Baker Hughes Q3 2025 Earnings Transcript

Core Insights - The company achieved strong order momentum with IET orders totaling $4.1 billion in the quarter, driven by LNG equipment and record Cordon Solutions orders, leading to a record IT backlog of $32.1 billion [1][38] - Adjusted EBITDA rose to $1.24 billion, reflecting operational performance and positive trends in gas technology, with a year-over-year margin increase to 17.7% [2][3] - The company expects full-year adjusted EBITDA to exceed $4.7 billion and anticipates IET orders to exceed prior guidance, with a target of at least $40 billion in IET orders over the next three years [2][5][45] Orders and Backlog - IET orders for the first three quarters reached nearly $11 billion, including $1.6 billion from New Energy, already at the high end of guidance [1] - The company secured over $800 million in LNG equipment orders this quarter, indicating strong demand in the LNG sector [6][7] - The record backlog of $32.1 billion provides strong revenue visibility for 2026 and beyond [38] Financial Performance - Total company bookings for the quarter were $8.2 billion, with free cash flow generated at $699 million [30] - The company expects free cash flow conversion of 45% to 50% for the full year [31] - The balance sheet remains strong with cash of $2.7 billion and a net debt to adjusted EBITDA ratio of 0.7 times [32] Market Outlook - The macro environment remains resilient, with AI-driven investments contributing significantly to U.S. GDP growth [14] - Natural gas demand is projected to grow by over 20% by 2040, with LNG demand increasing by at least 75% [19][22] - The company anticipates continued growth in LNG contracting activity, with 84 MTPA of long-term contracts signed in the first nine months of the year [20] Strategic Initiatives - The company is focused on integrating the Chart acquisition, which is expected to enhance its technology portfolio and drive cost synergies of $325 million [34][37] - A comprehensive evaluation of capital allocation and operations is underway to enhance shareholder value [28][76] - The company aims for total company margins of 20% by 2028, supported by ongoing operational improvements and portfolio optimization [48][68] Segment Performance - IET revenue increased by 15% year over year to $3.4 billion, with segment EBITDA rising 20% to $635 million [38] - OFSE revenue was $3.6 billion, with EBITDA of $671 million, reflecting resilience despite market challenges [40] - The company expects continued margin resilience in OFSE, focusing on cost control and productivity improvements [88]