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Baker Hughes Co (BKR)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025: Baker Hughes delivered broad beats versus consensus, with revenue $7.01B vs $6.83B* consensus, adjusted EPS $0.68 vs $0.622* consensus, and adjusted EBITDA $1.238B vs $1.196B* consensus; consolidated adjusted EBITDA margin expanded to 17.7% year over year .
  • IET drove the quarter: $4.1B orders, record IET RPO $32.1B, and 18.8% segment EBITDA margin; OFSE margins softened modestly (18.5%) amid mix and inflation, but North America outperformed production-related activity .
  • Guidance raised: FY25 total company adjusted EBITDA midpoint to $4.74B (from $4.675B), IET revenue to $13.05B (from $12.9B), IET EBITDA to $2.4B (from $2.35B), and IET orders midpoint to $14B; Q4 guide: total company adjusted EBITDA ~$1.255B (IET $680M, OFSE $650M) .
  • Catalysts: sustained LNG/power generation wins (Port Arthur Phase 2, Rio Grande Train 4), record SSPS orders, and Horizon 2 targets (20% company margin by 2028) plus pending Chart Industries acquisition integration planning .

What Went Well and What Went Wrong

What Went Well

  • Record IET backlog and orders momentum: IET orders $4.1B; IET RPO $32.1B (+3% q/q), supported by LNG equipment, Quorum/Cordant solutions, and power generation awards .
  • Margin progression: consolidated adjusted EBITDA margin 17.7% (+20bps YoY); IET margins up 90bps YoY to 18.8% driven by volume, pricing, FX; “strong quarter of performance” with “consistent execution and operational discipline” (Simonelli) .
  • Commercial wins in LNG/power/offshore: Sempra Port Arthur Phase 2 equipment (Frame 7 + compressors), NextDecade Rio Grande Train 4, FPSO topside power/compression award in South America, and >1GW mobile aeroderivative turbines for Dynamos .

What Went Wrong

  • Profitability headwind in OFSE: EBITDA margin 18.5% (-30bps q/q), reflecting lower volume, inflation, and business mix; net income down 13% q/q and 20% YoY .
  • Tariff/macro pressure: Management expects net tariff impact at low end of $100–$200M for FY25; Q4 commentary flagged tempered offshore/international product sales and E&P budget constraints in U.S. land .
  • Climate Technology Solutions revenue declines YoY in Q3: CTS revenue $84M (-56% YoY), weighing modestly on overall IET mix despite strength in Gas Technology .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Billions)$6.91 $6.91 $7.01
GAAP Diluted EPS ($)$0.77 $0.71 $0.61
Adjusted Diluted EPS ($)$0.67 $0.63 $0.68
Adjusted EBITDA ($USD Billions)$1.208 $1.212 $1.238
Cash Flow from Operations ($USD Billions)$1.010 $0.510 $0.929
Free Cash Flow ($USD Billions)$0.754 $0.239 $0.699
Consolidated Adjusted EBITDA Margin (%)17.5 17.5 17.7

Segment performance:

SegmentMetricQ3 2024Q2 2025Q3 2025
OFSEOrders ($USD Billions)$3.81 $3.50 $4.07
OFSERevenue ($USD Billions)$3.96 $3.62 $3.64
OFSEEBITDA ($USD Billions)$0.765 $0.677 $0.671
OFSEEBITDA Margin (%)19.3 18.7 18.5
IETOrders ($USD Billions)$2.87 $3.53 $4.14
IETRevenue ($USD Billions)$2.95 $3.29 $3.37
IETEBITDA ($USD Billions)$0.528 $0.585 $0.635
IETEBITDA Margin (%)17.9 17.8 18.8

KPIs:

KPIQ3 2024Q2 2025Q3 2025
Total Orders ($USD Billions)$6.68 $7.03 $8.21
Book-to-Bill (Total / IET)1.0 / — 1.0 / 1.1 1.2 / 1.2
RPO ($USD Billions)—$34.0 $35.3
IET RPO ($USD Billions)—$31.3 $32.1

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Company Adjusted EBITDA ($B)FY2025$4.675 $4.74 Raised
IET Revenue ($B)FY2025$12.90 $13.05 Raised
IET EBITDA ($B)FY2025$2.35 $2.40 Raised
IET Orders ($B) MidpointFY2025$13.50 $14.00 Raised
OFSE Revenue ($B)FY2025$14.20 $14.35 Raised
OFSE EBITDA ($B)FY2025$2.625 $2.62 Maintained (~flat)
Adjusted EBITDA ($B)Q4 2025—~$1.255 New
IET EBITDA ($B)Q4 2025—$0.680 New
OFSE EBITDA ($B)Q4 2025—$0.650 New
Quarterly Dividend ($/share)Q4 2025$0.23 (Q2 2025) $0.23 (pay Nov 14) Maintained

Earnings Call Themes & Trends

TopicQ1 2025 (Previous)Q2 2025 (Previous)Q3 2025 (Current)Trend
AI/Data centers power demandEntered data centers; >350 MW NovaLT booked; building CCS/power solutions with Frontier >$650M YTD data center orders; largest award (30 NovaLT); utility/behind-the-meter focus Year-to-date ~1.2 GW booked; pipeline strong; aiming to reach $1.5B earlier than plan Accelerating
LNG momentum~$1.7B LNG orders over 2 quarters; supply agreements >120 MTPA; 800 MTPA by 2030 target Expect 60 MTPA FIDs next 18 months; contracting robust (49 MTPA H1) >800M LNG awards in Q3; 84 MTPA contracts YTD; 950 MTPA by 2035 view Strong/sustained
Tariffs/macroNet tariff impact framework $100–$200M; mitigation actions underway ~$15M Q2 impact; maintaining $100–$200M FY view Low end of range; monitoring escalations; Q4 guide assumes no further escalation Manageable but dynamic
OFSE margin resilience17.8% margin (+80bps YoY) despite lower revenue 18.7% margin; cost-out driving resilience 18.5% margin with mix/inflation offsets; NA production leverage Resilient in softer cycle
Portfolio optimizationDivest JV SPC/PSI sale; CDC acquisition announced Three transactions to sharpen portfolio; ~$1B net proceeds CDC closed; Chart Industries acquisition announced; comprehensive evaluation underway Advancing/transformational
Horizon targetsIET 18% FY25, 20% FY26; company EBITDA approach low end given tariffs Focus on margin expansion, structural cost actions Horizon 2: 20% company margin by 2028; at least $40B IET orders in 3 years Upward trajectory

Management Commentary

  • “Our strong third quarter performance represents clear evidence of the consistent execution and operational discipline embedded across the organization… IET delivered another quarter of strong performance, driving consolidated Adjusted EBITDA margins higher year-over-year.” — Lorenzo Simonelli (CEO) .
  • “Adjusted EBITDA rose to $1.24 billion… IET backlog grew 3% sequentially, reaching a new record of $32.1 billion… we now expect full-year adjusted EBITDA for the total company to exceed $4.7 billion.” — Prepared remarks .
  • “We are raising the midpoint of total company adjusted EBITDA to $4.74 billion… increasing IET revenue midpoint to $13.05 billion and EBITDA to $2.4 billion; IET orders midpoint to $14 billion.” — Ahmed Moghal (CFO) .
  • “This is the age of gas, and Baker Hughes is well positioned to benefit… the Chart acquisition further expands this runway.” — Simonelli .

Q&A Highlights

  • Power and data centers: Pipeline strong and diversified across oil & gas/industrial/data centers; ~$800M Q3 power-gen orders; ~1.2 GW data center capacity YTD; NovaLT orders expected >$1B in 2025 and delivery slots well into 2028 .
  • Margin roadmap to 20%: Two levers—Business System-driven continuous improvement and AI-enabled efficiency; IET 20% margin targeted in 2026; total company 20% by 2028 (ex-Chart accretion) .
  • Capital allocation/portfolio: Comprehensive evaluation underway post Chart shareholder approval; portfolio optimization to reduce cyclical exposure and grow recurring industrial-like earnings .
  • Chart integration: 14 workstreams in place; $325M cost synergies targeted by end of year three; closing expected mid-2026 .
  • OFSE resilience: Margin decline driven by mix/inflation, offset by cost-outs; 4Q guide tempered by offshore/international product sales and U.S. land budgets; focus on margin quality over volume .

Estimates Context

How Q3 2025 results compared to Wall Street consensus and near-term outlook:

MetricQ3 2025 ConsensusQ3 2025 ActualQ4 2025 ConsensusQ1 2026 Consensus
Revenue ($USD Billions)$6.83*$7.01 $7.09*$6.45*
Adjusted/Primary EPS ($)$0.622*$0.68 $0.669*$0.548*
EBITDA ($USD Billions)$1.196*$1.238 $1.273*$1.064*
  • Q3 beats: revenue, primary/adjusted EPS, and EBITDA all exceeded consensus; management raised FY25 midpoints for total EBITDA, IET revenue/EBITDA, and IET orders .
  • Near-term: Q4 guide of ~$1.255B adjusted EBITDA sits broadly in line with consensus, with IET strength offsetting OFSE year-end product sales and U.S. land budget headwinds .

Values retrieved from S&P Global.
Asterisks (*) indicate estimates from S&P Global.

Key Takeaways for Investors

  • IET-led growth and visibility: Record IET backlog ($32.1B) and accelerating wins in LNG, power generation, and New Energy underpin FY25/FY26 revenue and margin trajectory .
  • Beat-and-raise quarter: Broad beats vs consensus and raised FY25 guidance midpoints (company EBITDA, IET revenue/EBITDA, IET orders), supporting estimate upward revisions .
  • Tariffs manageable but watch list: FY25 net tariff impact seen at low end of $100–$200M; Q4 assumptions exclude further escalation; monitor U.S.–China/commodity tariff path .
  • OFSE margin quality focus: Despite softer upstream cycle, OFSE margins remain resilient via cost-outs and pricing discipline; expect tempered 4Q product sales and U.S. land budgets .
  • Structural portfolio upgrade: CDC closed; Chart acquisition transformative for IET with $325M cost synergies and enhanced lifecycle economics in LNG/data centers/industrial gas .
  • Horizon 2 targets credible: IET 20% margin targeted in 2026; company 20% margin by 2028; strong orders ambition (≥$40B over next three years) provides long runway .
  • Trading setup: Near-term catalysts include LNG/power awards conversion, Q4 execution vs guide, and clarity on tariff environment; medium term hinges on IET margin expansion and Chart integration milestones .

Additional Relevant Press Releases (Q3 context)

  • Sempra Port Arthur LNG Phase 2 primary liquefaction equipment award (Frame 7 + compressors; ~13 MTPA); replicable expansion narrative .
  • NextDecade Rio Grande LNG Train 4 liquefaction equipment (Frame 7 + compressors; ~6 MTPA additional capacity) .
  • Petrobras subsea tree systems award (up to 50 trees) and Sakarya Phase 3 subsea/completions awards (Türkiye) — record SSPS orders driver .
  • Fervo Cape Station Phase II geothermal ORC equipment (approx. 300 MW) .
  • bp Tangguh LNG long-term services agreement (90 months) — installed base services durability .
  • Quarterly dividend declared $0.23 per share, payable Nov 14, 2025 .