Baker Hughes NASDAQ: BKR reported first-quarter 2026 results that management said overcame significant disruption tied to the ongoing conflict in the Middle East, driven by record order activity and margin expansion in its Industrial & Energy Technology (IET) segment.
First-quarter results exceeded guidance as IET orders hit a record
Chairman and CEO Lorenzo Simonelli said the company’s “top priority remains the safety and well-being of our employees and their families” in the Middle East, while noting that Baker Hughes “delivered another strong quarter of financial results” despite a “complex operating environment.”
On the quarter, adjusted EBITDA totaled $1.16 billion, which Simonelli said exceeded the company’s guidance range. Adjusted earnings per share were $0.58, up 13% year over year, with results affected by the Middle East conflict, the PSI divestiture, and the formation of the SPC joint venture. Adjusted EBITDA margin rose 140 basis points year over year to 17.6%, aided by strong IET performance and partly offset by lower Oilfield Services & Equipment (OFSE) margin.
CFO Ahmed Moghal added that total company orders were $8.2 billion, including record IET bookings of $4.9 billion. He reported GAAP diluted EPS of $0.93, and said the quarter included $0.35 of adjusting items. Free cash flow was $210 million; Moghal noted the first quarter is typically the weakest for free cash flow due to seasonality and that the period also saw some delays in customer payments.
In IET, Moghal said revenue was $3.35 billion, up 14% year over year and at the high end of guidance, while segment EBITDA increased 35% to $678 million and margin expanded 310 basis points to 20.2%. He attributed margin strength to “favorable backlog pricing, elevated project closeout and productivity, and ongoing execution of the Baker Hughes business system.”
Simonelli highlighted IET’s book-to-bill of 1.5x and record remaining performance obligations (RPO) of $33.1 billion, which he said marked the fifth consecutive quarter at a record level. Excluding transactions, he said RPO rose 3% sequentially and 10% year over year.
Power Systems, LNG, and new energy awards featured prominently in the quarter
Management detailed multiple awards across IET’s Power Systems, LNG, Gas Infrastructure, and energy management offerings. In Power Systems, Simonelli said the company converted a prior slot reservation agreement into an integrated solution award for a critical infrastructure project in North America that includes NovaLT16 gas turbines, BRUSH Power Generation generators, gears, and long-term aftermarket services to deliver up to 1 GW of power for growing data center demand.
Simonelli also cited a contract to provide 25 BRUSH generators to Boom Supersonic, which he said is expected to deliver 1.21 GW of generator capacity for data centers when paired with Boom’s gas turbines. In grid stability, he noted a contract with Hitachi Energy to provide four synchronous condensers for two substations in Australia.
In energy management, Simonelli said Baker Hughes received a second contract for engineering and design work on Hydrostor’s advanced compressed air energy storage system in the U.S., describing the collaboration as including “up to 1.4 GW of potential equipment orders.” He also announced a collaboration with Google Cloud to develop AI-enabled power optimization and sustainability solutions for data center applications.
In Gas Infrastructure, Simonelli said Baker Hughes secured an order for an electric motor-driven compression solution supporting offshore operations in the Middle East and will deliver gas compression units for Argentina’s San Matias Pipeline, including three NovaLT gas turbines—its “first NovaLT deployment in South America.”
In LNG, Simonelli said Baker Hughes booked $1.2 billion of equipment orders, including a QatarEnergy award for two mega trains on the North Field West project. He also pointed to a strategic agreement with ST LNG for its proposed 8.4 MTPA LNG export terminal offshore Texas and a five-year aftermarket service agreement with Petrobras covering up to 64 aeroderivative gas turbines across 19 FPSOs.
Simonelli said the company secured $1.4 billion in new energy orders in the quarter, including a QatarEnergy LNG award tied to a carbon capture facility designed to capture and transport 4.1 million tons of CO2 annually. He reiterated confidence in achieving the company’s 2026 new energy orders target of $2.4 billion to $2.6 billion.
OFSE results showed resilience amid Middle East disruption
Moghal said OFSE revenue was $3.24 billion, a 9% sequential decline but slightly above the midpoint of guidance. He explained that the SPC business was excluded following the joint venture with Cactus in early January, contributing 4% to the sequential decline. He added that Middle East disruptions in March impacted OFSE revenue by about 2% compared with the fourth quarter of 2025, while stronger performance in Mexico, Sub-Saharan Africa, and the Gulf of America helped offset the disruption.
OFSE segment EBITDA was $565 million, above the midpoint of guidance, while margin declined 70 basis points sequentially to 17.4%. Moghal cited the SPC transaction, seasonality, and Middle East disruption as key drivers, partially offset by improved North America OFS margins. He also noted that Subsea & Surface Pressure Systems (SSPS) orders totaled $650 million, up 22% year over year.
Middle East conflict reshaped the near-term outlook and reinforced “energy security” themes
Simonelli said the Middle East conflict has introduced “a meaningful new layer of macro uncertainty,” with disruptions across critical corridors such as the Strait of Hormuz tightening global oil and LNG balances. He said the conflict has impacted “over 10% of global oil volumes” and stated that “20% of worldwide LNG capacity [is] now offline,” contributing to price volatility.
Looking to 2026 upstream spending, Simonelli said Baker Hughes now expects global upstream spending to be modestly below its prior outlook of low single-digit declines versus 2025, “driven entirely by a significant reduction in Middle East activity.” He said this is expected to be partially mitigated by more resilient spending in other regions, with North America and international markets outside the Middle East now expected to be broadly flat year over year. That outlook assumes a resolution of the conflict by mid-year and full reopening of the Strait of Hormuz, while acknowledging conditions remain fluid.
In response to an analyst question, Simonelli said the conflict is likely to accelerate structural change, with “energy security” becoming a more foundational priority, driving more diversified energy supply, increased upstream investment, rebuilding inventories, and continued investment in lower-carbon solutions such as geothermal, nuclear, and grid modernization. He said Baker Hughes is “uniquely positioned” across the energy value chain and reiterated confidence in the opportunity to exceed the company’s $40 billion IET order target by the end of Horizon 2 in 2028.
Chart acquisition timeline, portfolio actions, and guidance
Moghal said Baker Hughes expects gross proceeds of approximately $3 billion in 2026 from portfolio actions including the sale of PSI to Crane, the SPC joint venture, and the announced divestiture of Waygate Technologies. He also said the company anticipates generating $1.6 billion in gross proceeds from the IPO of HMH and the sale of Waygate to Hexagon, which he said would allow Baker Hughes to achieve its $1 billion incremental divestment target ahead of schedule.
On the pending Chart transaction, Moghal said regulatory reviews remain underway in certain jurisdictions and the company expects closing in the second quarter, while noting timing could evolve. He said an integration management office led by Jim Apostolides is organized into 17 operational workstreams and has identified more than 250 synergy opportunities, with the company maintaining confidence in achieving $325 million in targeted cost synergies.
For the second quarter, Moghal guided to company revenue of $6.5 billion and adjusted EBITDA of $1.13 billion, assuming the Middle East situation continues through the end of June without further escalation and that the Strait of Hormuz fully reopens thereafter. Segment expectations at the midpoint included IET EBITDA of $670 million and OFSE EBITDA of $540 million on OFSE revenue of $3.2 billion.
For full-year 2026, Moghal said the company is maintaining its revenue and adjusted EBITDA guidance ranges, with results expected to be “slightly below the midpoint” given ongoing uncertainty. He said Baker Hughes believes it can achieve “at least the $14.5 billion midpoint” of full-year IET order guidance and “at least the midpoint” of full-year IET EBITDA guidance of $2.7 billion. For OFSE, Moghal said uncertainty around the Middle East could pressure the ability to reach the midpoint of the original guidance, but if the conflict concludes by the end of June without significant escalation and the Strait of Hormuz is fully operational in the second half, Baker Hughes anticipates it can reach the low end of its OFSE EBITDA guidance range of $2.325 billion.
In the Q&A, Simonelli also addressed demand and capacity in Power Systems, saying the company is “effectively sold out of NovaLTs through 2028.” He said Baker Hughes will evaluate opportunities with a focus on long-term partnerships, financing, and offtake arrangements, while monitoring conditions to determine whether to expand beyond its current doubling plan. He added the company has added capacity to BRUSH product lines, inaugurated an aftermarket NovaLT facility in Italy, and is assessing capacity needs across the broader portfolio.
About Baker Hughes NASDAQ: BKR
Baker Hughes is an energy technology company that provides a broad portfolio of products, services and digital solutions for the oil and gas and industrial markets. Its offerings span oilfield services and equipment — including drilling, evaluation, completion and production technologies — as well as turbomachinery, compressors and related process equipment used in midstream and downstream operations. The company also supplies aftermarket services, field support and integrated solutions designed to improve asset performance and uptime across the energy value chain.
The firm's roots trace back to the merger of Baker International and Hughes Tool Company, and more recently it combined with GE's oil and gas business in 2017 to form Baker Hughes, a GE company (BHGE); subsequent changes in ownership restored Baker Hughes as an independent publicly traded company.
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