Baker Hughes (BKR) Q3 2026: IET Orders Hit Record, Backlog Conversion Slows

Baker Hughes (BKR) third-quarter 2026 earnings showed record IET orders and a raised full-year order outlook, but the company also disclosed that its backlog will take longer to turn into revenue. Baker Hughes released results for the quarter ended September 30, 2026 in an 8-K press release on October 27, 2026, and all three segments met or beat company guidance [1][2][3]. Earlier analysis focused on three questions: when IET's record orders would become revenue, whether OFSE could recover under Middle East pressure, and whether Chart could hold its margin in its first consolidated quarter while the company kept generating cash. This quarter IET orders far exceeded plan but conversion stretched out, OFSE beat guidance and Chart was in line [1][2]. Overall, orders and cash were stronger than expected, but faster growth has moved out to 2028, and leverage remained 2.5x at quarter end [2].

Baker Hughes is an energy technology company shifting from oilfield services toward gas equipment. IET sells gas turbines and compressors to LNG, gas and power generation customers, recognizes equipment revenue at project milestones and provides long-term service [4]. OFSE provides drilling, completion and production services to oil and gas companies [5]. Chart, consolidated from July 16, supplies cryogenic and thermal management equipment and is reported as a separate third segment [1][2].

IET order guidance rises while backlog conversion lengthens

IET third-quarter orders came in well above the earlier plan. Orders were $5.886 billion, up 42% year over year. Full-year order guidance rose from $17.5-19.5 billion to $21.5-23.5 billion, and remaining performance obligations (RPO, contracted work not yet delivered) reached a record $39.4 billion [1][2][6].

Revenue beat guidance, but equipment revenue is still falling. IET revenue was $3.477 billion, above guidance of about $3.32 billion and up 3% year over year. Gas Technology Equipment (GTE) revenue was $1.576 billion, down 7% year over year, which management attributed to unfavorable mix and Middle East disruption [1][2][6].

The company quantified the longer conversion profile. At the end of September, only 33% of combined GTE and Climate Technology Solutions backlog was scheduled to convert in 2027, compared with 46% on the same basis a year earlier for the following year. The company expects IET organic revenue growth in the low-to-mid single digits in 2027 [2]. The new orders mainly support revenue after 2028.

IET margin improved year over year but came in slightly below the guidance midpoint. EBITDA was $685 million and the margin was 19.7%, up 0.9 percentage points year over year but below the roughly 19.9% guidance midpoint; management attributed the gap to project timing and inflation [1][2][6]. The company guides fourth-quarter IET revenue of $3.55 billion and EBITDA of $715 million, with margin improving sequentially [2].

OFSE revenue and margin beat guidance

OFSE revenue and margin rose together in the third quarter. Revenue was $3.660 billion, up 6% sequentially. EBITDA was $659 million and the margin was 18.1%, all above guidance of about $3.55 billion, $625 million and 17.6% [1][6]. Europe/CIS/Sub-Saharan Africa revenue rose 35% sequentially, and the CFO said OFS Middle East revenue rose 17% sequentially [1][2].

Only part of this recovery is likely to carry forward, and the margin was still 0.4 percentage points lower year over year [1]. The company expects Middle East and North America activity to decline in the fourth quarter, with OFSE EBITDA of about $640 million [2].

Chart's first quarter meets guidance and cash conversion guidance rises

Chart's first quarter was consistent with the guidance the company gave in September. From July 16, Chart revenue was $888 million, the margin was 17.6% and RPO was $3.6 billion [1][7]. Cost synergy actions worth about $70 million annualized have been executed, but only $3 million was realized in the third quarter; the company targets a Chart margin of 22-23% by the second half of 2028 [2].

Company cash was better than earlier guidance. Third-quarter free cash flow was $769 million after absorbing about $200 million of one-time acquisition costs [1][2]. The company raised full-year free cash flow conversion guidance from 40-45% to 45-50% [2][7]. On that basis, fourth-quarter free cash flow would be about $280-550 million, which suggests some advance payments may reverse.

Debt is the main constraint. Net debt was about $14.2 billion at the end of September, and third-quarter net interest expense was $177 million [1][3]. The company plans to start repaying debt in the fourth quarter with cash and about $1.45 billion of proceeds from the Waygate sale, and it maintains its target of net leverage below 1.5x by the second half of 2028 [2][8].

Conclusion

The third-quarter results strengthen the case on orders and cash, but the timing of growth has moved later. The adjusted EBITDA margin of 17.6% was flat with the prior year, as IET improvement offset the OFSE decline and Chart dilution [1][2]. The company expects 2027 revenue growth in the low-to-mid single digits for both IET and Chart [2]. The next quarter tests whether IET margin can return above 20%, whether OFSE can hold profit as Middle East activity falls, and whether net debt declines. Middle East conditions remain the main uncertainty.

Sources

[1] BKR 8-K filed 2026-10-27 · 3Q26 earnings release (Ex. 99.1), 2026-10-27, 8-K press release, https://www.sec.gov/Archives/edgar/data/1701605/000170160526000033/earningsreleaseex991093020.htm [2] BKR 3Q26 earnings call 2026-10-28, 2026-10-28, earnings call, drillr://earning_call_summary/BKR/2026-10-28 [3] BKR 10-Q filed 2026-10-28 · MD&A 3Q26, 2026-10-28, 10-Q quarterly report, https://www.sec.gov/Archives/edgar/data/1701605/000170160526000035/bkr-20260930.htm [4] BKR 10-K filed 2026-02-05 · IET Gas Technology Equipment portfolio and long-term service agreements, 2026-02-05, 10-K annual report, https://www.sec.gov/Archives/edgar/data/1701605/000170160526000007/ [5] BKR 10-K filed 2026-02-05 · OFSE customers, contracts and competitors, 2026-02-05, 10-K annual report, https://www.sec.gov/Archives/edgar/data/1701605/000170160526000007/ [6] BKR 2Q26 earnings call 2026-07-27 · Drillr structured summary of guidance, 2026-07-27, earnings call, https://investors.bakerhughes.com/ [7] BKR 8-K filed 2026-09-09 · updated FY26 guidance including Chart, 2026-09-09, 8-K, https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001701605&type=8-K&dateb=&owner=include&count=40 [8] BKR 10-Q filed 2026-10-28 · Note 21 dispositions and held for sale, 2026-10-28, 10-Q quarterly report, https://www.sec.gov/Archives/edgar/data/1701605/000170160526000035/bkr-20260930.htm