Baker Hughes(US:BKR)2026-01-26 15:30Financial Data and Key Metrics Changes - Adjusted EBITDA for Q4 2025 totaled $1.34 billion, contributing to a record full-year adjusted EBITDA of $4.83 billion, reflecting sustained momentum from the business system and positive performance in Industrial and Energy Technology (IET) [4][5] - Adjusted earnings per share rose to $0.78, resulting in a full-year adjusted EPS of $2.60, a 10% increase from 2024 [4] - Adjusted EBITDA margins for Q4 rose 30 basis points year-over-year to a record 18.1% [4] - For the full year, company-adjusted EBITDA margins increased by 90 basis points to a record of 17.4% [5] Business Line Data and Key Metrics Changes - IET achieved strong fourth quarter order bookings of $4 billion, contributing to a record full-year total of $14.9 billion, exceeding guidance [5][31] - IET margins increased by 170 basis points to a historical high of 18.5% for the full year [5][33] - OFSE revenue declined by 8% for the full year, but margins remained resilient at 18.3% [35] Market Data and Key Metrics Changes - LNG demand increased by approximately 7% in 2025, with expectations of at least 75% growth by 2040, primarily driven by growth across Asia [13][14] - The global macro environment remains resilient despite geopolitical uncertainties, with modestly stronger GDP growth anticipated in 2026 [11][12] Company Strategy and Development Direction - The company is focused on expanding its power systems portfolio, targeting a market opportunity exceeding $100 billion by 2030 [20][21] - The strategy includes enhancing capabilities in power generation, grid stability, and energy management, with a strong emphasis on digital integration and lifecycle services [20][21] - The pending acquisition of Chart is expected to add thermal management capabilities and enhance the power generation portfolio [25][44] Management's Comments on Operating Environment and Future Outlook - Management anticipates continued strong demand for power systems driven by digitization, AI, and electrification trends [12][18] - The company expects to achieve a net debt to adjusted EBITDA ratio of 1-1.5 times within 24 months following the Chart acquisition [29] - The outlook for global energy infrastructure investment remains positive, particularly in gas, LNG, and power generation [43][44] Other Important Information - The company generated robust free cash flow of $1.3 billion in Q4, contributing to a record annual free cash flow of $2.7 billion [6][28] - The company returned $1.3 billion to shareholders in dividends and share repurchases in 2025 [28] Q&A Session Summary Question: Can you elaborate on your strategy for further enhancing your current capabilities or sustaining growth from Power Systems? - Management highlighted a global power demand growth cycle, with expectations for power demand to double by 2040, driven by data centers and electrification [50][51] - The company sees significant opportunities in AI infrastructure and has identified a $100 billion annual market opportunity for Power Systems by 2030 [51][52] Question: Can you walk through some of the moving pieces within the IET order intake guide for 2026? - Management indicated strong pipelines in power systems and continued growth in LNG and gas infrastructure, with expectations for robust order levels [60][61] Question: Can you discuss the margin outlook for IET and OFSE? - Management expects IET margins to reach 20% in 2026, driven by higher-margin backlog conversion and productivity improvements [69][70] - OFSE margins are expected to remain resilient despite macro headwinds, with ongoing cost actions supporting stability [70][71]