GE Vernova (GEV) Q3 2025: Prolec GE Deal Adds $800M EBITDA by 2028, Electrification Backlog Surges
GE Vernova’s acquisition of the remaining 50% of Prolec GE marks a transformational move, immediately boosting margins and scale in North American electrification while unlocking new global growth levers. Robust backlog expansion and margin growth in power and electrification signal durable demand, but wind softness and integration execution remain key watchpoints. The company’s 2028 targets and capital allocation discipline set a clear path for sustained earnings expansion, with investor focus now shifting to synergy realization and the December outlook update.
Summary
- Grid Scale Leverage: Full Prolec GE ownership consolidates transformer leadership and margin upside in North America.
- Backlog Momentum: Equipment and services backlog growth signals sustained demand across electrification and power.
- Integration Execution: Prolec synergies and electrification outperformance will define upside through 2028 and beyond.
Performance Analysis
GE Vernova delivered a standout quarter, driven by electrification and power segments, while wind remains a drag. Total orders surged 55% year-over-year to $14.6 billion, with equipment orders nearly doubling and services orders up 5%. The equipment backlog reached $54 billion, up $12 billion YoY, and services backlog climbed to $81 billion, reflecting robust demand visibility. Electrification revenue soared 32% with margin expansion to 15.1%, while power revenue grew 14% and margins improved to 13.3%. Wind revenue fell due to prior-year offshore contract effects, but services and repowering orders showed resilience.
Adjusted EBITDA more than tripled to $811 million, with margin expansion of 600 basis points, underpinned by pricing power, mix, and productivity gains across core businesses. Free cash flow remained strong at $730 million despite higher CapEx, and the $8 billion cash balance supports ongoing investment and buybacks. The company reaffirmed full-year guidance and signaled a positive setup for 2026, with electrification now expected to deliver 25% organic growth and higher margins.
- Electrification Outpaces: Electrification revenue and orders growth outstripped expectations, driving margin expansion and backlog build.
- Power Segment Strength: Gas turbine demand, especially slot reservations, underpins multi-year growth and pricing discipline.
- Wind Headwinds Persist: Onshore equipment softness and offshore contract drag weigh on wind, with EBITDA losses guided at $400 million for 2025.
Overall, GE Vernova’s financial momentum is anchored by large, profitable backlogs and a disciplined capital allocation strategy. Investors should watch for the pace of Prolec integration and wind segment stabilization as key determinants of future performance.
Executive Commentary
"This acquisition fully aligns with our strategic and financial objectives. Prolec will further strengthen our capabilities in the grid equipment market, primarily for transformers in North America, but also, over time, beyond North America, accelerating the growth trajectory of our fastest-growing segment, electrification."
Scott Strasik, Chief Executive Officer
"Prolec had an equipment backlog of approximately $4 billion at the end of the second quarter. We expect low double-digit revenue growth driven by volume and pricing, with revenue increasing from $3 billion this year to over $4 billion in 2028. During the same timeframe, Prolec should see robust EBITDA growth to over $1 billion in 2028, before incorporating anticipated cost and revenue synergies."
Ken Parts, Chief Financial Officer
Strategic Positioning
1. Full Ownership of Prolec GE: Grid Scale and Margin Expansion
Acquiring the remaining 50% of Prolec GE gives GE Vernova full control of a $3 billion revenue, 25% EBITDA margin transformer leader. This move consolidates North American grid equipment leadership, removes commercial limitations, and enables global integration of medium and low voltage technologies. The deal is immediately accretive to EBITDA, adding $800 million in 2028, with $60–$120 million in cost synergies targeted by then. Importantly, management sees upside from revenue synergies and international expansion that are not yet baked into guidance.
2. Electrification: Outperforming and Scaling Capacity
Electrification remains the company’s fastest-growing segment, now expected to deliver 25% organic growth and 14–15% EBITDA margins for 2025. Backlog has quadrupled since early 2023, reaching $26 billion. Major orders from hyperscalers and grid modernization projects in the Middle East and Europe highlight the segment’s global reach. Capacity expansions and lean manufacturing improvements are driving output and margin gains, with the Stafford UK facility increasing HVDC production capacity by 40% in Q3 alone.
3. Power: Gas Turbine Visibility and Pricing Power
Power demand remains robust, with gas turbine orders and slot reservation agreements totaling 62 gigawatts—up from 55 GW last quarter. The company expects to approach 70 GW by year-end, with future commitments extending into 2029 and beyond. Slot reservations provide non-refundable cash commitments, creating a durable pipeline even as customers finalize EPC and permitting. Pricing remains firm, with new orders and reservations booked at higher margins, setting up a favorable margin mix for the next cycle. Services revenue continues to grow, leveraging the expanding installed base.
4. Wind: Mixed Progress, Structural Challenges
Wind remains the company’s weakest link, with onshore equipment softness and offshore contract headwinds dragging segment results. While services and repowering orders are up, onshore equipment faces permitting delays and tariff uncertainty. EBITDA losses are guided at $400 million for 2025, with management focused on productivity, cost reduction, and selective international growth to stabilize the business.
5. Capital Allocation and Portfolio Discipline
GE Vernova is executing a disciplined capital allocation strategy: investing in core growth, returning at least one-third of cash to shareholders, and pursuing targeted M&A. The company has divested non-core assets for $2.5 billion since the spin, repurchased $2.2 billion in stock year-to-date, and maintains a strong balance sheet with $8 billion in cash. Prolec GE fits the playbook for scale, margin, and strategic fit, while ongoing investments in AI and automation are expected to drive future productivity gains.
Key Considerations
The quarter’s results and Prolec acquisition position GE Vernova for multi-year earnings growth, but integration and segment execution remain critical levers.
Key Considerations:
- Synergy Realization Pace: The timing and magnitude of Prolec cost and revenue synergies will influence 2027–2028 earnings power.
- Electrification Growth Durability: Backlog momentum and capacity investments must translate into sustained double-digit growth and margin expansion.
- Power Pricing and Mix: Gas turbine slot reservations and pricing discipline underpin margin trajectory, but mix shifts require close monitoring.
- Wind Stabilization: Ongoing losses in wind segment highlight the need for continued cost discipline and strategic repositioning.
- Capital Deployment Balance: Maintaining investment-grade leverage while funding growth, buybacks, and integration is crucial as M&A activity increases.
Risks
Integration execution for Prolec GE is a central risk, with synergy delivery, talent retention, and systems alignment all critical to value capture. Wind segment underperformance and macro factors—such as tariff volatility, permitting delays, and supply chain constraints—pose ongoing challenges. Any shortfall in electrification demand or power pricing could pressure the multi-year earnings trajectory.
Forward Outlook
For Q4 2025, GE Vernova guided to:
- Adjusted EBITDA growth and margin expansion
- Positive free cash flow
For full-year 2025, management reaffirmed guidance:
- Revenue trending to the high end of $36–$37 billion
- Adjusted EBITDA margin of 8–9%
- Free cash flow of $3–$3.5 billion
Management cited continued backlog build, electrification outperformance, and durable power services demand as drivers of confidence, with wind revenue now expected to decline high single digits organically for the year.
- Prolec GE integration and synergy roadmap will be updated at the December 9 investor event
- Electrification and power margin updates expected with 2026 and 2028 guidance
Takeaways
GE Vernova is leveraging scale and backlog strength to drive multi-year earnings growth, with the Prolec GE acquisition providing a new margin and product lever in grid equipment.
- Backlog and Margin Expansion: Robust order activity and disciplined pricing drive higher backlog margins across electrification and power.
- Strategic M&A Execution: Prolec GE acquisition immediately boosts EBITDA and grid scale, setting up further revenue and cost synergies through 2028.
- Execution Watchpoints: Integration, wind segment turnaround, and capital allocation discipline will define the next phase of value creation.
Conclusion
GE Vernova’s Q3 results and Prolec GE acquisition represent a decisive pivot to scale, margin, and backlog-driven growth in electrification and power. With disciplined capital allocation and clear synergy targets, the company is well-positioned for sustained earnings expansion—pending successful integration and wind stabilization.
Industry Read-Through
GE Vernova’s results and Prolec deal underscore surging demand for grid modernization and power infrastructure in North America, with utilities, data centers, and hyperscalers driving transformer and electrification orders. The backlog and margin trends signal continued pricing power for high-voltage equipment and gas turbines, while the wind segment’s ongoing challenges reflect broader industry headwinds from permitting, tariffs, and project economics. Competitors in grid and power equipment should expect intensified competition for capacity, technology integration, and commercial bundling as the market consolidates around scale players.