Ge Vernova Inc at Citi Global Industrial Tech and Mobility Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Andrew Kaplowitz - Citigroup Inc - Analyst : Scott, a ton of good information there, good update. So let me step back and ask because I get this question often, right? New administration, you got this on the earnings call. Has anything changed in your conversation with customers? Because it seems like it has. You talked about the 5 gigs, you're ratably toward your 20. So has anything changed with your customers?

Question: Andrew Kaplowitz - Citigroup Inc - Analyst : And you know this because there's a lot of noise out there, but DeepSeek, that news came out at the same time the administration changed. Again, it doesn't seem like any conversations changed to your point.

Question: Andrew Kaplowitz - Citigroup Inc - Analyst : Got it. And then you mentioned wind. Maybe just stepping back, Scott, like so what are your wind customers saying? Do they have any visibility right now? Because it seems difficult on that side.

Question: Andrew Kaplowitz - Citigroup Inc - Analyst : That's helpful, Scott. And then you've talked about ramping your turbine capacity, 55 this year, 80 by '27, right? So can you maybe give a little more color where these turbines are going? I think right now, something like half are going to US customers. You've talked about hyperscaler orders. So maybe update us on where you're seeing that. And then talk about the sustainability of demand in other points of the world, not just the US.

Question: Andrew Kaplowitz - Citigroup Inc - Analyst : That's helpful. And then you talked about the 20 gigs that's embedded in your '28 forecast. We know you want to be careful about sort of boom-bust, right? But the markets have been stronger than that before. So how do you think about adding new roof lines? So you've recently announced $300 million over the next two years. How do you think about the next steps after that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 19, 2025 / 1:50PM, GEV.N - Ge Vernova Inc at Citi Global Industrial Tech and Mobility Conference

Question: Andrew Kaplowitz - Citigroup Inc - Analyst : That's helpful, Scott. And then we understand it's difficult to discuss pricing specifics, but you did raise, as you said, to us, your pricing again for new turbine potential slots in December. So what has been the receptivity from customers to that newest pricing?

Question: Andrew Kaplowitz - Citigroup Inc - Analyst : And Scott, to that point, like we always want to see it materialize in the results. So maybe talk about that. Is it possible to see pricing manifest itself in higher margin faster? So like transactional power services, like I think you said '26 plus is sort of where you see better pricing. But how do we think about the pricing evolution here in the margin?

Question: Andrew Kaplowitz - Citigroup Inc - Analyst : And Scott, I should ask you just because it's topical, people ask me a ton, like around sort of the tariff situation, all that kind of stuff, how are the contracts structured? Do they, I assume, protect you from price escalation, whether it's steel, whether it's some tariff on any country? Or like how does that work for you guys?

Question: Andrew Kaplowitz - Citigroup Inc - Analyst : So I want to ask you, you gave us a good update on the rate of growth on your services side and your transactional services side. But if I just look at sort of the numbers you reported, right, Power services orders up 10% for '24, but I think it was down 6% in Q4 against what was a very difficult comp, right?

Question: Andrew Kaplowitz - Citigroup Inc - Analyst : So I think there's an expectation though that Power services can grow more than mid-single digits, which is your long-term guide. So like how should we sort of reconcile -- I understand there's lots of long-term contracts, all that kind of stuff, but how to reconcile that?

Question: Andrew Kaplowitz - Citigroup Inc - Analyst : So you guys are on the forefront of structural change in power, all that kind of stuff. So I want to ask you this question actually now that I usually ask a lot of all of our companies. And then I'll open up the audience in case they have any questions. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 19, 2025 / 1:50PM, GEV.N - Ge Vernova Inc at Citi Global Industrial Tech and Mobility Conference What are the top two or top three innovations and structural changes affecting your company over the next five years? And are there any emerging industry trends that are perhaps being overlooked in the current discourse?

Question: Andrew Kaplowitz - Citigroup Inc - Analyst : Scott, I need to follow up there because I think a lot of us have been focused on gas and electrification for you guys. But it does seem like nuclear -- and nuclear is long lead, I cover a bunch of nuclear-focused companies. But it seems like maybe it's getting pushed up. So is that kind of what you're trying to tell us is like we shouldn't -- it's not going to move the GEV needle that much. But at the same time, it's a real impact. When is it a real impact, I guess?

Question: Andrew Kaplowitz - Citigroup Inc - Analyst : And it seems like you're also saying that because there's a lot of competition on the SMR side. But it seems like you really are starting to get positive momentum versus that competition. I mean, those are some big utilities that signed up, right?

Question: Andrew Kaplowitz - Citigroup Inc - Analyst : Any questions from the audience? Otherwise, I'll go. Please? Unidentified Participant Just a quick question. What is the most pressing issue or concern, I would say, like in your opinion, you have right now? And if there is, then how do you tackle that?

Question: Andrew Kaplowitz - Citigroup Inc - Analyst : Another question? Please. Unidentified Participant Could you maybe just tell us what your customers are seeing on the permitting side in wind and gas in the US and what's sort of changed in the last six weeks? And then secondly, in your Offshore business, I imagine the commercial terms there are getting worse, not better globally. How do you think about your manufacturing footprint there going forward?

Question: Andrew Kaplowitz - Citigroup Inc - Analyst : Any other question? Unidentified Participant Scott, it's about 2018, 2019, the world looked different on turbines. I was with Mitsubishi Heavy a few months ago, and they told me what their capacity is and how their order book was. And now, at the moment, like you're increasing your capacity. And this feel always like, are you building perhaps overcapacity? Or do you think you perhaps have not enough capacity to fulfill the demand? And with that comes normally margin, so pricing, I think the world is starving for energy. How much can you push pricing into -- like into new orders? So I expect like as you fulfill the old orders and the new ones are coming in, I think there is a rollover of just increasing margin and margin and margins. Just like how do you feel about, let's say, the next five to six years on operating margins?

Question: Andrew Kaplowitz - Citigroup Inc - Analyst : So I want to get to Electrification. So here, you seem to suggest in your earnings call that, in fact, you could tap the gas pedal a little bit more on capacity expansions to be able to sell premium slots, which it did seem to me that there would be a subtle change from your Investor Day. So maybe there's more color in terms of what you're doing there to free up additional manufacturing slots and how that might translate into that 16% margin target by '28.

Question: Andrew Kaplowitz - Citigroup Inc - Analyst : Got it. And so to that point, Scott, given your comment in the beginning about backlog growth expected this year, it seems to me like the chances of potentially double-digit growth lasting longer are reasonably high in that segment. Is that fair?

Question: Andrew Kaplowitz - Citigroup Inc - Analyst : Double digits, I got it.

Question: Andrew Kaplowitz - Citigroup Inc - Analyst : Okay. That's helpful. And then you got a few questions on Wind. Do you feel like you have the cost basis sort of where you need it now? Or do you need to do more there, would you say?

Question: Andrew Kaplowitz - Citigroup Inc - Analyst : And then just the two offshore jobs, anything to say about them? You already updated us very recently. They're proceeding along and you ramp up in the spring and summer, right?

Question: Andrew Kaplowitz - Citigroup Inc - Analyst : And then you talked at the Investor Day about the $600 million G&A cost reduction program. I mean, how do I say this, you're kind of born out of lean. And so there's always room to do more. So like how do you respond to that question? Like is $600 million the right number as you've kind of dug into the business? Can you keep going? Like how do you think about the lean journey for you guys?

Question: Andrew Kaplowitz - Citigroup Inc - Analyst : Just before we run out of time, I wanted to make sure to ask you about cash. You have a lot of it, over $8 billion, $6 billion buyback. You didn't buy back that much in Q4. So like what's the strategy going forward, Scott? Like I know you've said you got to pay attention, just got a lot of organic opportunity. I get that. But you do have a lot of cash. So what do you do?

Question: Andrew Kaplowitz - Citigroup Inc - Analyst : There's still 20 seconds. I'm going to ask you one very quick one. Just EPC companies, you mentioned last quarter in the earnings call that maybe there could be a bottleneck there. You met with them?

Question: Andrew Kaplowitz - Citigroup Inc - Analyst : Does it feel like it's going to be okay from that side? Or how would you say it?

Question: Andrew Kaplowitz - Citigroup Inc - Analyst : Handle, yes. Thank you very much, Scott.