Baker Hughes Delivers Growth as Energy Tech Expands

Baker Hughes (NASDAQ: BKR) proved its shareholders right and its skeptics wrong with a double-beat in its third-quarter earnings report. The energy technology company generated revenue of $7.01 billion, more than the $6.81 billion expected and up by 1% year-over-year (YOY). On the bottom line, the company delivered adjusted earnings per share (EPS) of 68 cents. That beat estimates for 62 cents and was slightly above the 67 cents it delivered a year earlier.

After initially climbing over 1% in after-hours trading, BKR stock pulled back modestly, reflecting broader volatility in the energy sector. In the weeks prior to the report, analysts had been raising their price targets for BKR stock, which closed approximately 8% below its consensus price target. However, with the volatile price movement after the report, investors will want to see if sentiment remains strong in the coming days.

The report highlighted Baker Hughes’ strategic pivot from purely an oilfield services provider to becoming a diversified energy technology company positioned at the intersection of natural gas, renewables, and digital infrastructure.

LNG and Energy Technology Lead the Way

The company’s strongest growth came from its Industrial & Energy Technology (IET) segment. This unit continues to drive profitability and order growth. IET orders surged 44% YOY to $4.1 billion. The highlight came from record bookings for liquified natural gas (LNG) equipment and accelerating power generation awards. Revenue of $3.37 billion was up 15% and EBITDA increased to $635 million, an increase of 20%, with margins expanding to 18.8%.

CEO Lorenzo Simonelli credited the performance to a resilient portfolio and strong execution in high-growth markets like LNG, data centers, and power generation. The company highlighted major contract wins, including NextDecade’s Rio Grande LNG Train 4 equipment, Sempra Infrastructure’s Port Arthur Phase 2, and bp’s Tangguh LNG operations in Indonesia.

Additionally, Baker Hughes’ Cordant™ asset health software continues to gain traction, helping operators improve uptime and efficiency across industrial operations. The company’s gas turbine technology also won orders to support geothermal and power projects, such as Fervo’s 300 MW Cape Station in Utah.

Oilfield Segment Holds Steady Amid Market Softness

While the Oilfield Services & Equipment (OFSE) segment faced a softer environment, results remained resilient. OFSE orders rose 7% YOY to $4.07 billion, driven by a record $1.2 billion in subsea and surface pressure systems (SSPS) orders, including major awards from Petrobras and Turkish Petroleum.

Investors are also aware that Ananym Capital Management is targeting this area of the company. The activist investor is advising the company to consider selling or spinning off its OFSE business. The company did not provide any comment in its earnings presentation.

Revenue for OFSE came in at $3.64 billion, down 8% YOY, with EBITDA of $671 million, reflecting a modest sequential margin decline due to mix and inflation pressures. Notably, North American offshore performance strengthened while land drilling activity grew modestly. International results were mixed, as weakness in Saudi Arabia and Argentina offset gains in Asia-Pacific and the broader Middle East.

Despite these challenges, Baker Hughes continues to execute well in offshore and production solutions, which are expected to benefit as global investment in complex reservoirs and deepwater assets grows.

Expanding Margins and Free Cash Flow

Baker Hughes reported adjusted EBITDA of $1.24 billion, translating to a 17.7% margin, up 20 basis points year over year. Free cash flow jumped to $699 million, nearly tripling from the prior quarter as the company maintained strict working capital discipline.

Management also reiterated its capital allocation priorities: strengthening the balance sheet ahead of its pending acquisition of Chart Industries, maintaining dividend growth, and investing roughly 2% of sales into R&D. The company completed its $553 million acquisition of Continental Disc Corporation during the quarter and raised its quarterly dividend to 23 cents per share earlier this year, marking the fourth consecutive year of dividend increases.

Baker Hughes’ net debt-to-EBITDA ratio stands at just 0.7x, giving the company ample flexibility to pursue targeted acquisitions and strategic technology investments.

Positioned for Growth in a Changing Energy Mix

Looking ahead, Baker Hughes guided for full-year 2025 revenue of $27.0 to $27.8 billion and adjusted EBITDA of $4.63 to $4.85 billion, implying continued margin expansion and healthy cash conversion of 45–50%.

The company expects global LNG capacity to climb toward 950 million tons per annum (MTPA) by 2035, driven by ongoing coal-to-gas substitution and emerging market demand. Baker Hughes estimates more than $40 billion in IET orders between 2026 and 2028 as the world invests heavily in gas infrastructure, power generation, and energy efficiency solutions.

Simonelli emphasized that Baker Hughes’ long-term investment thesis remains intact: accelerating margin expansion through operational discipline, portfolio optimization, and a growing mix of higher-margin energy technology solutions.

The company aims to lift its adjusted EBITDA margin from 17.3% in 2025 to 20% during its next strategic “Horizon Two” phase. Analysts expect 15% earnings growth over the next 12 months, which aligns with the company’s forward price-to-earnings (P/E) ratio of around 18x.

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