Strong Adjusted EBITDA and Margin Expansion
Adjusted EBITDA of $1.16 billion, exceeding guidance; adjusted EBITDA increased ~12% year-over-year and adjusted EBITDA margin rose 140 basis points YoY to 17.6%.
Baker Hughes Company
· BKR
April 23rd, 2026
Summary
- Earnings Call Date:
- 2026-04-23
- Change Since:
- -12.29%
- Next Earnings Date:
- 2026-07-26
Earnings Call Sentiment
PositiveThe call was broadly positive: management reported record IET orders, strong margin expansion (notably in IET), robust backlog/RPO and a strengthened balance sheet while executing portfolio actions and strategic partnerships. However, meaningful near-term headwinds persist—primarily from the Middle East conflict—which pressure OFSE revenue and create macro uncertainty. Management maintained full-year guidance ranges (with expectations slightly below midpoint), provided constructive Q2 segmentation, and emphasized progress on integration and divestitures. Overall, the positives (record orders, margin expansion, balance sheet strength, and portfolio momentum) materially outweigh the near-term geopolitical and transactional headwinds.
Company Guidance
Management guided Q2 revenue of $6.5 billion and adjusted EBITDA of $1.13 billion (assumes Middle East disruption through end‑June and Strait of Hormuz reopening thereafter), with IET EBITDA expected at about $670 million and OFSE EBITDA about $540 million (OFSE revenue ~ $3.2 billion); for the full year they maintained company revenue and adjusted EBITDA ranges but expect results slightly below the midpoint, reaffirmed at least the $14.5 billion midpoint for full‑year IET orders and the $2.7 billion midpoint for IET EBITDA, and noted OFSE may only reach the low end of its EBITDA range (~$2.325 billion) if the conflict resolves by end‑June; additional metrics cited in the call include Q1 adjusted EBITDA $1.16 billion, Q1 adjusted EPS $0.58 (ex‑items), Q1 free cash flow $210 million, Q1 IET bookings $4.9 billion and RPO $33.1 billion, net debt/adjusted EBITDA 0.32x, cash $14.8 billion, liquidity $17.8 billion, targeted Chart integration cost synergies of $325 million, and expected ~ $3 billion gross proceeds from 2026 portfolio actions.
Adjusted EPS Growth
Adjusted earnings per share of $0.58, up 13% year-over-year (GAAP diluted EPS $0.93; $0.35 of adjusting items excluded).
Record IET Orders and Backlog
IET bookings reached a record $4.9 billion (third consecutive quarter > $4B); book-to-bill 1.5x; record Remaining Performance Obligation (RPO) of $33.1 billion (5th consecutive quarter milestone). Excluding transactions, RPO +3% sequential and +10% YoY.
IET Margin and EBITDA Outperformance
IET EBITDA increased 35% YoY to $678 million; IET EBITDA margin expanded 310 basis points to 20.2%; IET revenue $3.35 billion, +14% YoY.
Robust Order and Booking Momentum Across Key Businesses
Total company orders $8.2 billion in Q1. Power Systems orders of $1.4 billion; LNG equipment orders $1.2 billion; new energy bookings $1.4 billion supporting 2026 target of $2.4–2.6 billion.
Notable Commercial Wins and Strategic Partnerships
Major awards include: NovaLT16 gas turbine/data center integrated solution (1 GW), 25 BRUSH generators for Boom Supersonic (1.21 GW), Hitachi Energy synchronous condensers (Australia), Hydrostor CAES engineering (up to 1.4 GW potential equipment), Qatar Energy 2 mega trains (16 MTPA) and multi-year downstream agreement with Marathon across 12 refineries and 2 renewable fuels facilities.
Digital Momentum and Aftermarket Strength
Cordant power-related orders doubled YoY; Cordant power momentum follows >80% YoY power order growth in 2025. Lucida/Leucipa digital deployments continue (technologies active on ~75,000 wells).
Solid Balance Sheet and Capital Actions
Net debt to adjusted EBITDA ratio improved to 0.32x; cash $14.8 billion and liquidity $17.8 billion following debt offering (raised $6.5B U.S. bonds and EUR 3B European bonds). Expect ~ $3 billion gross proceeds from 2026 portfolio actions (Waygate divestiture, PSI sale and SPC JV) and $1.6 billion from HMH IPO / Waygate sale.
Free Cash Flow and Cash Generation
Generated $210 million of free cash flow in Q1 despite Q1 seasonality and some customer payment delays; company targeting net-debt/EBITDA reduction to 1–1.5x within 24 months after Chart close.
Confident Outlook for IET and Horizon 2 Targets
Management expects IET order pipeline momentum to potentially exceed the $40 billion Horizon 2 target and expects to achieve at least the midpoint ($14.5 billion) of full-year IET order guidance and at least the midpoint of full-year IET EBITDA guidance ($2.7 billion).
Operator
Good day, ladies and gentlemen, and welcome to the Baker Hughes Company First Quarter 2026 Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's call, Mr. Chase Mulvehill, Vice President of Investor Relations. Sir, you may begin.
Chase Mulvehill
Thank you. Good morning, everyone, and welcome to the Baker Hughes First Quarter Earnings Conference Call. Here with me are our Chairman and CEO, Lorenzo Simonelli; and our CFO, Ahmed Moghal. The earnings release we issued yesterday evening can be found on our website at bakerhughes.com. We will also be using a presentation with our prepared remarks during this webcast, which can be found on our investor website. As a reminder, we will provide forward-looking statements during this conference call. These statements are not guarantees of future performance and involve a number of risks and assumptions. Please review our SEC filings and website for the factors that could cause actual results to differ materially.
Reconciliation of adjusted EBITDA and certain GAAP to non-GAAP measures can be found in our earnings release and presentation available on our investor website. With that, I'll turn the call over to Lorenzo.
Lorenzo Simonelli
Thank you, Chase. Good morning, everyone, and thanks for joining us. First, I'd like to provide a quick outline for today's call. I will begin with a summary of our first quarter results and recent portfolio actions, then highlight key awards and address the evolving macro environment, including the ongoing situation in the Middle East. I will then...
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