GE Vernova · 10-Q · Item 2 MD&A

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS. The following discussion and analysis of our financial condition and results of operations should be read in conjunction

with our consolidated financial statements, which are prepared in conformity with U.S. generally accepted accounting principles (GAAP),

and corresponding notes included elsewhere in this Quarterly Report on Form 10-Q. The following discussion and analysis provides

information that management believes to be relevant to understanding the financial condition and results of operations of the Company for

the three and six months ended June 30, 2026 and 2025. The below discussion should be read alongside Item 7. "Management’s

Discussion and Analysis of Financial Condition and Results of Operations" and our audited consolidated and combined financial statements

and corresponding notes in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. Unless otherwise noted, tables

are presented in U.S. dollars in millions, except for per-share amounts which are presented in U.S. dollars. Certain columns and rows

within tables may not add due to the use of rounded numbers. Percentages presented in this report are calculated from the underlying

numbers in millions. Unless otherwise noted, statements related to changes in operating results relate to the corresponding period in the

prior year.

In the accompanying analysis of financial information, we sometimes use information derived from consolidated financial data but not

presented in our financial statements prepared in accordance with GAAP. Certain of these data are considered “non-GAAP financial

measures” under SEC rules. For the reasons we use these non-GAAP financial measures and the reconciliations to their most directly

comparable GAAP financial measures, see "—Non-GAAP Financial Measures."

Prolec GE. T1On February 2, 2026, we completed the acquisition of the remaining 50% stake of Prolec GE, our former unconsolidated joint

venture with Xignux, in exchange for cash consideration of approximately $5.3 billion. Prolec GE is an electric industry leader in North

America, with approximately 10,000 employees across seven manufacturing sites in the Americas, including five in the U.S. It produces a

wide variety of transformers and transformer components for the generation, transmission, and distribution of electricity, complemented by

its broad transformer services offering. Net assets and results of operations of Prolec GE are included in our results commencing on

February 2, 2026 and are reported within the Electrification segment. As a result of this acquisition, we remeasured our previously held

equity interest to fair value, with the resulting pre-tax gain of $4.0 billion recognized within Other income (expense) – net in our

Consolidated Statement of Income (Loss) during the first quarter of 2026.

Long-term Borrowings. On February 4, 2026, we issued $2.6 billion aggregate principal amount of senior notes, consisting of $0.6 billion,

$1.0 billion, and $1.0 billion due February 2031, 2036, and 2056, respectively. The proceeds from the debt offering were used for general

corporate purposes, including financing a portion of the acquisition of the remaining 50% stake of Prolec GE.

Offshore Wind. T2At Offshore Wind, we continue to experience pressure related to our project costs and execution timelines, as we deliver

on our existing backlog. On December 22, 2025, the United States Department of Interior announced that it was pausing the leases for all

large-scale offshore wind projects under construction in the United States, which had a direct impact on the Vineyard Wind project

completion timeline. On January 27, that pause was lifted and during the first quarter of 2026, we successfully completed the installation of

all remaining wind turbines at the Vineyard Wind project and now have moved on to the remaining commissioning activities. As we work

through the final stages of the project, we are working with our customer to resolve outstanding claims and counterclaims.

Tariffs. Throughout 2025 and 2026, the United States and other countries imposed global tariffs. These tariffs have resulted, and any

future tariffs will result, in additional costs to us. T3The current total estimated cost impact from the global tariffs as outlined is approximately

$100 million to $200 million in 2026, after taking into consideration contractual protections and mitigating actions, including pursuing the

recovery of certain tariffs. The actual impacts of tariffs may be significantly different than our current estimate. Our estimate is subject to

several factors including the amount, duration, and scope and nature of the tariffs, countermeasures that countries take, mitigating or other

actions we take, and contractual implications.

Business Unit Realignment. T4Effective January 1, 2026, we realigned the reporting of certain of our business units. Historical financial

information presented within this report conforms to the new business unit structure within the Power, Electrification, and Wind segments.

•Within our Power segment, our Steam Power business unit was realigned into Nuclear Power, Hydro Power, and Gas Power. In

addition, a component of our former Electrification Software business unit was realigned into Gas Power.

•Within our Electrification segment, we revised our Grid Solutions business unit into three new business units, Power Transmission,

Grid Systems Integration, and Grid Automation & Software. In addition, a component of our former Electrification Software business

unit was realigned into Grid Automation & Software and another component was realigned into Gas Power within our Power segment.

•Within our Wind segment, we combined our Onshore Wind and LM Wind Power business units into Onshore Wind.

TRENDS AND FACTORS IMPACTING OUR PERFORMANCE. We believe our performance and future success depends on a number of

factors that present significant opportunities for us but also pose risks and challenges, including those discussed below.

Our worldwide operations are affected by regional and global factors impacting energy demand, including industry trends like

decarbonization, an increasing demand for renewable energy alternatives, governmental regulations and policies, and changes in broader

economic and geopolitical conditions. These trends, along with the growing focus on the digitization and sustainability of the electricity

infrastructure, can impact performance across each of our business segments. We believe that our industry-defining technologies and

commitment to innovation position us well to capitalize on, as well as mitigate adverse impacts from, these long-term trends:

•Demand growth for electricity generation – Significant investment, infrastructure, and supply diversity will be essential to help meet

forecasted energy demand growth arising from population and global economic growth.

•Decarbonization – The urgency to combat climate change is fueling technology advancements that improve the economic viability and

efficiency of renewable energy alternatives and facilitate the transition to a more sustainable power sector.

•Evolving generation mix – The power industry is shifting from coal generation to more electricity generated from zero- or low-carbon

energy sources, and an evolving balance of generation sources will be necessary to maintain a reliable, resilient, and affordable

system.

•Energy resilience & security – Threats and challenges from extreme weather events, cyber-attacks, and geopolitical tensions have

increased focus on the strength and resilience of power generation and transmission and reinforced the need for a diversified mix of

energy sources.

•Grid modernization and investment – Increased demand and the integration of advanced generation and storage solutions drive the

need to update aging infrastructure with new grid integration and automation solutions.

•Regulatory and policy changes – Government policies and regulations, such as carbon pricing, renewable energy mandates, and

subsidies for renewable energy technologies, can significantly impact the power generation landscape. Staying ahead of regulatory

changes and adapting to new compliance requirements is crucial for maintaining a competitive advantage.

•Financial and investment dynamics – Access to capital and investment trends in the energy sector can influence the development and

deployment of new power generation projects. Understanding market dynamics and securing funding are key to progressing strategic

initiatives.

RESULTS OF OPERATIONS

Summary of Results. RPO was $176.3 billion and $128.7 billion as of June 30, 2026 and 2025, respectively. For the three months ended

June 30, 2026, total revenues were $11.1 billion, an increase of $2.0 billion for the quarter. Net income (loss) was $0.6 billion, an increase

of $0.2 billion in net income for the quarter, and net income (loss) margin was 5.8%. Diluted earnings (loss) per share was $2.47 for the

three months ended June 30, 2026, an increase in diluted earnings per share of $0.61 for the quarter. Cash flows from (used for) operating

activities were $10.7 billion and $1.5 billion for the six months ended June 30, 2026 and 2025, respectively.

For the three months ended June 30, 2026, Adjusted EBITDA* was $1.2 billion, an increase of $0.5 billion. T5Free cash flow* was $9.9 billion

RPO, a measure of backlog, includes unfilled firm and unconditional customer orders for equipment and services, excluding any purchase

order that provides the customer with the ability to cancel or terminate without incurring a substantive penalty. Services RPO includes the

estimated life of contract sales related to long-term service agreements which remain unsatisfied at the end of the reporting period,

excluding contracts that are not yet active. Services RPO also includes the estimated amount of unsatisfied performance obligations for

time and material agreements, material services agreements, spare parts under purchase order, multi-year maintenance programs, and

other services agreements, excluding any order that provides the customer with the ability to cancel or terminate without incurring a

substantive penalty. See Note 9 in the Notes to the consolidated financial statements for further information.

RPO

Equipment

Services

Total RPO

As of June 30, 2026, RPO increased $26.0 billion (17%) from December 31, 2025, primarily at Power, due to increases at Gas Power from

Heavy-Duty Gas Turbine and Aeroderivative equipment and transactional services, and increases at Nuclear Power services; and at

Electrification, due to the acquisition of Prolec GE and demand for switchgear and transformers at Power Transmission, and demand for

alternating current substation solutions at Grid Systems Integration; partially offset at Wind, due to a decrease at Offshore Wind as we

continue to execute on our contracts and at Onshore Wind due to a decrease in orders primarily in North America. RPO increased $47.6

billion (37%) from June 30, 2025, primarily at Power, due to increases at Gas Power from Heavy-Duty Gas Turbine and Aeroderivative

equipment and contractual services, and increases at Nuclear Power services and equipment, partially offset by Hydro Power equipment;

and at Electrification, due to the acquisition of Prolec GE and demand for switchgear and transformers at Power Transmission, demand for

alternating current substation solutions and high-voltage direct current solutions at Grid Systems Integration, and synchronous condensers

at Power Conversion & Storage; partially offset at Wind, due to a decrease at Offshore Wind as we continue to execute on our contracts

and at Onshore Wind due to a decrease in orders primarily in North America.

Three months ended June 30

Six months ended June 30

REVENUES

Equipment revenues

Services revenues

Total revenues

For the three months ended June 30, 2026, total revenues increased $2.0 billion (22%). Equipment revenues increased at Electrification,

primarily due to the acquisition of Prolec GE, and increased volume in switchgear and transformers at Power Transmission, and at Grid

Systems Integration due to increased volume in alternating current substation solutions and high-voltage direct current solutions; and at

Power, due to increases at Gas Power from higher Aeroderivative deliveries and favorable pricing; partially offset at Wind, primarily at

Onshore Wind due to lower deliveries, partially offset by increases at Offshore Wind due to higher deliveries and installations. Services

revenues increased at Power, due to increases at Nuclear Power and Gas Power from higher volume and favorable pricing; at Wind, due to

an increase at Onshore Wind from higher transactional volume; and at Electrification.

Organic revenues* exclude the effects of acquisitions, dispositions, and foreign currency. Excluding these effects, organic revenues*

increased $1.1 billion (12%), organic equipment revenues* increased $0.7 billion (14%) and organic services revenues* increased $0.4

billion (10%). Organic revenues* increased at Power and Electrification, partially offset at Wind.

*Non-GAAP Financial Measure

For the six months ended June 30, 2026, total revenues increased $3.3 billion (19%). Equipment revenues increased at Electrification,

primarily due to the acquisition of Prolec GE, and increased volume in switchgear and transformers at Power Transmission, and at Grid

Systems Integration due to increased volume in alternating current substation solutions and high-voltage direct current solutions; and at

Power, due to increases at Gas Power from Heavy-Duty Gas Turbine and Aeroderivative deliveries and favorable pricing; partially offset at

Wind, primarily at Onshore Wind due to lower deliveries, partially offset by increases at Offshore Wind due to higher deliveries and

installations. Services revenues increased at Power, due to increases at Gas Power and Nuclear Power from higher parts volume and

favorable pricing; at Wind, due to an increase at Onshore Wind from higher transactional volume; and at Electrification.

Organic revenues* exclude the effects of acquisitions, dispositions, and foreign currency. Excluding these effects, organic revenues*

increased $1.7 billion (10%), organic equipment revenues* increased $1.1 billion (12%) and organic services revenues* increased $0.6

billion (7%). Organic revenues* increased at Electrification and Power, partially offset at Wind.

Three months ended June 30

Six months ended June 30

EARNINGS (LOSS)

Operating income (loss)

Net income (loss)

Net income (loss) attributable to GE Vernova

Adjusted EBITDA*

Diluted earnings (loss) per share

For the three months ended June 30, 2026, operating income (loss) was $0.7 billion, a $0.3 billion increase, primarily due to: an increase

in segment results at Electrification of $0.4 billion, primarily due to volume, productivity, and favorable price at Power Transmission and

Power Conversion & Storage; and at Power of $0.2 billion, primarily at Gas Power due to higher volume and favorable pricing, partially

offset by the impact of inflation; partially offset by a decrease at Wind of $(0.1) billion, primarily at Onshore Wind due to lower equipment

deliveries and at Offshore Wind due to higher project costs, partially offset by lower costs at Onshore Wind services; and an increase in

depreciation and amortization expense across all segments of $0.2 billion.

Net income (loss) and Net income (loss) margin were $0.6 billion and 5.8%, respectively, for the three months ended June 30, 2026, an

increase of $0.2 billion and 0.4%, respectively, for the quarter, primarily due to an increase in operating income (loss) of $0.3 billion,

partially offset by an increase in provision for income taxes of $0.1 billion.

Adjusted EBITDA* and Adjusted EBITDA margin* were $1.2 billion and 11.3%, respectively, for the three months ended June 30, 2026, an

increase of $0.5 billion and 2.8%, respectively, primarily driven by increases in segment results at Electrification and Power, partially offset

at Wind.

For the six months ended June 30, 2026, operating income (loss) was $0.8 billion, a $0.4 billion increase, primarily due to: an increase in

segment results at Electrification of $0.7 billion, primarily due to volume, productivity, and favorable price at Power Transmission and Grid

Systems Integration; and at Power of $0.5 billion, primarily at Gas Power due to favorable pricing, higher volume, and increased

productivity, partially offset by the impact of inflation and additional expenses to support investments at Gas Power and Nuclear Power;

partially offset by a decrease at Wind of $(0.3) billion, primarily at Onshore Wind due to lower equipment deliveries and the impact of tariffs,

and at Offshore Wind due to higher contract losses, partially offset by lower costs at Onshore Wind services; and an increase in

depreciation and amortization expense across all segments of $0.4 billion.

Net income (loss) and Net income (loss) margin were $5.4 billion and 26.4%, respectively, for the six months ended June 30, 2026, an

increase of $4.6 billion and 22.0%, respectively, for the year, primarily due to an increase in other income (expense) - net of $4.6 billion

driven by a $4.0 billion pre-tax gain related to the acquisition of Prolec GE and a $0.3 billion pre-tax gain related to the sale of our Proficy

manufacturing software business (Proficy), and an increase in operating income (loss) of $0.4 billion, partially offset by an increase in

provision for income taxes of $0.4 billion.

Adjusted EBITDA* and Adjusted EBITDA margin* were $2.1 billion and 10.5%, respectively, for the six months ended June 30, 2026, an

increase of $0.9 billion and 3.3%, respectively, primarily driven by increases in segment results at Electrification and Power, partially offset

at Wind.

*Non-GAAP Financial Measure

SEGMENT OPERATIONS. Segment revenues include sales of equipment and services by our segments. Segment EBITDA is

determined based on performance measures used by our Chief Operating Decision Maker, who is our Chief Executive Officer (CEO), to

assess the performance of each business in a given period. In connection with that assessment, the CEO may exclude certain non-cash

charges, such as depreciation and amortization, impairments and other matters, major restructuring programs, and certain gains and

losses from purchases and sales of business interests. Certain corporate costs, including those related to shared services, employee

benefits, and information technology (IT), are allocated to our segments based on usage or their relative net cost of operations.

Three months ended June 30

Six months ended June 30

SUMMARY OF REPORTABLE SEGMENTS

Power

Electrification

Wind

Eliminations and other

Total revenues

Segment EBITDA

Power

Electrification

Wind

Corporate and other(a)

Adjusted EBITDA*(b)

(a) Includes our Financial Services business and other general corporate expenses, including costs required to operate as a stand-alone

public company.

(b) See "—Non-GAAP Financial Measures" for additional information related to Adjusted EBITDA*. Adjusted EBITDA* includes interest and

other financial income (charges) and the benefit for income taxes of Financial Services as this business is managed on an after-tax

basis due to the nature of its investments.

POWER

Three months ended June 30

Six months ended June 30

Orders in units

Gas Turbines

Heavy-Duty Gas Turbines

HA-Turbines

7

Aeroderivatives

Gas Turbine Gigawatts

Three months ended June 30

Six months ended June 30

Sales in units

Gas Turbines

Heavy-Duty Gas Turbines

HA-Turbines

3

8

8

Aeroderivatives

3

Gas Turbine Gigawatts

RPO

Equipment

Services

Total RPO

RPO as of June 30, 2026 increased $17.1 billion (18%) from December 31, 2025, primarily at Gas Power due to increases in Heavy-Duty

Gas Turbine and Aeroderivative equipment and transactional services, and increases at Nuclear Power services. RPO increased $32.4

billion (41%) from June 30, 2025, primarily at Gas Power due to increases in Heavy-Duty Gas Turbine and Aeroderivative equipment and

contractual services, and increases at Nuclear Power services and equipment, partially offset by Hydro Power equipment.

*Non-GAAP Financial Measure

Three months ended June 30

Six months ended June 30

SEGMENT REVENUES AND EBITDA

Gas Power

Nuclear Power

Hydro Power

Total segment revenues

Equipment

Services

Total segment revenues

Segment EBITDA

Segment EBITDA margin

%

%

%

%

For the three months ended June 30, 2026, segment revenues were up $0.7 billion (14%) and segment EBITDA was up $0.2 billion

T6Segment revenues increased $0.7 billion (14%) organically*, primarily at Gas Power equipment due to higher Aeroderivative unit deliveries

and favorable pricing, and increases at Nuclear Power and Gas Power services due to higher volume and favorable pricing.

Segment EBITDA increased $0.3 billion (37%) organically*, primarily at Gas Power due to higher volume and favorable pricing, partially

offset by the impact of inflation.

For the six months ended June 30, 2026, segment revenues were up $1.2 billion (13%) and segment EBITDA was up $0.5 billion

Segment revenues increased $1.1 billion (12%) organically*, primarily at Gas Power equipment due to higher Heavy-Duty Gas Turbine and

Aeroderivative deliveries and favorable pricing, and increases at Gas Power and Nuclear Power services due to higher parts volume and

favorable pricing.

Segment EBITDA increased $0.6 billion (46%) organically*, primarily at Gas Power due to favorable pricing, higher volume, and increased

productivity, partially offset by the impact of inflation and additional expenses to support investments at Gas Power and Nuclear Power.

ELECTRIFICATION

RPO

Equipment

Services

Total RPO

RPO as of June 30, 2026 increased $10.3 billion (30%) from December 31, 2025, primarily due to the acquisition of Prolec GE and demand

for switchgear and transformers at Power Transmission, and demand for alternating current substation solutions at Grid Systems

Integration. RPO increased $17.4 billion (64%) from June 30, 2025, primarily due to the acquisition of Prolec GE and demand for

switchgear and transformers at Power Transmission, demand for alternating current substation solutions and high-voltage direct current

solutions at Grid Systems Integration, and synchronous condensers at Power Conversion & Storage.

Three months ended June 30

Six months ended June 30

SEGMENT REVENUES AND EBITDA

Power Transmission

Grid Systems Integration

Power Conversion & Storage

Grid Automation & Software

Total segment revenues

Equipment

Services

Total segment revenues

Segment EBITDA

Segment EBITDA margin

%

%

%

%

For the three months ended June 30, 2026, segment revenues were up $1.5 billion (68%) and segment EBITDA was up $0.4 billion.

Segment revenues increased $0.6 billion (29%) organically*, primarily at Power Transmission due to increased volume in switchgear and

transformers, and at Grid Systems Integration due to increased volume in alternating current substation solutions and high-voltage direct

current solutions.

*Non-GAAP Financial Measure

Segment EBITDA increased $0.3 billion organically*, primarily due to volume, productivity, and favorable price at Power Transmission and

Power Conversion & Storage.

For the six months ended June 30, 2026, segment revenues were up $2.6 billion (65%) and segment EBITDA was up $0.7 billion.

Segment revenues increased $1.1 billion (29%) organically*, primarily at Power Transmission due to increased volume in switchgear and

transformers, and at Grid Systems Integration due to increased volume in alternating current substation solutions and high-voltage direct

current solutions.

Segment EBITDA increased $0.5 billion organically*, primarily due to volume, productivity, and favorable price at Power Transmission and

Grid Systems Integration.

WIND

Three months ended June 30

Six months ended June 30

Onshore and Offshore Wind orders in units

Wind Turbines

Repower Units

—

Wind Turbine and Repower Units Gigawatts

Three months ended June 30

Six months ended June 30

Onshore and Offshore Wind sales in units

Wind Turbines

Repower Units

Wind Turbine and Repower Units Gigawatts

RPO

Equipment

Services

Total RPO

RPO as of June 30, 2026 decreased $1.2 billion (6%) from December 31, 2025 and decreased $2.1 billion (9%) from June 30, 2025,

primarily due to a decrease at Offshore Wind as we continue to execute on our contracts and at Onshore Wind due to a decrease in orders

primarily in North America.

Three months ended June 30

Six months ended June 30

SEGMENT REVENUES AND EBITDA

Onshore Wind

Offshore Wind

Total segment revenues

Equipment

Services

Total segment revenues

Segment EBITDA

Segment EBITDA margin

%

%

%

%

T7For the three months ended June 30, 2026, segment revenues were down $0.2 billion (10%) and segment EBITDA was down $0.1

billion (67%).

Segment revenues decreased $0.2 billion (11%) organically*, primarily at Onshore Wind equipment due to lower deliveries, partially offset

by increases at Onshore Wind services due to increased transactional volume and Offshore Wind due to higher deliveries and installations.

Segment EBITDA decreased $0.1 billion (79%) organically*, primarily at Onshore Wind due to lower equipment deliveries and at Offshore

Wind due to higher project costs, partially offset by lower costs at Onshore Wind services.

For the six months ended June 30, 2026, segment revenues were down $0.6 billion (16%) and segment EBITDA was down $0.3

billion.

Segment revenues decreased $0.7 billion (17%) organically*, primarily at Onshore Wind equipment due to lower deliveries, partially offset

by increases at Onshore Wind services due to increased transactional volume and Offshore Wind due to higher deliveries and installations.

Segment EBITDA decreased $0.3 billion organically*, primarily at Onshore Wind due to lower equipment deliveries and the impact of tariffs,

and at Offshore Wind due to higher contract losses, partially offset by lower costs at Onshore Wind services.

*Non-GAAP Financial Measure

OTHER INFORMATION

Gross Profit and Gross Margin. Gross profit was $2.4 billion and $1.8 billion for the three months ended and $4.1 billion and $3.3 billion

for the six months ended June 30, 2026 and 2025, respectively. Gross margin was 21.3% and 20.3% for the three months ended and

20.3% and 19.3% for the six months ended June 30, 2026 and 2025, respectively. The increase in gross profit for the quarter was due to an

increase at Electrification due to volume, productivity, and favorable price at Power Transmission and Power Conversion & Storage; and at

Power due to higher volume and favorable pricing at Gas Power, partially offset by the impact of inflation; partially offset by a decrease at

Wind primarily at Onshore Wind due to lower equipment deliveries and at Offshore Wind due to higher project costs. The increase in gross

profit for the year was due to increases at Power and Electrification, partially offset by a decrease at Wind due to the reasons described

above.

Selling, General, and Administrative. Selling, general, and administrative costs were $1.4 billion and $1.2 billion for the three months

ended and $2.7 billion and $2.4 billion for the six months ended and comprised 12.4% and 13.0% of revenues for the three months ended

and 13.1% and 13.8% of revenues for the six months ended June 30, 2026 and 2025, respectively. Selling, general, and administrative

costs increased $0.2 billion for the quarter and $0.3 billion for the year, primarily due to labor inflation and incremental costs associated with

the acquisition of Prolec GE, partially offset by cost reduction activities.

Restructuring Charges and Separation Costs. We continuously evaluate our cost structure and are implementing several restructuring

and process transformation actions considered necessary to simplify our organizational structure. In connection with the separation from

General Electric Company (GE), we incurred and will continue to incur certain one-time separation costs. See Note 23 in the Notes to the

consolidated financial statements for further information.

Interest and Other Financial Income (Charges) – Net. Interest and other financial income (charges) – net was $0.1 billion and less than

$0.1 billion in income for the three months ended and $0.1 billion and $0.1 billion in income for the six months ended June 30, 2026 and

2025, respectively. The increase in income for the quarter and for the year was primarily due to a higher average balance of invested funds,

partially offset by higher interest expense on borrowings. The primary components of net interest and other financial income (charges) are

fees on cash management activities, interest on borrowings, and interest earned on cash balances and short-term investments.

Income Taxes. Our effective tax rate was 29.8% for the three months ended June 30, 2026. The effective tax rate was higher than the U.S.

statutory rate of 21% primarily due to updated estimates of the purchase price allocation on the acquisition of Prolec GE and losses

providing no tax benefit in certain jurisdictions, partially offset by an income tax benefit from stock-based compensation.

Our effective tax rate was 10.5% for the six months ended June 30, 2026. The effective tax rate was lower than the U.S. statutory rate of

21% primarily due to a nontaxable gain on the acquisition of Prolec GE and an income tax benefit from stock-based compensation, partially

offset by losses providing no tax benefit in certain jurisdictions.

Our effective tax rate was 23.7% and 22.6% for the three and six months ended June 30, 2025, respectively. The effective tax rate was

higher than the U.S. statutory rate of 21% in both periods primarily due to losses providing no tax benefit in certain jurisdictions, partially

offset by an income tax benefit from stock-based compensation.

CAPITAL RESOURCES AND LIQUIDITY. As of June 30, 2026, our Cash, cash equivalents, and restricted cash was $13.1 billion,

$0.4 billion of which was restricted use cash. In addition, we have access to a $3.0 billion committed revolving credit facility (Revolving

Credit Facility). See “—Capital Resources and Liquidity—Debt” for further information. We believe our unrestricted cash, cash equivalents,

future cash flows generated from operations, and committed credit facility will be responsive to the needs of our current and planned

operations for at least the next 12 months.

T8On December 9, 2025, we announced that the Board of Directors had authorized an increase of our repurchase program to $10.0 billion of

common stock repurchases, from the prior authorization of $6.0 billion, which was announced on December 10, 2024. We repurchased 2.5

million shares and 4.3 million shares for $2.3 billion and $3.6 billion during the three months and six months ended June 30, 2026,

respectively. Cumulatively we have repurchased $7.0 billion of common stock over the life of the program. Although we intend to fund

priorities that profitably grow the Company and return capital to stockholders through dividends and share repurchases as part of our

capital allocation strategy, we are not obligated to pay cash dividends or to repurchase a specified or any number or dollar value of shares

under our share repurchase program. The declaration of any future dividends is at the discretion of our Board of Directors and will be based

on our earnings, financial condition, cash requirements, prospects, and other factors. The amount and timing of any future share

repurchases under our share repurchase program will be based on the trading price and volume of our shares of common stock and other

market factors as well as our earnings, financial condition, cash requirements, prospects, alternative uses for our cash, and other factors.

Consolidated Statement of Cash Flows. The most significant source of cash flows from operations is customer-related activities, the

largest of which is collecting cash resulting from equipment or services sales. The most significant operating uses of cash are to pay our

suppliers, employees, and tax authorities. We measure ourselves on a free cash flow* basis. We believe that free cash flow* provides

management and investors with an important measure of our ability to generate cash on a normalized basis.

Free cash flow* also provides insight into our ability to produce cash subsequent to fulfilling our capital obligations; however, free cash flow*

does not delineate funds available for discretionary uses as it does not deduct the payments required for certain investing and financing

activities.

We typically invest in property, plant, and equipment (PP&E) over multiple periods to support new product introductions and increases in

manufacturing capacity and to perform ongoing maintenance of our manufacturing operations. We believe that while PP&E expenditures

will fluctuate period to period, we will need to maintain a material level of net PP&E spend to maintain ongoing operations and growth of the

business.

*Non-GAAP Financial Measure

Six months ended June 30

FREE CASH FLOW (NON-GAAP)

Cash from (used for) operating activities (GAAP)

Add: Gross additions to property, plant, and equipment and internal-use software

Free cash flow (Non-GAAP)

Cash from operating activities was $10.7 billion and $1.5 billion for the six months ended June 30, 2026 and 2025, respectively.

Cash from operating activities increased by $9.2 billion in 2026 compared to 2025, primarily driven by: an increase from contract liabilities

and current deferred income of $11.8 billion, primarily due to higher down payments on orders and slot reservation agreements at Power,

higher down payments at Electrification, and lower revenue recognition at Wind; higher net income (after adjusting for depreciation of

PP&E, amortization of intangible assets, (gains) losses on purchases and sales of business interests, and provision (benefit) for income

taxes) of $1.0 billion; an increase from accounts payable of $0.7 billion, driven by growth at Electrification and Power, including a higher

impact related to decreases in prepayments across all segments; and an increase from current contract assets of $0.3 billion driven by

lower net revenue recognition at Wind; partially offset by a decrease from current receivables of $(1.9) billion, primarily due to higher net

billings and increases in supplier advances across all segments; a decrease from inventories of $(0.9) billion, primarily due to higher build

at Power and fewer liquidations at Wind; higher income taxes paid of $(0.9) billion; a decrease from All other operating activities of $(0.5)

billion, primarily due to an increase in realized gains related to the sale of our remaining interest in China XD Electric Co., Ltd. and a higher

decrease in employee benefit liabilities; and a voluntary contribution of $(0.5) billion to the GE Energy Pension Plan in 2026 that reduced

our pension liability.

Cash from operating activities of $10.7 billion for the six months ended June 30, 2026 included a $11.7 billion inflow from changes in

working capital. The cash inflow from changes in working capital was primarily driven by: contract liabilities and current deferred income of

$13.7 billion, driven by down payments on orders and slot reservation agreements at Power, and down payments at Electrification;

accounts payable and equipment project payables of $0.9 billion, due to purchases of materials outpacing disbursements, including a

decrease in prepayments at Electrification and Power, partially offset by higher disbursements at Wind; partially offset by inventories of

$(1.7) billion, due to higher volume to support fulfillment and future deliveries primarily at Power and Wind; current receivables of $(0.8)

billion, driven by net billings and an increase in supplier advances across all segments; and current contract assets of $(0.4) billion, driven

by equipment revenue recognition exceeding billings at Electrification and Power.

Cash from operating activities of $1.5 billion for the six months ended June 30, 2025 included a $1.6 billion inflow from changes in working

capital. The cash inflow from changes in working capital was primarily driven by: contract liabilities and current deferred income of $1.9

billion, driven by down payments on orders and slot reservation agreements at Power, and down payments and collections at

Electrification, partially offset by revenue recognition at Wind; and current receivables of $1.0 billion, driven by collections outpacing billings

in Power, including a decrease in past dues, and collections outpacing billings and a decrease in supplier advances at Wind; partially offset

by inventories of $(0.9) billion, primarily due to volume across all businesses to support fulfillment and deliveries expected in 2025 and

2026; and current contract assets of $(0.6) billion, driven by revenue recognition exceeding billings, primarily in Wind and Power.

Cash from (used for) investing activities was $(4.1) billion and $(0.2) billion for the six months ended June 30, 2026 and 2025,

respectively. Cash used for investing activities increased by $3.8 billion in 2026 compared to 2025 primarily driven by: net cash paid for the

acquisition of the remaining 50% stake of Prolec GE of $4.9 billion (net of cash acquired); and higher additions to PP&E and internal-use

software of $0.4 billion; partially offset by proceeds from sales of our remaining interest in China XD Electric Co., Ltd. in 2026 of $0.7 billion,

which is included in All other investing activities; proceeds (net of cash transferred) from the sale of our Proficy business of $0.6 billion; and

higher dispositions of PP&E of $0.2 billion. Cash used for additions to PP&E and internal-use software, which is a component of free cash

flow*, was $0.8 billion and $0.4 billion for the six months ended June 30, 2026 and 2025, respectively.

Cash from (used for) financing activities was $(2.3) billion and $(1.9) billion for the six months ended June 30, 2026 and 2025,

respectively. Cash used for financing activities increased by $0.4 billion in 2026 compared to 2025 primarily driven by: higher cash

settlements for share repurchases of $2.1 billion; the repayment of debt acquired in the Prolec GE transaction of $0.4 billion and higher

withholding tax payments on equity stock awards of $0.3 billion, which are both included in All other financing activities; and higher

dividends paid of $0.1 billion; partially offset by net cash from newly issued long-term debt of $2.6 billion in 2026.

Material Cash Requirements. In the normal course of business, we enter into contracts and commitments that oblige us to make

payments in the future. See Notes 7 and 22 in the Notes to the consolidated financial statements for further information regarding our

obligations under lease and guarantee arrangements as well as our investment commitments. See Note 13 in the Notes to the consolidated

financial statements for further information regarding material cash requirements related to our pension obligations.

Debt. Total debt, excluding finance leases, was $2.6 billion and less than $0.1 billion as of June 30, 2026 and December 31, 2025,

respectively, an increase of $2.5 billion, primarily due to long-term debt issued on February 4, 2026. We have a $3.0 billion Revolving Credit

Facility to fund near-term intra-quarter working capital needs as they arise. In addition, we have a $3.0 billion committed trade finance

facility (Trade Finance Facility, and together with the Revolving Credit Facility, the Credit Facilities). The Trade Finance Facility has not

been and is not expected to be utilized, and does not contribute to direct liquidity. We believe that our financing arrangements, future cash

from operations, and access to capital markets will provide adequate resources to fund our future cash flow needs. For more information

about the Credit Facilities, refer to our Current Report on Form 8-K, filed with the SEC on April 2, 2024, and see Note 14 in the Notes to the

consolidated financial statements.

*Non-GAAP Financial Measure

Credit Ratings and Conditions. Interest and fees payable by us under the Revolving Credit Facility are determined in part by our credit

ratings, and our credit ratings and market conditions will influence any future debt financing and may impact our commercial activities and

arrangements. Standard and Poor's Global Ratings (S&P) and Fitch Ratings (Fitch) have issued credit ratings for the Company. Our credit

ratings as of the date of this filing are set forth in the following table.

S&P

Fitch

Outlook

Positive

Positive

Long-term

BBB

BBB+

We are disclosing our credit ratings to enhance understanding of our sources of liquidity and the effects of our ratings on our costs of funds

and access to credit. Our ratings may be subject to a revision or withdrawal at any time by the assigning rating organization, and each

rating should be evaluated independently of any other rating. See Item 1A. “Risk Factors—Risks Related to our Customers and Industry

Dynamics” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 for a description of some potential

consequences for our credit ratings.

If we are unable to maintain investment grade ratings, we could face significant challenges in being awarded new contracts, substantially

increasing financing and hedging costs, and refinancing risks as well as substantially decreasing the availability of credit. As of June 30,

2026, we estimated an insignificant liquidity impact of a ratings downgrade below investment grade.

Parent Company Credit Support. Prior to the separation from GE, to support GE Vernova businesses in selling products and services

globally, GE often entered into contracts on behalf of GE Vernova or issued parent company guarantees or trade finance instruments

supporting the performance of its subsidiary legal entities transacting directly with customers, in addition to providing similar credit support

for noncustomer related activities of GE Vernova (collectively, the GE credit support). We are working to seek novation or assignment of GE

credit support, the majority of which relates to parent company guarantees, associated with GE Vernova legal entities from GE to GE

Vernova. For GE credit support that remained outstanding at the separation from GE, GE Vernova is obligated to use reasonable best

efforts to terminate or replace, and obtain a full release of GE’s obligations and liabilities under, all such credit support. GE Vernova pays

quarterly fees to GE which are determined by amounts associated with GE credit support. GE Vernova is subject to other contractual

restrictions and requirements while GE continues to be obligated under such credit support on behalf of GE Vernova. In addition, while GE

will remain obligated under the contract or instrument, GE Vernova will be obligated to indemnify GE for credit support related payments

that GE is required to make and possible related costs.

As of June 30, 2026, we estimated GE Vernova RPO and other obligations that relate to GE credit support to be approximately $7.0 billion,

an over 80% reduction since the separation. We expect approximately $5 billion of the RPO related to GE credit support obligations to

contractually mature by December 31, 2029. The underlying obligations are predominantly customer contracts that GE Vernova performs in

the normal course of its business. We have no known instances historically where payments or performance from GE were required under

parent company guarantees relating to GE Vernova customer contracts.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS. In November 2024, the Financial Accounting Standards Board (FASB)

issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (DISE). The new standard requires disclosure about specific

types of expenses included in the expense captions presented on the face of the income statement as well as disclosure about selling

expenses. The ASU is effective for fiscal years beginning after December 15, 2026 and interim reporting periods beginning after December

15, 2027, with early adoption permitted. We are currently evaluating the impact that this guidance will have on the disclosures within our

consolidated financial statements.

In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Targeted improvements to the Accounting for Internal-Use Software. The ASU updates the accounting for internal-use software by

eliminating the concept of development stages. Under this updated guidance, software costs are capitalized once management has

authorized and committed funding to the project, and it is probable the project will be completed and the software used as intended. The

ASU is effective for fiscal years beginning after December 15, 2027, and interim periods within those annual periods. We are currently

evaluating the impact that this guidance will have on our consolidated financial statements.

In December 2025, the FASB issued ASU No. 2025-10, Accounting for Government Grants Received by Business Entities. The new

standard establishes guidance on the recognition, measurement, and presentation of government grants received by business entities. The

ASU is effective for fiscal years beginning after December 15, 2028. We are currently evaluating the impact that this guidance will have on

our consolidated financial statements.

CRITICAL ACCOUNTING ESTIMATES. To prepare our consolidated financial statements in accordance with U.S. GAAP,

management makes estimates and assumptions that may affect the reported amounts of our assets and liabilities, including our contingent

liabilities, as of the date of our financial statements and the reported amounts of our revenues and expenses during the reporting periods.

Our actual results may differ from these estimates. We consider estimates to be critical (i) if we are required to make assumptions about

material matters that are uncertain at the time of estimation or (ii) if materially different estimates could have been made or it is reasonably

likely that the accounting estimate will change from period to period. See Item 7. "Management’s Discussion and Analysis of Financial

Condition and Results of Operations—Critical Accounting Estimates" and Note 2 in the Notes to the audited consolidated and combined

financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 for additional discussion of

accounting policies and critical accounting estimates.

Except as described below, there have been no material changes to our critical accounting estimates as compared to the critical accounting

estimates disclosed in our audited consolidated and combined financial statements and notes thereto for the year ended December 31,

Business Combinations. The results of a business acquired in a business combination are included in our consolidated financial

statements as of the date of the acquisition. Purchase accounting results in assets and liabilities of an acquired business being recorded at

their estimated fair values on the acquisition date, which may be considered preliminary and subject to adjustment during the measurement

period, which is up to one year from the acquisition date. Any excess consideration over the fair value of assets acquired and liabilities

assumed is recognized as goodwill.

We perform valuations of assets acquired and liabilities assumed and allocate the purchase price to the respective assets and liabilities.

Determining the fair value of assets acquired and liabilities assumed requires significant judgment and estimates, including the selection of

valuation methodologies, estimates of future revenue, costs, and cash flows, discount rates, royalty rates, and selection of comparable

companies. We engage third-party valuation specialists to assist in concluding on fair value measurements in connection with determining

fair values of assets acquired and liabilities assumed in a business combination. The resulting fair values and useful lives assigned to

acquisition-related intangible assets impact the amount and timing of future amortization expense.

These estimates are inherently uncertain and unpredictable, and if different estimates were used the purchase price for the acquisition

could be allocated to the acquired assets and liabilities differently from the allocation that we have made. In addition, unanticipated events

and circumstances may occur which may affect the accuracy or validity of such estimates, and if such events occur, we may be required to

record a charge against the value ascribed to an acquired asset, an increase in the amounts recorded for assumed liabilities, or an

impairment of some or all of the goodwill. See Note 8 in the Notes to the consolidated financial statements for further information.

NON-GAAP FINANCIAL MEASURES. The non-GAAP financial measures presented in this Quarterly Report on Form 10-Q are

supplemental measures of our performance and our liquidity that we believe help investors understand our financial condition and operating

results and assess our future prospects. We believe that presenting these non-GAAP financial measures, in addition to the corresponding

U.S. GAAP financial measures, are important supplemental measures that exclude non-cash or other items that may not be indicative of or

are unrelated to our core operating results and the overall health of our company. We believe that these non-GAAP financial measures

provide investors greater transparency to the information used by management for its operational decision-making and allow investors to

see our results “through the eyes of management.” We further believe that providing this information assists our investors in understanding

our operating performance and the methodology used by management to evaluate and measure such performance. When read in

conjunction with our U.S. GAAP results, these non-GAAP financial measures provide a baseline for analyzing trends in our underlying

businesses and can be used by management as one basis for financial, operational, and planning decisions. Finally, these measures are

often used by analysts and other interested parties to evaluate companies in our industry.

Management recognizes that these non-GAAP financial measures have limitations, including that they may be calculated differently by

other companies or may be used under different circumstances or for different purposes, thereby affecting their comparability from

company to company. In order to compensate for these and the other limitations discussed below, management does not consider these

measures in isolation from or as alternatives to the comparable financial measures determined in accordance with U.S. GAAP. Readers

should review the reconciliations below, and above with respect to free cash flow, and should not rely on any single financial measure to

evaluate our business. The reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable

U.S. GAAP financial measures follow.

We believe the organic measures presented below provide management and investors with a more complete understanding of underlying

operating results and trends of established, ongoing operations by excluding the effect of acquisitions, dispositions, and foreign currency,

which includes translational and transactional impacts, as these activities can obscure underlying trends.

ORGANIC REVENUES, EBITDA, AND EBITDA MARGIN BY SEGMENT (NON-GAAP)

Revenue(a)

Segment EBITDA

Segment EBITDA margin

Three months ended June 30

V%

V%

V pts

Power (GAAP)

Less: Acquisitions

—

—

—

—

Less: Business dispositions

—

—

—

—

Less: Foreign currency effect

4

(9)

Power organic (Non-GAAP)

Electrification (GAAP)

F

Less: Acquisitions

—

—

Less: Business dispositions

—

—

Less: Foreign currency effect

8

Electrification organic (Non-GAAP)

F

Wind (GAAP)

Less: Acquisitions

—

—

—

—

Less: Business dispositions

—

—

—

—

Less: Foreign currency effect

Wind organic (Non-GAAP)

(a) Includes intersegment sales of $44 million and $92 million for the three months ended June 30, 2026 and 2025, respectively. See Note

24 in the Notes to the consolidated financial statements for further information.

ORGANIC REVENUES, EBITDA, AND EBITDA MARGIN BY SEGMENT (NON-GAAP)

Revenue(a)

Segment EBITDA

Segment EBITDA margin

Six months ended June 30

V%

V%

V pts

Power (GAAP)

Less: Acquisitions

—

—

2

1

Less: Business dispositions

—

—

—

—

Less: Foreign currency effect

7

Power organic (Non-GAAP)

Electrification (GAAP)

F

Less: Acquisitions

—

—

Less: Business dispositions

Less: Foreign currency effect

9

Electrification organic (Non-GAAP)

F

Wind (GAAP)

U

Less: Acquisitions

—

—

—

—

Less: Business dispositions

—

—

—

—

Less: Foreign currency effect

Wind organic (Non-GAAP)

U

(a) Includes intersegment sales of $76 million and $206 million for the six months ended June 30, 2026 and 2025, respectively. See Note

24 in the Notes to the consolidated financial statements for further information.

Three months ended June 30

Six months ended June 30

ORGANIC REVENUES (NON-GAAP)

V%

V%

Total revenues (GAAP)

Less: Acquisitions

—

—

Less: Business dispositions

—

Less: Foreign currency effect

(1)

(3)

Organic revenues (Non-GAAP)

Three months ended June 30

Six months ended June 30

EQUIPMENT AND SERVICES ORGANIC REVENUES

(NON-GAAP)

V%

V%

Total equipment revenues (GAAP)

Less: Acquisitions

—

—

Less: Business dispositions

—

—

—

—

Less: Foreign currency effect

(6)

Equipment organic revenues (Non-GAAP)

Total services revenues (GAAP)

8%

Less: Acquisitions

—

—

Less: Business dispositions

—

Less: Foreign currency effect

6

9

Services organic revenues (Non-GAAP)

7%

We believe that Adjusted EBITDA* and Adjusted EBITDA margin*, which are adjusted to exclude the effects of unique and/or non-cash

items that are not closely associated with ongoing operations, provide management and investors with meaningful measures of our

performance that increase the period-to-period comparability by highlighting the results from ongoing operations and the underlying

profitability factors. We believe Adjusted organic EBITDA* and Adjusted organic EBITDA margin* provide management and investors with,

when considered with Adjusted EBITDA* and Adjusted EBITDA margin*, a more complete understanding of underlying operating results

and trends of established, ongoing operations by further excluding the effect of acquisitions, dispositions, and foreign currency, which

includes translational and transactional impacts, as these activities can obscure underlying trends. We believe these measures provide

additional insight into how our businesses are performing on a normalized basis. However, Adjusted EBITDA*, Adjusted organic EBITDA*,

Adjusted EBITDA margin* and Adjusted organic EBITDA margin* should not be construed as inferring that our future results will be

unaffected by the items for which the measures adjust.

*Non-GAAP Financial Measure

Three months ended June 30

Six months ended June 30

ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN (NON-

GAAP)

V%

V%

Net income (loss) (GAAP)

F

Add: Restructuring and other charges

9

Add: (Gains) losses on purchases and sales of business interests(a)

—

Add: Separation costs(b)

Add: Non-operating benefit income

Add: Depreciation and amortization(c)

Add: Interest and other financial (income) charges – net(d)(e)

Add: Provision (benefit) for income taxes(e)

Adjusted EBITDA (Non-GAAP)

Net income (loss) margin (GAAP)

Adjusted EBITDA margin (Non-GAAP)

(a) Includes a pre-tax gain of $3,992 million in the six months ended June 30, 2026 related to the acquisition of the remaining 50% stake

in Prolec GE from Xignux as a result of the remeasurement of our previously held equity interest to fair value and an expense of $35

million and $106 million for the impact of a fair value adjustment to Prolec GE inventory that was recorded in Cost of equipment in the

three and six months ended June 30, 2026, respectively. Includes a pre-tax gain of $330 million related to the sale of our Proficy

business in our Electrification segment in the six months ended June 30, 2026. Also includes realized (gains) losses related to the sale

of our remaining interest in China XD Electric Co., Ltd, recorded in Net interest and investment income (loss) which is part of Other

income (expense) - net. See Note 19 for further information.

(b) Costs incurred in the separation from GE, including system implementations, advisory fees, one-time stock option grant, and other

one-time costs.

(c) Excludes depreciation and amortization expense related to Restructuring and other charges. Includes amortization of basis differences

included in Equity method investment income (loss) which is part of Other income (expense) - net.

(d) Consists of interest and other financial charges, net of interest income, other than financial interest related to our normal business

operations primarily with customers.

(e) Excludes interest (income) expense of zero and zero and provision (benefit) for income taxes of $(3) million and $2 million for the three

months ended June 30, 2026 and 2025, respectively, as well as excludes interest (income) expense of zero and $1 million and

provision (benefit) for income taxes of $7 million and $4 million for the six months ended June 30, 2026 and 2025, respectively, related

to our Financial Services business which, because of the nature of its investments, is measured on an after-tax basis.

Three months ended June 30

Six months ended June 30

ADJUSTED ORGANIC EBITDA AND ADJUSTED ORGANIC EBITDA

MARGIN (NON-GAAP)

V%

V%

Adjusted EBITDA (Non-GAAP)

Less: Acquisitions

—

1

Less: Business dispositions

—

Less: Foreign currency effect

2

Adjusted organic EBITDA (Non-GAAP)

Adjusted EBITDA margin (Non-GAAP)

Adjusted organic EBITDA margin (Non-GAAP)

See "—Capital Resources and Liquidity” for discussion of free cash flow*.

*Non-GAAP Financial Measure