Oct 29, 2026 earnings call — Turbine generator progress and strong Q3 results
Company reported sales of just under $3.5 billion and light vehicle eProduct sales up 33%.
Revenue $3.5B (est $3.5B) · EPS $1.39 (est $1.25)
Key quotes
"Our partner is planning to expand external demonstrations of the turbine generator system during the fourth quarter due to strong customer interest."
"Importantly, our light vehicle eProduct sales were up 33%, primarily due to European growth."
"The company continued to operate at a very high level and delivered 20 basis points of adjusted margin expansion and 12% adjusted earnings per share growth despite a declining production environment."
Analyst Q&A 10
timing of industrial growth
Q (Chris McNally · Evercore): When will you give more clarity on the revenue path beyond the $300 million in 2027? Also, are data center buildout delays slowing negotiations or quoting activity?
A: Management said they are pleased with progress and hiring is in line with expectations. They will not provide more detailed shape until early 2027, and they see strong quoting activity despite some short-term political delays in finalizing awards.
"We will not be giving you any kind of color until we get into early 2027." — Joe Fadool
2027 outlook and inverter role
Q (Dan Levy · Barclays): Is modest outgrowth in the core automotive business into 2027 still expected? Also, how big is the microgrid inverter opportunity and does silicon carbide unlock it?
A: They confirm they expect modest growth over market in automotive in 2027 and they expect $300 million of turbine generator revenue in 2027. On inverters, they said progress is fast, they are leveraging light-vehicle technology (including silicon and silicon carbide), and they see strong system synergy across PowerGen, power conversion and energy storage.
"What we expect as we move into 2027 from the top-line perspective is we expect to see modest growth over market as it relates to our automotive business." — Craig Aaron
foundational vs eProduct mix
Q (Joseph Spak · UBS): How will the balance between foundational products and eProducts affect auto sales by region, especially Europe versus China? Also, any change in interest from NeoCloud players for PowerGen?
A: They said the portfolio is resilient, with eProduct sales up 33% year-over-year and strong e-motor awards, especially in Europe and China. Regarding NeoClouds, they see no specific challenge and overall demand and quoting activity remain strong across hyperscalers, edge and co-location data centers.
"We have a fast-growing and scaling eProduct business. Really pleased with the 33% increase year-over-year in eProduct sales, which is really evidence of all the hard work our teams have been putting in and those business awards are starting to pull through." — Joe Fadool
Q4 R&D and inverter size
Q (Emmanuel Rosner · Wolfe): Why call out $10 million industrial R&D in Q4 now? And can you give a framework for the inverter opportunity or average content per award?
A: They said the framework is not changing and clarified the Q4 revenue decline is $120 million versus Q1–Q3 average, with a mid-teens decrement and $10 million of industrial R&D to support quoting. On inverters, they said it is early stage and they are focused on the first awards; the new PSU product expands TAM and they will provide more color after initial wins.
"So we are excited about that expanded TAM, and we will provide you more color after we win our first few awards." — Joe Fadool
turbine generator progress and debt targets
Q (Tom Narayan · RBC): How concrete are the turbine generator customer discussions and contracts? Also, are you seeing hybrid growth in the U.S., and what is your target leverage and debt paydown plan?
A: They said they have a signed agreement with Endeavour as go-to-market partner and find the backlog and quoting activity encouraging; they will provide more detail early next year. On hybrids they see growth in advanced hybrids from Japanese players; gross net leverage target is 2.0x, they are at 1.5x now, and they completed an EPS-accretive debt tender plus $175 million share repurchases in Q3 and expect similar in Q4.
"If I go back a little bit, we do have a signed agreement with Endeavour." — Joe Fadool
PowerDrive margins and executive order
Q (James Picariello · BNP Paribas): Was the PowerDrive Systems quarter aided by one-offs and are you near break-even at current sales? Also, what margin profile do you expect for microgrid inverters and thoughts on the U.S. executive order banning foreign-sourced grid equipment?
A: They said PowerDrive delivered strong growth and converted about $0.24 on the dollar with a volume recovery; they expect about 20% growth this year and to convert in the mid-teens year-over-year. On inverters, they expect a mid-teens conversion in the first year of launch with upside, and on the executive order they said clarification is ongoing but it would be a tailwind since they will produce in the U.S. and their products are competitive.
"What we said for next year is we expect mid-teens conversion on that first year of launch." — Craig Aaron
input costs and M&A discipline
Q (Mark Delaney · Goldman Sachs): Are input cost pressures, especially electronics, a risk into 2027 and how are you managing them? Also, any update on M&A pipeline and criteria?
A: They said they see some electronic-side inflation in 2026 but are managing it within incremental conversion and will watch 2027 closely. On M&A they remain disciplined with three criteria: leverage the core, seek near-term accretion, and avoid overpaying; their aperture is open across auto and non-auto but they will only act on deals that meet those standards.
"Those three criteria as a reminder, we want to leverage our core." — Joe Fadool
what customers ask on TG and storage
Q (Andrew Percoco · Morgan Stanley): In customer discussions for the turbine generator, what do customers ask most about (efficiency, durability, uptime)? And are you seeing better pricing for energy storage?
A: They said hyperscaler visits are engineer-to-engineer and customers focus on meeting specs, tolerances, robustness, uptime/reliability, efficiency and emissions and want lower carbon than diesel; teams are reviewing test results and speed to market matters. On energy storage they are not ready to comment on pricing but see strong demand and are focused on winning and leveraging installed capacity; more color may come in 2027.
"Uptime is a big topic, of course, for any kind of stationary power, so reliability is important." — Joe Fadool
cost offsets and China outlook
Q (Alex Perry · BofA): What initiatives will offset commodity and input cost pressures and should industrial R&D continue? Also, how do you see China and OEM exposure given lower production?
A: They said supply chain savings and plant productivity are offsetting pressures and the company will keep the same goals for growth, TG revenue and mid-teens conversion of extra growth. For China, they expect the market to be down between 6% and 8% this year but see higher export volumes; 70% of their China OEM business is with the leading six or seven OEs and they feel well positioned as those OEMs export and localize.
"In China, we expect the overall market to be down between 6% and 8% this year, although we do see higher export volumes despite that." — Craig Aaron
China export restrictions and commercial CVs
Q (Rajat Gupta · JPMorgan): If China restricts hybrid exports, how does that affect your content and growth? And any update on commercial vehicle (CV) business and outlook for 2027?
A: They said their customer diversity is a strength and they will watch developments but do not expect to highlight it; on comparable vehicles there is no difference in content. On commercial vehicles they said global CV growth is about 3% with North America about 11%, ex-battery mid-single digit growth, and it is too early to give a 2027 outlook.
"From a market perspective, there is some growth globally, about 3% in CV overall." — Joe Fadool