVERSION
GE VERNOVA: ELECTRIFICATION ORDERS UP ABOUT 60% YEAR TO DATE THROUGH Q3
GE VERNOVA: EXPECTS Q4 TO BE LARGEST ELECTRIFICATION ORDER QUARTER, BACKLOG GROWTH ABOVE Q3
Posts (42)
Transcript
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Good day, ladies and gentlemen, and welcome to GE Reno.
Branova's third quarter 2026 earnings conference call.
good day ladies and gentlemen and welcome to ge vernova's third
quarter twenty twenty six earnings conference call
this time, all participants are in a listen-only mode. My name is Liz, and I.
at this time all participants are in a listen only mode
will be your conference coordinator today. If you experience issues with
this my name is liz and i will be your conference coordinator today
webcast slides refreshing, or there appears to be delays in the slide advancement.
if you experience issues with the webcast slides refreshing or there appears to
advancement, please hit F5 on your keyboard to refresh.
be delays in the slide advancement
please hit f five on your keyboard to refresh
As a reminder, this conference is being recorded. I would now like.
as a reminder this conference is being recorded
to turn the program over to your host for today's conference, Michael Lapitas.
i would now like to turn the program over to your host for today's conference michael lapides
vice president of investor relations. Please proceed.
vice president of investor relations
please proceed
Thank you. Welcome to the...
the conference call on GE Vernobas. Third quarter 2026.
thank you
2026 earnings in the planned acquisition of Trench Group. I'm joined today by
welcome to the conference call on ge vernova's third quarter twenty twenty six earnings
by our CEO, Scott Strazik, and CFO Ken Parks.
and the planned acquisition of trench group i'm joined today by our ceo
scott strazek and cfo ken parks
conference call remarks will include both gap and non-gap to the
our conference call remarks will include
financial results, including the standalone forecast of Trench Group.
both gaap and non gaap financial results
including the standalone forecast of trench group
Reconciliations between GAP and non-gap measures can be.
found in today's press release and presentation slides.
reconciliations between gaap and non gaap measures
can be found in today's press release
both of which are available on our website. Our Trench Grew.
and presentation slides both of which are available on our website
comments reflect expectations for the train's action.
our trench group comments reflect expectations
The cost and revenue synergies from the train's action in capital L.
for the transaction the cost and revenue synergies from the
allocation plans. The trends grew back with this and price and.
and capital allocation plans
penisual information are expressed in US dollar equivalents.
the trinch group acquisition price and financial information are
expressed in u s dollar equivalents
on a Euro to US dollar exchange rate of 1.12.
based on a euro to u s dollar exchange rate of one point one two
Actual US dollar equivalent amounts may differ based on the prevailing.
prevailing exchange rate at the applicable times. The Trent Group financial and
actual us dollar equivalent amounts may differ based on the prevailing exchange
rate at the applicable times
information was prepared by GE Vernova based on data provided by Trent.
the trench group financial information was prepared by ge vernova based
Trench Group and reflect Trench Group's accounting policies, which may
on data provided by trench group
may differ from GE Vernovas. Please note that unless other.
and reflect trench group's accounting policies which may differ
from ge vernovus
otherwise specified, or year over year commentary or variances on.
please note that unless otherwise specified
on orders, revenue. I just did in segment EBITDA and more.
our year over year commentary or variances on orders revenue
Morgen. Discuss during our prepared remarks or on and we're getting.
adjusted and segment ebitda and margin
organic basis. We will make forward looking statements about our professional.
discussed during our prepared remarks are on an organic basis
performance and the trench group business. These statements are based on how we
we will make forward looking statements about our performance in the trinch group business
we see things today. While we may update these forward-looking statements,
these statements are based on how we see things today
statements at some point in the future. We do not undertake any obligation to.
while we may elect to update these forward looking statements at some point in the future
to do so. As described in our SEC filings, today's
we do not undertake any obligation to do so
as described in our sec filings
press release and presentation slides, all of which are available on our
our website. Actual results may differ materially due to risk that.
today's press release and presentation slides
all of which are available on our website actual results may differ materially
and uncertainties. The acquisition is subject to regular.
due to risks and uncertainties
regulatory approvals in standard closing conditions, including infrastructure.
the acquisition is subject to regulatory approvals
information and employee consultation where required.
in standard closing conditions including in
information and employee consultation where required
With that, I'll hand the call over to Scott. Thanks, Michael.
with that i'll hand the call over to scott
We have a lot to cover today, but I wanted to start with three main messages.
thanks michael we have a lot to cover today
messages. First, our growth continues to accelerate with both our core.
i wanted to start with three main messages
core business and new products. With almost 30 billion in
first our growth continues to accelerate with both our core business
in new orders and an expansion of our backlog from 176.
and new products with almost thirty billion dollars in new orders and an
to approximately 200 billion in three queue. We continue to.
expansion of our backlog from one hundred and seventy six to approximately two hundred billion dollars
see strong pull from customers for the solutions we offer.
3q we continue to see strong pull
This demand is not only for our existing equipment, but also for.
from customers for the solutions we offer
for services, where we saw 10% orders growth in the quarter.
this demand is not only for our existing equipment
We also see growing interest in our new offerings, including in both power.
but also for services where we saw ten percent orders growth in the quarter
power with a nuclear SMR, and multiple products in electrification.
we also see growing interest in our new offerings including in both power
with a nuclear smr
electrification, including MVUPS in solid state transformers.
and multiple products in electrification including m v ups
transformers. Second, our margin expansion is encouraging, but
and solid state transformers second
our margin expansion is encouraging
but no one inside GEV is satisfied with where we are.
but no one inside gev is satisfied with where we are
This is just the beginning, with significant opportunity and all.
all three business segments. Power reached 21%, even.
this is just the beginning with significant opportunity in all
EBITDA margins and what is historically our weakest margin quarter.
three business segments power reached twenty one percent ebitda margins in what is
Q is typically our lowest quarter for services activity.
historically our weakest margin quarter as 3q is typically
These margins reflect the first quarter of our five gigawatt.
our lowest quarter for services activity these margins reflect
of gas power equipment shipments at better prices.
the first quarter of our five gigawatt of gas power equipment shipments
at better prices
Electrification reached 19% EBITDA margins while growing on.
RD mid-teens to support strong new product interest.
electrification reached nineteen percent ebitda
margins while growing r and d mid teens to support strong
introduction opportunities. Lind turned profitable and strong.
new product introduction opportunities
strong services improvement, and we continue improving execution and all.
win turned profitable on strong services improvement
offshore as our backlog to complete, continues to come down.
and we continue improving execution in offshore
down. Across all three businesses and corporate, we
as our backlog to complete continues to come down
have investments in automation and AI with strong use.
across all three businesses and corporate
use cases that will expand margins over the medium term. But in
we have investments in automation and ai
with strong use cases that will expand margins over the medium term
3Q and isolation, remain in net expense.
but in 3q and isolation remain a net expense
Point being, we are early in our margin expansion acceleration.
acceleration. Third, we have delivered significant year-to-date cash.
point being we are early in our margin expansion acceleration
cash generation to end the quarter with approximately 17 billion in cash.
third we have delivered significant year to date cash generation to
cash, and we've been working hard to position GE Vernova to invest this cash.
end the quarter with approximately seventeen billion dollars in cash
capital for strong returns. We are pleased to announce the sign.
and we've been working hard to position ge vernova to invest this capital
signing of the Trent Group acquisition, which will strengthen our core electrification.
for strong returns we are pleased to announce
electrification offerings and high voltage grid equipment. Be a creative undefined.
the signing of the trench group acquisition which will strengthen our
core electrification offerings in high voltage grid equipment
day one and bring us industry-leading technology to innovate.
into the future and serve this growing market. In Parallels, I
be accretive on day one and bring us industry leading technology to
innovate into the future and serve this growing market
announcing this $9 billion acquisition. We are announcing a doubling of our.
in parallel with announcing this nine billion dollars acquisition
stock buyback program from ten to twenty billion dollars.
we are announcing a doubling of our stock buyback program from ten
dollars. After investing 1.6 billion in the buyback in 3Q,
billion dollars to twenty billion dollars
and over 1.3 billion in October. We have largely.
after investing one point six billion dollars in the buyback in 3q
completed our 10 billion dollar authorization with excellent returns.
and over one point three billion dollars in october we have largely completed
having acquired 15.6 million shares at an average price of
our ten billion dollars authorization with excellent returns
of approximately 635. It is early in.
having acquired fifteen point six million shares
at an average price of approximately six thirty five
in our journey. We remain humble, but we have real convictions.
it is early in our journey we remain humble
conviction that we are building a unique company to serve the growing market.
but we have real conviction that we are building a unique company
market and deliver for our shareholders for the long term. With that,
to serve the growing market
and deliver for our shareholders for the long term
that, I'd like to go to the next page and give an overview of the Trench Acquisition.
acquisition. The announcement today of our acquisition of the Trench.
with that i'd like to go to the next page and give an overview
of the trench acquisition
Group, is an important step forward in strengthening, in scaling our electric.
the announcement today of our acquisition of the trench group
electrification business in the high and medium voltage markets globally.
is an important step forward in strengthening and scaling our electrification business
globally. If I take a step back, the beginning of 25, there were two assets.
in the high and medium voltage markets globally
if i take a step back
assets of scale. I felt we needed an electrification. The first
the beginning of twenty five there were two assets of scale
is Prolock to expand our North American manufacturing footprint.
i felt we needed in electrification the first was prolec
It is simplified the front end commercial experience or end customer.
to expand our north american manufacturing footprint and to simplify
customers, especially the hyperscalers. And the second is trent.
the front end commercial experience for our end customers
for the technology differentiation, management team.
especially the hyperscalers and the second is trench
for the technology differentiation
and the importance of the components Trent provides in solutions.
management team and the importance of the components trench provides
solutions we deliver today. There are many factors driving our.
in solutions we deliver today
conviction on the high voltage market for the long term.
there are many factors driving our conviction in the high voltage market
centers require large electricity loads, driving the increasing.
for the long term data centers require large electricity loads
need for more efficient high-voltage equipment. Trench, as an example.
driving the increasing need for more efficient high voltage equipment
example, has secured multiple agreements with hyperscalers in the past two years.
tranche as an example has secured multiple agreements with hyperscalers in the past
years. In addition, global utilities are also building out more.
two years
more high-voltage infrastructure. Today's grid loses as much.
in addition global utilities are also building out more high voltage
much as 8% from power generation to end use.
today's grid loses as much as
the upgrade of the grid to higher voltages dramatically reduces that.
eight percent from power generation to end use
energy losses, making the whole grid more economical.
and the upgrade of the grid to higher voltages
dramatically reduces energy losses making the whole grid
economical. In addition, as the existing grid takes on more loads.
more economical
load with increased building electrification. Manufacturing growth.
in addition as the existing grid takes on more load
with increased building electrification
growth, heat pumps and EVs, grid reinforcements to.
manufacturing growth heat pumps and evs
higher voltages will be required. And in parts of the world, building signals.
grid reinforcements to higher voltages will be required
significant wind and solar, there is a need to transport electrons.
and in parts of the world building significant wind and solar
electrons over long distances at higher voltages to eliminate.
there is a need to transport electrons over long distances at
eliminate waste. India is a great example of this today, and it's a market where.
higher voltages to eliminate waste
we are demonstrating real commercial success, including our
india is a great example of this today and is a market where we are demonstrating real
announced win on the Barmer HVDC project, that will be a
commercial success including our announced win
1.5 billion dollar order in 4Q.
on the bwrmer hvdc project that will be a one point five billion dollars
order
in 4q
Trent further positions us to serve this global, high-voltage market.
opportunity, we project to be 130 billion by the
trench further positions us to serve this global
high voltage market opportunity we project to be one hundred and thirty billion
end of the decade. As an existing supplier to Vernova,
by the end of the decade
Vernova, French is a business we know well. It's complementary and difficult.
as an existing supplier to vernova
trench is a business we know well
differentiated technology for high-voltage solutions will broaden.
complementary and differentiated technology for high voltage solutions
broaden our grid equipment portfolio and expand our presence across private.
product lines where we have a modest presence today.
will broaden our grid equipment portfolio and expand our presence
across product lines where we have a modest presence today
Vertically integrating Trench will also give us greater capacity and certain.
certainty across a key part of the supply chain, strengthening our ability.
vertically integrating trench will also give us greater capacity
and certainty across a key part of the supply chain
ability to deliver for customers. The foundation.
strengthening our ability to deliver
for customers
of Trench's success is technical excellence in a strong management.
the foundation of trench's success is technical excellence
management team. With more than 3,000 highly skilled employees across the world,
and a strong management team with more than
across 11 factories. Trench has established a footprint in many.
three thousand highly skilled employees across eleven factories
many of the world's largest grid markets. These capabilities have enabled.
trench has established a footprint in many of the world's largest grid markets
enabled French to develop deep, trusted relationships with a broad.
these capabilities have enabled trench to develop deep
broad customer base serving utilities, grid operators.
trusted relationships with a broad customer base
and increasingly hyperscalers. We expect this.
serving utilities grid operators
transaction to close late 27 and with a nine billion dollars.
and increasingly hyperscalers
we expect this transaction to close late twenty twenty seven
dollar purchase price, we are paying 13 times 28 EBITDA.
and with a nine billion dollars purchase price we are paying thirteen times
Ibidah before synergies. The first full year, we expect trend.
twenty eight ebitda before synergies
trench to be included in our financial results. This is a
the first full year we expect trench to be included in our financial results
strategically compelling and attractive acquisition that is directly.
this is a strategically compelling and attractive acquisition
directly aligned with our capital location priorities. We will add skills.
scale to the core of our fast-growing electrification segment to
that is directly aligned with our capital allocation priorities
we will add scale to the core of our fast growing electrification segment
to better serve the global electricity super cycle.
to better serve
Turn to the next page. You can see on the left-hand side.
the global electricity super cycle
the estimated 26 revenue of Trench. And GE Bernova.
turn to the next page you can see on the left
hand side the estimated twenty six revenue of trench
Vernova with the three primary product lines in the Trench portfolio.
and ge vernova with the three primary product lines in the trench portfolio
Trent revenue in 26 is estimated at 1.4%.
1.4 billion, and similar to our electrification business, is projected to.
trench revenue in twenty twenty six is estimated at one point four billion
to grow at double-digit levels over the coming years to approach two billion.
and similar to our electrification business is projected to grow
billion of revenue in 28 after the expected close.
at double digit levels over the coming years to approach two billion dollars of revenue in twenty eight
after the expected close
I'd like to provide a bit more context and color on each of the product lines.
i'd like to provide a bit more context and color
lines. Every medium and high-voltage transformer has a
on each of the product lines every medium and high voltage
bushing. For insulation, a mechanical support used for.
transformer has a bushing for insulation and mechanical support
reliable grid connection. Today, we source most of our Bushing.
bushings externally. But tomorrow, we will be able to internalize.
used for reliable grid connection today we source most of our bushing
externally
this key technology within the Trench facilities and better serve.
but tomorrow we will be able to internalize this
serve our customers with improved cycle time and integrated.
key technology within the trench facilities and better serve our customers
with improved cycle time
integrated performance, as we continue to invest in this business.
just as we're doing with Prolac, which you see very clearly in the
and integrated performance as we continue to invest in this business
growth of our Prolac results. In many cases, customers.
just as we are doing with prolec which you
see very clearly in the growth of our prolec results in many cases
customers specify the bushing provider for large transformers.
we see opportunities where trance bushings are the preferred technology.
customers specify the bushing provider for large transformers
technology to better integrate our transformer product line to dry.
and we see opportunities where trench bushings are the preferred technology
drive commercial synergies. Post close, we all saw her.
to better integrate our transformer product line
to drive commercial synergies
post close
a much larger percentage of bushings for our transformers.
transformers from the Trench factories to deliver better outcomes.
we will source a much larger percentage of bushings for our transformers
outcomes for our customers. Instrument transformers.
from the trench factories to deliver better outcomes
for our customers
transformers are important high-voltage equipment in electrical substations.
instrument transformers are important high voltage equipment
typically greater than 35 kV, that are used to measure bolts.
in electrical substations typically greater than thirty five kv
voltage and provide protection. This equipment is utilized for.
that are used to measure voltage
for new build high-voltage electrical substations.
and provide protection this equipment is utilized for new
For instance, with data centers where you see us playing a significant role.
build high voltage electrical substations for instance
But this is also technology to support upgrades as existing.
with data centers where you see us playing a significant role
infrastructure extends past its useful life.
but this is also technology to support upgrades as existing infrastructure
US alone, we project over 55,000 trends.
extends past its useful life in the us alone
transmission substations will be completely rebuilt.
we project over fifty five thousand transmission substations
will be completely rebuilt
or upgraded to higher voltages in the next decade.
or upgraded to higher voltages
in the next decade
Point being, our opportunity is both an expanding.
and modernizing the existing grid in serving new growth.
point being our opportunity is both an expanding
with opportunities like data centers. And finally,
and modernizing the existing grid and serving new growth
with opportunities like data centers
medium and high voltage coils. This equipment connects to the substation.
and finally medium and high voltage coils
substation and stores electrical energy inside a magnetic field.
this equipment connects to the substation and stores
field to enhance grid reliability and power quality.
electrical energy inside a magnetic field
to enhance grid reliability
The innovative high-voltage technology Trent produced.
and power quality
produces, is directly aligned with where customers are investing.
the innovative high voltage technology trench produces
and where we see long-term demand continue to grow.
is directly aligned with where customers are investing
and where we see long term demand continue to grow
very confident these technologies will allow us to better serve our customers.
customers, which I'll go into in more detail on the next page.
we are very confident these technologies will allow us to better serve our customers
which i'll go into in more detail
on the next page
We talked in the past how our existing addressable market and electrical.
electrification is projected to reach 300 billion by 2030.
we've talked in the past how our existing addressable market in electrification is
2030. The high voltage equipment market is an estimated 130.
projected to reach three hundred billion dollars by two thousand thirty
130 of the 300 billion. And you can see on the left-hand side of this page.
the high voltage equipment market is an estimated one hundred and thirty
page how each product line inside Trench supports our options.
of the three hundred billion dollars and you can see on the left hand side of this page
offerings across the columns. We see the high voltage equipment.
how each product line inside trench supports our offerings
across the columns
equipment market continue to grow at high single digits for the long term.
we see the high voltage equipment market continue to grow at
driven by the macro factors I mentioned on the earlier page.
high single digits for the long term driven by the macro factors
i mentioned on the earlier page
The real message on this page is we have a great conviction that.
that customers will benefit significantly with our addition of trends.
the real message on this page is we have a great conviction
Trench to the product portfolio to deliver to them more optimized.
that customers will benefit significantly with our addition of trench
integrated solutions. This will also provide our customers a more.
to the product portfolio to deliver to them more optimized
integrated solutions
more seamless experience and increase our capabilities in delivering.
this will also provide our customers a more seamless experience
delivering sustainable solutions, our customers value today.
and increase our capabilities in delivering sustainable solutions
our customers value today
For instance, Trench is the leader in dry type bushings.
in increasingly important technology across power transformers.
for instance trench is the leader in dry type bushings
switch gear, HVDC systems, substations and
an increasingly important technology across power transformers
switchgear
and stability solutions. Dry type transformers use a
hvdc systems substations and stability solutions
resin instead of oil, which reduces maintenance.
dry type transformers use a resin instead of oil
better for the environment, and dramatically reduces the risk of.
which reduces maintenance is better for the environment
of fire. Our combined global manufacturing footprint.
and dramatically reduces the risk of fire
footprint will be a key differentiator, enhancing delivery and
our combined global manufacturing footprint will be a
lead time management. With Trench, we will strengthen our ability to.
key differentiator enhancing delivery and lead time management
support the development of higher voltage electrical systems globally.
with trench we will strengthen our ability to support the development of
including the build out of 765 KV transmission and the
higher voltage electrical systems globally including the build out
the US. As we continue to serve Trench's existing customer.
of 765kv transmission in the u s
customers. We can also extend Trent's products to regions.
as we continue to serve trench's existing customers
regions with significant electrical infrastructure needs. For customers, that we
we can also extend trench's products to regions
we serve today. Finally, Trent's track record in.
with significant electrical infrastructure needs for customers that we serve today
quality and delivery aligns directly with our own in positions.
finally trenches track record in quality and delivery
positions us to better serve customers, rising demand for grid equipment.
aligns directly with our own and positions us
equipment. Turn to the next slide. I want to put in context.
to better serve customers' rising demand for grid equipment
context how this acquisition supports our existing electrification business.
turning to the next slide i wanna put in context
businesses. Today we have a 46 billion dollar backlog.
how this acquisition supports our existing electrification businesses
which again to remind everyone was 7 billion at the start.
today we have a forty six billion dollars backlog
of 22. Our two largest businesses, grid systems.
which again to remind everyone was seven billion dollars at the start of twenty twenty two
integration, and power transmission will be the largest direct bank.
our two largest businesses grid systems integration and power transmission
beneficiaries on day one of the acquisition. Although longer term,
will be the largest direct beneficiaries on day one of the acquisition
term, we also see a positive impact on our power conversion and storage business.
business. Especially with the new products we're developing like the M.
although longer term we also see a positive impact
on our power conversion and storage business especially with the new products we're developing
MVUPS stability block. GSI delivers H
developing like the mv ups stability block
HVDC projects and AC substations for utilities.
gsi delivers hvdc projects
utilities and data centers, among other high-voltage solutions.
and ac substations for utilities
solutions. Today, we source some of the components for these offerings externally.
and data centers among other high voltage solutions
externally, including from Trance, which supply the majority of A.
today we source some of the components for these offerings externally
including from trench which supply the majority
HVDC lines globally. Going forward.
forward, we will be able to offer better integrated solutions using technology.
of hvdc lines globally
going forward we will be able to offer better integrated
technologically advanced products that improve system durability.
solutions using technologically advanced products that improve
and are demanded by customers to grow our GSI business.
system durability and are demanded by customers
business at attractive margins. In power transmission, which produces.
to grow our gsi business at attractive margins
produces transformers, switch gear, and capacitors.
in power transmission which produces transformers switchgear
and capacitors
Trent will provide scale through its bushings and instrument transfer.
transformers. Bushings are a key component used in our power transformers.
trench will provide scale through its bushings and instrument
transformers, and Trench is differentiated technology. We'll help to the
bushings are a key component used in our power transformers
deliver high voltage transformers to customers. Lee tells.
and trenches differentiated technology will help
to deliver high voltage transformers to customers
times across the industry are increasingly important in this transaction.
lead times across the industry are increasingly important
transaction will enhance supply chain certainty for both businesses with an
electrification. By bringing Trench's manufacturing footprint.
and this transaction will enhance supply chain certainty
for both businesses within electrification
footprint and capabilities inside Vernova. We expect greater visitors.
by bringing trench's manufacturing footprint
visibility in the production planning and improved ability to align.
and capabilities inside vernova we expect greater visibility into
align this component supply with our customers' project schedules.
production planning and improved ability to align this component supply
schedules. Finally, Trench is adding significant competition.
with our customers' project schedules
capacity across its 11 factories globally to meet rise and demand.
finally trench is adding
demand. This includes Trench's newly opened factory in North Carolina.
significant capacity across its eleven factories globally to meet rising demand
which will be the first U.S. manufacturer of high voltage pushing.
this includes trench's newly opened factory in north carolina
busings up to 765 KV. Expanding Trenches leads.
which will be the first us manufacturer of high voltage bushings
leadership in extra high-voltage technology in giving
up to seven sixty five kv expanding trench's leadership
giving us an important capability within our U.S. footprint.
in extra high voltage technology and giving us
an important capability within our us footprint
footprint. With Trentsch, we will have additional scale and key geography.
geographies and more flexibility to serve customers. Complimenting our
with trench we will have additional scale in key geographies
our existing in-planned capacity across the lecture vacation.
and more flexibility to serve customers complementing our existing and planned
capacity
electrification. Take it a gather. Twenty enhances our electrification.
across electrification taken together
electrification segment's ability to deliver. As you will see in our three.
trench enhances our electrification segment's ability to deliver
cue results on the subsequent pages, our core business is continued.
as you will see in our 3q results on the subsequent pages
continue to gain momentum with accelerating growth and margin expense.
our core businesses continue to gain momentum with accelerating growth
expansion. The Prolet acquisition is outperforming our expectations.
and margin expansion
expectations, and Trench is the right next step in creating.
the prolec acquisition is outperforming our expectations
creating an industry leading electrification business at a traffic.
and trench is the right next step in creating an industry leading
economics, serving our customers with a team and tell.
business at attractive economics
technology we love. With that, I'll hand it over to Ken.
serving our customers with a team and technology
we love
Ken to walk through the financial details. Thanks, guys.
with that i'll hand it over to ken to walk through the financial details
On slide nine, let me highlight the financial profile of Trent's Group.
thanks scott on slide nine let me
group and our expectations for the next few years, but four synergies.
highlight the financial profile of trent's group and our expectations for the next
and integration costs. Trinch has strong fundamental.
few years before synergies and integration costs
fundamentals and approximately five billion dollars in combined backlog and framework agreement.
trench has strong fundamentals and approximately five billion dollars in combined
agreements as of September 2026, which has grown over the past.
backlog and framework agreements as of september twenty twenty six
past several years. Trench has approximately 80 existing.
which has grown over the past several years
existing framework agreements, some extending into the 2030s.
trench has approximately eighty existing framework agreements
representing volume commitments that account for approximately half.
some extending into the twenty thirties representing volume commitments
the five billion dollars. We expect Trent to generate.
that account for approximately half of the five billion dollars
generate mid-teens revenue growth annually from 2026 to 2028.
we expect trench to generate mid teens revenue growth annually from
2028. As Scott mentioned, this revenue growth is supported by plan.
twenty twenty six to twenty twenty eight
planned capacity expansions. The majority of the CapEx.
as scott mentioned this revenue growth is supported by planned
capacity expansions
for these expansions will be completed prior to our anticipated closing.
the majority of the capex for these expansions will be completed
close in late 2027, we also expect.
prior to our anticipated close in late twenty twenty seven
prints to deliver strong margins, including an adjusted EBITDA margin.
we also expect trench to deliver strong margins
margin of approximately 36% in 2028.
including an adjusted ebitda margin of approximately
thirty six percent in twenty twenty eight
Even before synergies, this is an immediately accretive transaction.
transaction. As Scott noted, we currently plan to fund the
even before synergies this is an immediately accretive transaction
$9 billion acquisition price using an equal mix of debt and cash.
as scott noted we currently plan to fund the nine billion dollar acquisition
cash on hand, and remain committed to maintaining an investment-grade balance.
price using an equal mix of debt and cash on hand
balance sheet. Even after issuing roughly $4.5 billion.
and remain committed to maintaining an investment grade balance sheet
dollars in debt resulting from the acquisition. We expect to remain.
even after issuing roughly four point five billion dollars in debt
below a one times debt to adjusted EBITDA ratio.
resulting from the acquisition we expect to remain below a one times
ratio. Turning to slide 10, I'll walk through the synergy opportunity.
debt to adjusted ebitda ratio
opportunities we see in this transaction, which are reinforced by the proven.
turning to slide ten i'll walk through the synergy opportunities we see in the
execution of value creation. We've demonstrated in the integration of.
transaction which are reinforced by the proven execution of value creation
Prolac. That is already well underway and performing ahead of expectations.
we've demonstrated in the integration of prolec that is already well
expectations. Starting with cost synergies.
underway and performing ahead of expectations
we plan to apply our combined advance manufacturing expertise.
starting with cost synergies we plan
including robotics and automation, across the expanded book.
to apply our combined advanced manufacturing expertise
footprint. We'll expand the lean to increase volume.
including robotics and automation across the expanded footprint
and capture efficiencies by redesigning and enhancing fluoride.
we'll expand lean to increase volume
layouts to improve yields and factory flow.
and capture efficiencies by redesigning and enhancing floor layouts
to improve yields and factory flow
We'll also bring together the sourcing operations of Trench and G.E. Bernova.
to drive efficiency in the aggregated material spend.
we'll also bring together the sourcing operations of trench and ge vernova
to drive efficiency in the aggregated material spend
And finally, we see potential to optimize the production cost of these.
these offerings through the use of best cost locations.
and finally we see potential to optimize the production cost
of these offerings through the use of best cost locations
On revenue, we see growth opportunities across G.
GE Vernova and trenches combined, and highly complementary customers.
on revenue we see growth opportunities across ge vernova
customer base. This is especially true for utilities and high process.
trenches combined and highly complementary customer base
hyperscalers in North America. In 2026, Trent's
this is especially true for utilities and hyperscalers in north america
saw significant growth in its hyperscaler business and our strong track record.
in twenty twenty six trent saw significant growth in its hyperscaler business
of partnering with these customers positions us well to continue serving.
and our strong track record of partnering with these customers
serving their evolving needs. We also plan to use our existing.
positions us well to continue serving their evolving needs
existing commercial capabilities in markets like India, Southeast Asia.
we also plan to use our existing commercial
and the Middle East to expand trenches reach and grow.
capabilities in markets like india southeast asia and the middle east
grow revenues. For example, India is one of Asia's largest.
to expand trenches reach and grow revenues
HPDC markets, and its electrical system increasingly rely.
for example india is one of asia's largest hvdc markets and its
relies on high and extra high voltage grid equipment.
electrical system increasingly relies on high
and extra high voltage grid equipment
We'll utilize Trench's offerings combined with our existing capabilities in.
India to serve this opportunity, especially as we evaluate.
we'll utilize trench's offerings combined with
our existing capabilities in india to serve this
expanding manufacturing of Trinch's products there.
opportunity especially as we evaluate expanding manufacturing of trenches
products there
In summary, we expect to realize approximately 50.
$50 to $100 million of annualized cost synergies by 2030.
in summary we expect to realize approximately fifty
and we see additional revenue synergy potential over time.
dollars to one hundred million dollars of annualized cost synergies by two thousand and thirty
and we see additional revenue synergy potential over time
As we move forward, we will stay focused on both the
disciplined integration and execution to deliver on the operating.
as we move forward we will stay focused
opportunities we've outlined today. With that, let me turn it back to Scott.
on both a disciplined integration and execution
to deliver on the opportunities we've outlined today
Scott. Things, Ken, put simply, Trench strength.
with that let me turn it back to scott
thanks ken
strengthens our offerings in high voltage group equipment, expands our scale.
put simply trench strengthens our offerings in high voltage grid equipment
in key product categories and improves our ability to serve customers.
expands our scale in key product categories
as global demand for electrification continues to grow.
and improves our ability to serve customers as global demand for electrification
approximately five billion and combined backlog and framework agreements,
continues to grow with approximately five billion dollars in combined back
Trench has strong visibility into its long-term growth, and are
backlog and framework agreements trench has strong visibility
earnings profile. This is an attractive acquisition that will be.
into its long term growth and earnings profile
immediately accretive after closing. Our electricity
this is an attractive acquisition that will be immediately accretive
electrification team continues to deliver solid results with 26 rep.
after closing our electrification team continues to deliver solid results
representing another year of increasing backlog, growing revenues.
with twenty six representing another year of increasing backlog
revenues and expanding margins. The Prolac integration is
growing revenues and expanding margins
performing ahead of expectations, and we are successfully driving both.
the prolec integration is performing ahead of expectations
both revenue and cost synergies. We expect Prolet.
and we are successfully driving both revenue
Prolax integration to be substantially complete before trends closes.
and cost synergies we expect prolec's integration to be
closes, and this experience reinforces our confidence in our.
substantially complete before trench closes
ability to integrate Trench with that same discipline.
and this experience reinforces our confidence
and our ability to integrate trench with that same discipline
focus. Finally, this acquisition is fully aligned with.
and focus
with our capital location priorities, which include investing for organic growth.
finally this acquisition is fully aligned with our capital allocation priorities
which include investing for organic growth
growth, returning capital to shareholders, and pursuing target.
targeted MA in our core businesses, where we can add scale.
returning capital to shareholders and pursuing targeted
scale, increase vertical integration, and accelerate RD.
m and a in our core businesses where we can add scale
increase vertical integration
RD. Trench fits that framework very well, and we were doing.
and accelerate r and d trench fits that framework very well
doing this all while we're turning significant capital to shareholders and may.
maintaining a strong balance sheet. Now, with that, let's
and we're doing this all while returning significant capital to shareholders
and maintaining a strong balance sheet
shift to our three cube results on page 13. Throw out 26.
now with that let's shift to our 3q results on page thirteen
demand for our solutions has continued to strengthen, and our teams.
throughout twenty six
teams are executing well to meet customers' growing energy needs.
demand for our solutions has continued to strengthen and our teams are executing well
So far, we have added 46 billion to our total back.
to meet customers' growing energy needs
so far
backlog to reach approximately 200 billion. With a margin profile.
have added forty six billion dollars to our total backlog
profile that continues to improve. In 26, we expect.
to reach approximately two hundred billion dollars with a margin profile that
continues to improve
the growth in equipment margin and backlog to be substantially larger than that of.
in twenty twenty six we expect the growth in equipment margin and back
of 25, which was approximately 8 billion. Add improved more.
backlog to be substantially larger than that of twenty twenty five
margin rates, positioning us well to drive further margin expense.
which was approximately eight billion dollars add improved margin rates
expansion and cash generation in the years to come.
positioning us well to drive further margin
expansion and cash generation
in the years to come
As we grow our large install base, we will generate additional.
additional services growth at high margins. This year alone.
as we grow our large installed base we will generate additional services
growth
at high margins
we've seen 17% growth in services orders with services.
this year alone we've seen seventeen percent growth in services orders
services backlog up to 7 billion. We are running the business back.
with services backlog up seven billion
better today with solid execution across our three segments.
we are running the business better today with solid execution
segments. In power, we continue to see strong, global.
across our three segments
global demand for our equipment and services. In gas power,
in power we continue to see strong
global demand for our equipment and services
we've signed 52 gigawatts of new agreements year to date, and now.
in gas power we've signed fifty two gigawatts of new agreements year to date
now expect at least 130 gigawatts under contract.
the end of 26, compared to 83 gigawatts.
and now expect at least one hundred and thirty gigawatts under contract
we started the year. In 27, we expect our combined.
by the end of twenty twenty six compared to eighty three gigawatts
when we started the year
gigawatts under contract and our gas power equipment backlog.
in 'twenty seven we expect our combined gigawatts under contract
backlog to continue to grow. In 3Q, we ship five.
and our gas power equipment backlog
to continue to grow
five gigawatts while signing 11 gigawatts of orders and slot reservation.
in 3q we shipped five gigawatts
reservation agreements to grow our total gigawatts on our contract from 160.
while signing eleven gigawatts of orders and slot reservation agreements
116 to 122 gigawatts, sequentially.
to grow our total gigawatts under contract from a hundred and sixteen
to one hundred and twenty two gigawatts sequentially
This includes orders for 55 heavy duty units.
this includes orders for fifty five heavy duty units
and 57 aerial derivatives, as expected.
and fifty seven aero derivatives
we've reached an important inflection point where backlog is now greater than.
as expected we've reached an important inflection point where backlog
our SRA balance, further reinforcing the certainty.
is now greater than our sra balance further reinforcing the certainty
we will ship more gigawatts through the rest of the decade.
that we will ship more gigawatts through the rest of the decade
This quarter, we sold multiple slots for 32 to
delivery. As the demand environment remains strong, and customers
this quarter we sold multiple slots for thirty two delivery
secure turbines further into the future. Demand also.
as the demand environment remains strong and customers secure turbines
further into the future
remains diverse, with approximately 100 customers in 25.
demand also remains diverse
25 different countries, of which approximately 80%.
approximately a hundred customers in twenty five different countries
are traditional customers, and 20% are for data.
of which approximately eighty percent are traditional customers
and twenty percent
data centers. We are seeing strong equipment pricing and
total life cycle economics and gas. On the equipment side,
are for data centers we are seeing strong equipment
and total life cycle economics in gas
side, three Q orders were priced more than 20% above for.
on the equipment side 3q orders were priced more than
Q25 equipment orders based on higher price turbines.
twenty percent above 4q twenty five equipment orders
and a greater mechanical derivatives. Given our view of
based on higher priced turbines and a greater mix of aero derivatives
SRA conversions, we expect gas equipment orders to have a price.
given our view of sra conversions we
price per KW and 4Q that is lower than 3Q.
expect gas equipment orders to have a price per kw in 4q
to fewer air derivatives and relatively more 50 hertz on it.
that is lower than 3q due to fewer error derivatives
units. Full year 26, gas orders pricing per KW.
and relatively more fifty hertz units
KW will be approximately 50% higher than full.
full year twenty six gas orders pricing per kw
will be approximately fifty percent higher
full year 25 orders. Our large and growing.
than full year twenty five orders
install base will generate services growth at higher margins for you.
our large and growing installed base will generate services growth
years to come. Increasing in the 30s, as these units are in.
at higher margins for years to come increasing in the thirties
installed. Our HA fleet running or on contract.
as these units are installed
will be at least 400 units by the end of 27. And
our fleet running or on contract
as I mentioned at a recent conference, we expect every gigawatt.
will be at least four hundred units by the end of twenty seven
gigawatt of HAs to generate half a billion dollars of high market.
and as i mentioned at a recent conference we expect
every gigawatt of has to generate
margin services revenue over the first twenty years of its lifetime.
zero five billion dollars of high margin services revenue
lifetime. It's not just gas where we're seeing services grow.
over the first twenty years of its lifetime
it's not just gas where we're seeing services growth
More customers are coming to our nuclear business for up rates and life extension.
extensions, as our equipment touches 65 gigawatts.
more customers are coming to our nuclear business for up rates and life extensions
gigawatts of the U.S. nuclear fleet. In electrification,
as our equipment touches sixty five gigawatts
of the us
nuclear fleet
electrification, backup growth is being driven by both traditional customers.
in electrification
customers and data centers. With equipment backlog rising,
backlog growth is being driven by both traditional customers
by 12 billion in 26, so far. Total segmentation.
and data centers with equipment backlog rising
by twelve billion dollars in twenty twenty six so far
data center orders are now more than six billion years.
including roughly 1.4 billion in 3Q.
total segment data center orders are now more than six billion dollars year to date
including roughly one point four billion dollars in 3q
mentioned earlier, Prolec is performing well in one.
encouraged by the continued strong momentum we are seeing in this business.
as mentioned earlier prolec is performing well
business's integration and the capabilities it brings to better serve ourselves.
and we're encouraged by the continued strong momentum
we are seeing in this business' integration and the capabilities
our customers, especially in North America.
it brings to better serve our customers
especially in north america
26, so far, we have booked 900 million dollars.
in twenty six so far
dollars in orders for transformers in the U.S. that will be fulfilled.
we have booked nine hundred million dollars in orders
fulfilled by our global factories. Something we could not do when we
for transformers in the us that will be fulfilled by our global factories
did not fully own proloc. In wind, the team is.
something we could not do when we did not fully own prolec
remained focused on execution this year to reach profitability in 3Q.
in wind the team has remained focused on execution this year to reach
but a softer US market for new onshore equipment.
profitability in 3q despite a softer u s market
This year, we have continuously driven onshore services market.
for new onshore equipment this year we have continuously driven
margin expansion versus a year ago. Well, the US market for new.
services margin expansion versus a year ago
on-shore equipment remains soft, we are monitoring the outcome of two, three, two.
while the us market for new onshore equipment remains soft
tariffs that impact wind development, which should lead to more orders.
we are monitoring the outcome of two thirty two tariffs that impact wind development
clarity. And offshore, we're making good progress on dog.
which should lead to more orders clarity
Dogger Bank, and are pleased that we closed out the open dispute.
in offshore we're making good progress on dogger bank and are pleased
with Vineyard Wind and 3Q with a very modest negative.
that we closed out the open dispute with vineyard wind in three q
with a very modest
PL impact. We are focused on investing to deliver.
negative p and l impact
deliver innovative solutions for profitable growth. We have spent two points
we are focused on investing to deliver innovative solutions for profitable
2.4 billion in RD and CapEx so far in 26.
growth we have spent two point four billion dollars in r and d and capex
reinvesting nearly as much back in the business as an
so far in twenty twenty six reinvesting nearly as much back in the business
all of 25. Let me give a few examples where investments.
as in all of twenty five
are leading to new business and commercial opportunities.
let me give you a few examples of where our investments are leading to new business
Nuclear, we continue advancing the SMR for industrialization at scale.
and commercial opportunities in nuclear we continue advancing the smr
scale, as evidenced by our continued progress on the existing.
for industrialization at scale as evidenced by our continued progress
project underway in Ontario. The recent approval, but
on the existing project underway in ontario
the NRC for the construction permit at Clinch River is a significant
the recent approval by the nrc
milestone for TBA, TE Bernowa Hatachi.
for the construction permit at clinch river is a significant milestone for tva
ge vernova hitachi
and the U.S. nuclear industry. As the country advances towards a new
new generation of nuclear power deployment with SMRs.
and the u s nuclear industry as the country advanced
towards a new generation of nuclear power deployment with smrs
We also want a 1.2 gigawatt tech select for SMR and
in Sweden and three queue, building momentum in Europe.
we also won a one point two gigawatt tech select
for our smr in sweden in 3q
building momentum in europe
in electrification. This includes commercializing multiple.
in electrification
new solutions like the energy management system and the UPS.
this includes commercializing multiple new solutions like energy management system
and solid state transformers. We recently signed our
mvups
and solid state transformers
our first MVUPS order with a hyperscaler, as well as several.
we recently signed our first mv ups order with a hyperscaler
EMS orders this year. We are also making good progress.
as well as several ems orders this year
progress developing SSTs with hyperscalers, and we already have our.
we are also making good progress developing ssts with hyperscalars
first prototype and testing now in our facility in Malta, New York.
and we already have our first prototype in testing now
York. Additionally, we have already received notification of a hyper.
our facility in malta new york
hyperscaler award for a six-megawatt outdoor SST.
additionally we have already received notification of a hyperscaler award for our
advance contracting in 4-2. We are off.
six megawatt outdoor sst and will advance contracting
in 4q
operating from a position of financial strength and are well positioned.
we are operating from a position of financial strength
positioned to serve and transform the global electricity system.
and are well positioned to serve and transform
electricity system. We're actively improving how we operate and generate.
the global electricity system we're actively improving how we operate
better returns while expanding the platform of solutions we provide.
provide customers as their need for infrastructure accelerates.
and generating better returns while expanding the
platform of solutions we provide customers as their need for infrastructure
accelerates. Given the strength of third quarter performance and confidence.
confidence in our fourth quarter trajectory. We are raising our revenue.
accelerates given the strength of third quarter performance and confidence
revenue, margin, and free cash flow guidance for 26.
in our fourth quarter trajectory we are raising our revenue
With that, I will turn the call over to Ken for more details on our three kids.
margin and free cash flow guidance for twenty six
cube performance, as well as our financial outlook.
with that i will turn the call over to ken for more details on our 3q performance
as well as our financial outlook
Thanks, guys. Turning to slide 14, we delivered strong.
strong results in the third quarter with robust orders, going backlog.
thanks scott turning to slide fourteen we delivered
backlog in revenues, margin expansion, and significant free cash.
strong results in the third quarter with robust orders
growing backlog and revenues margin expansion
flow generation. In the quarter, we booked orders of 29%.
and significant free cash flow generation
29.3 billion dollars, a 96% increase year over year.
in the quarter we booked orders of twenty nine point three billion dollars
and a book to bill ratio of more than two times. With growth and
a ninety six percent increase year over year and a book to bill ratio of more than
in both equipment and services. As Scott mentioned, our
two times with growth in both equipment and services
backlog expanded to 197 billion dollars. A significant
as scott mentioned our backlog expanded to one hundred and ninety seven billion dollars
significant year over year and sequential increase. Equipment.
a significant year over year and sequential increase
backlog increased to $104 billion, up approximately.
equipment backlog increased to one hundred and four billion dollars
approximately 16 billion dollars sequentially and 92 percent.
up approximately sixteen billion dollars sequentially
year over year driven by both power and electrification.
and ninety two percent year over year driven by both power
and incorporates Prolex backlog. The quitman.
and electrification and incorporates prolec's backlog
backlog margin continues to expand, reflecting favorable.
equipment backlog margin continues to expand
price and our continued focus on disciplined underwriting.
reflecting favorable price and our continued focus on disciplined underwriting
services backlog grew approximately 11 billion dollars, or four.
14% year over year, to 93 billion dollars led by.
our services backlog grew approximately eleven billion dollars
by power. As Scott touched on, the growth in our installed base will.
or fourteen percent year over year to ninety three billion dollars
led by power
will continue to generate strong services growth at high margin.
as scott touched on the growth in our installed base will continue to generate
margins. Revenue increased 18%.
strong services growth at high margins
revenue increased eighteen percent
Equipment revenue rose 26% year over year as 60 by
65% growth at power, and 21% growth at electrification.
equipment revenue rose twenty six percent year over year a sixty five percent growth
electrification was partially offset by anticipated lower wind driven.
at power and twenty one percent growth at electrification
revenues. Services revenue increased 6% year over year.
was partially offset by anticipated lower wind revenues
over year with growth in onshore wind and power. Price
services revenue increased six percent year over year
with growth in onshore wind and power
remained positive. Adjusted EBITDA grew.
price remained positive
grew 123% year over year to 1.9 billion dollars.
adjusted ebitda grew a hundred and twenty three
led by power and electrification. Adjusted Ebida margin.
percent year over year to one point nine billion dollars led by power and electrification
expanded 690 basis points with higher price.
adjusted ebitda margin expanded six ninety basis points with
more profitable volume, and further productivity more than offset.
higher price more profitable volume
off-setting inflation. We completed our exit from Trans.
further productivity more than offsetting inflation
transition services agreements with GE Aerospace in the quarter.
we completed our exit from transition
an important milestone as we successfully concluded a multi-year.
services agreements with ge aerospace in the quarter and in
multi-year effort to build the standalone capabilities required to operate.
important milestone as we successfully concluded
in the Pendale. This work not only completes an important.
a multiyear effort to build the standalone capabilities
required to operate independently
part of the separation, but will also drive approximately 130.
this work not only completes an important part of the separation
135 million dollars of GNA savings, of which approximately.
but will also drive approximately a hundred and thirty five million dollars
approximately a hundred million dollars, has been realized to date.
of g and a savings of which approximately a hundred million dollars
has been realized to date
date. This strong adjusted EBITDA and working capital man.
management, drove 5.4 billion dollars of free cash flow.
this strong adjusted ebitda and working capital management drove
in the third quarter. Working capital was a five.
five point four billion dollars of free cash flow in the third quarter
5.3 billion dollar cash benefit, driven primarily by down payments on.
working capital was a five point three billion dollars cash benefit
on increased orders and slot reservations at Power, as well as down payments.
driven primarily by down payments on increased orders and slot reservations at power
payments at electrification. Year over year, free cash flow.
as well as down payments at electrification
flow increased 4.7 billion dollars, driven by higher positive benefits.
year over year free cash flow increased four point seven billion dollars
benefits from working capital and stronger adjusted EBITDA.
driven by higher positive benefits from working capital
offset by higher taxes and CapEx investments supporting capacity.
and stronger adjusted ebitda partially offset by higher taxes and cap
capacity expansion. We also made a voluntary payment.
capex investments supporting capacity expansion
payment of approximately $350 million to fund retirement.
we also made a voluntary payment
benefits and transfer the obligation to a third party insurer.
of approximately three hundred and fifty million dollars to fund retiree benefits
insurer. The transaction generated an 84 million dollar gain.
and transfer the obligation to a third party insurer
gain, which is removed from our adjusted EBITDA results.
the transaction generated an eighty four million dollar gain
which is removed from our adjusted ebitda results
With our strong cash position, we'll continue to seek opportunities.
opportunities to utilize cash proactively when those opportunities.
with our strong cash position we'll continue to seek opportunities to utilize
opportunities generate solid economic returns.
cash proactively when those opportunities generate
solid economic returns
ended 3Q with a cash balance of approximately 17 billion dollars.
we ended 3q with a cash balance of approximately
a $4 billion increase from the end of the second quarter.
seventeen billion dollars a four billion dollars increase from the end of the second quarter
returning $1.8 billion of cash to shareholders through.
share repurchases and dividends in the quarter.
after returning one point eight billion dollars of cash to shareholders
through share repurchases and dividends in the quarter
Under our repurchase program, we've repurchased 15.6 million.
under our repurchase program we've repurchased
million shares at an average price of $635 per share.
fifteen point six million shares at an average price of six hundred and thirty five dollars per
totaling approximately 9.9 billion dollars throughout.
October 23rd. Importantly, with the ten billion dollars.
share totaling approximately nine point nine billion dollars
through october twenty third
billion increase in our share repurchase authorization, we'll continue to be.
importantly with the ten billion dollars increase in our share repurchase authorization
disciplined in returning capital to shareholders and remain committed.
we'll continue to be disciplined in returning capital to shareholders
committed to maintaining a strong investment-grade balance sheet.
and remain committed to maintaining a strong investment grade balance sheet
We're encouraged by our strong financial performance in the third quarter.
Our growing backlog with increasing margin continues to.
we're encouraged by our strong financial performance in the third quarter
provide an excellent foundation for further improvement in our financial.
our growing backlog with increasing margin continues to provide an
performance moving forward. Now, Tony.
excellent foundation for further improvement in our financial performance
moving forward
to power on slide 15, the segment delivered another strong question.
now turning to power on slide fifteen
quarter with robust demand, strong revenue growth, and solid.
the segment delivered another strong quarter with robust demand
EBITDA margin expansion. Power orders more.
strong revenue growth and solid ebitda margin expansion
more than doubled as gas power equipment increased by approximately.
power orders more than doubled as gas power
approximately four times year over year on higher volume and
equipment increased by approximately four times year over year
pricing from both HA and Aero-derivative units.
on higher volume and pricing from both
Power services orders increased 12%, driven by.
and aero derivative units
by gas power and nuclear power.
power services orders increased twelve percent driven by gas power
and nuclear power
Revenue increased 25%. Equipment revenue increased.
increased primarily from gas power, driven by higher turbine volume, and things.
revenue increased twenty five percent
equipment revenue increased primarily from gas power
favorable price. We shipped a total of 32 gas turbines.
driven by higher turbine volume and favorable price
turbines in the quarter, a 60% increase year over year, including.
we shipped a total of thirty two gas turbines in the quarter a sixty percent increase
including 13 arrow derivatives. Services revenue.
year over year including thirteen aero derivatives
revenue also increased due to growth at gas power and nuclear power.
services revenue also increased due to growth at gas
power and nuclear power
power. EBITDA margins expanded 830 bases.
basis points to 21.4%, mainly driven by favorable.
ebitda margins expanded eight thirty basis points
favorable price and higher volume, more than offsetting inflation, as well as a district.
twenty one point four percent mainly driven by favorable price and higher volume
additional expenses to support capacity investments at gas.
more than offsetting inflation as well as additional expenses
as well as RD. For the full year, we're raising.
to support capacity investments at gas as well as r and d
our organic revenue growth expectations from 18 to 20 percent.
for the full year we're raising our organic revenue growth
to 19 to 21%, due to higher volume.
expectations from eighteen percent to twenty percent to nineteen percent to twenty one percent
including aero derivatives. Given the improved volume.
due to higher volume including aero derivatives
volume, we're also raising our power EBITDA margin range by two.
given the improved volume we're also raising our power
two points. From 17% to 19%.
ebitda margin range by two points from seventeen
to night team to 21 percent.
percent to nineteen percent to nineteen percent twenty one percent
Turning to electrification on slide 16, we had another quarter of.
turning to electrification on slide sixteen
of significant backlog and revenue growth, as well as even dumb margins.
we had another quarter of significant backlog and revenue growth
expansion. Orders remain strong, reaching five.
as well as ebitda margin expansion
5.4 billion dollars at roughly 1.4 times their revenue.
orders remained strong reaching five point four billion dollars at
While we saw significant growth in substations and switch gear,
roughly one point four times revenue
Total orders decreased 9% year over year due to a
while we saw significant growth in substations and switchgear
a significant order for $1.6 billion of synchronous condensers.
total orders decreased nine percent year over year
condensers in Saudi Arabia in the third quarter of 2025.
due to a significant order for one point six billion dollars of synchronous condensers
in saudi arabia in the third quarter of twenty twenty five
Equipment orders growth was particularly strong in.
North America, doubling year over year. North America.
equipment orders growth was particularly strong in north america
doubling year over year
America, which includes Prolex backlog, continues to be the largest point.
north america which includes prolec backlog
portion of our electrification equipment backlog, while all regions.
continues to be the largest portion of our electrification equipment backlog
including Europe, are still growing.
while all regions including europe are still growing
Importantly, electrification equipment orders continued outfacing revenue.
importantly electrification equipment orders continued out
revenue and further increased our equipment backlog to 42.
billion dollars up 60%, or roughly 16 billion dollars.
outpacing revenue and further increased our equipment backlog
dollars compared to the third quarter of 2025.
to forty two billion dollars up sixty percent
or roughly sixteen billion dollars compared to the third quarter
twenty twenty five
Revenue increased 51% on a reported basis.
inclusive of a prolac, and 16% organically.
revenue increased fifty one percent on a reported basis
with growth across all regions. We saw an
inclusive of prolec and sixteen percent organically
with growth across all regions
increased volume at grid systems integration, primarily from substance.
we saw increased volume at grid systems integration
substations and HVDC equipment, and at power transmission, primarily.
primarily from substations and hvdc equipment
primarily from switchgear and transformers. Prolect also.
and at power transmission primarily from switchgear and transformers
also delivered solid performance with almost 950 million dollars of rep.
prolec also delivered solid performance
revenue. Electrification segment EBITDA.
with almost nine hundred and fifty million dollars of revenue
EBITDA with 739 million dollars, increasing by 57.
electrification segment ebitda was seven thirty nine million dollars
year over year, with margin expansion of 400 and 70%.
increasing by fifty seven percent year over year
70 basis points to 19.1%, led by Street.
with margin expansion of four seventy basis points
strong volume, productivity, and favorable pricing.
to nineteen point one percent led by strong volume
productivity and favorable pricing
For the full year, we continue to expect revenue at electrification.
electrification to be between 14 and a half to 15 billion dollars.
for the full year we continue to expect revenue at electrification
In addition, we now expect electrification even more.
to be between fourteen point five billion to fifteen billion dollars
margin to trend towards the higher end of the 18 to 20.
in addition we now expect electrification ebitda margin
percent range, as the team continues to deliver solid.
to trend towards the higher end of the eighteen to twenty percent range
solid execution. Turning to slide 17.
as the team continues to deliver solid execution
17 on wind, we delivered a profitable quarter as we make good progress.
turning to slide seventeen on wind
progress executing our strategy. In the third quarter,
we delivered a profitable quarter as we make good progress executing our strategy
the team continued to deliver improving performance and onshore wind services.
in the third quarter the team continued to deliver improving
services, while making good progress on Dogger Bank B installations.
performance in onshore wind services while making good progress
and commissioning. When the orders increase six to
on dogger bank b installations and commissioning
16% with growth in onshore equipment and services.
wind orders increased sixteen percent
especially for repowering in North America. It remained.
with growth in onshore equipment and services
especially for repowering in north america
remains difficult to call an inflection point in U.S. orders as customers.
it remains difficult to call an inflection point in us orders
still face permitting delays and tear up uncertainty.
as customers still face permitting delays and tariff uncertainty
Wind revenue increased 3% in the quarter due to higher.
higher on-shore services and off-shore equipment, driven by higher deliveries.
wind revenue increased three percent in the quarter due to higher onshore
and installations at Dogger Bank B, partially offset by.
services and offshore equipment driven by higher deliveries
lower on-shore equipment deliveries. When
and installations at dogger bank b partially offset
by lower onshore equipment deliveries
Wynn delivered EBITDA of $72 million. The year over
wind delivered ebitda of seventy two million dollars
year-over-year improvement in Evatah was primarily due to lower offshore project costs.
the year over year improvement in ebitda was primarily due to lower off
costs and improve the onshore wind performance. Including recover.
recovery of previously paid tariffs and better services.
offshore project costs and improved onshore wind performance
including recoveries of previously paid tariffs and better services
partially offset by lower on-shore equipment volume.
partially offset by lower onshore equipment volume
For the full year, we now anticipate organic revenue to be down mid.
for the full year we now anticipate organic revenue
mid-single digits. Better than our previous expectation of down low double.
to be down mid single digits
double digits due to additional onshore wind turbine deliveries in the
better than our previous expectation of down low double digits
second half of the year. We now expect even losses.
due to additional onshore wind turbine deliveries in the second half of the year
losses to be between four hundred and five hundred million dollars for the year.
we now expect ebitda losses
Significant performance improvement in on-shore services.
to be between four hundred million and five hundred million dollars for the year
has enabled us to accelerate scheduled maintenance from 2027.
significant performance improvement in onshore services
into the fourth quarter. These incremental service costs.
has enabled us to accelerate scheduled maintenance from twenty twenty seven
into the fourth quarter
costs, along with the vineyard wind settlement, more than offset the impact.
these incremental service costs along with the vineyard wind settlement
of additional on-shore volume.
more than offset the impact of additional onshore volume
Moving now to slide 18 to discuss 2026 GE Bernova guy.
moving now to slide eighteen to discuss
guidance. Based on our strong year-to-day results and full year.
twenty twenty six ge brnova guidance
year segment expectations. We're raising our GE Bernova financial.
based on our strong year to date results and full year segment expectations
financial guidance. We now expect revenue to be in the range of 40.
we're raising our ge vernova financial guidance
46 and a half to 47 and a half billion dollars. And it just
we now expect revenue to be in the range of forty
EBITDA margin to be in the range of 13 and a half to 14 and a half.
six point five billion to forty seven point five billion dollars and adjusted ebitda margin
half percent. In addition, we also anticipate our
to be in the range of thirteen point five percent to fourteen point five percent
our free cash flow to be in the range of $16 to $17 billion.
in addition we also anticipate our free cash flow to be in the range of
billion dollars. We're generating significant margin expansion in cash.
sixteen billion dollars to seventeen billion dollars
cash flow this year while still investing in the business.
we're generating significant margin expansion and cash flow this year
while still investing in the business
Our 2026 guidance includes a more than 30% year.
year-over-year combined increase in RD and CapEx.
our twenty twenty six guidance includes a more than thirty percent
we accelerate our work to support innovation and growth.
year over year combined increase in r and d and capex
as we accelerate our work to support innovation and growth
At Corporate, costs are typically uneven across quarters.
quarter due to compensation timing and portfolio activity at our financial.
at corporate costs are typically uneven across
financial services business. We continue to expect full year 2020.
quarters due to compensation timing and portfolio activity at our financial services
2026 corporate costs to be between 450 and 500 million.
business we continue to expect full year twenty twenty six corporate costs
million dollars as we continue investing in AI, robotics.
to be between four fifty million dollars and five hundred million dollars
and automation to drive productivity over the medium and
as we continue investing in ai robotics and automation
and long term. For the fourth quarter, we expect growth and
to drive productivity over the medium and long term
revenue and adjusted EBITDA, adjusted EBITDA margin expansion.
for the fourth quarter we expect growth in revenue and adjusted ebitda
expansion and positive free cash flow.
adjusted ebitda margin expansion and positive free cash flow
have delivered strong results year to date. The combination
we have delivered strong results year to date
of rising demand with consistently stronger execution.
the combination of rising demand with consistently stronger execution
investments into our business, the completion of.
investments into our business
the acquisition of Prolac and the announced acquisition of Trent.
the completion of the acquisition of prolec
Trench sets us up nicely going forward. With that,
and the announced acquisition of trench sets us up nicely going forward
I'll turn it back to Scott. Thanks, Ken. We deliver an
with that i'll turn it back to scott
another strong quarter, and I'm proud of how our teams continue to exercise.
thanks ken we delivered another strong quarter and i'm proud
execute as demand for electricity infrastructure accelerates.
of how our teams continue to execute as demand for electricity infrastructure
around the world. With a growing backlog, it is improving margins.
accelerates around the world
margins, our potential continues to grow. And we are deploying.
with a growing backlog and improving margins
deploying capital both organically and through MA with Pearl Anton Trent.
our potential continues to grow and we are deploying capital
Tretch to generate strong returns, all while returning.
both organically and through m and a with prolec and trench
to generate strong returns
returning significant capital to our shareholders. We remained.
all while returning significant capital
remain focused on meeting the moment. Serving our customers is well.
to our shareholders we remain focused on meeting the moment
as the communities we're in, improving how we operate through Lean.
serving our customers as well as the communities we're in
improving how we operate through lean
AI, robotics, and automation. And delivering
ai
delivering continued profitable growth. We are still in the early
robotics and automation and delivering continued
early stages of this electricity investment super cycle.
profitable growth we are still in the early stages
are working with humility, confidence, and conviction.
of this electricity investment super cycle and we are working with humility
conviction to deliver for all stakeholders. Finally, I'm
confidence and conviction
to deliver for all stakeholders
also excited to welcome Claire Nakan as our next CFO in wind leader.
finally i'm also excited to welcome claire and akan as our next
respectively. Both start next week and will be in transition with.
cfo and win leader respectively both start next week
Canon Vec through the remainder of this year before taking their rolls.
and will be in transition with ken and vic through the remainder of this year
in January 27, both can and Vec will be with us.
before taking their roles in january twenty seven
us for a period of time in twenty seven, in which we'll have multiple opportunities.
both ken and vic will be with us for a period of time in twenty seven
opportunities to celebrate and recognize their contributions to the founding.
in which we'll have multiple opportunities to celebrate
foundations of GEV. With that, Michael,
and recognize their contributions to the foundations of gev
let's open it up for questions. Before we open the line, I
with that michael let's open it up for questions
before we open the line
I'd ask everyone in the queue to consider your fellow analysts and that's just one question.
question so we can get to as many people as possible. Please return.
i'd ask everyone in the queue to consider your fellow analysts and ask just one question
we can get to as many people as possible
to the queue if you have follow-ups. Upgrader, please open the line.
please return to the queue if you have follow ups
Ladies and gentlemen, if you wish to ask a question, please press start.
operator please open the line
star 11 on your telephone. If you wish to withdraw your question,
question or your question has already been answered, please press star one.
1-1.
please press star one one
Our first question comes from Joe Riti with Goldman Sachs.
our first question comes from joe ritchie
Sachs. Please proceed. Morning, Joe. Morning Joe.
with goldman sachs please proceed
Hey, guys, the morning look, congrats on a nice quarter, and then obviously the
morning joe morning joe hey guys
trend check was this. I'm sure many people asked about that. But I really want to focus my questions.
hey guys good morning look congrats on a nice quarter and then
my question on power margins. So the margins this quarter.
obviously the trench acquisition i'm sure many people asked about that but i really want to focus my question
quarter were acceptable, especially given the fact that, you know, from a seasonality standpoint.
on power margins so the margins this quarter were
especially given the fact that from a seasonality
standpoint, three cues always a little bit lower from the service revenue perspective. I think you were down.
down three hundred million dollars Q on Q. I guess the question is.
standpoint 3q is always a little bit lower from a service
revenue perspective i think you were down three hundred million q on q
from a pricing standpoint, are you still largely shipping orders?
i guess the question is from a pricing standpoint are you
orders from the second half of 2024. And then, as I look
still largely shipping orders
look at the high end of your 4Q power margin guide, it implies about mid.
the second half of twenty twenty four and then as i
mid-20s margins exiting the year. Is it fair to use the
as i look at the high end of your 4q power margin guide it implies about mid
this like second half of the year, power margins, as the jump off point for?
20s margins exiting the year is it fair to use this like
margins in 2027. Yeah, Joe, I mean, I'll.
second half of the year power margins as the jump off point for
for margins in twenty twenty seven
I'll start can all compliment. Certainly, the second half of the
yes joe i mean i'll start ken will complement
this year is the beginning of us starting to ship our better price to quit.
certainly the second half of this year is the beginning of us starting to
quipment shipment. So, and yes, it started with orders.
ship our better priced equipment shipments so and yes
orders in the second half of 24, but there are orders that we're showing.
it started with orders in the second half of twenty four but there are
shorter cycle than that, that are contributing to the three Q4Q shipment.
orders that were shorter cycle than that that are contributing to the 3q
profile that's helping, but there's no reason to think that the second half.
half of this year isn't the right way to start to think about our projection and
q shipment profile that's helping but there's no reason to think
into 27. We've been pretty open for a while that.
that the second half of this year isn't the right way to start to think about
our projection into into twenty seven we've been pretty open for a while that
we needed to get to this five gigawatt core.
we needed to get to this five gigawatt
quarterly run rate, and that this is going to be the first quarter with better margins.
shipments, and that's what you're seeing in the margins in the third quarter, even with
quarterly run rate and that this was gonna be the first quarter with better margin shipments
with it being the lightest services quarter that we'll have.
and that's what you're seeing in the margins in the third quarter even with
have in the year. Yeah, and Joe, I think Scott obviously.
it being the the lightest services quarter that we'll have in the year
yeah and joe i think
covered it well. I think the thing I would say is one of the things we're excited about is just.
scott obviously covered it well i think the thing i would say is
is just how the factory has ramped as we brought on this new capacity.
one of the things we're excited about is just how the factory has ramped
capacity, so running at the five gigawatts a quarter, we were.
as we brought on this new capacity so running at the five gigawatts
not overly cautious about our ability to do that, but that always is a big move.
a quarter we were
move for the factory. So getting that productivity and the ability to kind of
not overly cautious about our ability to do that but that always is a big move for the factory
so getting that productivity and the ability to kinda deliver that to the bottom line
of deliver that to the bottom line is also a positive contribution.
we move out of 26 into 27.
is also a positive contribution as we move out of twenty six into twenty seven
The next question comes from Nigel.
Co with both morning nigel and nigel.
the next question comes from nigel coe with wolfe
morning, guys. Thanks, thanks for the question. So, since Joe popped over.
good morning nigel hey nigel good morning guys thanks for the question
over the Trench acquisition, I think I'll dive into that. Can you say maybe talk about?
so since joe passed over the trench acquisition think i'll dive into that
about how much of trench is supplying GEV versus?
versus external customers. And you
can you just maybe talk about how much of trench is
supplying ge versus external
touched on the US international sort of obtaining, but
customers and you touched on the u s international
maybe talk about, you know, is there opportunity to do more even more supply chain dealers?
sort of opportunity but maybe talk about
deals, recognizing that 9g and dollars is a big deployment. Yeah, it's.
about is there opportunities to do even more supply chain deals recognizing that nine billion dollars is a big
deployment
you bet, Nigel. I'll start. I mean, today of their 1.4.
yeah you bet nigel i'll start i mean today of their
1.4 billion dollars of revenue, we're a very small part of the 1.4 billion.
1.4 billion dollars of revenue that you'll see on the page. Although we are buying from
one point four billion dollars of revenue we're a very small part
of the one point four billion dollars of revenue that you'll see on the page although we are buying
from them across those product lines that we showed on the page.
What I would just share to provide context is, you know, bushings.
from them across those product lines that we showed on the page
what i what i would just share to provide context is
bushings, generally speaking, are five to eight percent of the bill of materials of every transcript.
transformer. The Barmer HVDC order.
you know bushings generally speaking are five to eight
of the bill of materials of every transformer
order that'll come in the fourth quarter. What Trench provides a
the bwrm or hvdc order that'll come in the fourth quarter
across both mushings, instant transformers, and oils.
what trench provides across both
about 10% of the bill on the territory of that $1.5 billion.
bushings instrument transformers and coils it's
HVDC order. We talked about the MVUPS order that we had.
ten percent of the bill of materials of that one point five billion dollars hvdc
order
in the third quarter, which is an MPI. The coils that trench from.
we talked about the mvups order that we had in the third quarter which is an npi
provides, about five percent of the bill of materials of an MDUPS on a go forward.
the coils that trench provides about five percent of the bill of materials of an mvups
basis. So, my point is just this gives us a lot.
on a go forward basis so my point is just
a lot more control over the critical technology in the supply chain.
this gives us a lot more control over the
chain to meet the growing backlog that we see.
critical technology in the supply chain to meet the growing backlog
with differentiated technology. I mean, I talked about it earlier in the
that we see with differentiated technology i mean
prepared remarks, but the fact that many customers select their
i talked about it earlier in the prepared remarks but the fact that many customers
bushings specifically for a transformer, as we were going through diligent.
select their bushings specifically for a
diligence on this project, we see a lot of opportunities where there's
transformer as we are going through diligence on this
strong customer loyalty to Trench for the bushing.
project we see a lot of opportunities where there's strong
loyalty to trench for the bushings
think is going to pull forward more of our transformer values.
that we think is gonna pull form forward more of our
volumes. So, you know, we aren't in a position now as we did with.
our transformer volumes so you know we aren't in a position
Pearl, like that on day one, we wanted to quantify revenue synergies as an
now as we did with prolec that on day one we wanted
an example, but we also see opportunities there because of the customer.
to quantify revenue synergies as an example but we also see
customer connectedness that Trench has with many customers, including.
opportunities there because of the customer
including hyper scalers, relative to where we have it.
connectedness that trench has with many customers including hyperscalers
relative to where we have it
foundationally, it's a very attractive vertical in the Gration.
of critical components that we need to meet this growing back law.
but foundationally it's a a very attractive vertical integration of
backlog. And you know, I know we talk about this a lot, but beginning of 22.
critical components that we need to meet this growing backlog and
you know i know we talk about this a lot but
22, this is a seven billion dollar electrification backlog. The fact it's
beginning of twenty two this is a seven billion dollar electrification backlog the fact that's
40 billion dollars higher as we go into the 40.
forty billion dollars higher
fourth quarter, controlling this part.
as we go into the fourth quarter
of the supply chain will help us meet this moment. Now, on the other part,
controlling this this this part of the supply chain will help us meet
moment
of your question, on are there more, we'll keep looking, right?
now on the other part of your question on are there more
We're always going to be looking for opportunities to end.
we'll keep looking right we're always gonna be looking for opportunities to
invest in businesses that are within our core, that gave our.
our teams more control to meet this moment. But as I said, in the
invest in businesses that are within our core that give our
teams more control to meet this moment
prepared remarks, our two priorities with MA were really getting.
as i said in the prepared remarks our two
print done for the technology, and all the reasons I mentioned.
priorities with m and a were really getting trench done for
the technology and all the reasons i mentioned
in prolock for the North America footprint. And we'll move.
move forward from here.
and prolec for the north america footprint and
we'll move forward from here
The next question comes from Julian Mitchell.
the next question comes from julian mitchell
with jpmorgan
with JP Morgan. Morning, Julian.
good morning julian
I good morning. Um maybe I just wanted to uh
hi good morning
ask about the power segment and specifically.
maybe i just wanted to ask about the power
that SRA and what is back to long feed.
segment and specifically that sra and orders
So I think you've raised that five gigawatts plus.
at the end of the year. That expectations are over 130.
backlog figure so i think you've raised that five gigawatts plus
Just one good, you know, as you look at that figure.
the end of the year that expectation is over one hundred and thirty
just wondered as you look at that
figure, the probability that that continues.
figure
to expand, you know, given you just had such an exceptional year.
the probability that that continues to
to date of SRAs, and just wondered how that custom.
expand given you just had such an exceptional year to date of
customer conversation around SRAs kind of is.
sras and just wondered how that customer conversation
progressing and that converged right into all the speakers.
around sras kind of is progressing and that conversion rates
always please
Very healthy conversations, Julian, across the board. What we're
really guiding you to here is that we see the fourth corridor.
very healthy conversations julian across the board what we're
quarter gigawatts that we'll get on a dream, and to be modestly long.
really guiding you to here is that we see the
larger than the third quarter. We did 11 gigawatts in the third quarter.
fourth quarter gigawatts that we'll get on agreement to be modest
by saying we're gonna end up at 130. That's saying probably 13.
larger than the third quarter we did eleven gigawatts in the third
quarter by saying we're gonna end up at one thirty that's saying
gigawatts plus in the fourth quarter, so modestly higher.
probably thirteen gigawatts plus in the fourth quarter so modestly higher
As we look into 27, although it's hard to call the coincidence.
quarters per se at this point, we certainly continue to see.
as we look into twenty seven although it's hard
call the quarters per se at this point we certainly
real growth in our gigawatts on contract throughout 2020.
continue to see real growth in our gigawatts on contract throughout
2027. But that maybe the quarterly profiles.
profiles in 2027 are more likely to feel like three queue.
twenty twenty seven but that maybe
the quarterly profiles in twenty twenty seven
and four queue than they may have felt in one queue and two queue. But within a building.
are more likely to feel like three q and four q than they may have felt in one
ability for us to material continue to grow.
and two q but with an ability for us to material con
both our backlog and our gigawatts on contract throughout next year.
continue to grow both our backlog and our gigawatts
on contract throughout next year
The next question comes from Andrew Oben.
with Bank of America. Yes, good morning, congratulations.
the next question comes from andrew obin
bank of america
Congratulations on the quota. I don't say it often, but very impressive margins on power.
hi guys good morning congratulations on the quarter i don't say it often but
Good morning, Andrew. Thanks, Andrew. Just shifting to win.
very impressive margins on power good morning andrew
wind a little bit, you know, as you are pivoting straight to clear right.
thanks andrew just shifting to wind a little bit
More focus on data centers. Clearly, you
you know as you are pivoting strategically right more
deploying cash in supply.
focus on data centers clearly deploying cash
in
chain building out, you know, vertically. The question I have on when.
wind now that the business has stabilized, and I appreciate some moving pieces.
supply chain building out vertically
a question i have on wind now that the business has stabilized and i appreciate
pieces in the fourth quarter. How are you guys feeling about?
about long-term strategic optionality for the business? We talked about it.
some moving pieces in the fourth quarter how are you guys
a couple years ago. Then, you know, you had a lot of North American.
feeling about long term strategic optionality for the business
American movement margins, but the business clearly has turned popular.
we talked about it a couple of years ago then you know you had a lot of
positive. You know, what does the future hold for when business will?
north american movement margins but the business clearly has
within GEV? Thank you. Andrew, I appreciate the question and.
turned positive what does the future hold for wind business within
gev thank you
as you framed in the question, I mean, we're pleased that we've gotten a business back to property.
andrew i appreciate the question and as you framed in the
profitability. We see real improvement in services profitability.
i mean we're pleased that we've gotten the business back to profitability
profitability this year, and expact is similar year over year, improvement.
we see real improvement in services profitability this year and expect
a similar
in 27 relative to 26. We're pleased that we're large.
year over year improvement in twenty seven relative to twenty six
largely through our North America offshore project execution.
we're pleased that we're largely through our north america offshore
execution. But to be clear, we've got one more year to go in the offshore.
project execution but to be clear we've got one more year to go
offshore execution in the North Sea, which is a very
in the offshore execution in the north sea
to kind of answer the question as you're framing with our optionality as.
which is a variable to kind of answer the question as you're framing with our
as I see it. And I think it's important for us to see where the U.S.
optionality as i see it
market goes because, practically speaking, we have.
and i think it's important for us to see where the us market goes because
have historically been about 50% of the North America.
practically speaking we have historically been
America onshore wind market. We expect to continue to perform very.
about fifty percent of the north america
very well in the North America onshore wind market.
onshore wind market we expect to continue to perform very well in the
market, but it's a very small market right now. And although our orders grew
north america onshore wind market
but it's a very small market right now and
grew year over year, that's off of a very small base. So I think we're
although our orders grew year over year that's off of a very small base so
we're improving our optionality with this business, but we've got to.
a navigate through 27, execute on the rest of offshore.
i think we're improving our optionality with this business
And for me and leading the company, I'd like to see where the you.
but we've gotta navigate through twenty seven execute on the rest of offshore
US market goes over the next year and continue to.
and for me and leading the company i'd like to see where the us market goes
over the next year and
evaluate how we invest in this business for value and/or continue.
continue to evaluate how we invest in this business
continue to evaluate how we create value with this business. And whatever.
for value and or continue to evaluate how we
create value with this business and
is the smartest way possible. But we are making progress.
whatever is the smartest way possible but
I'm proud of the team, and I think 2027 is going to be another very
we are making progress i'm proud of the team
very important year for us to continue to create value and options.
i think twenty twenty seven's gonna be another very important year for us to
optionality for ourselves with our wind business. I think that optionality.
continue to create value and optionality for ourselves with our win business
optionality point is extremely important. You know, as we gave you guidance on
i think that optionality point is extremely important you know
as we gave you guidance on
how this business would look when we were with you in December of last year.
year and gave the look through 2028.
how this business would look when we were with you in december of last year and gave
It's important as you're thinking about the optionality there that are we.
the look through twenty twenty eight it's important as you're thinking about
we keep saying that we're focused on our strategy, which is getting offshore.
the optionality there that our our we keep saying that we're focused on our strategy
offshore wind backlog deployed, working on our service.
which is getting offshore wind backlog deployed
service margins. But in those expectations, we kind of held.
working on our service margins but in those expectations
the expectations for volume in North America win.
we kind of held the the expectation
wind to be essentially flat, essentially flat to what we saw in 2020.
for volume in north america wind to be essentially flat
2025. I make that point because, as you asked the question about options.
essentially flat to what we saw in twenty twenty five
optionality, we're focused on all the things that we can control today and getting them.
i make that point because as you asked the question about optionality we're focused on all the things that we can
them to the best place. And we're very proud of the team delivering.
control today and getting them to the best place and and we're very proud
delivering a profitable quarter this quarter, including settling um.
of the team delivering a profitable quarter this quarter including
the matter that we had with Benjamin Gwen, which we mentioned in our earlier.
settling the matter that we had with vineyard wind which we mentioned in our
earlier comments. But it sets us up well. We keep saying it's hard to call the influx.
inflection in this US market based upon all the dynamics at play.
our earlier comments but it sets us up well we keep
saying it's hard to call the inflection in this us market based
but we will be ready to actually benefit from that.
upon all the dynamics at play but we will be ready to
based upon all the work that the team is doing today.
actually benefit from that based upon all the work that the team is doing today
The next question comes from Alexander Virgo.
the next question comes from alexander virgo
Virgo with Evercore ISI. Money odds.
with evercore isi
Good morning, gentlemen. Thanks very much for taking the question. I wonder if you
good morning alex good morning gentlemen thanks
could talk a little bit about the opportunity and electrification margins.
very much for taking the question i wonder if you could talk a little bit about the
Given where Trench is coming in, Product obviously, high 20.
opportunity in electrification margins given where trenches
twenties was the original target performing very, very well.
coming in prolec obviously high 20s was the original target
by the looks of things. And I appreciate you might address this in more detail and a
performing very very well by the looks of things
of an extra with the four year numbers. But can you just give us a
and i appreciate you might address this in more detail next year
sense of why margins and electrification can't be all for
the full year numbers but can you just give us a sense of why margins in
electrification
30%, given the sort of setup that you're seeing here.
can't be north of thirty percent given the sort of setup that you're seeing here
Listen, I think your framing is appropriate with where the
pro-life margins were the day that we acquired the deal and we.
listen i think your framing is appropriate with where the
see real operating leverage that we're going to yield through that position.
prolec margins were the day that we acquired the deal and we
What you see with the trench margins and
see real operating leverage that we're gonna yield through the acquisition what you
the continued growth in backlog and electrification are.
see with the trench margins and
expectations are growing with electrification. I think the next important
the continued growth in backlog and electrification our
important data point will show you in the January earnings call is.
expectations are growing with electrification i think the next important data point we'll
show you
is the change in margin in backlog and electrification in twenty twenty.
in the january earnings call is the change in margin and back
2026, which will further strengthen the thread that says.
backlog in electrification in twenty twenty six which
says, okay, this is a business that is, I had to jump.
will further strengthen the thread that says okay this is a business
off point, so to speak, in the second half of 26.
that is has a jump off point so to speak in the second half of
26, that's approximately 20 percent, and with a change.
in margin and backlog, that'll continue to be healthy. Acquisition.
twenty six that's approximately twenty percent
and with a change in margin and backlog that'll continue to be healthy
acquisitions that are very accretive. We see significant opportunities.
acquisitions that are very accretive
we see
opportunity that continue to accrete margins in this business.
significant opportunity to continue to
business. Now, we owe you when we get to our next capital market.
accrete margins in this business now
markets day, that will set that date at the January earnings.
we owe you when we get to our next capital markets day
earnings call on when we're going to have that meeting to create a 20.
that we'll set that date at the january earnings
call on when we're gonna have that meeting
20-30 financial guide, including margins and electrification.
to create a twenty thirty financial guide
electrification that will, like all of our financial estimates, be a lower.
including margins and electrification that will likely
on what we expect by 2030. But we have a high.
all of our financial estimates be a floor on what we expect
by twenty thirty
high expectations of significant margin expansion every year.
but we have a high expectations of significant margin
between now and then, and that's going to take you directionally in.
expansion every year between now and then and that's
the neighborhood of your question.
gonna take you directionally in the neighborhood of your question
The next question comes from Nicola Blaze, which is the only thing that
Deutsche Bank. And the money guys.
the next question comes from nicole deblase with deutsche bank
guys. Can you graduate on a great quarter? Just wanted.
morning good morning guys
to ask about gas turbine and pricing. I don't think that question has been asked yet.
congrats on a great quarter
yet. Scott, you had said that pricing was up over 20%.
just wanted to ask about gas turbine pricing i don't think that question has been asked yet
20%, I think, in the first half. Just curious how that momentum has continued into.
scott you had said that pricing was up over
3Q, and then maybe you could also comment on what you're seeing with respect to electrification.
twenty percent i think in the first half just curious how that momentum has continued in
electrification pricing as well. Thank you. You bet in the colon.
3q and then maybe you could also comment on what you're seeing
respect to electrification pricing as well thank you
I mean, we've been talking throughout the years that off the baseline of the
you bet nicole i mean we've we've been talking throughout the year that off the baseline of a
fourth quarter orders last year, that we were expecting to see.
orders up 10 to 20 points relative to the fourth quarter.
fourth quarter orders last year that we were expecting to see orders up
Third quarter in isolation was north of 20 points.
ten to twenty points relative to the fourth quarter
So that just shows you that the pricing environments continue to be strong.
third quarter in isolation was north of twenty points
But we did call out in the prepared remarks that Nick's did.
so that just shows you that the pricing environments continue to be
contribute to that with a very healthy mix of both arrow.
strong but we did call out in the prepared remarks that
mix did contribute to that with a very healthy mix of
and 60 hertz gas turbines that.
both arrow and sixty hertz
drove a very strong calm. We expect to be with.
gas turbines that drove
within the range that we've talked about in the fourth quarter.
a very strong comp we expect to be within the range that we've talked about
that leads to a result for the year. The year over year.
in the fourth quarter that leads to a result for the year
year, our orders in 26 relative to 25.
the year over year our orders in twenty
pricing is up directionally 50 percent. So that
relative to twenty five
pricing is up directionally fifty percent
kind of with any one quarter mix can move those numbers.
so that kind of with any one quarter mix
numbers, but I think that year over year marker is important.
can can can move those numbers but i think that year over year mark
And we look forward to showing you in the January earnings called a change in marginalized
is important and we look forward to showing you in the january earnings call the
margin and backlog in power that's largely reflective of that.
change in margin and backlog
price, in which we talked about on the call earlier.
in power that's largely reflective of that price
earlier that we that the margin in backlog for 26.
in which we talked about on the call earlier that we
26, relative to the margin at the end of last year, is going to be.
we that the margin in backlog for twenty six relative to the
is going to grow substantially more this year than last year.
margin at the end of last year is gonna be is gonna grow
substantially more this year than last year
on electrification, what we are continuing.
continuing to see positive pricing overall in the electrification.
and then on electrification
what we are continuing to see
electrification business. Now, as you know, we talk about multiple different products.
positive pricing overall in the electrification business
products and businesses within that. It's not consistent across.
now as you know we talk about multiple different products and businesses within that
across in the sense of what the rate of growth is across each one.
it's it's not consistent across in the in the sense of what the rate of growth is
one of the lines. We talked a lot in the last few years about the growth in the HVD.
across each one of the lines we talked a lot in the last
HVDC side of the business. And we saw good pricing growth in that over.
few years about the growth in the hvdc side of the business
2023, 2024, and it kind of stabilized that.
and we saw good pricing growth in that over twenty twenty three twenty twenty four
at a relatively high price. Now, what we're seeing is more pricing growth.
and it kinda stabilized at a relatively high price
growth in parts of the business. Transmission, sweet.
now what we're seeing is more pricing growth in parts of the business
switch gear, synchronous condensers, things like that. But when you mix.
transmission switch gear synchronous condensers things like that
mix it all together, we continue to see positive pricing and electrification.
but more at a slightly less growth rate than what.
but when you mix it all together we continue to see positive pricing in electrification
Scott talked about on the power business.
but more at a slightly less growth rate than what
scott talked about on the power business
The next question comes from Abed Marota.
the next question comes from amit mehrotra
with UBS. Morning of it, telling it. Hey.
with ubs
good morning, guys. Thanks for the question. Obviously, the
good morning amit hi amit hey good morning guys thanks for the
question
there's just been so much pricing that's now manifesting itself.
obviously there's just been so much pricing
itself in the gas equipment margin. And that's great, but I guess I.
that's now manifesting itself in the gas equipment margin
guess the natural question is maybe what the mix impact is.
and that's great but i guess the natural question
when eventually service starts to outgrow equipment. I can't believe I'm.
is maybe what the mix impact is when eventually service starts
I'm asking this question, but I guess it's the sign of the times. I'd just be curious to.
to outgrow equipment i i can't believe i'm asking this question but i guess it's the sign of the times
if you think that margins for the service business, you know.
i'd just be curious to if you think that margins for the service business
as a whole, and maybe even on an annual basis, will be accretive.
if to sort of group margins when this backlog gets delivered and this is.
as a whole and maybe even on an annual basis will be accretive to
there's a handoff to the service part of the business. Yeah.
sort of group margins when this backlog gets delivered and this is there's a handoff
to the service part of the business
Yes, the service is service is growing as a proportion.
yes the service is service is growing as
proportion of the equipment would continue to be accreated to Margin.
margins because as much as the equipment, margins are improving, and you can.
a proportion of the equipment would continue to be accretive to margins
because as much as the equipment margins are improving
can see that in really the beginning of this journey with our first.
and you can see that and really
quarter now of the better priced equipment shipments. We also
the beginning of this journey with our first quarter now of the better priced equipment
shipments
also are pricing up the services book, and the margins will continue.
continue to expand there. Not on a nominal basis.
we also are pricing up the services book and the margins will continue to
expand there
and points growth as steeply as the equipment.
not on a nominal basis in points growth as steeply
equipment margin expansion, because it's already off of a much higher.
as the equipment margin expansion
baseline. But to be clear, as services grow and
because it's already off of a much higher baseline but
as a proportion of the total, that drives margin expansion for the power.
to be clear as services grow as a proportion of the total
that drives margin expansion for the power business
power business.
The next question comes from Andy Tapowitz with Citigroup.
group. Morning, Andy, the morning. Morning, everyone.
the next question comes from andy kaplowitz with citigroup
a little bit more on services. Gotta think you mentioned 17% growth.
good morning andy good morning good morning everyone
growth in service orders this year, and I know you mention again that HA.
just a little bit more on services scott i think you mentioned seventeen percent growth in
generated 0.5 billion in revenue over 20 years. I think you've also talked about.
service orders this year and i know you mentioned again that
about transactional generally picking up. So, how are you thinking about that trajectory in Palestine?
generates zero point five billion dollars of revenue over twenty years i think you've also talked about
power services? I think you originally gave that guy going from 12 billion.
transactional generally picking up so how are you thinking about that trajectory in power services
billion to 22 by 2035. A recent conference you took.
i think you originally gave that guidance of going from twelve billion dollars to twenty two billion by
you talked about that maybe being a little conservative. Yeah, and I think.
two thousand and thirty five at a recent conference talked about that maybe being a little conservative
think when we get to our next capital markets today, that likely will prove.
yeah and i think when we get to our next
prove out to be conservative, the 22 billion that we framed up.
capital markets day that likely will prove out to be
up last year. What I would say on the trajectory would.
conservative the twenty two billion dollars that we framed up last
year what i would say on the
with services over the next few years is we have a
trajectory with services over the next few years is we have a
a confluence of dynamics where, as our supply chain builds.
builds up for new units, we're also having a fulfill on service.
confluence of dynamics where as our supply chain
services, and that's driving a continued back.
up for new units we're also having to fulfill on services
and that's driving
backlog of services for film, and that if that
a continued backlog of services
the outages give us the grace of more time before we need.
fulfillment that if the outages give us the grace of more
need to ship parts. Frankly, we may be prioritizing a time.
time before we need to ship parts
times the equipment shipments to hold schedule.
frankly we may be prioritizing at times the equipment shipments to
hold schedule
as long as we don't put customers at risk for services.
So we're going to continue to see real services grow, but we
as long as we don't put customers at risk for services so
we have a lot of fulfillment ramp to come here in 2015.
we're gonna continue to see real services growth but we have a lot of
27 and 28. So clearly, our revenue is going to continue.
fulfillment ramp to come here in twenty seven and twenty eight
continue to grow at a healthy basis over the next number of years.
so clearly our revenue is gonna continue to grow at a healthy basis over the next
years in services through the end of the decade.
number of years in services through the end of the decade
growth is going to be percentage-wise exponentially larger in equipment.
the growth is gonna be
equipment. But what that's all contributing to is just a larger.
percentage wise exponentially larger in equipment
and larger annuity stream for services that's very high.
but what that's all contributing to is just a larger and larger new
margin business for a very long time into the next decade.
annuity stream for services that's very high margin business
for a very long time into the next decade
The next
question comes from a meat stacker with BMO Capital Markets.
the next question comes from amit vacker
bmo capital markets
What do you mean? The morning take the morning. Thanks, guys.
Scott, I think you've booked like nearly 120 air derivatives.
good morning amit good morning hey good morning thanks guys
over the last two quarters. Is that like a level of demand that you can?
scott you i think you've booked like nearly a hundred and twenty error derivatives over the last
see kind of changing. And how do you think about the size and duration of the aerodrome?
two quarters is that like a level of demand that you see
aeroderative cycle, and given the strength and work of the kind of key kids race of.
kind of changing and how do think about the size and duration of the aero derivative cycle and
of maybe increasing output from here. I mean, I mean, the demand is.
given the strength in order to kind of keep constraints and kind of maybe increasing output from here
is strong, but I wouldn't say that we'll sustain the two.
i mean i mean the demand is strong but i wouldn't
2Q, 3Q run rate as an example in 4Q. So that's part.
say that we'll sustain the two q three q run rate as
partly why we framed up that the dollar per KW is going to come down.
an example in 4q so that's partly why we framed up that the dollar
little bit in the fourth quarter, relative to third quarter, because the
kw is gonna come down a little bit in the fourth quarter relative to
dollar per KW is very high with Arrow. Not because
third quarter because the dollar per kw is is very high with arrow
because the demand is softer, but more because we're
not because the demand
we're now going out so far in the future before we have availability.
is softer but more because we're now going out
right? Because we're sold out so far. So that kind of
so far in the future before we have availability right because we're sold out
so far
continues to be an attractive market. We continue to have.
so that continues to be an attractive market we continue to have
supplied, but being very transparent, we're also using.
supply but being very transparent
using the error derivatives in strategic.
we're also using the error derivatives in strategic
partnerships, where we also secure heavy duty and electrification.
partnerships where we also secure hedge
electrification equipment combined. And we'll continue to do that.
duty and electrification equipment combined
So good demand, fourth quarter.
and we'll continue to do that so
quarter arrows will be lighter than the 2Q3Q run rate, but it's an important.
good demand fourth quarter arrows will be lighter than the
important part of our business and one that we're very excited about.
2q 3q run rate but it's an important part of our business and
and one that we're very excited about
The next question.
the next question comes from david arcero
question comes from David Arcaro with Morgan Stanley.
morgan stanley
Hey, thanks so much for warning.
hey thanks so much good morning
I was wondering for the price.
good morning
projects and customers in your turbine backlog.
i was wondering for the for the projects and
crush your contracts overall. Are you seeing any financing challenges?
customers in your turbine backlog and across your contracts overall are you
challenges leading to disruptions or slowdowns at all, or request.
seeing any financing challenges leading
request to exit slot reservations, or any slowing of the conversion.
to disruptions or slowdowns at all or requests
of SRAs to backlog. No, David, we're not.
to exit slot reservations or any slowing of the conversion
of sras to backlog
And I mean, I think what you can see is with the orders growing.
no david we're not and i mean think what you can
growth, the gigawatts and contract growth attached with 17.
see is with the orders growth
17 billion dollars of cash from the bank account, is that there's no
the gigawatts on contract growth attached with seventeen billion dollars
no change in our tax terms required to secure the equipment?
of cash in the bank account is that there's no
equipment. And the customer archetype that we're serving has.
change in our cash terms required to secure the equipment
very strong balance sheets and continue to lean.
and the customer archetype that we're serving have very strong balance sheets
and
lean in with us, and no is the short answer to the question.
the question. Operator, we have time for one more question, please.
continue to lean in with us and
no is the short answer to the question
please. This question comes from the line of Rob Worder.
operator we have time for one more question please
with near his research. What are you invented, Rob? Hey.
this question comes from the line of rob wertheimer
with melius research
Hey. So, the question: obviously, there's an immense value to getting.
getting a compute online right now. And I was curious, I mean, obviously, in terms of.
my question obviously there's a there's an immense value to getting compute online right
Turbine you're sold out for a number of years. Where do you see bottlenecks?
now and i was curious i mean obviously in turbines you're sold out for a number of years
bottlenecks in that system now? And is there any opportunity for electrification?
where do you see bottlenecks in that system now and is there any
kind of near term, where you know your products can solve, you know, and
opportunity for electrification kind of near term where your products can
bring capacity on one faster, pricing power, etc. Thank you.
solve you know and bring capacity online faster pricing power etcetera thank you
Yeah, I mean, Rob, our electrification business orders.
today is up 60% or thereabouts.
yeah i mean rob our our electrification business orders
three q year to date is up
expect the fourth quarter to, as it normally is, to be our largest.
sixty percent or thereabouts we expect the fourth quarter
quarter orders in the year. And while growing our backlog, probably.
to as it normally is to be our largest quarter orders in the
probably more in the first quarter than we did in the third quarter, as an example.
year while growing our backlog probably more in the
So we continue to see real demand for electrification.
fourth quarter than we did in the third quarter as an example so we
continue to see real demand
but I don't know if a lecture of recasion and isolation also.
for electrification but
or any other provider can provide enough of it.
i don't know if electrification and isolation us or any other provider
can
unlock for what we're seeing, for the need for incremental electricity.
provide enough of an unlock for what we're seeing for the need for incremental
electricity in the country and in the world today. It's a contributor.
in the country and in the world today
contributor, but it's not going to replace the need for more power generation.
it's a contributor but it's not gonna replace the need for more
generation that gets added to the system, it's a compliment, is the way that I would say.
power generation that gets added to the system it's a complement
would say it. So we're going to continue to invest in our electrification.
is the way that i would say it
electrification business, really to modernize the grid and drive these unlocks.
so we're gonna continue to invest in our electrification business
unlocks, but I would view this to be a medium to long term.
really to modernize the grid and drive these unlocks but
very durable demand. But now
i would view this to be a medium to long term
very durable demand
but not
an electrification solution for the country of the world that
is going to replace the need for more incremental power generation.
an electrification solution for the country or the world that is gonna
replace the need for more incremental power generation
Operator, before we wrap up, let me turn it back to Scott for.
for closing comments. Everybody, as I always do, I just want to thank our team.
operator before we wrap up let me turn it back
to scott for closing comments
I'm proud of how we're performing. I want to thank our customers and partners.
everybody as i always do i just want to thank our team i'm
for being with us. We do this together, and I want to thank all of you for.
proud of how we're performing i wanna thank our customers and partners for being with us
giving us this time today. I know we extended the call by a few minutes today.
we do this together and i wanna thank all of you
and went a little bit longer with our prepared remarks, but we wanted to provide a
for giving us this time today i know we extended the call by a few minutes today and
a lot of transparency and visibility into the Trench acquisition that we're really.
went a little bit longer with our prepared remarks but we wanted to
excited about. We're deep into the fourth quarter and.
provide a lot of transparency and visibility into the
acquisition that we're really excited about
and looking forward to being out in the field operationally with a lot of our.
we're deep into the fourth quarter and
teams the next 90 days, and we look forward to seeing many of you.
looking forward to being out in the field operationally
with a lot of our teams the next ninety days and
in platforms where it presents itself, and soon enough.
we look forward to seeing many of you in platforms where it presents itself
and
enough, we'll be in front of you with our January earnings.
call for the fourth quarter. So, thanks, everybody.
soon enough we'll be in front of you with our january earnings call
for the fourth quarter so thanks everybody
Thank you, ladies and gentlemen. This concludes today's conference.
thank you ladies and gentlemen
this concludes today's conference
Thank you for participating. You may now disconnect.
thank you for participating
you may now disconnect
I think that we have
That's very
I'm sorry.
I do the
I'm a big.
money, I think.
Yeah
actor, as I'm sure this.
beautiful, it was really good.
I think it's a
it's reflecting.
that's
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