Baker Hughes Co BKR

Baker Hughes delivered a strong Q4 and record full year 2025 results, with adjusted EBITDA of $1.34 billion in Q4 and $4.83 billion for the full year. Adjusted EPS rose to $0.78 in Q4, with full year adjusted EPS at $2.60, a 10% increase from 2024. Company adjusted EBITDA margins reached a record 18.1% in Q4 and 17.4% for the full year, driven by IET's 160 bps Q4 margin increase to 20%.

The Industrial & Energy Technology (IET) segment achieved record Q4 order bookings of $4 billion, leading to a record full year total of $14.9 billion, exceeding the high end of guidance. Non-LNG equipment orders represented approximately 85% of total IET orders for both 2024 and 2025, demonstrating portfolio diversity. IET's backlog reached a record $32.4 billion at year-end, with a book-to-bill ratio exceeding 1x, marking the sixth consecutive year of RPO growth.

Power systems orders increased significantly to $2.5 billion in 2025, including $1 billion tied to data center applications. The company secured a slot reservation for approximately 1 gigawatt of NovaLT capacity for data centers in Q4, expected to convert to a firm order in 2026. Baker Hughes now expects to book $3 billion in data center-related orders between 2025 and 2027, capitalizing on the growing demand for reliable, scalable power, which is projected to increase by a 12% CAGR through 2040.

New Energy orders reached a record $2 billion for the full year, well above the $1.4 billion to $1.6 billion target, with notable awards including turbomachinery for a blue ammonia project in the U.S. and continued strength in geothermal orders. In OFSE, the company saw strong customer demand in deepwater and Middle East markets, securing $3 billion in Production Solutions awards in the Middle East, including $1 billion of multiyear contracts in Q4. Subsea & Surface Pressure Systems (SSPS) had a near-record order quarter with $1.1 billion in bookings and a 1.4x book-to-bill.

Despite geopolitical uncertainty^🌐, the global macro environment remained resilient in 2025, with expectations for modestly stronger GDP growth in 2026. Long-term energy demand is rising, driven by population growth, living standards, and accelerating electrification. AI and data centers are adding a new and durable layer of energy demand, reinforcing the need for reliable power. Global natural gas demand is expected to grow approximately 20% by 2040, underpinning accelerating investment in gas and power infrastructure. LNG demand is projected to increase by at least 75% by 2040.

Baker Hughes is undergoing a comprehensive strategic evaluation, a disciplined, ongoing process designed to ensure sustainable long-term value creation. The immediate focus is on closing the Chart acquisition, expected in Q2 2026, and achieving the $325 million cost synergy target. The company aims for a net debt-to-adjusted EBITDA ratio of 1x to 1.5x within 24 months post-Chart close, supported by ongoing free cash flow generation and $1 billion from portfolio management initiatives.

In 2025, the company returned $1.3 billion to shareholders in dividends and share repurchases. Recent strategic transactions, including the sale of the Precision Sensors & Instrumentation (PSI) business and the formation of the Surface Pressure Control (SPC) joint venture with Cactus, generated approximately $1.5 billion in gross cash proceeds. These actions reflect a disciplined approach to portfolio management and commitment to maximizing long-term value creation.