GE Investor Call Debrief

This week we discuss the recent GE Vernova investor call,
discussing the company's current situation, future plans, and how
the US market will react. We also cover an article by TRESIOS from
PES Wind Magazine about their offshore construction business. Join
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www.weatherguardwind.comIntelstor - https://www.intelstor.com Allen
Hall: In an extraordinary display of memory and pattern
recognition, a man who doesn't speak Spanish has dominated the
Spanish World Scrabble Championships. Nigel Richards, a New
Zealander living in Malaysia, defeated 145 competitors and won 22
consecutive matches to claim the title in Grenada, Spain. Known as
the quote, Tiger Woods of Scrabble, Richards has mastered the game
across multiple languages despite not speaking them. He has a
unique ability to memorize dictionaries without understanding
anything what the words mean, and has led him to winning nearly 200
tournaments, including French in 2015 and 2018. Now, that is crazy,
guys. Did you ever meet somebody with that kind of photographic
memory, and you're like, that is a very odd person? If you have
done it, if you've won championships in Spanish and French, and I
assume English, wow, that is a unique person. Joel Saxum: Is there
money to be won playing Scrabble? Allen Hall: Evidently there is
because he's won so many championships. It's the, from all the
information I could find online he, this guy is super human in how
he does this. According to some of his friends, he can look at a
page of words and remember all those words. It's like a
photographic memory, even though he couldn't carry a conversation
in French or Spanish at all, he can't carry one. It's just
understanding how words go together. Phil Totaro: It's technically
a I forget specifically what it's called, but it's actually
technically a form of autism that allows you to do that. allows a
person to do that. It's still an astonishing talent. So Joel Saxum:
what I would say to as a segue into the show today is some people
have an optimized electrical grid in their brain and it works
better. You're listening to the Uptime Wind Energy Podcast brought
to you by BuildTurbines. com. Learn, train, and be a part of the
clean energy revolution. Visit BuildTurbines. com today. Allen
Hall: In the latest edition of PES Wind Magazine, which you can
download at PESWind. com, a good article from Tresios, and I did
not know that business very well until I read the article. It's a
big subsea construction and marine services company. And they've
actually reorganized themselves because there's so much offshore
wind work that they're, they have divided into basically two
sections to do that, subseas construction and marine services. And
they have a third division because there's so much work in offshore
wind. They have a sort of a human resources division. It's a
company, workforce company called Mr. James. You can go to the Mr.
James website. It's actually quite good. It's one of the better
human resource workforce websites that I've ever seen, honestly.
It's pretty cool. So when you're looking for people to work at sea,
Mr. James is not a bad place to go look for those people. But Joel
the interesting thing about this is that there's so much activity
around wind. And you just don't see all this work that's happening,
but it's major construction work. You got to know what you're doing
out there and Trecios is one of those companies. The Joel Saxum:
tough thing with Allen Hall: offshore Joel Saxum: construction is
like the general public doesn't see it, right? As for
understanding, like you drive down the highway, high rises going
up, cranes, big machines building the highway. So it's so visible
and you can understand it a little bit. But when you go offshore,
it's just, it's it's imaginary to most people to see Oh, you see
these turbines in the water. Great. The one I always compare it to
Allen, you and I talk about this often is like the subsea oil and
gas infrastructures. Same thing with wind. Like you see these
towers and the big blades up there, but you don't see all the stuff
that happens below the surface. The pile driving, the rock dumps,
the cable lays, the trenching, all of the geo geophysical work that
has to be done beforehand. There's so much to do there and it's
inherently complex, right? Because almost everything you do outside
of basically an offshore wind driving monopiles is remote work. So
you're working with ROVs. You don't actually have people on it. You
have, robotics and you're dealing in sea states and keeping the
vessel steady and customizing that vessel to be able to work with
the kit that you need for that specific job. So having people like
Tresios that have a lot of experience, it says, we're reading the
article here, doing a little research, the founders both previously
worked for Allseas, huge offshore construction company. So these
kinds of people that you grab for a construction project like this,
they have these skill sets. They're very specialized, right? I've
been on projects before. We're like, Hey, we need this one person
to come in because they have the knowledge of how to do this. And
that person costs 2, 500 a day. That's the kind of crazy stuff that
happens in offshore construction. Having a partner like Trecios, it
has a lot of experience. They have the body shop part figured out.
They know how to upfit vessels. They know how to go from feed study
all the way through construction as a full on EPC. They're the
partner, the kind of partner you want to have. Allen Hall: Yeah.
It's quite remarkable. So if you want to learn all the things that
TRESIOS is doing, just go to peswind.com ,download your issue and
give it a good read. There's a lot of great articles in this issue.
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Allen Hall: right, GE just held an investor update as we're
recording this. It happened last night. Very interesting. GE
Vernova is broken into the three main parts. They have a gas
turbine division. They have an a switch transformer division. And
they have the wind energy division. So they call different titles,
but it's essentially it. So she, understand what products are
they're serving there. So it's really three different businesses
that are all wrapped together, but it's all about electrification.
That's where their emphasis is. That business is seeing tremendous
growth in gas turbines, and it's seeing really good growth in
electrification, the switchgear and transformers that it's
delivering and the the, Outlook for that is fantastic. They're sold
out through 2028 for a lot of equipment already. They're selling
slots into 2029 right now, but the wind division, not so much. All
right. So the wind divisions is reporting about a negative 10 and a
half a percent EBITDA margin in 2023, but they're expecting that to
be have about a 50 percent improvement in 2024. Still negative, but
half what it was, which is good. And they're projecting EBITDA
losses between 200 and 400 million into 2025. And that is all, or
vastly all, from offshore. The offshore wind business is really
dragging them down in terms of numbers, right? So they had the
blade break at Dogger Bank and they had blades break at Vineyard.
That and the slowdown of those projects really are pushing them to
the right, which they wanted to have done sometime next year.
Whatever now you're talking about. 26 ish timeframe when they're
going to be wrapped up. And that is killing them because you can
imagine, Joel, as you pointed out numerous times, ships are
expensive and if you're not producing, putting turbines up, you're
just spending money. And that's what's happening. Onshore, which is
the real focus here, GE has not taken an order for offshore in 35,
37 months. And they don't plan to take any more, so their focus is
onshore. The vast majority of the onshore sales are in the United
States, like 80 percent of the business is going to be in the
United States, which kind of makes sense. But the projection of
revenue is flat. So 2024 is expected to be flat. It's roughly what
it was last year, about almost 10 billion, 9 billion, 10 billion.
And they're projecting it's going to be down a little bit in 2025.
As I think Phil pointed out a while ago. They're planning to make
about 2, 000 wind turbines, and Joel and I had talked to a couple
other people and involved with that, and he said, GE's planning to
make about 2, 000 wind turbines. They have the capability to make
4, 000. Their break even's at 1, 000 for onshore. So they're gonna
get to 1, 000, be break even, make another 1, 000 more, and that's
essentially it. They have a capability to do twice that, but they
have no plans to do it right now. Because they're really focused on
improving the quality. And that is the big driver. I mentioned in
the Slack chat Also that GE said the word lean probably a thousand
times during that hour and a half.