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What were the key takeaways from Baker Hughes’s earnings call?

- **Record Q3 EBITDA**: $1.24 billion, beating guidance, with IET orders up 15% YoY to $3.4 billion.
- **LNG Expansion Ambition**: 950 MTPA by 2035, Chart acquisition to close mid-2026 with $325M synergies.
- **Power Gen Surge**: $800M Q3 orders, NovaLT on track for $1.5B+ ahead of schedule, geothermal project to power 180,000 homes.
- **Margin Targets**: IET targeting 20%+ 2026, OFSE closing gap to peers amid soft upstream spending.

**【CEO Summary Section】**
- **Q3 2025 Performance**: Adjusted EBITDA of $1.24 billion, above guidance midpoint, driven by strong IET orders ($4.1 billion) and OFSE execution. Full-year adjusted EBITDA expected to exceed $4.7 billion.
- **IET Momentum**: IET orders up 15% YoY to $3.4 billion, with LNG equipment orders at $800 million. IET RPO reached $32.1 billion, supporting 2026+ visibility.
- **LNG Expansion**: Global LNG capacity target of 950 MTPA by 2035, with 175 MTPA needed through 2031. Chart acquisition expected to close mid-2026, adding $325 million in cost synergies.
- **Power Generation Growth**: $800 million in Q3 power gen orders, including data center, oilfield, and geothermal solutions. NovaLT orders on track for $1.5 billion+ ahead of 3-year target.

**【CFO Financial Commentary】**
- **Q3 Financials**: GAAP EPS $0.61, Non-GAAP EPS $0.68. Free cash flow $699 million, with full-year conversion target 45-50%.
- **Balance Sheet**: Net debt/EBITDA 0.7x, cash $2.7 billion. Chart deal to maintain 1.0-1.5x leverage post-close via $1 billion+ proceeds from divestitures.
- **Segment Performance**: IET EBITDA up 20% YoY to $635 million (18.8% margin). OFSE EBITDA $671 million (18.5% margin), despite cost inflation.
- **2026 Outlook**: IET targeting 20%+ EBITDA margin. OFSE focused on margin resilience amid soft upstream spending.

**【Q&A Highlights】**
- **Power Gen Demand**: $800 million Q3 orders, including data center, oilfield, and geothermal. NovaLT pipeline extends to 2028+. Geothermal project to power 180,000 homes.
- **Chart Integration**: 14 workstreams targeting $325M cost synergies. Cultural alignment and commercial opportunities driving acceleration.
- **OFSE Margin Resilience**: 18.5% Q3 margin vs. peers, driven by cost-out and productivity. 2026 targeting 20%+ IET margins, OFSE closing peer gap.
- **NovaLT Lead Times**: Orders booked for 2028+ deliveries. $1B+ 2025 orders expected, 1/3 in oil/gas, 2/3 in industrial/data centers.

Baker Hughes Company (BKR) Q3 2025 Earnings Call Transcript

- **Record EBITDA Growth**: $1.21B Q2 EBITDA (+7% YoY), driven by 170 bps margin expansion and $3.5B IET orders.
- **Data Center Surge**: $650M data center orders booked, with 1.2 GW NovaLT capacity for digital infrastructure.
- **New Energy Leadership**: $1B+ new energy orders (CCUS, geothermal), targeting $6-7B by 2030.
- **Margin Ambition**: IET on track for 20%+ margins by 2026, OFSE improving despite market softness.
- **Strategic Transactions**: $1.15B divestiture and $540M CDC acquisition enhance portfolio flexibility and returns.

**【CEO Summary Section】**
- **Strong Q2 Results**: Adjusted EBITDA rose to $1.21 billion, up 7% YoY, driven by margin expansion (170 bps YoY) and structural cost actions. IET orders reached $3.5 billion, with IET backlog hitting a record $31.3 billion.
- **Strategic Transactions**: Announced $1.15 billion sale of Precision Sensors & Instrumentation and $540 million acquisition of Continental Disc Corporation (CDC), enhancing IET's pressure control capabilities. Joint venture with Cactus for surface pressure control yielded $345 million.
- **Data Center Momentum**: Secured $650 million in data center orders, including 30 NovaLT turbines for U.S. projects and 16 units for Frontier's Wyoming/Texas facilities. Year-to-date, 1.2 GW of NovaLT capacity booked for data centers.
- **New Energy Growth**: Booked $1 billion in new energy orders (CCUS, geothermal), exceeding 2024 total. Expect to surpass $1.6 billion annual target and reach $6-7 billion by 2030.
- **Free Cash Flow**: Generated $239 million, with $423 million returned to shareholders (60%+ of FCF target).

**【CFO Financial Commentary】**
- **Financial Highlights**: GAAP EPS $0.71, Non-GAAP EPS $0.63 (+11% YoY). Free cash flow conversion target 45-50% for FY25. Net debt/EBITDA 0.6x, liquidity $6.1 billion.
- **Segment Performance**: 
  - **IET**: EBITDA $600M (midpoint guidance), +18% YoY, driven by Gas Tech Equipment (record margins) and Cordant Solutions. Book-to-bill 1.1x, RPO $31.3B.
  - **OFSE**: EBITDA $677M (+90 bps sequentially), margins 18.7% despite soft upstream activity. Structural cost-out initiatives offset market headwinds.
- **Tariff Impact**: Q2 EBITDA impact $15M, with $100-200M annual estimate unchanged. Mitigation actions include supply chain diversification and surcharges.
- **Guidance**: FY25 EBITDA $4.675B (midpoint). IET EBITDA target raised to $2.35B, OFSE $2.625B. Expect IET to hit 20%+ margins by 2026.

**【Q&A Key Highlights】**
- **Margin Drivers**: OFSE margins expanded 90 bps Q/Q (18.7%) via cost efficiency and pricing discipline. IET margins +190 bps YoY (17.8%) despite tariffs. Both segments on track for 20%+ targets.
- **IET Order Momentum**: 2025 order guidance ($12.5-14.5B) reaffirmed, with LNG and data center growth offsetting Industrial Tech softness. 2026 orders expected to match 2025 levels.
- **Portfolio Optimization**: $1B+ net proceeds from Q2 transactions to fund M&A and organic growth. CDC acquisition adds $50M+ annual EBITDA. Focus on high-margin, recurring-revenue businesses.
- **Tariff Risks**: 2025 impact $100-200M, with Q3/Q4 sequential increases. No further escalation assumed, but retaliatory tariffs could emerge.


Baker Hughes Company (BKR) Q2 2025 Earnings Call Transcript

- **Strong Q1 Growth**: $1.04B EBITDA (+10% YoY), $454M free cash flow
- **Tariff Impact Contained**: $100-200M EBITDA drag offset by supply chain diversification
- **LNG & Data Center Momentum**: $1.7B Q1 LNG orders, 350MW+ data center power wins
- **IET Margin Expansion**: 17.1% EBITDA margin vs 14.8% YoY
- **2025 Guidance**: $4.7-4.95B EBITDA, 20% OFSE margin target on track

**【CEO Opening Remarks】**
- Global macro challenges include geopolitical tensions, trade policy uncertainty, and slower Chinese growth. 
- Oil prices face downward pressure from OPEC+ production increases and tariff-related demand weakness.
- 2025 upstream spending outlook: -high single digits globally (-mid/high single digits intl, -low double digits NA). 
- LNG and gas infrastructure remain key growth areas with $1.7B in Q1 orders.
- IET orders up 11% YoY to $3.2B, driven by Gas Tech Services upgrades (+167% YoY) and data center wins (350MW+ power capacity).
- 2025 IET EBITDA guidance ($2.2-2.4B) remains achievable despite tariff headwinds.

**【CFO Financial Review】**
- Q1 2025 Results:
  - Total revenue: $6.5B (up 5% YoY)
  - Adjusted EBITDA: $1.04B (+10% YoY)
  - Free cash flow: $454M
  - Share buybacks: $188M
- Segment Performance:
  - IET: EBITDA +30% YoY to $522M (17.1% margin)
  - OFSE: EBITDA $623M (17.8% margin vs 17.0% YoY)
- Tariff Impact Estimate: $100-200M EBITDA drag (50% from IET, 50% from OFSE)
- 2025 Outlook:
  - Total EBITDA: $4.7-4.95B
  - IET EBITDA: $2.2-2.4B
  - OFSE EBITDA: $1.4-1.5B

**【Q&A Key Themes】**
1. Tariff Mitigation:
   - Direct cost impact: $100-200M
   - Mitigation strategies: supply chain diversification, contractual pass-throughs, domestic sourcing
   - 50% of IET business not exposed to China tariffs
2. Data Center Growth:
   - 35 NovaLT turbines booked for data centers (350MW+ power)
   - $1.5B+ data center orders expected over next 3 years
3. OFSE Margin Progress:
   - 20% EBITDA margin target still achievable
   - Q2 EBITDA margin: ~18.6% (vs 17.8% Q1)
   - 2026 margin path remains intact despite macro challenges

Baker Hughes (BKR)-23 Apr 25-2025 Q1 Earnings call transcript

- **Revenue Records**: Q4 2024 revenue $7.5B, full-year $28.2B (+15% YoY), driven by gas infrastructure and LNG projects.
- **Margin Expansion**: EBITDA margin 17.8% (up 1.8ppt YoY), free cash flow $2.3B (49% conversion rate).
- **New Energy Growth**: 2024 new energy orders $1.3B (+70% YoY), targeting $1.4-$1.6B in 2025.
- **Installed Base Momentum**: IET installed base to grow 20% by 2030, with LNG units up 50%.
- **2025 Guidance**: Revenue $27.75B, EBITDA $4.95B. IET orders $12.5-$14.5B, OFSE EBITDA $3B.
- **Dividend Growth**: 10% dividend hike to $0.48/share, 4th consecutive year of increases.

**【CEO Summary Section】**
- **Record Financial Performance**: Q4 2024 revenue reached $7.5 billion, with IET orders at $3.8 billion, exceeding the midpoint of EBITDA guidance for the 8th consecutive quarter. Full-year revenue hit $28.2 billion, up 15% YoY, driven by gas infrastructure and LNG projects.
- **Margin Expansion**: Adjusted EBITDA margin rose 1.8ppt YoY to 17.8%, with IET EBITDA up 38% YoY. Free cash flow reached $2.3 billion annually, conversion rate of 49% near the high end of the 45%-50% target.
- **New Energy Growth**: New energy orders grew 70% YoY to $1.3 billion, with a target of $1.4-$1.6 billion in 2025. LNG FIDs expected to exceed 80 MTPA in 2025-26, supporting gas infrastructure expansion in Saudi Arabia and Algeria.
- **Installed Base Momentum**: IET serviceable installed base to grow 20% by 2030, with LNG units outpacing at +50%, driving high-margin aftermarket services.

**【CFO Financial Commentary】**
- **Profitability**: Full-year adjusted EPS of $2.35 (+47% YoY), GAAP EPS of $1.18, and free cash flow of $2.3 billion. Effective tax rate declined 5ppt to 28%, adding $0.17 to EPS.
- **2025 Guidance**: Revenue $27.75 billion, EBITDA $4.95 billion. IET orders $12.5-$14.5 billion (midpoint +3% YoY), OFSE revenue $15 billion (-4% YoY) with EBITDA up to $3 billion.
- **Capital Allocation**: $1.3 billion returned to shareholders in 2024 (60% of FCF). Dividend increased 10% to $0.48/share, 4th consecutive year of hikes. Free cash flow conversion target maintained at 45%-50%.

**【Q&A Highlights】**
- **IET Order Outlook**: 2025 IET orders guided at $13.5 billion midpoint, with LNG FIDs rebounding post-U.S. moratorium. NovaLT turbines expected to double in 2025, targeting data centers and oil/gas behind-the-meter solutions.
- **OFSE Resilience**: OFSE EBITDA margin expanded 1.5ppt YoY to 18.4%, driven by SSPS margin doubling to mid-teens. Production-weighted portfolio (+50% of OFSE) to outperform softer North American drilling market.
- **Margin Targets**: IET to reach 20%+ EBITDA margin by 2026, OFSE to 15% by 2025. Self-help initiatives (lean manufacturing, BVC sourcing) contributed 6ppt margin improvement over 5 years.
- **M&A Strategy**: Focused on tuck-in acquisitions to fill technology gaps, e.g., new energy and distributed power solutions. No plans for transformational deals, prioritizing organic growth.

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