Ge Vernova Inc. · NYSE:GEV
Ge Vernova — Investor Day (December 2024)
37 slides from Ge Vernova's investor day presentation, Dec 10, 2024
Slide 1: 2024 Investor Update
2024 INVESTOR UPDATE December 10, 2024 © 2024 GE Vernova and/or its affiliates. All rights reserved. 1 GE and the GE Monogram are trademarks of General Electric Company used under trademark license.
Slide 2: Caution concerning forward-looking statements
Caution concerning forward-looking statements: Certain statements contained in this presentation and certain other public communications and SEC filings of GE Vernova Inc. (“GE Vernova”, the “Company”, “we” and “us”) may constitute “forward-looking statements” that involve risks and uncertainties. T
Slide 3: Safety Moment
SAFETY MOMENT Stop Work Containment Event STARTING WORK ONLY WHEN IT IS SAFE Systemic Solution Implemented Root Cause Analysis Read Across One Person… One Process… Global Impact… Guided by our life saving rules © 2024 GE Vernova and/or its affiliates. All rights reserved. 3
Slide 4: Overview & Strategy
OVERVIEW & STRATEGY Scott Strazik GE Vernova CEO © 2024 GE Vernova and/or its affiliates. All rights reserved. 4 GE and the GE Monogram are trademarks of General Electric Company used under trademark license.
Slide 5: Purpose-Built to Electrify and Decarbonize
Purpose-Built to Electrify and Decarbonize Serving the vital energy Executing with Delivering disciplined growth to transition market with sustainability, innovation drive margin expansion, higher multi-decade growth & lean at our core free cash flow* & strategic capital allocation * Non-GAAP Financ
Slide 6: GE Vernova Investor Update: Updates since 3Q'24 Earnings
GE Vernova Investor Update Updates since 3Q’24 Earnings • Generated ~$0.6B of cash-a) by selling partial Delivering on growing demand & ownership stakes in India & China grid businesses executing better • Growing demand for gas, secured ~9GW of reservation agreements in the U.S. for 2025-2026 orders
Slide 7: A foundation to build upon
A foundation to build upon 2023 2024 guidance 2025 guidance $33B $34 – 35B $36 – 37B Trending towards the higher end Revenue Revenue Revenue 2.4% 5.5 – 6% HSD Adj. EBITDA margin* Adj. EBITDA margin* Adj. EBITDA margin* $0.4B $1.3 – 1.7B $2.0 – 2.5B Trending towards the higher end Free cash flow* FCF
Slide 8: A stronger outlook by 2028
A stronger outlook by 2028 Revenue Adj. EBITDA margin* Cumulative FCF*-a) $45B 14% $14B+ *Non-GAAP Financial Measure (a – expected cumulative free cash flow* generation from 2025 through 2028 8 © 2024 GE Vernova and/or its affiliates. All rights reserved.
Slide 9: Significant margin expansion in all segments
Significant margin expansion in all segments Segment EBITDA Margin Outlook Assumptions • Annual Gas Power equipment orders of ~20GW with 2023 By 2028 continued services growth • Substantial growth in Electrification equipment backlog POWER 9.9% 16% • Onshore Wind revenue ~flat to 2024; both Offshore
Slide 10: Offshore Wind execution
Offshore Wind execution Backlog Updates Year-end equipment backlog ~$4B • Completed the root-cause analysis of the blade events and remediating as necessary ~$3B • Installing blades, nacelles, & towers at both project sites … with 56 turbines installed • Evaluating economics to accelerate completion
Slide 11: Lean culture enabling significant opportunity
Lean culture enabling significant opportunity At the installed base Inside the factory Expanding Live Outage to more Increasing gas services output while Decreasing aeroderivative units to decrease outage time enabling HDGT capacity expansion packaging cycle time ~30% reduction in outage cycle time
Slide 12: Investing in capex … lean supports strong returns
Investing in capex … lean supports strong returns Capex focus areas • Heavy duty gas turbine (HDGT) capacity expansion • Aeroderivative hydrogen testing capabilities POWER ~$4B • Factory modernization for nuclear fuel • Tooling & repair machinery for Gas Power services ELECTRIFICATION • Switchgear a
Slide 13: Investing in innovation, R&D increasing ~20% in 2025
Investing in innovation, R&D increasing ~20% in 2025 R&D focus areas • HA services productivity POWER • Small modular reactor (SMR) ~$5B • Carbon capture & sequestration (CCUS) / Direct air capture (DAC) • SF6-free switchgear products ELECTRIFICATION • Next-generation HVDC • GridOS® software applica
Slide 14: Substantial capital available after growth investments
Substantial capital available after growth investments ~$4B Strategic principles Cash balance at spin 1 Incremental organic investments to drive profitable growth ~$4B Cash generated in 2024-a) 2 Return at least 1/3 of cash generation to shareholders • Declared $0.25 per share quarterly dividend, pa
Slide 15: Wrap-up
Wrap-up Market opportunity accelerating Lean starting to impact our financials beyond Power Financial strength and durability gaining momentum GE Vernova culture taking hold … just the beginning with the best yet to come © 2024 GE Vernova and/or its affiliates. All rights reserved. 15 * Non-GAAP Fin
Slide 16: Financials & Outlook
FINANCIALS & OUTLOOK Ken Parks GE Vernova CFO © 2024 GE Vernova and/or its affiliates. All rights reserved. 16 GE and the GE Monogram are trademarks of General Electric Company used under trademark license.
Slide 17: Financial Strategy
Disciplined top line growth OUR Driving adj. EBITDA* growth and margin expansion FINANCIAL STRATEGY Delivering strong FCF* conversion Investment grade balance sheet, continued innovation and strategic capital allocation *Non-GAAP Financial Measure 17 © 2024 GE Vernova and/or its affiliates. All righ
Slide 18: Building momentum into 2025
Building momentum into 2025 Revenue Adjusted EBITDA margin*-a) Free cash flow*-a) $B % $B 2.0 – 2.5 HSD 36 - 37 1.3 - 1.7 34 – 35 higher end higher end 5.5-6% 33.2 29.7 2.4% 0.4 2022 2023 2024E 2025E (1.4)% (0.6) 2022 2023 2024E 2025E 2022 2023 2024E 2025E Disciplined revenue growth Improving profit
Slide 19: Continued margin expansion in 2025
Continued margin expansion in 2025 Adj. EBITDA margin* (%) HSD Increased R&D Opex to support capacity expansions 5.5-6% 2024E Price/(Inflation) Volume Productivity & Cost Absence of 2024 Investments 2025E Reduction Offshore Items Key levers remain in our control to drive higher margins * Non-GAA
Slide 20: Segment financial performance
Segment financial performance Revenue EBITDA margin $B % MSD*-a) Higher end of MSD*-a) 13-14% 17.4 ~150-200bps*-b) 9.9% POWER 2023A 2024E 2025E 2023A 2024E 2025E 9.8 Flat*-a) Down MSD*-a) WIND 2023A 2024E 2025E Nearly 50% EBITDA $200-400M (10.5)% improvement EBITDA losses 2023A 2024E 2025E Mid- to H
Slide 21: Our backlog will fuel multi-year profitable growth
Our backlog will fuel multi-year profitable growth Backlog-a) 3Q’24 backlog 118 $B 112 Services 101 ~65% of backlog Electrification Wind Power $76B +$17B $42B since 4Q’22-a) Equipment ~35% of backlog 2022 2023 3Q'24 ~70% of backlog is in the OECD Approximately 80% of 2025 revenue currently in backlo
Slide 22: Stronger equipment backlog … disciplined underwriting
Stronger equipment backlog … disciplined underwriting Equipment backlog-a) $B 42 37 Electrification equipment backlog tripled 28 Significant orders and backlog growth in both Europe and North America Electrification Wind Power equipment backlog increased double digits Power Rising demand for HDGTs,
Slide 23: Increasing G&A cost reduction target by $100M
Increasing G&A cost reduction target by $100M Adjusted G&A expenses* Key levers $B • Optimizing IT systems and processes 3.3 • Transforming finance, HR, and legal functions 2.7 • Reducing legal entities • Exiting transition service agreements (TSAs) • Decreasing facility footprint and cost 2023-a) 2
Slide 24: Lean culture beyond the factory floor
Lean culture beyond the factory floor Transition service agreements Application rationalization Facilities-a) optimization Number of active TSAs Number of applications in use $M annual cost 275 140 2,500 April 2024 By 2028 2023 By 2028 2023 By 2028 Driving continuous improvement (a – Office and othe
Slide 25: Substantial FCF growth, better linearity
Substantial FCF* growth, better linearity FCF* Key levers $B • Robust demand enabling orders and related down 2023: $0.4-a) payments 2024 Guidance: $1.3-$1.7 (higher end) 1.7 • Accelerating cash collection cycle & reducing past 1.0 0.8 due invoices 0.1 • More effective inventory management, yielding
Slide 26: Disciplined capital allocation strategy
Disciplined capital allocation strategy Substantial cash available to deploy by 2028 INVESTMENT GRADE RATING $22B+ Fitch BBB/S&P BBB- $14B+ Return at least 1/3 of cash generation to $1.9B cumulative FCF* shareholders through dividends & net pension and generation 2025 - 2028 share repurchases $10B+
Slide 27: Updated financial outlook by 2028
Updated financial outlook by 2028 March 2024 December 2024 What’s changed • Incremental equipment growth from strong MSD HSD demand Organic revenue growth*-a) Organic revenue growth*-a) • Further services strength 10% 14% • Increased price and volume leverage Adj. EBITDA margin* Adj. EBITDA margin*
Slide 28: Energy Expansion & Transition: GE Vernova Opportunity
QA & Energy Expansion & Transition GE Vernova Opportunity THE TRILEMMA ATTRACTIVE RETURNS Electricity Decarbonization Increasing HSD organic More than Disciplined demand doubling security & revenue growth*-a) doubling margins capital reliability needs allocation An investment supercycle accelerating
Slide 29: Appendix
APPENDIX Supplements Non-GAAP reconciliations © 2024 GE Vernova and/or its affiliates. All rights reserved. GE and the GE Monogram are trademarks of General Electric Company used under trademark license. 29
Slide 30: Guidance Supplement
Guidance Supplement This Supplement provides additional information, including assumptions and calculations, related to the guidance and outlook covered by this presentation. Relatively flat to 2024, consists of our Financial Services business, Advanced Research Center, and 2025 Corporate and other
Slide 31: Definition Supplement
Definition Supplement Free cash flow* Abbreviated as FCF* Heavy duty gas turbine Abbreviated as HDGT High voltage direct current Abbreviated as HVDC Transition service agreement Abbreviated as TSA Backlog Defined on a remaining performance obligation (RPO) basis OECD Refers to the Organization for E
Slide 32: Adjusted backlog and Adjusted equipment backlog
Adjusted backlog* and Adjusted equipment backlog* ADJUSTED BACKLOG As of, ($ in millions) 2022 2023 Sep-24 Remaining Performance Obligations (RPO) (GAAP) $ 104,899 $ 115,598 $ 117,746 -a) Less: RPO related to the portion of Steam Power nuclear activities sold to Electricité de France S.A. 4,120 4,08
Slide 33: Adjusted EBITDA and Adjusted EBITDA margin
Adjusted EBITDA* and Adjusted EBITDA margin* Adjusted EBITDA* and Adjusted EBITDA margin* For the years ended December 31, ($ in millions) 2022 2023 Net income (loss) (GAAP) $ (2,722) $ (474) Add: Restructuring and other charges(a) 288 433 Add: Steam Power asset sale impairment(b) 824 - Add: Purchas
Slide 34: Adjusted EBITDA margin; Power segment organic EBITDA margin expansion
Adjusted EBITDA margin* 2024 Guidance and Outlook by 2028: Adjusted EBITDA margin* We cannot provide a reconciliation of the differences between the non-GAAP financial measures expectations and the corresponding GAAP financial measures for Adjusted EBITDA margin* in the 2024 guidance and outlook by
Slide 35: Adjusted general and administrative expenses
Adjusted general and administrative expenses* ADJUSTED GENERAL AND ADMINISTRATIVE (G&A) EXPENSES Year ended December 31, ($ in millions) 2023 Selling, general, and administrative expenses (GAAP) $ 4,845 Less: Restructuring and other charges(a) 265 Less: Russia and Ukraine charges(b) 78 Less: Depreci
Slide 36: Free cash flow; Cumulative free cash flow
Free cash flow* Free cash flow* For the years ended December 31, ($ in millions) 2022 2023 Cash from (used for) operating activities (GAAP) $ (114) $ 1,186 Add: gross additions to property, plant and equipment and internal-use software (513) (744) Free cash flow* (Non-GAAP) $ (627) $ 442 Free cash f
Slide 37: GE Vernova
GE VERNOVA