GE Vernova Inc.

Good day, ladies and gentlemen, and welcome to GE Vernova's first quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. My name is Liz, and I will be your conference coordinator today. If you experience issues with the webcast slides refreshing or there appears to be delays in the slide advancement, please hit F5 on your keyboard to refresh. As a reminder, this conference is being recorded. I would now like to turn the program over to your host for today's conference, Michael Lapidus. Vice President of Investor Relations. Please proceed.

Thank you. Welcome to GE Vernova's first quarter 2025 earnings call. I'm joined today by our CEO, Scott Strasick, and CFO, Ken Parks. Our conference call remarks will include both GAAP and non-GAAP financial results. Reconciliations between GAAP and non-GAAP measures can be found in today's Form 10Q press release and presentation slides. all of which are available on our website. Please note that year-over-year commentary or variances on orders, revenue, adjusted and segment EBITDA and margin discussed during our prepared remarks are on an organic basis unless otherwise specified. We will make forward-looking statements about our performance. These statements are based on how we see things today. While we may elect to update these forward-looking statements at some point in the future, we do not undertake any obligation to do so. As described in our SEC filings, actual results may differ materially due to risks and uncertainties. And with that, I'll hand the call over to Scott. Thanks, Michael.

Good morning, everyone. Welcome to our first quarter earnings call, our fifth as a standalone public company. It's a start. I have to share with you that I am as confident and optimistic today as any day since our spin that we are creating a stronger company at GE Vernova, one that will drive substantial value ahead. We start with the markets. We continue to see very strong end markets in power and electrification. Put simply, the world is entering an era of accelerated electrification, driven by manufacturing growth, industrial electrification, EVs, and emerging data center needs. which is driving an unprecedented need for investment in reliable baseload power, grid infrastructure, and decarbonization solutions. As supply chains become more decoupled, with more redundancy built into the global system to manage trade complexities, this manufacturing build-out creates incremental demand for additional electrons. To put today's investment supercycle into perspective in terms of energy needs and decarbonization, The scale of load growth we're seeing in North America is the most significant since the post-World War II industrial build-out. But unlike then, the growth is global. The most populous country in the world, India, nearly 1.5 billion people, derives 80% of its electricity from coal. Saudi Arabia, which relies on heavy oil for nearly half of its power, has committed to a 50-50 mix of gas and renewables by 2030. These are just a few examples of the opportunities ahead as we help customers deliver more reliable and affordable power to the markets they serve. All this demand is driving growth, not only for new equipment, but also for services as increased utilization of our install base creates opportunities for additional service revenues, including upgrades. Services represents over 60% of our backlog at strong margins, and provide significant revenue and cash flow visibility for years to come. While our end markets remain strong, we are not immune to the complexity of play given the current outline of tariffs and resulting inflation. We do expect our costs to go up $300 million to $400 million in 2025. We are moving at pace to mitigate these pressures with pricing actions, including use of existing contractual provisions and the acceleration of our G&A cost structure transformation. We continue to invest in our supply chain to strengthen the durability and resiliency of our operations. For example, in January, we announced our plans to invest $600 million and add 1,500 new jobs in U.S. manufacturing as part of our $9 billion global commitment to R&D and CapEx cumulatively through 2028. We remain confident in our financial trajectory from here and are reaffirming our 25 financial guidance inclusive of the three to $400 million of tariffs and resulting inflation that we estimate as of today, net of our mitigating actions. In this dynamic environment, we will continue to act with urgency on further mitigation steps. This is an opportunity for GE Vernova to differentiate itself as a great industrial company. Overall, we have a solid balance sheet with an $8 billion cash balance, growing free cash flow, and expanding backlog, which positions us to invest both in our business and in shareholder accretive actions. For example, in the first quarter, we sold an incremental 2% in our China XD investment and completed our acquisition of Woodward's gas turbine parts business to further vertically integrate our gas power supply chain. As we begin our second year as a public company, we are well positioned to meet the growing demand with disciplined execution. Turning to the next slide on our first quarter results, we continued to build a stronger backlog supporting the long-term growth potential in our businesses. On a sequential basis, our equipment backlog grew $2.4 billion in Q1, and our services backlog grew $2 billion. we now maintain a total backlog of $123 billion. Specifically the gas power, we grew equipment orders over 30% by booking seven gigawatts of gas turbine orders. Additionally, we secured seven gigawatts of new slot reservation agreements. In total, our gas turbine backlog has increased to 29 gigawatts, and we also have 21 gigawatts of slot reservation agreements that are expected to convert to orders and are not yet in backlog. All of these numbers in gigawatts align with McCoy reporting, which may differ from how our customers often announce projects, as they cite the total combined cycle output of the plant, including the power from steam turbines. Considering the focus on gas power demand, I wanted to provide some incremental context on where we are seeing the orders trend for the year. We currently have 50 gigawatts of gas turbines under contract, or with a slot reservation. We expect to ship over 10 gigawatts of equipment in the remainder of the year and add contracts for more than two times that amount to end the year with over 60 gigawatts between backlog and reservation agreements. The second half of the year should see a heavier mix of combined cycle orders after a first half with more simple cycle or peaking applications, driving the dollar value of orders in the second half of the year to be substantially higher than the first half. Sitting here today, 26 and 27 are largely sold out. We are approaching filling out 28 and starting to sign agreements for later years. I give that context to just frame that I continue to see this market normalizing to a higher for longer gas market. The world needs more dispatchable power generation to support economic growth and national security. Gas power will provide a significant amount of the incremental dispatchable power while also being the force multiplier for more renewables where wind and solar resources make sense. With this strength, commercial activity is accelerating for 29 and 30 deliveries. We remain focused on our fulfillment strategy of reaching 20 gigawatts of annualized deliveries in the second half of 26 and sustaining 20 gigawatts per year. starting in 27. we are gaining momentum in nuclear as well our customer and ontario power generation received the license to construct construct the first smr in north america earlier this month we are also seeing increased interest in the u.s about expansions at existing nuclear sites as well as the development of smrs with productive discussions with utilities hyperscalers and the administration on what it takes to commission our first SMR in the US by late 2030. And the growth is not restricted to power. We continue to grow our equipment backlog and electrification systems with $2 billion of sequential backlog growth, up 10% versus year-end levels on the strength of demand for transformers and switchgear. Electrification remains our fastest growing business and orders remain strong, particularly in North America and Asia, which were our strongest growth regions this quarter. I mentioned services earlier, and we will go into more detail here on what we saw this quarter. Customers continued to invest more in the install base, driving orders in high-margin services. Services orders grew 16% as customers aimed to get more capacity and better performance out of their plants. Gas power and onshore wind drove double-digit services order strength And steam services orders were up nearly 60% this quarter as our customers are increasingly investing in equipment upgrades, including at existing nuclear sites, to extend the life of their plants and get more capacity. To provide a bit more context on wind in the quarter, we were pleased with delivering our fifth straight profitable quarter in onshore wind. We're also pleased with our progress with our utilization robotic crawlers that inspect the inside of our blades, both at the factory and at the site before we commissioned the turbine. We are investing over $100 million more year over year in 2025 to improve the performance of our install base and remain confident these investments will yield a substantial improvement in fleet availability and services profitability in 2026. In offshore, we continue to make progress executing our existing backlog in the first quarter. commissioning another 17 units across Dogger Bank and Vineyard Wind. We still expect to be materially complete with Vineyard Wind in 25 and to be mostly complete with Dogger Bank in 26. We also agreed to a termination of the last remaining offshore wind supply agreement associated with the 18 megawatt product we are no longer developing. Our only remaining contractual commitments are the two projects currently in execution. Our losses in offshore wind and have improved sequentially, and absent this one-time charge, we are better year over year as well. From a margin perspective, power expanded margin 70 basis points, while electrification expanded margin almost 700 basis points. Wind expanded margin 190 basis points while continuing to control what they can control, given this is the one end market we continue to see real softness in today. We continue to expect margin expansion across all three segments in 25. Lean remains core to how we operate as we maintain an intense focus on improving safety, quality, delivery, and cost, a focus we are embedding throughout GE Vernova that will benefit all stakeholders. In mid-February, we held our CEO Kaizen Week with over 120 Kaizens across 13 countries, across the segments and corporate functions. Overall, we identified over 500 safety improvements in total during Kaizen Week. We also identified enhancements to either capacity or delivery times that will create roughly $150 million in incremental revenues. Kaizens like these drive tangible, sustainable improvements across SQDC, while also benefiting both our customers, employees, and our financial performance. In Q1, we generated a billion dollars in free cash flow after spending over $400 million between R&D and CapEx combined, an improvement of 1.6 billion year over year, given working capital benefits and higher EBITDA as we continue to run our businesses better. We are also creating value for our shareholders. In the quarter, we returned 1.3 billion of capital to shareholders and continued in April for a total of 1.5 billion of capital returned so far this year. Overall, we repurchased approximately 5 million shares at an average share price of $299. We shared at our investor update in December that we would be opportunistic with our share buyback program. And today, we see a more valuable company with even greater prospects ahead. Taking into account the dynamic supply chain environment matched with the strength in our businesses, as I discussed on the previous page, we are reaffirming our 25 financial guidance and expect to continue to grow backlog, expand margins, and deliver positive free cash flow throughout the year. With that, I'm going to hand it over to Ken to provide details on Q1 results.