Baker Hughes Q1 FY26 earnings call BKR

IET delivered record bookings of $4.9 billion, its third consecutive quarter above $4 billion, with a 1.5x book-to-bill lifting RPO to a record $33.1 billion (fifth straight record quarter; +10% YoY ex-transactions). IET revenue rose 14% YoY to $3.35 billion and EBITDA jumped 35% YoY to $678 million, with margins expanding 310bps to 20.2% on favorable backlog pricing, elevated project closeout, productivity and the Baker Hughes Business System. Trailing four-quarter IET orders reached $16.6 billion, up 25% versus the prior four quarters.

The Middle East conflict and effective closure of the Strait of Hormuz took ~10% of global oil volumes and 20% of worldwide LNG capacity offline, tightening balances and driving price volatility. Management now sees 2026 global upstream spending modestly below its prior low-single-digit decline outlook, driven entirely by reduced Middle East activity, with North America and international ex-Middle East broadly flat. OFSE Q1 revenue was hit ~2% versus Q4 by March disruptions, with a >20% sequential Middle East decline expected in Q2. Guidance assumes conflict resolution by midyear and a full Hormuz reopening thereafter.

Power Systems secured $1.4 billion of orders (~30% of IET orders) across power generation, grid stability and energy management. Management framed a multiyear power demand cycle — demand projected to double by 2040 — with the behind-the-meter market reaching $60 billion by 2030 and a total annual opportunity exceeding $100 billion. Baker Hughes is sold out of NovaLT turbines through 2028 and is doubling capacity, while adding BRUSH generator and synchronous condenser capacity. Cordant power-related digital orders doubled YoY, continuing 80%+ growth from 2025.

Baker Hughes announced the Waygate Technologies divestiture to Hexagon and completed the SPC JV (Cactus) and PSI sale (Crane) in January; with the HMH IPO, it expects ~$1.6 billion of gross proceeds and to exceed its $1 billion incremental divestment target ahead of schedule, totaling ~$3 billion of 2026 gross proceeds. Chart integration planning is advancing via 17 work streams and 250+ identified synergy opportunities toward $325 million of targeted cost synergies, with closing expected in Q2 pending regulatory reviews.

Net debt to adjusted EBITDA declined to 0.32x. Following a March debt offering that raised $6.5 billion in U.S. bonds and EUR 3 billion in European bonds (its inaugural European offering), cash increased to $14.8 billion and liquidity to $17.8 billion, with proceeds earmarked to fund the Chart acquisition. Free cash flow was $210 million, the seasonally weakest quarter, further affected by delays in customer payments. The post-Chart leverage target is 1.0x-1.5x within 24 months.

OFSE revenue was $3.24 billion, down 9% sequentially (SPC deconsolidation contributed 4 points), while EBITDA of $565 million beat the guidance midpoint; margin declined 70bps sequentially to 17.4% on the SPC transaction, seasonality and Middle East disruption, partly offset by North America OFS margin improvement, FX and a favorable direct-sales offshore mix. SSPS orders reached $650 million, up 22% YoY (+82% ex-SPC). Awards spanned Petrobras (91km flexible pipe; workover/P&A extension), Turkish Petroleum subsea, YPF Vaca Muerta, and a first integrated project in Sub-Saharan Africa with Gulf Energy (43 wells in Kenya).