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Baker Hughes Co (BKR)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered broad-based beats vs Street: adjusted EPS $0.63 vs ~$0.555 consensus; revenue $6.91B vs ~$6.63B; EBITDA beat as well. Management highlighted 170 bps YoY margin expansion to 17.5% driven by structural cost improvements and the Business System deployment . Consensus values marked with asterisks and sourced from S&P Global (see tables).
  • Industrial & Energy Technology (IET) momentum was the key catalyst: $3.5B orders (record RPO $31.3B), >$550M data-center power awards, and strength in Gas Technology Services; Baker raised FY IET revenue/EBITDA guidance midpoints and reestablished OFSE guidance, signaling confidence despite macro softness .
  • Portfolio optimization advanced: JV of OFSE Surface Pressure Control with Cactus ($345M), sale of IET Precision Sensors & Instrumentation to Crane ($1.15B), and acquisition of Continental Disc ($540M); post-quarter, BKR announced a definitive agreement to acquire Chart Industries (EV $13.6B), accelerating IET’s scope and synergy potential .
  • Tariffs are a monitored headwind: ~$15M Q2 EBITDA impact with updated FY net impact estimated at $100–$200M, mitigated by actions; guidance bakes in sequential tariff headwinds in 2H .

What Went Well and What Went Wrong

What Went Well

  • Record IET backlog and strong orders: IET orders $3.53B (+2% YoY), RPO $31.3B (+3% seq); >$550M data-center power awards and $350M+ CSAs in GTS underpin durable lifecycle revenues .
  • Margin expansion and operational execution: adjusted EBITDA $1,212M (+7% YoY); total adjusted EBITDA margin rose 170 bps YoY to 17.5% driven by productivity and structural cost actions .
  • Strategic portfolio actions: JV of OFSE Surface Pressure Control ($345M), PSI divestiture to Crane ($1.15B), Continental Disc acquisition ($540M) to reweight toward higher-margin, recurring revenue businesses .
  • Quote: “We delivered strong second-quarter results… adjusted EBITDA margins increasing 170 basis points year-over-year to 17.5%… driving higher productivity, stronger operating leverage and more durable earnings across the company.” — CEO Lorenzo Simonelli .

What Went Wrong

  • OFSE softness pressured top-line: company revenue down 3% YoY to $6,910M driven by OFSE (-10% YoY) despite IET growth (+5% YoY) .
  • Tariff-related headwinds: Q2 EBITDA impact of ~$15M, with a second-half net impact likely exceeding $100M embedded in guidance ranges .
  • Regional mixed for OFSE: Middle East/Asia down 7% YoY; Europe/CIS/SSA down 21% YoY; NA down 9% YoY, reflecting subdued upstream activity and pricing/mix pressures .

Financial Results

Consolidated Results vs Prior Periods

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Millions)7,139 6,427 6,910
Adjusted EBITDA ($USD Millions)1,130 1,037 1,212
GAAP Diluted EPS ($USD)0.58 0.40 0.71
Adjusted Diluted EPS ($USD)0.57 0.51 0.63

Q2 2025 Actual vs S&P Global Consensus

MetricActualConsensusBeat/Miss
Adjusted EPS ($USD)0.63 0.55453*Beat
Revenue ($USD Millions)6,910 6,626.0*Beat
EBITDA ($USD Millions)1,212 1,117.7*Beat

Values with asterisk (*) retrieved from S&P Global.

Segment Breakdown

Segment MetricQ2 2024Q1 2025Q2 2025
OFSE Revenue ($USD Millions)4,011 3,499 3,617
OFSE EBITDA Margin (%)17.8% 17.8% 18.7%
IET Revenue ($USD Millions)3,128 2,928 3,293
IET EBITDA Margin (%)15.9% 17.1% 17.8%

KPIs

KPIQ2 2024Q1 2025Q2 2025
Orders ($USD Millions)7,526 6,459 7,032
Book-to-Bill (Company)1.0 1.0 1.0
Book-to-Bill (IET)1.1 1.1 1.1
RPO ($USD Billions)—33.2 34.0
IET RPO ($USD Billions)—30.4 31.3
OFSE RPO ($USD Billions)—2.8 2.7
Free Cash Flow ($USD Millions)106 454 239
Cash from Operations ($USD Millions)348 709 510
Capital Expenditure, net ($USD Millions)242 255 271
Returns to Shareholders ($USD Millions)—417 423
Cash & Equivalents ($USD Millions)—3,277 3,087

Note: “—” where not disclosed for that period in the cited documents.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Company EBITDAFY 2025 (midpoint)—$4.675B Reestablished
IET OrdersFY 2025 (midpoint)$13.5B $13.5B Maintained
IET RevenueFY 2025 (midpoint)$12.75B $12.9B Raised
IET EBITDAFY 2025 (midpoint)$2.30B $2.35B Raised
OFSE RevenueFY 2025 (midpoint)—$14.2B Reestablished
OFSE EBITDAFY 2025 (midpoint)—$2.625B Reestablished
Company EBITDAQ3 2025 (midpoint)—~$1.185B New
IET EBITDAQ3 2025 (midpoint)—~$600M New
OFSE EBITDAQ3 2025 (midpoint)—~$665M New
Dividend per ShareQuarterly$0.23 (Q1 declared) $0.23 (Q2 declared) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Data-center power solutionsFirst data-center awards >350 MW; pipeline building >$550M awards; 69 NovaLT units; 1.2 GW YTD; capacity expansion plans Accelerating
LNG & gas infrastructureStrong LNG orders, Jafurah expansion; multiple projects (Venture Global, Woodside) Continued gas infra awards; LNG orders expected to strengthen in 2H Sustaining
Tariffs/macro—~$15M Q2 EBITDA impact; FY net $100–$200M, mitigation actions Headwind
OFSE regional trendsBroad declines across regions in Q1 International +4% seq; Europe & Middle East ex-Saudi strength; Middle East/Asia YoY decline Mixed
Portfolio optimizationTransformation actions in 2024 (cost out) SPC JV ($345M), PSI sale ($1.15B), CDC acquisition ($540M); post-quarter Chart deal announced Active
Lifecycle/service revenueGTS long-term services agreements (Rio Grande, Plaquemines) $350M+ CSAs; expanded iCenter remote services; aftermarket trajectory Strengthening

Management Commentary

  • “IET orders totaled $3.5 billion… supported by more than $550 million of data center related orders… confident of achieving the full-year order guidance range for IET.” — CEO Lorenzo Simonelli .
  • “We are raising our full-year revenue and EBITDA guidance for IET and reestablishing full-year guidance for OFSE.” — CEO Lorenzo Simonelli .
  • “Net tariff impact was approximately about $15 million to EBITDA [in Q2]… we are maintaining the previously communicated estimate of $100–$200 million net EBITDA impact for the year.” — CFO Ahmed Moghal .
  • “OFSE delivered EBITDA of $677 million… EBITDA margins expanded 90 basis points sequentially to 18.7%.” — CFO Ahmed Moghal .
  • “Adjusted EBITDA rose to $1.21 billion… structural margin improvement… laying the foundation for long-term value creation.” — CEO Lorenzo Simonelli .

Q&A Highlights

  • Margin trajectory: Confidence in IET reaching ~20% margins; OFSE margin focus over market share; Business System underpinning sustained accretion .
  • Orders visibility into 2026: Expect IET orders in 2026 to be consistent with 2025, with LNG strengthening in 2H and continued data-center momentum; GTS orders +28% YTD; upgrades +165% YTD .
  • Portfolio moves: Net EBITDA impact from the three transactions in 2026 expected just over $100M; continued discipline to recycle capital into margin-accretive, lifecycle businesses .
  • Tariffs: ~$15M Q2 impact, sequentially higher implied in 2H; mitigation actions underway; guidance assumes no further escalation beyond announced measures .

Estimates Context

  • Baker Hughes beat Street on adjusted EPS, revenue, and EBITDA for Q2 2025. Consensus EPS ~$0.555 vs actual adjusted EPS $0.63; revenue ~$6.63B vs actual $6.91B; EBITDA ~$1.12B vs actual adjusted EBITDA $1.212B . Consensus values marked with asterisks and sourced from S&P Global.
  • Given raised IET revenue/EBITDA midpoints and reestablished OFSE guidance, we expect upward revisions to IET estimates, while OFSE margins look resilient despite revenue pressure; tariff impacts are embedded in company ranges and may lead analysts to refine EBITDA/FCF conversion assumptions .

Key Takeaways for Investors

  • IET is the structural growth engine: record backlog, strong GTS/CTS traction, and accelerating data-center awards drive visibility; raised FY IET guidance confirms confidence .
  • OFSE margins resilient: 18.7% despite upstream softness; cost-out and productivity initiatives sustaining profitability; watch regional mix and transactional pricing .
  • Portfolio reshaping is a positive catalyst: monetizing non-core (PSI), JV for SPC, bolt-on CDC, and strategic pending Chart acquisition should enhance growth/margins and aftermarket penetration .
  • Tariffs are a real but manageable headwind: Q2 impact ~$15M; FY net $100–$200M; mitigation actions underway and reflected in guidance .
  • Cash returns and balance sheet flexibility: $423M returned in Q2; dividend maintained at $0.23; liquidity $6.1B and net leverage ~0.6x provide capacity for disciplined M&A and returns .
  • Near-term trading: Beat and guidance raise on IET are supportive; monitor tariff headlines, 2H LNG order timing, and any integration updates related to announced transactions .

Values with asterisk (*) retrieved from S&P Global.

References:

  • Q2 2025 press release and financials
  • Q2 2025 8-K and exhibit
  • Q2 2025 earnings call transcript
  • Q1 2025 press release for trend analysis
  • Q4 2024 8-K for prior-quarter context
  • Dividend declaration (Q2)
  • Portfolio releases (PSI sale, Equinor P&A award, Chart Industries acquisition)