Q1 2025 Earnings Summary
- Robust Order Pipeline & Backlog Growth: Management emphasized a strong order intake in Gas Power—with a total of 29 GW in backlog and 21 GW in slot reservation agreements—and highlighted very low cancellation risk as these slots convert into firm orders over time, indicating sustained long-term revenue visibility.
- Pricing Momentum & Margin Expansion: Executives noted a persistent price‐up environment in gas turbines—with pricing improvements even amid tariff pressures—and reinforced that incremental pricing actions (including adjustments in Electrification) are expected to drive significant margin expansion across segments.
- Resilient Financial Profile: Despite tariff-driven cost pressures, the team is actively mitigating these via supply chain adjustments and G&A cost transformation, underpinning a strong free cash flow profile and a healthy liquidity position, which supports ongoing investments and shareholder returns.
- Tariff and Inflation Risks: The company highlighted a $300–400 million estimated cost impact from tariffs in 2025, which could continue to pressure margins if mitigation efforts fall short or if tariffs persist longer than anticipated.
- Wind Segment Softness: The wind business showed significant challenges with 43% lower orders and ongoing softness due to permitting delays and policy uncertainties, potentially impacting overall profitability.
- Reliance on Slot Reservation Agreements: A considerable portion of future gas turbine demand is tied up in slot reservation agreements, which, while showing early down payments, face uncertainties regarding final site selection and EPC contracts, posing a risk of delayed or reduced conversion into firm orders.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +10.6% (from $7,260M in Q1 2024 to $8,032M in Q1 2025) | Total revenues grew strongly due to balanced contributions from both segments, with Equipment sales at $4,197M and Services at $3,835M, reflecting improved market execution, volume growth, and pricing performance compared to the previous period. |
Net Income | Turnaround from a Q1 2024 loss of $106M to a Q1 2025 gain of $264M | Net income showed a dramatic recovery; the reversal from a loss to a profit suggests significant operational improvements, cost management, and margin expansion that addressed previous inefficiencies and underperformance. |
Operating Cash Flow | Shift from an outflow of $444M in Q1 2024 to an inflow of $1,161M in Q1 2025 | Operating cash flow rebounded sharply as stronger net income, improved working capital management, and better operational execution drove a recovery from previous cash outflows, signaling a vital operational turnaround compared to the prior period. |
Free Cash Flow | Improved from -$661M in Q1 2024 to $975M in Q1 2025 | Free cash flow improvement resulted primarily from the combination of higher operating cash inflows and relatively controlled capital expenditures, indicating effective cash management and an operational reset compared to the negative figures seen in the prior period. |
Balance Sheet Snapshot | Equity strengthened with total assets at $51,559M and liabilities at $41,887M, supporting an equity base of $9,672M | The robust balance sheet—with a solid asset base and a lower proportion of liabilities—reflects financial strengthening and improved capital positioning relative to previous trends, providing a stable platform for future growth. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue | FY 2025 | $36 billion to $37 billion | $36 billion to $37 billion | no change |
Adjusted EBITDA Margin | FY 2025 | high single digits | high single digits | no change |
Free Cash Flow | FY 2025 | $2 billion to $2.5 billion | $2 billion to $2.5 billion | no change |
Tariffs and Inflation Impact | FY 2025 | no prior guidance | $300 million to $400 million | no prior guidance |
Power Revenue Growth | FY 2025 | mid-single-digit organic revenue growth | mid-single-digit organic revenue growth | no change |
Power EBITDA Margin | FY 2025 | 13% to 14% EBITDA margins | 13% to 14% EBITDA margins | no change |
Wind Revenue | FY 2025 | revenue expected to be down mid-single digits | revenue expected to decline mid-single digits | no change |
Wind EBITDA | FY 2025 | $200 million to $400 million EBITDA losses | $200 million to $400 million EBITDA losses | no change |
Electrification Revenue Growth | FY 2025 | mid- to high-teens organic revenue growth | mid- to high-teens organic revenue growth | no change |
Electrification EBITDA Margin | FY 2025 | 11% to 13% EBITDA margins | 11% to 13% EBITDA margins | no change |
Revenue Growth | Q2 2025 | no prior guidance | Continued year-over-year growth expected | no prior guidance |
Adjusted EBITDA Margin | Q2 2025 | no prior guidance | Anticipated sequential margin expansion | no prior guidance |
Free Cash Flow | Q2 2025 | no prior guidance | Positive free cash flow expected, though lower year-over-year due to a $300 million nonrecurring arbitration refund received in Q2 2024 | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Free Cash Flow | Q1 2025 | Positive free cash flow is expected in all four quarters of 2025 | 975 million | Met |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Gas Power Order Pipeline & Backlog Growth | Q4 2024, Q3 2024 and Q2 2024 discussions emphasized a diversified and growing order pipeline with substantial backlog increases (e.g., orders for heavy-duty turbines and a sizable gigawatt backlog). | In Q1 2025, orders grew by over 30% with a marked increase in heavy‐duty gas turbine bookings and backlog reaching 29 gigawatts, with long‐term visibility through slot reservations. | Consistent and improving growth: The focus on robust order intake and expanding backlog continues with even stronger growth and clearer long‐term visibility in Q1 2025. |
Pricing Momentum & Margin Expansion in Gas Turbines | Earlier periods (Q2–Q4 2024) highlighted a favorable and improving pricing environment with margin expansion achieved through productivity gains and disciplined pricing, especially for HA gas turbines. | Q1 2025 emphasized a “price up” environment with further pricing increases (including actions in April 2025) and significant margin expansion in the Power segment driven by productivity and volume. | Steady upward trajectory: The qualitative tone remains positive with consistent pricing improvements that are now even more pronounced, contributing to enhanced margins. |
Electrification Segment Growth & Expanding Grid Infrastructure Backlog | Q2–Q4 2024 earnings calls showcased strong revenue growth (increases up to 24%), order gains and significant backlog expansion driven by grid modernization investments globally. | Q1 2025 continued this robust performance with 18% revenue growth, 680 basis points of EBITDA margin expansion, and a backlog expansion to about $22 billion, supported by global electrification trends. | Consistently strong performance: Electrification maintains its momentum with healthy growth and expanding backlog, with improvements in margins and robust order activity persisting into Q1 2025. |
Wind Segment Softness, Quality Issues & Profitability Outlook | Across Q2–Q4 2024, discussions noted softness in orders (especially onshore), recurring quality issues (e.g. blade events), and cautious profitability outlooks with gradual margin improvements. | In Q1 2025, the wind segment remains challenged with a 43% drop in onshore orders, ongoing quality issues addressed by increased field efforts, and only modest profitability improvements despite better onshore margins. | Persistent challenges with slight improvements: The softness and quality issues continue to impact performance, although incremental progress in onshore profitability is noted without a significant shift in overall sentiment. |
Reliance on Slot Reservation Agreements & Conversion Uncertainty | Q4 2024 discussions mentioned securing slot reservation agreements (e.g., 9 gigawatts tied to U.S. load growth) without highlighting conversion uncertainty; Q3 and Q2 did not address this topic specifically. | Q1 2025 detailed 21 gigawatts of slot reservation agreements with explicit discussion of conversion uncertainty tied to EPC contracts, site selections, and permitting, though with minimal cancellation risk. | Increased emphasis: There is a shift toward detailed discussion on the conversion timing and uncertainty of slot reservations, reflecting a deeper focus on managing this risk. |
Production Capacity Constraints & Manufacturing Slot Scarcity | Q2 2024 focused on supply chain constraints (access to castings and forgings), while Q3 and Q4 2024 highlighted manufacturing slot scarcity and efforts to expand capacity (e.g., increasing turbine production from 48 to 70–80 units). | In Q1 2025, while strong market demand persists, the discussion continues on manufacturing slot scarcity, with capacity constraints still in focus despite ongoing expansion efforts and additional shifts. | Ongoing capacity challenges: The issue of manufacturing slot scarcity remains a recurring theme, with continuous efforts to expand capacity not fully alleviating supply constraints. |
Tariff & Inflation Risks Impacting Margins | Q2–Q4 2024 mentions described inflationary pressures being offset by productivity and pricing improvements, with little to no explicit discussion of tariff impacts in earlier calls. | Q1 2025 is more explicit, forecasting $300–$400 million in tariff‐related and inflation costs, while also outlining mitigation measures through contractual clauses, supply chain adjustments, and G&A cost reductions. | More explicit risk management: While inflation has been a consistent concern, Q1 2025 places greater emphasis on both tariff and inflation risks and details proactive strategies to mitigate their impact. |
EPC & Project Execution Challenges | Q3 2024 focused on project execution delays (especially in offshore wind) and quality issues (including manufacturing deviations), and Q4 2024 emphasized the need for robust EPC support and alignment. | In Q1 2025, EPC-related challenges are discussed in the context of converting slot reservations into firm orders, with ongoing concerns over EPC contracts, site selection, and permitting causing timing uncertainties. | Consistent execution concerns: The challenges with EPC and project execution remain a key issue, with the emphasis shifting slightly to the impact on order conversion timing in Q1 2025. |
Nuclear Energy Opportunities with BWRX Small Modular Reactors | Q3 2024 discussed a surge in demand for nuclear, leveraging an installed base of 65 plants and the accelerating sentiment around SMRs; Q4 2024 provided specific timelines (2032–2034 in the U.S. and 2029 in Canada). | In Q1 2025, the discussion highlights regulatory progress with Ontario Power Generation receiving a license and heightened U.S. interest, targeting the commissioning of the first SMR by late 2030. | Progressing toward execution: The focus on nuclear opportunities is evolving from aspirational growth to clearer regulatory milestones and execution timelines, reflecting increased momentum in the SMR space. |
Understated Product Warranty and Environmental Liabilities from Steam Business Sale | Q2 2024 mentioned a reduction in product warranty liabilities (from $1.4 billion to $1.2 billion) due to the steam business sale; no significant discussion of environmental liabilities was provided. | This topic is absent in Q1 2025 and later periods, with no further discussion on warranty or environmental liabilities. | Topic discontinued: The issue of understated warranty and environmental liabilities appears to have been resolved or deprioritized following the steam business sale, as it is no longer mentioned in subsequent periods. |
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Tariff Impact
Q: Tariffs increasing costs, mitigation planned?
A: Management expects tariffs to add $300–400 million in costs for 2025, mainly driven by China exposure. They’re actively adjusting their supply chain, using contractual clauses, and accelerating G&A restructuring to lessen the impact over time. -
Backlog & Orders
Q: How firm is the backlog and slot reservation risk?
A: They reported a firm equipment backlog of 29 GW plus 21 GW in slot reservations. These slots will convert to orders once final EPC contracts and permits are secured, with minimal cancellation risk. -
Pricing Dynamics
Q: Are gas and electrification prices being raised?
A: Management is raising prices sharply in gas power while seeing more modest price improvements in electrification, with variations by geography. -
Free Cash Flow Outlook
Q: What is the free cash flow guidance?
A: They anticipate generating between $2–2.5 billion in free cash flow for 2025, driven by strong EBITDA and improved working capital management despite cost pressures. -
Customer Behavior & Tariffs
Q: Have tariffs changed customer spending behavior?
A: Despite recent tariff pressures, customer behavior remains on track with previous projections, and management is making adjustments without fundamentally altering contract structures. -
Permitting Concerns
Q: Do EPA actions affect utility permitting?
A: Management noted that while permitting challenges continue, the impact of EPA directives will likely materialize more in 2026 rather than changing current spending plans. -
Electrification Backlog
Q: How is electrification backlog performing?
A: The electrification segment posted strong sequential backlog growth, with equipment backlog expanding by over $2 billion, reflecting steady demand despite tough comparisons. -
Data Centers
Q: What about data center slot reservations converting?
A: Approximately one-third of the 21 GW slot reservations are tied to data centers, expected to convert into orders after finalizing EPC partnerships and permitting, with financing concerns being minimal.
Research analysts covering GE Vernova.