IET Orders and Horizon 2 Target
Q: Scott Gruber with Citigroup asked for more color on the building blocks across power, LNG, gas infrastructure, and new early-stage verticals driving the new $50 billion-plus Horizon 2 IET order target.
A: Lorenzo Simonelli, Chairman and CEO, stated that year-to-date AAT orders totaled approximately $18 billion, driven by data center orders of $4.9 billion and $13 billion across LNG, pipelines, upstream gas processing, and FPSOs, and noted that Power System orders could approach $15 billion and LNG equipment orders could approach $10 billion during Horizon 2.
2027 Outlook and Puts and Takes
Q: Arun Jayaram with JPMorgan asked for puts and takes and overall expectations for 2027 across segments.
A: Ahmed Moghal, CFO, stated that for 2027 the company expects a book-to-bill above 1x, revenue growth, and EBITDA margin expansion, with IET organic revenue growth in the low to mid-single-digit range, OFS supported by low to mid-single-digit growth in global upstream spending, and Chart revenue growing at a low to mid-single-digit rate.
Data Centers and Power Generation Constraints
Q: Stephen Gengaro with Stifel asked how permitting, capital constraints, and project development timelines affect customer decisions and how to assess the quality and maturity of the IET backlog.
A: Lorenzo Simonelli, Chairman and CEO, stated that power demand growth will not be linear and key constraints relate to how quickly customers secure reliable power, noting that Baker Hughes evaluates counterparty profiles, technology access, and enforces contract structures with nonrefundable down payments and cancellation penalties.
Chart EBITDA Margin Expansion Drivers
Q: Saurabh Pant with Bank of America asked for the drivers behind the path from current Chart EBITDA margins to the 22% to 23% target for the second half of 2028 and whether improvement will be linear.
A: Ahmed Moghal, CFO, stated that the progression will not be perfectly linear and is driven by $325 million in annualized cost synergies, improved project mix as LNG volume picks up, and operational and commercial improvements through the Baker Hughes business system.
Middle East Activity and Infrastructure Rebuilds
Q: David Anderson with Barclays asked what is embedded in fourth-quarter guidance for the Middle East, how 2027 normalization is viewed, and what the IET opportunity set is regarding infrastructure rebuilds.
A: Lorenzo Simonelli, Chairman and CEO, stated that fourth-quarter outlook assumes Middle East activity levels return to second quarter levels due to heightened tensions, while long-term strategic importance remains high and stable operating environments could create broader infrastructure upgrade opportunities.
Chart Integration and Baker Hughes Business System
Q: James West with Melius Research asked for an update on the implementation of the Baker Hughes business system into Chart, including processes, discipline, accountability, and the outlook for upcoming quarters.
A: Ahmed Moghal, CFO, stated that the business system implementation is progressing well with baselined processes, Tier 1 and Tier 2 KPIs, standardized operating reviews, and targeted operational improvements in manufacturing and capacity.
