Core Viewpoint - Baker Hughes has announced a definitive agreement to acquire Chart Industries for $210 per share, totaling an enterprise value of $13.6 billion, marking a significant strategic move in the energy and industrial technology sector [1][9]. Company Overview - Chart Industries is a global leader in designing, engineering, and manufacturing process technologies for gas and liquid molecule handling, generating $4.2 billion in revenue and $1.0 billion in adjusted EBITDA in 2024 [2]. - The company operates 65 manufacturing locations and over 50 service centers worldwide, providing a comprehensive portfolio that spans the entire liquid gas supply chain [2]. Strategic Rationale - The acquisition is seen as a milestone for Baker Hughes, enhancing its position as a leading energy and industrial technology company, with complementary products and services that align with the growing demand for lower-carbon energy solutions [3][7]. - The combination is expected to deepen Baker Hughes' exposure to high-growth markets such as LNG, data centers, and New Energy, significantly increasing its addressable market [7][8]. Financial Impact - The transaction is projected to deliver strong earnings accretion and returns, with an expected $325 million in annualized cost synergies by the end of the third year [6][14]. - Baker Hughes anticipates immediate accretion to growth, margins, and cash flow, with double-digit EPS accretion in the first full year post-transaction [14]. Transaction Details - Chart shareholders will receive $210 per share in cash, representing a purchase price that equates to approximately 9 times Chart's consensus 2025 EBITDA on a fully synergized basis [9]. - Baker Hughes has secured bridge debt financing to fund the transaction, with plans to maintain its A credit rating and reduce net leverage from 2.25x at close to a target of 1.0-1.5x within 24 months [10]. Approval Process - The Boards of Directors of both companies have unanimously approved the transaction, which is subject to customary conditions, including shareholder approval from Chart and regulatory approvals [11].

Core Insights - Baker Hughes reported revenue of $6.91 billion for the quarter ended June 2025, a decrease of 3.2% year-over-year, while EPS increased to $0.63 from $0.57 in the same quarter last year [1] - The revenue exceeded the Zacks Consensus Estimate of $6.63 billion by 4.17%, and the EPS surpassed the consensus estimate of $0.55 by 14.55% [1] Financial Performance Metrics - Total orders reached $7.03 billion, exceeding the three-analyst average estimate of $6.8 billion [4] - Orders in Industrial & Energy Technology amounted to $3.53 billion, surpassing the four-analyst average estimate of $3.26 billion [4] - Revenue from Oilfield Services & Equipment was $3.62 billion, compared to the $3.5 billion average estimate, reflecting a year-over-year decline of 9.8% [4] - Revenue from Industrial & Energy Technology was $3.29 billion, exceeding the $3.13 billion average estimate, with a year-over-year increase of 5.3% [4] Regional Performance - Revenue from Oilfield Services & Equipment in North America was $928 million, above the three-analyst average estimate of $881.16 million, representing a year-over-year decline of 9.3% [4] - International revenue from Oilfield Services & Equipment in Europe/CIS/Sub-Saharan Africa was $653 million, exceeding the $593.13 million average estimate, with a year-over-year decline of 21% [4] - Revenue from Oilfield Services & Equipment in the Middle East/Asia was $1.4 billion, slightly below the $1.46 billion estimate, reflecting a year-over-year decline of 6.7% [4] Stock Performance - Baker Hughes shares have returned +21% over the past month, significantly outperforming the Zacks S&P 500 composite's +4.9% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Core Viewpoint - Baker Hughes is positioning itself to benefit from the increasing interconnection between energy infrastructure, digital automation, and defense spending, particularly in areas like unmanned systems and energy resilience [1][5]. Group 1: Company Overview - Baker Hughes is primarily known for providing energy and oilfield services, making its earnings sensitive to oil and natural gas prices [2]. - The company is transforming into a technology-driven industrial player, focusing on digital infrastructure, industrial AI, and process optimization [3][9]. Group 2: Financial Performance - Baker Hughes reported revenue of $6.8 billion, with a 130-basis-point increase in operating margin, indicating strong financial performance [8]. - The Industrial & Energy Technology (IET) segment generated $2.8 billion in revenue, growing 13% year over year, driven by demand for electrification and automation tools [13]. Group 3: Market Position and Strategy - The U.S. defense budget for fiscal 2025 is projected to exceed $900 billion, with significant allocations towards unmanned systems and energy resilience, creating potential opportunities for Baker Hughes [4][5]. - Baker Hughes is pivoting towards technologies that support electrification and energy efficiency, which aligns with the U.S. Department of Defense's increasing focus on tech-forward industrial partners [10]. Group 4: Stock Performance and Valuation - Baker Hughes stock has seen a year-to-date increase of approximately 6.8%, with a notable jump of over 9.5% following its second-quarter earnings report [6]. - The stock is currently trading at a forward P/E ratio of 16.8x, which is reasonable relative to the sector average, and the company has approved a $3 billion share repurchase authorization [16].

Shares of Baker Hughes ( BKR ) have been a solid performer over the past year, gaining 31%. These gains intensified Wednesday, with Baker adding about 10% thanks to extremely strong quarterly results and commentary. Baker Hughes continues to beOver fifteen years of experience making contrarian bets based on my macro view and stock-specific turnaround stories to garner outsized returns with a favorable risk/reward profile. If you want me to cover a specific stock or have a question for an article, just let m ...

Investment Rating - The report maintains an "Outperform" rating for Baker Hughes, indicating an expected total return exceeding the relevant market benchmark over the next 12-18 months [12]. Core Insights - Baker Hughes is expected to receive positive market feedback for its Q2 2025 performance, with adjusted EBITDA reported at $1.212 billion, surpassing consensus estimates [1][2]. - The company plans to raise its full-year revenue and adjusted EBITDA guidance for its Industrial Energy and Technology segment, while also revising guidance for its Oilfield Services and Equipment segment [1][2]. - The strong performance in Q2 2025 is attributed to productivity improvements, structural cost reductions, and sales growth across both business segments [2][3]. Summary by Sections Financial Performance - Adjusted EBITDA for Q2 2025 was $1.212 billion, exceeding the consensus of $1.123 billion by nearly 10% [2]. - Revenue for the quarter was $6.910 billion, slightly above consensus, driven by growth in both business segments [2]. - The EBITDA margin improved to 18% in Q2 2025 from 16.1% in Q1 2025 [2][5]. Oilfield Services and Equipment - Revenue for this segment reached $3.617 billion, exceeding consensus expectations [2]. - Adjusted EBITDA for the segment was also above consensus, benefiting from productivity gains and cost-cutting measures [2]. - The full-year guidance for this segment is set at $14.5 billion to $15.5 billion in revenue, with adjusted EBITDA between $2.85 billion and $3.15 billion [2]. Industrial and Energy Technology - This segment reported revenue of $3.293 billion, surpassing expectations, with an EBITDA margin of 18% [3]. - The strong performance is attributed to favorable pricing, beneficial foreign exchange rates, and productivity, although partially offset by rising costs [3]. - The full-year guidance for this segment is revenue between $12.4 billion and $13.1 billion, with adjusted EBITDA of $2.2 billion to $2.4 billion [3].

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This part provides the unaudited condensed consolidated financial statements and management's discussion and analysis of the company's financial condition and results of operations [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements of Baker Hughes Company, including statements of income (loss), comprehensive income (loss), financial position, changes in equity, and cash flows, along with detailed notes explaining significant accounting policies, financial instruments, segment information, and recent business activities [Condensed Consolidated Statements of Income (Loss)](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(Loss)%20(Unaudited)%20-%20Three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024) For Q2 2025, total revenue decreased by $229 million YoY to $6,910 million, while net income attributable to Baker Hughes Company increased by $122 million YoY to $701 million. For the six months ended June 30, 2025, total revenue decreased by $220 million YoY to $13,337 million, and net income attributable to Baker Hughes Company increased by $69 million YoY to $1,103 million. Basic and diluted EPS also increased for both periods **Three Months Ended June 30, 2025 vs. 2024:** | Metric | 2025 (Millions) | 2024 (Millions) | Change (Millions) | % Change | | :--------------------------------- | :-------------- | :-------------- | :---------------- | :------- | | Total Revenue | $6,910 | $7,139 | $(229) | (3.2)% | | Net Income Attributable to BKR | $701 | $579 | $122 | 21.1% | | Basic EPS | $0.71 | $0.58 | $0.13 | 22.4% | | Diluted EPS | $0.71 | $0.58 | $0.13 | 22.4% | | Cash Dividend per Class A Common Stock | $0.23 | $0.21 | $0.02 | 9.5% | **Six Months Ended June 30, 2025 vs. 2024:** | Metric | 2025 (Millions) | 2024 (Millions) | Change (Millions) | % Change | | :--------------------------------- | :-------------- | :-------------- | :---------------- | :------- | | Total Revenue | $13,337 | $13,557 | $(220) | (1.6)% | | Net Income Attributable to BKR | $1,103 | $1,034 | $69 | 6.7% | | Basic EPS | $1.11 | $1.04 | $0.07 | 6.7% | | Diluted EPS | $1.11 | $1.03 | $0.08 | 7.8% | | Cash Dividend per Class A Common Stock | $0.46 | $0.42 | $0.04 | 9.5% | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)%20(Unaudited)%20-%20Three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024) For Q2 2025, comprehensive income attributable to Baker Hughes Company significantly increased to $1,018 million from $453 million in Q2 2024, primarily driven by positive foreign currency translation adjustments. For the six months ended June 30, 2025, comprehensive income attributable to Baker Hughes Company rose to $1,611 million from $849 million in the prior year period **Comprehensive Income Attributable to Baker Hughes Company:** | Period | 2025 (Millions) | 2024 (Millions) | Change (Millions) | % Change | | :--------------------------------- | :-------------- | :-------------- | :---------------- | :------- | | Three Months Ended June 30 | $1,018 | $453 | $565 | 124.7% | | Six Months Ended June 30 | $1,611 | $849 | $762 | 89.8% | **Foreign Currency Translation Adjustments:** | Period | 2025 (Millions) | 2024 (Millions) | | :--------------------------------- | :-------------- | :-------------- | | Three Months Ended June 30 | $325 | $(128) | | Six Months Ended June 30 | $513 | $(192) | [Condensed Consolidated Statements of Financial Position](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Position%20(Unaudited)%20-%20June%2030%2C%202025%20and%20December%2031%2C%202024) As of June 30, 2025, total assets increased to $38,740 million from $38,363 million at December 31, 2024. Total equity also increased to $17,868 million from $17,055 million over the same period, driven by retained earnings and accumulated other comprehensive income **Key Financial Position Metrics (June 30, 2025 vs. December 31, 2024):** | Metric | June 30, 2025 (Millions) | December 31, 2024 (Millions) | Change (Millions) | % Change | | :--------------------------------- | :----------------------- | :--------------------------- | :---------------- | :------- | | Total Assets | $38,740 | $38,363 | $377 | 1.0% | | Total Liabilities | $20,869 | $21,328 | $(459) | (2.2)% | | Total Equity | $17,868 | $17,055 | $813 | 4.8% | | Cash and Cash Equivalents | $3,087 | $3,364 | $(277) | (8.2)% | | Total Current Assets | $17,618 | $17,211 | $407 | 2.4% | | Total Current Liabilities | $12,515 | $12,991 | $(476) | (3.7)% | [Condensed Consolidated Statements of Changes in Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity%20(Unaudited)%20-%20Three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024) For the six months ended June 30, 2025, Baker Hughes Company's total equity increased by $813 million to $17,868 million, primarily due to net income of $1,103 million and other comprehensive income of $508 million, partially offset by dividends and share repurchases **Changes in Equity (Six Months Ended June 30, 2025):** | Item | Amount (Millions) | | :--------------------------------- | :-------------- | | Balance at December 31, 2024 | $17,055 | | Net income | $1,103 | | Other comprehensive income | $508 | | Dividends on Class A common stock | $(456) | | Repurchase and cancellation of Class A common stock | $(384) | | Stock-based compensation cost | $102 | | Balance at June 30, 2025 | $17,868 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)%20-%20Six%20months%20ended%20June%2030%2C%202025%20and%202024) For the six months ended June 30, 2025, net cash flows provided by operating activities increased to $1,219 million from $1,132 million in the prior year period. Cash flows used in investing activities increased to $596 million, and cash flows used in financing activities increased to $945 million, leading to an overall decrease in cash and cash equivalents **Cash Flow Summary (Six Months Ended June 30, 2025 vs. 2024):** | Activity | 2025 (Millions) | 2024 (Millions) | Change (Millions) | | :--------------------------------- | :-------------- | :-------------- | :---------------- | | Net cash flows provided by operating activities | $1,219 | $1,132 | $87 | | Net cash flows used in investing activities | $(596) | $(530) | $(66) | | Net cash flows used in financing activities | $(945) | $(929) | $(16) | | Decrease in cash and cash equivalents | $(277) | $(362) | $85 | | Cash and cash equivalents, end of period | $3,087 | $2,284 | $803 | - Operating cash flow drivers for the six months ended June 30, 2025, included net income of **$1,120 million**, depreciation and amortization of **$579 million**, and a **$532 million** cash inflow from current receivables, partially offset by cash outflows from inventories and accounts payable[24](index=24&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and breakdowns of the company's financial statements, covering accounting policies, specific asset and liability categories, debt, equity, revenue recognition, segment performance, and recent business transactions like acquisitions and divestitures [NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=9&type=section&id=NOTE%201.%20BASIS%20OF%20PRESENTATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Baker Hughes is an energy technology company with a diversified portfolio across the energy and industrial value chain. The financial statements are unaudited and prepared in accordance with U.S. GAAP. A presentation change in Q1 2025 now reports R&D and other (income) expense separately, and segments are evaluated using segment EBITDA - Baker Hughes Company is an energy technology company with a diversified portfolio of technologies and services spanning the energy and industrial value chain[26](index=26&type=chunk) - In the first quarter of 2025, the company changed its income statement presentation, reporting research and development costs and other (income) expense, net as separate line items, and removed operating and non-operating income (loss) lines[30](index=30&type=chunk) - Supply chain finance program liabilities recorded in 'Accounts payable' were **$384 million** as of June 30, 2025, down from **$411 million** at December 31, 2024[32](index=32&type=chunk) [NOTE 2. CURRENT RECEIVABLES](index=10&type=section&id=NOTE%202.%20CURRENT%20RECEIVABLES) Net current receivables decreased to $6,511 million as of June 30, 2025, from $7,122 million at December 31, 2024, primarily due to a decrease in customer receivables. The allowance for credit losses increased slightly **Current Receivables (June 30, 2025 vs. December 31, 2024):** | Metric | June 30, 2025 (Millions) | December 31, 2024 (Millions) | Change (Millions) | % Change | | :--------------------------------- | :----------------------- | :--------------------------- | :---------------- | :------- | | Customer receivables | $5,434 | $5,945 | $(511) | (8.6)% | | Total current receivables, net | $6,511 | $7,122 | $(611) | (8.6)% | | Allowance for credit losses | $(253) | $(232) | $(21) | 9.1% | - As of June 30, 2025, **17%** of the company's gross customer receivables were from customers in the U.S., compared to **16%** at December 31, 2024[38](index=38&type=chunk) [NOTE 3. INVENTORIES](index=10&type=section&id=NOTE%203.%20INVENTORIES) Net inventories increased to $5,105 million as of June 30, 2025, from $4,954 million at December 31, 2024, driven by an increase in work in process and raw materials **Inventories (June 30, 2025 vs. December 31, 2024):** | Metric | June 30, 2025 (Millions) | December 31, 2024 (Millions) | Change (Millions) | % Change | | :--------------------------------- | :----------------------- | :--------------------------- | :---------------- | :------- | | Finished goods | $2,462 | $2,494 | $(32) | (1.3)% | | Work in process and raw materials | $2,643 | $2,460 | $183 | 7.4% | | Total inventories, net | $5,105 | $4,954 | $151 | 3.0% | [NOTE 4. OTHER INTANGIBLE ASSETS](index=11&type=section&id=NOTE%204.%20OTHER%20INTANGIBLE%20ASSETS) Net intangible assets slightly decreased to $3,919 million as of June 30, 2025, from $3,951 million at December 31, 2024. Finite-lived intangible assets decreased, while indefinite-lived intangible assets saw a minor increase. Amortization expense remained consistent year-over-year **Intangible Assets (June 30, 2025 vs. December 31, 2024):** | Metric | June 30, 2025 (Millions) | December 31, 2024 (Millions) | Change (Millions) | % Change | | :--------------------------------- | :----------------------- | :--------------------------- | :---------------- | :------- | | Finite-lived intangible assets, net | $1,712 | $1,749 | $(37) | (2.1)% | | Indefinite-lived intangible assets, net | $2,207 | $2,202 | $5 | 0.2% | | Total intangible assets, net | $3,919 | $3,951 | $(32) | (0.8)% | - Amortization expense for the three months ended June 30, 2025, was **$68 million** (up from $66 million in 2024), and for the six months, it was **$134 million** (up from $133 million in 2024)[41](index=41&type=chunk) [NOTE 5. CONTRACT AND OTHER DEFERRED ASSETS](index=11&type=section&id=NOTE%205.%20CONTRACT%20AND%20OTHER%20DEFERRED%20ASSETS) Contract and other deferred assets increased to $1,841 million as of June 30, 2025, from $1,730 million at December 31, 2024, primarily due to an increase in long-term equipment contracts and certain other service agreements **Contract and Other Deferred Assets (June 30, 2025 vs. December 31, 2024):** | Metric | June 30, 2025 (Millions) | December 31, 2024 (Millions) | Change (Millions) | % Change | | :--------------------------------- | :----------------------- | :--------------------------- | :---------------- | :------- | | Long-term product service agreements | $350 | $346 | $4 | 1.2% | | Long-term equipment contracts and certain other service agreements | $1,344 | $1,247 | $97 | 7.8% | | Contract and other deferred assets | $1,841 | $1,730 | $111 | 6.4% | [NOTE 6. PROGRESS COLLECTIONS AND DEFERRED INCOME](index=12&type=section&id=NOTE%206.%20PROGRESS%20COLLECTIONS%20AND%20DEFERRED%20INCOME) Contract liabilities, including progress collections and deferred income, slightly increased to $5,680 million as of June 30, 2025, from $5,672 million at December 31, 2024. Revenue recognized from contract liabilities at the beginning of the period was $1,373 million for Q2 2025 and $2,919 million for the first six months of 2025 **Contract Liabilities (June 30, 2025 vs. December 31, 2024):** | Metric | June 30, 2025 (Millions) | December 31, 2024 (Millions) | Change (Millions) | % Change | | :--------------------------------- | :----------------------- | :--------------------------- | :---------------- | :------- | | Progress collections | $5,549 | $5,550 | $(1) | (0.0)% | | Deferred income | $131 | $122 | $9 | 7.4% | | Total contract liabilities | $5,680 | $5,672 | $8 | 0.1% | - Revenue recognized from contract liabilities at the beginning of the period was **$1,373 million** for the three months ended June 30, 2025 (vs. $1,392 million in 2024) and **$2,919 million** for the six months ended June 30, 2025 (vs. $2,868 million in 2024)[46](index=46&type=chunk) [NOTE 7. LEASES](index=12&type=section&id=NOTE%207.%20LEASES) Total operating lease expense decreased to $201 million for Q2 2025 from $223 million in Q2 2024, and to $406 million for the first six months of 2025 from $461 million in the prior year period. The weighted-average remaining lease term increased to approximately eight years **Total Operating Lease Expense:** | Period | 2025 (Millions) | 2024 (Millions) | Change (Millions) | % Change | | :--------------------------------- | :-------------- | :-------------- | :---------------- | :------- | | Three Months Ended June 30 | $201 | $223 | $(22) | (9.9)% | | Six Months Ended June 30 | $406 | $461 | $(55) | (12.0)% | - The weighted-average remaining lease term as of June 30, 2025, was approximately **eight years**, up from seven years at December 31, 2024[49](index=49&type=chunk) - The weighted-average discount rate for operating lease liability as of June 30, 2025, was **4.5%**, up from 4.3% at December 31, 2024[49](index=49&type=chunk) [NOTE 8. DEBT](index=13&type=section&id=NOTE%208.%20DEBT) Total debt increased slightly to $6,034 million as of June 30, 2025, from $6,023 million at December 31, 2024. The company has a $3.0 billion unsecured revolving credit facility with no borrowings outstanding and is in compliance with all debt covenants **Total Debt (June 30, 2025 vs. December 31, 2024):** | Metric | June 30, 2025 (Millions) | December 31, 2024 (Millions) | Change (Millions) | % Change | | :--------------------------------- | :----------------------- | :--------------------------- | :---------------- | :------- | | Short-term debt | $66 | $53 | $13 | 24.5% | | Long-term debt | $5,968 | $5,970 | $(2) | (0.0)% | | Total debt | $6,034 | $6,023 | $11 | 0.2% | - The estimated fair value of total debt at June 30, 2025, was **$5,629 million**, up from **$5,409 million** at December 31, 2024[52](index=52&type=chunk) - The company has a **$3.0 billion** committed unsecured revolving credit facility maturing in November 2028, with no borrowings outstanding as of June 30, 2025, and December 31, 2024. The company was in compliance with all debt covenants[53](index=53&type=chunk)[55](index=55&type=chunk) [NOTE 9. INCOME TAXES](index=14&type=section&id=NOTE%209.%20INCOME%20TAXES) The provision for income taxes for Q2 2025 was $256 million, up from $243 million in Q2 2024. For the first six months of 2025, it was $408 million, down from $421 million in 2024. The effective tax rate differs from the U.S. statutory rate primarily due to income in higher tax jurisdictions and losses with no tax benefit. The recently enacted OBBBA is being evaluated for its impact on Q3 2025 financial results **Provision for Income Taxes:** | Period | 2025 (Millions) | 2024 (Millions) | Change (Millions) | % Change | | :--------------------------------- | :-------------- | :-------------- | :---------------- | :------- | | Three Months Ended June 30 | $256 | $243 | $13 | 5.3% | | Six Months Ended June 30 | $408 | $421 | $(13) | (3.1)% | - The One Big Beautiful Bill Act (OBBBA), signed on July 4, 2025, preserves the **21%** U.S. Federal statutory tax rate, favorably changes business interest expense limitation, and makes key elements of the Tax Cuts and Jobs Act permanent. The company is evaluating its impact for Q3 2025 financial results[59](index=59&type=chunk) [NOTE 10. EQUITY](index=14&type=section&id=NOTE%2010.%20EQUITY) The company repurchased and canceled 5.3 million shares of Class A common stock for $196 million in Q2 2025 and 9.8 million shares for $384 million in the first six months of 2025. As of June 30, 2025, $1.3 billion remained authorized for repurchases. Accumulated other comprehensive loss decreased due to positive foreign currency translation adjustments **Share Repurchases (Class A Common Stock):** | Period | Shares Repurchased (Millions) | Cost (Millions) | Average Price per Share | | :--------------------------------- | :---------------------------- | :-------------- | :---------------------- | | Three Months Ended June 30, 2025 | 5.3 | $196 | $36.66 | | Six Months Ended June 30, 2025 | 9.8 | $384 | $39.38 | | Three Months Ended June 30, 2024 | 5.1 | $166 | $32.19 | | Six Months Ended June 30, 2024 | 10.5 | $324 | $30.72 | - As of June 30, 2025, the company had authorization remaining to repurchase approximately **$1.3 billion** of its Class A common stock[61](index=61&type=chunk) - Accumulated other comprehensive loss decreased from **$(3,161) million** at December 31, 2024, to **$(2,653) million** at June 30, 2025, primarily due to **$513 million** in foreign currency translation adjustments[64](index=64&type=chunk) [NOTE 11. EARNINGS PER SHARE](index=16&type=section&id=NOTE%2011.%20EARNINGS%20PER%20SHARE) Basic and diluted EPS for Class A common stock increased for both the three and six months ended June 30, 2025, compared to the prior year periods, reflecting higher net income attributable to Baker Hughes Company **Basic and Diluted EPS (Class A Common Stock):** | Period | 2025 (Basic) | 2024 (Basic) | 2025 (Diluted) | 2024 (Diluted) | | :--------------------------------- | :------------- | :------------- | :------------- | :------------- | | Three Months Ended June 30 | $0.71 | $0.58 | $0.71 | $0.58 | | Six Months Ended June 30 | $1.11 | $1.04 | $1.11 | $1.03 | - Weighted average shares outstanding (diluted) for the six months ended June 30, 2025, were **995 million**, slightly down from **1,002 million** in 2024[67](index=67&type=chunk) [NOTE 12. FINANCIAL INSTRUMENTS](index=17&type=section&id=NOTE%2012.%20FINANCIAL%20INSTRUMENTS) The company's total assets measured at fair value increased to $1,309 million as of June 30, 2025, from $1,295 million at December 31, 2024, primarily driven by investment securities. Derivative liabilities decreased from $64 million to $44 million. The company uses derivatives for risk management, not speculation, including cash flow hedges for foreign exchange and fair value hedges for interest rate risk **Fair Value Measurements (June 30, 2025 vs. December 31, 2024):** | Metric | June 30, 2025 (Millions) | December 31, 2024 (Millions) | Change (Millions) | % Change | | :--------------------------------- | :----------------------- | :--------------------------- | :---------------- | :------- | | Total Assets (Fair Value) | $1,309 | $1,295 | $14 | 1.1% | | Total Liabilities (Fair Value) | $(44) | $(64) | $20 | (31.3)% | | Investment securities (Fair Value) | $1,292 | $1,284 | $8 | 0.6% | - Net gains (losses) recorded to earnings related to investment securities were **$119 million** for the three months ended June 30, 2025 (vs. $19 million in 2024) and **$(22) million** for the six months ended June 30, 2025 (vs. $45 million in 2024)[71](index=71&type=chunk) - The company uses derivatives to manage risks, primarily foreign exchange rate changes on purchase and sale contracts (cash flow hedges) and interest rate risk on fixed-rate debt (fair value hedges), not for speculation[74](index=74&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk) [NOTE 13. REVENUE RELATED TO CONTRACTS WITH CUSTOMERS](index=20&type=section&id=NOTE%2013.%20REVENUE%20RELATED%20TO%20CONTRACTS%20WITH%20CUSTOMERS) Total revenue decreased by $229 million to $6,910 million for Q2 2025 and by $220 million to $13,337 million for the first six months of 2025. OFSE revenue declined across all product lines, while IET revenue increased, driven by Gas Technology and Climate Technology Solutions. Remaining performance obligations totaled $34 billion as of June 30, 2025 **Total Revenue by Segment (Three Months Ended June 30, 2025 vs. 2024):** | Segment | 2025 (Millions) | 2024 (Millions) | Change (Millions) | % Change | | :--------------------------------- | :-------------- | :-------------- | :---------------- | :------- | | Oilfield Services & Equipment (OFSE) | $3,617 | $4,011 | $(394) | (9.8)% | | Industrial & Energy Technology (IET) | $3,293 | $3,128 | $165 | 5.3% | | Total | $6,910 | $7,139 | $(229) | (3.2)% | **Total Revenue by Segment (Six Months Ended June 30, 2025 vs. 2024):** | Segment | 2025 (Millions) | 2024 (Millions) | Change (Millions) | % Change | | :--------------------------------- | :-------------- | :-------------- | :---------------- | :------- | | Oilfield Services & Equipment (OFSE) | $7,116 | $7,794 | $(678) | (8.7)% | | Industrial & Energy Technology (IET) | $6,221 | $5,763 | $459 | 8.0% | | Total | $13,337 | $13,557 | $(220) | (1.6)% | - As of June 30, 2025, the aggregate amount of the transaction price allocated to unsatisfied (or partially unsatisfied) performance obligations (RPO) was **$34 billion**, with OFSE totaling **$2.7 billion** and IET totaling **$31.3 billion**[88](index=88&type=chunk)[146](index=146&type=chunk) [NOTE 14. SEGMENT INFORMATION](index=21&type=section&id=NOTE%2014.%20SEGMENT%20INFORMATION) Baker Hughes operates through two segments: Oilfield Services & Equipment (OFSE) and Industrial & Energy Technology (IET). OFSE revenue decreased by $394 million in Q2 2025, while IET revenue increased by $165 million. Segment EBITDA for OFSE decreased, while IET's increased, reflecting differing market conditions and operational efficiencies **Segment EBITDA (Three Months Ended June 30, 2025 vs. 2024):** | Segment | 2025 (Millions) | 2024 (Millions) | Change (Millions) | % Change | | :--------------------------------- | :-------------- | :-------------- | :---------------- | :------- | | OFSE | $677 | $716 | $(39) | (5.5)% | | IET | $585 | $497 | $88 | 17.7% | | Total Segment EBITDA | $1,262 | $1,213 | $49 | 4.0% | **Segment EBITDA (Six Months Ended June 30, 2025 vs. 2024):** | Segment | 2025 (Millions) | 2024 (Millions) | Change (Millions) | % Change | | :--------------------------------- | :-------------- | :-------------- | :---------------- | :------- | | OFSE | $1,300 | $1,360 | $(60) | (4.4)% | | IET | $1,086 | $883 | $203 | 23.0% | | Total Segment EBITDA | $2,386 | $2,243 | $143 | 6.4% | - OFSE provides products and services for onshore and offshore oilfield operations, expanding into new energy areas such as geothermal and carbon capture, utilization and storage. IET provides technology solutions and services for mechanical-drive, compression, and power-generation applications across the energy industry and broader industrial sectors[90](index=90&type=chunk)[91](index=91&type=chunk) [NOTE 15. RELATED PARTY TRANSACTIONS](index=23&type=section&id=NOTE%2015.%20RELATED%20PARTY%20TRANSACTIONS) The company has a 50% ownership interest in an aeroderivative joint venture (Aero JV) with GE Vernova. Purchases from the Aero JV increased to $226 million in Q2 2025 and $374 million for the first six months of 2025, compared to the prior year periods **Purchases from Aero JV:** | Period | 2025 (Millions) | 2024 (Millions) | Change (Millions) | % Change | | :--------------------------------- | :-------------- | :-------------- | :---------------- | :------- | | Three Months Ended June 30 | $226 | $173 | $53 | 30.6% | | Six Months Ended June 30 | $374 | $276 | $98 | 35.5% | - Amounts due to the Aero JV were **$146 million** at June 30, 2025, up from **$117 million** at December 31, 2024[97](index=97&type=chunk) [NOTE 16. COMMITMENTS AND CONTINGENCIES](index=24&type=section&id=NOTE%2016.%20COMMITMENTS%20AND%20CONTINGENCIES) The company is involved in legal proceedings, including a securities class action related to C3.ai, Inc., where claims against the company were reasserted. Management does not expect current legal proceedings to have a material adverse effect. Total off-balance sheet arrangements were approximately $5.8 billion at June 30, 2025 - The company is a defendant in a putative securities class action related to C3.ai, Inc., with claims reasserted against it in February 2025[100](index=100&type=chunk) - Management does not expect the ultimate outcome of currently pending legal proceedings to have a material adverse effect on its results of operations, financial position, or cash flows[99](index=99&type=chunk) - Total off-balance sheet arrangements were approximately **$5.8 billion** at June 30, 2025, including surety bonds, letters of credit, and other bank issued guarantees[102](index=102&type=chunk) [NOTE 17. OTHER (INCOME) EXPENSE, NET](index=25&type=section&id=NOTE%2017.%20OTHER%20(INCOME)%20EXPENSE%2C%20NET) Other (income) expense, net, was $(134) million for Q2 2025, a significant decrease from $(26) million in Q2 2024, primarily due to a net gain of $119 million from the change in fair value of equity securities. For the first six months of 2025, it was $6 million, compared to $(48) million in 2024 **Other (Income) Expense, Net:** | Period | 2025 (Millions) | 2024 (Millions) | Change (Millions) | | :--------------------------------- | :-------------- | :-------------- | :---------------- | | Three Months Ended June 30 | $(134) | $(26) | $(108) | | Six Months Ended June 30 | $6 | $(48) | $54 | - The change in fair value of equity securities resulted in a **$(119) million** gain for the three months ended June 30, 2025 (vs. $(19) million gain in 2024) and a **$21 million** gain for the six months ended June 30, 2025 (vs. $(71) million loss in 2024)[105](index=105&type=chunk) [NOTE 18. ACQUISITIONS AND BUSINESSES HELD FOR SALE](index=25&type=section&id=NOTE%2018.%20ACQUISITIONS%20AND%20BUSINESSES%20HELD%20FOR%20SALE) The company agreed to acquire Continental Disc Corporation (CDC) for approximately $540 million in Q3 2025. It also entered agreements to form a joint venture for its Surface Pressure Control (SPC) business (35% non-controlling interest and $345 million cash) and to sell its Precision Sensors & Instrumentation (PSI) business for approximately $1.15 billion cash, both expected to close late 2025 or early 2026 - The company entered into an agreement to acquire Continental Disc Corporation (CDC) for approximately **$540 million**, expected to close in Q3 2025[106](index=106&type=chunk) - The company agreed to form a joint venture for its Surface Pressure Control (SPC) business, contributing it in exchange for a **35% non-controlling interest** and approximately **$345 million** cash[108](index=108&type=chunk) - The company agreed to sell its Precision Sensors & Instrumentation (PSI) business for approximately **$1.15 billion** cash. Both SPC and PSI transactions are expected to close late 2025 or early 2026[109](index=109&type=chunk)[108](index=108&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, market conditions, operational results, liquidity, and capital resources for the three and six months ended June 30, 2025, compared to the prior year. It highlights slowing global oil market activity, strong LNG and natural gas outlook, and strategic initiatives to improve profitability and capital allocation [EXECUTIVE SUMMARY](index=27&type=section&id=EXECUTIVE%20SUMMARY) In Q2 2025, Baker Hughes experienced slowing global oil market activity due to geopolitical tensions and slower economic growth, leading to a revenue decrease. However, net income increased due to higher EBITDA margins and fair value gains. The company remains optimistic about global LNG and natural gas, while expecting continued volatility in oil markets and lower upstream spending in 2025 - Slowing activity across global oil markets in Q2 2025 was primarily due to ongoing geopolitical tensions, uncertainty around trade policy and tariffs, and slower global economic growth[117](index=117&type=chunk) - The company expects 2025 global upstream spending to be lower than 2024, with pockets of resilience in select international markets and a shift towards optimizing mature fields[118](index=118&type=chunk) - Q2 2025 revenue decreased by **$0.2 billion** to **$6.9 billion** (YoY), with IET revenue increasing and OFSE revenue decreasing. Net income increased by **$0.1 billion** to **$0.7 billion** (YoY), driven by higher EBITDA margins, gains in equity securities, and FX, partially offset by lower OFSE volume[121](index=121&type=chunk) [BUSINESS ENVIRONMENT](index=28&type=section&id=BUSINESS%20ENVIRONMENT) The business environment is characterized by slowing global oil markets and lower E&P spending in North America and internationally for OFSE, while IET sees continued strength in LNG, gas infrastructure, and industrial/distributed power markets, including data centers. Oil prices (Brent and WTI) and worldwide rig counts decreased significantly in Q2 2025 compared to Q2 2024, while natural gas prices increased **Average Oil and Natural Gas Prices (Three Months Ended June 30):** | Metric | 2025 | 2024 | % Change | | :--------------------------------- | :------ | :------ | :------- | | Brent oil prices ($/Bbl) | $68.07 | $84.68 | (19.6)% | | WTI oil prices ($/Bbl) | $64.57 | $81.81 | (21.1)% | | Natural gas prices ($/mmBtu) | $3.19 | $2.07 | 54.1% | **Average Rig Counts (Three Months Ended June 30):** | Region | 2025 | 2024 | % Change | | :--------------------------------- | :------ | :------ | :------- | | North America | 699 | 738 | (5)% | | International | 897 | 963 | (7)% | | Worldwide | 1,596 | 1,701 | (6)% | - OFSE outlook for 2025 anticipates a second consecutive year of lower Exploration and Production (E&P) spending in North America and lower international activity due to recent commodity price weakness. IET outlook sees continued strength in LNG and gas infrastructure, with increasing opportunities in industrial and distributed power markets, emphasizing data centers[131](index=131&type=chunk) [RESULTS OF OPERATIONS](index=29&type=section&id=RESULTS%20OF%20OPERATIONS) For Q2 2025, total revenue decreased by $0.2 billion, with OFSE down $0.4 billion and IET up $0.2 billion. Net income increased by $0.1 billion. For the first six months of 2025, total revenue decreased by $0.2 billion, with OFSE down $0.7 billion and IET up $0.5 billion, and net income increased by $0.1 billion. Both periods saw cost optimization efforts, partially offset by inflation - Total revenue decreased by **$0.2 billion** to **$6.9 billion** in Q2 2025 compared to Q2 2024, with OFSE revenue decreasing by **$0.4 billion** and IET revenue increasing by **$0.2 billion**. Net income increased by **$0.1 billion**, or **21%**, to **$0.7 billion**[147](index=147&type=chunk)[151](index=151&type=chunk) - For the first six months of 2025, total revenue decreased by **$0.2 billion** to **$13.3 billion**, with OFSE revenue decreasing by **$0.7 billion** and IET revenue increasing by **$0.5 billion**. Net income increased by **$0.1 billion**, or **7%**, to **$1.1 billion**[157](index=157&type=chunk)[162](index=162&type=chunk) **Orders (Three Months Ended June 30):** | Segment | 2025 (Millions) | 2024 (Millions) | $ Change | | :--------------------------------- | :-------------- | :-------------- | :------- | | Oilfield Services & Equipment | $3,503 | $4,068 | $(565) | | Industrial & Energy Technology | $3,530 | $3,458 | $72 | | Total | $7,032 | $7,526 | $(494) | [LIQUIDITY AND CAPITAL RESOURCES](index=34&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company maintains solid financial strength with $3.1 billion in cash and cash equivalents as of June 30, 2025. Operating cash flows increased to $1,219 million for the first six months of 2025. Capital expenditures are expected to be up to 5% of annual revenue in 2025, and income tax payments are anticipated to be $1.0 billion to $1.1 billion. The company has a $3.0 billion revolving credit facility with no outstanding borrowings and is in compliance with debt covenants - Cash and cash equivalents were **$3.1 billion** at June 30, 2025, down from **$3.4 billion** at December 31, 2024. Approximately **82%** of the total cash balance is held outside the U.S.[168](index=168&type=chunk)[169](index=169&type=chunk)[188](index=188&type=chunk) **Cash Flows (Six Months Ended June 30):** | Activity | 2025 (Millions) | 2024 (Millions) | | :--------------------------------- | :-------------- | :-------------- | | Operating activities | $1,219 | $1,132 | | Investing activities | $(596) | $(530) | | Financing activities | $(945) | $(929) | - Capital expenditures in 2025 are expected to be up to **5%** of annual revenue, primarily for normal, recurring items. Anticipated income tax payments for 2025 are in the range of **$1.0 billion to $1.1 billion**[185](index=185&type=chunk) - The company has a **$3.0 billion** committed unsecured revolving credit facility with no borrowings outstanding as of June 30, 2025, and is in compliance with all debt covenants. Total guaranteed Debt Securities amount to **$5.8 billion**[170](index=170&type=chunk)[171](index=171&type=chunk)[189](index=189&type=chunk) [CRITICAL ACCOUNTING ESTIMATES](index=37&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES) The company's critical accounting estimation processes are consistent with those described in its 2024 Annual Report - The company's critical accounting estimation processes are consistent with those described in Item 7 of Part II, "Management's discussion and analysis of financial condition and results of operations" of its 2024 Annual Report[191](index=191&type=chunk) [FORWARD-LOOKING STATEMENTS](index=37&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section highlights that the report contains forward-looking statements subject to risks, uncertainties, and assumptions, and actual results may vary materially. Readers are cautioned not to place undue reliance on these statements, and the company does not undertake to update them except as required by law - This Quarterly Report contains forward-looking statements based on current plans, estimates, and expectations that are subject to risks, uncertainties, and assumptions, which could cause actual results to vary materially[192](index=192&type=chunk) - Readers are cautioned not to place undue reliance on any forward-looking statements, and the company does not undertake any obligation to update them, except as required by law[193](index=193&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's exposure to market risk has not materially changed since December 31, 2024, and further details are available in the 2024 Annual Report - The company's exposure to market risk has not changed materially since December 31, 2024[194](index=194&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025. There have been no material changes to internal controls over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025[195](index=195&type=chunk) - There has been no material change in internal controls over financial reporting during the quarter ended June 30, 2025[196](index=196&type=chunk) [PART II - OTHER INFORMATION](index=39&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This part contains information on legal proceedings, risk factors, equity sales, defaults, mine safety disclosures, other information, and exhibits [Item 1. Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) Information on legal proceedings is referenced to "Note 16. Commitments and Contingencies" in this report and the 2024 Annual Report - Legal proceedings are discussed in "Note 16. Commitments and Contingencies" of this Quarterly Report and the 2024 Annual Report[198](index=198&type=chunk) [Item 1A. Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) The company's operations remain subject to the risk factors previously discussed in the 2024 Annual Report - The company's operations continue to be subject to the risk factors previously discussed in the "Risk Factors" sections contained in the 2024 Annual Report[199](index=199&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2025, the company repurchased 5.3 million shares of Class A common stock for $196 million at an average price of $36.66 per share under its publicly announced repurchase program **Class A Common Stock Repurchases (Three Months Ended June 30, 2025):** | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of a Publicly Announced Program | | :--------------------------------- | :----------------------------- | :--------------------------- | :----------------------------------------------------------------------- | | April 1-30, 2025 | 857,498 | $35.70 | 839,500 | | May 1-31, 2025 | 4,507,700 | $36.87 | 4,506,172 | | June 1-30, 2025 | 8,179 | $37.50 | — | | Total | 5,373,377 | $36.68 | 5,345,672 | - During the three months ended June 30, 2025, the company repurchased **5.3 million** shares of Class A common stock for a total of **$196 million** at an average price of **$36.66** per share[204](index=204&type=chunk) [Item 3. Defaults Upon Senior Securities](index=39&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities - There were no defaults upon senior securities[202](index=202&type=chunk) [Item 4. Mine Safety Disclosures](index=39&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Information regarding mine safety violations for the company's barite mining operations is included in Exhibit 95 of this report - Information concerning mine safety violations for the company's barite mining operations is included in Exhibit 95 to this Quarterly Report[203](index=203&type=chunk) [Item 5. Other Information](index=40&type=section&id=Item%205.%20Other%20Information) No officers or directors adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q2 2025 - During the three months ended June 30, 2025, none of the company's officers or directors adopted or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement"[205](index=205&type=chunk) [Item 6. Exhibits](index=40&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed or furnished as part of the Form 10-Q, including certifications, mine safety disclosures, and XBRL documents - The exhibits include certifications (31.1, 31.2, 32), Mine Safety Disclosure (95), and various XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[207](index=207&type=chunk) [Signatures](index=41&type=section&id=Signatures) The report is signed by Ahmed Moghal, Executive Vice President and Chief Financial Officer, and Rebecca Charlton, Senior Vice President, Controller and Chief Accounting Officer, on July 23, 2025 - The report was signed on July 23, 2025, by Ahmed Moghal, Executive Vice President and Chief Financial Officer, and Rebecca Charlton, Senior Vice President, Controller and Chief Accounting Officer[210](index=210&type=chunk)

Demand & Growth Drivers - Energy infrastructure sees continued momentum with strong orders in both the first and second half of the year [2] - Data center growth, driven by artificial intelligence, is fueling demand for distributed power generation, particularly for Nova LT turbines (12 MW, 16 MW, and multi-fuel flexible turbines) [2] - The company anticipates accelerating the achievement of $15 billion (15,000 million) in orders within three years [3] - Data center demand represents a significant opportunity for industrial energy technology and synergies with oil field services and equipment, including carbon capture sequestration (CCS) [4] Oil & Gas Market Dynamics - North America activity is impacted by rig efficiency, digital solutions usage, and incremental supply from OPEC plus, leading to rangebound prices [5] - Underlying demand for oil service and equipment is softening due to OPEC adding barrels and US activity slowing [6] - Baker Hughes is focused on margin accretion in the oilfield services and equipment sector [6] International Opportunities - Mexico has an important role to play in energy infrastructure, both from a Mexican and global perspective [8] - Baker Hughes had productive discussions with Mexico regarding how its energy technology can assist in expanding and securing energy, including gas from the United States [8]

Financial Data and Key Metrics Changes - Adjusted EBITDA rose to $1,210 million, reflecting a 170 basis point year-over-year improvement in margins, driven by structural cost actions and stronger operational execution [6][35] - Free cash flow generated was $239 million, with a total of $423 million returned to shareholders, including $196 million in share repurchases [9][36] - GAAP diluted earnings per share were $0.71, while adjusted earnings per share were $0.63, up 11% year-over-year [35] Business Line Data and Key Metrics Changes - Oilfield Services and Equipment (OFSE) revenue was $3,600 million, up 3% sequentially, with EBITDA margins expanding by 90 basis points to 18.7% [40][42] - Industrial and Energy Technology (IET) revenue increased by 5% year-over-year to $3,300 million, with a 190 basis point margin expansion to 17.8% [39][40] - IET orders totaled $3,500 million in the quarter, with a year-to-date total of $6,700 million, indicating strong momentum [34][37] Market Data and Key Metrics Changes - The company booked $1 billion in new energy orders during the quarter, bringing year-to-date bookings to $1.25 billion, already matching the total for last year [21] - LNG demand is expected to grow by over 20% by 2040, with global LNG increasing by at least 75% [23] - The company secured $2.9 billion in gas infrastructure equipment orders over the past six quarters, indicating strong momentum in this area [23] Company Strategy and Development Direction - The company announced three strategic transactions to advance its portfolio optimization strategy, including a joint venture and acquisitions, aimed at enhancing earnings durability and cash flow [10][44] - Focus remains on executing a disciplined capital allocation approach to maximize long-term shareholder value, with a commitment to returning 60% to 80% of free cash flow to shareholders [36][44] - The company is expanding its presence in distributed power solutions, particularly for data centers, which is seen as a compelling growth factor [28][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving IET's full-year order guidance range of $12.5 billion to $14.5 billion, supported by strong demand in new energy and gas infrastructure [9][21] - The macro environment remains uncertain, but long-term fundamentals are strong, with global energy demand expected to grow due to population growth and industrialization [20][19] - Management anticipates continued volatility in oil markets but expects natural gas demand to grow significantly, creating a favorable environment for the company [25][23] Other Important Information - The company ended the quarter with cash of $3.1 billion and a net debt to EBITDA ratio of 0.6 times, indicating a strong balance sheet [36] - The company is focused on enhancing operational discipline and productivity through its business system, which is now in its third year [39][54] Q&A Session Summary Question: Can you unpack the drivers of the margin performance? - Management highlighted that OFSE's EBITDA margins expanded by 90 basis points due to stronger revenue and cost efficiency initiatives, while IET's margins increased by 190 basis points despite tariff-related headwinds [60][63] Question: Can you expand on the IET order performance this quarter? - Management noted that IET secured $3.5 billion in orders, driven by strength in non-LNG markets, gas infrastructure, and data centers, with expectations for strengthening LNG orders in the second half [67][70] Question: What is the net impact from the three transactions announced in June? - Management indicated that the transactions are expected to provide a modest benefit to segment margins, with a net EBITDA impact of just over $100 million anticipated for 2026 [78][79]

Financial Data and Key Metrics Changes - Adjusted EBITDA rose to $1,210 million, reflecting a 170 basis point year-over-year improvement in margins, driven by structural cost actions and stronger operational execution [7][36] - GAAP diluted earnings per share were $0.71, while adjusted earnings per share were $0.63, up 11% year-over-year [37] - Free cash flow generated was $239 million, with a total of $423 million returned to shareholders, including $196 million in share repurchases [10][38] Business Line Data and Key Metrics Changes - Oilfield Services and Equipment (OFSE) revenue was $3,600 million, up 3% sequentially, with EBITDA margins expanding 90 basis points to 18.7% [41] - Industrial and Energy Technology (IET) revenue increased by 5% year-over-year to $3,300 million, with a 190 basis point margin expansion to 17.8% [40] - IET orders totaled $3,500 million in the quarter, with a year-to-date total of $6,700 million, indicating strong momentum [39][72] Market Data and Key Metrics Changes - The company booked $1 billion in new energy orders during the quarter, bringing year-to-date bookings to $1.25 billion, matching the total for the previous year [22] - Gas infrastructure equipment orders totaled $2.9 billion over the past six quarters, reflecting strong demand for natural gas solutions [24][25] - LNG demand increased by 5% year-over-year, with significant contracting activity expected to continue [26] Company Strategy and Development Direction - The company announced three strategic transactions to enhance portfolio optimization, including a joint venture and acquisitions aimed at higher growth opportunities [11][44] - Focus remains on executing a disciplined capital allocation strategy to maximize long-term shareholder value while advancing in new energy and industrial markets [12][45] - The company is positioned to capitalize on emerging trends in distributed power solutions, particularly for data centers, with a target of $1.5 billion in data center-related awards [30][33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the full-year order guidance range of $12.5 billion to $14.5 billion for IET, supported by strong momentum in power solutions and new energy [10][72] - The macro environment remains uncertain, but long-term fundamentals for energy demand are strong, driven by population growth and urbanization [20][21] - The company anticipates continued growth in natural gas demand, with expectations for a 20% increase by 2040 [24] Other Important Information - The company ended the quarter with cash of $3.1 billion and a net debt to EBITDA ratio of 0.6 times, indicating a strong balance sheet [38] - The company is committed to returning 60% to 80% of free cash flow to shareholders, reinforcing its focus on shareholder returns [38] Q&A Session Summary Question: Can you unpack the drivers of the margin performance? - Management highlighted that OFSE EBITDA margins expanded by 90 basis points due to stronger revenue and cost efficiency initiatives, while IET margins increased by 190 basis points despite tariff-related headwinds [62][65] Question: Can you expand on the IET order performance this quarter? - Management noted that IET bookings reached $3.5 billion, driven by strength in non-LNG markets, gas infrastructure, and data centers, with expectations for continued strength in LNG orders in the second half [70][72] Question: What is the net impact from the three transactions announced? - The transactions are expected to have a modest benefit to segment margins, with a net EBITDA impact of just over $100 million anticipated for 2026 [80][82]

Core Insights - Baker Hughes Company (BKR) reported second-quarter 2025 adjusted earnings of 63 cents per share, exceeding the Zacks Consensus Estimate of 55 cents and improving from 57 cents year-over-year [1] - Total quarterly revenues reached $6,910 million, surpassing the Zacks Consensus Estimate of $6,633 million and increasing from $6,418 million in the same quarter last year [1] - The strong performance was attributed to cost improvements and operational efficiency [1] Segmental Performance - BKR reorganized its operations into two segments: Oilfield Services and Equipment (OFSE) and Industrial and Energy Technology (IET), effective October 1, 2022 [2] - Revenues from the OFSE unit were $3,617 million, a 10% decrease from $4,011 million year-over-year, but above the estimate of $3,569 million [2] - EBITDA from the OFSE segment totaled $677 million, down 5% from $716 million in Q2 2024, impacted by inflation and revenue mix, partially offset by productivity from cost-out initiatives [3] - Revenues from the IET unit amounted to $3,293 million, a 5% increase from $3,128 million year-over-year, exceeding the estimate of $3,038 million [3] - EBITDA from the IET segment was $585 million, an 18% increase from $497 million in the previous year, driven by productivity, positive pricing, and favorable foreign exchange [4] Costs & Expenses - Total costs and expenses for Baker Hughes were $5,943 million in Q2, down from $6,315 million year-over-year, while the projection was $5,033 million [5] Orders - Total orders from all business segments were $7,032 million, a 7% decline from $7,526 million a year ago, with the decrease primarily attributed to lower order intake in the OFSE segment [6] Free Cash Flow - Baker Hughes generated free cash flow of $239 million, compared to $106 million in the same quarter last year [7] Capex & Balance Sheet - Net capital expenditure for BKR in Q2 was $271 million [8] - As of June 30, 2025, BKR had cash and cash equivalents of $3,087 million and long-term debt of $5,968 million, resulting in a debt-to-capitalization ratio of 25.8% [8]