GE Vernova Morgan Stanley's 14th Annual Laguna Conference

David, thank you for having me.

Sounds good, David. Thanks, and thanks again for having me, everyone. Just a few observations on the company and the opportunity we have ahead at the start. If we begin with the end markets, I would tell you we continue to see very strong and durable demand with our end products. We had a $176 billion backlog at the end of the second quarter, and we've talked about getting to a $200 billion backlog in 2027.

I would say on the strength of the orders we expect to see in the third quarter, that $200 billion milestone we should hit very early in 2027, and I would just emphasize that that $200 billion is a very humble milestone on the trajectory we see towards growing to a much larger and more profitable business with a secular dynamic in which the world needs a lot more energy, and it's going to get a lot more of that energy from electric power, in which GE Vernova is very well-positioned to serve. I'd also say in our internal operations, we're continued to have a lot of confidence and momentum with how we're running the business. I see real progress in our factories with automation and robotics to fulfill on that growing backlog.

We also see an incredible opportunity in our install base with the data that we have and artificial intelligence to serve our customers in new and different ways. That's going to be a real growth opportunity for us over the long term. You couple those things together, the durable demand for our product, the exponential technologies with things like automation, robotics, AI, and couple it with the culture of the company we're building, which is really focused on us meeting our potential. Meeting our potential for our customers, for our shareholders, and for our team, and it's a real privilege to lead this company. A few thoughts on the businesses I referenced before the backlog, $176 billion growing to north of $200 billion, and we spent a lot of time in that backlog talking about our gas power capacity additions, and for good reason.

We're going to grow our gas capacity additions by 50% over the course of this year. What I think we can do a better job is helping you understand the services economics associated with those gigawatts on contract. If we just take a small part of the business, take our HA services revenue. Today, our HA services revenue is about $1 billion of the power business's $24 billion of revenue. We also only have 130 machines running today. We have 195 more machines on contract, and by the end of next year, we'll cumulatively have at least 400 machines either running or on contract. That's 200 gigawatts or thereabout of incremental power, in which every HA, every gigawatt of HAs will generate half a billion dollars of high-margin services revenue over the first 20 years of its lifetime.

You think about that, and today it's a billion-dollar product line. By the end of next year, we'll have contracted $100 billion of future services revenue, and it's just one example on why we see so much growth in this business over the course of the next decade. I talk about electrification. This is a business that when we launched GE Vernova in the end of 2021, had a $6 billion backlog. Today, it's $45 billion. What I'm most excited about is not the $45 billion in isolation, it's the fact that it's a part of our business where we see real innovation and new product development. We've talked about our Energy Management System. This is really the brains of a data center to help it integrate with the grid or the power generation source. Multiple orders in the first half of the year for our EMS solutions.

We've talked about our MV-UPS solution, which is really a stability block outside of the data center to drive resilience between the data center and the power gen. We expect our launch order for the MV-UPS in the second half of the year. We talked in the past about our solid-state transformers, in which our 5-megawatt indoor application is built, and our 6-megawatt outdoor application is in engineering right now. Those are three products that aren't really even embedded in that $45 billion backlog, but a very important part of our future growth. On wind, that is the part of the business with certainly less growth, but at the same time, what I would say is we're reaching a profitability pivot point in wind. We're doing a very nice job closing out on the existing offshore wind projects.

In the onshore wind services, profitability continues to improve in a very material way. The profitability of that business will be much better in the second half of the year than the first. In 2027 will be much better than 2026. You couple those business dynamics with the macro opportunity, a business that at the end of the second quarter, had $13 billion of cash and is very well-positioned to serve this growing market and create value for our shareholders every day. A few thoughts at the beginning, and then David, we can take it where you'd like.

Yeah. If we start with our largest business in power and gas and talk about the last couple of months relative to our earnings call in late July, we've secured multiple slots or sold multiple slots for 2032 deliveries since our 2Q earnings call. We added, over the course of the summer, 12 incremental gigawatts of supply in 2030 and 2031. When we did that, we've had a very strong market response to that at premium pricing, in which all 12 gigawatts is in some form of contracting right now. Although, I think most of that 12 gigawatts will get contracted in the fourth quarter versus the third quarter based on the pace of the deals. We also see our customers continue to really accelerate their slot reservation agreements into orders, which drove my earlier comment on us continuing to expect a very strong third-quarter orders performance.