GE Vernova Inc. (GEV)

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. On 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. At 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. The 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. Effective 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.

2026 2Q FORM 10-Q 26

•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. Free cash flow* was $9.9 billion

and $1.2 billion for the six months ended June 30, 2026 and 2025, respectively.

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.

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

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ITEM 7. 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 and combined financial statements, which are prepared in conformity with U.S. generally accepted accounting

principles (GAAP), and corresponding notes included elsewhere in this Annual Report on Form 10-K. 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 years ended December 31, 2025 and 2024. 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. Refer to the "Management's

Discussion and Analysis of Financial Condition and Results of Operations" included in Part II, Item 7 of our Annual Report on Form 10-K for

the fiscal year ended December 31, 2024, for discussions of results for the years ended December 31, 2024 versus 2023.

In the accompanying analysis of financial information, we sometimes use information derived from consolidated and combined 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."

Financial Presentation Under GE Ownership. We completed our separation from General Electric Company (GE), which now operates

as GE Aerospace, on April 2, 2024 (the Spin-Off). For further information, see Note 1 in the Notes to the consolidated and combined

financial statements.

Prolec GE. On October 21, 2025, we announced that GE Vernova will acquire the remaining fifty percent stake of Prolec GE, our

unconsolidated joint venture with Xignux. Prolec GE is a leading grid equipment supplier, producing transformers across most ratings and

voltages with approximately 10,000 global employees across seven manufacturing sites globally, including five in the U.S. Under the

purchase agreement, GE Vernova will pay approximately $5.3 billion at closing, expected to be funded equally between cash and debt. The

acquisition is expected to close in February 2026.

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

result in additional costs to us. The total cost impact from the global tariffs for the full year 2025 was approximately $250 million, after taking

into consideration contractual protections and mitigating actions. The future impacts of tariffs may be significantly different and are subject

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

actions we take, and contractual implications.

Power Conversion & Storage. Effective January 1, 2025, our Power Conversion and Solar & Storage Solutions business units within our

Electrification segment were combined to form a new business unit, Power Conversion & Storage. Historical financial information presented

within this report conforms to the new business unit structure within the Electrification segment.

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.

2025 FORM 10-K 24

RESULTS OF OPERATIONS

Summary of Results. RPO was $150.2 billion and $119.0 billion as of December 31, 2025 and 2024, respectively. For the year ended

December 31, 2025, total revenues were $38.1 billion, an increase of $3.1 billion for the year. Net income (loss) was $4.9 billion, an

increase of $3.3 billion in net income for the year, and net income (loss) margin was 12.8%. Diluted earnings (loss) per share was $17.69

for the year ended December 31, 2025, an increase in diluted earnings per share of $12.11 for the year. Cash flows from (used for)

operating activities were $5.0 billion and $2.6 billion for the years ended December 31, 2025 and 2024, respectively.

For the year ended December 31, 2025, Adjusted EBITDA* was $3.2 billion, an increase of $1.2 billion. Free cash flow* was $3.7 billion

and $1.7 billion for the years ended December 31, 2025 and 2024, respectively.

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 and combined financial statements for further information.

As of December 31, 2025, RPO increased $31.2 billion (26%) from December 31, 2024, primarily at Power, due to increases at Gas

Power due to Heavy-Duty Gas Turbine and Aeroderivative equipment and contractual services, and increases at Steam Power services,

Hydro Power equipment, and Nuclear Power equipment, partially offset by a decrease at Steam Power equipment; at Electrification,

primarily due to demand for alternating current substation solutions, switchgear, and transformers at Grid Solutions and synchronous

condensers and energy storage at Power Conversion & Storage; partially offset at Wind, due to a decrease at Offshore Wind as we

continue to execute on our contracts and a decrease in orders at Onshore Wind as U.S. customers dealt with policy uncertainty.

For the year ended December 31, 2025, total revenues increased $3.1 billion (9%). Equipment revenues increased at Electrification,

primarily at Grid Solutions due to growth in switchgear, high-voltage direct current solutions, and alternating current substation solutions

volume and at Power Conversion & Storage; and at Power, due to increases in Gas Power from Heavy-Duty Gas Turbine and

Aeroderivative units deliveries and favorable price; partially offset at Wind, due to decreases at Offshore Wind from the nonrecurrence of

revenues recorded on the settlement of a previously canceled project in the third quarter of 2024, project delays, and fewer nacelles

produced in the year, and decreases at LM Wind Power due to lower volume from footprint reduction, partially offset by increases at

Onshore Wind due to improved pricing and delivery of more units. Services revenues increased at Power, driven by Gas Power higher

parts volume and favorable price; at Electrification, primarily due to growth at Grid Solutions; and at Wind due to higher transactional

services.

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

increased $3.2 billion (9%), organic equipment revenues* increased $2.0 billion (11%) and organic services revenues* increased $1.2

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

(a) The computation of earnings (loss) per share for all periods through April 1, 2024 was calculated using 274 million common shares that

were issued upon Spin-Off and excludes Net loss (income) attributable to noncontrolling interests. For periods prior to the Spin-Off, the

Company participated in various GE stock-based compensation plans, and there were no dilutive equity instruments as there were no

equity awards of GE Vernova outstanding prior to Spin-Off.

For the year ended December 31, 2025, operating income (loss) was $1.4 billion, a $0.9 bi

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