Baker Hughes Drills Into A Record Order Book

Baker Hughes’ second-quarter report delivered an earnings beat, but the real headline was a record order haul powered by gas turbines and LNG equipment. Revenue declined 2% from a year earlier to $6.74 billion, partly reflecting business disposals, but still topped the approximately $6.51 billion analysts expected. Adjusted net income increased 3% to $640 million, while adjusted earnings of $0.64 per share exceeded the $0.49 consensus. Adjusted EBITDA climbed 2% to $1.23 billion and surpassed the top of the company’s guidance range. Shares closed 5.8% higher Monday at $60.59 after reaching $62.67, as investors looked beyond the revenue decline and focused on the demand building behind it.

Baker Hughes' strongest momentum came from the equipment it has yet to deliver. Total orders surged 49% to a record $10.50 billion, driven by Industrial and Energy Technology orders that more than doubled to an all-time high of $7.09 billion. Gas Technology Equipment orders alone increased more than sixfold to $4.91 billion from $781 million, reflecting robust demand for LNG infrastructure and power-generation systems serving data centers and other energy-intensive facilities. Baker Hughes’ remaining performance obligations rose $4 billion during the quarter to $40.1 billion, including a record $37.1 billion in the IET segment. That gives the company years of equipment deliveries and service revenue still waiting to reach its financial statements.

Even without revenue growth, IET still generated far more profit. Segment revenue remained essentially flat at $3.29 billion, but EBITDA increased 16% to $678 million and its EBITDA margin expanded to 20.6% from 17.8%, as pricing, productivity improvements and cost reductions outweighed inflation and lower equipment volume. The traditional Oilfield Services and Equipment business moved in the opposite direction. Revenue fell 5% to $3.45 billion, EBITDA declined 11% to $605 million and its margin contracted to 17.5% from 18.7%. The business disposal and disruptions in the Middle East contributed to the revenue decline, making a pretty good case for keeping one foot in the oil patch and the other in the power market.

With customers lining up, Baker Hughes responded by making an already huge goal even larger, raising its 2026-through-2028 IET order target to more than $45 billion from more than $40 billion. The company now expects full-year revenue of $26.65 billion to $28.05 billion and adjusted EBITDA of $4.6 billion to $5.1 billion, excluding the recently acquired Chart Industries. But not every forecast pointed up — Baker Hughes expects global oil-and-gas producer spending to decline modestly this year, while its third-quarter IET revenue projection of $3.17 billion to $3.47 billion fell below the approximately $3.79 billion analysts anticipated. Still, the company is expanding gas-turbine and generator capacity that could support a nearly $5 billion annual Power Systems revenue opportunity by 2029. The order book suggests Baker Hughes may have found its next gusher — and this one plugs straight into the power grid.

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