Key financial results
- Adjusted EBITDA totaled $1.42 billion with margins of 17.6% comparable to last year.
Adjusted EBITDA totaled $1.42 billion with margins of 17.6% comparable to last year.
- Adjusted earnings per share were $0.70, up modestly year-over-year as strong operational performance more than offset the impact of higher interest expense.
Adjusted earnings per share were $0.70, up modestly year-over-year as strong operational performance more than offset the impact of higher interest expense.
- Free cash flow remained strong at $769 million, including approximately $200 million of integration, restructuring and closing-related cash costs associated with the Chart acquisition.
Free cash flow remained strong at $769 million, including approximately $200 million of integration, restructuring and closing-related cash costs associated with the Chart acquisition.
- Revenue was approximately $8 billion, up 14% year-over-year.
Revenue was approximately $8 billion, up 14% year-over-year.
- GAAP diluted earnings per share were $0.41 while adjusted diluted earnings per share were $0.70.
GAAP diluted earnings per share were $0.41 and while adjusted diluted earnings per share were $0.70, up 2% year-over-year.
Business segment results
- IET: IET recorded $5.9 billion of orders, representing a 1.7x book-to-bill ratio, including $1 billion of LNG equipment awards and $2.2 billion of power systems orders led by strong data center demand.
- IET: IET revenue of $3.48 billion was modestly above the top end of guidance range and increased 3% year-over-year.
Revenue of $3.48 billion was modestly above the top end of our guidance range and increased 3% year-over-year
- IET: IET EBITDA increased 8% to $685 million with margins expanding by 90 basis points to 19.7%.
IET EBITDA increased 8% to $685 million, near the upper end of our guidance range. Margins expanded by 90 basis points to 19.7%
- OFSE: OFSE revenue increased 6% sequentially to $3.66 billion, approaching the high end of guidance.
Third quarter revenue increased 6% sequentially to $3.66 billion, approaching the high end of our guidance range.
- OFSE: OFSE reported EBITDA of $659 million with margins increasing 50 basis points sequentially to 18.1%.
OFSE reported EBITDA of $659 million, above the midpoint of our guidance. EBITDA margins increased 50 basis points sequentially to 18.1%
- Chart: Chart orders were $831 million, resulting in a book-to-bill of 0.9x.
Orders were $831 million, resulting in a book-to-bill of 0.9x
- Chart: Chart revenue was $888 million and EBITDA was $156 million resulting in an EBITDA margin of 17.6%.
Revenue was $888 million with strong project execution in LNG, data centers and space. EBITDA was $156 million, resulting in an EBITDA margin of 17.6%
Capital allocation
- At quarter end, the leverage ratio increased to 2.5x largely reflecting the debt used to fund the Chart acquisition.
At quarter end, our leverage ratio increased to 2.5x largely reflecting the debt used to fund the Chart acquisition.
- The near-term capital allocation priority remains deleveraging the balance sheet through free cash flow generation and proceeds from the Wage divestiture.
- Management remains confident in achieving net leverage of less than 1.5x by the second half of 2028.
With these actions supporting our deleveraging efforts, we remain confident in our ability to achieve net leverage of less than 1.5x by the second half of 2028.
Industry trends and dynamics
- The macroeconomic environment continues to underscore the importance of energy security and reliable supply, with disruptions tightening inventories and supporting commodity prices.
The macro environment continues to underscore the importance of energy security and reliable supply. Disruptions across key producing regions have tightened inventories and supported commodity prices
- Global upstream spending is expected to be broadly flat year-over-year with an improving outlook into 2027.
we expect global upstream spending to be broadly flat year-over-year with an improving outlook into 2027.
- LNG capacity is expected to reach approximately 800 MTPA by 2030, with future FIDs supporting further growth to 950 MTPA by 2035.
With existing capacity and committed projects expected to bring global LNG capacity to approximately 800 MTPA by 2030, we see future FIDs supporting further growth to 950 MTPA by 2035
- In the U.S. alone, approximately 100 gigawatt of incremental data center capacity is expected by 2035, requiring roughly 18 Bcf per day of incremental gas supply.
Competitive landscape
- Baker Hughes is increasingly a critical enabler of power infrastructure required to support the rapid growth of AI.
Baker Hughes is increasingly a critical enabler of the power infrastructure required to support the rapid growth of AI.
- The Chart acquisition expands the total addressable market to more than $400 billion and adds complementary capabilities in thermal management, cryogenics and carbon capture.
The combination also significantly expands our market opportunity, positioning Baker Hughes with a total addressable market of more than $400 billion with greater exposure to attractive growth markets
Macroeconomic environment
- Customers continue to take a disciplined approach to near-term spending against the backdrop of broader energy security and geopolitical considerations.
customers continue to take a disciplined approach to near-term spending.
Growth opportunities and strategies
- Management is targeting a high single-digit CAGR in mass-related revenue, achieving at least $3 billion by 2030.
We are targeting a high single-digit CAGR in mass-related revenue, achieving at least $3 billion by 2030
- The company is on track to achieve $325 million of annualized cost synergies within 3 years of closing the Chart acquisition.
We remain on track to achieve $325 million of annualized cost synergies within 3 years of closing the acquisition.
Financial guidance and outlook
- For the fourth quarter, the company anticipates company revenue of $8.25 billion and adjusted EBITDA of $1.46 billion.
For the fourth quarter, we anticipate company revenue of $8.25 billion and adjusted EBITDA of $1.46 billion, reflecting sequential revenue growth and margin expansion.
- For full year 2026, management is increasing the midpoint of total company EBITDA to $5.265 billion and expects free cash flow conversion of 45% to 50%.
- Full year IET orders outlook is raised to $21.5 billion to $23.5 billion.
As Lorenzo mentioned, we are raising our full year IET order outlook to $21.5 billion to $23.5 billion
Q3 2026 results
| Metric | Result | Change |
|---|---|---|
| Revenue | $8 billion | up 14% year-over-year |
| Adjusted EBITDA | $1.42 billion | up 14% year-over-year |
| Adjusted diluted EPS | $0.70 | up 2% year-over-year |
| Free cash flow | $769 million | up 10% year-over-year |
| IET orders | $5.9 billion | 1.7x book-to-bill ratio |
| Chart revenue | $888 million | Not stated |
How management sounded
Balanced (+35 on our -100 to +100 scale). Management highlighted exceptional third quarter performance, record IET RPO, and raised the full year outlook while noting disciplined execution and strong cash generation. Management sounded more upbeat than on 20% of the 302 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Read the analyst Q&A summary and guidance and outlook for this call.
What to watch before the next call
- Pace of Middle East activity and potential regional logistics and supply chain disruptions affecting IET execution.
- Realization of Chart integration cost synergies and progress toward the 22% to 23% EBITDA margin target by the second half of 2028.
- Deleveraging progress and reduction of debt following the Chart acquisition to achieve net leverage of less than 1.5x by the second half of 2028.
Earlier calls
- Q2 2026 (Jul 27, 2026), tone Balanced: Baker Hughes reported a strong second quarter with adjusted EBITDA of $1.23 billion, driven by record orders in industrial and energy technology.
