Clean Energy Idea GE Vernova Reaffirms 2024 Guidance

Image: GE Vernova shares have powered higher as of late.

By Brian Nelson, CFA

GE Vernova (GEV) reported mixed third quarter results on October 23 with revenue beating expectations, but GAAP earnings per share coming in lower than expected. Total revenue increased 8% (10% organically) in the third quarter with growth in both equipment and services. Total orders came in at $9.4 billion, up 17% organically, with particular strength in services (+28% organically). Adjusted EBITDA came in at $243 million on an adjusted EBITDA margin of 2.7%, up from $205 million and 2.5% in the same period a year ago.

Management was positive in the press release:

GE Vernova had a solid third quarter, delivering double-digit orders and continued revenue growth with services strength across all segments, significant margin expansion in Power and Electrification, and substantial cash generation. We continued to leverage lean to drive operational improvements across safety, quality, delivery and cost, and released our first GE Vernova sustainability report, outlining our progress in helping to electrify and decarbonize the world. It is an exciting time in our industry and I appreciate the work our team is doing to serve growing customer demand for energy transition technologies and services, while creating value for our stakeholders.

GE Vernova reaffirmed its 2024 financial guidance, with revenue now trending towards the higher end of the range of $34-$35 billion, adjusted EBITDA margin of 5%-7%, and free cash flow of $1.3-$1.7 billion, also now trending towards the higher end of the free cash flow range. In Power, the company expects mid-single-digit organic revenue growth and 150-200 basis points of organic segment EBITDA margin expansion. In Wind, the company expects flat organic growth, and it expects material segment EBITDA improvement. In Electrification, the company now expects high teens organic revenue growth, up from prior guidance of mid-to-high teens.

GE Vernova spun off from GE earlier this year, and its “Power, Wind, and Electrification segments provide essential products and services to the electric power industry…Many of the world’s leading utilities, developers, governments, and large industrial electricity users rely on its installed base to generate, transfer, orchestrate, convert, and store electricity reliably and efficiently (GE Vernova completes spin-off and begins trading on the New York Stock Exchange, April 2).”

“With an installed base of over 7,000 gas turbines, the world’s largest, approximately 55,000 wind turbines, and leading edge electrification technology, GE Vernova helps generate approximately 30% of the world’s electricity (GE Vernova completes spin-off and begins trading on the New York Stock Exchange, April 2).” GE Vernova is one of our favorite clean energy ideas, and its financials speak to continued strength. The high end of our fair value estimate range stands at $243 per share.

—–