ITEM 1A. RISK FACTORS.
You should carefully consider the following risks and other information set forth in this Annual Report on Form 10-K in evaluating GE
Vernova and GE Vernova’s common stock. The risks and uncertainties described below are not the only risks and uncertainties we face.
Additional risks and uncertainties not presently known to us or that we presently deem less significant may also adversely affect our
business.
Risks Relating to Operations and Supply Chain
Quality issues among our products, solutions, and services could cause us to incur significant costs, reduce demand for our
products and services, lead to claims for damages or regulatory actions, and harm our business or reputation. We design,
manufacture, and service sophisticated, software-enabled industrial machinery and infrastructure (including gas turbines, onshore and
offshore wind turbines, grid infrastructure, and nuclear power generation equipment), engineered for demanding conditions and compliance
with stringent certification, performance, and reliability standards. A serious product, solution, or execution failure could result in injury or
death, widespread power outages, suspension of power production or operations, delivery delays, environmental impacts, or other
systemic issues.
Actual or perceived design, production, performance, or other quality issues in new introductions or existing product lines have resulted and
can result in warranty, maintenance, and other damage claims, including costs for project delays, repairs, and replacements, potentially in
significant amounts. These potential impacts are greater where the defects or issues affect an entire product line or component and can be
more pronounced with new technologies.
Developing and maintaining offerings that meet these standards is complex, costly, and technologically challenging and requires extensive
coordination across suppliers and global manufacturing and project sites. Failures to meet these standards, whether actual or perceived,
may result in significant contractual or other claims and regulatory suspensions of installation or operations, with adverse financial,
competitive, and reputational effects. Warranty and quality-related costs have represented, and may in the future represent, a meaningful
portion of our expenses.
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Significant supply chain and logistics disruptions, including volatility in the cost or availability of critical materials and
components, could delay or impact our ability to deliver on customer obligations, increase costs, and expose us to contractual
and reputational risks. We rely on third-party suppliers, contract manufacturers, service providers, and commodity markets for raw
materials, parts, components, and subsystems. Our globally distributed supply chains are subject to economic and geopolitical dynamics,
sanctions, tariffs, import/export restrictions, severe weather events, as well as other factors. We operate in a supply-constrained
environment and have experienced, and may continue to experience, shortages of materials and skilled labor, inflationary pressures,
transportation and logistics challenges, and manufacturing disruptions that affect revenues, profitability, cash flow, and on-time fulfillment.
While we pursue mitigation measures, such as long-term supply agreements, dual-sourcing, increased inventory levels, factory capacity
expansion, lean initiatives, alternative logistics, product or component redesign, and cost-sharing with customers and suppliers, supply
chain pressures are expected to persist and may continue to adversely affect our operations and financial performance. Certain inputs are
limited or sole-sourced, concentrated with a small number of suppliers, or primarily available from a single country, including semiconductor
chips and critical materials (such as specialty metals and rare earths). Although prior disruptions have not been material, the inability of a
supplier to deliver, and our inability to secure timely and cost-effective alternatives, could impair our ability to manufacture products or
provide services.
Our operations may be adversely affected by delivery delays, capacity constraints, upstream or downstream production disruptions, price
spikes, cyber-related attacks, or decreased availability of materials and commodities arising from war or other hostilities, natural disasters,
public health emergencies, increased tariffs or trade restrictions, or other business continuity events. Supplier nonperformance or
underperformance could impact our ability to fulfill customer commitments, trigger contract terminations or liability, and impair our
competitiveness.
We depend on multiple forms of transportation and transportation routes. Logistics can be disrupted by weather, strikes or lockouts,
inadequate infrastructure or port capacity, hostilities, terrorism, or other events, and transportation costs can be volatile. Any of these
factors could impede our ability to deliver quality products, solutions, and services and have a material adverse effect on our results of
operations, cash flows, and financial condition.
Disruptions or capacity constraints at our manufacturing and operating facilities could delay deliveries, increase costs, damage
customer relationships, and limit our ability to meet demand for our products and services, and planned capacity expansions
may not result in the benefits we expect if demand does not meet expectations. We depend on our global production and operating
network to develop, manufacture, assemble, supply, and service our offerings. Disruptions such as work stoppages, labor shortages,
import/export restrictions, significant public health or safety events, severe weather or natural disasters, financial distress, unplanned
downtime, manufacturing deviations or quality issues, production constraints, equipment failures, cybersecurity attacks, and geopolitical
dynamics can interrupt our operations, with risks heightened in certain emerging markets .
We also rely on our production facilities for critical components. If disturbances at these locations prevent us from producing sufficient
quantities, we may need to source more from external suppliers, which could introduce delays, quality control issues, or additional costs.
A significant event affecting any of our production or operating facilities, particularly when capacity is at or near full utilization or alternative
sites are unavailable, may disrupt our ability to supply customers, require us to defer or decline orders, or cause late deliveries. Expanding
our capacity to meet current or future demand or support new products requires significant capital investment and lead time and may be
delayed in execution.
Further, our capacity expansions and related commitments may outpace realized demand. We make capacity expansion decisions and
supply commitments based on demand forecasts, orders, slot reservation agreements, and deposits. If anticipated demand is delayed or
does not materialize, orders may be deferred, reduced, or canceled and slot reservation agreements may not result in orders. As a result,
we could be over-invested in our facilities and could incur excess or idle capacity, under-absorption of fixed costs, production inefficiencies,
inventory build and write-downs, penalties under supply agreements, lower margins, and impairment of long-lived assets.
Risks Related to Managing Growth and Competition
We may fail to achieve anticipated cost savings . Achieving our long-term financial and cash flow goals depends on our ability to
effectively manage operating costs. Because many costs are affected by factors outside our control, we rely on productivity initiatives
(including lean operations and supply chain management) to drive savings, but there is no assurance they will succeed. Expected savings
are based on estimates and assumptions that are inherently uncertain and subject to business, economic, and competitive factors. If we
cannot identify, implement, and sustain initiatives that effectively manage costs and increase operating efficiency, or if implemented
initiatives fail to generate expected savings, our financial results and cash flows could be adversely affected and we may fail to achieve our
financial goals.
We may fail to execute and accurately estimate long-term service obligations. We enter into long-term service agreements with many
of our customers in connection with significant contracts for the sale of products. Profitability under these agreements, particularly in Gas
Power, depends on our ability to execute and estimates of product durability and reliability, our costs to deliver products and services over
time, and the availability of cost-reducing materials, technology, and skilled technicians. Under such agreements for our long-cycle
businesses, errors in estimating, planning, or execution may cause us to miss delivery, cost, or financial performance targets, leading to
excess costs, inventory build (including obsolescence), lower profit margins and cash flows, loss contracts, and erosion of our competitive
position.
We may fail to compete successfully in the highly-competitive global markets in which we operate. We operate in highly competitive
domestic and international markets, and our products, solutions, and services face significant pressure on technology, quality, delivery, and
price. Remaining competitive requires continual development of advanced technologies and product enhancements, as well as cost-
effective supply chain, production, and delivery. If we change strategic priorities or fail to anticipate or respond quickly to technological
developments, evolving industry standards, new regulations or incentives, changing customer demands, supply chain disruptions, or
innovations in production techniques, we could experience lower revenues, price erosion, reduced margins, and forgone growth
opportunities. Competition has intensified as existing participants expand internationally and as new entrants, including manufacturers from
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regions such as China, improve quality and reliability and pursue markets outside their home countries. Some competitors are government-
sponsored, which may provide them with an advantage over us, such as access to more resources. In addition, global competition
increasingly depends on innovation in emerging technologies, including nuclear fuels and advanced energy systems, where failure to
innovate could limit our ability to participate in new markets. Further, government policies and actions may impact us more adversely
compared to competitors whose operations are more limited in scope or geographic exposure. If we are unable to continue to compete
successfully against our current or future competitors in our core businesses, we may experience declines in revenues and industry
segment share.
Our business success is dependent upon our ability to innovate and successfully commercialize new technologies in fast-
changing markets, and manage our product cycles. We operate in industries where technology and customer needs evolve rapidly, and
our growth and business depend on developing and bringing to market new products, solutions, and services. The commercial success of
technologies such as small modular or other advanced nuclear power, hydrogen-based power generation, carbon capture and
sequestration, and grid-scale batteries or other storage solutions depends on factors including the pace of innovation; development costs;
capital resource availability; the intensity of competition; our customers’ ability to obtain and maintain required permits or certifications; the
effectiveness of our production, distribution, and marketing, including our ability to successfully deploy technologies intended to cost-
effectively enhance our production, such as robotics and automation, and integration of AI; the availability of raw materials and
components; our supply chain; the economics for customers to deploy and support these technologies; overall market demand and
acceptance; and the timing of market entry.
Global competition increasingly depends on innovation in emerging technologies, including nuclear fuels and advanced energy systems,
where failure to innovate could limit our ability to participate in new markets. Failure to cost-effectively innovate and commercialize
technologies, products, solutions, and services our customers demand could adversely impact our competitive position, growth, and
financial results and position. Rapid innovation can shorten product cycles and accelerate market introductions, increasing quality and
execution risks, raising costs, and challenging profitability for new products. These risks are heightened in our Nuclear Power business,
which is constructing small modular reactors. Due to the nascent nature of the industry and higher ramp-up costs, new product
introductions could result in losses in the near and long term. Further, breakthrough technologies deployed at scale by competitors may
reduce the demand for legacy products and technologies.
We may not realize the benefits we expect from our strategic transactions. Our strategy includes acquiring technologies and
businesses that expand, enhance or complement our portfolio through acquisitions, minority equity investments, joint ventures, and other
alliances, and divesting non-core assets or businesses and reinvesting any proceeds in our core businesses. Success depends on
identifying suitable opportunities and synergies, conducting effective due diligence, negotiating favorable terms, obtaining required
approvals, closing transactions, effectively integrating acquired businesses or separating divested operations, and collaborating well with
any joint venture participants, partners, and equity co-owners.
Strategic transactions may expose us to risks and uncertainties, including competition driving higher prices or less favorable terms; delays,
costs, or failures in integration or separation of assets, people, systems, and products; noncompliance with multi-jurisdictional laws,
regulations, disclosures, and filings; operational disruption and management distraction from core operations; dependence on external
capital and financing availability and cost; antitrust or other regulatory reviews, conditions, or adverse rulings; legacy noncompliance or
violations at acquired companies; inability to scale production or loss of distribution channels; inadequate IP rights or heightened scrutiny of
acquired IP, or systems integration and transition complexities; failure to achieve expected growth, cost savings, synergies, or market
acceptance; due diligence gaps or unidentified/underestimated liabilities; successor liability for pre-acquisition conduct; inadequate
compliance and risk management organization and infrastructure at acquired companies; retained liabilities or continued losses after
divestitures; loss of key customers or personnel; and adverse market reactions and stock price volatility.
Assessments and assumptions supporting a transaction may prove incorrect, and actual outcomes may differ significantly from
expectations. In joint ventures and other strategic alliances, we may share ownership and, in some cases, management with others whose
objectives, priorities, or resources may differ from ours, increasing governance and execution risk. Further, any such joint venture or other
strategic alliance, may restrict us from taking certain actions in our business and we may be limited in our ability to exit such arrangements
if we later desire to do so.
Divestitures may be delayed or prevented by difficulties finding buyers or by regulatory, governmental, or contractual constraints, including
provisions of the Separation and Distribution Agreement described under “Certain Relationships and Related Person Transactions—
Agreements with GE" in Part III, Item 13 of our annual report on Form 10-K for the year ended December 31, 2024, as incorporated by
reference from our definitive proxy statement relating to our 2025 Annual Meeting of Stockholders filed with the SEC pursuant to Regulation
Joint ventures, consortiums, and other third-party collaborations expose us to partner, governance, compliance, and financial
risks that could impose additional costs and obligations, cause reputational harm and adversely affect our business, results of
operations, cash flows, financial condition, or prospects. We have entered, and expect to continue entering, into joint ventures for
manufacturing, commercial operations, and project development and funding, and into consortium arrangements to perform projects. These
arrangements involve risks, including exposure to the economic, political, legal, and regulatory environments of partners’ jurisdictions; legal
or regulatory violations by partners outside our control; and contractual, governmental, or exclusivity obligations that may restrict our
operations. They may also require us to incur nonrecurring charges, increased expenditures, or disruption to our normal operations. If
partners face financial distress, restructure, or declare bankruptcy, we may be required to provide additional investment or services,
assume responsibility for contract breaches, or take on additional financial or operational obligations, which may expose us to credit risk.
Our influence over joint ventures varies by ownership and negotiated rights, and major decisions often require consensus, creating risks of
impasses and delays where partner interests diverge. Disputes may arise over performance milestones, interpretation of key terms
(including financial obligations and termination rights), or ownership and control of intellectual property developed in the arrangement. We
cannot control partner actions; in some projects we have joint and several liability and cannot ensure partners will satisfy their
responsibilities. These arrangements may also restrict our access to cash flows or assets of a joint venture, and some joint ventures are
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subject to governmental limitations on cash distributions. Consortium project outcomes depend on partner performance. Partners may
block or delay critical decisions, pursue strategies contrary to our interests, or fail to fulfill obligations, reducing expected returns. We may
need to provide or procure additional services to compensate for such failures, which can increase costs and expose us to reputational
harm and customer or counterparty complaints. Any of the foregoing could materially adversely affect our business, results of operations,
cash flows, financial condition, or prospects.
Risks Related to our Customers and Industry Dynamics
Issues with grid connectivity and customers’ ability to sell generated electricity could delay projects, reduce output, demand and
revenues, increase costs, and cause reputational harm. Many of our customers, projects, and offerings depend on timely grid
connection. Factors beyond our control, including regulatory and permitting requirements and delays, interconnection constraints, limited
land for connection infrastructure, and system failures, may impede or prevent grid connection. If customers cannot obtain grid access or
agreements to sell their electricity on reasonable terms and timelines, order timing and project milestones may be delayed. Grid connection
and operations are governed by statutory and regulatory frameworks intended to ensure safety and stability, but transmission constraints
and operating practices can lead to curtailment (e.g., congestion, limited transmission capacity, or dispatch restrictions). Unplanned project
execution or commissioning challenges due to delays from construction, contractors, or severe weather issues (e.g., wind speed or
direction) can further delay project execution leading to reduced electricity output, reduced demand for our products and solutions,
increased costs for us and our customers, and reputational harm.
Our failure to manage customer and counterparty relationships and contracts could adversely affect our financial results. Our
success depends on delivering in accordance with contractual requirements and anticipating changes in customer and counterparty needs.
Customers and counterparties, including those undertaking large infrastructure projects, may delay or cancel purchases or be unable to
meet their obligations due to business deterioration, cash flow constraints, reduced availability of financing for certain technologies (such as
prohibitions on financing for fossil fuel–based projects), macroeconomic conditions, changes in law or policy, disputes, or other delays. If a
major customer reduces purchases, ceases doing business with us, favors competitors or new entrants, or changes purchasing patterns,
our business could be harmed.
Many of our contracts are complex and contain warranty, performance, delivery, and availability provisions that can trigger significant repair
or replacement costs, penalties, liquidated damages, or other unanticipated expenses if we fail, actually or allegedly, to meet specifications
or schedules. For example, in our Wind business, delays in assembling and delivering critical components (such as nacelles) or other
noncompliance with contract terms have increased costs, presented litigation risks, and exposed us to damages, and we may experience
similar delays and possible consequences in the future. Warranty costs and contract-related penalties have represented, and may in the
future represent, a meaningful portion of our expenses.
We also contract with U.S. and non-U.S. governmental and government-affiliated entities, which may delay, modify, or terminate contracts if
funding or support is unavailable. Collecting receivables can be more challenging with sovereign or state-owned customers and in
emerging markets.
Engaging in new types of transaction structures or unique contractual relationships with nontraditional customers, such as hyperscalers,
government departments focused on energy, or other first‑time counterparties, or with new contracting approaches adopted by traditional
customers, may challenge our ability to effectively negotiate and manage our relationships. Due to our limited experience with such
customers, counterparties, and contracting parties, we may fail to anticipate or control the unique expectations, costs, and operational
complexities associated with such arrangements. Some counterparties may have limited operating histories, different contracting practices,
or weaker credit profiles. They may depend on external financing, subsidies, or project milestones, and may delay payment, seek to
renegotiate terms, or default. Further, some counterparties to slot reservation agreements may not place orders equal to the value of their
reservation amount or at all, and the volume of orders we expect under such agreements may fail to materialize.
Our ability to maintain our investment grade credit ratings could affect our ability to access capital, increase our interest rates,
and limit our ability to secure new contracts or business opportunities. Our commercial relationships and competitive positioning rely
on maintaining corporate investment grade credit ratings, which are evaluated by major rating agencies. Any downgrade could increase the
cost of existing or future indebtedness, constrain borrowing and bonding capacity or worsen terms, and limit or prevent access to capital on
competitive terms. Adverse rating actions may also reduce our ability to secure new contracts and business opportunities and limit our
ability to maintain and obtain supply sources and customers.
Fixed‑price customer contracts expose us to reduced margins and project loss risks if costs exceed expectations. We enter into
contracts that commit to a fixed price well before project completion. However, actual revenues and costs may differ from estimates due to
factors that are difficult to predict or control, which include: procurement challenges and schedule disruptions on large projects; product
performance failures; unforeseen site conditions; rejection or termination clauses in contracts that reduce revenue or increase costs;
inability to be compensated for additional work arising from unanticipated technical issues or deficient customer‑provided designs,
engineering information, products, or materials; inaccurate estimates based on historical data under current conditions (e.g., inflation, labor
and material cost increases); weather and other force majeure events that cause delays or productivity losses; contractual obligations to
pay liquidated or other damages for failure to meet schedule or performance requirements; difficulties engaging or overseeing third‑party
subcontractors, manufacturers, or suppliers, or their underperformance or nonperformance, resulting in delays and added costs; and
project modifications or change orders that create unanticipated costs or delays and potential claims or disputes. Any of these factors can
reduce our margins or result in project losses. Cost overruns and related penalties have represented, and may in the future represent, a
meaningful portion of our expenses.
We may not be able to access the capital and credit markets or obtain other financing on terms that are favorable to us, or at all.
Our business depends on the availability of financing. Capital and credit markets can experience volatility and disruptions that reduce
liquidity and increase borrowing costs. Although we maintain a $3.0 billion committed credit facility and a $3.0 billion committed trade
finance facility, there is no assurance these will be sufficient for our needs, and we may need additional capital markets financing. Factors
beyond our control, including domestic and international economic conditions, increases in benchmark interest rates and credit spreads,
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changes in banking and capital market regulations, and market risk repricing, could limit or increase the cost of financing. Adverse market
conditions or credit rating changes could impair our access to capital on acceptable terms or at all. These conditions may also hinder our
customers’ and suppliers’ ability to obtain debt, guarantees, trade finance, or hedging, negatively affecting our business. In addition, our
customers’ projects often require co-financing through project development loans, structured debt, or equity investments. Such financing
arrangements may be unavailable or more costly than anticipated, which could limit our ability to bid for projects and adversely affect
financial results, cash flows, and returns.
Risks Related to the Energy Transition
We are subject to decarbonization and energy-transition dynamics, including shifting policies, market economics, and
technology trajectories. We must anticipate and respond to market, technological, regulatory, governmental policy, and energy security
changes driven by decarbonization and energy transition dynamics. For example, increased policy support for fossil fuels or the rollback or
suspension of renewable-supportive policies could reduce demand for our renewable and other decarbonization products and services.
Conversely, as a supplier to the power generation sector, falling renewable costs and evolving stakeholder expectations can reduce
demand for and the competitiveness of sales of new gas turbines and service for unabated gas plants.
Continued increases in renewables’ share of capacity additions and generation, depending on pace and timing, could materially affect our
Power segment and consolidated results. Key uncertainties include the level and timing of government subsidies and credits (including the
implementation of U.S. and global policies), regulatory and permit approval timeframes, level of price competition among manufacturers,
competition from solar and other technologies, deprioritization of renewables, the pace of grid modernization needed to maintain reliability
with higher renewables penetration, and industrywide pressure on profitability.
Our long-term success depends on addressing both electrification and decarbonization by adapting our portfolio and scaling less carbon-
intense and lower carbon technologies (such as gas as a replacement for coal, small modular or other advanced nuclear reactors,
hydrogen-based power generation, carbon capture and sequestration, and grid-scale storage). These transitions require substantial
investments by us and third parties in grids, infrastructure, R&D, and new technologies, and depend on timely governmental and regulatory
support, incentives, and market design. If we do not succeed, or are perceived to not succeed, to advance our electrification and
decarbonization objectives, or if investors and financial institutions shift funding away from certain types of generation, our and our
customers’ access to capital could be negatively affected. Government actions may also affect these dynamics in unforeseeable ways.
Developing new high-technology products and enhancing existing offerings to address dynamic energy markets is complex, costly, and
uncertain, and strategies or investments may not be commercially successful within expected timeframes or at all. If the decarbonization
landscape evolves faster or differently than anticipated, demand for our products, solutions, and services could be adversely affected.
Changes in energy, environmental, and tax policies may reduce demand for our products and undermine project economics. Our
businesses benefit from government incentives and policies supporting utility-scale renewable energy (e.g., tax incentives). In addition,
regulatory policies influencing renewable energy mandates and grid integration standards directly impact the demand for wind energy.
Reductions, elimination, suspension or adverse modifications have and could in the future limit markets for new projects, reduce returns on
projects or manufacturing, lead to project abandonment, or impair investments. Eligibility and structuring rely on legal and regulatory
guidance, which is subject to uncertainty, potential modification (possibly retroactive), and governmental audit challenge. Repeal,
modification, suspension or unfavorable interpretations could reduce available credits, require changes to tax equity arrangements, or force
alternative funding, adversely affecting our business and financing.
Separately, changes to environmental regulations and enforcement could increase costs or impede sales. For example, broader
greenhouse gas regulations and carbon pricing could increase compliance costs for us and our customers. While such policies can
increase demand for decarbonization technologies we are developing (e.g., hydrogen and carbon capture capabilities for our gas turbines
and direct air capture) , they may also impose significant compliance burdens that adversely affect our business and may reduce demand
for our offerings.
Demand for certain of our products, solutions, and services, particularly in our Power segment, depends on oil and gas regulatory policy,
prices, and global and regional supply and demand, all of which are largely outside our control. More stringent regulations and
commitments stemming from international initiatives could increase production costs, reduce oil and gas demand, and curtail investments
in gas turbine generation; further, if renewable energy or other alternatives become more affordable than gas, customers may switch away
from gas-fired solutions. Periods of elevated prices and volatility can contribute to economic slowdowns and prompt countries dependent
on oil and gas revenues to reduce investment in oil and gas, power generation, and transmission projects, lowering demand for our
offerings.
Risks Related to Macroeconomic and Geopolitical Factors
Operating globally, especially in emerging markets, creates complex legal, regulatory, and compliance risks. We operate across
diverse legal and regulatory systems in approximately 100 different countries and, as a result, are subject to varying requirements,
procedures and standards, including country-specific regulatory regimes relating to anti-corruption and anti-bribery laws, tax, trade controls,
environmental, employment and labor requirements, sustainability, product safety, liability and design regulations, human rights laws, and
privacy, data protection and cybersecurity laws. Further, we expect increasingly stringent environmental and safety standards across
diverse global jurisdictions, including potential liabilities related to chemicals such as PFAS, that could affect product design, manufacturing,
servicing, and financial results across various jurisdictions.
Navigating a variety of legal and regulatory regimes, which may evolve and be interpreted differently across jurisdictions, including on an
extra-territorial basis, increases the complexity of compliance. Risks in emerging markets may be particularly complex due to less mature
regulatory frameworks, inconsistent and aggressive enforcement, and heightened exposure to geopolitical and economic volatility, which
can amplify the challenges of maintaining compliance across our global operations. Any actual or perceived failure to comply with relevant
laws, regulations, or standards could damage our reputation and customer relationships, and expose us to investigations, inquiries,
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litigation, or other proceedings initiated by governmental entities, customers, or individuals. Such actions could result in significant fines,
sanctions, penalties, awards, or judgments, all of which could negatively affect our business and operating results.
Further, as a global employer in more than 100 countries of permanent and fixed-term contract employees, contingent workers and
contractors, we must design and maintain compensation programs, employment policies, cybersecurity and other intellectual property
protections, compliance programs, and other administrative frameworks that align with the laws of multiple countries. Shifting requirements
and interpretations may influence how we structure our operations and investments, and can lead to rising costs, including those
associated with organizational changes and protective measures. We implement, communicate, audit and monitor, and enforce group-wide
standards and practices across our businesses to address these risks; however, these efforts may not be successful. We are also
responsible for communicating, monitoring, and upholding group-wide directives across our global network, including among suppliers,
subcontractors, and other relevant stakeholders. Failure to manage our geographically diverse operations in light of these challenges could
impair our responsiveness to changing conditions and our ability to enforce compliance with group-wide standards and applicable
requirements.
Major events beyond our control, such as natural disasters, the physical effects of climate change, pandemics, and others, may
increase our cost of doing business or disrupt our operations. Natural disasters, fires, tornadoes, tsunamis, hurricanes, earthquakes,
floods, severe weather, product failures, and power outages in regions where we, our customers or our suppliers operate can damage
facilities. In addition, the physical effects of climate change include increased frequency and severity of significant weather events, natural
hazards, rising average temperatures and sea levels, and long-term changes in precipitation. These events and conditions can disrupt our
operations and those of our customers and suppliers, damage project sites, cause partial or complete plant or distribution center closures,
delay logistics and transportation to project sites, and contribute to supply chain disruption and market volatility. Changes in temperature
and precipitation can also affect electricity demand patterns. Public health crises, epidemics or pandemics can prevent employees,
contractors, suppliers, customers, and other partners from conducting business due to shutdowns, travel restrictions, or other governmental
actions, and may otherwise impair operations. Any of these effects could adversely impact our business, results of operations, cash flows,
and prospects. Insurance may not cover all losses from these events or may become more costly or less available, and our disaster
recovery and business continuity plans (including for information technology systems) may not fully mitigate the impact of these events.
Geopolitical events beyond our control may impact or increase our cost of doing business or disrupt our operations. Events such
as armed conflicts, acts and threats of terrorism, civil unrest and political and economic instability in regions where we, our customers or
our suppliers operate can damage facilities, cause partial or complete plant or distribution center closures, disrupt component supply,
damage infrastructure and delay transportation to project sites. The broader consequences of geopolitical and terrorism threats, which may
also include sanctions that prohibit our ability to do business in specific countries, embargoes, restrictions on repatriation of funds, the
potential inability to service our remaining performance obligations, and potential contractual breaches and litigation, regional political and
economic instability and geopolitical shifts, and the extent of any such threats effect our business and results of operations as well as the
global economy, cannot be predicted. Geopolitical conflicts also contribute to volatility in financial markets, energy costs, and commodity
prices. If global economic and market conditions were to deteriorate, we may experience material harm to our business, operating results,
and financial condition.
Risks Relating to Policy, Government Regulations and Legal Matters
Failure to meet expectations, standards, or our goals for sustainability could harm our business and reputation. Certain of our
regulators and stakeholders focus on ESG topics, including emissions and climate risk, inclusive employment, responsible sourcing, human
rights, and governance. We have set sustainability goals aligned with these objectives, but our ability to accomplish them presents
numerous operational, regulatory, financial, legal, and other challenges, several of which are outside of our control. Perceived deficiencies
in our sustainability policies or performance, or unfavorable ESG ratings of our voluntary disclosures (e.g., under the Global Reporting
Initiative, the Sustainability Accounting Standards Board, and recommendations issued by the Financial Stability Board’s Task Force for
Climate-related Financial Disclosures), could negatively affect investor sentiment, our stock price, and our cost of capital. Regulatory
requirements are frequently changing, including EU CSRD, EU Taxonomy, and EU CSDDD, and U.S. state-level requirements. Given our
extensive disclosures about our sustainability framework and goals and notwithstanding efforts we undertake to manage those disclosures
appropriately, we also face increasing risks of allegations of inaccurate or misleading ESG statements. Failure to meet our goals or comply
with evolving requirements could lead to penalties, supply chain disruption, operational restrictions, product redesign investments, carbon
offset purchases, competitive disadvantages, reputational harm, talent attraction and retention challenges, and heightened scrutiny or
enforcement.
International trade policies could limit market access, disrupt supply chains and operations, raise costs, and harm our
competitiveness. Changes globally in various countries’ international trade and investment policies have increased and may in the future
increase our costs and could meaningfully reduce demand for our offerings or restrict our ability to sell, manufacture, and transport to or in
certain countries. Changes to tariffs, import/export controls, trade barriers, inflation, sanctions, licensing and authorization requirements,
restrictions on outbound or inbound investment, inspections, cash and exchange controls, buy-national policies, local production
requirements, supply chain impacts, and/or other barriers to entry have been and could in the future be disruptive and costly to us and our
supply chain and adversely affect our results, creditworthiness, cash flows, and prospects. Failure to comply with such policies could
increase our exposure to regulatory enforcement actions or penalties. Global or regional economic conditions and government policies may
change in ways we do not anticipate. In addition, our responses to mitigate the impact of these conditions, such as potential price
increases, could negatively impact our sales volume, market share, or relationships with our customers.
Failure to obtain, maintain, or comply with approvals, licenses, and permits could disrupt operations and growth. Parts of our
business require international, federal, state, and local approvals, licenses, and permits that may be denied, revoked, suspended, modified,
delayed or not renewed, or made more onerous. Noncompliance leads to suspended operations, curtailed work, penalties, and other
sanctions. For example, our U.S. nuclear operations are regulated by the NRC; failure to obtain or renew NRC licenses could significantly
disrupt our nuclear business. Obtaining and renewing approvals, licenses or permits can involve extended delays or suspensions and has
and may in the future be jeopardized by noncompliance, violations, or community and political opposition, resulting in substantial costs.
Heightened climate concerns and activism may slow approvals for fossil fuel-related activities in certain regions where we sell our products,
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affecting associated offerings. New or amended laws or changed enforcement may require additional approvals, facility, labor or product
adaptations, leading to substantial costs. Our customers and suppliers are also subject to such approvals; their failures or difficulties in
obtaining or complying with them may hinder our ability to provide products and services and execute projects.
Compliance with EHS laws and regulations could result in significant costs, sanctions, operational restrictions, and reputational
harm. We are subject to extensive EHS regulations worldwide, including, for example, hazardous chemical handling laws, and may incur
liabilities for personal injury, property damage, and health risks from exposures to hazardous substances, processes, or working conditions
at current or former facilities, including from third-party contractor activities. Real or perceived safety issues can be costly, damage our
reputation, divert management attention, and jeopardize our ability to operate in certain jurisdictions. We have and may in the future
continue to face increased regulatory oversight and operational suspensions at our projects. We invest significant amounts to maintain
policies and procedures designed to comply with EHS regulations, and we may need to invest increased amounts in the future if there are
material changes in EHS regulations or in their interpretation or application or in potential environmental liability exposures. In some
jurisdictions, environmental laws can impose strict, joint, and several liability for investigation and remediation, including for conduct
compliant at the time or caused by others. We are subject to governmental safety-related requirements globally, including the U.S.
Department of Energy and the NRC; noncompliance could lead to increased oversight, fines, or shutdowns. Changes to security and safety
requirements could necessitate substantial expenditures.
For our nuclear operations, the handling of radioactive and hazardous materials exposes us and our customers to regulation, attendant
costs and delays, and potential liabilities. Improper handling could cause personal injury, environmental contamination, property damage,
and harm to surrounding communities. Accident severity may depend on the nature of the event, speed of corrective action, and factors
beyond our control (such as weather). Releases may damage or destroy property, depress property values, injure people, and require
costly response actions. Activities of contractors, suppliers, or other counterparties involving these materials may also expose us to
contractual or legal liability. We are subject to international, federal, state, and local regulations that are complex and frequently change;
new or stricter requirements, changed interpretations, or newly discovered contamination could require material expenditures or create
unanticipated liabilities. Contractual protections and insurance may not be effective in all cases or cover all liabilities; defense costs and
damages resulting from an accident or release (including those associated with a precautionary evacuation) could adversely affect our
results, cash flows, and financial condition.
Claims, litigation, regulatory proceedings, and enforcement actions could be costly, disruptive, and unpredictable. We are, in the
ordinary course of business, regularly subject to claims, lawsuits, regulatory proceedings, inquiries, investigations, and enforcement actions
involving customers and their insurers, employees, joint venture and consortium participants, subcontractors, suppliers, and government
agencies. We also face legacy risks associated with previously owned businesses or acquired businesses or liabilities assigned to GE
Vernova in its Spin-Off from GE. Customers have asserted, and may assert in the future, contractual or other claims related to product
performance, design, delivery, or commercial terms, among other claims. Given our size, the nature and type of our products, services, and
contracts, large and long-duration projects and long-term relationships, claims can be significant. Global customs and anti-corruption
enforcement (e.g., under the U.S. Foreign Corrupt Practices Act) is unpredictable, and in such proceedings, we have incurred, and may in
incur in the future, liability for actions beyond our control, including with respect to prior actions taken by others we have assumed by
acquisition or by assignment in connection with the Spin-Off. These proceedings may limit our access to financing from, or being involved
with projects funded by, multilateral development banks, the World Bank, and other sources of financing. Outcomes are uncertain; plaintiffs
and regulators may seek injunctive relief or very large or indeterminate amounts, and potential losses may remain unknown for extended
periods. Initial claims in commercial disputes can be large even if ultimate liability is lower, and plaintiffs may seek punitive, consequential,
or other damages. Defense can be costly and distract management from the operation of the business. We may incur significant defense
costs and payments or be required to alter operations, adversely affecting results, cash flows, and financial condition. Insurance may not
cover all liabilities or amounts and premiums may rise. See Note 22 in the Notes to the consolidated and combined financial statements for
further information on material pending legal proceedings.
Noncompliance with antitrust and competition laws could result in fines, sanctions, business restrictions, and reputational harm.
Antitrust and competition laws prohibit conduct deemed anti-competitive (e.g., price fixing, bid rigging, cartels, price discrimination,
monopolization, tying, anti-competitive acquisitions, and market allocation). Authorities may impose fines, sanctions, restrictions, or
conditions on our business, and violations can lead to suspension or debarment from certain contracts or transactions. The risk of
investigation or enforcement may also chill or inhibit business activities. Many jurisdictions provide private rights of action for damages.
Increased scrutiny or enforcement in this area could harm our business and reputation and result in increased compliance or defense
costs.
Noncompliance with government contracting and procurement laws and rules could result in penalties, contract loss, or
debarment. We sell to government entities globally and are subject to laws and rules governing government contracts and public
procurement, which differ from private contracting and may impose additional risks and liabilities, including local presence, local
manufacturing or sourcing, and technology or IP transfer requirements. Governments have a broader array of criminal, civil, administrative
and other penalties than are available in purely commercial contract disputes.
Many government entities can terminate contracts for convenience or for default and their ongoing business with us may be subject to
legislative or executive funding approvals. Termination or funding changes could reduce expected revenues; a default termination could
trigger penalties and reprocurement costs.
We are subject to audits, investigations, and oversight; ensuring compliance imposes costs, and authorities may conclude our practices are
noncompliant. Adverse findings could result in civil, criminal, and administrative penalties, damages, disgorgement, exclusion from
programs, reputational harm, delayed or reduced payments, diminished profits, operational curtailment or restructuring, contract
terminations, or suspension/debarment.
Failure to comply with financial services regulations or manage conflicts of interest could result in enforcement actions and
reputational harm. Certain affiliates are a broker-dealer or a registered investment adviser, providing fee-based arranging and syndication
of securities, advisory and structuring, and investment management (including tax equity). These activities may present conflicts of interest
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because they often involve investments in large energy infrastructure projects to which our businesses sell equipment and services,
potentially leading to litigation or regulatory actions. Broker-dealers are regulated by the SEC and FINRA under the Exchange Act and
FINRA rules; investment advisers are regulated by the SEC under the Advisers Act. These regimes are extensive and evolving, and
complying with them, or failing to comply, could be costly, time consuming, and disruptive.
Risks Related to Technology, Cybersecurity, Data Privacy & Intellectual Property
We may fail to secure, successfully deploy, and protect our IP or defend against third party IP claims. We may be unable to secure,
successfully deploy, and protect our IP rights. IP laws and enforcement requirements and standards vary by jurisdiction. In some countries
where we do business, there are limited protection or effective remedies. Protecting proprietary technology is difficult and costly, and IP
disputes are complex and unpredictable.
From time to time, third parties allege that our offerings violate their IP rights. To resolve or avoid such claims, we may seek licenses that
are costly or unavailable on acceptable terms, if at all. Failure to obtain necessary licenses could result in financial damages or injunctions
that restrict our business. Any settlement or license may limit our ability to use or protect our own IP in the future. We do not maintain
insurance for IP claims, and any IP dispute—regardless of merit—could require significant financial and management resources.
Our pending and future IP applications may not issue, and any issued rights may be narrower than expected, challenged, invalidated, held
unenforceable, or circumvented. Competitors may infringe, misappropriate, or otherwise violate our IP; both our ability to detect it and the
available remedies may be limited. In addition, our contracts with customers and other third parties often include indemnification or similar
obligations for certain third-party IP claims; we may be unable to limit our liability and could face significant indemnity payments or
damages for alleged contractual breaches. If we fail to obtain and protect our IP, secure necessary licenses and approvals, and defend
against third-party IP claims, our competitiveness may be harmed and we may incur liabilities.
We do not own GE trademarks and use them under a license agreement that, if terminated, could require costly rebranding and
other actions. We do not own the GE trademark or logo. We use them under a Trademark License Agreement with GE, in combination
with our Vernova trademark. GE owns and controls the GE brand, and its integrity and strength depend on how GE and other GE brand
licensees use, promote, and protect it, which are factors largely outside our control. The Trademark License Agreement may be terminated
under certain circumstances. Termination would eliminate our rights to use specified GE marks and could force us to negotiate a new or
reinstated license on less favorable terms or discontinue use of those marks. Loss of these rights would likely require a corporate name
change and significant global rebranding, which could be costly, require substantial management resources, disrupt customer relationships,
and impair our ability to attract and retain customers.
Security or data privacy incidents or disruptions of our or our third parties’ information technology systems could adversely
affect our business. In some of our businesses, we design, build and support software that are embedded in our products and may
operate within our customers’ IT environments and process data. In many jurisdictions, customers and regulators require built in
cybersecurity protections. Techniques used to circumvent cybersecurity protections to gain unauthorized access or sabotage systems are
constantly evolving and increasingly sophisticated, and our measures may not prevent, detect, or mitigate attacks across our installed
base, current offerings, newly introduced products, or legacy technologies still in use.
Global cybersecurity threats, including malware and ransomware, human or technology errors, and attacks by state, state-affiliated actors
or cybercriminal groups, pose risks to us and to our customers, partners, suppliers, and service providers as well as to those of companies
we have acquired. Broader attacks on critical infrastructure could disrupt our operations even if our existing or new systems or products are
not directly targeted. Industry wide third-party incidents continue to increase, and our large supplier base requires ongoing verification of
cybersecurity practices. Growing interconnectedness and shared liability within our ecosystem heighten our exposure to cybersecurity
risks. We also outsource certain cybersecurity functions, use managed service providers, and collaborate with GE during the transition
period that follows our Spin-Off ; these arrangements increase risk due to interconnectivity and potential impacts from a cybersecurity
incident.
We handle sensitive, confidential, and personal information in accordance with privacy and security requirements. Security incidents, data
loss, programming or employee errors, social engineering or malfeasance (including by employees or third parties) could result in
unauthorized access, use, disclosure, modification, destruction, or denial of access to information, as well as defective products, production
downtime, and operational disruptions.
We rely on third-party hardware, software, and other components. A supplier’s cyber incident could interrupt component availability and our
manufacturing or business process. Third-party software (including open source or embedded code), malicious code, or critical
vulnerabilities could increase customer risk. A significant incident involving our systems or data could result in significant material
investigation, remediation, and notification costs, damage our reputation, and expose us to litigation and regulatory enforcement.
Evolving and divergent global data privacy and protection requirements, and any failure to comply with them or adequately
safeguard personal information, could lead to significant costs, fines, litigation, operational restrictions, and reputational harm.
We access sensitive, confidential, proprietary, and personal information subject to numerous jurisdiction specific laws and regulations
contractual obligations, and customer-imposed controls. The legal environment for privacy, data protection, and security is increasingly
complex and rigorous, with continually evolving requirements, including novel issues arising from new technologies such as generative AI.
In the United States, the Federal Trade Commission and various state laws may impose privacy and security obligations that may require
changes to our data processing practices and policies and could result in substantial compliance costs and operational impacts.
Internationally, many jurisdictions maintain unique privacy and cybersecurity frameworks. Violations can lead to substantial fines, regulatory
investigations, orders to cease processing or change data uses, sanctions, enforcement notices, civil claims (including class actions), and
reputational damage.
These laws differ significantly and are interpreted and enforced inconsistently across jurisdictions, often with delayed guidance that creates
prolonged uncertainty. Increasing cross border transfer restrictions and reliance on globally distributed third parties add complexity,
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potentially necessitating organizational changes, additional technical safeguards, vendor management measures, and external expertise,
and may divert management attention and resources.
Any failure or perceived failure to comply with applicable laws, regulations, standards, contractual obligations, or customer-imposed
controls relating to data privacy and security, or to adequately protect personal information, could damage customer and employee
relationships and our reputation and result in our incurring significant costs.
Risks Related to Employee Matters
Inability to attract, retain, and safely deploy highly qualified personnel could impair execution of our strategy and adversely affect
our operations, reputation, and financial results. Our success depends on our personnel, particularly senior management, key
employees, and technical staff, to develop, manufacture, and deliver our products and provide services worldwide. Competition for talent,
our reputation, the availability of qualified individuals, and the emergence of new skills could limit our ability to hire and retain needed
personnel. Difficulties hiring, ineffective succession planning, or depletion of institutional knowledge, as well as inefficient workforce
utilization and ability to engage qualified contractors, could impede execution of our strategy and growth objectives and adversely affect our
business performance, results of operations, liquidity, and financial condition.
Many projects require deploying personnel or contractors in geographically remote or high-risk locations. We incur significant costs to meet
safety requirements and to attract and retain skilled workers, and some roles—such as the installation, operation, and maintenance of
offshore wind turbines—are difficult, labor-intensive, costly, and depend on the availability of highly-skilled labor. Despite our safety
precautions and compliance with applicable laws and regulations, we have experienced serious safety incidents, including injury and death.
Safety concerns or incidents, regardless of fault, could harm our reputation and further impede our ability to attract and retain qualified
employees and contractors.
Significant postretirement benefit obligations and volatility in assumptions and asset returns could increase required
contributions and expenses and adversely affect our earnings, cash flows, and financial condition. We have net liabilities for
pension, healthcare, and life insurance benefits for our employees, former employees, and certain legacy former employees allocated to us
by GE. These obligations arise under multiple plans and statutory requirements across various countries and include defined benefit
pension plans that are fully funded, partially funded, or unfunded. Upward pressure on healthcare costs, increases in benefit obligations, or
asset underperformance could adversely affect our earnings, cash flows, and financial condition.
Our defined benefit expense is determined under U.S. generally accepted accounting principles using actuarial valuations and annual
remeasurements that rely on assumptions and market inputs, including discount rates (generally based on high-quality corporate bond
yields), expected long-term returns on plan assets, compensation growth, and biometric factors (such as participant mortality). Changes in
these assumptions or economic conditions, such as lower discount rates or sustained market volatility, can increase our obligations and
pension expense and require us to make additional cash contributions to the defined benefit plans. Differences between actual experience
and actuarial assumptions, as well as deviations in investment performance, can materially change net plan liabilities and funding
requirements. In addition, changes in legislation, regulations, case law, or accounting standards could result in increased obligations, cash
requirements, and expenses. For further information, see Note 13 in the Notes to the consolidated and combined financial statements .
Labor disputes, collective bargaining obligations, and other labor actions could disrupt our operations and increase our costs. A
significant number of our employees are represented by labor unions under collective bargaining agreements, and many of our European
employees are represented by works councils. These arrangements may limit our flexibility to manage costs and respond to market
changes, and employees who are not currently represented may seek representation in the future. We cannot assure that existing
collective bargaining agreements will prevent strikes or work stoppages, that we will successfully negotiate new agreements, or that
negotiations will not result in increased labor costs (including wages, healthcare, pensions, and other benefits). Negotiations, potential work
stoppages, and related disputes may divert management attention. In addition, labor actions affecting our customers or suppliers, or
general country strikes or work stoppages, could disrupt our operations, project execution, supply chain, and deliveries.
Risks Relating to Financial, Accounting, and Tax Matters
Volatility in foreign currency exchange rates may adversely affect our financial condition, results of operation, and cash flows.
Because we operate globally, we transact in a variety of currencies. Fluctuations in exchange rates can affect our pricing, cost structure,
and margins. For transactions not denominated in the U.S. dollar, we are subject to foreign currency exchange translation risk. In addition,
since our financial statements are denominated in U.S. dollars, changes in foreign currency exchange rates between the U.S. dollar and
other currencies have had, and will continue to have, an impact on our financial condition, results of operations, and cash flows. Although
we use hedging and derivatives to reduce earnings and cash flow volatility, our efforts may not be successful. For additional information,
see Note 20 in the Notes to the consolidated and combined financial statements and Item 7A. “Quantitative and Qualitative Disclosures
About Market Risk.”
Future impairments of long-lived assets, including goodwill, could result in significant non-cash charges. We review our goodwill
for impairment annually and whenever indicators of impairment arise and our other long-lived assets, including identifiable intangible assets
and property, plant, and equipment, for impairment whenever indicators of impairment arise. Adverse changes in market conditions or in
our business outlook, as well as future events or strategic decisions (including asset sales or changes in business direction), could result in
impairment charges and related losses. Certain non-cash impairments may arise from shifts in strategic goals or broader business
environment factors. Any impairment charges we recognize will reduce our results of operations.
Changes in tax laws and rates, adverse positions taken by taxing authorities, and tax audits could increase our tax obligations
and costs and our ability to use deferred tax assets may be subject to limitation. We are subject to income and other taxes (including
sales, excise, and value added) in the U.S. and numerous foreign jurisdictions. Determining our worldwide tax provision requires significant
judgment across diverse legal regimes. Changes in tax laws, tax rates, or interpretations; new or increased tariffs; adverse positions by
taxing authorities; and the resolution of governmental audits and assessments may significantly increase our tax obligations and costs. We
2025 FORM 10-K 19
have deferred tax assets in certain countries, and their utilization depends on generating sufficient taxable income in those jurisdictions
(and within applicable carryforward periods). Subsequent changes in tax laws, rates, or rules in those jurisdictions could restrict or delay
utilization, reduce the value of these assets, and adversely affect our financial results.
The Spin-Off could result in significant tax liability to GE and its stockholders if it is determined to be a taxable transaction and
we may have corresponding indemnification obligations. The Spin-Off may not qualify as tax-free, which could result in significant tax
liabilities for GE and its stockholders and substantial indemnification obligations by us to GE. Although GE obtained an IRS private letter
ruling and tax opinions supporting tax-free treatment under Sections 355 and 368(a)(1)(D), these are not binding on the IRS or courts, rely
on compliance with specified agreements and representations, and do not cover state, local, or foreign taxes. The IRS could determine that
the Spin-Off or related transactions are taxable, including due to incorrect assumptions, breaches of covenants, or post-Spin-Off ownership
changes. If the Spin-Off is taxable, GE and its stockholders could face significant adverse tax consequences. Under our Tax Matters
Agreement with GE, if tax-free treatment fails because of our actions or certain ownership changes (including a 50% or greater change in
our stock by vote or value within the specified four-year period under Section 355(e), excluding the change that resulted from the Spin-Off),
we may be required to indemnify GE for resulting taxes, interest, penalties, and related expenses, which amounts could be substantial.
The Tax Matters Agreement limits us from taking certain actions and may require us to indemnify GE significant amounts. We are
subject to covenants under the Tax Matters Agreement for the period required under the agreement. These covenants are intended to
preserve the non-recognition treatment of the Spin-Off under Section 355 and related provisions of the Code (and analogous state, local,
and foreign tax laws). The covenants include limits on certain acquisitions, mergers, liquidations, sales, dispositions, transfers or stock
redemptions involving our stock or assets; discontinuing the active conduct of our Gas Power business; issuing or selling stock or other
securities (including convertibles, except certain compensatory arrangements); and selling, disposing or transferring assets outside the
ordinary course. We may be required to indemnify GE for taxes, interest, penalties, and related expenses that may result from any violation
of these covenants. Further, under the Tax Matters Agreement, we may be allocated a portion of liability relating to certain pre-Spin-Off tax
matters. Any such allocation or indemnification amounts could be substantial. These covenants and indemnification obligations may require
us to forgo, delay, or restructure strategic transactions and other initiatives, and may discourage third parties from proposing transactions
that our stockholders might otherwise favor.
We may not realize expected benefits from the Spin-Off. We may not realize the benefits we expect from the Spin-Off, including greater
strategic focus, operational simplification, cost savings, targeted innovation, and a tailored capital allocation policy. Achieving these benefits
depends on timely and successful execution of our stand alone strategy and may be limited by the costs and distractions of operating as an
independent public company, restrictions intended to preserve the tax-free treatment of the Spin-Off that may limit strategic transactions for
a period of time, and reduced scale and diversification versus GE pre-separation. Building and sustaining standalone capabilities takes
time, may be less effective, and could be costly and disruptive. Our ongoing relationship with GE creates potential conflicts of interest,
including where directors or officers have roles or equity interests in both companies, and our governance policies may not fully mitigate
these risks. We and GE are subject to multiple separation and transition agreements; if either party fails to perform (including with respect
to indemnities, transition services, or other obligations), we could experience operational disruption and increased costs. Further, we may
be obligated to indemnify GE for actions and positions taken prior to the Spin-Off, and we may have limited influence on the determination
of the indemnifiable amounts, which could be significant. In addition, certain GE credit support and guarantees of our obligations may not
be replaced or released when expected, which could impose contractual restrictions, require alternative credit support, and obligate us to
indemnify GE for amounts paid. Any of these events could adversely affect our business, financial condition, cash flows, and results of
operations and could limit our strategic flexibility.
Risks Relating to Our Common Stock and the Securities Market
Our stock price may be volatile, and we could face securities litigation. The market price of our common stock has in the past
fluctuated, and may in the future fluctuate, significantly. Because we manufacture and sell products used in AI infrastructure, our
performance and the market price of our common stock are frequently linked to AI investment trends and sector sentiment, which has
resulted in, and may continue to result in, significant volatility. A significant decline could result in securities class action litigation, which
could be costly, divert management’s attention, and adversely affect our business.
We may not achieve our targeted return of cash to stockholders. Our ability to return cash to stockholders in the form of dividends or
stock repurchases depends on earnings, financial condition, cash needs, other potential uses of cash, and market conditions. In addition,
the price, availability, and trading volumes of our stock will also affect repurchase timing and size.
Future equity issuances, including equity compensation, may dilute stockholders. We may issue equity to finance acquisitions, raise
capital, or for other purposes. We also grant stock-based awards to directors, officers, and employees, and some of those persons also
have stock-based awards granted by GE prior to the Spin-Off that converted to our stock-based awards at the Spin-Off. We plan to
continue granting additional awards (e.g., annual, new hire, and retention) under our equity compensation programs. These issuances
dilute existing stockholders and may reduce earnings per share, potentially adversely affecting our stock price.
Anti-takeover provisions and Delaware law may deter transactions and limit stockholder rights. Provisions in our certificate of
incorporation, bylaws, the Separation and Distribution Agreement, and Delaware law that may delay, deter, or prevent a change in control
include: a classified board through 2029 with directors removable only for cause during that period; advance notice requirements for
stockholder proposals and director nominations; limitations on stockholders’ ability to call special meetings or act by written consent; Board
authority to issue preferred stock without stockholder approval; and only the Board having authority to fill vacancies (including those
created by Board expansion). We are also subject to Section 203 of the Delaware General Corporation Law (DGCL), change-of-control
restrictions under the Separation and Distribution Agreement, and restrictions in the Tax Matters Agreement intended to preserve the Spin-
Off’s tax treatment. These provisions may discourage certain unsolicited transactions that could offer stockholders a premium for their
shares.
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Exclusive forum provisions may limit stockholders’ choice of judicial forum. Unless we consent otherwise, our certificate of
incorporation provides that the Delaware Court of Chancery (or, if it lacks jurisdiction, another Delaware state court or the U.S. District
Court for the District of Delaware) is the exclusive forum for (a) any derivative action or proceeding brought on our behalf, (b) any action
asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers, employees, agents or stockholders to
us or our stockholders, (c) any action asserting a claim arising pursuant to any provision of the DGCL, our certificate of incorporation or
bylaws, or (d) any action asserting a claim governed by the internal affairs doctrine, and that federal district courts are the exclusive forum
for claims under the Securities Act of 1933, as amended. These provisions do not apply to Exchange Act claims, which are subject to
exclusive federal jurisdiction. Courts may not enforce our exclusive forum provisions in all circumstances. The provisions may increase the
cost of litigation for stockholders, limit forums perceived as more favorable, discourage certain lawsuits, or, if found unenforceable, require
us to litigate in multiple jurisdictions, thereby increasing our costs.
