Baker Hughes Company Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Strong Results: Adjusted EBITDA for Q4 was $1.34B, full year adjusted EBITDA was $4.83B. Adjusted EPS rose to $0.78 for Q4 and $2.60 for the full year.
• Power Systems Portfolio: Orders in power systems increased to $2.5B in 2025, including $1B tied to data center applications. NovaLT industrial gas turbines booked ~2GW of orders. Secured a large slot reservation agreement for ~1GW of NovaLT capacity for data centers and a contract to supply over 40 BRUSH generators for gas-fired utility-scale power plants.
• LNG and New Energy: LNG equipment orders in 2025 were $2.3B, with similar levels expected in 2026. New Energy orders reached a record $2B in 2025, with a target of $2.4B-$2.6B in 2026.
• Macro Environment: Global macro environment resilient, with modestly stronger GDP growth expected in 2026. Energy demand continues to rise, driven by population growth, electrification, and data centers.
• Chart Integration: Progress on Chart integration planning, with expected close in Q2 2026, and aim to achieve net debt-to-adjusted EBITDA ratio of 1 to 1.5x within 24 months post-close.

Segment Performance

• IET (Industrial & Energy Technology): In Q4, IET delivered strong order bookings of $4B, contributing to a record full year total of $14.9B, exceeding guidance. Adjusted EBITDA for Q4 was strong, and full year adjusted EBITDA was $4.83B. For 2026, IET orders are projected to be $13.5 billion to $15.5 billion, with margins expected to continue expanding, targeting 20% margin. Non-LNG equipment orders represented ~85% of total IET orders in 2025.
• OFSE (Oilfield Services & Equipment): Revenue declined 8% for the full year due to macro-driven softness. However, margins remained resilient at 18.3%. In Q4, OFSE revenue was $3.57B, with EBITDA of $647M. For 2026, OFSE revenue is expected to be slightly lower year-over-year but flat on an organic basis, with margins expected to be relatively flat.

Guidance

• 2026 Outlook:
  • IET orders projected to be $13.5 billion to $15.5 billion, flat on an organic basis, with strong growth in power systems and LNG.
  • OFSE revenue expected to be slightly lower year-over-year but flat on an organic basis, with margins relatively flat.
  • First quarter 2026 guidance: Total company revenues $6.4B, adjusted EBITDA $1.06B; IET EBITDA expected to grow strongly, led by Gas Technology; OFSE EBITDA expected at $540M.
• Long-Term: Aim to achieve 20% company adjusted EBITDA margin by 2028 through structural margin improvements and portfolio optimization.

Risks

• Geopolitical and Trade Uncertainty: Ongoing geopolitical and trade-related uncertainties that could impact business operations and demand.
• Macro-Driven Softness in OFSE: Continued macro-driven softness in Oilfield Services & Equipment could affect revenue and margins.
• Tariff-Related Costs: Unfavorable tariff-related costs and pricing variability across markets could impact margins.

Question and Answer

Q: Arun Jayaram from JPMorgan Chase asked about enhancing power systems capabilities.

A: Lorenzo Simonelli responded that Baker Hughes is in a global power demand multiyear growth cycle. Power systems orders were $2.5B in 2025, with $1B tied to data centers. There's a large addressable market across power generation, grid stability, and energy management, with initiatives like NovaLT gas turbines, BRUSH generators, and pending Chart acquisition to strengthen the portfolio.

Q: Scott Gruber from Citigroup inquired about IET order guide for 2026.

A: Lorenzo Simonelli said 2026 IET orders are expected to be $13.5B-$15.5B, driven by power systems, gas infrastructure, and New Energy. Non-LNG equipment orders have grown 20% CAGR since 2023, and there's potential for upside in the power vertical.

Q: Saurabh Pant from Bank of America asked about margins.

A: Ahmed Moghal explained IET margins aim for 20% in 2026 due to backlog conversion, Gas Tech Services growth, and Cordant's contribution. OFSE margins are resilient despite headwinds, with cost actions and structural changes offsetting challenges.

Q: James West from Melius Research asked about strategic evaluation.

A: Lorenzo Simonelli stated the comprehensive evaluation is ongoing to create sustainable value, focusing on Chart acquisition integration, operational performance, and portfolio optimization.

Q: Marc Bianchi from TD Cowen asked about Venezuela opportunity.

A: Lorenzo Simonelli mentioned Venezuela has production potential, with Baker Hughes having a historical presence and significant infrastructure, expecting investment in well integrity, power generation, and equipment upgrades.

Q: David Anderson from Barclays asked about NovaLT capacity.

A: Ahmed Moghal responded that Nova capacity is on track to double by H1 2027, with slots full through 2028, and capacity expansion will support demand from multiple end markets.