Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported July 26, 2026 · Beat 7 of last 7 quarters
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Baker Hughes' record IET orders, particularly in Power Systems and LNG, underscore the accelerating AI infrastructure buildout, with data center power demand driving a multiyear growth cycle. The company's capacity expansion to support nearly $5B in annual Power Systems revenue by 2029 positions it to capture a significant share of the power generation needed for AI data centers. The Chart acquisition further strengthens its ability to offer integrated power and cooling solutions, critical for data center deployment.
Baker Hughes delivered another strong quarter, with adjusted EBITDA of $1.23B and EPS of $0.64, both above expectations. IET orders hit a record $7.1B, driven by Power Systems ($2.6B) and LNG ($1.8B), while OFSC revenue of $3.45B exceeded guidance despite Middle East disruptions. The company closed the Chart acquisition and announced it will be reported as a third segment. Free cash flow was robust at $1.1B, and net debt to adjusted EBITDA ratio declined to 0.1x. Management raised full-year guidance and IET orders outlook, reflecting strong demand across data centers and gas infrastructure.
Management raised full-year 2026 guidance, now expecting revenue and adjusted EBITDA to modestly exceed prior expectations. IET orders guidance was raised to $17.5B–$19.5B, and Horizon 2 IET orders target was increased to over $45B. Power Systems capacity expansion is expected to support nearly $5B in annual revenue by 2029, a 3-4x increase over 2025, with first incremental NovaLT capacity online in H1 2027. The Chart acquisition closed, with $325M in annualized cost synergies targeted by year 3, and Chart will operate as a third segment. Management assumes Middle East activity remains broadly stable through year-end, with OFSC revenue in the region flat sequentially and IET facing a 1-2% revenue headwind. They expect GTS growth to level off in H2 due to planned outages and lower catch-up work, while IET margins benefit from favorable backlog pricing and mix.
“We delivered another strong quarter as disciplined execution and the strength of our diversified portfolio more than offset anticipated headwinds in the Middle East.”
on Q2 performance
“IET delivered another exceptional quarter with orders doubling year-over-year to a record $7.1 billion, resulting in a 2.2x book-to-bill ratio and driving RPO up 19% to an all-time high of $37.1 billion.”
on IET orders
“We now expect company revenue and adjusted EBITDA to modestly exceed our previous expectations provided alongside first quarter results.”
on Guidance raise
Can you elaborate on your capacity expansion plans through 2029, including mix, pricing, revenue ramp, and CapEx implications?
Lorenzo detailed the $5B annual revenue opportunity by 2029, a 3-4x increase from 2025. Gas turbines represent roughly half of the mix, with BRUSH about a quarter. CapEx is phased from 2026-2028, with paybacks below 2 years, leveraging existing roofline and make-buy strategy. Pricing assumptions are based on 2025 average levels. First incremental NovaLT capacity comes online H1 2027, with gas turbine capacity doubling by end of 2028.
Can you impact the commercial synergy opportunity set with Chart, including near-term and underappreciated opportunities?
Lorenzo highlighted data centers as the clearest near-term opportunity, combining Baker Hughes power generation with Chart's thermal management and cooling. Gas infrastructure is also actionable, offering complete solutions across gas value chain and multiple molecules. Underappreciated opportunities include space, geothermal, and mining, where Chart's cryogenic expertise and installed base create cross-sell potential.
What drove the record IET orders this quarter, and what are the key drivers and margin implications?
Lorenzo attributed the record to broad-based strength across data centers, LNG, and gas processing. Power Systems orders totaled $2.6B, with data centers accounting for $2.2B. Even excluding data centers, IET orders would have been $4.9B, matching the prior record. LNG equipment orders of $1.8B in the quarter brought H1 to $2.9B, exceeding full-year 2025. Margins benefit from disciplined commercial framework and constructive pricing environment, providing tailwinds for 2027 and beyond.