# GE Vernova (GEV) Financial Model Free Excel 3-statement financial model and company analysis for GE Vernova. - Canonical: https://finamodel.com/companies/ge-vernova - Industry: Energy Equipment - Downloadable model: Yes - Excel download: https://finamodel.com/company-models/GEV.xlsx ## Model Purpose This model provides a comprehensive equity valuation and scenario analysis platform for GE Vernova to determine its intrinsic value as an independent entity capitalising on the global energy transition and electrification supercycle. ## Company Overview GE Vernova is a purpose-built global energy company that provides equipment, services, and software to generate, transfer, orchestrate, convert, and store electricity. Spun off from General Electric in April 2024, the company operates an installed base that helps generate approximately 25% of the world's electricity. The business operates through three primary segments: * **Power** (~45% of revenue): Provides dispatchable, flexible electricity generation solutions, including gas, nuclear, hydro, and steam technologies. * **Wind** (~25% of revenue): Manufactures and services onshore and offshore wind turbines and blades. * **Electrification** (~30% of revenue): Delivers grid solutions, power conversion, and electrification software to transmit and manage electricity. GE Vernova operates globally with a heavy manufacturing footprint combined with a highly profitable, asset-light services business (services account for over 55% of the company's $150 billion backlog). The company holds a dominant competitive position, boasting the largest fleet of gas turbines globally (~7,000 units) and a massive wind installed base (~59,000 turbines). Recent major events include its April 2024 spin-off from GE, a major turnaround programme in the Wind segment to stem offshore contract losses, and the 2026 acquisition of the remaining 50% stake in Prolec GE to bolster the Electrification segment. ## Revenue Deep Dive ### Power * **Segment name**: Power * **Revenue driver formula**: (Gas Turbine Deliveries x Average Selling Price) + (Installed Base x Service Attachment Rate x Service Fee) * **Historical growth rate**: High single-digit to low-teens percentage (targeted high-teens CAGR). * **Key growth levers and headwinds**: Driven by surging electricity demand from AI data centres and grid constraints requiring dispatchable gas power. Headwinds include long-term regulatory pressure to phase out fossil fuels. * **Pricing dynamics**: Highly contractual with long-term service agreements (LTSAs) providing inflation-linked pricing power. * **Revenue recognition notes**: Equipment revenue is often recognised over time using the cost-to-cost method for highly customised turbines; services are recognised as performed. * **Seasonality**: Q4 is historically the strongest quarter for equipment deliveries and cash collections. ### Wind * **Segment name**: Wind * **Revenue driver formula**: (Onshore/Offshore Turbine Volumes x Price per Megawatt) + Service Revenue * **Historical growth rate**: Negative to flat (revenue declined 25% in Q4 2025 due to lower onshore deliveries). * **Key growth levers and headwinds**: Headwinds include severe offshore wind contract losses, supply chain inflation, and permitting delays. Growth levers rely on the onshore turnaround and reducing the break-even point to 1,000 turbines per year. * **Pricing dynamics**: Highly competitive bidding environment; historical contracts lacked inflation protection, which the company is currently restructuring. * **Revenue recognition notes**: Percentage-of-completion accounting heavily impacts this segment, leading to forward loss provisions on unprofitable offshore contracts. * **Seasonality**: Deliveries are typically weighted towards the second half of the year, dependent on weather and construction windows. ### Electrification * **Segment name**: Electrification * **Revenue driver formula**: Grid Equipment Volume x Unit Price + Software Subscription Revenue * **Historical growth rate**: 25% to 30% (grew 28% in FY2025). * **Key growth levers and headwinds**: Massive tailwinds from grid modernisation, renewable energy integration, and HVDC (high-voltage direct current) infrastructure upgrades. * **Pricing dynamics**: Strong pricing power due to industry-wide transformer and switchgear shortages. * **Revenue recognition notes**: Mix of point-in-time for standard equipment and over-time for large, complex grid installations. * **Seasonality**: Relatively smooth, though Q4 sees a slight uptick in software renewals and final project acceptances. ## Cost Structure ### Variable Costs / COGS * COGS primarily consists of raw materials (steel, copper, specialised alloys), direct manufacturing labour, logistics, and project execution costs. * Gross margins vary wildly by mix: equipment gross margins are typically low-to-mid single digits, while services gross margins run in the 30% to 40% range. * The company faces significant commodity exposure, particularly to copper for grid equipment and steel for wind towers. * COGS scales linearly with equipment volumes but exhibits strong operating leverage in the services and software divisions. ### Operating Expenses * **R&D**: Critical for developing next-generation gas turbines (hydrogen-capable), small modular reactors (SMRs), and larger wind turbines. Typically runs at 3% to 4% of revenue. * **SG&A**: Driven by a global sales force, corporate overhead, and IT infrastructure. The company is actively reducing corporate allocations post-spin-off. * **Depreciation & Amortisation**: Heavy depreciation from the global manufacturing footprint, running at roughly 3% to 4% of revenue. * **Restructuring / one-time charges**: Frequent in recent years due to the spin-off and the ongoing Wind segment turnaround (right-sizing manufacturing capacity). ### Margin Profile * **Adjusted EBITDA margin**: Reached 8.4% in FY2025, with guidance targeting 11% to 13% in 2026 and 20% by 2028. * **Segment margins**: Power operates at ~16% to 17% EBITDA margins; Electrification operates at ~15% to 17%; Wind is currently loss-making (Q4 2025 EBITDA loss of $225 million) but targeting break-even. * Margins are expanding rapidly due to disciplined underwriting, price increases in backlog, and volume leverage in Electrification. ## Balance Sheet Structure * **Total assets**: Approximately $45 billion to $50 billion. * **Key asset categories**: Cash and equivalents ($8.8 billion at end of 2025), contract assets (unbilled revenue), inventory, and PP&E. * **Working capital profile**: * **Days Sales Outstanding (DSO)**: 70 to 85 days. * **Days Inventory Outstanding (DIO)**: 80 to 100 days. * **Days Payable Outstanding (DPO)**: 90 to 110 days. * The company operates with structurally negative net working capital. It funds manufacturing through customer progress collections and advance payments (contract liabilities), which is a massive cash flow advantage during growth cycles. * **PP&E**: Consists of heavy manufacturing facilities, testing sites, and tooling. Maintenance capex is relatively low compared to historical levels due to lean manufacturing initiatives. ## Capital Expenditure & Investment * **Capex as % of revenue**: Typically runs at 2.0% to 3.0%. * **Maintenance vs. growth**: Approximately 60% maintenance and 40% growth, with growth capex directed towards Electrification capacity and Nuclear SMR development. * **M&A pattern**: Selective bolt-on acquisitions to secure supply chains or expand technology. The most notable recent transaction is the acquisition of the remaining 50% stake in Prolec GE (a joint venture for transformers) in 2026. ## Debt & Capital Structure * **Total debt**: The company was spun off with a pristine, net-cash positive balance sheet. Cash balances ($8.8 billion) far exceed any minimal lease liabilities or short-term borrowings. * **Credit rating**: Investment grade profile. * **Share repurchase programme**: Highly active. The board increased the authorisation to $10 billion in early 2026 (repurchased 8.2 million shares for $1.1 billion in 2025). * **Dividend policy**: Declared a $0.50 per share quarterly dividend in late 2025 (annualised $2.00 per share), representing a doubling of the initial payout. ## Cash Flow Characteristics * **Operating cash flow conversion**: Extremely high during order growth phases due to the influx of customer advances. * **Free cash flow margin**: Reached roughly 9.7% in FY2025 ($3.7 billion FCF on $38.1 billion revenue). Guidance targets $5.0 to $5.5 billion FCF in 2026. * **Major non-cash items**: Depreciation, stock-based compensation, and massive deferred tax asset valuation allowance releases (e.g., a $2.9 billion non-cash tax benefit in 2025). * **Working capital cash flow impact**: A major source of cash. As the $150 billion backlog grows, progress collections provide upfront cash before revenue is recognised. ## Sheet Structure 1. **Assumptions**: Hardcoded inputs for macroeconomic drivers, segment growth rates, margin targets, and capital allocation policies. 2. **Backlog & Orders**: Roll-forward schedules (Beginning Backlog + Orders - Revenue = Ending Backlog) for Power, Wind, and Electrification. 3. **Income Statement**: Segment-level revenue and EBITDA build, corporate unallocated expenses, D&A, interest, and tax to reach Net Income. 4. **Balance Sheet**: Standard assets and liabilities, with specific breakouts for Contract Assets (unbilled revenue) and Contract Liabilities (progress collections). 5. **Cash Flow Statement**: Indirect method starting from Net Income, adjusting for the 2025 valuation allowance release, detailed working capital changes, capex, and shareholder returns. 6. **Working Capital Schedule**: DSO, DIO, DPO calculations and the roll-forward of contract assets/liabilities based on order intake versus revenue recognition. 7. **Debt & Equity Schedule**: Share count roll-forward (factoring in the $10 billion buyback), dividend payments, and interest income on the large cash balance. 8. **DCF Valuation**: Unlevered free cash flow calculation, WACC assumptions, terminal value, and bridge from enterprise value to equity value (adding the $8.8 billion cash). ## Key Financial Relationships 1. `Ending Backlog = Beginning Backlog + Orders - Recognised Revenue` 2. `Power Revenue = Power Equipment Revenue + Power Services Revenue` 3. `Wind Revenue = Wind Equipment Revenue + Wind Services Revenue` 4. `Electrification Revenue = Electrification Equipment Revenue + Electrification Services Revenue` 5. `Segment EBITDA = Segment Revenue x Segment EBITDA Margin` 6. `Consolidated Adjusted EBITDA = Power EBITDA + Wind EBITDA + Electrification EBITDA - Corporate Unallocated Expenses` 7. `Contract Liabilities Change = New Orders x Advance Payment % - Revenue Recognised from Backlog` 8. `Free Cash Flow = Cash from Operations - Capital Expenditures` 9. `Interest Income = Average Cash Balance x Yield on Cash` 10. `Ending Shares Outstanding = Beginning Shares - (Share Repurchase Amount / Average Share Price) + SBC Issuances` ## Cross-Sheet Dependencies * The **Backlog & Orders** sheet is the critical engine; it dictates the revenue recognised on the **Income Statement** and the progress collections on the **Working Capital Schedule**. * The **Working Capital Schedule** feeds directly into the **Cash Flow Statement**, which is highly sensitive to the delta between Orders and Revenue. * The **Cash Flow Statement** determines the ending cash balance on the **Balance Sheet**, which in turn feeds the **Debt & Equity Schedule** to calculate interest income (creating a minor circularity that should be managed with an average balance toggle or broken via a macro). * The **Income Statement** feeds Net Income to the top of the **Cash Flow Statement** and Retained Earnings on the **Balance Sheet**. ## Sign Convention * **Income Statement**: Revenues are positive. Expenses (COGS, SG&A, R&D, Interest, Tax) are negative. * **Balance Sheet**: All assets, liabilities, and equity balances are positive. * **Cash Flow Statement**: Cash inflows (Net Income, D&A, increases in liabilities, decreases in assets) are positive. Cash outflows (Capex, dividends, buybacks, increases in assets) are negative. ## Things Most Likely to Go Wrong * **Ignoring the backlog constraint**: Projecting revenue growth that exceeds the mathematical reality of the backlog roll-forward will invalidate the model. Revenue must be tied to backlog conversion. * **Misinterpreting the 2025 tax benefit**: The $2.9 billion U.S. valuation allowance release in FY2025 artificially inflated GAAP Net Income. The model must strip this out to calculate true operating cash flow and normalised earnings. * **Underestimating working capital swings**: GE Vernova's cash flow is heavily dependent on contract liabilities. If orders slow down, the lack of new advance payments will cause a severe cash burn even if reported revenue remains high. * **Missing the Prolec GE step-up**: The 2026 acquisition of the remaining 50% of Prolec GE adds approximately $3 billion in inorganic revenue to the Electrification segment. This must be modelled as a step-function increase in 2026. * **Extrapolating Wind losses**: The Wind segment posted a $225 million EBITDA loss in Q4 2025. Extrapolating this indefinitely ignores management's restructuring. The model must reflect a gradual return to break-even by 2026/2027. * **Corporate unallocated expenses**: Segment EBITDA margins look artificially high because they exclude corporate overhead. The model must deduct corporate unallocated costs to bridge to Consolidated Adjusted EBITDA. * **Interest income vs. expense**: Because the company has $8.8 billion in cash and negligible debt, it generates net interest income. Hardcoding an interest expense based on historical GE allocations will break the valuation. * **Share count reduction**: With a $10 billion buyback authorisation on a ~$144 billion market cap, the share count will decrease meaningfully. Failing to model this will understate EPS and per-share valuation metrics. ## Validation Checks * "Consolidated Revenue for 2026 must fall within the $44.0 billion to $45.0 billion guidance range." * "Consolidated Adjusted EBITDA margin must expand to the 11.0% to 13.0% range in 2026." * "Free Cash Flow for 2026 must be between $5.0 billion and $5.5 billion." * "Power segment EBITDA margin should remain stable in the 16.0% to 18.0% range." * "Wind segment EBITDA must show sequential improvement, crossing above $0 by late 2026 or 2027." * "Balance sheet must balance: Total Assets = Total Liabilities + Equity in every forecasted period." * "Cash balance must not drop below $5.0 billion given the strong FCF generation and lack of debt maturities." * "Dividend payout should reflect the stated $2.00 per share annualised rate, growing in line with FCF." ## Key Assumptions (Default Values) | Assumption | Default Value | Unit | Rationale | |---|---|---|---| | Power Revenue Growth | 10.0 | % | Aligns with high-teens organic growth target, tempered for conservatism. | | Power EBITDA Margin | 17.0 | % | Based on Q4 2025 actuals (16.9%) and management guidance. | | Wind Revenue Growth | 2.0 | % | Reflects flat onshore volumes and selective offshore bidding. | | Wind EBITDA Margin | -1.0 | % | Reflects ongoing turnaround, improving from Q4 2025 losses. | | Electrification Rev Growth | 25.0 | % | Includes organic growth plus the ~$3B Prolec GE acquisition impact in 2026. | | Electrification EBITDA Margin | 17.0 | % | Based on Q4 2025 actuals (17.1%) and strong pricing power. | | Corporate Unallocated | 2.5 | % of Rev | Estimated corporate overhead not allocated to segments. | | Effective Tax Rate | 21.0 | % | Normalised rate excluding the 2025 valuation allowance release. | | Capex as % of Revenue | 2.5 | % | Historical average required to support manufacturing capacity. | | Annual Share Repurchases | 2,500 | $ Millions | Run-rate to execute the $10 billion authorisation over 4 years. | | Annual Dividend per Share | 2.00 | $ | Based on the $0.50 quarterly dividend declared in late 2025. | | Yield on Cash | 4.0 | % | Assumed interest rate earned on the $8.8 billion cash balance. | | WACC | 9.5 | % | Standard discount rate for heavy electrical equipment manufacturers. | | Terminal Growth Rate | 2.5 | % | Long-term growth rate reflecting the ongoing energy transition. | ## Data Sources & Benchmarks * **Filings**: GE Vernova Investor Relations website (gevernova.com/investors), SEC EDGAR for 10-K and 10-Q filings. * **Key Peers**: Siemens Energy (ENR), Vestas Wind Systems (VWS), Schneider Electric (SU), ABB Ltd (ABBN). * **Industry Data**: International Energy Agency (IEA) reports on grid investment and renewable capacity additions; Wood Mackenzie for wind turbine market share data. * **Consensus Estimates**: Bloomberg or FactSet for checking model outputs against sell-side expectations. ## Sources * GE Vernova Q4 and Full Year 2025 Earnings Press Release (January 28, 2026) * GE Vernova 2025 Annual Report and 10-K * GE Vernova Q4 2025 Earnings Presentation and Webcast Transcript * GE Vernova December 2024 Investor Update Presentation --- ## Frequently asked questions ### What does GE Vernova do as a company? GE Vernova is a purpose-built global energy company that provides equipment, services, and software for generating, transferring, orchestrating, converting, and storing electricity. Spun off from General Electric in April 2024, it operates an installed base that helps generate approximately 25% of the world's electricity. ### What are GE Vernova's primary revenue-generating segments? GE Vernova's business operates through three primary segments: Power, Wind, and Electrification. The Power segment accounts for approximately 45% of revenue, Wind for about 25%, and Electrification for roughly 30%. ### How does GE Vernova manage its working capital profile? GE Vernova operates with a structurally negative net working capital profile. It funds its manufacturing operations through customer progress collections and advance payments, which provides a significant cash flow advantage during growth cycles. ### What is GE Vernova's typical capital expenditure as a percentage of revenue? GE Vernova's capital expenditure typically runs at 2.0% to 3.0% of its revenue. Approximately 60% of this capex is for maintenance, with the remaining 40% directed towards growth initiatives like Electrification capacity and Nuclear SMR development. ### What is the main purpose of the GE Vernova financial model? The GE Vernova financial model provides a comprehensive equity valuation and scenario analysis platform. Its primary goal is to determine the intrinsic value of GE Vernova as an independent entity, leveraging the global energy transition and electrification supercycle. ### Is there a downloadable Excel financial model available for GE Vernova? No, a downloadable Excel model for GE Vernova is not currently available. This platform offers a comprehensive equity valuation and scenario analysis for the company. [Interactive forecast calculator](https://finamodel.com/companies/ge-vernova/forecast)