Baker Hughes(BKR) - 2025 Q2 - Quarterly Results

Second-Quarter 2025 Results Overview Financial & Operational Highlights Baker Hughes reported strong Q2 2025 results with increased adjusted EBITDA and margins, driven by cost improvements, alongside strategic portfolio optimization and key awards - The company achieved a 170 basis point year-over-year increase in total adjusted EBITDA margins to 17.5%, driven by structural cost improvements and higher productivity, despite a modest revenue decline[3] Q2 2025 Financial and Operational Highlights | Metric | Q2 2025 | YoY Change | QoQ Change | | :--- | :--- | :--- | :--- | | Orders | $7.0B | -7% | +9% | | Revenue | $6.9B | -3% | +8% | | Adjusted EBITDA* | $1,212M | +7% | +17% | | Adjusted Diluted EPS* | $0.63 | +11% | +23% | | Cash Flow from Operations | $510M | +47% | -28% | | Free Cash Flow* | $239M | +125% | -47% | - The company returned $423 million to shareholders, which included $196 million in share repurchases[5] - The Industrial & Energy Technology (IET) segment achieved a record backlog of $31.3 billion, with strong order momentum continuing despite the absence of large LNG awards[4][29] Strategic Developments & Key Awards In Q2, the company advanced its portfolio optimization through three strategic transactions and secured significant new energy and data center awards - Executed three strategic transactions to optimize the portfolio: formed a JV with Cactus, Inc. for the OFSE Surface Pressure Control product line for ~$345 million; agreed to sell the IET Precision Sensors & Instrumentation product line to Crane Company for ~$1.15 billion; and agreed to acquire Continental Disc Corporation, a pressure management solutions provider, for ~$540 million[9][10][11] - Secured significant awards for data center projects, with year-to-date awards exceeding $650 million, including the largest data center award to-date for 30 NovaLT™ turbines to deliver up to 500 MW of power[13] - New Energy bookings reached $1.25 billion year-to-date, highlighted by one of the largest CCS orders to-date in the Middle East[18] - OFSE secured multi-year production solutions contracts in Angola and Kazakhstan, and a contract with Equinor for offshore plug and abandonment (P&A) operations in Norway[19] Consolidated Financial Performance Consolidated Financial Results Consolidated Q2 financial performance featured $6.91 billion revenue, $701 million GAAP net income, and $1.212 billion adjusted EBITDA, with increased RPO and positive cash flow Consolidated Financial Results Overview | Metric | Q2 2025 Value | Sequential Change | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $6,910M | +8% | -3% | | GAAP Net Income | $701M | +$299M | +$122M | | Adjusted Net Income* | $623M | +22% | +10% | | Adjusted EBITDA* | $1,212M | +17% | +7% | - The year-over-year increase in adjusted net income and adjusted EBITDA was driven by productivity and structural cost-out initiatives, and favorable FX, partially offset by lower volume in OFSE and cost inflation[28] Other Financial Items Total Remaining Performance Obligations increased to $34.0 billion, with IET segment's RPO reaching a record $31.3 billion, alongside strong cash flow generation - Remaining Performance Obligations (RPO) ended the quarter at $34.0 billion, up $0.8 billion sequentially, with IET RPO at a record $31.3 billion and OFSE RPO at $2.7 billion[29] Key Financial Metrics | Metric | Q2 2025 Value | | :--- | :--- | | GAAP Diluted EPS | $0.71 | | Adjusted Diluted EPS* | $0.63 | | Cash Flow from Operations | $510M | | Free Cash Flow* | $239M | | Capital Expenditures, net | $271M | Segment Performance Oilfield Services & Equipment (OFSE) OFSE revenue was $3.62 billion, down 10% year-over-year but up 3% sequentially, with EBITDA margin improving to 18.7% due to productivity and cost-out initiatives OFSE Segment Performance | Metric | Q2 2025 Value | Sequential Change | YoY Change | | :--- | :--- | :--- | :--- | | Orders | $3,503M | +7% | -14% | | Revenue | $3,617M | +3% | -10% | | EBITDA | $677M | +9% | -5% | | EBITDA Margin | 18.7% | +0.9 pts | +0.9 pts | - International revenue of $2,689 million was down 10% year-over-year, with the largest decline in the Europe/CIS/Sub-Saharan Africa region (-21%), while North America revenue was down 9% year-over-year[33][34] - The sequential increase in EBITDA was primarily driven by productivity, structural cost-out initiatives, and higher volume, partially offset by inflation and revenue mix[35] Industrial & Energy Technology (IET) IET delivered strong growth with revenue up 5% year-over-year to $3.29 billion and EBITDA up 18% to $585 million, driven by Gas and Climate Technology Solutions IET Segment Performance | Metric | Q2 2025 Value | Sequential Change | YoY Change | | :--- | :--- | :--- | :--- | | Orders | $3,530M | +11% | +2% | | Revenue | $3,293M | +12% | +5% | | EBITDA | $585M | +17% | +18% | | EBITDA Margin | 17.8% | +0.7 pts | +1.9 pts | - Year-over-year revenue growth was driven by Gas Technology Equipment (+6%), Gas Technology Services (+9%), and Climate Technology Solutions (+22%)[38] - The 18% year-over-year increase in segment EBITDA was driven by positive pricing, favorable FX, and productivity, partially offset by cost inflation[39] Financial Statements & Reconciliations Reconciliation of GAAP to non-GAAP Financial Measures This section details reconciliations of GAAP to non-GAAP financial measures and presents the unaudited condensed consolidated GAAP financial statements - Management provides non-GAAP measures like adjusted EBITDA, adjusted net income, and free cash flow, believing they are widely used by investors to analyze operating performance, liquidity, and identify underlying business trends[41] - For Q2 2025, GAAP Net Income of $701 million was reconciled to Adjusted EBITDA of $1,212 million, with key adjustments including adding back depreciation & amortization ($293M) and taxes ($256M), and subtracting a $119M gain from the change in fair value of equity securities[42] - Q2 2025 GAAP Net Income of $701 million was reconciled to Adjusted Net Income of $623 million after a net adjustment of $(78) million, primarily related to the change in fair value of equity securities[43] - Net cash from operating activities of $510 million was reconciled to Free Cash Flow of $239 million by subtracting net capital expenditures of $271 million[44] GAAP Financial Statements This section presents the unaudited condensed consolidated financial statements for the period, including the Statements of Income, Financial Position, and Cash Flows, prepared in accordance with U.S. GAAP Condensed Consolidated Statements of Income (Loss) For Q2 2025, the company reported revenue of $6.91 billion and net income attributable to Baker Hughes of $701 million, or $0.71 per diluted share Condensed Consolidated Statements of Income (Loss) | (In millions, except per share) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenue | $6,910 | $7,139 | | Cost of revenue | $5,295 | $5,493 | | Income before income taxes | $967 | $824 | | Net income attributable to Baker Hughes | $701 | $579 | | Diluted income per Class A common stock | $0.71 | $0.58 | Condensed Consolidated Statements of Financial Position As of June 30, 2025, total assets were $38.74 billion, total equity was $17.87 billion, and cash was $3.09 billion Condensed Consolidated Statements of Financial Position | (In millions) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total current assets | $17,618 | $17,211 | | Total assets | $38,740 | $38,363 | | Total current liabilities | $12,515 | $12,991 | | Total liabilities | $20,872 | $21,308 | | Total equity | $17,868 | $17,055 | Condensed Consolidated Statements of Cash Flows For Q2 2025, net cash from operating activities was $510 million, with net cash decrease of $190 million after investing and financing activities Condensed Consolidated Statements of Cash Flows | (In millions) | Three Months Ended June 30, 2025 | | :--- | :--- | | Net cash flows provided by operating activities | $510 | | Net cash flows used in investing activities | $(286) | | Net cash flows used in financing activities | $(443) | | Decrease in cash and cash equivalents | $(190) | | Cash and cash equivalents, end of period | $3,087 | Other Information Supplemental Information & Conference Call This section directs investors to supplemental financial information and announces the investor conference call details - Supplemental financial information is available on the Company's investor relations website[51] - An investor conference call to discuss the results is scheduled for 9:30 a.m. Eastern time on Wednesday, July 23, 2025[52] Forward-Looking Statements This section contains a standard safe harbor statement, cautioning that the release includes forward-looking statements subject to numerous risks and uncertainties - The news release contains forward-looking statements that are subject to risks and uncertainties, and actual results could differ materially[53] - Key risk factors include economic and political conditions, oil and gas market volatility, ability to convert orders and RPO to revenue, and geopolitical risks such as war, terrorist activities, and cybersecurity attacks[54][55]