GEV Financial Analysis

Analysis Date: 1/24/2025

Business Model

GE Vernova operates through three segments: Power, Wind, and Electrification. Revenue is generated from the sales of equipment and services within these segments.

Revenue Sources

• Sales of equipment (e.g., Gas Power equipment, Onshore Wind turbines, Grid Solutions equipment)
• Sales of services (e.g., Power services, Wind services, Electrification services)

Income Statement Analysis

• Total revenues increased by 5% year-over-year, driven by growth in both equipment and services.
• Gross profit significantly increased by 25% year-over-year, indicating improved profitability.
• Operating income saw a substantial increase, turning from $195 million in Q4 2023 to $593 million in Q4 2024, reflecting strong operational performance.
• Net income attributable to GE Vernova also showed a large increase, from $197 million to $484 million, demonstrating improved bottom-line results.

Balance Sheet Analysis

• Significant increase in cash and cash equivalents from $1.55B to $8.2B, indicating strong cash position.
• Total current assets increased by 24.5%, driven by growth in cash, receivables, inventories, and contract assets.
• Total liabilities also increased, but at a slower pace than assets, leading to a stronger equity position.
• Total equity attributable to GE Vernova increased by 28.7%, reflecting improved financial health and profitability.

Cash Flow Analysis

• Significant improvement in net income, turning from a loss of $474 million in FY 2023 to a profit of $1.559 billion in FY 2024.
• Cash from operating activities more than doubled, from $1.186 billion to $2.583 billion, indicating strong operational cash generation.
• Cash from financing activities shows a large positive inflow in FY 2024, mainly due to transfers from Parent, likely related to the spin-off.
• Overall increase in cash, cash equivalents, and restricted cash by $6.654 billion, reflecting strong cash flow generation and management.

Capital Allocation

GE Vernova declared a quarterly dividend of $0.25 per share and approved an initial $6 billion share repurchase authorization, demonstrating commitment to return capital to shareholders. They also invested $0.3 billion in capital expenditures and $0.3 billion in R&D, indicating reinvestment in the business for growth and innovation. Monetization of stakes in GE Vernova T&D India Limited and China XD Electric Co Ltd. also highlights active portfolio management.

Management Commentary

Record orders of $13.2B, +22% organically in Q4 2024.

Record revenue of $10.6B, +9% organically in Q4 2024.

Adjusted EBITDA margin of 10.2% in Q4 2024.

Reaffirming 2025 financial guidance.

Wind orders decreased (38)% organically for the full year due to lower Onshore Wind equipment.

Overall Sentiment: Positive. Management expresses optimism about the future and highlights strong performance in orders, revenue, and margin expansion, particularly in Power and Electrification. While Wind orders declined, there's improvement in Wind segment EBITDA losses. The reaffirmation of 2025 guidance further supports a positive outlook.

Recommendation

Rating: Buy

Reason for Rating: GE Vernova demonstrates strong financial performance with record orders and revenue, significant margin expansion, and robust cash generation. The company is well-positioned to benefit from the energy transition, with growth in Power and Electrification segments. The initiation of dividends and share repurchase program signals confidence in future performance and commitment to shareholder returns.

Disclaimer: This report is for informational purposes only and not investment advice. The analysis is based on limited information and subject to change. Investing in securities involves risks, including potential loss of principal. Past performance doesn't guarantee future results. Always conduct your own research, understand the risks, and consult a financial professional before making investment decisions.

Generated on: 1/24/2025, 8:58:09 AM