GE Vernova Reports Mixed Q3 Earnings: Revenue Growth vs. EPS Miss

GE Vernova Inc. (NYSE: GEV) saw its shares decline in premarket trading following the release of its third-quarter earnings, which presented a mixed bag of results.

In terms of financial performance, the company achieved an impressive revenue growth of 8% year-over-year, totaling $8.913 billion. When accounting for organic growth, revenues increased by 10%, surpassing analyst expectations, which had set the revenue consensus at $8.783 billion.

CEO Scott Strazik noted, “GE Vernova had a solid third quarter, delivering double-digit orders and continued revenue growth with services strength across all segments, significant margin expansion in Power and Electrification, and substantial cash generation.”

Orders for the quarter totaled $9.4 billion, marking a 17% increase in organic orders, primarily driven by a robust 28% growth in services across all business segments and an uptick in equipment orders specifically in Power and Electrification.

However, the company recorded a loss per share of $0.35, which was wider than last year’s loss of $0.62 and fell short of the consensus EPS estimate of $0.32. The net loss for the quarter narrowed to $99 million, down from a loss of $185 million in the previous year.

On the earnings before interest, taxes, depreciation, and amortization (EBITDA) front, the adjusted EBITDA margin saw a slight expansion of 20 basis points to 2.7%, although it contracted by 70 basis points on an organic basis, registering an adjusted EBITDA of $243 million, reflecting an 18.5% increase year-over-year.

Breaking down revenue streams, the Power segment generated $4.206 billion in revenue, an 8% increase from last year, with orders reaching $5.202 billion, showing a strong gain of 28% driven by Gas Power equipment and services. The segment benefited from significant services growth of 29% on an organic basis, bolstered by the installation of 9 HA units and 15 aeroderivative units.

In contrast, Wind revenue remained flat year-over-year at $2.89 billion, but orders decreased by 19% to $1.747 billion, impacted by reduced Onshore Wind equipment orders, particularly outside North America.

The Electrification segment performed well, securing $1.928 billion in revenue, marking a 22% increase year-on-year driven by strong performance in Grid Solutions and Power Conversion. Orders for this segment increased by 17% to $2.51 billion.

On the cash flow side, GE Vernova reported robust operating cash flows of $1.127 billion, a stark improvement from the $233 million used in the same quarter last year. The free cash flow for the quarter was tallied at $968 million.

As of the end of the quarter, GE Vernova boasted a strong cash position with a total cash balance of $7.4 billion, showing an increase from $5.8 billion at the end of the second quarter.

Outlook for 2024

Looking ahead, GE Vernova reaffirms its guidance for 2024, projecting revenues towards the higher end of the $34 billion to $35 billion range, compared to the previous year's revenue of $34.93 billion. Additionally, the company anticipates free cash flow will trend towards the higher end of the $1.3 billion to $1.7 billion range.

Market Reaction

Following these announcements, GEV shares were down by 4.49%, trading at $264.00 in premarket, reflecting market investors' sentiments in light of the earnings report.

Earnings, Finance, Companies