Q2 2025 GE Vernova Inc Earnings Call

Unknown Executive: Welcome to GE Vernova's second quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode.

Good day, ladies and gentlemen, and welcome to GE vernova second quarter 2025 earnings conference call.

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At this time, all participants are in a listen-only mode. My name is Liz and I will be your conference coordinator today.

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Michael Lapides: I would now like to turn the program over to your host for today's conference, Michael Lapides, Vice President of Investor Relations. Please proceed.

As a reminder, this conference is being recorded.

Speaker Change: I would now like to turn the program over to your host for today's conference, Michael litus, vice president of investor relations, please proceed.

Michael Lapides: Welcome to GE Vernova's second quarter 2025 earnings call. I'm joined today by our CEO, Scott Strazik, and our CFO, Ken Parks. Our conference call remarks will include both GAAP and non-GAAP financial results. Reconciliations between GAAP and non-GAAP measures can be found in today's Form 10Q press release and the presentation slides, all of which are available on our website. Please note that year-over-year commentary or variance on Orders, Revenue, Adjusted, and Segment EBITDA and Margin discussed during our prepared remarks are on an organic basis, unless otherwise specified.

Speaker Change: Welcome to GE vernova second quarter 2025 earnings call. I'm joined today by our CEO Scott strazy, NR, CFO Ken Parks our conference. Call remarks will include both gaap and non-gaap financial results. Reconciliations between gaap and non-gaap measures can be found in today's Forum 10, Cube press release and the presentation slides, all of which are available on our website.

Michael Lapides: We will make forward-looking statements about our performance. These statements are based on how we see things today. While we may elect to update these forward-looking statements at some point in the future, we do not undertake any obligation to. As described in our SEC filings, actual results may differ materially due to risk and uncertainty.

Scott Strazik: With that, I'll hand the call over to Scott. Thanks, Michael, and good morning, everyone. We had a productive second quarter, positioning us well to continue to accelerate our growth and margin expanse. This era of accelerated electrification is driving unprecedented investments in reliable power, grid infrastructure, and decarbonization solutions. We see attractive end markets converging with better run business. giving us a substantial opportunity to create value from here.

Speaker Change: Early due to risk and uncertainties with that. I'll hand the call over to Scott.

Thanks Michael and good morning everyone.

We had a productive, second quarter, positioning us. Well to continue to accelerate our growth and margin expansion.

Scott Strazik: At the start, I just want to share some market context as I see it today. Continued strength in gas power demand as we sign nine gigawatts of new gas equipment contracts in 2Q, of which seven went into slot reservation agreements and two went directly into order. During the quarter, we also converted three gigawatts of SRAs from previous quarters into orders while shipping five gigawatts of equipment. This resulted in backlog remaining at 29 gigawatts while growing slot reservation agreements from 21 to 25 gigawatts, building our total backlog and slot reservation agreements to 55 gigawatts from the 50 we talked about at April Learning.

Speaker Change: This era of accelerated electrification is driving unprecedented Investments, and reliable power grid infrastructure and decarbonization solutions. We see attractive and markets converging with better run businesses. Giving us a substantial opportunity to create value from here.

At the start, I just want to share some Market context as I see it today.

Continued strength and gas power demand as we sign 9, gigawatts of new gas equipment, contracts in 2q of which 7 went into slot reservation agreements and 2 went directly into orders.

during the quarter, we also converted 3 gigawatts of sras from previous quarters into orders, while shipping 5, gigawatts of equipment,

Scott Strazik: We continue to see higher turbine prices and strong demand and still expect to have at least 60 gigawatts between backlog and reservation agreements by the end of the year at better margins. with significant momentum into 26.

Speaker Change: This resulted in backlog remaining at 29 gigawatts. While growing slot, reservation agreements from 21 to 25. Gigawatts building our total backlog in slot reservation agreements to 55. Gigawatts from the 50, we talked about at April learning.

Speaker Change: We continue to see higher turbine prices, and strong demand, and still expect to have at least 60 gigawatts between backlog and reservation agreements by the end of the year.

if better margins with significant momentum,

Scott Strazik: But the power demand isn't limited to gas new units. We also see solid services demand growth as customers look to invest in their existing fleet. Not only are we seeing strength in gas services, STEAM services orders were up 30% in Q2 in support of nuclear extensions and upgrades, and we booked significantly higher up rates in hydro, which increased 61%. We continue to work hard to ramp our production capacity at gas power and to meet this rise in demand for services across our fleet. We also are pleased with the progress in our 300 megawatt small modular reactor, which is part of our higher R&D for this year.

Speaker Change: Into 26.

Speaker Change: But the power demand isn't limited to gas, new units.

We also see solid Services demand growth as customers look to invest in their existing fleets.

Speaker Change: Not only are we seeing strength in gas services?

Steam Services, orders were up 30% in Q2 in support of nuclear extensions and upgrades.

And we booked significantly, higher up, rates in hydro, which increase 61%.

We continue to work hard to ramp our production capacity at gas power and to meet this rise in demand for services across our Fleet.

Scott Strazik: We are starting to see the initial proof points of our investment. We are in construction in Ontario on the first project. The NRC has now formally accepted TVA's application to construct at Clinch Riverside, which means the formal process has started, and I expect more customer announcements. with our SMR technology in the second half of the year.

We also are pleased with the progress in our 300 megawatt, small modular reactor, which is part of our higher R&D for this year.

Speaker Change: We are starting to see the initial proof points of our investment.

Scott Strazik: Continued progress in electrification. We grew our equipment backlog, an incremental $2 billion in 2Q25, led by Europe, with North America and Asia backlogs both sequentially increasing almost 10%. Demand in the Middle East is accelerating, as evidenced with our announcement on the Saudi grid stabilization equipment, synchronous condenser. We expect at least $1.5 billion of this agreement to become an order in the third quarter. Synchronous condensers provide voltage support and frequency regulation to help balance the grid when generation levels are volatile, especially in areas with significant renewable intermittency. This is a technology we have manufactured for years, and now the market is starting to catch up.

We are in construction in Ontario on the first project, the NRC has now formally accepted tva's application to construct a Clint River Site, which means the formal processes started. And I expect more customer announcements with our SMR technology and the second half of the year.

Speaker Change: Continued progress. In electrification, We Grow our equipment. Backlog and incremental, 2 billion and 2, q25 led by Europe with North America and Asia backlogs, both sequentially, increasing almost 10%.

Speaker Change: Demand in the Middle. East is accelerating as evidenced whether announcement on the Saudi grid stabilization equipment, synchronous condensers,

We expect at least 1 and a half billion of disagreement to become an order in the third quarter.

Scott Strazik: Investments in the reliability and resiliency of the grid are clearly growing globally. Technologies like synchronous condensers have been a small market over the last decade. But we see this as a credible $5 billion market opportunity a year going forward in our investing and positioning our business.

Speaker Change: Synchronous, condensers provide voltage support and frequency regulation to help balance the grid when generation levels are volatile, especially in areas with significant renewable intermittency. This is a technology we have manufactured for years and now the market is starting to catch up.

Scott Strazik: served this opportunity. Demand for data centers also remains strong in electrification. We've already received almost 500 million in orders in the first half 25 versus 600 million in full year 24. So this growth market continues to accelerate.

Investments in the reliability and resiliency of the grid are clearly growing globally Technologies. Like synchronous condensers have been a small Market over the last decade, but we see this. As a credible 5 billion dollar market opportunity, a year going forward and are investing in positioning our businesses to serve this opportunity.

Speaker Change: Demand for data centers also remains strong in electrification.

Scott Strazik: We do see weaker European HVDC orders in 25 as we sit here today with some projects canceled or moving to the right as affordability challenges in the EU becomes even more real. But the momentum we are seeing elsewhere in this segment is more than offsetting it, and we continue to see a clear pathway to grow our electrification equipment backlog at least as much in 25 as we did in 23.

Speaker Change: We've already received almost 500 million in orders in the first half, 25 versus 600 million in full year 24. So this growth Market continues to accelerate.

Speaker Change: We do see weaker European hvdc orders in 25. As we sit here today with some projects canceled or move into the right as affordability challenges in the EU becomes even more real

Scott Strazik: On wind. Since the tax bill was signed on July 4th, we've experienced an increase in customer engagement in the U.S. So the potential certainly exists for an inflection towards growth, although permitting and managing through the interconnect queue are also key. It is early, and we'll see how the rest of the year materializes. I'm also encouraged with some wins we've had recently in international markets, Romania, Australia, Japan, Spain, Germany. Markets where we expect to see orders in second half 25. The markets continue to come our way while we continue to work hard every day to run our businesses better.

Speaker Change: But the momentum we are seeing elsewhere in this segment is more than offsetting it and we continue to see a clear pathway to grow. Our electrification equipment backlog. At least as much in 25 as we did in 23 and 24.

Speaker Change: On wind. Since the tax bill was signed on July 4th, we've experienced an increase in customer engagement in the US.

Speaker Change: Ing, through the interconnect queue are also key.

Speaker Change: It is early and we'll see how the rest of the year materializes.

Speaker Change: I'm also encouraged with some wins. We've had recently an international markets

Romania, Australia, Japan, Spain, Germany markets where we expect to see orders and second half 25.

Scott Strazik: Ten will walk through the detailed performance by business, but I was pleased to see power deliver EBITDA margins north of 16% with electrification approaching 15% into Q. But I would emphasize that as our teams continue to get their feet under them, we see real opportunity to continue to accrete margins higher from here. On wind, we continue to ship more profitable onshore equipment, but that was more than offset in 2Q, with our investments in our services quality programs in the field, in addition to the impact of tariffs on our offshore wind business. Year-to-date, we've lost approximately $300 million in the wind segment, but expect the business in the second half of 2025 to be closer to break even.

Speaker Change: The markets continue to come our way, while we continue to work hard every day to run our businesses better.

10 will walk through the detailed performance by business but I was pleased to see Power delivery ibida. Margins north of 16%

with electrification, 15% into Q.

Speaker Change: But I would emphasize that as our teams continue to get their feet under them. We see real opportunity to continue to accrete margins higher from here.

On wind, we continue to ship more profitable Honore equipment, but that was more than offset and 2 with our investments and our services quality programs in the field.

Speaker Change: In addition to the impact of tariffs on our offshore wind business,

Scott Strazik: Our onshore fleet performance continues to improve. We've seen the availability of our fleet increased by one percentage point since last year, positively impacting our customers with long term service. We are starting to free up more capacity in 3Q onwards for transactional related work in the onshore install bay. In offshore, we installed 34 units in 2Q and commissioned 33, our most productive quarter to date.

Speaker Change: year to date, we've lost approximately 300 million in the wind segment but expect the business in the second half of 25 to be closer to break even

Are onshore Fleet performance continues to improve. We've seen the availability of our Fleet increased by 1% points since last year.

Positively impacting. Our customers with long-term service contracts. We are starting to free up more capacity, in 3Q, onwards for transactional, related work, in the onshore installed base.

Scott Strazik: Another variable that is giving me real confidence in the future is that we are now getting to a point in many of our larger certainly in both gas and grid solutions. where we have a solid enough lean foundation to evaluate robotics and automation in a more strategic ways both in the factories and out in the field. Standard work in our functions is also laying the foundation to even more aggressively invest in AI and drive real productivity improvement at pace. As I see it, robotics and automation are critical, but can only be invested into once a business has sufficiently eliminated the waste in their core processes.

Speaker Change: in offshore, we installed 34 units in 2q and commission 33, our most productive quarter,

Speaker Change: To date.

Speaker Change: Another VAR variable that is giving me real confidence in the future. Is that we are now getting to a point in many of our larger businesses certainly, in both gas and grid Solutions where we have a solid enough, lean Foundation to evaluate Robotics and Automation in a more strategic ways both in the factories and out in the field.

Speaker Change: Standard work in our functions is also laying the foundation to even more aggressively, invest in Ai and drive. Real productivity improvements at PACE.

Scott Strazik: In a similar vein, a business must get to standard work before investing in AI.

Scott Strazik: We are now ready for both, and these two themes are important parts of our strategy reviews that will take place in 3Q across the company. better market conditions and continued operational improvement in our business. are both important, as is our focus on leading the industry. from a position of financial strength.

As I see it Robotics and automation are critical but can only be invested into. Once a business is sufficiently eliminated. The waste in their core processes in a similar vein, a business must get to standard work before investing in AI.

Speaker Change: We are now ready for both. And these 2 themes are important parts of our strategy reviews that will take place in 3Q across the company.

Better market conditions and continued operational improvement in our businesses are both important.

Scott Strazik: We were pleased to deliver positive free cash flow again in Q2 and end the quarter with almost $8 billion of cash. So far this year, we've spent 1.6 billion on stock buybacks, repurchasing approximately 5 million shares. We are continuing to invest in our organic growth. Just last week, I was at our Charleroi factory in Pennsylvania, where we announced an incremental 250 jobs over the next two years, with up to $100 million investment that will support a doubling of volume out of that factory from 25 to 28.

Speaker Change: As is our focus on leading the industry from a position of financial strength.

Speaker Change: We were pleased to deliver. Positive free cash flow again in Q2.

Speaker Change: And end the quarter with almost 8 billion of cash.

Scott Strazik: We are also pleased with our progress in our small strategic acquisition. A great example of this is our acquisition of Woodward's gas turbine parts. which includes a factory that allows us to redirect work and optimize the layout of our Greenville plant with limited capex spending and improve productivity in our gas power supply chain. prior to our acquisition. This site experienced 50,000 labor hours in 2020. But after approximately 100 days since close, we now see a clear path to 90,000 hours in the factory by 28, freeing up space in our Greenville factory to drive more productive growth.

So far this year we've spent 1.6 billion on stock, BuyBacks repurchasing, approximately 5 million shares. We are continuing to invest in our organic growth. Just last week, I was at our Charlotte Roy Factory in Pennsylvania, where we announced an incremental 250 jobs over the next 2 years with up to a hundred million dollar investment, that will support a double doubling of volume, out of that Factory from 25 to 28.

Speaker Change: We are also pleased with our progress and our small strategic acquisitions.

Speaker Change: A great example of this is our acquisition of Woodward's gas turbine Parts business, which includes a factory that allows us to redirect work and optimize the layout of our Greenville plan with limited capex spending and improved productivity and our gas power supply chain.

Speaker Change: Prior to our access acquisition, this site experienced 50,000 labor hours and 24.

Scott Strazik: These are the kinds of transactions we are working hard to add to our pipeline, where we see clear opportunity to complement the growth and markets we serve with our lean discipline to do very attractive, lower risk, and accretive deals in our core.

Speaker Change: but after approximately 100 days since closed, we now see a clear path to 90,000 hours in the factory by 28 freeing up space in our Greenville Factory to drive more productive growth

Scott Strazik: We were also excited to announce this week our acquisition of Altea scheduled for an August 1st close. With this acquisition, we are buying an existing partner that uses AI and visualization technologies to help our customers manage and orchestrate the grid. We will be able to immediately integrate this with our grid OS as another important step forward for our electrification software.

Speaker Change: These are the kinds of transactions. We are working hard to add to our pipeline where we see clear opportunity to compliment the growth in markets. We serve with our Dean discipline to do very attractive, lower risk and accretive deals in our core.

Speaker Change: We are also excited to announce this week. Our acquisition of LT is scheduled for an August 1st close.

Scott Strazik: Share all of that to just outline in my words what it means to lead from a position of financial strength. $1.6 billion stock buyback at very attractive value. Smart Vertical Integration of Supply Chain Opportunities in our core, where we can rapidly increase productivity to gain substantial operating and Strategic Editions of Complementary New Technology. to improve growth going forward.

Speaker Change: We will be able to immediately integrate this with our grid OS as another important step forward for our electrification software business.

I share all of that to just outline in my words. What it means to lead from a position of financial strength, 1.6 billion dollar stock buyback at very attractive valuation.

Smart vertical integration of supply chain opportunities in our core where we can rapidly increase productivity to gain substantial operating leverage and strategic editions of complimentary new technology.

Scott Strazik: In all these cases, it is early, but I expect us to deliver substantially more from here.

To improve growth going forward.

Speaker Change: In all these cases, it is early.

But I expect us to deliver substantially more.

Scott Strazik: Turn to the next slide on our second quarter results. We continue to build a stronger backlog, supporting the long-term growth potential in our business. Our equipment backlog grew from $45 to $50 billion in 2Q, up almost $7 billion in first half 25. We are growing this backlog at improved margins. and consistent with prior communications. Look forward to showing you at fourth quarter earnings next January, the full change in margin in the equipment back. Our services backlog also grew approximately $1 billion in the second quarter. We now maintain a total backlog of $129 billion. In light of the strength of our power and electrification results in first half 25 and forecast for the remainder of the year, we've revised up our EBITDA margin expectations for both segments and increased our free cash flow expectations for the year in line with these expanded margins at modestly higher revenue levels.

Speaker Change: From here.

Speaker Change: Turn to the next slide on our second quarter results. We continue to build a stronger backlog, supporting the long-term growth potential in our businesses, our equipment backlog, Grew From 45 to 50 billion. In 2q up almost 7 billion in first half 2525.

Speaker Change: We are growing this backlog at improved margins.

Speaker Change: And consistent with prior Communications. Look, forward to showing you at fourth quarter earnings. Next January, the full change in margin in the equipment backlog.

Our service backlog. Also grew approximately 1 billion in the second quarter. We now maintain a total backlog of 129 billion.

Speaker Change: In light of the strength of our power and electrification results in first half, 25 and forecast for the remainder of the year.

Scott Strazik: Ken will provide more details. But these updated estimates fully embed the cost of tariffs in 2025, which we estimate to be trending towards the lower end of three and four hundred million dollars in today's announced tariffs. So almost one point of negative EBITDA margin embedded in the guide. The teams are making real progress on a go-forward basis on how we are contracting for this, in addition to new sourcing strategies and more utilization of free trade zones. But for 25, it is likely the impact remains within this band.

Speaker Change: We've revised up our ibida margin expectations for both segments, and increased, our free cash flow expectations for the year in line with these expanded margins at modestly higher Revenue levels.

Ken Parks: Ken will provide more details.

Ken Parks: But these updated estimates fully embed the cost of tariffs in 25 which we estimate to be trending towards the lower end.

Ken Parks: Of 3 and 400 million dollars at today's announced tariffs. So, almost 1 point of negative ibida margin embedded in the guide,

Scott Strazik: The last thing I want to touch on, and which Ken will also give more details to in the later slides, is our announced plan restructuring costs, which we expect to incur over the next 12 months of approximately 250 to 275 million dollars. It was very important to me that after our first year as a public company, we evaluated how our organization was performing and where we had opportunities to be more efficient and streamlined. More important than the savings this will yield is that this is an important step forward in the culture of the company I want GE Vernova to be.

Ken Parks: the teams are making real progress on a go forward basis on how we are Contracting for this, in addition to new sourcing strategies and more utilization of free trade zones. But for 25, it is likely the impact remains within this band.

The last thing I want to touch on in which Ken will also give more details to in the later. Slides is our announcement plan restructuring costs which we expect to incur over the next 12 months of approximately 250 to 275 million.

Ken Parks: It was very important to me.

Ken Parks: That. After our first year, as a public company, we evaluated how our organization was performing and where we had opportunities to be more efficient and streamlined.

Scott Strazik: Even with the growth ahead of us, it is critical culturally. We continue looking in the mirror and finding opportunities to get better with a lower cost structure. This is the first of many ways I expect us to be more productive while meeting the substantial growth ramp ahead in the early stages of this investment super cycle. into the electric power.

Ken Parks: More important than the savings. This will yield, is that this is an important step forward in the culture of the company. I want you, you've earned over to be,

Ken Parks: even with the growth ahead of us, it is critical culturally. We continue looking in the mirror and finding opportunities to get better with a lower cost structure.

Ken Parks: This is the first of many ways. I expect us to be a more productive while meeting the substantial growth ramp ahead in the early stages of this investment super cycle.

Ken Parks: With that, I'm going to hand it over to Ken to provide details on our second quarter results and our updated guidance. Thank you, Scott. Turning to slide five, we delivered strong results in 2Q 2025 with continued orders and revenue growth and adjusted EBITDA margin expansion. We also generated positive free cash flow again this quarter and returned approximately $450 million to shareholders through share repurchases and dividends, while maintaining a healthy cash balance of nearly $8 billion. Demand remained robust in the second quarter as we booked $12.4 billion of orders, an increase of 4% year-over-year, and approximately 1.4 times revenue.

Ken Parks: Into the electric power system.

Ken Parks: With that, I'm going to hand it over to Ken to provide details on our second quarter results and our updated guidance.

Thank you Scott. Turning to side 5, we delivered strong results in 2q 2025 with continued orders and revenue growth and adjusted IBA. De margin expansion. We also generated positive free cash flow again, this quarter and returned to 450 million dollars to shareholders through, share repurchases and dividends while maintaining a healthy cash balance of nearly 8 billion dollars.

Ken Parks: Equipment orders grew 5% driven by power, which more than doubled year over year. Electrification equipment orders remain strong, but decreased year over year given the value of large equipment orders recorded in the second quarter of last year. Services orders increased 3% with growth in power and onshore wind. As a result of the strong orders, our backlog continued to expand both year over year and sequentially across equipment and services, now reaching $129 billion in total, led by both power and electrification. Equipment margin and backlog remains healthy, reflecting higher price as well as our continued focus on disciplined underwriting.

Demand remained robust in the second quarter. As we booked 12.4 billion of orders, an increase of 4% year-over-year and approximately 1.4 times Revenue.

Ken Parks: Equipment orders, grew 5% driven by power, which more than doubled year-over-year.

Ken Parks: In orders, remain strong, but decreased year-over-year, given the value of large equipment, orders recorded in the second quarter of last year.

Services orders increased 3%, with growth in power and onshore wind.

Ken Parks: Led by both power and electrification.

Ken Parks: Revenue increased 12% with higher equipment and services revenues in all three segments. Equipment revenue grew 18% with double digit growth in electrification and power, while total services revenue increased 6%. Price was positive in each segment. Adjusted EBITDA increased just over 25% to $770 million, led by strength in electrification and power. Adjusted EBITDA margin expansion of 80 basis points was driven by more profitable volume, price, and productivity, which more than offset investments for innovation and future volume growth, as well as tariff impacts primarily at offshore wind. We continue to generate positive free cash flow with approximately $200 million in the second quarter, reflecting stronger adjusted EBITDA.

Equipment margin and backlog remains healthy reflecting higher price as well as our continued focus on disciplined underwriting.

Ken Parks: Revenue increased 12% with higher equipment and services revenues in all 3, segments.

equipment Revenue, grew 18% with double-digit growth in electrification and power, while total Services Revenue, increased 6%,

Ken Parks: Price was positive in each segment.

Ken Parks: Adjusted IBA increased just over 25% to 770, million led by strength, and electrification and Power.

Ken Parks: Adjusted IBA margin expansion of 80 basis points was driven by more profitable, volume price and productivity which more than offset Investments for Innovation and future volume growth as well as tariff impacts primarily at offshore wind.

Ken Parks: Working capital in the quarter was an approximately $600 million cash benefit driven by strong down payments from rising orders and slot reservation agreements at power, which more than offset cash taxes, along with capex investments, supporting capacity expansion. As we've discussed in prior quarters, we continue to utilize Lean to improve our billings and collection processes to drive better cash management and linearity. In the second quarter, we reduced day sales outstanding by two days sequentially, resulting in an approximately $200 million of additional free cash flow in the quarter. As expected, free cash flow decreased year over year due to the absence of a $300 million arbitration refund that we received in the second quarter of 2024, as well as a lower positive benefit from working capital and higher cash taxes on higher adjusted EBITDA.

Ken Parks: We continue to generate positive free cash flow with approximately $200 million in the second quarter, reflecting stronger, adjusted ebitda.

Ken Parks: Working capital in the quarter was an approximately $600 million. Cash, benefit driven by strong down payments from rising orders in slot. Reservation agreements at Power which more than offset cash taxes along with capex Investments supporting capacity expansion.

Ken Parks: As we've discussed in Prior quarters, we continue to utilize lean to improve our Billings and collection processes to drive better cash management and linearity.

Ken Parks: In the second quarter we reduced Day sales outstanding by 2 days sequentially resulting in an approximately million dollars of additional free cash flow in the quarter.

Ken Parks: As a result of our improving free cash flow linearity through the year, we continued to return cash to our shareholders in the second quarter, with a total of approximately $450 million of share repurchases and dividends. So far this year, we've repurchased $1.6 billion of stock, and we'll continue to execute our buyback authorization opportunistically as we firmly believe there is incremental value embedded in our stock. We ended second quarter 2025 with a healthy cash balance of approximately $8 billion and with no debt, which gives us confidence to invest in the business for growth and return cash to shareholders through dividends and share repurchases while maintaining a solid investment grade balance.

As expected free cash flow decreased year-over-year, due to the absence of a million dollar arbitration refund that we received in the second quarter of 2024, as well as a lower positive benefit from working capital and higher cash taxes on higher adjusted. Ebit dots,

as a result of our improving free cash flow linearity through the year, we continue to return cash to our shareholders. In the second quarter with a total of approximately 450 million of share repurchases and dividends

so far this year, we've repurchased 1.6 billion dollars of stock and we'll continue to execute our buyback authorization opportunistically as we firmly believe there is incremental value embedded in our stock

Ken Parks: In the first half of this year, both S&P and Fitch affirmed our investment grade credit rating and increased their ratings outlooks to positive from stable. We're encouraged by our overall financial performance in the first half of 2025, delivering double-digit organic growth, 120 basis points of adjusted EBITDA margin expansion, and approximately $1.2 billion of free cash flow generation. Our growing backlog with healthy margin provides an excellent foundation for continuing improvement in our financial performance moving forward.

Ken Parks: We ended second quarter 2025 with a healthy cash balance of approximately 8 billion dollars and with no debt, which gives us confidence to invest in the business for growth and return cash to shareholders through dividends and share repurchases, while maintaining a solid investment grade balance sheet.

Ken Parks: In the first half of this year, both S&P and Fitch affirmed. Our investment grade credit rating and increased their ratings, outlooks to positive from stable.

Ken Parks: We're overall financial performance in the first half of 2025 delivering double-digit organic growth. 120 basis points of adjusted IBA margin expansion and approximately 1.2 billion dollars of free cash flow generation.

Ken Parks: Turning to power on slide six, the segment delivered another strong quarter with robust orders, continued revenue growth, and further EBITDA margin expansion. Power orders grew 44%, led by gas power equipment nearly tripling year over year. We booked 20 heavy-duty gas turbines, including seven HA units, which was six more heavy-duty units compared to the number booked in the second quarter of 2024. We also secured orders for 27 Arrow derivative units compared to only one unit last year. We're seeing incremental demand for our Arrow derivative technology, particularly to support data centers. Power services orders remain strong, with mid-single-digit growth in the quarter primarily driven by steam power, given more life extension and upgrades for existing nuclear sites.

Our growing backlog with healthy margin provides, an excellent foundation for continuing improvement in our financial performance moving forward.

Turning to power on slide 6, the segment delivered. Another strong quarter with robust orders, continued Revenue growth and further, ibida margin expansion.

Ken Parks: power orders grew 44% led by gas power equipment, nearly tripling year-over-year

We booked 20, heavy duty gas turbines, including 7 ha units. Which was 6 more. Heavy duty units compared to the number booked in the second quarter of 2024.

Ken Parks: We also secured orders for 27 arridy derivative units compared to only 1 unit last year.

We're seeing incremental demand for our arridy, derivative technology, particularly to support data centers.

Ken Parks: As Scott mentioned, we also saw strong orders growth at Hydro, driven by higher demand for up... Revenue increased 9% led by gas power. Power Equipment Revenue increased 23% as we delivered seven more HA units than the second quarter of 2024. Power services revenue increased mainly from higher transactional services volume, as well as price. EBITDA margins expanded 40 basis points to 16.4% driven by strength at gas and steam. Margin benefited from higher price, productivity, and volume, despite the mixed headwind of higher equipment delivery. This expansion more than offset additional expenses to support R&D at nuclear and expenses to support capacity investments at gas as well as inflation.

Ken Parks: Power Services orders remain strong with mid single-digit growth in the quarter primarily driven by steam, power given more life extension up and upgrades for existing nuclear sites.

Ken Parks: As Scott mentioned, we also saw strong orders growth at Hydro driven by higher demand for upgrades.

Revenue increased 9% led by gas power.

Ken Parks: Power Power Equipment, Revenue, increased 23%. As we delivered 7, more ha units than the second quarter of 2024.

Ken Parks: Increased mainly from higher transactional, Services volume as well as price.

IBA margins, expanded 40 basis points to 16.4% driven by strength that gas and steam.

Ken Parks: Margin benefited from higher price, productivity and volume despite the mix headwind of higher equipment, deliveries.

Ken Parks: Looking to the third quarter of 2025 at power, we expect continued year over year growth in gas equipment. We also anticipate mid-single-digit organic revenue growth on higher equipment deliveries, as well as continued services growth. We expect EBITDA margin of approximately 11 to 13% as productivity, price and volume should more than offset additional expenses to support R&D and capacity investments, as well as inflation. Given the typical seasonality of services outages, power revenue and EBITDA margin should be lower sequentially in the third quarter.

Ken Parks: This expansion more than offset additional expenses to support R&D at nuclear and expenses to support capacity Investments at gas as well as inflation.

Looking to the third quarter of 2025 at Power, we expect continued year-over-year growth in gas equipment orders. We also anticipate mid single digit, organic Revenue, growth on higher equipment, deliveries, as well as continued Services growth.

We expect IBA margin of approximately 11 to 13% as productivity price and volume should more than offset additional expenses to support R&D and capacity Investments as well as inflation.

Ken Parks: Turning to slide seven, we are executing on our win strategy. In Onshore Wind, we delivered double-digit revenue growth, and we invested more to enhance fleet performance. In Offshore Wind, we remain focused on executing our existing challenged backlog. Wind Orders Decreased 5% Year Over Year Driven by Lower Onshore Wind Equipment Orders Outside of North America Sequentially, onshore orders improved primarily due to equipment growth in North America. Wind revenue increased 9% in the quarter on higher onshore wind equipment volume in North America, partially offset by lower offshore wind revenue as we executed on our current production and delivery schedule.

Given the typical seasonality of services. Outages power revenue and IBA margin should be lower sequentially in the third quarter.

Turning to slide 7. We are executing on our wind strategy.

In onshore Wind, we deliver double-digit Revenue growth and we invested more to enhance Fleet performance.

In offshore wind we remain focused on executing our existing challenged backlog.

Ken Parks: Wind orders decreased 5% year-over-year driven by lower onshore wind equipment orders outside of North America.

Sequential orders improved primarily due to equipment growth in North America.

Ken Parks: Wind EBITDA losses increased approximately $50 million versus the prior year. At Onshore Wind, the benefit of more profitable onshore equipment volume was essentially offset by increased services costs as we're deploying more crews and cranes to accelerate improvement in the installed fleet performance. At Offshore, we incurred additional costs primarily due to the impact of tariffs. As Scott discussed, there's potential for an increase in onshore wind orders over the coming quarters, as developers and utilities work to ensure projects meet tax credit requirements outlined in the recently passed U.S. legislation. We will need to see how this materializes.

Wind Revenue increased 9% in the quarter on higher onshore, wind equipment volume in North America, partially offset by lower offshore wind Revenue. As we executed on our current production and delivery schedule.

Wind ibida. Losses increased approximately 50 million dollars versus the prior year.

Ken Parks: At onshore wind the benefit of more profitable onshore equipment. Volume was essentially offset by increased Services costs as we're deploying more crews and cranes to accelerate Improvement in the installed Fleet performance.

At offshore, we incurred additional costs primarily due to the impact of tariffs.

Ken Parks: In the third quarter, we expect wind segment revenue to decrease by a mid-teens rate year-over-year. Absent the approximately $500 million benefit of the one-time settlement from an offshore contract termination in the third quarter of last year, we expect wind revenue to increase low single digit. EBITDA losses should improve substantially year-over-year and approach break-even, driven by further improvement at onshore wind, as well as the absence of the offshore contract losses recorded in the third quarter of 2024, net of the previously mentioned one-time termination settlement gain.

Ken Parks: As Scott discussed, there's potential for an increase in onshore Wind orders, over the coming, quarters as developers and utilities, work to ensure projects meet tax, credit requirements, outlined in the recently passed us legislation. We will need to see how this materializes

In the third quarter, we expect wind segment Revenue to decrease by a mid teens rate year-over-year.

Abbreviation.

Ken Parks: Losses should improve substantially year-over-year and approach break, even driven by further Improvement at onshore wind, as well as the absence of the offshore contract. Losses recorded in the third quarter of 2024. Net of the previously mentioned 1-time, ter, termination settlement gain

Ken Parks: Turning to electrification on slide eight, we had another quarter of robust demand, significant revenue growth, and EBITDA margin expansion. orders remain strong at approximately $3.3 billion, roughly 1.5 times revenue, driven by the growing need for grid equipment. While we saw strong orders growth for switchgear products in Europe and Asia, total orders decreased 31% year over year due to large equipment orders recorded in the second quarter of last year, where we recorded two orders that were both greater than a billion dollars, an HVDC order for Europe and a grid equipment order for Algeria. Importantly, equipment orders continue outpacing revenue, further expanding the equipment backlog to approximately $24 billion, up more than $6 billion compared to the second quarter of 2024.

Turning to electrification on slide 8, we had another quarter of robust, demand, significant Revenue growth and IBA margin expansion.

Orders remain strong at approximately 3.3 billion dollars. Roughly 1.5 times Revenue driven by the growing need for grid equipment.

Ken Parks: While we saw strong orders growth for switch gear products in Europe and Asia, total orders decreased 31% year-over-year due to large equipment. Orders recorded in the second quarter of last year where we recorded 2 orders that were both greater than a billion dollars and hvdc order for Europe and a great equipment order for Algeria.

Ken Parks: Revenue increased 20% driven by strong volume and higher price at Grid Solutions, where we saw meaningful growth in HVDC, switchgear, and transformer equipment volume. The team is executing well on its capacity expansion plans, and we continued to increase output in the second quarter. The segment delivered another quarter of significant EBITDA growth, with margin expansion of 740 basis points to 14.6% on more profitable volume, increased productivity, and favorable pricing primarily at grid solutions.

Ken Parks: Importantly equipment orders. Continue outpacing Revenue further expanding the equipment backlog to approximately 24 billion dollars up more than 6 billion dollars compared to the second quarter of 2024.

Ken Parks: Revenue increased 20% driven by strong volume and higher price at grid Solutions where we saw meaningful growth in hvdc, switch gear and Transformer equipment volume.

Second quarter.

Ken Parks: In the third quarter of 2025, we anticipate significant equipment orders at healthy margins. Electrification revenue growth should be approximately 20% driven by grid solutions as well as power conversion and storage. We expect significant year-over-year EBITDA margin expansion from higher volume, productivity, and favorable price with a margin rate slightly above 2Q25 level.

Ken Parks: The segment delivered, another quarter of significant ebit dog growth with margin expansion of 740, basis points to 14.6% on more profitable volume increased productivity, and favorable pricing primarily at grid Solutions.

Ken Parks: In the third quarter of 2025, we anticipate significant equipment orders at healthy margins.

Electrification Revenue growth should be approximately 20% driven by grid Solutions as well as power conversion and Storage.

Ken Parks: I'll now turn to slide nine to discuss GE Vernova guidance. For the third quarter, based on our expectations for the segments, which I've already outlined, we expect continued year-over-year revenue growth and adjusted EBITDA margin expansion in the quarter, which includes our estimated impact of tariff. We expect to generate positive free cash flow again for the sixth consecutive quarter in 3Q, given our increased adjusted EBITDA, as well as our continuing focus on improving cash linearity. We continue to expect to deliver positive free cash flow in all four quarters this year.

Ken Parks: We expect significant year-over-year ibida. Margin expansion from higher volume productivity and favorable price with a margin rate. Slightly above 2q, 25 levels.

Ken Parks: I'll now turn to slide 9 to discuss GE vernova guidance.

Ken Parks: For the third quarter, based on our expectations, for the segments, which I've already outlined. We expect continued year-over-year, Revenue growth, and adjusted ebit down margin expansion in the quarter, which includes our estimated impact of tariffs.

Ken Parks: For the full year, we're raising our financial guidance based on the strong first half results and continued momentum we see in our business. For revenue, we're trending towards the higher end of our original $36 to $37 billion guidance range. And we now expect adjusted EBITDA margin to be in the range of 8% to 9% due to the incremental strength of electrification and power. In addition, we're raising our full year free cash flow guidance by approximately $1 billion to be in the range of $3 billion to $3.5 billion due to higher down payments from increased orders and our updated adjusted EBITDA out.

Ken Parks: We expect to generate positive free, cash flow again for the sixth consecutive quarter in 3Q, given our increased adjusted Eva as well as our continuing focus on improving cash linearity. We continue to expect to deliver positive free cash flow in all 4 quarters this year.

Ken Parks: For the full year, we're raising our financial guidance based on the strong first half results and continued momentum. We see in our businesses.

Ken Parks: For Revenue.

Ken Parks: We're trending towards the higher, end of our original 36, to 37 billion, guidance range. And we now expect adjusted IBA damn margin to be in the range of 8 to 9%, due to the incremental strength, that electrification and Power.

Ken Parks: Our increased 2025 guidance also includes the impact of tariffs as currently outlined, which we now estimate trending towards the lower end of our previously stated range of approximately $300 to $400 million net of mitigating action. These costs are expected to be relatively similar in each of the last three quarters of 2025.

Ken Parks: In addition, we're raising our full year free cash flow guidance by approximately 1 billion dollars to be in the range of 3 billion to 3 and a half billion dollars due to higher down payments from increased orders and our updated adjusted ebit da Outlook

Ken Parks: Our increased 2025 guidance also includes the impact of tariffs as currently outlined, which we now estimate trending towards the lower. End of our previously stated range of approximately 300 to 400 million dollars. Net of mitigating actions.

Ken Parks: As Scott mentioned, we're actively navigating this ongoing dynamic environment and taking action, including the acceleration of our $600 million G&A cost reduction roadmap. In 2024, we reduced our adjusted GNA cost by approximately $170 million, and we expect to decrease our cost by a similar amount in 2025. To accelerate the achievement of our $600 million target, we've launched a restructuring program subject to local regulatory information and consultation requirements to be executed over the next 12 months and anticipate approximately $250 million of annualized GNA savings beginning in 2026. We estimate that we will incur approximately $250 to $275 million in cost to execute the plan.

Ken Parks: These costs are expected to be relatively similar in each of the last 3 quarters of 2025.

Ascott mentioned. We're actively navigating this ongoing Dynamic environment and taking action, including the acceleration of our 600 million GNA, cost reduction road map.

In 2024, we reduced our adjusted GNA cost by approximately 170 million and we expect to decrease our cost by a similar amount in 2025.

Ken Parks: To accelerate the achievement of our $600 million Target. We've launched a restructuring program subject to local regulatory information and consultation requirements to be executed over the next 12 months and anticipate approximately 250 million of annualized GNA. Savings beginning in 2026

Ken Parks: By segment, we're increasing our organic revenue growth guidance at power to be between 6% and 7% compared to our previous guidance of mid-single digit. We're also raising our EBITDA margin guidance per power to the range of 14 to 15% compared to our previous range of 13 to 14% driven by strength at gas and steam. In wind, we expect revenue to be down mid single digits with EBITDA losses trending towards the bottom of our $200 to $400 million range and improvement year over year driven by onshore margin expansion within the high single digit range and lower losses at offshore.

Ken Parks: We estimate that we will incur approximately 250 to 275 million in cost to execute the plan.

Ken Parks: By segment, we're increasing our organic Revenue. Growth guidance at power to be between 6 and 7% compared to our previous guidance of mid single digits.

Ken Parks: We're also raising our ibida margin guidance, for power to the range of 14, to 15% compared to our previous range. Of 13 to 14% driven by strength at gas and steam.

Ken Parks: In electrification, we're increasing our organic revenue growth guidance from mid to high teens to approximately 20% as we continue to deliver our growing backlog. Given higher top-line expectations, we now expect electrification EBITDA margin to be in the range of 13-15% compared to our previous expectation of 11-13% EBITDA margin. We expect adjusted EBITDA in the second half of 2025 to be more fourth quarter weighted, similar to last year. We anticipate typical gas services seasonality with the highest outage volume of the year in the fourth quarter. As Scott mentioned, we expect wind to be approaching breakeven in the second half of the year, primarily due to the timing of onshore turbine deliveries already in backlog and improved services profitability.

Ken Parks: In Wind, we expect Revenue to be down mid single digits with evida losses. Trending towards the bottom of our 200 to 400 million range and Improvement year-over-year driven by onshore margin expansion within the high single digit range, and lower losses at offshore,

Ken Parks: In electrification, we're increasing our organic Revenue growth guidance from mid to high, teens to approximately 20% as we continue to deliver our growing backlog.

Ken Parks: Given higher Topline expectations. We now, expect electrification IBA margin to be in the range of 13 to 15% compared to our previous expectation of 11 to 13%, ibida margin.

Ken Parks: We expect adjusted ibida in the second half of 2025, to be more fourth quarter, weighted similar to last year.

Ken Parks: Outage volume of the year in the fourth quarter.

Ken Parks: We also expect electrification to grow sequentially as is typical.

Ken Parks: As Scott mentioned, we expect wind to be approaching break even in the second half of the Year. Primarily due to the timing of onshore turbine deliveries already and backlog and improved services profitability.

Ken Parks: Finally, at corporate, we now anticipate higher costs this year, largely given higher than expected stock compensation based upon the midpoint evaluation of our incentive program. As discussed, corporate costs can be uneven across quarters like 2024, as it includes the portfolio activity at our financial services business, but we expect corporate costs to sequentially improve as we move through the remainder of the year.

We also expect electrification to grow sequentially. As is typical.

Ken Parks: Finally, at corporate, we now anticipate higher costs this year largely given higher than expected. Stock, compensation based upon the midpoint evaluation of our incentive programs.

Ken Parks: Overall, we delivered strong results in the first half of the year. We're very encouraged by the rising demand and consistently stronger execution we're seeing at power and electrification, as well as the improvements we're making at wind, enabled by our lean culture.

Ken Parks: As discussed corporate costs can be uneven across quarters like 2024 as it includes the portfolio activity at our financial services business. But we expect corporate costs to sequentially improve as we move through the remainder of the year.

Scott Strazik: With that, I'll turn it back to Scott. Thanks, Ken. Just to reinforce a few important themes at the close. Productive2Q. We continue to position GE Vernova to serve the accelerating growth we see in the market. Real Strength in Power and Electrification. but potential for an inflection point forward on wind that we'll monitor in the second half. Margins are improving, but we are just getting started. Our team is seeing more opportunity every day. And as lean starts to take hold and spread across the business. I like what I'm seeing in this regard. Good cash performance first half of the year and pleased with our capital location, whether it be the stock buyback year to date, our organic investments for growth.

Overall we delivered strong results in the first half of the year were very encouraged by the rising demand and consistently stronger execution, we're seeing at Power and electrification as well as the improvements. We're making at wind enabled by our lean culture.

Ken Parks: With that, I'll turn it back to Scott.

Scott Strazy: Thanks Ken, just to reinforce a few important themes at the close.

Speaker Change: Productive. 2q we continue to position GE vernova to serve the accelerating growth. We see in the markets, real strength, and power and electrification.

Speaker Change: But potential for an inflection point forward on wind that will Monitor and the second half of the year.

Margins are improving but we are just getting started.

Speaker Change: Our team is seeing more opportunity every day and as lean starts to take hold and spread across the business.

I like what I'm seeing in this regard.

Scott Strazik: or the small but strategic M&A weird. We are creating a unique, special company. serves the world in a way like no other. We don't take that for granted. I certainly don't. And wake up each day hungry and ready to serve our customers, our investors. and our partners.

Speaker Change: Good cache, performance, first half of the year and pleased with our Capital location, whether it be the stock buyback year. Today, our organic Investments for growth

Speaker Change: Or the small but strategic m&a. We are doing.

Speaker Change: We are creating a unique special company.

Speaker Change: that serves the world in a way like no other

We don't take that for granted. I certainly don't.

Scott Strazik: We're just getting started, but I like our channel.

Michael Lapides: With that, I'll hand it back to Michael for the Q&A portion of the call. Before we open the line, I'd ask everyone in the queue to consider your fellow analysts and ask one question so we can get to as many people as possible. Please return to the queue if you have follow-ups.

Speaker Change: And wake up each day hungry and ready to serve our customers, our investors and our partners. We are just getting started, but I like our chances with that, I hand it back to Michael for the Q&A portion of the call.

Unknown Executive: Operator, please open the line. Ladies and gentlemen, if you wish to ask a question, please press star 1 1 on your telephone. If you wish to withdraw your question or your question has already been answered, please press star 1 1 again.

Speaker Change: Before we open the line, I'd ask everyone in the queue to consider your fellow analysts and ask 1 question so we can get to as many people as possible. Please return to the queue. If you have follow-ups operator, please open the line.

Speaker Change: Ladies and gentlemen, if you wish to ask a question, please press star 1 1 on your telephone.

Speaker Change: If you wish to withdraw your question or your question has already been answered. Please. Press star. 1 1 again.

Julien Mitchell: Our first question comes from Julien Mitchell with Barker. Hi, good morning. Maybe just wanted to start with the electrification segment. So a couple of different things there. One was just on the demand outlook. maybe give a bit more color on the regional differences. You know, it seems like Europe's maybe losing steam, Asia picking up, and pricing, I think in Europe, you talked about maybe softening the last six to 12 months. And then on the margin front at electrification, the updated guide for this year puts you close to touching distance of the medium-term margin goal. So maybe any thoughts around that and how you keep the discipline on big projects there.

Julian Mitchell: Our first question comes from Julian Mitchell with Barclays.

Julian Mitchell: Hi, good morning. Um, maybe. Um, just wanted to start with the electrification segment, um, so a couple of uh, different things there. 1 was just on the demand Outlook. Um,

Scott Strazik: Thanks, Julien.

Scott Strazik: I'll start. I mean, I think to take it in reverse on the margin guide, I think it's fair. I mean, we're pleased with where we are with electrification performance for the first half of the year, approaching 15% in the second quarter EBITDA margins. And we do expect modest incremental improvement sequentially in 3Q and 4Q.

Julian Mitchell: Maybe give a bit more Colour on the regional differences, you know, it seems like Europe's, maybe losing steam, Asia, picking up um, and pricing. I think in Europe, you talked about maybe softening uh the last 6 to 12 months. Um and and then on the margin front at electrification, the updated guide for this year, puts you close to touching distance of the medium-term margin goal. Um, so maybe any thoughts around that and how you keep the discipline on big projects there?

Scott Strazik: So to your point, I think this is an area that we'll go through our strategy reviews here in the summer and to the fall and likely have an update for you at the end of the year on the by 28 margin expectations and electrification. Now, on the first part of your point, we do continue to see growth regionally, whether it be Europe, North America, or Asia. But what I would tell you is the big projects, so call it the long transmission line, HVDC projects that are quite a bit more lumpy. There's a lot more scrutiny in those projects today.

Scott Strazik: So the orders that we're seeing are more core transformers, switch gears. We're encouraged with our grid stabilization equipment solutions like synchronous condensers. We've announced the transaction with Saudi, but we see real opportunities in many markets that have high renewables penetration rates for those solutions. And we're still seeing price, but at a decelerating rate. So this becomes a dynamic where we need to continue to drive variable cost productivity. You're seeing that in our, in our margin performance to the first half, but we're gonna have to keep driving that because we don't expect to continue to get priced the same level that we have experienced over the previous 18 months.

Ken Parks: And maybe just always kind of keep in mind as you're thinking about this pricing dynamic that Scott outlined, we gave you an update at the end of the year as we closed out 2024 as to what was going on with our margins and backlog in all of our businesses. But specifically about your question around electrification, over the last two years, we've seen about nine full points of electrification margin and backlog expansion. And I raise that just because as we continue to see things kind of get to the levels where you're not seeing the rate of growth to continue to inflect up as quickly as maybe we saw a couple of years ago.

Julian Mitchell: Core Transformers switch gears. Um we're encouraged with our grid stabilization. Equipment Solutions like synchronous condensers. We've announced the transaction with Saudi but we see real opportunities in many markets that have high Renewables penetration rates for those Solutions and we're still seeing price but at a decelerating rate so this becomes a dynamic where we need to continue to drive variable cost productivity. You're seeing that and our and our margin performance to the first half. But we're going to have to keep driving that because uh we don't expect to continue to get price the same level that we have uh experienced over the previous 18 months.

Julian Mitchell: And maybe just, um, always kind of keep in mind as you're thinking about this pricing Dynamic that, uh, Scott outlined we we we gave you an update at the end of the year, as we close out 2024, as to what was going on with our margins and backlog in all of our businesses, but specifically about your question around electrification over the last 2 years. We've seen about 9 full points of electrification. Uh, margin and backlog expansion. I I raised that just because as we continue to see things um kind of

Scott Strazik: What is really good to look at as you're thinking about the business as much of that backlog is yet to be delivered. So as we think about the future, there is already margin and backlog to be delivered as we move out into the 26, 27, 28 timeframe.

Get to the levels where you're not seeing the rate of of growth to continue to inflect up as quickly. As maybe we saw a couple of years ago, what is really good to look at? As you're thinking about the business, as much of that backlog is yet to be delivered. So, as we think about the future, there is already, uh, margin in backlog, to be delivered as we move out into the 26th 2728 time frame,

Mark Strouse: Our next question comes from Mark Strouse with J.P. Morgan. Yes, good morning. Thanks for taking our questions.

Speaker Change: Our next question comes from Mark Strauss with JP Morgan.

Scott Strazik: I wanted to pivot over to the gas power business. A lot of investors focus on pricing that gets disclosed in some of these deals on the equipment side. I'm curious what you can talk about on the service side, what you're seeing in pricing for your existing install base, but also what you're seeing on new deals that are being signed. Thank you. Thanks, Mark.

Scott Strazik: I'll start. I think, you know, this is another good illustration to connect DOPS with what's happening in the market. When you even look at the PJM pricing that was confirmed yesterday with the capacity market, that's driving incremental demand for incremental services and frankly justifies incremental pricing into our services book for upgrades that can create incremental capacity for things like those capacity markets. So, you're right. We talk a lot more about equipment, new build pricing, but we are also in a price up environment in services that will materialize through our income statement in the years ahead.

Mark Strauss: Uh, yes, good morning. Thanks for taking our questions, uh, wanted to Pivot over to the, the gas power business. So a lot of investor focus on on pricing, that that gets disclosed and, uh, in some of these deals on the equipment side, um, curious what you can talk about on the, on the service side. Uh, what you're seeing in pricing for your existing install base, but also what you're seeing on New Deals that are being signed. Thank you.

Speaker Change: Thanks, Mark house. I'll start. I think you know, this is another good illustration to

Speaker Change: Connect dots with what's happening in the market. When you even look at the pjm pricing, that was uh, confirmed yesterday with the capacity Market that's driving incremental demand for incremental services and frankly justifies incremental pricing into our services book for upgrades that can create incremental capacity um for things like those capacity.

Scott Strazik: So, it's early in that regard, but we've been on that journey for the better part of the last 12 to 18 months, and we'll continue to see that translate into the income statement in the subsequent, let's say, 12 to 24 months, because it's shorter cycle conversion than our new year.

Speaker Change: market so you're right, we talk a lot more uh, about equipment, new build pricing, but we are also in a price up environment in services that will um will materialize through our income statement in um,

Speaker Change: In the years ahead. So um, it's early and that regard, but we've been on that Journey for the better part of

Speaker Change: The last 12 to 18 months and we'll continue to see that translate into the income statement in, um, in the subsequent let's say 12 to 24 months because it's shorter cycle. Um, conversion than than our new units.

Joe Ritchie: Our next question comes from Joe Ritchie with Goldman Sachs. Hey, good morning, guys. And nice, nice, strong quarter again.

Speaker Change: Our next question comes from Joe Richie. With Goldman Sachs,

Scott Strazik: Just the, you know, I want to try to square something actually on your new equipment orders in power, you know, saw that you guys booked roughly about a little over five gigawatts versus seven last quarter, but then I'm trying to square the revenue, the order dollars were up sequentially, roughly $700 million. And so how much I don't know if you can tell me how much of that is pricing versus the equipment that you booked in the other areas of your power business, whether it's. Hydro, steam, nuclear, etc. We did see continued growth. So to square up the numbers, we did actually book, we said we contracted about nine gigawatts of orders in the quarter of which two went directly into backlog, seven went into SRAs, then we had some SRAs convert over into orders, delivered five gigawatts out of backlog, keeping the backlog number flat and seeing the SRA number grow from 21 gigawatts to 25.

Joe Richie: Hey, good morning guys. And uh, nice, nice strong quarter again. Um,

Joe Richie: Just the um, you know, I want to try to square something actually, on your uh, new equipment orders in power. You know, saw that you guys booked roughly above a little over 5, gigawatts versus 7 last quarter, but then I'm trying to square. Um, the revenue the order dollars um, were up. Sequentially roughly, 700 million dollars. And so, how much? Like I don't know if you can tell me how much of that is pricing versus the equipment that you booked in the other areas of your power business. Whether it's

Joe Richie: Um, Hydro esteemed nuclear Etc.

Scott Strazik: So those are the numbers that we've quoted there. As far as the pricing on that, much of what we're seeing is a pricing positive dynamic there. We are seeing incremental equipment, but both on the service side, as well as on the equipment side, we're seeing positive pricing on the orders themselves. And to triangulate orders and gigawatts, just think to yourself in the second half of the year, the mix of combined cycle orders that will be booked will be substantially larger. So you're going to see an orders dollar connection to gigawatts that will be larger in the second half of the year.

Scott Strazik: The first half of the year has been more simple cycle orders. So that's where you've got to think about the gigawatt dollar connections and the mix between whether it's a simple cycle or a combined cycle deal, and we'll have substantially more combined cycle orders in the second half of the year.

Joe Richie: Is a pricing positive Dynamic there. Um, we are seeing incremental equipment, but both on the service side as well. As on the equipment side, we're seeing positive pricing on the um, on the orders themselves and to triangulate, uh, orders and gigawatts. Just think to yourself in the second half of the year, the mix of combined cycle orders. That will be booked, will be substantially larger. So you're going to see an order's dollar connection to gigawatts that will be larger and the second half of the year, the first half of the year has been more simple cycle orders. So that's where you've got to think about the gigawatt dollar connections, and the mix between, whether it's a simple cycle or a combined cycle deal, and we'll have substantially more combined cycle orders in the second half of the year.

Nicole DeBlase: Our next question comes from Nicole DeBlase with Deutsche Bank. Yeah, thanks. Good morning, guys. Good morning, Nicole.

Speaker Change: Our next question comes from Nicole de Blaze with Deutsche Bank.

Scott Strazik: Can we just talk a bit about capacity? So I guess, Scott, the Pennsylvania plant announcement for electrification, was that kind of already embedded in your thinking? Like, if we look at the 2028 revenue ramp, or is this totally incremental? Anything you can give on what that means from a revenue perspective, if it is incremental? And then any change to how you guys are thinking about capacity on the gas side relative to what you've already announced? Thank you.

Speaker Change: Yeah, thanks. Good morning, guys.

Speaker Change: Good morning, Nicole.

Speaker Change: Um, can we just talk a bit about capacity so I guess Scott the Pennsylvania plant announcement for electrification was that kind of already embedded in your thinking. Um, like if we look at the 2028 Revenue ramp, where is this totally incremental anything you can give and what that means from a revenue perspective. If it is incremental and then any change to how you guys are thinking about capacity on the gas side, relative to what you've already announced.

Scott Strazik: Let's take them in reverse. I think on gas, we're really in the exact same place we've been, which is, first things first, let's get to a 20 gigawatt run rate, which we should get to in the second half of 2026. On top of that, we've talked about wanting to get to 4 to 5 years of backlog, and that's backlog between slot reservations and explicit RPO. And we've talked about the fact that we'll get to at least 60 gigawatts by the end of the year. So, that's directionally three years of backlog. So, for us to really lean into the incremental capacity, I think we've got more work to do, both in proving out that we can deliver what we've already committed, but then seeing that backlog growth more towards the 80 to 100 gigawatts versus where we think we'll be at the end of the year, which is 60.

Speaker Change: Thank you.

Speaker Change: Let's take them in Reverse. I think on on gas, we're really in the exact same place we've been, which is first things first. Let's get to a 20 gigawatt uh, run rate, which we should get to in a second half of 2026. Um, on top of that, we've talked about wanting to get to 4 to 5 years of backlog, um, and that's backlog between slot, reservations and explicit RPO. And we've talked about the fact that we'll get to at least 60 gigawatts by the end of the year. So that's directionally 3 Giga, 3 years of backlog. Um,

Scott Strazik: Now on electrification, we do continue to gain conviction that we can ramp up in these businesses within our existing factories with incremental investments into more both machining but also more labor. That's the 250 incremental jobs we announced in Pennsylvania. Some of that's simply more shifts. The reality is that's a plant that if you go back a few years ago was one shift five days a week. We're very quickly six days a week, three shifts. And as we leverage lean, we're finding capacity and finding opportunities to do things better. And that's in Pennsylvania, but that is extrapolated across a number of our electrification factories.

Speaker Change: So for us to really lean into the incremental capacity, I think we've got we've got more work to do, both in proving out that we can deliver what we've already committed but then seeing that backlog growth more towards the 80 to 100 gigawatts versus where we think will be at the end of the year, which is 60.

Speaker Change: Now, on electrification, we do continue to gain conviction, that we can ramp up in these businesses within our existing factories with incremental investments into, uh, more both Machining but also more labor. That's the 250 incremental jobs. We announced in Pennsylvania, some of that simply more shifts. The reality is, that's a plant that if you go back a few years ago, was 1 shift 5 days a week.

Scott Strazik: And we'll be all part of what we need to work through in our strategy cycle here and come back to you at the end of the year with an updated view on revenue trajectory for electrification through 2028.

Speaker Change: We're very quickly 6 days a week 3 shifts. And, um, as we leverage lean, we're finding capacity and finding opportunities to do things better and that's in Pennsylvania, but that is extrapolated across a number of our electrification.

Speaker Change: Factories and um we'll be all part of what we need to work through in our strategy cycle here, and come back to you at the end of the year, with an updated view on, um, Revenue, uh, trajectory for uh, electrification through 2028.

Nigel Coe: Our next question comes from Nigel Coe with Wolf Research. Thanks. Good morning, guys. Thanks for the question.

Speaker Change: Our next question comes from Nigel. Co with Wolfe research.

Scott Strazik: Scott, just want to put it back to services, maybe a bit more color in terms of what you've seen, you know, transactional CSA and upgrades, and in particular, any updated view on the potential for upgrades in the fleet.

Thanks, good morning guys. Um, thanks for the question. Um,

Scott Strazik: But I know it's one question, but I'd really like you to address the Aero opportunity, because big quarter for orders, you got the Crusoe deal hitting the tape, I think, yesterday. You know, where do you see the opportunity for Aero? And what is the ability to scale up this business in the next one or two years? Well, there's a need for incremental bridge power. And the beauty of error derivatives is they can be commissioned faster. And, and that's needed in the environment today. And our customers are able to price at a premium for expedited power.

Speaker Change: Just want to put it back to um to to Services uh maybe um, a bit more color in in terms of what you've seen, you know, transactional CSA uh and upgrades and in particular any updated view on the potential for upgrades in the fleet. But I know it's 1 question but I'd really like you to address the arrow opportunity because uh, big caught up orders. You got the Crusoe deal. Uh, hitting the tape, uh, I think yesterday, you know, where do you see the opportunity for arrows? Uh, and you know what is the ability to scale up this business uh in the sort of next model of 2 years?

Speaker Change: well there's a need for incremental Bridge power and the beauty of era derivatives is they can be commissioned faster and um and that's needed in the environment today and our customers are able to

Scott Strazik: So error derivatives are a very attractive solution right now. They may, in the end, lead to customers having strategy where they become backup over time because maybe the plant will get connected to the grid in three to five to six years once the system hurdles the interconnect queue at large. But in the near term, demand for error derivatives is very strong. And that's in the US, but it's also in global markets. At the end of the day, the need for incremental electrons right now is driving continued strength and upgrades. We will continue to see strength in our services book.

Grid and 3 to 5 to 6 years once the the the the the the the system hurdles, the interconnect Queue at large, but in the near term demand for are derivatives is very strong and that's in the US. But it's also in global markets. Um,

Scott Strazik: We grew our services backlog in the second quarter by approximately a billion dollars. And a lot of that incremental backlog in services is new incremental orders that go into our CSA book. And when we get incremental demand into the CSA book, it goes directly into backlog, and then the orders convert when the revenue converts. So that's why you're seeing that that billion dollars of growth. And we expect that trend to continue. So We're, I still say early in this process here, we said probably directionally late last year that we saw at least a 50% growth and upgrades by the end of the decade.

Speaker Change: At the end of the day, the need for incremental, electrons right now is driving continued strength and upgrades, we will continue to see strength in our services book, we grew our services backlog in the second quarter by approximately a billion dollars. And a lot of that incremental, backlog and services is new incremental orders that go into our CSA book. And when we get incremental demand into the CSA book, it goes directly into backlog and then the orders convert when the revenue converts. So that's why you're seeing that that billion dollars of growth and we expect that Trend to continue. So,

Scott Strazik: And today I'd say that's, that's likely a floor on what we see, but let us get through our strategy processes here in the 3rd quarter and and come back and give you another update there on on on on what entitlement really becomes with power services the next few years. But it's very encouraged.

Speaker Change: We're I I still say early in this process here. We said probably directionally late last year that we thought at least a 50% growth in upgrades by the end of the decade. And um today I'd say that's that's likely a floor on what we see. But um let us get through our strategy processes here in the third quarter and and come back and give you another update their on on um on on

Speaker Change: On what entitlement really becomes with power Services the next few years, but it's very encouraging.

Christopher Dendrinos: Our next question comes from Chris Dendrinos with RBC Capital Markets. Yeah, thank you and good morning. I wanted to focus a little bit on the robotics and automation opportunity that you highlighted. And I recognize it's probably early here, but you maybe highlight where you see the greatest opportunity to leverage that technology across the business lines. Thanks.

Speaker Change: Our next question.

Chris Dendrinos: from Chris dendrinos, with RBC Capital markets,

Speaker Change: Yeah, thank you and good morning.

Scott Strazik: Yeah, we're we have a number of we call them lighthouse projects right now that we're working in some of our factories and both gas power and our power transmission set of businesses and grid and the reason we're starting there is because they're factories that we've made the most progress on lean and once you've really eliminated a lot of the manual waste in the processes, you're most ready to apply that automation. But it's not going to be limited to there. We're doing very interesting work right now in wind to look at automation opportunities in the install base.

Speaker Change: Morning to to focus a little bit on the Robotics and automation opportunity that you highlighted and I recognize it's probably early here but you may be highlight where you see the greatest opportunity to leverage that technology uh across the business line. Thanks

Scott Strazik: When you think about servicing wind turbines in very remote locations in the world, You could very easily make a declaration and I could very well have already done this internally to say, we really shouldn't have humans out there servicing blades and wind farms at high altitudes. Robots can do that. Now, that takes time to kind of get to that end outcome, but this is an important part of our future. I mean, we see a growing backlog. We have a lot more certainty on the demand outlook. Our both supply chain and services teams are Performing Better Leveraging Lean, and this is the natural next extension.

Speaker Change: Yeah we are we have a number of we call them Lighthouse projects right now that we're working in some of our factories and both gas power and um our power transmission set of businesses and grid. And the reason we're starting there is because their factories that we've made the most progress on lean and and once you've really eliminated, a lot of the manual waste in the processes, your most ready to apply that automation, but it's not going to be limited to their we're doing very interesting work right now and wind to look at automation opportunities in the install base when you think about servicing wind turbines and very remote locations in the world. Um,

Speaker Change: You could very easily make a declaration and I, you know, could very well have already done this internally to say, we really shouldn't have humans out there servicing blades in wind farms at high altitudes robots, can do that. Now, that takes time to kind of get to that end outcome. But, um, this is an important part of our future. I mean, we see a growing backlog, we have a lot more certainty on. The demand Outlook are both supply chain and services teams are

Scott Strazik: So I do think in a similar vein that we're talking about a lot of updates we owe you by the end of the year. This is an example of an incremental investment. I would project into 2026 on the strength of the backlog that we have that will yield return in the out years. So, as you said, it's early, but with the strength of our visibility in the future right now, these are very attractive investment return equations and ones that we will be leaning into more in the financial year 2026 for returns that will come in the years that follow.

Speaker Change: Performing better leveraging lean and this is the natural next extension. So I do think in a similar vein that we're talking about uh a lot of updates we owe you by the end of the year. This is an an example of an incremental investment. I would project into 2026 on the strength of the backlog that we have that will yield return in the out years. So, as you said, it's early,

Speaker Change: But with the, the the strength of our visibility in the future, right now, these are these are very attractive investment return equations, and ones that we will be leaning into more in the financial year, 2026 for returns. That will come in the years that follow

Amit Mehrotra: Our next question comes from Amit Mehrotra with UBS. Thanks for joining. Wanted to maybe just ask about any implications to the power business from the recent tax bill. If you're seeing any thawing of, you know, EPC or permitting bottlenecks, demand is obviously very strong. So I'm just trying to assess if there's an opportunity for SRAs to accelerate conversions, you know, to increase. And if data centers are becoming a bigger piece of the growth relative to kind of that third of the of the book that you talked about last quarter.

Speaker Change: Our next question comes from Amit marotta with UBS.

Scott Strazik: Thank Amit, it's early, right, since the bill was signed on July 4th, but I would give a few elements of context. I mean, in our wind business, in our inverter business for solar farms, with our grid equipment that supports wind and solar, I would say in all three of those categories, we've seen an acceleration of activity, not necessarily orders yet, but an acceleration of activity that we're going to need to monitor through the second half of this year and give you better transparency on as it materializes. In relation to that, though, as that activity increases for wind and solar for, call it, the near to medium term, there also is very clear market sentiment that on the back half of the decade into the next decade, there's going to be a need for more gas.

Amit Marotta: Thanks morning. Um, wanted to maybe just ask about any implications to the power business from the recent tax bill. Um, if you're seeing any thawing of, you know, EPC or permitting, bottlenecks demand is obviously um, very strong. So I'm just trying to assess if there's an opportunity for sras to accelerate conversions. Um, you know, to increase. Um, and if, if data centers are becoming a bigger piece of the growth relative to kind of that third of the of the book that you talked about last quarter. Thank you.

Amit Marotta: Elements of context. I mean, in our win business, in our inverter business, for solar Farms, with our grid equipment, that supports wind and solar.

Amit Marotta: I would say and all 3 of those categories, we've seen an acceleration of activity, um, not necessarily orders yet, but an acceleration of activity that we're going to need to monitor through the second half of this year and and give you better transparency on as it materializes.

Scott Strazik: So this theme of more gas longer, and this is a US centric comment related to the tax bill, I would say our pipeline of for gas demand is only growing, but it's growing at even more healthy levels for 29 deliveries, 30, 31, in periods of time where maybe prior to the bill being signed, some of our traditional customers may have been intending more wind or solar, but looking to the other side of the tax bill, see more incremental gas making sense. And That is at least today what we see. There may very well be more incremental activity for wind in our.

In relation to that though, as that activity increases for wind and solar, for call it, the near to Midian term. There also is very clear Market sentiment that on the back half of the decade into the any next decade. There's going to be a need for more gas. So this theme of more gas longer and this is a us-centric comment related to the tax bill. I would say our pipeline of activity for gas. Demand is only growing

Amit Marotta: But it's growing at even more healthy levels for 29 deliveries 3031 in periods of time where maybe prior to the bill being signed some of our traditional customers may have been intending more wind or solar. But looking to the other side of the tax bill see more incremental gas making sense and

Unknown Executive: Equipment we sell to serve solar, but then I think in the medium to long term, this is another bull case for gas, and those conversations are accelerating as we Operator, I think we have time for one last question, please.

That is at least today. What we see there may very well be more incremental activity for wind and

Amit Marotta: Our equipment we serve to or sell to serve solar, but then I think in the medium to long term, this is another bull case for for gas and those conversations are uh are accelerating as we speak.

Amit Marotta: Operator, I think we have time for 1 last question, please.

Andrew Obin: This question comes from the line of Andrew Obin with Bank of America. Yes, good morning. Thank you for fitting me in. Good morning. Yeah, just a question.

Amit Marotta: This question comes from the line of Andrew oen with Bank of America.

Andrew: Uh, yes uh good morning. Thank you for feeding me in

Scott Strazik: Why gross margin declining, particularly service gross margins? And I'll stick one more in.

Scott Strazik: Why is nuclear revenue declining? I totally appreciate that we have a bright outlook here. But just what's the dynamic here? Thank you. So the gross margins moved a little bit just in light of the mix of revenues between equipment and services overall. So I don't see that as anything other than setting us up for a very positive future as we continue to deliver those, those new equipment units that over time will actually accrete to our service portfolio. So, a little bit of a mix issue, nothing there at all to be concerned about. On the nuclear side, just the timing of right now, we are heavily focused on fuel servicing until the new SMR book builds and we begin to deliver more of those units.

Speaker Change: Good morning and just, yeah, just a question. Uh, why gross margin declining? Particularly service gross margins and I'll stick 1 more in. Why is nuclear Revenue declining? Uh, totally appreciate that. We have uh, bright outlook here but just what's the dynamic here? Thank you.

Scott Strazik: So, it's just the timing of fuel servicing, nothing, nothing significant.

Speaker Change: So the gross margins moved a little bit just in light of the mix of revenues between equipment and Services overall. So I don't see that as anything other than setting us up for a very positive future, as we continue to deliver those. Those new equipment units that over time will actually accrete to our service portfolio. So little bit of a mix issue. Nothing there at all, to be concerned about on the nuclear side, just the timing of right now. We are heavily focused on fuel servicing until the new SMR book builds and we begin to deliver more of those units. Um, so it's just the timing of fuel servicing. Nothing

Scott Strazik: Before we wrap up, let me turn it back to Scott for closing comments. Michael, I appreciate it. And everybody giving us the time, it is appreciated. I mean, we've had a few questions on the context of our performance year to date relative to the outlook. And if I try to wrap this all together in a moment or two to try to help all of us think about the company going forward, we talked a little bit about electrification at the start. And we are definitely pleased with our progress and electrification to be at almost 15% EBITDA margins today with modest improvements the second half of the year.

Nothing significant.

Scott Strazy: Before we wrap up, let me turn it back to Scott for uh, closing comments.

Scott Strazik: So we'll get through our strategy process and electrification and come back to you on a new by 2028 financial outlook. What I would tell you in that regard is, we're also gaining real confidence and conviction on our ability to continue to expand our markets in electrification. We're having very productive conversations with the hyperscalers on incremental solutions. We can provide them and I do expect our R&D to continue to ramp up in electrification in 2026. And that's something we'll share with you as we get to the end of the year. Similar themes in power, we're pleased to be approaching the 14 to 15% band with power also.

Mike. I appreciate it and and everybody giving us the time it is appreciated. I mean we've had a few questions on the context of our performance year to date, relative to the Outlook. And if I try to wrap this all together in a moment or 2 to try to help all of us, think about the company going forward, we talked a little bit about electrification of the start and we are definitely pleased with our progress and electrification to be at almost 15% ibida. Margins today, with modest improvements the second half of the year. So we'll get through our strategy process and electrification and come back to you on a new by 2028, uh, Financial Outlook what I would tell you in that regard is we're also gaining real confidence and conviction on our ability to continue to expand our markets in electrification. We're having very productive conversations with the hyperscalers on incremental Solutions. We can provide them and I do expect our R&D to continue to ramp up

In electrification in 2026 and that's something we'll share with you. Um, as we get to the end of the year.

Scott Strazik: And as we've been saying for a period of time, that's primarily the strength of services and core operations. I mean, the better equipment backlog does not cut in, in power until the second half of 2026 and really 2027. So where we are sitting in power today, we also have an opportunity to go through the strategy processes this year and likely update that by 2028 financial guide. On wind, that's probably of our three business segments, the one that as we look out to 2028, we're still sitting at a very similar expectation as where we were in December 24.

Scott Strazy: Similar themes and power were pleased to be approaching the 14 to 15% ban with power also. And as we've been saying for a period of time, that's primarily the strength of services and core operations. I mean, the better equipment, backlog does not cut in in power until the second half of 26 and really 2027. So

Scott Strazy: Where we are sitting in power today, we also have an opportunity to go through the strategy processes this year and likely update that by 28 Financial guide.

Scott Strazik: That's the business segment that we're probably still sitting at by 2028, 10% EBITDA expectations. But there's also a lot that we owe you over the second half of the year in wind. I mean, in onshore wind with where our orders have been in the first half of the year, we have directionally 45% of next year's revenue in backlog today. So these orders need to convert in the second half of the year to fill our revenue profile for 2020. That's important. In addition to that, with offshore wind, although we had our most productive quarter operationally in 2Q, both installing and commissioning more than 30 wind turbines, Sitting here today, we've talked to you in the past about the fact that we'll have maybe a stub period with offshore to complete Dogger Bank in 2027.

Scott Strazy: As where we were in December 24th, that's the business segments. That we're probably still sitting it by 2028 10% ebida expectations, but there's also a lot that we owe you over the second half of the year. And when I mean in onshore Wind with where our orders have been in the first half of the year, we have directionally 45% of next year's Revenue in backlog today. So these orders need to convert and the second half of the year to fill our Revenue profile for 2026. That's important.

Scott Strazy: in addition to that, with offshore wind,

Although we had our most productive quarter, operationally into Q, uh, both installing and commissioning more than 30 wind turbines.

Scott Strazik: The most practical outcome is we're likely completing Dogger Bank through the four quarters of 2027 and with the benefit of the summer and our executions for the rest of the year, we'll give you an update on that.

Scott Strazy: Sitting here today. We've talked to you in the past about the fact that, um, we'll have maybe a stub period with offshore to complete dogger Bank in 2027.

Scott Strazik: By the end of 2026, so I thought it was important just to reground on where we are in all three business segments at the wrap and some of the stuff that we're going to be working on here as we look to the future with the business. Practically speaking, I think some of the big questions for us as we go into the end of the year is This is the strength of the backlog growth we expect in these businesses in 2026. Because very quickly, when we start talking about incremental backlog growth in 2026, that's telling us and you, the incremental growth we expect in this company in 2029 and 30 and beyond, and that's going to be an important piece of the equation, because the 2028 marker is just that, it's a marker.

Scott Strazy: The most practical outcome is, we're likely completing dogger Bank through the 4 quarters of 2027 and with the benefit of the summer and our execution, through the rest of the year, we'll give you an update on that.

Scott Strazy: By the end of 2026. So I thought it was important just to reground on where we are and all 3 business segments at the W and some of the stuff that we're going to be working on here, is we look to the future with the business.

Scott Strazy: Practically speaking. I think some of the big questions for us as we go into the end of the year is

Scott Strazy: The strength of the backlog growth, we expect in these businesses in 2026.

Scott Strazik: We are running this business and intend to lead this company with much grander expectations than 2028, and it is early for us and we're confident with where we're going.

Scott Strazik: So, with that, it's a wrap. I just want to thank all of you for giving us the time as you always do. We look forward to both Ken, Michael and I seeing you out in the field for our customers. We appreciate the continued commitment and faith in us for our partners and suppliers. We need you in this growth ramp and we're going to keep working with you and for our teams. We're proud of our progress. We're appreciative of everything you're doing, but we also know we have a lot of opportunities to improve and we are going to focus on that every day.

Scott Strazy: Because very quickly when we start talking about incremental backlog growth in 2026 that's telling us and you the incremental growth, we expect in this company in 2029 and 30 and Beyond and that's going to be an important piece of the equation. Because the 2028 marker is just that it's a marker, we are running this business and intending to lead this company with, um, much grander expectations than 2028, and it is early for us and um, we're confident with where we're going. So,

Scott Strazy: With that, at the wrap. I just want to thank all of you for giving us the time as you always do. We look forward to both Ken Michael and I seeing you out in the field, uh, for our customers, we appreciate the continued commitment and faith in us for our partners and suppliers. We need you in this growth ramp, and we're going to keep working with you. And for our teams, uh, we're proud of our progress.

Unknown Executive: So thanks for the time today. Everyone. Thank you.

Press were appreciative of everything you're doing, but, um, we also know, we have a lot of opportunities to improve and we are going to focus on that every day. So, thanks for the time. Uh, today, everyone.

Unknown Executive: Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.

Scott Strazy: thank you, ladies and gentlemen, this concludes today's conference

Scott Strazy: Thank you for participating. You may now. Disconnect