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Baker Hughes Co (BKR)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 was operationally solid: adjusted EPS $0.51, adjusted EBITDA $1.04B, record first-quarter adjusted EBITDA and margin performance, with IET driving year-over-year growth; GAAP EPS was $0.40 and revenue was $6.43B, flat year-over-year but down sequentially on seasonal and macro softness .
  • Versus Wall Street: EPS beat consensus ($0.51 vs $0.47*), EBITDA modestly beat ($1.04B vs $1.02B*), while revenue was slightly below ($6.43B vs $6.50B*). Segment mix and tariff/macro dynamics drove the variance; IET execution offset OFSE volume pressure . Values retrieved from S&P Global.
  • Guidance pivot: management introduced a hybrid approach—explicit Q2 guidance (total revenue $6.3–$7.0B; EBITDA $1.04–$1.20B) while maintaining IET FY EBITDA guidance ($2.2–$2.4B) and framing FY company outcomes given tariff uncertainty and upstream spending declines .
  • Strategic catalysts: first data center awards (>350 MW NovaLT turbines) and LNG pipeline/framework agreements (NextDecade Trains 4–8; Argent LNG), underpinning record IET backlog ($30.4B) and durable multi-year growth narrative .

What Went Well and What Went Wrong

What Went Well

  • Strong IET momentum: IET revenue +11% YoY to $2.93B; EBITDA +30% YoY to $501M; segment margin up 240 bps to 17.1% on project closeouts, pricing, and productivity .
  • Entry into data centers: “we booked $3.2 billion of [IET] orders, including our first data center awards, totaling more than 350 MW of power solutions for this rapidly evolving market” . Management expects at least $1.5B of data center equipment orders over the next three years .
  • Record RPO and resilient cash generation: RPO $33.2B (IET $30.4B), free cash flow $454M; returns to shareholders $417M (including $188M buybacks); dividend declared at $0.23 per share .

What Went Wrong

  • OFSE volume pressure: OFSE revenue fell 10% sequentially and 8% YoY to $3.50B; EBITDA down 18% sequentially to $623M; margins compressed to 17.8% as customers delayed discretionary spending and Mexico activity slumped .
  • Tariff and macro headwinds: management outlined a net EBITDA impact of $100–$200M for 2025 under current tariff assumptions; visibility beyond Q2 is limited, especially for OFSE and Industrial Tech .
  • Sequential revenue decline: total company revenue down 13% sequentially, driven by seasonal weakness and softer upstream activity; book-to-bill held at 1.0, but momentum shifted to longer-cycle IET .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$6,908 $7,364 $6,427
GAAP Diluted EPS ($)$0.77 $1.18 $0.40
Adjusted Diluted EPS ($)$0.67 $0.70 $0.51
Adjusted EBITDA ($USD Millions)$1,208 $1,310 $1,037

Segment performance:

Segment MetricQ3 2024Q4 2024Q1 2025
OFSE Revenue ($USD Millions)$3,963 $3,871 $3,499
OFSE EBITDA ($USD Millions)$765 $755 $623
OFSE EBITDA Margin (%)19.3% 19.5% 17.8%
IET Revenue ($USD Millions)$2,945 $3,492 $2,928
IET EBITDA ($USD Millions)$528 $639 $501
IET EBITDA Margin (%)17.9% 18.3% 17.1%

KPIs and operating metrics:

KPIQ3 2024Q4 2024Q1 2025
Orders ($USD Millions)$6,676 $7,496 $6,459
RPO ($USD Billions)$33.4 $33.1 $33.2
IET RPO ($USD Billions)$30.2 $30.1 $30.4
Total Book-to-Bill (x)1.0 1.0 1.0
Cash from Operations ($USD Millions)$1,010 $1,189 $709
Free Cash Flow ($USD Millions)$754 $894 $454
Capex, net ($USD Millions)$256 $295 $255

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($)Q2 2025N/A$6.3B–$7.0B New explicit Q2 guide
Total EBITDA ($)Q2 2025N/A$1.04B–$1.20B New explicit Q2 guide
IET Revenue ($)Q2 2025N/A$3.0B–$3.3B New explicit Q2 segment guide
IET EBITDA ($)Q2 2025N/A$520M–$580M New explicit Q2 segment guide
OFSE Revenue ($)Q2 2025N/A$3.3B–$3.7B New explicit Q2 segment guide
OFSE EBITDA ($)Q2 2025N/A$600M–$700M New explicit Q2 segment guide
IET EBITDA ($)FY 2025$2.2B–$2.4B (Jan framework) Maintained ($2.2B–$2.4B) Maintained
Company EBITDA ($)FY 2025Low end $4.7B; midpoint $4.95B (prior) Hybrid framework; path to approach low end if tariffs at lower bound Shift to framework
Dividend per shareQ2 2025$0.21 (Q4 cash dividend) $0.23 declared, payable May 16, 2025 Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Tariffs/macro uncertaintyNot a focus; commentary centered on margins and backlog Margin journey to 20% emphasized; no explicit tariff detail Net EBITDA impact estimated $100–$200M; hybrid guidance introduced Rising uncertainty
LNG momentumFPSO and ICL awards; GTS multi-decade LNG services Multiple LNG equipment awards (Venture Global, Woodside) North America liquefaction train order; frameworks with NextDecade (Trains 4–8) and Argent LNG Sustained strength
Data center power solutionsNo mentionNo mentionFirst awards >350 MW; Frontier partnership; NovaLT turbines New growth vector
OFSE margin trajectoryHigh-teen margins achieved 19.5% margin; progress toward 20% 17.8% margin; resilient despite volume declines Near-term compression
Regional activityBrazil flexible pipe awards; Middle East contracts Saudi Jafurah gas expansion equipment Mexico activity down sharply; international seasonal softness Mixed; Mexico weaker
New energy/CCSLaunch of CarbonEdge for CCUS Flare reduction projects (CTS awards) CCS CO2 compression orders; CCS/data center partnership Building pipeline

Management Commentary

  • “Baker Hughes started the year strong, building on the positive momentum from 2024 and setting multiple first-quarter records. Our continued transformation initiatives and strong execution continue to drive structural margin improvement across both segments” — Lorenzo Simonelli, CEO .
  • “We booked $3.2 billion of IET orders, including our first data center awards, totaling more than 350 MW… In addition to expanding opportunities for data centers, we have a strong pipeline of LNG, FPSO and gas infrastructure projects” — CEO .
  • “Our strong first quarter results reflect our commitment to profitable growth… adjusted EBITDA margin expanding by 140 basis points to 16.1%… even as a softer upstream market weighed on OFSE” — CEO .
  • “After accounting for [tariff] offsets across both segments, we estimate a net EBITDA impact in the range of $100 million to $200 million… assumes current tariff levels remain in place for 2025” — CFO .

Q&A Highlights

  • FY EBITDA framework: management sees path to approach prior low-end ($4.7B) if tariff impacts land toward the lower bound and oil prices stabilize; hybrid guidance adopted to balance uncertainty .
  • Data center opportunity: Baker expects at least $1.5B of data center equipment orders over the next three years; data centers could be a meaningful growth driver with recurring aftermarket .
  • OFSE margin target: still committed to 20% milestone; expect sequential margin improvement in Q2 (~80 bps) with more benefits in 2H from restructuring, though pace depends on tariffs and upstream environment .
  • Tariff mitigation: diversified global footprint limits direct U.S. tariff exposure; “we purchased roughly $14B… imported less than 5% into the U.S. and under 2% comes from China,” pursuing pass-throughs and sourcing shifts .
  • IET margin path: 18% FY 2025 midpoint seen as achievable despite tariff modest pressure; 20% EBITDA margin in 2026 remains the target .

Estimates Context

MetricConsensus (Q1 2025)Actual (Q1 2025)Outcome
Primary EPS ($)0.47403*0.51 Beat
Revenue ($USD)6,501.62M*6,427M Miss
EBITDA ($USD)1,023.91M*1,037M Beat
Primary EPS – # of Estimates18*——
Revenue – # of Estimates18*——

Values retrieved from S&P Global.

Where estimates may need to adjust:

  • OFSE volume softness and Mexico activity likely temper near-term revenue expectations, while structural cost-outs support margin resilience; IET’s stronger-than-expected margin and backlog support upward bias to IET profitability assumptions .

Key Takeaways for Investors

  • The beat/miss mix (EPS and EBITDA beat; revenue miss) reflects segment divergence: IET strength offset OFSE volume and macro/tariff headwinds; mix should remain favorable near term given IET backlog and data center traction .
  • Hybrid guidance increases event risk around macro/trade headlines; explicit Q2 ranges reduce near-term uncertainty, but FY outcomes hinge on tariff trajectory (net $100–$200M EBITDA impact) and upstream spend trends .
  • Data center power builds a new leg of growth; >350 MW booked and the Frontier partnership de-risks execution, supporting multi-year orders (management targeting ≥$1.5B over three years) .
  • LNG remains a core engine (NextDecade, Argent, Bechtel awards); record IET RPO ($30.4B) underpins margin progression and cash conversion in 2025–2026 .
  • OFSE should see margin improvement in Q2 despite flat revenues, aided by restructuring and productivity; watch Mexico activity normalization and international seasonal recovery breadth .
  • Capital returns intact: $417M returned in Q1; dividend raised to $0.23/share, with a stated 60%–80% FCF return commitment enhancing yield support through cycles .
  • Trading setup: favor IET-levered backlog/margin narrative and data center/LNG catalysts; risks include tariff escalation, weaker oil pricing, and prolonged Mexico/international discretionary delays .